Exhibit 10.2

 

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

EXECUTION VERSION

 

LICENSE AGREEMENT

 

THIS LICENSE AGREEMENT (“Agreement”) is made effective as of the 11th day of
July, 2012 (the “Effective Date”), by and between Verastem, Inc., a corporation
organized and existing under the laws of Delaware with offices at 215 First
Street, Suite 440, Cambridge, Massachusetts 02142 (“LICENSEE”) and PFIZER Inc.,
a corporation organized and existing under the laws of Delaware with offices at
235 East 42nd Street, New York, NY 10017 (“PFIZER”).  LICENSEE and PFIZER may,
from time-to-time, be individually referred to as a “Party” and collectively
referred to as the “Parties”.

 

RECITALS

 

WHEREAS, PFIZER Controls the Licensed Technology (hereinafter defined); and

 

WHEREAS, LICENSEE wishes to obtain, and PFIZER wishes to grant, certain licenses
under the Licensed Technology on the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the mutual agreements and covenants set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which the Parties hereby acknowledge, the Parties, intending to
be legally bound hereby, agree to the foregoing and as follows:

 

1.                                      DEFINITIONS

 

1.1.                            “Affiliate” means, with respect to a Party, any
Person that controls, is controlled by, or is under common control with that
Party.  For the purpose of this definition, “control” shall refer to: (a) the
possession, directly or indirectly, of the power to direct the management or
policies of an entity, whether through the ownership of voting securities, by
contract or otherwise; or (b) the ownership, directly or indirectly, of fifty
percent (50%) or more of the voting securities of such entity.

 

1.2.                            “Applicable Laws” means all applicable laws,
statutes, rules, regulations and guidelines, including all good manufacturing
practices and all applicable standards or guidelines promulgated by the
appropriate Regulatory Authority.

 

1.3.                            “Business Day” means any day other than a
Saturday, a Sunday or a day on which commercial banks located in New York, New
York are authorized or required by law to remain closed.

 

1.4.                            “Calendar Quarter” means the respective periods
of three (3) consecutive calendar months ending on March 31, June 30,
September 30 and December 31.

 

1.5.                            “Calendar Year” means any twelve (12) month
period commencing on January 1.

 

1.6.                            “Combination Product” means a Product that
includes a Compound and at least one (1) Other Active Ingredient.

 

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1.7.                            “Commercialize” or “Commercialization” means to
manufacture for sale, market, promote, otherwise offer for sale, distribute, and
sell.

 

1.8.                            “Commercially Reasonable Efforts” means, with
respect to the Development or Commercialization of a Product, that level of
efforts and resources commonly dedicated in the research-based pharmaceutical
industry by a similarly situated company to the development or
commercialization, as the case may be, of a product of similar commercial
potential at a similar stage in its lifecycle, in each case taking into account
issues of safety and efficacy, product profile, the proprietary position, the
then-current competitive environment for such product and the likely timing of
such Product’s entry into the market, the regulatory environment and status of
such Product, and other relevant scientific, technical and commercial factors.

 

1.9.                            “Compounds” means the compounds designated by
PFIZER as PF-04554878 and PF-00562271, and all salts, polymorphs and
formulations thereof.

 

1.10.                     “Control” or “Controlled” means, with respect to any
Intellectual Property Rights, the legal authority or right (whether by
ownership, license or otherwise other than pursuant to this Agreement) of a
Party to grant a license or a sublicense of or under such Intellectual Property
Rights to the other Party without breaching the terms of any agreement with a
Third Party.  For clarity, if a Party only can grant a license or sublicense to
Intellectual Property Rights, or provide access to a material or document, of a
limited scope due to an encumbrance imposed by a Third Party, “Control” or
“Controlled” shall be construed to so limit the license or sublicense to such
Intellectual Property Rights or the provision of, or provision of access to,
such materials or documents (as applicable).

 

1.11.                     “Develop” or “Development” means to conduct research
and development activities (including related manufacturing activities) under
conditions designed to yield data suitable for inclusion in, or otherwise
necessary to support, an application for Regulatory Approval of a Product by a
Regulatory Authority within the Territory.

 

1.12.                     “Distributor” means a Third Party, other than a Third
Party to which any sublicense hereunder is granted, that (a) purchases any
Products in finished form from LICENSEE or any of its Affiliates or sublicensees
with the intent or purpose of reselling such Products; and (b) has the right to
Commercialize such Products in one or more regions.

 

1.13.                     “EMA” means the European Medicines Agency, or any
successor agency thereto.

 

1.14.                     “FDA” means the United States Food and Drug
Administration, or a successor federal agency thereto.

 

1.15.                     “Field” means all therapeutic, prophylactic and
diagnostic uses of a Product in humans, including the treatment of human disease
with such Product, regardless of the route of administration.

 

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1.16.                     “First Commercial Sale” means with respect to a
Product, the first sale for use or consumption of the Product following receipt
of Regulatory Approval for such Product in a country in the Territory.

 

1.17.                     “GAAP” means the generally accepted accounting
principles in the United States, consistently applied.

 

1.18.                     “IND” means: (a) an investigational new drug
application filed with the FDA for authorization for the investigation of a
Product; or (b) any foreign equivalents as filed with the applicable Regulatory
Authorities in other countries or regulatory jurisdictions in the Territory, as
applicable.

 

1.19.                     “Indication” for a Product means the use of such
Product for treating a particular disease or medical condition.

 

1.20.                     “Intellectual Property Rights” means all trade
secrets, copyrights, patents, patent applications, Trademarks, moral rights,
know-how and any and all other intellectual property or proprietary rights now
known or hereafter recognized in any jurisdiction.

 

1.21.                     “Licensed Know-How” know-how, processes, data,
regulatory filings, information and knowledge, whether or not patentable, that
(a) are Controlled by PFIZER on the Effective Date and used by PFIZER as of or
prior to the Effective Date in the development or manufacture of a Compound or a
Product containing a Compound; (b) are Controlled by PFIZER on the Effective
Date, and is necessary to make, use or sell a Compound or a Product as it exists
on the Effective Date containing a Compound; or (c) arises out of PFIZER’s
exercise of the license granted to PFIZER under Section 2.3 and directly relates
to the formulation of a Compound.

 

1.22.                     “Licensed Patent Rights” means (a) the patents and
patent applications listed on Schedule A; and (b) (i) all continuations,
divisionals, renewals and continuations-in-part (to the extent the claims
thereof are entirely supported by one or more of the patents and patent
applications listed on Schedule A to which it claims priority) claiming priority
to the patents and patent applications described in clause (a), (ii) any other
subsequent filings in any country worldwide claiming priority to the patents and
patent applications described in clause (a) (to the extent the claims thereof
are entirely supported by one or more of the patents and patent applications
listed on Schedule A to which it claims priority); and (iii) all letters of
patent granted with respect to any of the foregoing and patents of addition,
restorations, extensions, supplementary protection certificates, registration or
confirmation patents, reissues and re-examinations of any of the foregoing
described in clauses (b)(i) and (b)(ii), each of the foregoing (b)(i) through
(b)(iii), to the extent Pfizer Controls such patents and patent applications.

 

1.23.                     “Licensed Technology” means collectively, the Licensed
Patent Rights and Licensed Know-How.

 

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1.24.                     “MAA” means (a) a Marketing Authorization Application
for a Product filed with (i) the EMA under the centralized European procedure
(including amendments and supplements thereto) or (ii) a Regulatory Authority in
any country in the EU if the centralized European procedure is not used to
obtain Regulatory Approval of such Product; or (b) any other equivalent or
related Regulatory Filing, such as a Type II variation, to gain Regulatory
Approval of a Product in any country in the EU.

 

1.25.                     “Milestone” means each milestone set forth in
Section 5.1.3.

 

1.26.                     “NDA” means: (a) a new drug application filed with the
FDA for authorization for marketing the Product; or (b) any of its foreign
equivalents as filed with the applicable Regulatory Authorities in other
countries or regulatory jurisdictions in the Territory, as applicable.

 

1.27.                     “Net Sales” means the gross amount invoiced by or on
behalf of LICENSEE, its Affiliates and their respective sublicensees (each a
“Selling Party”) for sales of a Product, less the following deductions actually
paid, granted, or accrued and to the extent such deductions are included in the
gross invoiced sales price of such Product: (a) rebates, quantity and cash
discounts, and other usual and customary discounts to customers; (b) taxes and
duties paid, absorbed or allowed which are directly related to the sale of such
Product; (c) credits, allowances, discounts and rebates to, and chargebacks for
spoiled, damaged, out-dated, rejected or returned Product; (d) actual freight
and insurance costs incurred in transporting such Product to customers, provided
that in no event shall deductions for freight and insurance exceed three percent
(3%) of the gross amount invoiced; (e) discounts or rebates or other payments
required by Applicable Laws, including any governmental special medical
assistance programs; and (f) customs duties, surcharges and other governmental
charges incurred in connection with the exportation or importation of such
Product.  Subsections (a) through (f) shall be collectively referred to as
“Deductions”.

 

The following principles shall apply in the calculation of Net Sales:

 

(a)                                             Products will be considered
“sold” when a sale by a Selling Party is recognized in accordance with revenue
recognition policies mandated by GAAP.

 

(b)                                             Nothing herein will prevent a
Selling Party from selling, distributing or invoicing Products at a discounted
price for shipments to Third Parties in connection with clinical studies,
compassionate sales, or an indigent program or similar bona fide arrangements in
which the Selling Party agrees to forego a normal profit margin for good faith
business reasons, provided that the proceeds from any Products so sold or
distributed shall be included for purposes of calculating Net Sales.

 

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(c)                                              A sale or transfer of Products
between any of the Selling Parties will not result in any Net Sales, and Net
Sales instead will be based on subsequent sales or distribution to a non-Selling
Party, unless such Products are used or consumed by a Selling Party in the
course of its own activities (other than resale or transfer to a non-Selling
Party).  For the avoidance of doubt, sales to Distributors shall be included in
the determination of Net Sales.

 

(d)                                             In the case of any sale or other
disposal of a Product for non-cash consideration, Net Sales shall be calculated
as the fair market price of such Product in the country of sale or disposal. 
Notwithstanding the foregoing, provision of a Product for the purpose of
conducting pre-clinical or clinical research shall not be deemed to be a sale,
so long as such Product is provided at a price which does not exceed the
reasonably estimated cost of production and distribution thereof.

 

(e)                                              Except as otherwise provided
herein, Net Sales shall be calculated in accordance with GAAP.

 

Notwithstanding the foregoing, in the event a Product is sold in a country in
the Territory as a Combination Product in a Calendar Quarter, Net Sales of such
Combination Product will be calculated as follows:

 

(i)                              if the Compound contained in such Combination
Product and Other Active Ingredient(s) contained in such Combination Product are
each sold separately in such country during such Calendar Quarter, the Net Sales
attributable to such Combination Product during such Calendar Quarter shall be
calculated by multiplying actual Net Sales of such Combination Product by the
fraction A/(A+B) where: A is the average gross selling price in such country
during such Calendar Quarter of such Compound sold separately in the same
formulation and dosage, and B is the sum of the average gross selling prices in
such country during such Calendar Quarter of such Other Active Ingredients(s)
sold separately in the same formulation and dosage;

 

(ii)                          if the Compound contained in such Combination
Product is sold independently of the Other Active Ingredient(s) contained in
such Combination Product in such country during such Calendar Quarter, but the
average gross selling price of the Other Active Ingredient(s) in such country
during such Calendar Quarter cannot be determined, the Net Sales attributable to
such Combination Product during such Calendar Quarter shall be calculated by
multiplying actual Net Sales of such Combination Product by the fraction A/C
where: A is the average gross selling price in such country during such Calendar
Quarter of such Compound sold

 

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separately in the same formulation and dosage and C is the average gross selling
price of such Combination Product in such country during such Calendar Quarter;
and

 

(iii)                      if the Compound contained in such Combination Product
is not sold independently of the Other Active Ingredient(s) contained in such
Combination Product in such country during such Calendar Quarter, then the Net
Sales attributable to such Combination Product shall be calculated by
multiplying the Net Sales of such Combination Product by the fraction D/(D+E)
where: D is the fair market value of the portion of such Combination Product
that contains such Compound and E is the fair market value of the portion of
such Combination Product containing such Other Active Ingredients contained in
such Combination Product, as such fair market values are determined by mutual
agreement of the Parties.

 

1.28.                     “Other Active Ingredient” means any therapeutically
active pharmaceutical ingredient other than a Compound.

 

1.29.                     “Person” means an individual, corporation,
partnership, limited liability company, trust, business trust, association,
joint stock company, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization, governmental authority or any other form of entity
not specifically listed herein.

 

1.30.                     “Product” means any and all pharmaceutical products
that contain a Compound.

 

1.31.                     “Regulatory Approval” means, with respect to a Product
in any country or regulatory jurisdiction, any approval (including where
required, pricing and reimbursement approvals), registration, license or
authorization that is required by the applicable Regulatory Authority to market
and sell such Product in such country or regulatory jurisdiction.

 

1.32.                     “Regulatory Authority” means any governmental agency
or authority responsible for granting Regulatory Approvals for a Product in the
Territory.

 

1.33.                     “Regulatory Filings” means, with respect to a Product,
any submission to a Regulatory Authority of any appropriate regulatory
application, including, without limitation, any IND, any NDA, any submission to
a regulatory advisory board, any marketing authorization application (including
any MAA), and any supplement or amendment thereto.

 

1.34.                     “Royalty Term” means, on a Product-by-Product and
country-by country basis, the period commencing on the First Commercial Sale of
such Product in such country and expiring upon the later of: (a) expiration or
abandonment of the last Valid Claim of the Licensed Patent Right that covers the
Use of such Product in such country; or (b) ten (10) years following the date of
First Commercial Sale of such Product in such country.

 

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1.35.                     “Territory” means worldwide.

 

1.36.                     “Third Party” means any Person other than a Party or
an Affiliate of a Party.

 

1.37.                     “Trademarks” means all registered and unregistered
trademarks, service marks, trade dress, trade names, logos, insignias, domain
names, symbols, designs, and combinations thereof.

 

1.38.                     “Use” means to research, develop, make, have made,
use, sell, offer for sale, market, distribute, import, export or otherwise
exploit.

 

1.39.                     “Valid Claim” means either: (a) a claim of an issued
and unexpired patent included within the Licensed Patent Rights, which has not
been permanently revoked or declared unenforceable or invalid by an unreversed
and unappealable or unreversed and unappealed decision of a court or other
appropriate body of competent jurisdiction and which has not been abandoned,
disclaimed, denied or admitted to be invalid or unenforceable through reissue,
re-examination, disclaimer or otherwise; or (b) a claim of a pending patent
application included within the Licensed Patent Rights, which claim was filed in
good faith and has not been cancelled, withdrawn, abandoned or finally
disallowed without the possibility of appeal or refiling of such application.

 

1.40.                     Additional Definitions.  Each of the following
definitions is set forth in the Section indicated below:

 

Definition

 

Section

 

 

 

Agreement

 

Preamble

Bankruptcy Code

 

13.4

Bankruptcy Event

 

13.4

Cap

 

12.3

CDA

 

17.11

Change in Control

 

17.1

Claims

 

11.1

Deductions

 

1.27

Defense Action

 

8.1

Designated Affiliate/Third Party

 

13.5.5(e)

Developed IP

 

7.2

Development Plan

 

4.1.1

Effective Date

 

Preamble

FAK

 

1.21

Fees

 

6.1.1

Force Majeure Event

 

17.4

Government

 

10.3.1

Government Official

 

10.3.1

Indemnified Party

 

11.3

Indemnifying Party

 

11.3

 

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Definition

 

Section

 

 

 

Initial Development Plan

 

4.1.1

Knowledge

 

10.2.1

LICENSEE

 

Preamble

LICENSEE Indemnitees

 

11.2

LICENSEE Inventory

 

13.5.5(e)

LICENSEE Withholding Tax Action

 

5.3.2

Milestone Payment

 

5.1.3

Party(ies)

 

Preamble

PFIZER

 

Preamble

PFIZER Indemnitees

 

11.1

PFIZER Transfer Notice

 

3.1

Pharmacovigilance Agreement

 

4.3.3

Recipients

 

9.2

Relevant Records

 

6.1.1

Remaining Recoveries

 

8.2.4

Residuals

 

2.4

Selling Party

 

1.27

Subscription Agreement

 

5.1.2

Third Party Infringement

 

8.1

Third Party IP

 

5.1.4

Third Party Payment

 

5.1.4

 

2.                                      LICENSE GRANT

 

2.1.                            License Grant.

 

2.1.1.                  Patent Rights.  Subject to the terms and conditions of
this Agreement PFIZER hereby grants to LICENSEE a sublicensable (subject to
Section 2.2), royalty-bearing right and license under the Licensed Patents
Rights to Use the Compounds and Products in the Field within the Territory.  The
license granted under this Section 2.1.1 shall be exclusive even as to PFIZER
with respect to Compounds and Products, in each case except as expressly
provided in Section 2.3 or as necessary for PFIZER to carry out its obligations
under Sections 3.1and 4.4.2.

