Execution Copy

Exhibit 10.1

Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Asterisks denote omissions.

OPTION AND LICENSE AGREEMENT

BY AND BETWEEN

AVEO PHARMACEUTICALS, INC.

AND

BIOGEN IDEC INTERNATIONAL GMBH

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OPTION AND LICENSE AGREEMENT

This Option and License Agreement, made this 18th day of March, 2009 (the
“Effective Date”), is by and between AVEO Pharmaceuticals, Inc., a Delaware
corporation, with principal offices located at 75 Sidney St., Cambridge, MA
02139 (“AVEO”) and Biogen Idec International GmbH, with principal offices
located at Landis+Gyr-Strasse 3, 6300 Zug, Switzerland (“Biogen Idec”). Each of
AVEO and Biogen Idec shall be referred to, individually, as a “Party”, and,
collectively, as the “Parties”.

RECITALS

WHEREAS, AVEO has a broad pipeline of preclinical stage novel antibodies
directed at targets with potential utility in the oncology area, including
antibodies targeting erbB3;

WHEREAS, Biogen Idec is in the business of researching, developing and
commercializing biopharmaceutical products, and has an interest in the area of
oncology; and

WHEREAS, Biogen Idec is interested in obtaining an option to commercialize
AVEO’s antibodies to erbB3 outside of North America, and AVEO is willing to
grant Biogen Idec such an option on the terms and conditions set forth in this
Agreement.

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
contained in this Agreement, AVEO and Biogen Idec, intending to be legally
bound, hereby agree as follows:

ARTICLE I.

DEFINITIONS

When used in this Agreement, each of the following capitalized terms, whether
used in the singular or plural, shall have the meanings set forth in this
Article I.

1.1 “Affiliate” of a Person means any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such
Person. For the purposes of this definition, “control” refers to any of the
following: (i) direct or indirect ownership of fifty percent (50%) or more of
the voting securities entitled to vote for the election of directors in the case
of a corporation, or of fifty percent (50%) or more of the equity interest with
the power to direct management in the case of any other type of legal entity;
(ii) status as a general partner in any partnership; or (iii) any other
arrangement where a Person possesses, directly or indirectly, the power to
direct the management or policies of an entity, whether through ownership of
voting securities, by contract or otherwise.

1.2 “Agreement” means this Option and License Agreement, including any and all
schedules, appendices, exhibits and other addenda to it, as it may be added to
or amended from time to time in accordance with the provisions of this document.

1.3 “Agreement Term” shall mean the period commencing on the Effective Date and
ending on the expiration of the Agreement in accordance with the provisions of
Section 14.1.

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1.4 “Antibody” means any immunoglobulin molecule (such as IgG) whether in
monospecific, bispecific or any other form, and shall include any immunoglobulin
fragment (such as Fv, Fab, F(ab’)2) of any such immunoglobulin molecule
containing one or more complementarity determining regions, any fusion protein
comprising any such immunoglobulin molecule or immunoglobulin fragment and any
single chain antibody (such as scFv), and any truncation or derivative of any of
the foregoing.

1.5 “AVEO Collaboration Know-how” means, subject to Sections 3.6, 5.11, 5.12 and
5.13, any Know-how that is owned or otherwise Controlled by AVEO or any of its
Affiliates, patentable or otherwise, first identified, discovered, or developed
solely by employees of AVEO or its Affiliates, or other persons not employed by
AVEO or any of its Affiliates but acting on behalf of AVEO or any of its
Affiliates, in the conduct of Development, Manufacture or Commercialization of
Licensed Product under this Agreement during the License Term, but not including
AVEO’s interest in Joint Collaboration Know-how.

1.6 “AVEO Collaboration Patent Rights” means, subject to Sections 3.6 and 3.9,
any Patent Rights Covering AVEO Collaboration Know-how that are owned or
otherwise Controlled by AVEO or any of its Affiliates, but not including AVEO’s
interest in Joint Collaboration Patent Rights.

1.7 “AVEO In-License” means, subject to Section 3.9, any agreement between AVEO
or any of its Affiliates, on the one hand, and a Third Party, on the other hand,
entered into prior to the Option Exercise Date subject to the provisions of
Section 2.6 or during the License Term in compliance with the provisions of
Section 3.6, pursuant to which AVEO or any of its Affiliates acquires or obtains
a license or other right to use, any Know-how and/or Patent Rights that are
necessary or reasonably useful to Develop, Commercialize or Manufacture Licensed
Product in the Field in the Territory.

1.8 “AVEO Know-how” means any Know-how owned or otherwise Controlled by AVEO or
any of its Affiliates as of the Effective Date or, subject to Sections 3.6, 3.9,
5.11, 5.12 and 5.13, any Know-how as to which Control is obtained (whether by
ownership, license or otherwise) by AVEO or any of its Affiliates during the
Agreement Term, in each case to the extent such Know-how is necessary or
reasonably useful in the Development, Manufacture or Commercialization of
Licensed Product in the Field, but not including AVEO Collaboration Know-how or
AVEO’s interest in Joint Collaboration Know-how.