 

2.1.2.                  Know-How.  Subject to the terms and conditions of this
Agreement, PFIZER hereby grants to LICENSEE an exclusive (even as to PFIZER
except as expressly provided in Section 2.3 or as necessary for PFIZER to carry
out its obligations under Sections 3.1and 4.4.2), sublicensable (subject to
Section 2.2), royalty-bearing right and license to use the Licensed Know-How to
Use the Compounds and Products in the Field within the Territory.

 

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2.1.3.                  Affiliates.  To the extent that any of the Licensed
Technology is Controlled by an Affiliate of PFIZER, then promptly following the
Effective Date, PFIZER shall procure that such Affiliate undertakes all
necessary actions to give effect to the licenses granted under this Section.

 

2.2.                            Sublicense Rights.  LICENSEE may sublicense the
rights granted to it by PFIZER under this Agreement (a) to any Third Party upon
PFIZER’s prior written approval, which approval shall not be unreasonably
withheld or delayed, or (b) to any of its Affiliates.  For the avoidance of
doubt, it shall not be reasonable for Pfizer to withhold its consent to a
sublicense merely because the proposed sublicensee is a competitor or potential
competitor of Pfizer in any area, and the Parties anticipate that the only bases
upon which Pfizer may reasonably withhold its consent to any proposed
sublicensee are circumstances regarding the financial or other resources of the
proposed sublicensee that would give rise to a bona fide concern over the
ability of the proposed sublicensee to carry out its obligations hereunder, or
circumstances that would give rise to a bona fide concern regarding the
likelihood that the proposed sublicensee could reasonably be expected to fail to
carry out its activities with respect to the Development or Commercialization of
the Products in compliance with Applicable Laws, including the U.S Foreign
Corrupt Practices Act of 1977 (as amended).  Any and all sublicenses shall be
subject to the following requirements:

 

2.2.1.                  All sublicenses shall be subject to and consistent with
the terms and conditions of this Agreement and shall: (a) preclude the
assignment of such sublicense without the prior written approval of PFIZER,
(b) include PFIZER as a third party beneficiary under the sublicense with the
right to enforce the terms of such sublicense, and (c) preclude the granting of
further sublicenses in contravention with the terms and conditions of this
Agreement.  In no event shall any sublicense relieve LICENSEE of any of its
obligations under this Agreement.

 

2.2.2.                  LICENSEE shall furnish to PFIZER a true and complete
copy of each sublicense agreement and each amendment thereto, within thirty (30)
days after the sublicense or amendment has been executed.

 

2.3.                            Retained Rights.  LICENSEE acknowledges and
agrees that PFIZER retains the right to make, have made and use and have used
the Licensed Technology for all internal research purposes, and LICENSEE hereby
grants to PFIZER a worldwide, irrevocable, non-exclusive, fully paid up license
(with the right to sublicense to any Affiliate without the need for LICENSEE’S
consent) to such Licensed Technology solely for such internal research purposes,
without the consent of LICENSEE.

 

2.4.                            Residuals.  PFIZER may use for any purpose the
Residuals resulting from access to or work with the Compounds, Products and
Licensed Know-How.  As used herein, “Residuals” means information in
non-tangible form which may be retained by persons who have had access to the
Compounds, Products and

 

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Licensed Know-How, including ideas, concepts, know-how or techniques contained
therein.

 

2.5.                            No Additional Rights.  Nothing in this Agreement
shall be construed to confer any rights upon LICENSEE by implication, estoppel,
or otherwise as to any active pharmaceutical ingredients, compounds, products,
technology or Intellectual Property Rights of PFIZER or its Affiliates other
than the rights under the Licensed Technology expressly granted herein.  For the
avoidance of doubt, this Agreement does not exclude Pfizer from Using any active
pharmaceutical ingredient, compound or product that may be contained in a
Product, other than the Compounds.

 

3.                                      TRANSFER ACTIVITIES

 

3.1.                            Technology Transfer and Transition Services. 
PFIZER shall use reasonable efforts to (a) transfer to LICENSEE the embodiments
of the Licensed Technology set forth in Schedule B; and (b) perform the services
set forth in Schedule B for the compensation or reimbursement, if any, provided
for in Schedule B (where the activities under subsections (a) and (b) shall be
collectively referred to as “Transfer Activities”).  PFIZER shall use reasonable
efforts to perform the Transfer Activities and complete such Transfer Activities
within the time periods specified in Schedule B.

 

4.                                      DEVELOPMENT, MANUFACTURING, REGULATORY
AND COMMERCIALIZATION

 

4.1.                            Development.

 

4.1.1.                  LICENSEE shall itself, or through its Affiliates or
sublicensees, use Commercially Reasonable Efforts to Develop Products in the
Territory, and LICENSEE shall undertake all Development activities at its sole
expense.  Without limiting the foregoing, in connection with its efforts to
Develop Products, LICENSEE shall bear all responsibility and expense for filing
Regulatory Filings in LICENSEE’s name and obtaining Regulatory Approval for
Products.  LICENSEE’s Development activities will be undertaken in accordance
with a Development plan (the “Development Plan”), the initial Development Plan
being agreed to by the parties in writing as of the date hereof (the “Initial
Development Plan”).  PFIZER acknowledges that (a) the Initial Development Plan
has been based on the due diligence carried out by LICENSEE prior to the
Effective Date, largely utilizing information furnished to LICENSEE by PFIZER;
(b) such Initial Development Plan is predicated, in part, on clinical data that
has not yet been generated; and (c) such Initial Development Plan is subject to
revision from time to time to take into account, among other factors: safety or
efficacy concerns, matters related to patent protection, or issues related to
present or future marketability or profitability, including existing or
anticipated competition, and that such revisions may include seeking

 

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Regulatory Approval for different Indications than are contained in the Initial
Development Plan.  Each Development Plan or amendment shall be treated by both
Parties as a good faith statement of LICENSEE’s intentions for the Development
of the Product, but such Development Plan shall not be deemed to be a
contractual commitment by LICENSEE to undertake all of the efforts described in
such Plan or to refrain from making adjustments to such Plan that, in LICENSEE’s
reasonable judgment, are necessary in light of factors described in the
preceding sentence.  LICENSEE shall provide to PFIZER reports regarding
LICENSEE’s progress and future plans, including amendments to the Development
Plan, every [**] months during the terms of this Agreement, and Pfizer will be
provided with an opportunity to comment on all amendments to the Development
Plan as well as all Development and Commercialization activities.  Such reports
shall include information regarding LICENSEE’s activities with respect to the
Milestone events described in Section 5.1.3(a) and, when available, information
demonstrating whether or not such Milestone events have been achieved.

 

4.1.2.                  Notwithstanding the provisions of the foregoing
Section 4.1.1, LICENSEE shall, at a minimum, use Commercially Reasonable Efforts
to (a) execute the Development Plan; (b) find a formulation that addresses the
pharmacokinetic variability of the current formulation of the existing Product
(with such formulation activities to begin no later than December 31, 2012); and
(c) conduct appropriate human studies designed to establish proof of mechanism
of a Product (with such studies to be initiated no later than June 30, 2013),
provided that LICENSEE shall not be in breach of this Section 4.1.2 if it fails
to undertake the activities described in this Section 4.1.2 by the date
specified in this Section 4.1.2 due to factors outside of LICENSEE’s reasonable
control.

 

4.2.                            Commercialization.  LICENSEE shall itself, or
through its Affiliates, sublicensees or Distributors, use Commercially
Reasonable Efforts to Commercialize the Products throughout the Territory, it
being understood that LICENSEE, in the exercise of such Commercially Reasonable
Efforts, may determine to not Commercialize the Product in certain countries in
the Territory.  LICENSEE shall undertake such activities at its sole expense and
shall have sole decision-making authority with respect to such activities.

 

4.3.                            Regulatory and Pharmacovigilance.

 

4.3.1.                  Transfer of Regulatory Filings.  PFIZER shall transfer
and assign to LICENSEE all existing Regulatory Filings in accordance with
Schedule B and LICENSEE shall bear all costs and expenses payable to Third
Parties in connection with such transfer and assignment.  LICENSEE shall use
commercially reasonable efforts to seek Regulatory Approval for Products
throughout the Territory, it being understood that LICENSEE, in the

 

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exercise of such Commercially Reasonable Efforts, may determine to not seek
Regulatory Approval for Product in certain countries in the Territory.

 

4.3.2.                  Safety Reporting.  PFIZER shall submit PFIZER-generated
safety reports for all Compounds to the relevant regulatory authorities until
the effective date of the transfer of the applicable clinical trial sponsorship
(including, any IND, clinical trial application (or “CTA”) or clinical trial
notification (or “CTN”)) to LICENSEE.

 

4.3.3.                  Pharmacovigilance Agreement.  During the implementation
of the Transition Plan, the safety units of each of the Parties shall discuss
whether or not it may be necessary to put in place a written agreement for
exchanging adverse event and other safety information relating to the Products
prior to PFIZER’s transfer of the existing INDs to LICENSEE, and if they agree
that such an agreement is necessary, they shall promptly meet and agree upon
such an agreement (the “Pharmacovigilance Agreement”).  Such Pharmacovigilance
Agreement shall ensure that adverse events and other safety information is
exchanged upon terms that will permit each Party to comply with Applicable Laws
and requirements of Regulatory Authorities.

 

4.3.4.                  Regulatory Cooperation.  In the event that one or more
Regulatory Authorities contact PFIZER regarding an audit of any of the research
and development done prior to the Effective Date, by, or under the direction of,
PFIZER regarding the Compounds or the Products, PFIZER shall promptly notify
LICENSEE and shall coordinate with LICENSEE and provide reasonable co-operation
to furnish or provide access to such Regulatory Authority as may be required to
comply with the audit so requested.

 

4.4.                            Manufacturing.  Subject to Section 2.3 and to
the rights needed by Pfizer to manufacture Product as set forth in
Section 4.4.2, LICENSEE shall have the sole right to manufacture, or have
manufactured, Compounds and Products, and it shall be entitled to use, and to
sublicense the manufacturing rights under the Licensed Patent Rights, for such
purposes.  Except as provided below, LICENSEE shall be responsible for all
aspects of manufacturing of the Compounds and Products.

 

4.4.1.                  Transfer of Inventory.  Promptly after the Effective
Date, PFIZER shall transfer free of charge (except for transportation costs
which shall be borne by LICENSEE) the quantities of Compounds and Products set
forth in Schedule C hereto to LICENSEE.  PFIZER shall be permitted to retain any
other quantities of the Compounds and Products for purposes of exercising the
rights retained and the license granted to PFIZER under Section 2.3.

 

12

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4.4.2.                  Additional Supply.  PFIZER shall manufacture and supply
to LICENSEE: (a) [**][**]mg pills of Product containing [**] that meet the
specifications for the pills previously used by PFIZER in clinical trials for
such Product; and (b) [**] placebo pills for the pills described in clause (a). 
Upon the delivery of such pills described in clauses (a) and (b) of the
immediately preceding sentence, LICENSEE shall pay to PFIZER $[**].  PFIZER
shall use its commercially reasonable efforts to ship such pills no later than
September 30, 2012 and LICENSEE shall have no obligation to accept delivery of
such pills shipped after September 30, 2012, provided that PFIZER is prepared to
ship such pills after September 30, 2012, PFIZER shall so notify LICENSEE and
LICENSEE shall notify PFIZER whether LICENSEE will accept delivery of such pills
on a mutually agreeable date.  If LICENSEE notifies PFIZER that it will accept
such delivery after September 30, 2012, LICENSEE shall pay for such pills as set
forth above.

 

5.                                      PAYMENT TERMS

 

5.1.                            Payment Terms.

 

5.1.1.                  Upfront Payment.  In partial consideration of the
licenses and rights granted to LICENSEE hereunder, LICENSEE shall pay to PFIZER
one million five hundred thousand dollars ($1,500,000) on the Effective Date;
Such payment shall be non-refundable and non-creditable.

 

5.1.2.                  Equity.  In partial consideration of the licenses and
rights granted to LICENSEE hereunder, LICENSEE shall issue to PFIZER one hundred
ninety-two thousand and twelve (192,012) shares of LICENSEE common stock on the
Effective Date.  In connection with the issuance of such shares of LICENSEE
common stock, on the Effective Date PFIZER and LICENSEE shall enter into the
subscription agreement substantially in the form of Annex A attached hereto (the
“Subscription Agreement”).

 

5.1.3.                  Milestone Payments.  LICENSEE shall notify PFIZER as
soon as practicable upon (and in any event within [**] days after) achievement
of each Milestone.  In further consideration of the licenses and rights granted
to LICENSEE, within [**] days after achievement of each Milestone set forth
below (unless otherwise specified below), LICENSEE shall pay to PFIZER the
corresponding non-creditable and non-refundable milestone payment (each, a
“Milestone Payment”).

 

13

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(a)                                 Development Milestone.

 

DEVELOPMENT MILESTONE 

 

MILESTONE
PAYMENT

 

[**]

 

$

[**]

 

[**]

 

$

[**]

 

 

Notwithstanding the foregoing, if LICENSEE or its Affiliates or sublicensees
achieve demonstration of at least [**], LICENSEE shall pay to PFIZER a single
Milestone Payment of [**] dollars ($[**]) within [**] days after achievement of
such Milestone in lieu of the Milestone Payments set forth in the table above.
In addition, if LICENSEE or its Affiliates or sublicensees [**] milestone set
forth above in this Section, regardless of results, but has not yet paid a total
amount of [**] dollars ($[**]) pursuant to this Section 5.1.3(a), LICENSEE shall
pay to PFIZER a Milestone Payment of [**] dollars ($[**]) minus any amount
previously paid pursuant to this Section 5.1.3(a), such amount to be payable
within [**] days after [**].

 

(b)                                 Regulatory Milestones.

 

REGULATORY MILESTONES 

 

MILESTONE
PAYMENT

 

[**]

 

$

[**]

 

[**]

 

$

[**]

 

[**]

 

$

[**]

 

 

The payments described in this Section 5.1.3(b) shall be due and payable within
[**] days after achievement of the relevant milestones described above.

 

(c)                                  Sales Milestones

 

SALES MILESTONES

 

MILESTONE
PAYMENT

 

[**]

 

$

[**]

 

[**]

 

$

[**]

 

[**]

 

$

[**]

 

[**]

 

$

[**]

 

[**]

 

$

[**]

 

 

For the avoidance of doubt, if annual aggregate Net Sales of Products reach any
of the Net Sales thresholds specified in the

 

14

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table above for the first time at any time when any Milestone Payment
corresponding to any lower amount of annual aggregate Net Sales of Products has
not yet been paid, then all such unpaid Milestone Payments shall be paid at the
same time.  For example, if annual aggregate Net Sales of Products exceed [**]
dollars ($[**]) in a Calendar Year, and LICENSEE has not yet paid the Milestone
Payment for the achievement of [**] dollars ($[**]) of annual aggregate Net
Sales of Products, LICENSEE shall pay to PFIZER a total of [**] dollars
($[**]).  The milestones provided for in this Section 5.1.3(c) shall be due and
payable within [**] days after the relevant aggregate Net Sales level is
achieved, even if achieved prior to the end of the relevant Calendar Year.

 

(d)                                 For the avoidance of doubt: (i) each
Milestone Payment shall be payable only once upon achievement of the applicable
Milestone; and (ii) satisfaction of a Milestone by a sublicensee or assignee of,
or Third Party retained by, LICENSEE or its Affiliates shall be deemed to have
been satisfied by LICENSEE for purposes of this Section 5.1.3.

 

5.1.4.                  Royalty Payments.

 

(a)                                 In consideration of the licenses and rights
granted to LICENSEE hereunder, LICENSEE shall pay to PFIZER, with respect to
sales of the Products in the Territory during the applicable Royalty Term, an
amount equal to:

 

(i)                                    [**] percent ([**]%) of Net Sales in a
Calendar Year (or portion thereof) for the portion of annual aggregate Net Sales
of the Products in the Territory (aggregated in all countries with respect to
which the Royalty Term for such Products has not expired) below or equal to [**]
dollars ($[**]); plus

 

(ii)                                [**] percent ([**]%) of Net Sales in a
Calendar Year (or portion thereof) for the portion of annual aggregate Net Sales
of the Products in the Territory (aggregated in all countries with respect to
which the Royalty Term for such Products has not expired) greater than [**]
dollars ($[**]) and less than or equal to [**] dollars ($[**]); plus

 

(iii)                            [**] percent ([**]%) of Net Sales in a Calendar
Year (or portion thereof) for the portion of annual aggregate Net Sales of the
Products in the Territory (aggregated in all countries with respect to which the
Royalty Term for such Products has not expired) in excess of [**] dollars
($[**]).

 

15

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LICENSEE shall pay such royalties to PFIZER within [**] days following the end
of each Calendar Quarter after the date of the First Commercial Sale.

 

(b)                                 In the event that LICENSEE cannot
Commercialize a particular Product in the form as it existed as of the Effective
Date without infringing a Third Party’s Intellectual Property Rights (“Third
Party IP”), and if LICENSEE pays a royalty to a Third Party for the right to
Commericialize such Product under such Third Party IP (the “Third Party
Payment”), then LICENSEE may credit [**] percent ([**]%) of such Third Party
Payment for a given Calendar Quarter against the Royalties owed and payable on
the Net Sales for the Product for such Calendar Quarter.  Notwithstanding the
foregoing, in no event shall such credits reduce the Royalties payable to PFIZER
to less than [**] percent ([**]%) of the Royalties owed for such Net Sales prior
to the application of such credits.

 

(c)                                  All royalty payments made in accordance
with Section 5.1.4(a) shall be accompanied by a report that includes reasonably
detailed information regarding a total monthly sales calculation on a
country-by-country basis of gross sales of Products, Net Sales of Products
(detailing all Deductions) and all royalties payable to PFIZER for the
applicable Calendar Quarter (including any foreign exchange rates used).  In
addition, in order to enable PFIZER to prepare its quarterly and annual public
disclosures regarding PFIZER’s results of operations, within [**] days after the
end of each Calendar Quarter, LICENSEE shall deliver to PFIZER a good faith,
preliminary estimate of the foregoing information, provided that PFIZER
acknowledges that such information is an estimate only and may vary from the
final report delivered pursuant to the preceding sentence.

 

5.1.5.                  Other Payments.  LICENSEE shall pay to PFIZER any other
amounts due under this Agreement within [**] days following receipt of invoice.

 

5.1.6.                  Late Payments.  Any late payments shall bear interest,
to the extent permitted by law, at five percent (5%) above the Prime Rate of
interest as reported in the Wall Street Journal on the date payment is due.

 

5.2.                            Payment Method.

 

5.2.1.                  Currency.  With respect to Net Sales invoiced in U.S.
dollars, the Net Sales and the amounts due for royalties under Section 5.1.4
will be expressed in U.S. dollars.  With respect to Net Sales invoiced in a
currency other than U.S. dollars, payments will be calculated based on amounts
converted to U.S. dollars using currency exchange rates for the

 

16

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Calendar Quarter for which remittance is made for such royalties.  Conversion of
Net Sales recorded in local currencies to U.S. dollars will be performed in a
manner consistent with LICENSEE’s normal practices used to prepare its audited
financial statements for external reporting purposes, provided that such
practices use a widely accepted source of published exchange rates.

 

5.2.2.                  Method of Payment.  All payments from LICENSEE to PFIZER
shall be made by wire transfer in U.S. Dollars to the credit of such bank
account as may be designated by PFIZER in writing to LICENSEE.  Any payment
which falls due on a date which is not a Business Day may be made on the next
succeeding Business Day.

 

5.3.                            Taxes.

 

5.3.1.                  VAT. It is understood and agreed between the Parties
that any payments made under this AGREEMENT are exclusive of any value added or
similar tax (VAT), which shall be added thereon as applicable.

 

5.3.2.                  Withholding Taxes. If LICENSEE is required to make a
payment to PFIZER subject to a deduction of tax or withholding tax, then (i) if
such withholding or deduction obligation arises as a result of any action by
LICENSEE, including but not limited to any assignment or sublicense, or any
failure on the part of LICENSEE to comply with applicable tax laws or filing or
record retention requirements, that has the effect of modifying the tax
treatment of the parties hereto (a “LICENSEE Withholding Tax Action”), then the
sum payable by LICENSEE (in respect of which such deduction or withholding is
required to be made) shall be increased to the extent necessary to ensure that
PFIZER receives a sum equal to the sum which it would have received had no such
LICENSEE Withholding Tax Action occurred, (ii) otherwise, the sum payable by
LICENSEE (in respect of which such deduction or withholding is required to be
made) shall be made to PFIZER after deduction of the amount required to be so
deducted or withheld, which deducted or withheld amount shall be remitted in
accordance with applicable law.

 

5.3.3.                  Tax Cooperation.  To the extent LICENSEE is required to
deduct and withhold taxes on any payments to PFIZER, LICENSEE shall pay the
amounts of such taxes to the proper Governmental Authority in a timely manner
and promptly transmit to PFIZER an official tax certificate or other evidence of
such withholding sufficient to enable PFIZER to claim such payments of taxes. 
PFIZER shall provide to LICENSEE any tax forms that may be reasonably necessary
in order for LICENSEE not to withhold tax or to withhold tax at a reduced rate
under an applicable bilateral income tax treaty.  Each party shall provide the
other with reasonable assistance to enable the recovery, as permitted by law, of
withholding taxes, VAT, or similar obligations resulting from payments

 

17

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made under this Agreement, such recovery to be for the benefit of the party
bearing such withholding tax or VAT.

 

5.3.4.                  Tax Forms.  The parties agree to cooperate and produce
on a timely basis any tax forms or reports reasonably requested by the other
Party in connection with any payment made by the LICENSEE to PFIZER under this
Agreement.

 

6.                                      RECORDS; AUDIT RIGHTS

 

6.1.                            Relevant Records.

 

6.1.1.                  Relevant Records.  LICENSEE shall keep, and will cause
each of its Affiliates or sublicensees, as applicable, to keep, accurate books
and records of accounting for the purpose of calculating all payments due to 
PFIZER under Section 5.1 (such payments, collectively the “Fees” and such books
and records, collectively the “Relevant Records”).  For the [**] years following
the end of the Calendar Year to which each will pertain, such Relevant Records
will be kept by LICENSEE or such Affiliate or sublicensee at each of their
principal place of business.

 

6.1.2.                  Audit Request.  At the request of PFIZER, LICENSEE
shall, and, shall cause each of its Affiliates or sublicensees to, permit PFIZER
and its representatives (including an independent auditor), at reasonable times
and upon reasonable notice, to examine the Relevant Records.  Such examinations
may not (a) be conducted for any Calendar Year more than [**] years after the
end of such year; (b) be conducted more than [**] in any twelve (12) month
period; or (c) be repeated for any Calendar Year.  Such audit shall be requested
in writing at least [**] days in advance, and shall be conducted during
LICENSEE’s normal business hours and otherwise in manner that minimizes any
interference to LICENSEE’s business operations.

 

6.1.3.                  Audit Fees and Expenses.  PFIZER shall bear any and all
fees and expenses incurred by it in connection with any such audit of the
Relevant Records; provided, however, in the event an audit reveals an
underpayment by LICENSEE of more than five percent (5%) as to the period subject
to the audit, LICENSEE shall reimburse PFIZER for any reasonable and documented
out-of-pocket costs and expenses of the audit within [**] days after receiving
invoices thereof.

 

6.1.4.                  Payment of Deficiency.  If such audit or, if the Parties
dispute the findings of such audit, an independent accounting firm as described
below, concludes that additional payments were owed or that excess payments were
made during such period, or if the Parties otherwise agree that additional
payments were owed or that excess payments were made during such period,
LICENSEE will pay the additional royalties or amounts with

 

18

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interest from the date originally due as provided in Section 5.1.6 or PFIZER
will reimburse such excess payments without interest, within [**] days after the
date on which a written report of such audit or the report of the final
determination of such independent accounting firm is delivered to the Parties or
on which the Parties reach such agreement, as the case may be.  In the event of
a dispute regarding such Relevant Records, the Parties will work in good faith
to resolve the disagreement.  If the Parties are unable to reach a mutually
acceptable resolution of any such dispute within [**] days, such dispute will be
resolved by submitting such dispute to an independent accounting firm mutually
agreeable to both Parties, which firm shall render its decision within [**] days
after submission of the dispute to such firm.  PFIZER shall treat all
information subject to review under this Section 6.1 in accordance with the
confidentiality provisions of Section 9 and the Parties will cause any auditor
to enter into a reasonably acceptable confidentiality agreement with LICENSEE
obligating such firm to retain all such financial information in confidence
pursuant to such confidentiality agreement.

 

7.                                      INTELLECTUAL PROPERTY RIGHTS

 

7.1.                            Pre-existing IP.  Subject only to the rights
expressly granted to the other Party under this Agreement, each Party shall
retain all rights, title and interests in and to any Intellectual Property
Rights that are owned, licensed or sublicensed by such Party prior to or
independent of this Agreement.

 

7.2.                            Developed IP.  LICENSEE shall own all rights,
title and interests in and to any Intellectual Property Rights that are both:
(a) related to a Compound or Product; and (b) conceived solely by LICENSEE, its
Affiliates or sublicensees following the Effective Date (collectively,
“Developed IP”).

 

7.3.                            Patent Prosecution and Maintenance of Licensed
Patent Rights.

 

7.3.1.                  Prosecution and Maintenance of Licensed Patent Rights. 
LICENSEE shall be responsible for filing, prosecuting (including in connection
with any reexaminations, oppositions and the like) and maintaining the Licensed
Patent Rights in the Territory.  LICENSEE shall file, prosecute and maintain the
Licensed Patent Rights using qualified outside patent counsel and foreign patent
associates selected by LICENSEE, provided that LICENSEE identifies such counsel
for PFIZER in advance and PFIZER consents to such counsel (such consent not to
be unreasonably withheld or delayed).  LICENSEE shall be responsible for all
costs and expenses in connection with such filing, prosecution and maintenance,
provided that if LICENSEE provides PFIZER with a written request to abandon, or
not file a patent application included in, any of the Licensed Patent Rights at
least sixty (60) days in advance of the relevant deadline: (a) LICENSEE shall no
longer be responsible for such costs and expenses relating to filing,
prosecuting and maintaining (as applicable) such

 

19

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Licensed Patent Right; (b) PFIZER may, or may allow a Third Party to, file,
prosecute and maintain (in its sole discretion) such Licensed Patent Right;
(c) upon PFIZER’s request, LICENSEE shall promptly provide all files related to
filing, prosecuting and maintaining such Licensed Patent Right to counsel
designated by PFIZER; and (d) the term “Licensed Patent Rights” automatically
shall be modified to exclude such patent or patent application as of the date
LICENSEE provides such written request to PFIZER.

 

7.3.2.                  Cooperation.  Upon the written request of PFIZER,
LICENSEE shall provide PFIZER with material correspondence with the relevant
patent offices pertaining to LICENSEE’s prosecution of the Licensed Patent
Rights. On at least a yearly basis, and also upon written request, LICENSEE
shall provide to Pfizer  a report detailing the status of all Licensed Patent
Rights, including any patent term extensions, and the anticipated expiration
dates of any issued patents.  Upon the written request of PFIZER, LICENSEE shall
provide PFIZER a reasonable opportunity to review and comment on proposed
material submissions to any patent office with respect to the Licensed Patent
Rights prior to submission and LICENSEE shall reasonably consider any comments
provided by PFIZER.

 

8.                                      ACTUAL OR THREATENED INFRINGEMENT,
DISCLOSURE OR MISAPPROPRIATION.

 

8.1.                            Notification.  Each Party shall promptly notify
the other Party in writing of its becoming aware of (a) any actual or threatened
infringement, misappropriation or other violation or challenge to the validity,
scope or enforceability by a Third Party of any Licensed Technology (“Third
Party Infringement”); or (b) initiation by a Third Party of an opposition
proceeding against any Licensed Patent Rights, or initiation by LICENSEE of an
opposition against a Third Party or any allegation by a Third Party that
Intellectual Property Rights owned by it is infringed, misappropriated or
violated by the Development, Commercialization or Use of any Compound or Product
(“Defense Action”).

 

8.2.                            Third Party Infringements.

 

8.2.1.                  LICENSEE Right to Enforce.  LICENSEE shall have the
first right (but not the obligation), at its own expense, to control enforcement
of the Licensed Technology against any Third Party Infringement.  Prior to
commencing involvement in any such suit, action or proceeding, LICENSEE shall
consult with PFIZER and shall consider PFIZER’s recommendations regarding the
proposed suit, action or proceeding, except to the extent delay would result in
the loss of rights by LICENSEE or PFIZER.  LICENSEE shall give PFIZER timely
notice of any proposed settlement of any such suit, action or proceeding that
LICENSEE controls and LICENSEE shall not settle, stipulate to any facts or make
any

 

20

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admission with respect to any Third Party Infringement without PFIZER’s prior
written consent (not to be unreasonably withheld or delayed) if such settlement,
stipulation or admission would: (a) adversely affect the validity,
enforceability or scope, or admit non-infringement, of any of the Licensed
Technology; (b) give rise to liability of PFIZER or its Affiliates; (c) grant to
a Third Party a license or covenant not to sue under, or with respect to, any
Intellectual Property controlled by Pfizer (including the Licensed Technology);
or (d) otherwise impair PFIZER’s, any of its Affiliates’ rights in any Licensed
Technology or PFIZER’s or any of its Affiliates’ rights in this Agreement.

 

8.2.2.                  PFIZER Right to Enforce. PFIZER shall have the right
(but not the obligation) to control, enforcement of the Licensed Technology
against any Third Party Infringement if LICENSEE provides PFIZER with written
notice that it is not exercising its right to control such enforcement or if
such Third Party does not desist such Third Party Infringement or LICENSEE fails
to initiate, or file the relevant response to (as applicable), a suit, action or
proceeding with respect to such Third Party Infringement upon the earlier of:
(a) expiration of the ninety (90) day period following first receipt by either
Party of notice from the other Party of such Third Party Infringement; or (b)
fifteen (15) days prior to the deadline for filing, or filing the applicable
response to (as applicable), such suit, action or proceeding (including suits,
actions or proceedings based on a Third Party’s filing of a Paragraph IV
Certification under 21 CFR §314.94(a)(12)(i)(A)(4)).

 

8.2.3.                  Cooperation. Notwithstanding anything to the contrary
herein, the Party that is not controlling the suit, action or proceeding
pertaining to enforcement of the Licensed Technology against Third Party
Infringement as described in this Section 8.2 may, at its sole discretion and
expense (subject to Section 8.3), join as a party to such suit, action or
proceeding, provided that such Party shall join as a party to such suit, action
or proceeding upon the reasonable request and expense of the Party controlling
such action if necessary for standing purposes.  The Party that is not
controlling such a suit, action or proceeding shall have the right to be
represented by counsel (which shall act in an advisory capacity only, except for
matters solely directed to such Party) of its own choice and at its own expense
(subject to Section 8.3) in any such suit, action or proceeding.

 

8.2.4.                  Recoveries. Any and all recoveries resulting from a
suit, action or proceeding relating to a claim of Third Party Infringement shall
first be applied to reimburse each Party’s costs and expenses in connection with
such suit, action or proceeding (such recoveries to be applied pro rata in
accordance with the costs and expenses incurred by each Party, in the event that
the amount of such recoveries is less than the total amount of all such costs
and expenses), with any remaining recoveries retained by the

 

21

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Party that controlled such suit, action or proceeding pursuant to this Section
8.2 (the “Remaining Recoveries”).  Notwithstanding the foregoing, LICENSEE shall
pay PFIZER royalties in accordance with Section 5.1.4(a) on the Remaining
Recoveries retained or received by LICENSEE as if such Remaining Recoveries
retained or received by LICENSEE were Net Sales in the Calendar Quarter in which
such Remaining Recoveries were retained or received, and such Remaining
Recoveries retained or received by LICENSEE shall be included in determining the
level of Net Sales for purposes of Section 5.1.3(c).