1.9 “AVEO Patent Rights” means Patent Rights Covering AVEO Know-how that are
owned or otherwise Controlled by AVEO or any of its Affiliates as of the
Effective Date or, subject to Sections 3.6 and 3.9, Patent Rights covering AVEO
Know-how as to which Control is obtained (whether by ownership, license or
otherwise) by AVEO or any of its Affiliates at any time after the Effective
Date, including the Patent Rights in the Territory described in Exhibit A, but
not including AVEO Collaboration Patent Rights or AVEO’s interest in Joint
Collaboration Patent Rights.

1.10 “AVEO Proprietary Composition Licensed Product” means a Licensed Product
the composition of matter of which is Covered by AVEO Patent Rights.

 

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1.11 “AVEO Technology” means, collectively, AVEO Know-how, AVEO Patent Rights,
AVEO Collaboration Know-how, AVEO Collaboration Patent Rights and AVEO’s
interest in Joint Collaboration IP.

1.12 “AVEO Territory” means North America.

1.13 “Biogen Idec Collaboration Know-how” means, subject to Sections 3.6, 5.11,
5.12 and 5.13, any Know-how that is owned or otherwise Controlled by Biogen Idec
or any of its Affiliates, patentable or otherwise, first identified, discovered,
or developed solely by employees of Biogen Idec or its Affiliates, or other
persons not employed by Biogen Idec or any of its Affiliates but acting on
behalf of Biogen Idec or any of its Affiliates, in the conduct of Development,
Manufacture or Commercialization of Licensed Product under this Agreement during
the License Term, but not including Biogen Idec’s interest in Joint
Collaboration Know-how.

1.14 “Biogen Idec Collaboration Patent Rights” means, subject to Sections 3.6
and 3.9, Patent Rights Covering Biogen Idec Collaboration Know-how that are
owned or otherwise Controlled by Biogen Idec or any of its Affiliates, but not
including Biogen Idec’s interest in Joint Collaboration Patent Rights.

1.15 “Biogen Idec Collaboration Technology” means, collectively, Biogen Idec
Collaboration Know-how, Biogen Idec Collaboration Patent Rights and Biogen
Idec’s interest in Joint Collaboration IP

1.16 “Biogen Idec In-License” means, subject to Section 3.9, an agreement
between Biogen Idec or any of its Affiliates, on the one hand, and a Third
Party, on the other hand, entered into during the License Term in compliance
with the provisions of Section 3.6, pursuant to which Biogen Idec or any of its
Affiliates acquires or obtains title to, or a license or other right to use, any
Know-how and/or Patent Rights that are necessary or reasonably useful to
Develop, Commercialize or Manufacture the Licensed Product in the Field in the
Territory.

1.17 “BLA” means a biologics license application or equivalent application that
is filed with the FDA to obtain Regulatory Approval for a Licensed Product in
the United States or any comparable application filed with a Regulatory
Authority of a country or group of countries in the Territory other than the
United States to obtain Regulatory Approval for Licensed Product in that country
or in that group of countries.

1.18 “Business Day” means a day that is not a Saturday or Sunday and not a
federal holiday in the United States or a state holiday in the Commonwealth of
Massachusetts.

1.19 “Calendar Quarter” means each of the three month periods ending on
March 31, June 30, September 30 and December 31 of any year.

1.20 “Calendar Year” means each successive period of twelve (12) months
commencing on January 1 and ending on December 31; provided that the first
Calendar Year of the License Term shall begin on the Option Exercise Date and
end on the following December 31, and the last Calendar Year of the License Term
shall end on the last day of the License Term.

 

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1.21 “Commercialization”, “Commercializing” or “Commercialize” means all
activities related to pre-marketing, launching, marketing, promotion (including
advertising and detailing), labeling, pricing and reimbursement, distribution,
storage, handling, offering for sale, selling, importing and exporting for sale,
distribution, customer service and support, and post-marketing safety
surveillance and reporting, but not including Manufacturing.

1.22 “Collaboration Know-how” means AVEO Collaboration Know-how, Biogen Idec
Collaboration Know-how and Joint Collaboration Know-how.

1.23 “Collaboration Patent Rights” means AVEO Collaboration Patent Rights,
Biogen Idec Collaboration Patent Rights and Joint Collaboration Patent Rights.

1.24 “Combination Product” means any pharmaceutical product containing a
Licensed Product and one or more other significantly active pharmaceutical
ingredients.

1.25 “Commercially Reasonable Efforts” in respect of a Party means efforts and
resources (measured as of the time that such efforts are required to be used
under this Agreement) commonly used by a company in the industry of a similar
size and profile as such Party to Develop, Manufacture or Commercialize, as the
case may be, a product owned by such company or to which it has rights, which
product is at a similar stage in its development or product life and is of a
similar market and profitability potential to Licensed Product and taking into
account all relevant factors including the patent and other proprietary position
of the product, product labeling or anticipated labeling, market potential,
financial return, medical and clinical considerations, regulatory environments
and competitive market conditions, and other technical, legal, scientific,
medical or commercial factors that such a company would deem to be relevant.

1.26 “Confidential Information” means any and all information, data and
materials of a confidential or proprietary nature, including information, data
and materials regarding or included within AVEO Technology or Biogen Idec
Collaboration Technology and all other scientific, pre-clinical, clinical,
regulatory, manufacturing, marketing, financial or commercial information or
data, whether communicated in writing or orally or by any other method, which is
provided by one Party or any of its Affiliates to the other Party or any of its
Affiliates in connection with this Agreement. AVEO Technology is Confidential
Information of AVEO, and Biogen Idec Collaboration Technology is Confidential
Information of Biogen Idec, provided that Joint Collaboration IP is the
Confidential Information of both Parties.

1.27 “Control” or “Controlled”, other than for purposes of Section 1.1, means
the possession of the right to grant licenses or sublicenses or to disclose
proprietary or trade secret information without violating the terms of any
agreement or other arrangement with a Third Party.

1.28 “Cost of Goods Sold” means, with respect to Licensed Product in bulk form
manufactured for use as an active pharmaceutical ingredient or in finished final
packaged and labeled product form, or in intermediate states, as the case may
be, Manufactured by or on behalf of a Party under this Agreement, the reasonable
internal and external costs of such Party or any of its Affiliates incurred in
Manufacturing such Licensed Product, including: (a) to the extent that such
Licensed Product is Manufactured by such Party or any of its Affiliates, the
cost of goods sold of such Licensed Product, consisting of direct materials and
direct labor

 

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costs, plus Manufacturing overhead directly attributable to Licensed Product
supplied (excluding facilities start-up costs, corporate administrative
overhead, depreciation and costs associated with excess capacity), all
calculated in accordance with GAAP in the United States consistently applied,
(b) to the extent that such Licensed Product is Manufactured by a Third Party
manufacturer, the actual fees paid by such Party or any of its Affiliates to the
Third Party for the Manufacture, supply, testing, packaging, labeling and
shipping of such Licensed Product, and any reasonable out-of-pocket and direct
labor costs actually incurred by such Party or any of its Affiliates in managing
or overseeing the Third Party relationship, and (c) royalties, license or other
fees paid by such Party or any of its Affiliates to Third Parties in respect of
Manufacture of such Licensed Product.

1.29 “Cover”, “Covering” or “Covered” means, with respect to whether an
invention or Know-how is “Covered” by a Patent Right, that, in the absence of
ownership of, or a license under, such Patent Right, the practice by such Person
of such invention or Know-how would infringe a Valid Claim of such Patent Right
(including in the case of a Patent Right that is a patent application, a Valid
Claim of such patent application as if such patent application were an issued
patent).

1.30 “CPI” means the Consumer Price Index for all Urban Consumers Northeastern
Urban (Boston, Brockton, Nashua, NH, ME, CT) City Average for all Items, 1982,
84-100, published by the United States Department of Labor, Bureau of Labor
Statistics (or its successor equivalent index) in the United States.

1.31 “Data Exclusivity” means, with respect to a Licensed Product in a country,
that period during which a Party or any of its Affiliates or Sublicensees has
been granted the exclusive legal right by a Regulatory Authority (or is
otherwise entitled to the exclusive legal right by operation of applicable Law)
in such country to market and sell such Licensed Product in such country in the
approved indication in the Field.

1.32 “Data Package” means a complete, detailed, data-cleaned, unbiased and
unblended data package that contains the results of the first Proof of Concept
Study in the following form: (i) a statistical analysis of results;
(ii) analysis tables, data listings and illustrative figures; (iii) the table of
adverse events; (iv) case report forms (CRFs) in hard copy or electronic form,
or, alternatively, available for review by Biogen Idec employees during normal
business hours at the principal office of AVEO in the United States, commencing
upon delivery of the other parts of the Data Package; and (v) a narrative
description of serious adverse events, in each case in the format compiled by
AVEO, which shall be cGCP compliant and otherwise consistent with industry
standards. The Data Package shall also contain (x) a copy (or rights of access
for purposes of clause (iv) above) of the relevant IND and the information
specified in clauses (i) – (v) for any Phase 1 Clinical Trial or any other Phase
2 Clinical Trial completed prior to completion of the first Proof of Concept
Study, as well as all regulatory correspondence relating thereto, (y) copies of
all AVEO In-Licenses entered into between the period commencing after the
Effective Date through the date of delivery of the Data Package and (z) a copy
of the initial Development Plan.

 

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1.33 “Development” or “Develop” means any and all non-clinical and clinical drug
research and development activities, whether before or after Regulatory
Approval, including discovery efforts, toxicology and pharmacology work, test
method development, stability testing, process development, formulation
development, delivery system development, quality assurance and quality control
development, statistical analysis, clinical studies (including pre-approval
studies and Post-Approval Clinical Studies), regulatory affairs, and product
approval and clinical study regulatory activities (excluding regulatory
activities directed to obtaining pricing and reimbursement approvals).