 

8.3.                            Defense Actions. Upon LICENSEE’s request, PFIZER
shall reasonably cooperate with LICENSEE, to the extent necessary to defend
LICENSEE or any sublicensee of LICENSEE in a Defense Action related to
LICENSEE’s or its Affiliates or sublicensee’s Development, Commercialization or
Use of any Compound or Product (in accordance with Section 2).  LICENSEE shall
have all authority with respect to any Defense Action, including the right to
exclusive control of the defense of any such suit, action or proceeding and the
exclusive right to compromise, litigate, settle or otherwise dispose of any such
suit, action, or proceeding, provided that LICENSEE shall keep PFIZER timely
informed of the proceedings and filings, and provide PFIZER with copies of all
material communications, pertaining to each Defense Action and LICENSEE shall
not settle, stipulate to any facts or make any admission with respect to any
Defense Action without PFIZER’s prior written consent (not to be unreasonably
withheld or delayed) if such settlement, stipulation or admission would (a)
adversely affect the validity, enforceability or scope, or admit infringement,
of any of the Licensed Technology; (b) give rise to liability of PFIZER or its
Affiliates; (c) grant to a Third Party a license or covenant not to sue under,
or with respect to, any Intellectual Property controlled by Pfizer (including
the Licensed Technology); or (d) otherwise impair PFIZER’ or any of its
Affiliates’ rights in any Licensed Technology or PFIZER’s or any of its
Affiliates’ rights in this Agreement.

 

9.                                      CONFIDENTIALITY

 

9.1.                            Definition.  “Confidential Information” means
the terms and provisions of this Agreement and other proprietary information and
data of a financial, commercial or technical nature that the disclosing Party or
any of its Affiliates has supplied or otherwise made available to the other
Party or its Affiliates, which are disclosed in writing or orally.  All Licensed
Know-How shall be considered PFIZER’s Confidential Information.

 

9.2.                            Obligations.  During the term of this Agreement
and for [**] years thereafter, the receiving Party will (a) protect all
Confidential Information of the disclosing Party against unauthorized disclosure
to Third Parties and (b) not use or disclose the Confidential Information of the
disclosing Party, except as permitted by or in furtherance of exercising rights
or carrying out obligations hereunder or for internal legal, accounting or
finance purposes.  The receiving Party shall treat all Confidential Information
provided by the disclosing Party with the same degree

 

22

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of care as the receiving Party uses for its own similar information, but in no
event less than a reasonable degree of care.  The receiving Party may disclose
the Confidential Information to its Affiliates, and their respective directors,
officers, employees, subcontractors, sublicensees, consultants, attorneys,
accountants, banks and investors (collectively, “Recipients”) who have a
need-to-know such information for purposes related to this Agreement, provided
that the receiving Party shall hold such Recipients to written obligations of
confidentiality with terms and conditions at least as restrictive as those set
forth in this Agreement.

 

9.3.                            Exceptions to Confidentiality. The obligations
under this Section 9 shall not apply to any information to the extent the
receiving Party can demonstrate by competent evidence that such information:

 

(a)                                 is (at the time of disclosure) or becomes
(after the time of disclosure) known to the public or part of the public domain
through no breach of this Agreement by the receiving Party or any Recipients to
whom it disclosed such information;

 

(b)                                 was known to, or was otherwise in the
possession of, the receiving Party prior to the time of disclosure by the
disclosing Party;

 

(c)                                  is disclosed to the receiving Party on a
non-confidential basis by a Third Party who is entitled to disclose it without
breaching any confidentiality obligation to the disclosing Party; or

 

(d)                                 is independently developed by or on behalf
of the receiving Party or any of its Affiliates, as evidenced by its written
records, without use or access to the Confidential Information.

 

9.4.                            Permitted Disclosures.

 

9.4.1.                  Compliance with Law.  The restrictions set forth in this
Section 9 shall not apply to any Confidential Information that the receiving
Party is required to disclose under Applicable Laws or a court order or other
governmental order or to enforce any Licensed Patent Rights under Section 8,
provided that the receiving Party: (a) provides the disclosing Party with prompt
notice of such disclosure requirement if legally permitted; (b) affords the
disclosing Party an opportunity to oppose or limit, or secure confidential
treatment for such required disclosure; and (c) if the disclosing Party is
unsuccessful in its efforts pursuant to subsection (b), discloses only that
portion of the Confidential Information that the receiving Party is legally
required to disclose as advised by the receiving Party’s legal counsel.

 

9.4.2.                  PFIZER Permitted Disclosures.  Notwithstanding the
restrictions set forth in this Section 9, in the event that PFIZER wishes to
assign, pledge or otherwise transfer its rights to receive some or all of the
Fees payable hereunder, PFIZER may disclose to a Third Party Confidential

 

23

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Information of LICENSEE in connection with any such proposed assignment,
provided that PFIZER shall hold such Third Parties to written obligations of
confidentiality with terms and conditions at least as restrictive as those set
forth in this Agreement.

 

9.4.3.                  LICENSEE Permitted Disclosures.  Notwithstanding the
restrictions set forth in this Section 9, in the event that LICENSEE wishes to
enter into a sublicense in accordance with Section 2.2, LICENSEE may disclose to
a Third Party Confidential Information of PFIZER relating to the Products or
Compounds in connection with any such proposed sublicense, provided that
LICENSEE shall hold such Third Parties to written obligations of confidentiality
with terms and conditions at least as restrictive as those set forth in this
Agreement.

 

9.4.4.                  Disclosure of Agreement Terms.  Notwithstanding the
restrictions set forth in this Section 9, a Party may, without the prior consent
of the other Party, disclose the terms and provisions of this Agreement to any
Third Party that (a) is performing diligence in connection with any permitted
Change of Control or similar transaction, (b) is an underwriter or placement
agent or its counsel in connection with any offering by LICENSEE, or (c) is a
permitted sublicensee under this Agreement or a permitted assignee of this
Agreement, provided that such Party shall hold such Third Party to written
obligations of confidentiality with terms and conditions at least as restrictive
as those set forth in this Agreement.

 

9.5.                            Right to Injunctive Relief.  Each Party agrees
that breaches of this Section 9 may cause irreparable harm to the other Party
and shall entitle such other Party, in addition to any other remedies available
to it (subject to the terms of this Agreement), the right to seek injunctive
relief enjoining such action.

 

9.6.                            Ongoing Obligation for Confidentiality.  Upon
expiration or termination of this Agreement, the receiving Party shall, and
shall cause its Recipients to, destroy, delete or return (as requested by the
disclosing Party) any Confidential Information of the disclosing Party, except
for one copy which may be retained in its confidential files for archive
purposes.

 

10.                               REPRESENTATIONS, WARRANTIES AND COVENANTS

 

10.1.                     Representations and Warranties by Each Party.  Each
Party represents and warrants to the other Party as of the Effective Date that:

 

(a)                                 it is a corporation duly organized, validly
existing, and in good standing under the laws of its jurisdiction of formation;

 

(b)                                 it has full corporate power and authority to
execute, deliver, and perform under this Agreement, and has taken all corporate
action required by Applicable Laws and its organizational documents to authorize
the execution and delivery of this Agreement and the

 

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consummation of the transactions contemplated by this Agreement;

 

(c)                                  this Agreement constitutes a valid and
binding agreement enforceable against it in accordance with its terms;

 

(d)                                 all consents, approvals and authorizations
from all governmental authorities or other Third Parties required to be obtained
by such Party in connection with this Agreement have been obtained; and

 

(e)                                  the execution and delivery of this
Agreement and all other instruments and documents required to be executed
pursuant to this Agreement, and the consummation of the transactions
contemplated hereby do not and shall not: (i) conflict with or result in a
breach of any provision of its organizational documents; (ii) result in a breach
of any agreement to which it is a party that would impair the performance of its
obligations hereunder; or (iii) violate any Applicable Laws.

 

10.2.                     Representations and Warranties by PFIZER.

 

10.2.1.           PFIZER represents and warrants to LICENSEE as of the Effective
Date that:

 

(a)                                 PFIZER Controls the Licensed Patent Rights
and the Licensed Know-How, and is entitled to grant the licenses specified
herein;

 

(b)                                 PFIZER has not granted to any Third Party
any rights or licenses under any of the Licensed Patent Rights or Licensed
Know-How that would conflict with the licenses granted to LICENSEE hereunder;

 

(c)                                  to its Knowledge, PFIZER does not Control
any patents other than those listed on Schedule A, a license to which is
necessary to practice the license granted herein

 

(d)                                 PFIZER is not subject to any royalty or
similar payment obligation to any Third Party with respect to the grant of
rights to PFIZER to practice the Licensed Technology;

 

(e)                                  to its Knowledge, PFIZER has not received
any written notice from a Third Party alleging that the Use of the Compounds or
Product in the Field within the Territory infringes, misappropriates or
otherwise violates the Intellectual Property Rights of a Third Party; and

 

(f)                                   to its Knowledge, there is no claim
pending or threatened by PFIZER alleging that a Third Party is or was
infringing,

 

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misappropriating or otherwise violating the Licensed Technology in the Field
within the Territory.

 

As used in Section 10.2.1, “Knowledge” means first hand and actual knowledge of
the officers of PFIZER and is not meant to require or imply that any particular
inquiry or investigation has been undertaken including, without limitation,
obtaining any type of search (independent of that performed by the actual
governmental authority during the normal course of patent prosecution, as
applicable, in a jurisdiction) or opinion of counsel.

 

10.3.                     Covenants and Representations and Warranties by
LICENSEE.

 

10.3.1.           LICENSEE represents and warrants as of the Effective Date and
covenants thereafter to PFIZER that:

 

(a)                                 it shall, and shall ensure all Third Parties
that it engages, comply with all Applicable Laws with respect to the performance
of its obligations hereunder;

 

(b)                                 without limiting the generality of Section
10.3(a), LICENSEE shall comply with the U.S. Foreign Corrupt Practices Act of
1977 (as modified or amended);

 

(c)                                  it has not and will not directly or
indirectly offer or pay, or authorize such offer or payment of, any money, or
transfer anything of value, to improperly seek to influence any Government
Official; and

 

(d)                                 if LICENSEE is itself a Government Official,
LICENSEE represents warrants and covenants that it has not accepted, and will
not accept in the future, such a payment or transfer.

 

As used in this Section 10.3.1, “Government Official” means: (i) any elected or
appointed government official (e.g., a member of a ministry of health); (ii) any
employee or person acting for or on behalf of a government official, agency, or
enterprise performing a governmental function; (iii) any political party
officer, employee, or person acting for or on behalf of a political party or
candidate for public office; (iv) an employee or person acting for or on behalf
of a public international organization; or (v) any person otherwise categorized
as a government official under local law.  “Government” is meant to include all
levels and subdivisions of non-U.S. governments (i.e., local, regional, or
national and administrative, legislative, or executive).

 

10.4.                     No Other Warranties.  EXCEPT AS EXPRESSLY STATED IN
THIS SECTION 10, NEITHER PARTY MAKES ANY REPRESENTATIONS OR EXTENDS ANY
WARRANTIES OF ANY KIND, EITHER EXPRESS OR

 

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IMPLIED, STATUTORY OR OTHERWISE, INCLUDING BUT NOT LIMITED TO WARRANTIES OF
TITLE, NON-INFRINGEMENT, VALIDITY, ENFORCEABILITY, MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE.  ANY INFORMATION PROVIDED BY PFIZER OR ITS AFFILIATES
IS MADE AVAILABLE ON AN “AS IS” BASIS WITHOUT WARRANTY WITH RESPECT TO
COMPLETENESS, COMPLIANCE WITH REGULATORY STANDARDS OR REGULATIONS OR FITNESS FOR
A PARTICULAR PURPOSE OR ANY OTHER KIND OF WARRANTY WHETHER EXPRESS OR IMPLIED.

 

11.                               INDEMNIFICATION

 

11.1.                     Indemnification by LICENSEE.  LICENSEE agrees to
indemnify, hold harmless and defend PFIZER and its Affiliates, and their
respective officers, directors and employees (collectively, “PFIZER
Indemnitees”), from and against any Claims arising or resulting from: (a) the
Development of a Product by, on behalf of or under grant of rights from
LICENSEE, its Affiliates, subcontractors or sublicensees; (b) the
Commercialization of a Product by, on behalf of or under grant of rights from
LICENSEE, its Affiliates, subcontractors or sublicensees; (c) the gross
negligence or wrongful intentional acts or omissions of LICENSEE, its
Affiliates, subcontractors or sublicensees in connection with this Agreement;
(d) breach by LICENSEE of any representation, warranty or covenant as set forth
in this Agreement; or (e) breach by LICENSEE of the scope of the license set
forth in Section 2.1.  As used herein, “Claims” means collectively, any and all
Third Party demands, claims, actions and proceedings (whether criminal or civil,
in contract, tort or otherwise) for losses, damages, liabilities, costs and
expenses (including reasonable attorneys’ fees).

 

11.2.                     Indemnification by PFIZER. PFIZER agrees to indemnify,
hold harmless and defend LICENSEE and its Affiliates and their respective
officers, directors and employees (collectively, “LICENSEE Indemnitees”), from
and against any Claims arising or resulting from: (a) the Development and other
Use of Compounds and Products by, on behalf of or under grant of rights from
PFIZER, its Affiliates, subcontractors or sublicensees prior to the Effective
Date; (b) the gross negligence or wrongful intentional acts or omissions of
PFIZER, its Affiliates, or subcontractors in connection with this Agreement; or
(c) breach by PFIZER of any representation, warranty, obligation or covenant as
set forth in this Agreement.

 

11.3.                     Indemnification Procedure.  In connection with any
Claim for which a Party (the “Indemnified Party”) seeks indemnification from the
other Party (the “Indemnifying Party”) pursuant to this Agreement, the
Indemnified Party shall: (a) give the Indemnifying Party prompt written notice
of the Claim; provided, however, that failure to provide such notice shall not
relieve the Indemnifying Party from its liability or obligation hereunder,
except to the extent of any material prejudice as a direct result of such
failure; (b) cooperate with the Indemnifying Party, at the Indemnifying Party’s
expense, in connection with the

 

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defense and settlement of the Claim; and (c) permit the Indemnifying Party to
control the defense and settlement of the Claim; provided, however, that the
Indemnifying Party may not settle the Claim without the Indemnified Party’s
prior written consent, which shall not be unreasonably withheld or delayed, in
the event such settlement materially adversely impacts the Indemnified Party’s
rights or obligations.  Further, the Indemnified Party shall have the right to
participate (but not control) and be represented in any suit or action by
advisory counsel of its selection and at its own expense.

 

12.                               LIMITATION OF LIABILITY

 

12.1.                     Consequential Damages Waiver.  EXCEPT FOR A BREACH OF
SECTION 9 OR OBLIGATIONS ARISING UNDER SECTION 11, NEITHER PARTY SHALL BE LIABLE
FOR ANY INDIRECT OR CONSEQUENTIAL, SPECIAL, EXEMPLARY OR PUNITIVE DAMAGES,
INCLUDING DAMAGES FOR LOST PROFITS OR LOST REVENUES REGARDLESS OF WHETHER IT HAS
BEEN INFORMED OF THE POSSIBILITY OR LIKELIHOOD OF SUCH DAMAGES OR THE TYPE OF
CLAIM, CONTRACT OR TORT (INCLUDING NEGLIGENCE).

 

12.2.                     Limitations on Claims for Certain Representations and
Warranties.  Any claim or cause of action for breach by PFIZER of any of the
representations and warranties set forth in Section 10.2.1 (whether based on the
indemnification set forth herein, breach of contract, or otherwise) must be
made, if at all, by delivery by LICENSEE of notice in writing to PFIZER or
through the commencement by LICENSEE of a legal proceeding against PFIZER in a
court of competent jurisdiction on or prior to the second anniversary of the
Effective Date.

 

12.3.                     Liability Cap.  Except for PFIZER’s breach of Section
9, IN NO EVENT SHALL PFIZER’S LIABILITY FOR INDEMNIFICATION OR DAMAGES IN
CONNECTION WITH THIS AGREEMENT OR THE SUBSCRIPTION AGREEMENT EXCEED THE CAP,
REGARDLESS OF WHETHER PFIZER HAS BEEN INFORMED OF THE POSSIBILITY OR LIKELIHOOD
OF SUCH DAMAGES OR THE TYPE OF CLAIM, CONTRACT OR TORT (INCLUDING NEGLIGENCE). 
“Cap” means the total Fees paid by LICENSEE to PFIZER during the twelve (12)
months immediately preceding the event giving rise to the claim.

 

13.                               TERM; TERMINATION

 

13.1.                     Term.  The term of this Agreement shall commence as of
the Effective Date and, unless earlier terminated as expressly provided herein,
shall expire upon the last-to-expire Royalty Term.