1.34 “Development Costs” means all costs incurred by AVEO or any of its
Affiliates in Developing the Licensed Product in the Field, in accordance with
this Agreement and GAAP, whether incurred before or after Regulatory Approval,
provided that except as otherwise specifically set forth in this Agreement, such
activities and costs are consistent with the then current Development Plan and
included in the related budget (pursuant to the provisions of Section 5.4 and
5.5 below), including without duplication:

(i) all out-of-pocket costs and expenses actually incurred;

(ii) the costs of internal personnel engaged in such efforts, which costs shall
be determined based on the FTE Cost, unless another basis is otherwise agreed by
the Parties in writing;

(iii) (a) the Cost of Goods Sold and distribution costs and expenses for
pre-clinical and clinical supplies needed for such efforts as set forth in the
Development Plan, including the Cost of Goods Sold for clinical supplies of the
Licensed Product; (b) the costs of comparator or combination drugs, placebo or
devices; (c) costs and expenses of disposal of clinical samples; (d) costs and
expenses incurred in connection with (1) manufacturing process, formulation or
delivery system development or validation; (2) manufacturing scale-up and
improvements; (3) stability testing; and (4) quality assurance/quality control
development; and (e) internal and Third Party costs and expenses incurred in
connection with qualification, validation or auditing of Third Party contract
manufacturers, in each case to the extent specific to Licensed Product, and not
including the purchase of capital equipment for the purposes of building
manufacturing facilities and capabilities;

(iv) subject to Section 5.5(b), (a) costs associated with threatened or pending
claims or actions by a Third Party for product liability resulting from those
Development activities under this Agreement as to which Development Costs are
shared by the Parties or paid fully by Biogen Idec under Section 5.4, other than
those claims or actions for which Biogen Idec is entitled to indemnification
under Article XII or pursuant to a Supply Agreement, provided that if there is a
bona fide dispute as to whether a Party is entitled to indemnification for any
such costs, the determination as to whether such costs are Development Costs
shall not be made until such dispute is resolved; and (b) product liability
insurance premiums for policies related to Development of Licensed Product in
the Licensed Territory under which Biogen Idec is named as an additional
insured; and

 

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(v) other costs incurred that are explicitly included in the budgets that are
approved by the JDC and included in the Development Plan.

In addition to the foregoing, “Development Costs” shall also include Pre-Option
Exercise Phase 3 Manufacturing Costs, to the extent not otherwise captured by
this definition. For purposes of clarity, the FTE Cost does not include travel
and lodging expenses incurred by an FTE in connection with Development
activities which such expenses shall be separately included as Development
Costs. The term “Development Costs” shall in no event include any payments made
by either Party or its Affiliates in connection with an AVEO In-License or a
Biogen Idec In-License or in connection with any Third Party Technology
Agreement, except to the extent that such payments are in respect of the
Manufacture of Licensed Product and are included in Costs of Goods Sold for
pre-clinical and clinical supplies needed for such efforts as set forth in the
Development Plan. Section 8.9 sets forth the Parties’ respective obligations
regarding payments under AVEO In-Licenses and Biogen Idec In-Licenses, as well
as the Parties’ respective rights to offset certain payment obligations under
other Third Party Technology Agreements against royalty payments obligations,
that the Parties would otherwise have under this Agreement.

1.35 “Development Plan” means the written work-plan and budget for AVEO’s
Development efforts, agreed upon by the Parties after the Option Exercise Date
in accordance with Section 5.2, and as amended from time to time in accordance
with this Agreement or, if none, the Delivered Initial Development Plan.

1.36 “Directly Competitive Product” means any product comprising or containing
an ERBB3 Antibody that is not a Licensed Product.

1.37 “Drug Regulations Laws” means Laws regulating drugs and pharmaceutical
products, including the United States Federal Food, Drug, and Cosmetic Act, 21
U.S.C. §301 et seq., the Prescription Drug Marketing Act of 1987, the federal
Controlled Substances Act, 21 U.S.C. §801 et seq., and policies issued by the
FDA, and similar Laws of the EMEA or other countries or jurisdictions in the
Territory, each as in effect and as amended from time to time.

1.38 “Drug Safety Information Exchange Agreement” means an agreement between the
Parties which outlines the requirements and responsibilities for drug safety
reporting and monitoring within the Territory, as described in Section 5.8.

1.39 “ERBB3” means the human erbB3 (aka HER3) polypeptide, including: (i) any
species variants or homologs thereof; (ii) any amino acid sequence variants or
mutations of the foregoing, (iii) any post-translational modifications of the
foregoing; and (iv) any derivative or fragment of the foregoing; provided that
the derivative or fragment elicits an antibody that reacts with native human
erbB3, when used as an antigen.

1.40 “ERBB3 Antibody” means an Antibody that binds to ERBB3.

1.41 “EMEA” means the European Medicines Agency or any successor agency.

 

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1.42 “European Union” or “EU” means the countries of the European Union, as it
is constituted as of the Effective Date and as it may be expanded from time to
time.

1.43 “FDA” means the United States Food and Drug Administration or any successor
agency thereto.

1.44 “Field” means all diagnostic, therapeutic and prophylactic uses in humans.

1.45 “First Commercial Sale” as to a particular country in the applicable
Territory means the first commercial sale of a Licensed Product by a Party or
its Affiliates or permitted Sublicensee to a Third Party in an arm’s length
transaction in such country after approval of the BLA, or if approval of a BLA
is not required in such country, then following receipt of Regulatory Approval
required to market such Licensed Product in such country. Sales for test
marketing, clinical study purposes or compassionate, named patient or similar
use shall not constitute a First Commercial Sale, but may constitute a sale
under the definition of Net Sales if the recipient is billed.

1.46 “FTE” means a full-time-equivalent person year of scientific, technical,
regulatory or professional work. An FTE shall consist of a total of [**], with
any portion of an FTE calculated based upon hours worked divided by such annual
total.

1.47 “FTE Cost” means, for any period, the product of (i) the actual total FTEs
(and/or portion thereof) during such period, and (ii) the FTE Rate.

1.48 “FTE Rate” means [**] Dollars ($[**]) increased or decreased on the Option
Exercise Date by the cumulative percentage increase or decrease in the CPI as of
the Option Exercise Date over the level of the CPI as of the Effective Date, and
thereafter further increased or decreased annually during the Agreement Term by
the percentage increase in the CPI as of December 31st of each year over the
level of the CPI as of December 31st of the prior year; provided, however, that
in no event shall the FTE Rate exceed [**] Dollars ($[**]) or be less than [**]
Dollars ($[**]) at any time during the Agreement Term.

1.49 “GAAP” means United States generally accepted accounting principles applied
on a consistent basis, or any successor accounting principles generally accepted
for public companies in the United States (such as International Financial
Reporting Standards (“IFRS”)).

1.50 “Governmental Authority” means any United States federal, state or local
government or any foreign national, state, provincial, county, or city
government or political subdivision thereof or any multinational organization or
authority or any authority, agency, or commission entitled to exercise any
administrative, executive, judicial, legislative, police, regulatory, or taxing
authority or power, any court or tribunal (or any department, bureau or division
thereof) or any governmental arbitrator or arbitral body.

1.51 “ICH” means the International Conference on Harmonization of Technical
Requirements for Registration of Pharmaceuticals for Human Use.

 

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1.52 “IND” means an Investigational New Drug Application filed with FDA or a
similar application filed with an applicable Regulatory Authority outside of the
United States such as a clinical trial application (CTA).

1.53 “Joint Collaboration Know-how” means Know-how, patentable or otherwise,
first identified, discovered or developed jointly by the Parties or their
Affiliates or others acting on behalf of the Parties or their Affiliates in the
conduct of Development, Manufacturing or Commercialization of Licensed Product
under this Agreement during the Agreement Term.

1.54 “Joint Collaboration Patent Rights” means Patent Rights that Cover Joint
Collaboration Know-how.

1.55 “Joint Collaboration IP” means, collectively Joint Collaboration Know-how
and Joint Collaboration Patent Rights.

1.56 “Know-how” means all biological materials and other tangible materials,
inventions, practices, methods, protocols, formulae, knowledge, know-how, trade
secrets, processes, procedures, assays, skills, experience, techniques, data and
results of experimentation and testing, including pharmacological, toxicological
and pre-clinical and clinical test data and analytical and quality control data,
patentable or otherwise.

1.57 “Law” or “Laws” means all laws, statutes, rules, codes, regulations,
orders, decrees, judgments or ordinances of any Governmental Authority, or any
license, permit or similar right granted under any of the foregoing, or any
similar provision having the force or effect of law.

1.58 “Licensed Product” means any product comprising or containing an ERBB3
Antibody (A) that is (i) discovered, Developed or Controlled by or on behalf of
AVEO or any of its Affiliates prior to or during the Agreement Term or
(ii) derived from an ERBB3 Antibody discovered, Developed or Controlled by or on
behalf of AVEO or any of its Affiliates prior to or during the Agreement Term,
or (B) the Development, Manufacture or Commercialization of which is Covered by
Patent Rights owned or Controlled by AVEO or any of its Affiliates, but, in each
case, not including any product excluded from the definition of Licensed Product
under Section 3.9.

1.59 “License Term” means the period commencing upon the Option Exercise Date
and ending on the date of expiration of the Agreement in accordance with the
provisions of Section 14.1.

1.60 “Licensed Territory” means the entire world except North America.