 

13.2.                     Termination for Cause.  Each Party shall have the
right, without prejudice to any other remedies available to it at law or in
equity, to terminate this Agreement in the event the other Party breaches any of
its material obligations hereunder or

 

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under the Subscription Agreement and fails to cure such breach within sixty (60)
days of receiving notice thereof; provided, however, that if such breach is
capable of being cured, but cannot be cured within such sixty (60) day period,
and the breaching Party initiates actions to cure such breach within such period
and thereafter diligently pursues such actions, the breaching Party shall have
such additional period as is reasonable to cure such breach, but in no event
will such additional period exceed sixty (60) days.  Any termination by a Party
under this Section 13.2 shall be without prejudice to any damages or other legal
or equitable remedies to which it may be entitled from the other Party.  For the
avoidance of doubt, LICENSEE’s failure to use Commercially Reasonable Efforts to
Develop and Commercialize the Product shall constitute a material breach by
LICENSEE under this Agreement.

 

13.3.                     Termination by LICENSEE.  LICENSEE may, provided that
LICENSEE is not then in material breach of this Agreement, terminate this
Agreement at will on a Product-by-Product and country-by-country basis, or in
its entirety, in its sole discretion, on not less than ninety (90) days prior
written notice to PFIZER.

 

13.4.                     Termination for a Bankruptcy Event.  Each Party shall
have the right to terminate this Agreement in the event of a Bankruptcy Event
with respect to the other Party.  “Bankruptcy Event” means the occurrence of any
of the following: (a) the institution of any bankruptcy, receivership,
insolvency, reorganization or other similar proceedings by or against a Party
under any bankruptcy, insolvency, or other similar law now or hereinafter in
effect, including any section or chapter of the United States Bankruptcy Code,
as amended or under any similar laws or statutes of the United States or any
state thereof (the “Bankruptcy Code”), where in the case of involuntary
proceedings such proceedings have not been dismissed or discharged within ninety
(90) days after they are instituted; (b) the insolvency or making of an
assignment for the benefit of creditors or the admittance by a Party of any
involuntary debts as they mature; (c) the institution of any reorganization,
arrangement or other readjustment of debt plan of a Party not involving the
Bankruptcy Code; (d) appointment of a receiver for all or substantially all of a
Party’s assets; or (e) any corporate action taken by the board of directors of a
Party in furtherance of any of the foregoing actions.

 

13.5.                     Effect of Termination or Expiration.

 

13.5.1.           Upon termination or expiration of this Agreement, LICENSEE
shall pay to PFIZER all Fees or other amounts due to PFIZER as of the effective
date of termination or expiration within [**] days following the effective date
of termination or expiration.

 

13.5.2.           Upon expiration of this Agreement pursuant to Section 13.1
(but not upon termination of this Agreement pursuant to any other Section of
this Agreement), PFIZER hereby grants to LICENSEE a royalty-free right and
license to Use the Licensed Know-How to Use Compounds and Products within the
Territory.

 

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13.5.3.           Subject to Section 13.5.5(e), upon termination of this
Agreement, LICENSEE shall have the right to sell its remaining inventory of
Products following the termination of this Agreement so long as LICENSEE has
fully paid, and continues to fully pay when due, any and all Fees owed to
PFIZER, and LICENSEE otherwise is not in material breach of this Agreement.

 

13.5.4.           A termination of this Agreement will not automatically
terminate any sublicense granted by LICENSEE pursuant to Section 2.2 with
respect to a Third Party, provided that (a) such sublicensee is not then in
breach of any provision of this Agreement or the applicable sublicense
agreement; (b) PFIZER will have the right to step into the role of LICENSEE as
sublicensor, with all the rights that LICENSEE had under such sublicense prior
to termination of this Agreement (including the right to receive any payments to
LICENSEE by such sublicensee that accrue from and after the date of the
termination of this Agreement); and (c) PFIZER will only have those obligations
to such sublicensee as PFIZER had to LICENSEE hereunder.  LICENSEE shall include
in any sublicense agreement a provision in which said sublicensee acknowledges
its obligations to PFIZER hereunder and the rights of PFIZER to terminate this
Agreement with respect to any sublicensee for material breaches of this
Agreement by such sublicensee.

 

13.5.5.           Upon termination of this Agreement:

 

(a)                                 LICENSEE hereby grants to PFIZER a
non-exclusive, fully paid-up, royalty-free, worldwide, transferable, perpetual
and irrevocable license, with the right to sublicense, to Use any and all
Developed IP for the Development and Commercialization of the Products;

 

(b)                                 to the extent permitted by applicable
Regulatory Authorities, LICENSEE shall: (i) transfer to PFIZER all Regulatory
Filings and Regulatory Approvals held by LICENSEE with respect to the Product;
and (ii) to the extent subsection (i) is not permitted by the applicable
Regulatory Authority, permit PFIZER to cross-reference and rely upon any
Regulatory Approvals and Regulatory Filings filed by LICENSEE with respect to
the Product;

 

(c)                                  LICENSEE, if requested in writing by
PFIZER, shall provide any and all (i) material correspondence with the relevant
patent offices pertaining to the LICENSEE’s prosecution of the Licensed Patent
Rights to the extent not previously provided to PFIZER during the course of the
Agreement and (ii) a report detailing the status of all Licensed Patent Rights
at the time of termination or expiration;

 

(d)                                 effective as of the date of termination,
LICENSEE hereby grants to PFIZER a fully paid-up, royalty-free, worldwide,
transferable,

 

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sublicensable, perpetual and irrevocable license to use the Trademarks
Controlled by LICENSEE solely identifying a Product for the purpose of
Commercializing the Products; and

 

(e)                                  LICENSEE will responsibly wind-down, in
accordance with accepted pharmaceutical industry norms and ethical practices,
any on-going clinical studies of Products for which it has responsibility
hereunder in which patient dosing has commenced or, if reasonably practicable
and requested by PFIZER, allow PFIZER or its Affiliates or a Third Party that is
designated in writing by PFIZER (“Designated Affiliate/Third Party”) to complete
such trials (and then assign all related Regulatory Filings, Regulatory
Approvals, and investigator and other agreements relating to such studies). 
LICENSEE shall be responsible for any Development costs associated with such
wind-down.  PFIZER shall pay all Development Costs incurred by either Party to
complete such studies should PFIZER request that such studies be completed. 
During any such winding down of ongoing trials, LICENSEE shall provide such
knowledge transfer and other training to PFIZER or its Designated
Affiliate/Third Party as reasonably necessary for PFIZER or the Designated
Affiliate/Third Party to continue such trial.  In connection with such transfer,
LICENSEE shall, at PFIZER’s option: (i) transfer to PFIZER or the Designated
Affiliate/Third Party all Products at the cost paid by LICENSEE to manufacture
such Product; (ii) transfer to PFIZER or the Designated Affiliate/Third Party
all LICENSEE Inventory owned by LICENSEE at the cost paid by LICENSEE for such
LICENSEE Inventory; and (iii) assign to PFIZER or the Designated Affiliate/Third
Party any agreements with Third Parties with respect to the Development or
Commercialization of the Product.  As used herein, “LICENSEE Inventory” means
all components and works in process produced or held by LICENSEE with respect to
the manufacture of Products.

 

13.6.                     Survival.  Expiration or termination of this Agreement
shall not relieve the Parties of any obligation accruing hereunder prior to such
expiration or termination.  Without limiting the foregoing, the provisions of
Sections 5.1.6, 5.2, 5.3, 6, 7.1, 7.2, 9, 11, 12, 13.5, 14.1.2, 15, 16, 17.3 and
17.8 shall survive expiration or termination of this Agreement.

 

14.                               PUBLICITY AND PUBLICATIONS

 

14.1.                     Publicity and Publications.

 

14.1.1.           Use of Trademarks.  Subject to PFIZER’s rights pursuant to
Section 13.5.5(d), neither Party (nor any of its Affiliates or agents) shall use
the Trademarks of the other Party or its Affiliates in any press release,

 

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publication or other form of promotional disclosure without the prior written
consent of the other Party in each instance.

 

14.1.2.           Public Statements.  Except as expressly set forth herein, each
Party agrees not to issue any press release or other public statement or any
information relating to this Agreement, whether written, electronic, oral or
otherwise, disclosing the existence of this Agreement or the terms hereof or any
other information relating to this Agreement without the prior written consent
of the other Party; provided, however, that neither Party will be prevented from
complying with any duty of disclosure it may have pursuant to Applicable Laws or
the rules of any recognized stock exchange, including disclosure of the terms of
this Agreement, so long as the disclosing Party provides the other Party at
least ten (10) Business Days prior written notice to the extent practicable and
only discloses information to the extent required by Applicable Law or the rules
of any recognized stock exchange.

 

14.1.3.           Publications.  LICENSEE acknowledges that PFIZER personnel may
desire to publish in scientific journals or present at scientific conferences
scientific, pre-clinical or clinical data derived from research and development
related to the Compounds and Products that was conducted by PFIZER or its
Affiliates prior to the Effective Date or after the Effective Date pursuant to
Section 2.3.  Accordingly, no such publication will be submitted and no such
presentation shall be made unless a written copy of such proposed publication or
presentation is submitted to LICENSEE no later than thirty (30) days before
submission for publication or presentation. LICENSEE shall provide its comments
with respect to such publications and presentations within fifteen (15) days
after its receipt of such written copy from PFIZER.  PFIZER shall consider in
good faith all comments made by LICENSEE, including limitations on disclosure of
Pfizer confidential information requested by LICENSEE consistent with what
Pfizer would consider normal procedure for its own development compounds. 
LICENSEE and PFIZER will each comply with standard academic practice regarding
authorship of scientific publications and recognition of contribution of other
parties in any publication.

 

15.                               LICENSEE INSURANCE

 

15.1.                     Insurance Requirements.  LICENSEE shall maintain
during the term of this Agreement and until the later of: (a) three (3) years
after termination or expiration of this Agreement, or (b) the date that all
statutes of limitation covering claims or suits that may be instituted for
personal injury based on the sale or use of the Products have expired,
commercial general liability insurance from a minimum “A-” AM Bests rated
insurance company or insurer reasonably acceptable to PFIZER, including
contractual liability and product liability or clinical trials, if applicable,
with coverage limits of not less than [**] US dollars ($[**]) per

 

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occurrence and [**] US dollars ($[**]) in the aggregate.  LICENSEE has the right
to provide the total limits required by any combination of primary and
umbrella/excess coverage.  The minimum level of insurance set forth herein shall
not be construed to create a limit on LICENSEE’s liability hereunder.  Such
policies shall name PFIZER and its Affiliates as additional insured and provide
a waiver of subrogation in favor of PFIZER and its Affiliates.  Such insurance
policies shall be primary and non-contributing with respect to any other similar
insurance policies available to PFIZER or its Affiliates.  Any deductibles for
such insurance shall be assumed by LICENSEE.

 

15.2.                     Policy Notification.  LICENSEE shall provide PFIZER
with original certificates of insurance (which may be done through the
submission of an electronic copy of such certificate) evidencing such insurance:
(a) promptly following execution by both Parties of this Agreement; and (b)
prior to expiration of any one coverage.  PFIZER shall be given at least thirty
(30) days written notice prior to cancellation, termination or any change to
restrict the coverage or reduce the limits afforded.

 

16.                               DISPUTE RESOLUTION

 

16.1.                     General.  Promptly after the written request of either
Party, each of the Parties shall appoint a designated representative to meet in
person or by telephone to attempt in good faith to resolve any dispute that
arises under this Agreement.  If the designated representatives do not resolve
the dispute within [**] days of such request, then a senior executive of each
Party shall meet in person or by telephone to review and attempt to resolve the
dispute in good faith. The executive officers shall have [**] days to attempt to
resolve the dispute.  If the executive officers cannot resolve such dispute
within such period of time, then either Party may commence litigation with
respect to such matter.  If a Party’s legal rights would be adversely affected
as a result of the passage of time that would occur by participating in the
dispute resolution mechanism set forth above, including the effect of applicable
statutes of limitations or time-based defenses (such as estoppels or laches),
such Party may commence litigation prior to or during the course of such dispute
resolution mechanism.

 

16.2.                     Injunctive Relief.  Notwithstanding the foregoing, in
the event of an actual or threatened breach hereunder, the aggrieved Party may
seek equitable relief (including restraining orders, specific performance or
other injunctive relief) in any court or other forum, without first submitting
to the dispute resolution procedures set forth in Section 16.1.

 

17.                               GENERAL PROVISIONS

 

17.1.                     Assignment.  LICENSEE may not assign its rights and
obligations under this Agreement without PFIZER’s prior written consent, except
that: (a) LICENSEE may assign its rights and obligations under this Agreement in
whole or in part to one or more of its Affiliates without the consent of PFIZER;
and (b) LICENSEE may assign this Agreement in the event of a Change in Control. 
As used herein,

 

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“Change in Control” means the acquisition of LICENSEE or its ultimate parent
company by a Third Party or the sale of all or substantially all of LICENSEE’s
business to which this Agreement relates.  LICENSEE shall provide PFIZER with
prompt written notice of any such assignment.  Any permitted assignee pursuant
to clause (b) above shall assume all obligations of its assignor under this
Agreement, and no permitted assignment shall relieve the assignor of liability
for its obligations hereunder.  Any attempted assignment in contravention of the
foregoing shall be void.  PFIZER may assign its rights and obligations under
this Agreement in whole or in part without LICENSEE’s consent.

 

17.2.                     Severability.  Should one or more of the provisions of
this Agreement become void or unenforceable as a matter of law, then such
provision will be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of this Agreement, and the
Parties agree to substitute a valid and enforceable provision therefor which, as
nearly as possible, achieves the desired economic effect and mutual
understanding of the Parties under this Agreement.

 

17.3.                     Governing Law; Exclusive Jurisdiction.

 

17.3.1.           Governing Law.  This Agreement shall be governed by and
construed under the laws in effect in the State of New York, US, without giving
effect to any conflicts of laws provision thereof or of any other jurisdiction
that would produce a contrary result.

 

17.3.2.           Jurisdiction.  Each Party to this Agreement, by its execution
hereof, (a) hereby irrevocably submits to the exclusive jurisdiction of the
state courts of the State of New York or the United States District Court for
the Southern District of New York for the purpose of any and all actions, suits
or proceedings arising in whole or in part out of, related to, based upon or in
connection with this Agreement or the subject matter hereof, (b) hereby waives
to the extent not prohibited by applicable law, and agrees not to assert, by way
of motion, as a defense or otherwise, in any such action, any claim that it is
not subject personally to the jurisdiction of the above-named courts, that its
property is exempt or immune from attachment or execution, that any such action
brought in one of the above-named courts should be dismissed on grounds of forum
non conveniens, should be transferred to any court other than one of the
above-named courts, or should be stayed by reason of the pendency of some other
proceeding in any other court other than one of the above-named courts, or that
this Agreement or the subject matter hereof may not be enforced in or by such
court, and (c) hereby agrees not to commence any such action other than before
one of the above-named courts nor to make any motion or take any other action
seeking or intending to cause the transfer or removal of any such action to any
court other than one of the above-named courts whether on the grounds of
inconvenient forum or otherwise.  Notwithstanding the foregoing, application may
be made to any court of competent jurisdiction with respect to the enforcement
of any judgment or award.

 

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17.4.                     Force Majeure.  Except with respect to delays or
nonperformance caused by the negligent or intentional act or omission of a
Party, any delay or nonperformance by such Party (other than payment obligations
under this Agreement) will not be considered a breach of this Agreement to the
extent such delay or nonperformance is caused by acts of God, natural disasters,
acts of the government or civil or military authority, fire, floods, epidemics,
quarantine, energy crises, war or riots or other similar cause outside of the
reasonable control of such Party (each, a “Force Majeure Event”), provided that
the Party affected by such Force Majeure Event will promptly begin or resume
performance as soon as reasonably practicable after the event has abated.  If
the Force Majeure Event prevents a Party from performing any of its obligations
under this Agreement for one hundred eighty (180) days or more, then the other
Party may terminate this Agreement immediately upon written notice to the
non-performing Party.

 

17.5.                     Waivers and Amendments.  The failure of any Party to
assert a right hereunder or to insist upon compliance with any term or condition
of this Agreement shall not constitute a waiver of that right or excuse a
similar subsequent failure to perform any such term or condition by the other
Party.  No waiver shall be effective unless it has been given in writing and
signed by the Party giving such waiver.  No provision of this Agreement may be
amended or modified other than by a written document signed by authorized
representatives of each Party.