1.61 “Losses” means any and all damages (including all incidental,
consequential, statutory and treble damages), awards, deficiencies, settlement
amounts, defaults, assessments, fines, dues, penalties, costs, fees,
liabilities, obligations, liens, losses, and expenses (including court costs,
interest and reasonable fees of attorneys, accountants and other experts)
required to be paid to Third Parties with respect to a claim as to which a Party
is entitled to indemnification under Article XII, by reason of any judgment,
order, decree, stipulation or injunction, or any settlement entered into in
accordance with the provisions of this Agreement, together with all

 

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documented reasonable out-of-pocket costs and expenses incurred in complying
with any judgments, orders, decrees, stipulations and injunctions that arise
from or relate to a claim of a Third Party.

1.62 “Manufacture” or “Manufacturing” means all activities related to the
manufacturing of any Licensed Product, in bulk form manufactured for use as an
active pharmaceutical ingredient or in finished final packaged and labeled
product form, or in intermediate states, including but not limited to
formulation, manufacturing scale-up, manufacturing for use in non-clinical and
clinical studies, manufacturing for commercial sale, packaging, release of
product, manufacturing quality assurance/quality control testing (including
in-process release and stability testing), release, storage and shipping of
product or any component or ingredient thereof, regulatory activities related to
all of the foregoing, and data management and recordkeeping related to all of
the foregoing.

1.63 “Net Sales” means the gross amount invoiced on sales of the Licensed
Product by a Party, its Affiliates or Sublicensees to any Third Party, less the
following reasonable deductions to the extent included in the gross invoiced
sales price for the Licensed Product or otherwise directly paid, allowed,
accrued, or incurred by such Party, its Affiliates or Sublicensees with respect
to the sale of such Licensed Product:

(i) reasonable, normal and customary trade, cash and quantity discounts actually
given; coupons for price reductions, actually taken; credits, price adjustments
or allowances for damaged products, recalls, returns or rejections of products;

(ii) reasonable price adjustments, allowances, credits, chargeback payments and
rebates (or the equivalent thereof) for the Licensed Product granted to and
actually used by group purchasing organizations or other buying groups, managed
health care organizations, pharmacy benefit management companies, health
maintenance organizations and any other providers of health insurance coverage,
health care organizations or other health care institutions (including
hospitals), Third Party health care administrators or patient assistance or
other similar programs, or to federal, state/provincial, local and other
governments, including their agencies, or to wholesalers, distributors or other
trade customers;

(iii) reasonable and customary freight, shipping, insurance and other
transportation expenses (if actually borne by such Party or its Affiliates or
Sublicensees without reimbursement from any Third Party);

(iv) required distribution commissions/fees payable to Third Party wholesalers
for distribution of Licensed Product;

(v) sales, value-added, excise taxes, tariffs and duties, and other taxes and
government charges directly related to the sale, to the extent that such items
are included in the gross invoice price of the Licensed Product and actually
borne by such Party, its Affiliates or Sublicensees without reimbursement from
any Third Party (but not including taxes assessed against the income derived
from such sale); and

 

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(vi) a reasonable amount for bad debts actually written off which are
attributable to sales of Licensed Product not to exceed [**] of Net Sales.

The transfer of a Licensed Product by a Party or one of its Affiliates to
another Affiliate or Sublicensee for resale shall not be considered a sale.

Disposal of the Licensed Product for, or use of the Licensed Product in,
clinical trials, as free samples, or under compassionate use, patient
assistance, or test marketing programs or non-registrational studies or other
similar programs or studies where a Licensed Product is supplied without charge,
shall not result in any Net Sales, however if a Party or its Affiliates or
Sublicensees charges for such Licensed Product, the amount billed will be
included in the calculation of Net Sales.

Net Sales will include the cash consideration received on a sale and the fair
market value of all non-cash consideration. In the event Licensed Product is
sold, other than in an arm’s length transaction, Net Sales for such sale will be
determined using the average per unit Net Sales amount for the preceding
Calendar Quarter.

Net Sales shall be determined on an accrual basis from books and records
maintained in accordance with GAAP, consistently applied throughout the
organization and across all products of the entity whose sales of Licensed
Product are giving rise to Net Sales.

In the event a Licensed Product is sold in the form of a Combination Product,
then the Net Sales for any such Combination Product shall be determined by [**].

1.64 “North America” or “N.A.” means the United States, Canada and Mexico and
their respective territories and possessions.

1.65 “Patent Rights” means (i) all national, regional and international patents
and patent applications, including provisional patent applications; (ii) all
patent applications filed either from such patents, patent applications or
provisional applications or from an application claiming priority from any of
these, including divisionals, continuations, and continuations-in-parts;
(iii) any and all patents that have issued or issue in the future from the
foregoing patent applications, including author certificates, inventor
certificates, utility models, petty patents and design patents and certificates
of invention; (iv) any and all extensions or restorations by existing or future
extension or restoration mechanisms, including revalidations, reissues,
re-examinations and extensions (including any supplementary protection
certificates and the like) of the foregoing patents or patent applications; and
(v) any similar rights, including pipeline protection (where the subject matter
previously disclosed was not previously patentable in a particular jurisdiction
but subsequently becomes patentable subject matter in such jurisdiction), or any
importation, revalidation, confirmation or introduction patent or registration
patent or patent of additions to any such foregoing patent applications and
patents.

 

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1.66 “Person” means any natural person, corporation, firm, business trust, joint
venture, association, organization, company, partnership or other business
entity, or any government, or any agency or political subdivisions thereof.

1.67 “Phase 1 Clinical Trial” means a human clinical trial that is intended to
initially evaluate the safety and/or pharmacological effect of Licensed Product
or that would otherwise satisfy the requirements of 21 C.F.R. 312.21(a) or an
equivalent clinical trial in a country in the Territory other than the United
States.

1.68 “Phase 2 Clinical Trial” means a human clinical trial, for which the
primary endpoints include a determination of dose ranges or an indication of
efficacy in patients being studied as described in 21 C.F.R. §312.21(b), or an
equivalent clinical trial in a country in the Territory other than the United
States.

1.69 “Phase 3 Clinical Trial” means a human clinical trial that is prospectively
designed to demonstrate statistically whether a product is safe and effective
for use in humans in the indication being investigated in a manner sufficient to
obtain Regulatory Approval to market such product in patients having the disease
or condition being studied as described in 21 C.F.R. §312.21(c), or an
equivalent clinical trial in a country in the Territory other than the United
States.

1.70 “Post-Approval Clinical Study” means (A) with respect to AVEO, any human
clinical trial or registry either (i) required to be carried out by a Regulatory
Authority in the AVEO Territory for the purpose of post-marketing surveillance
of Licensed Product in the AVEO Territory or (ii) otherwise requested by
Regulatory Authorities in the AVEO Territory after Regulatory Approval of
Licensed Product in the AVEO Territory in an indication, designed to obtain
additional information regarding Licensed Product’s risks, benefits and optimal
use of that Licensed Product in such indication, and (B) with respect to Biogen
Idec, any human clinical trial or registry either (i) required to be carried out
by a Regulatory Authority in the Licensed Territory for the purpose of
post-marketing surveillance of Licensed Product in the Licensed Territory or
(ii) otherwise requested by Regulatory Authorities in the Licensed Territory
after Regulatory Approval of Licensed Product in the Licensed Territory in an
indication, designed to obtain additional information regarding Licensed
Product’s risks, benefits and optimal use of that Licensed Product in such
indication. For purposes of clarity, a clinical trial of Licensed Product in an
indication for which such Licensed Product is not approved shall not be
considered Post-Approval Clinical Study even if such trial occurs after such
Licensed Product is approved in another indication.

1.71 “Pre-Option Exercise Phase 3 Manufacturing Costs” means the out-of-pocket
costs and expenses incurred by AVEO or any of its Affiliates prior to the Option
Exercise Date to obtain quantities of Licensed Product (including drug
substance, drug product, validation batches and material for stability and other
testing) for a Phase 3 Clinical Trial or for Commercialization or for testing of
Licensed Product for any such Phase 3 Clinical Trial.

1.72 “Proof of Concept Development Plan” means the written work-plan for AVEO’s
Development efforts in connection with the Proof of Concept Study (including a
description of the Proof of Concept Study itself), prepared and finalized by
AVEO in accordance with Section 2.5, and as amended from time to time in
accordance with this Agreement.

 

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1.73 “Proof of Concept Study” means a Phase 2 Clinical Trial that is
appropriately designed (i) to demonstrate efficacy in the disease to be studied
through relevant primary and/or secondary efficacy endpoints as described in the
Proof of Concept Development Plan and (ii) to allow dose selection and support
generation of efficacy data that would allow movement of the product into a
Phase 3 Clinical Trial that would support the regulatory strategy of seeking
Regulatory Approval in both the AVEO Territory and the EU. For purpose of
clarity, a clinical study meeting the requirements of this definition will be
considered a Proof of Concept Study when completed whether or not the endpoints
of the study are actually met.

1.74 “Regulatory Approval” means any approval, including price approval,
registration, license or authorization from any Governmental Authority or
Regulatory Authority required for the Manufacture, Development or
Commercialization of a Licensed Product in the Territory, and shall include,
without limitation, an approval, registration, license or authorization granted
in connection with the BLA.

1.75 “Regulatory Authority” means any federal, national, multinational, state,
county, city, provincial, or local regulatory agency, department, bureau or
other governmental entity with authority over the Marketing, Commercialization,
Manufacture or sale of a pharmaceutical product in the Territory, including the
FDA in the United States and the EMEA in the EU.

1.76 “Safety Data” means adverse event information and other information (if
any) required by one or more Regulatory Authorities to be collected or to be
reported to such Regulatory Authorities under applicable Laws.

1.77 “Sales Representative” means an individual, who engages in or manages sales
calls and other promotional efforts with respect to the Licensed Product and who
is employed by a Party or an Affiliate of a Party.