 

17.6.                     Relationship of the Parties.  Nothing contained in
this Agreement shall be deemed to constitute a partnership, joint venture, or
legal entity of any type between PFIZER and LICENSEE, or to constitute one Party
as the agent of the other.  Moreover, each Party agrees not to construe this
Agreement, or any of the transactions contemplated hereby, as a partnership for
any tax purposes.  Each Party shall act solely as an independent contractor, and
nothing in this Agreement shall be construed to give any Party the power or
authority to act for, bind, or commit the other Party.

 

17.7.                     Successors and Assigns.  This Agreement shall be
binding upon and inure to the benefit of the Parties hereto and their respective
successors and permitted assigns.

 

17.8.                     Notices.  All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when: (a) delivered by hand (with written confirmation of
receipt); (b) sent by fax (with written confirmation of receipt), provided that
a copy is sent by an internationally recognized overnight delivery service
(receipt requested); or (c) when received by the addressee, if sent by an
internationally recognized overnight delivery service (receipt requested), in
each case to the appropriate addresses and fax numbers set forth below (or to
such other addresses and fax numbers as a Party may designate by written
notice):

 

35

--------------------------------------------------------------------------------

 

If to PFIZER:

 

PFIZER INC.

235 East 42nd Street

New York, NY 10017

Fax: 646-348-8157

Attention: General Counsel

 

If to LICENSEE:

 

VERASTEM, INC.

215 First Street, Suite 440

Cambridge, MA 02142

Fax: 617-812-0059

Attention: Chief Operating Officer

 

with a copy to:

 

Ropes & Gray LLP

Prudential Tower

800 Boylston Street

Boston, MA 02199-3600

Fax: 617-235-0706

Attention: Marc A. Rubenstein

 

17.9.                     Further Assurances.  LICENSEE and PFIZER hereby
covenant and agree without the necessity of any further consideration, to
execute, acknowledge and deliver any and all such other documents and take any
such other action as may be reasonably necessary or appropriate to carry out the
intent and purposes of this Agreement.

 

17.10.              No Third Party Beneficiary Rights.  This Agreement is not
intended to and shall not be construed to give any Third Party any interest or
rights (including, without limitation, any third party beneficiary rights) with
respect to or in connection with any agreement or provision contained herein or
contemplated hereby.

 

17.11.              Entire Agreement; Confidentiality Agreement.  This
Agreement, together with its Schedules, sets forth the entire agreement and
understanding of the Parties as to the subject matter hereof and supersedes all
proposals, oral or written, and all other prior communications between the
Parties with respect to such subject matter, including, without limitation, that
certain letter agreement by and between the Parties, dated April 28, 2012 (the
“CDA”).  The Parties acknowledge and agree that, as of the Effective Date, all
Confidential Information (as defined in the CDA) disclosed by PFIZER or its
Affiliates pursuant to the CDA shall be considered PFIZER’s Confidential
Information and subject to the terms set forth in this Agreement.  In the event
of any conflict between a material provision of this Agreement and any Schedule
hereto, the Agreement shall control.

 

17.12.              Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall

 

36

--------------------------------------------------------------------------------

 

constitute one and the same instrument.  An executed signature page of this
Agreement delivered by facsimile transmission shall be as effective as an
original executed signature page.

 

17.13.              Cumulative Remedies.  No remedy referred to in this
Agreement is intended to be exclusive, but each shall be cumulative and in
addition to any other remedy referred to in this Agreement or otherwise
available under law.

 

17.14.              Waiver of Rule of Construction.  Each Party has had the
opportunity to consult with counsel in connection with the review, drafting and
negotiation of this Agreement.  Accordingly, any rule of construction that any
ambiguity in this Agreement shall be construed against the drafting Party shall
not apply.

 

17.15.              Construction.  For purposes of this Agreement: (a) words in
the singular shall be held to include the plural and vice versa as the context
requires; (b) the words “including” and “include” shall mean “including, without
limitation,” unless otherwise specified; (c) the terms “hereof,” “herein,”
“herewith,” and “hereunder,” and words of similar import shall, unless otherwise
stated, be construed to refer to this Agreement as a whole and not to any
particular provision of this Agreement; and (d) all references to “Section”,
“Schedule” and “Exhibit,” unless otherwise specified, are intended to refer to a
Section, Schedule or Exhibit of or to this Agreement.

 

[Signatures on next page]

 

37

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the Parties intending to be bound have caused this Agreement
to be executed by their duly authorized representatives as of the Effective
Date.

 

 

PFIZER INC.

 

VERASTEM, INC.

 

 

 

 

 

By:

/s/ Garry Nicholson

 

By:

/s/ Robert Forrester

 

Name: Garry Nicholson

 

 

Name: Robert Forrester

 

Title:   President, General Manager

 

 

Title:  COO

 

--------------------------------------------------------------------------------

 

SCHEDULE A

 

Licensed Patent Rights

 

Country

 

Application
Number

 

Application
Date

 

Patent Number

 

Status

 

Next Tax
Date

 

[**]

 

 

 

 

 

 

 

 

 

 

 

[**]

 

[**]

 

[**]

 

 

 

[**]

 

 

 

[**]

 

[**]

 

[**]

 

 

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

 

 

[**]

 

[**]

 

[**]

 

 

 

 

 

 

 

 

 

 

 

[**]

 

[**]

 

[**]

 

 

 

[**]

 

 

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

 

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

 

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

 

 

[**]

 

 

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

 

 

[**]

 

[**]

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

A-1

--------------------------------------------------------------------------------

 

Country

 

Application
Number

 

Application
Date

 

Patent Number

 

Status

 

Next Tax
Date

 

[**]

 

[**]

 

[**]

 

 

 

[**]

 

 

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

 

 

 

 

 

 

 

 

 

 

[**]

 

[**]

 

[**]

 

 

 

[**]

 

 

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

 

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

 

 

[**]

 

 

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

 

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

 

 

[**]

 

 

 

[**]

 

 

 

 

 

 

 

 

 

 

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

 

A-2

--------------------------------------------------------------------------------

 

Country

 

Application
Number

 

Application
Date

 

Patent Number

 

Status

 

Next Tax
Date

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

[**]

 

[**]

 

[**]

 

 

 

[**]

 

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

[**]

 

 

 

 

 

 

 

 

 

 

[**]

 

[**]

 

[**]

 

 

 

[**]

 

 

[**]

 

[**]

 

[**]

 

 

 

[**]

 

[**]

[**]

 

[**]

 

[**]

 

 

 

[**]

 

 

[**]

 

[**]

 

[**]

 

 

 

[**]

 

[**]

[**]

 

[**]

 

[**]

 

 

 

[**]

 

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

[**]

 

[**]

 

[**]

 

 

 

[**]

 

[**]

[**]

 

[**]

 

[**]

 

 

 

[**]

 

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

[**]

 

[**]

 

[**]

 

 

 

[**]

 

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

[**]

 

 

 

 

 

 

 

 

 

 

[**]

 

[**]

 

[**]

 

 

 

[**]

 

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

[**]

 

[**]

 

[**]

 

 

 

[**]

 

[**]

[**]

 

[**]

 

[**]

 

 

 

[**]

 

 

[**]

 

 

 

 

 

 

 

 

 

 

[**]

 

[**]

 

[**]

 

 

 

[**]

 

 

[**]

 

[**]

 

[**]

 

 

 

[**]

 

 

[**]

 

[**]

 

[**]

 

 

 

[**]

 

 

 

A-3

--------------------------------------------------------------------------------

 

Country

 

Application
Number

 

Application
Date

 

Patent Number

 

Status

 

Next Tax
Date

 

 

 

 

[**]

 

 

 

 

 

 

[**]

 

[**]

 

[**]

 

 

 

[**]

 

 

[**]

 

[**]

 

[**]

 

 

 

[**]

 

[**]

[**]

 

[**]

 

[**]

 

 

 

[**]

 

[**]

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

[**]

 

[**]

 

[**]

 

 

 

[**]

 

 

[**]

 

[**]

 

[**]

 

 

 

[**]

 

[**]

[**]

 

[**]

 

[**]

 

 

 

[**]

 

[**]

[**]

 

[**]

 

[**]

 

 

 

[**]

 

 

[**]

 

[**]

 

[**]

 

 

 

[**]

 

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

[**]

 

[**]

 

[**]

 

 

 

[**]

 

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

[**]

 

[**]

 

[**]

 

 

 

[**]

 

[**]

[**]

 

[**]

 

[**]

 

 

 

[**]

 

 

[**]

 

[**]

 

[**]

 

 

 

[**]

 

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

[**]

 

[**]

 

[**]

 

 

 

[**]

 

 

 

A-4

--------------------------------------------------------------------------------

 

SCHEDULE B

 

Transfer Activities

 

1.                                      Regulatory Transfer Activities.  The
Regulatory Transfer Activities shall be those activities set forth in this
Section 1 of this Schedule.

 

1.1.                            United States IND: Within [**] Business Days
after written notification from LICENSEE that LICENSEE is able to assume all
clinical, regulatory, and safety obligations (the “LICENSEE Assumption Notice”),
PFIZER shall execute and provide to LICENSEE all documents (in a form reasonably
acceptable to LICENSEE and PFIZER) required to transfer the sponsorship of the
IND for the Product in the Field that was submitted to the FDA prior to the
Effective Date.

 

1.2.                            Transfer Process.  Notwithstanding anything to
the contrary herein, LICENSEE shall provide PFIZER with the LICENSEE Assumption
Notice during the [**] day period immediately following the Effective Date and
promptly after execution of the Pharmacovigilance Agreement as provided in
Section 4.3.3 of the Agreement, to the extent such agreement is determined to be
necessary as set forth in such Section.  Within [**] Business Days after
LICENSEE’s receipt from PFIZER of the documents described in Section 1.1 of this
Schedule (as applicable), LICENSEE shall provide to the applicable Regulatory
Authority written notification (and any related necessary documents) of the
transfer of sponsorship of the Regulatory Filings from PFIZER to LICENSEE
(“LICENSEE Transfer Notice”).  LICENSEE shall provide to PFIZER a copy of any
and all LICENSEE Transfer Notices.  In addition, LICENSEE shall provide to
PFIZER a copy of any and all notices received by LICENSEE from the applicable
Regulatory Authority confirming transfer of any applicable Regulatory Filings
from PFIZER to LICENSEE (“Regulatory Confirmation Notice”).

 

1.3.                            Maintenance of the Regulatory Filings.

 

1.3.1.                  Maintenance of IND.  For the period beginning on the
Effective Date and ending on the effective date of the transfer to LICENSEE of
an IND for the Product in the Field that was submitted to a Regulatory Authority
prior to the Effective Date (i.e., the date that LICENSEE serves official
confirmation of acceptance of regulatory transfer of responsibility) (each, a
“Regulatory Transfer Period”), PFIZER shall continue to maintain such IND, at
LICENSEE’s direction and cost and expense.  For clarity, (a) during each
Regulatory Transfer Period, PFIZER shall not be permitted to cancel or withdraw
the IND that pertains to such Regulatory Transfer Period, and (b) PFIZER will
file on a timely basis the annual report for the IND for PF-04554878.

 

1.4.                            Interaction with Regulatory Authorities.

 

1.4.1.                  During the Regulatory Transfer Period, LICENSEE shall
lead all interactions with any Regulatory Authority relating to the Compound in

 

B-1

--------------------------------------------------------------------------------

 

the Field.  Notwithstanding the foregoing, during the Regulatory Transfer
Period, if LICENSEE so reasonably requests, PFIZER will participate, by
telephone, in certain interactions with Regulatory Authorities relating to any
Compound in the Field, at LICENSEE’s direction and cost and expense; provided
that LICENSEE shall provide PFIZER written notice at least [**] Business Days
prior to any such meetings.

 

1.5.                            Maintenance of Safety Reporting.

 

1.5.1.                  Unless otherwise directed by LICENSEE, PFIZER will
submit all PFIZER-generated CIOMS/serious adverse event reports for the Compound
to the relevant Regulatory Authority for the Regulatory Transfer Period to
LICENSEE.

 

2.                                      Inventory and Specimen Transfer

 

2.1.                            Pharmaceutical Sciences/Manufacturing.  PFIZER
shall package and ship those amounts of Compound in PFIZER’s inventory to the
extent set forth on Schedule C to a storage facility of LICENSEE’s choosing;
such transfer will take place within [**] Business Days following PFIZER’s
receipt from LICENSEE of its written nomination of a storage facility. 
Notwithstanding anything to the contrary herein, LICENSEE must identify this
facility no later than [**] months after the Effective Date.  LICENSEE shall
bear all costs and expenses incurred by PFIZER after the Effective Date related
to packaging and shipping of the Compound pursuant to this Section of this
Schedule.

 

2.2.                            Non-Clinical Toxicology Specimens: GLP Studies:
Within [**] Business Days of the Effective Date, PFIZER shall identify
specimens/data records (“Items”) that were identified in final reports of GLP
studies of the Compounds and Products as having been archived at or by PFIZER. 
Such Items will be shipped by PFIZER within [**] months following PFIZER’s
receipt of notice from LICENSEE to an archival facility of LICENSEE choice at
LICENSEE expense and direction.  This facility must be identified within [**]
months of the Effective Date.  LICENSEE shall bear all costs and expenses
incurred by PFIZER after the Effective Date related to packaging and shipping
Items pursuant to this Section.

 

3.                                      Documentation Transfer

 

3.1.                            Initial Request.  No later than [**] days after
the Effective Date (unless otherwise specified herein or agreed to in writing by
the Parties), PFIZER will provide to LICENSEE, those documents set forth in
Section 3.3 of this Schedule (the “Documentation”)  to the extent it exists as
of the Effective Date, provided that PFIZER has the right, but not the
obligation to retain (a) copies of all such documents and records; (b) copies of
Regulatory Filings and correspondence, and clinical trial data; and (c) any
records reasonably required by PFIZER for the conduct of its activities under
the terms of its previous obligations, subject to the terms and conditions of
the Agreement.

 

B-2

--------------------------------------------------------------------------------

 

3.2.                            Method of Transfer.  Notwithstanding the
foregoing, the Parties agree as follows with respect to the Documentation:
PFIZER will provide electronic copies (in Microsoft Office format and/or in
other non-proprietary format) of the Documentation by a method reasonably
acceptable to LICENSEE; provided that, to the extent such Documentation exists
as of the Effective Date in an electronic format, PFIZER shall provide to
LICENSEE an electronic copy of such Documentation and to the extent such
Documentation does not exist in an electronic format as of the Effective Date,
PFIZER shall provide to LICENSEE a physical copy of the Documentation. 
Notwithstanding the foregoing, in no event shall PFIZER be required to provide
(i) data or records that include technology or products other than those that
pertain to the Compound, or (ii) laboratory notebooks, internal team meeting
minutes, personal notes of PFIZER employees or any of PFIZER’s contractors or
subcontractors, or internal intra-PFIZER correspondence.  For clarity, in no
event shall the Documentation include any of the items set forth in Section 3.3
if such items do not exist.

 

3.3.                            Documentation.  The Documentation shall be
comprised the following documents to the extent containing Licensed Know-How and
Controlled by PFIZER or its Affiliates as of the Effective Date (and for the
avoidance of doubt the Documentation shall include any of the following relating
to either PF-04554878 or PF-00562271 or both of them):

 

3.3.1.                  Regulatory.  All applications, registrations, licenses,
authorisations and approvals, and all correspondence and supporting documents
submitted to or received from Regulatory Authorities (including minutes and
official contact reports relating to any communications with any Regulatory
Authority) as of the Effective Date to the extent pertaining to the Product in
the Field (to the extent Controlled by PFIZER or its Affiliates, the “Regulatory
Documentation”).

 

3.3.2.                  Pharmaceutical Sciences/Manufacturing.  All data and
records to the extent pertaining to the synthesis, formulation and manufacture
of the Product in the Field generated by PFIZER or its Affiliates, including
summary reports and signed development reports pertaining thereto.

 

3.3.3.                  Non-Clinical Toxicology.  Copies of all protocols, data,
results, and reports related to pivotal (e.g., GLP) non-clinical animal safety
and toxicity studies, and reports prepared in support of IND submissions and any
descriptions and records pertaining to the production/testing of materials used
in non-clinical studies to the extent for the Product in the Field.

 

3.3.4.                  Non-Clinical Research and Development.  A summary of the
data and results from non-GLP studies (and reports based thereon) that were
performed in support of IND submissions to the extent for the Product in the
Field.

 

B-3

--------------------------------------------------------------------------------

 

3.3.5.                  Clinical Development.

 

3.3.5.1.                  Copies of all protocols and amendments, study reports
and results (including tables, figures and data) of clinical studies of the
Product (without limiting the generality of the foregoing, Pfizer will complete
the study report for study number [**] and provide such report to LICENSEE by
September 30, 2012);

 

3.3.5.2.                  Copies of all adverse event reports (e.g., Medwatch or
equivalent forms) for any and all clinical trials (investigator-initiated or
PFIZER-sponsored) of the Product;

 

3.3.5.3.                  Copies of Case Report Forms (CRFs) or equivalents
thereof for all completed clinical studies of the Product (i.e., studies with
signed-off final clinical study reports);

 

3.3.5.4.                  Copies of clinical study raw data from clinical
studies of the Product, including such data that is included in study databases;
and

 

3.3.5.5.                  Copies of all Trial Master Files (TMF’s) or
equivalents thereof, for all completed clinical studies of the Product (i.e.,
studies with signed-off final clinical study reports). TMF for studies currently
without a signed and approved CSR will be transferred no later than [**]
business days after the approval of the respective CSR.

 

3.3.6.                  Intellectual Property.

 

3.3.6.1.                  A listing of all issued patents and pending patent
applications filed with the applicable patent offices encompassed by the term
“Licensed Patent Rights” as of the Effective Date, including United States and
foreign equivalents thereof, with docket and status reports to be delivered to
LICENSEE, within [**] Business Days of the Effective Date; and

 

3.3.6.2.                  Copies of file wrappers for such Licensed Patent
Rights, will be delivered to LICENSEE within [**] calendar days of the Effective
Date; records will be provided electronically in non-proprietary format.

 

**********

 

In the event of any conflict between this Schedule B and the main text of the
Agreement, the main text of the Agreement shall govern.

 

B-4

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SCHEDULE C

 

Quantities of Product and Compound to be Transferred

 

DESCRIPTION

 

APPROXIMATE QUANTITIES

[**]

 

[**]

[**]

 

[**]

[**]

 

[**]

[**]

 

[**]

[**]

 

[**]

 

For the avoidance of doubt, this table does not include quantities of Product to
be provided by Pfizer pursuant to Section 4.4.2.

 

C-1

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ANNEX A

FORM OF SUBSCRIPTION AGREEMENT

 

VERASTEM, INC.

 

STOCK SUBSCRIPTION AGREEMENT

 

Pfizer Inc. (the “Subscriber”) hereby subscribes for 192,012 shares (the
“Shares”) of common stock, $0.0001 par value (the “Common Stock”), of
Verastem, Inc., a Delaware corporation (the “Company”).  In consideration for
the Shares, the Subscriber has provided certain licenses and rights to the
Company pursuant to that certain License Agreement between the Company and
Subscriber, dated July 11, 2012.

 

This subscription is submitted to the Company in accordance with and subject to
the terms and conditions described in this Stock Subscription Agreement (the
“Agreement”) as of July 11, 2012.

 

1.                                      Subscriber agrees not to sell or
otherwise dispose of the Shares in violation of the provisions of the Securities
Act of 1933, as amended (the “Act”).  Subscriber understands that the Shares are
being sold to Subscriber pursuant to an exemption from the registration
requirements of the Act and that the Company is relying upon the representations
and agreements contained in this Agreement for the purpose of determining
whether this transaction meets the requirements for such exemption.  Subscriber
understands that the Shares must be held indefinitely by Subscriber unless they
are later transferred in transactions that are either registered under the Act
or exempt from registration.  Subscriber understands Subscriber understands that
the Company is under no obligation to register the Shares under the Act or any
securities law of any state of the United States or of any other jurisdiction or
to file for or comply with an exemption from registration, and recognizes that
exemptions from registration, in any case, are limited and may not be available
when Subscriber may wish to sell, transfer or otherwise dispose of the Shares.

 

Subscriber understands that the certificate(s) or book entry units representing
the Shares will bear the following legends restricting their transfer and that a
notation restricting their transfer will be made on the stock transfer books or
book entry system of the Company:

 

“THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
ACT.”

 

2.                                      The Company hereby represents and
warrants to Subscriber as follows:

 

a.                                      The Company is a corporation duly
organized and validly existing under the laws of the State of Delaware.  The
Company has made available to Subscriber the Restated Certificate of
Incorporation of the Company and the Amended and Restated Bylaws of the Company
as in effect on the date hereof.

 

b.                                      The Company has the capacity, full
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions

 

Annex A-1

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contemplated hereby.  The execution, delivery and performance of this Agreement
and the issuance of the Shares to Subscriber have been duly authorized by all
necessary corporate action on the part of the Company.  The Shares, when issued
in accordance with the terms of this Agreement, will be duly and validly issued,
fully paid and nonassessable.

 

3.                                      Subscriber hereby acknowledges,
represents and warrants to, and agrees with the Company as follows:

 

a.                                      Subscriber understands that the offering
and sale of the Shares is intended to be exempt from registration under the Act,
by virtue of Section 4(2) of the Act and, in accordance therewith and in
furtherance thereof, Subscriber represents and warrants to and agrees with the
Company as follows:

 

i.                                          Subscriber acknowledges that the
Company has made available documents, records, and books pertaining to this
investment that have been requested by Subscriber and Subscriber’s advisors.

 

ii.                                       Subscriber or Subscriber’s
advisor(s) have had a reasonable opportunity to ask questions of and receive
information and answers from a person or persons acting on behalf of the Company
concerning the offering of the Shares, as Subscriber has deemed necessary, and
all such questions have been answered and all such information has been provided
to the full satisfaction of Subscriber.

 

iii.                                    Subscriber is not subscribing for the
Shares as a result of or subsequent to any advertisement, article, notice, or
other communication published in any newspaper, magazine, or similar media or
broadcast over television or radio, or presented at any seminar or meeting, or
filed by the Company with the U.S. Securities and Exchange Commission, or any
solicitation of a subscription by a person not previously known to Subscriber in
connection with investments in securities generally.

 

iv.                                   Subscriber has such knowledge and
experience in financial, tax and business matters so as to enable Subscriber to
utilize the information made available to Subscriber in connection with the
offering of the Shares in order to evaluate the merits and risks of an
investment in the Company and to make an informed investment decision with
respect thereto and, therefore, it is not relying upon the advice of a purchaser
representative in making a final investment decision to purchase Shares.

 

v.                                      Subscriber is not relying on the Company
with respect to the tax and other economic considerations of Subscriber relating
to this investment.  In regard to such considerations, Subscriber has relied on
the advice of, or has consulted with, only Subscriber’s own advisors who are
unaffiliated with and who are not directly or indirectly compensated by the
Company or any affiliate.

 

vi.                                   Subscriber is acquiring the Shares solely
for Subscriber’s own account as principal, for investment purposes only and not
with a view to the resale or distribution thereof, in whole or in part, and no
other person has a direct or indirect beneficial interest in such equity
interest.

 

b.                                      Subscriber recognizes that an investment
in the Company involves a high degree of risk and understands that no Federal or
state agency has passed upon the Shares or made any finding or determination as
to the fairness of this investment.

 

Annex A-2

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c.                                       Subscriber is authorized to purchase
the Shares and the person signing this Agreement on behalf of such entity has
been duly authorized by such entity to do so, and such purchase will not
contravene any law, rule or regulation binding on the Subscriber.

 

d.                                      Subscriber is an “accredited investor”
within the meaning of Rule 501 under the Act.

 

4.                                      The Company hereby represents and
warrants as of the date hereof and the Closing Date (except for the
representations and warranties that speak as of a specific date, which shall be
made only as of such date), to Subscriber that, except as set forth in the
Schedules delivered herewith or disclosed in the SEC Reports (as defined below):

 

a.                                      Subsidiaries. The Company has no direct
Subsidiaries.  For purposes of this Agreement, “Subsidiary” means any entity in
which the Company, directly or indirectly, owns sufficient capital stock or
holds a sufficient equity or similar interest such that it is consolidated with
the Company in the financial statements of the Company.

 

b.                                      Organization and Qualification. The
Company is an entity duly incorporated, validly existing and in good standing
under the laws of the State of Delaware, with the requisite corporate power and
authority to own or lease and use its properties and assets and to carry on its
business as currently conducted. The Company is not in violation of any of the
provisions of its certificate of incorporation or bylaws. The Company is duly
qualified to conduct business and is in good standing as a foreign corporation
in each jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, except where the failure to be
so qualified or in good standing, as the case may be, would not have a Material
Adverse Effect.  For purposes of this Agreement, “Material Adverse Effect” means
any of (i) a material and adverse effect on the legality, validity or
enforceability of this Agreement or the Registration Rights Agreement between
the Subscriber and the Company (collectively, the “Transaction Documents”),
(ii) a material and adverse effect on the results of operations, assets,
business or financial condition of the Company, or (iii) any adverse impairment
to the Company’s ability to perform in any material respect on a timely basis
its obligations under any Transaction Document.

 

c.                                       Authorization; Enforcement; Validity.
The Company has the requisite corporate power and authority to enter into and to
consummate the transactions contemplated by each of the Transaction Documents to
which it is a party and otherwise to carry out its obligations hereunder and
thereunder. The Company’s execution and delivery of each of the Transaction
Documents to which it is a party and the consummation by it of the transactions
contemplated hereby and thereby (including, but not limited to, the sale and
delivery of the Shares) have been duly authorized by all necessary corporate
action on the part of the Company, and no further corporate action is required
by the Company, its Board of Directors or its stockholders in connection
therewith other than in connection with the Required Approvals (as defined
below). Each of the Transaction Documents to which it is a party has been (or
upon delivery will have been) duly executed by the Company and is, or when
delivered in accordance with the terms hereof, will constitute the legal, valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, except (i) as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement of, creditors’
rights and remedies or by other equitable principles of general, (ii) as limited
by laws relating to the availability of specific performance, injunctive relief
or other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable law.

 

Annex A-3

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d.                                      No Conflicts. The execution, delivery
and performance by the Company of the Transaction Documents and the consummation
by the Company of the transactions contemplated hereby or thereby (including,
without limitation, the issuance of the Shares) do not and will not (i) conflict
with or violate any provisions of the Company’s certificate of incorporation or
bylaws or otherwise result in a violation of the organizational documents of the
Company, (ii) conflict with, or constitute a default (or an event that with
notice or lapse of time or both would result in a default) under, result in the
creation of any lien upon any of the properties or assets of the Company or give
to others any rights of termination, amendment, acceleration or cancellation
(with or without notice, lapse of time or both) of, any contract of the Company
that was filed as an exhibit to the SEC Reports pursuant to Item 601(b)(4) or
Item 601(b)(10) of Regulation S-K (“Material Contract”), or (iii) subject to the
Required Approvals, conflict with or result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any
court or governmental authority to which the Company is subject (including
federal and state securities laws and regulations and the rules and regulations,
assuming the correctness of the representations and warranties made by
Subscriber herein, of any self-regulatory organization to which the Company or
its securities are subject), or by which any property or asset of the Company is
bound or affected, except in the case of clauses (ii) and (iii) such as would
not, individually or in the aggregate, have a Material Adverse Effect.

 

e.                                       Filings, Consents and Approvals. The
Company is not required to obtain any consent, waiver, authorization or order
of, give any notice to, or make any filing or registration with, any court or
other federal, state, local or other governmental authority or other person in
connection with the execution, delivery and performance by the Company of the
Transaction Documents (including, without limitation, the issuance of the
Shares), other than (i)  filings required by applicable state securities laws,
(ii) the filing of a Notice of Sale of Securities on Form D with the U.S.
Securities and Exchange Commission (the “Commission”) under Regulation D of the
Act, (iii) the filing of any requisite notices and/or application(s) to the
NASDAQ Global Market (“NASDAQ”) for the issuance and sale of the Common Stock
and the listing of the Common Stock for trading or quotation, as the case may
be, thereon in the time and manner required thereby, and (iv) those that have
been made or obtained prior to the date of this Agreement (collectively, the
“Required Approvals”).

 

f.                                        Issuance of the Shares. The Shares
have been duly authorized and, when issued and paid for in accordance with the
terms of this Agreement, will be duly and validly issued, fully paid and
nonassessable and free and clear of all liens, other than restrictions on
transfer provided for in the Transaction Documents or imposed by applicable
securities laws, and shall not be subject to preemptive or similar rights. 
Assuming the accuracy of the representations and warranties of Subscriber in
this Agreement, the Shares will be issued in compliance with all applicable
federal and state securities laws.

 

g.                                       Capitalization. The number of shares
and type of all authorized, issued and outstanding capital stock, options and
other securities of the Company (whether or not presently convertible into or
exercisable or exchangeable for shares of capital stock of the Company) has been
set forth in the SEC Reports (as defined below), and has changed since the date
of such SEC Reports only due to stock option grants or other equity awards or
stock option and warrant exercises, in each case in the ordinary course of
business. All of the outstanding shares of capital stock of the Company are duly
authorized, validly issued, fully paid and non-assessable, have been issued in
compliance in all material respects with all applicable federal and state
securities laws, and none of such outstanding shares was issued in violation of
any preemptive rights or similar rights to subscribe for or purchase any capital
stock of the Company. Except as specified

 

Annex A-4

--------------------------------------------------------------------------------

 

in the SEC Reports and in Schedule 4.1(g) hereto: (i) no shares of the Company’s
outstanding capital stock are subject to preemptive rights or any other similar
rights; (ii) there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, or exercisable or exchangeable for, any
shares of capital stock of the Company, or contracts, commitments,
understandings or arrangements by which the Company is or may become bound to
issue additional shares of capital stock of the Company, other than those issued
or granted pursuant to Material Contracts or equity or incentive plans or
arrangements described in the SEC Reports; (iii) there are no material
outstanding debt securities, notes, credit agreements, credit facilities or
other agreements, documents or instruments evidencing indebtedness of the
Company or by which the Company is bound; (iv) to the Company’s knowledge, there
are no financing statements securing obligations in any material amounts, either
singly or in the aggregate, filed in connection with the Company; (v) except as
described in the SEC Reports or identified in Schedule 4.1(y) hereto and the
Transaction Documents, there are no agreements or arrangements under which the
Company is obligated to register the sale of any of their securities under the
Act; (vi) there are no outstanding securities or instruments of the Company
which contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company is or may
become bound to redeem a security of the Company (other than in connection with
repurchases of unvested stock issued to employees of the Company); (vii) there
are no securities or instruments containing anti-dilution or similar provisions
that will be triggered by the issuance of the Shares; (viii) except as provided
under the Company’s equity or incentive plans described in the SEC Reports, the
Company does not have any stock appreciation rights or “phantom stock” plans or
agreements or any similar plan or agreement; and (ix) the Company has no
liabilities or obligations required to be disclosed in the SEC Reports but not
so disclosed in the SEC Reports, other than those incurred in the ordinary
course of the Company’s businesses and which, individually or in the aggregate,
do not or would not have a Material Adverse Effect.

 

h.                                      SEC Reports. Except as set forth in
Schedule 4.1(h) hereto, the Company has filed all reports, schedules, forms,
statements and other documents required to be filed by it under the Exchange Act
of 1934, as amended (the “Exchange Act”), including pursuant to Section 13(a) or
15(d) thereof, for the twelve months preceding the date hereof (or such shorter
period as the Company was required by law or regulation to file such material)
(the foregoing materials, including the exhibits thereto and documents
incorporated by reference therein, being collectively referred to herein as the
“SEC Reports”), on a timely basis or has received a valid extension of such time
of filing and has filed any such SEC Reports prior to the expiration of any such
extension. As of their respective filing dates, or to the extent corrected by a
subsequent restatement or subsequent filings, the SEC Reports complied in all
material respects with the requirements of the Act and the Exchange Act, as
applicable, and the rules and regulations of the Commission promulgated
thereunder, and, except as corrected by subsequent filings, none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The Company has never been an issuer subject to
Rule 144(i) under the Act.

 

i.                                          Financial Statements. The financial
statements of the Company included in the SEC Reports comply in all material
respects with applicable accounting requirements and the rules and regulations
of the Commission with respect thereto as in effect at the time of filing (or to
the extent corrected by a subsequent restatement). Such financial statements
have been

 

Annex A-5

--------------------------------------------------------------------------------

 

prepared in accordance with U.S. generally accepted accounting principles
(“GAAP”) applied on a consistent basis during the periods involved, except as
may be otherwise specified in such financial statements or the notes thereto and
except that unaudited financial statements may not contain all footnotes
required by GAAP, and fairly present in all material respects the financial
position of the Company as of and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal, year-end audit adjustments.

 

j.                                         Tax Matters. The Company (i) has
prepared and filed all foreign, federal and state income and all other tax
returns, reports and declarations required by any jurisdiction to which it is
subject, and (ii) has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith,
with respect to which adequate reserves have been set aside on the books of the
Company, except, in each case, where the failure to so pay or file any such tax,
assessment, charge or return would not have a Material Adverse Effect.

 

k.                                      Material Changes. Since the date of the
latest financial statements included within the SEC Reports, except as
specifically disclosed in the SEC Reports or as set forth in Schedule
4.1(k) hereto, (i) there have been no events, occurrences or developments that
have had or would reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect, (ii) the Company has not incurred any
material liabilities (contingent or otherwise) other than (A) trade payables,
accrued expenses and other liabilities incurred in the ordinary course of
business consistent with past practice and (B) liabilities not required to be
reflected in the Company’s financial statements pursuant to GAAP or required to
be disclosed in filings made with the Commission, (iii) the Company has not
altered materially its method of accounting or the manner in which it keeps its
accounting books and records, (iv) the Company has not declared or made any
dividend or distribution of cash or other property to its stockholders or
purchased, redeemed or made any agreements to purchase or redeem any shares of
its capital stock (other than in connection with repurchases of unvested stock
issued to employees of the Company), (v) the Company has not issued any equity
securities to any officer, director or Affiliate, except Common Stock (A) issued
in the ordinary course as dividends on outstanding preferred stock or (B) issued
pursuant to existing Company stock option, stock purchase or other equity plans
or executive and director corporate arrangements disclosed in the SEC Reports or
(C) issued pursuant to other existing agreements disclosed in the SEC Reports
and (vi) there has not been any material change or amendment to, or any waiver
of any material right by the Company under, any Material Contract. Except for
the transactions contemplated by this Agreement and by the items set forth in
Schedule 4.1(k) hereto, no event, liability or development has occurred or
exists with respect to the Company or its business, properties, operations or
financial condition that would be required to be disclosed by the Company under
the Exchange Act at the time this representation is made that has not been
publicly disclosed at least one business day prior to the date that this
representation is made.  For purposes of this Agreement, “Affiliate” means, with
respect to any person, any other person that, directly or indirectly through one
or more intermediaries, controls, is controlled by or is under common control
with such person, as such terms are used in and construed under Rule 405 under
the Act.

 

l.                                          Environmental Matters. To the
Company’s knowledge, and except as would not, individually or in the aggregate,
have a Material Adverse Effect, the Company (i) is not in violation of any
applicable statute, rule, regulation, decision or order of any governmental
agency or body or any court, domestic or foreign, relating to the use, disposal
or release of hazardous or toxic substances or relating to the protection or
restoration of the environment or

 

Annex A-6

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human exposure to hazardous or toxic substances (collectively, “Environmental
Laws”), (ii) does not own or operate any real property contaminated with any
substance that is in violation of any Environmental Laws, (iii) is not liable
for any off-site disposal or contamination pursuant to any Environmental Laws,
and (iv) is not subject to any claim relating to any Environmental Laws; and, to
the Company’s knowledge, there is no pending investigation that might lead to
such a claim.

 

m.                                  Litigation. To the Company’s knowledge and
except as specifically disclosed in the SEC Reports, there is no Action which is
reasonably likely to have a Material Adverse Effect, individually or in the
aggregate, if there were an unfavorable decision. Neither the Company, nor to
the Company’s knowledge, any director or officer thereof, is or has been the
subject of any Action involving a claim of violation of or liability under
federal or state securities laws or a claim of breach of fiduciary duty. The
Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company under the
Exchange Act or the Act.  For purposes of this Agreement, “Action” means any
action, suit, inquiry, notice of violation, proceeding (including any partial
proceeding such as a deposition) or investigation pending or, to the Company’s
knowledge, threatened in writing against the Company, or any of its properties
or, to the Company’s knowledge, any officer or director of the Company acting in
his or her capacity as an officer or director before or by any federal, state,
county, local or foreign court, arbitrator, governmental or administrative
agency, regulatory authority, stock market, stock exchange or trading facility.

 

n.                                      Employment Matters. No material labor
dispute exists or, to the Company’s knowledge, is imminent with respect to any
of the employees of the Company which would have a Material Adverse Effect. To
the Company’s knowledge, none of the Company’s employees is a member of a union
that relates to such employee’s relationship with the Company, and the Company
is not a party to a collective bargaining agreement, and the Company believes
that its relationship with its employees is good. To the Company’s knowledge, it
is in compliance with all U.S. federal, state, local and foreign laws and
regulations relating to employment and employment practices, terms and
conditions of employment and wages and hours, except where the failure to be in
compliance would not, individually or in the aggregate, have a Material Adverse
Effect.

 

o.                                      Compliance. The Company is not (i) in
default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by
the Company under), nor has the Company received written notice of a claim that
it is in default under or that it is in violation of, any Material Contract
(whether or not such default or violation has been waived), (ii)  in violation
of any order of which the Company has been made aware in writing of any court,
arbitrator or governmental body having jurisdiction over the Company or its
properties or assets, or (iii)  in violation of, or in receipt of written notice
that it is in violation of, any statute, rule or regulation of any governmental
authority applicable to the Company, except in each case as would not,
individually or in the aggregate, have a Material Adverse Effect.

 

p.                                      Regulatory Permits. The Company
possesses or has applied for all certificates, authorizations and permits issued
by the appropriate federal, state, local or foreign regulatory authorities
necessary to conduct its business as currently conducted and as described in the
SEC Reports, except where the failure to possess such permits, individually or
in the aggregate, has not and would not have, individually or in the aggregate,
a Material Adverse Effect (“Material Permits”), and (i) the Company has not
received any notice in writing of proceedings relating to

 

Annex A-7

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the revocation or material adverse modification of any such Material Permits and
(ii) the Company is unaware of any facts or circumstances that would give rise
to the revocation or material adverse modification of any Material Permits.

 

q.                                      Title to Assets. The Company does not
own any real property. The Company has good and marketable title to all tangible
personal property owned by it which is material to the business of the Company,
free and clear of all liens except such as do not materially affect the value of
such property and do not interfere with the use made and proposed to be made of
such property by the Company. Any real property and facilities held under lease
by the Company are held by it under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and facilities by the Company.

 

r.                                         Patents and Trademarks. To the
Company’s knowledge, except as set forth in Schedule 4.1(r) hereto and except as
would not, individually or in the aggregate have a Material Adverse Effect, the
Company owns, possesses, licenses or has other rights to use all foreign and
domestic patents, patent applications, trade and service marks, trade and
service mark registrations, trade names, copyrights, inventions, trade secrets,
technology, Internet domain names, know-how and other intellectual property
necessary for the conduct of its business as now conducted or as proposed to be
conducted in the SEC Reports (collectively, the “Intellectual Property”). Except
as set forth in the SEC Reports and except where such violations or
infringements would not have, either individually or in the aggregate, a
Material Adverse Effect, (a) to the Company’s knowledge, there are no rights of
third parties to any such Intellectual Property, except for (i) any co-owner of
any patent or patent application constituting Intellectual Property who is
listed as such on the records of the U.S. Patent and Trademark Office and
(ii) the ownership rights of the owners of the Intellectual Property which the
SEC Reports disclose is licensed to the Company; (b) to the Company’s knowledge,
there is no infringement by third parties of any such Intellectual Property; (c)
to the Company’s knowledge, there is no pending or threatened action, suit,
proceeding or claim by others challenging the Company’s rights in or to any such
Intellectual Property; (d) to the Company’s knowledge, there is no pending or
threatened action, suit, proceeding or claim by others challenging the validity
or scope of any such Intellectual Property; and (e) to the Company’s knowledge,
there is no pending or threatened action, suit, proceeding or claim by others
that the Company infringes or otherwise violates any patent, trademark,
copyright, trade secret or other proprietary rights of others.

 

s.                                        Insurance. The Company is insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as the Company believes to be prudent and customary in the
businesses and locations in which the Company is engaged. The Company has not
received any notice of cancellation of any such insurance, nor, to the Company’s
knowledge, will it be unable to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business.

 

t.                                         Transactions With Affiliates. Except
as set forth in the SEC Reports and other than the grant of stock options or
other equity awards in the ordinary course of business, none of the executive
officers or directors of the Company is presently a party to any transaction
with the Company or to a presently contemplated transaction (other than for
services as executive officers and directors) that would be required to be
disclosed pursuant to Item 404 of Regulation S-K promulgated under the Act.

 

Annex A-8

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u.                                      Internal Accounting Controls. The
Company maintains a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
GAAP and to maintain asset and liability accountability, (iii) access to assets
or incurrence of liabilities is permitted only in accordance with management’s
general or specific authorization, and (iv) the recorded accountability for
assets and liabilities is compared with the existing assets and liabilities at
reasonable intervals and in the Company’s good faith judgment appropriate action
is taken with respect to any differences.

 

v.                                      Sarbanes-Oxley; Disclosure Controls. To
the Company’s knowledge, the Company is in compliance in all material respects
with all of the provisions of the Sarbanes-Oxley Act of 2002 which are
applicable to it, except where such noncompliance would not have, individually
or in the aggregate, a Material Adverse Effect. The Company maintains disclosure
controls and procedures (as such term is defined in Rule 13a-15(e) and
15d-15(e) under the Exchange Act).

 

w.                                    Certain Fees. Except as identified in
Schedule 4.1(w) hereto, the Company has not incurred any liability for any
finder’s or broker’s fee or agent’s commission in connection with the execution
and delivery of this Agreement.

 

x.                                      Private Placement. Assuming the accuracy
of Subscriber’s representations and warranties set forth in Section 3 of this
Agreement, no registration under the Act is required for the offer and sale of
the Shares by the Company to Subscriber under this Agreement.

 

y.                                      Registration Rights. Other than as set
forth in the SEC Reports and other than Subscriber or as set forth in Schedule
4.1(y) hereto, no person has any right to cause the Company to effect the
registration under the Act of any securities of the Company other than those
securities which are currently registered on an effective registration statement
on file with the Commission.

 

z.                                       Listing and Maintenance Requirements.
The Company’s Common Stock is registered pursuant to Section 12(b) or 12(g) of
the Exchange Act, and the Company has taken no action designed to terminate the
registration of the Common Stock under the Exchange Act nor has the Company
received any notification that the Commission is contemplating terminating such
registration. The Company has not, in the 12 months preceding the date hereof,
received written notice from any trading market on which the Common Stock is
listed or quoted to the effect that the Company is not in compliance with the
listing or maintenance requirements of such trading market. The Company is in
compliance in all material respects with the listing and maintenance
requirements for continued trading of the Common Stock on NASDAQ.

 

aa.                               Investment Company. The Company is not
required to be registered as, and immediately following the Closing will not be
required to register as, an “investment company” or an entity “controlled” by an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended.

 

bb.                               Questionable Payments. To the Company’s
knowledge, neither the Company nor any directors, officers, employees, agents or
other person authorized to act on behalf of the Company has, in the course of
its actions for, or on behalf of, the Company: (a) directly or indirectly, used
any material corporate funds for unlawful contributions, gifts, entertainment or
other unlawful expenses relating to foreign or domestic political activity;
(b) made any material direct or indirect unlawful payments to any foreign or
domestic governmental officials or

 

Annex A-9

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employees or to any foreign or domestic political parties or campaigns from
corporate funds; (c) violated in any material respect any provision of the
Foreign Corrupt Practices Act of 1977, as amended, or (d) made any other
material unlawful bribe, rebate, payoff, influence payment, kickback or other
material unlawful payment to any foreign or domestic government official or
employee.

 

cc.                                 Application of Takeover Protections; Rights
Agreements. The Company and its board of directors have taken all necessary
action, if any, in order to render inapplicable any control share acquisition,
business combination, poison pill (including any distribution under a rights
agreement) or other similar anti-takeover provision under the Company’s charter
documents or the laws of its state of incorporation that is applicable to
Subscriber as a result of Subscriber and the Company fulfilling their
obligations or exercising their rights under the Transaction Documents,
including, without limitation, the Company’s issuance of the Shares and
Subscriber’s ownership of the Shares. Except as disclosed in the SEC Reports,
the Company has not adopted any other stockholder rights plan or similar
arrangement relating to accumulations of beneficial ownership of Common Stock or
a change in control of the Company.

 

dd.                               Off Balance Sheet Arrangements. There is no
transaction, arrangement, or other relationship between the Company and an
unconsolidated or other off balance sheet entity that is required to be
disclosed by the Company in its Exchange Act filings and is not so disclosed
which would have a Material Adverse Effect.

 

ee.                                 OFAC. Neither the Company nor, to the
Company’s knowledge, any director, officer, agent, employee or Affiliate is
currently subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will
not knowingly directly or indirectly use the proceeds of the sale of the Shares,
or lend, contribute or otherwise make available such proceeds to any joint
venture partner or other person or entity towards any sales or operations in
Cuba, Iran, Syria, Sudan, Myanmar or any other country sanctioned by OFAC or for
the purpose of financing the activities of any person currently subject to any
U.S. sanctions administered by OFAC.

 

ff.                                   Money Laundering Laws. To the Company’s
knowledge, the operations of each of the Company are and have been conducted at
all times in compliance with the money laundering statutes of applicable
jurisdictions, the rules and regulations thereunder and any related or similar
rules, regulations or guidelines, issued, administered or enforced by any
applicable governmental agency (collectively, the “Money Laundering Laws”) and
to the Company’s knowledge, no action, suit or proceeding by or before any court
or governmental agency, authority or body or any arbitrator involving the
Company with respect to the Money Laundering Laws is pending or threatened.

 

gg.                                 FDA.  To the Company’s knowledge, there is
no pending, completed or threatened, action (including any lawsuit, arbitration,
or legal or administrative or regulatory proceeding, charge, complaint, or
investigation) against the Company, and the Company has not received any notice,
warning letter or other communication from the U.S. Food and Drug Administration
(“FDA”) or any other governmental entity, which (i) requires the termination,
suspension or material modification of any of the Company’s pending preclinical
tests, or (ii) otherwise alleges any violation of any laws, rules or regulations
of the FDA by the Company, which, either individually or in the aggregate, would
have a Material Adverse Effect.

 

5.                                      With a view to making available to
Subscriber the benefits of Rule 144 promulgated under the Act (“Rule 144”) and
any other rule or regulation of the Commission that may at any

 

Annex A-10

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time permit Subscriber to sell securities of the Company to the public without
registration, the Company shall:

 

a.                                      make and keep available adequate current
public information, as those terms are understood and defined in Rule 144;

 

b.                                      use commercially reasonable efforts to
file with the Commission in a timely manner all reports and other documents
required of the Company under the Act and the Exchange Act; and

 

c.                                       furnish to Subscriber, so long as
Subscriber owns any Shares, forthwith upon request (i) a written statement by
the Company that it has complied with the reporting requirements of Rule 144,
the Securities Act, and the Exchange Act; and (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and documents
so filed by the Company.

 

6.                                      Subscriber agrees to indemnify the
Company and hold the Company harmless for all losses, damages, liabilities and
expenses (including legal fees) resulting from any breach of any representation,
warranty or agreement or any misrepresentation by Subscriber herein.  The
Company agrees to indemnify Subscriber and hold Subscriber harmless for all
losses, damages, liabilities and expenses (including legal fees) resulting from
any breach of any representation, warranty or agreement or any misrepresentation
by the Company herein.

 

7.                                      No provision herein may be amended or
modified other than by a written document signed by authorized representatives
of Subscriber and the Company.  Neither party may assign its rights and
obligations hereunder without the other party’s prior written consent.  This
Agreement shall be governed by and construed under the laws in effect in the
State of New York, without giving effect to any conflicts of laws provision
thereof or of any other jurisdiction that would produce a contrary result.  This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.  An executed signature page of this Agreement delivered by facsimile
transmission shall be as effective as an original executed signature page.

 

[Signature Page Immediately Follows.]

 

Annex A-11

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This Stock Subscription Agreement shall be binding on the heirs,
representatives, successors and assigns of the Subscriber.

 

 

SUBSCRIBER:

 

COMPANY:

 

 

 

PFIZER INC.

 

VERASTEM, INC.

 

 

 

By:

 

 

By:

 

 

Name:

 

 

Name:

 

Title:

 

 

Title:

 

Signature Page to Subscription Agreement

 

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