1.78 “Sublicensee” means a Third Party to whom a Party, as permitted under this
Agreement, grants a license or sublicense, as the case may be, under the AVEO
Technology, Biogen Idec Collaboration Technology or Joint Collaboration IP, to
Develop, Manufacture, Commercialize or use Licensed Product in the Field, or
otherwise grants rights to distribute, promote or sell Licensed Product in the
Field, but does not include wholesale distributors of a Party or its Affiliates
who purchase Licensed Product from such Party or its Affiliates in an arm’s
length transaction. For purposes of clarity, the term “wholesale distributors”
does not include those distributors whose obligations to a Party or any of its
Affiliates include responsibility for sales or marketing efforts in such country
or sharing of costs and expenses with respect to sales or marketing on behalf of
a Party or its Affiliates, which such distributors shall be deemed Sublicensees
for purposes of this definition.

1.79 “Territory” means, collectively, the AVEO Territory and the Licensed
Territory.

1.80 “Territory-Specific Clinical Trial” means, with respect to AVEO, a human
clinical trial specifically required in the AVEO Territory which will generate
data that will not be applicable to Licensed Product in the Licensed Territory
(other than the

 

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applicability of safety data) and, except with respect to safety data, will not
be included in a filing for Regulatory Approval for Licensed Product in the
Licensed Territory, and, with respect to Biogen Idec, a human clinical trial
specifically required in the Licensed Territory which will generate data that
will not be applicable to Licensed Product in the AVEO Territory (other than the
applicability of safety data) and, except with respect to safety data, will not
be included in a filing for Regulatory Approval for Licensed Product in the AVEO
Territory.

1.81 “Third Party” means any Person other than a Party or any of its Affiliates
or their respective employees.

1.82 “United States” or “U.S.” means the United States of America and its
territories and possessions.

1.83 “Valid Claim” means (i) a claim of an issued and unexpired patent, which
has not been held permanently revoked or held unenforceable or invalid by a
decision of a court or other governmental agency of competent jurisdiction,
unappealable or un-appealed within the time allowed for appeal, and which has
not been admitted to be invalid or unenforceable through reissue or disclaimer
or otherwise or been dedicated to the public or (ii) a claim in a pending patent
application that (A) is being prosecuted in good faith, (B) has not been
abandoned or disclaimed or finally determined to be unallowable by the
applicable Governmental Authority in a decision from which no appeal is or can
be taken, and (C) has not been pending for more than five (5) years from the
date of issuance of the first substantive patent office action considering the
patentability of such claim by the applicable Governmental Authority in such
country (at which time such pending claim shall cease to be a Valid Claim for
purposes of this Agreement unless and until such claim becomes a claim of an
issued patent).

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

 

Defined Term

  

Section

Audited Party

   §8.16(a)

Auditing Party

   §8.16(a)

AVEO

   Preamble

AVEO Control Assumption Date

   §14.6(a)

AVEO Indemnities

   §12.1

AVEO Group

   §3.2(b)

Bankruptcy Code

   §13.3

Biogen Idec

   Preamble

Biogen Idec Control Assumption Date

   §14.6(b)

Biogen Idec Indemnitees

   §12.2

Breached Licensed Product

   §14.5(a)

[**]

   §8.3(b)

Collaboration Manager

   §4.5

Commercially Viable Indication

   §5.12(a)

Competing Acquiror

   §13.1

 

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Defined Term

  

Section

Competitive Infringement

   §9.6(a)

Contract Manufacturer Notice

   §7.2

Control Assumption Option

   §13.1

Cost Payment

   §5.5

Cure Plan

   §14.3(b)

Delivered Initial Development Plan

   §2.9

Development Plan Guidelines

   §4.8(a)

Divestiture Period

   §13.1

Effective Date

   Preamble

Event Milestone

   §8.4

Event Milestone Payment

   §8.4

Force Majeure Event

   §16.2

Funding Party

   §5.11(a)

[**]

   §8.3(c)

Indication Specific Royalty

   §5.13(a)

Indemnitee

   §12.3

Initial Development Plan

   §2.9

Initial Release

   §10.3

Insolvency Control Assumption Option

   §13.3

Insolvency Event

   §13.3

JCT

   §6.2(a)

JCT Chairperson

   §6.2(b)

JDC

   §4.1

JDC Chairperson

   §4.2

M&A Control Assumption Option

   §13.1

M&A Event

   §3.9

Manufacturing Party

   §14.7

New Indication Existing Licensed Product

   §5.12(a)

New Indication Funding Party

   §5.12(a)

New Licensed Product

   §5.11(a)

Non-Manufacturing Party

   §14.7

Non-performing Manufacturing Party

   §7.6

Notified Party

   §14.3(b)

Notifying Party

   §14.3(b)

Opt-in Indication

   §5.13(a)

Opt-in Effective Date

   §5.13(a)

Opt-in New Indication Existing Licensed Product

   §5.13(a)

Opt-in Notice

   §5.13(a)

Opt-in Notice Date

   §5.13(a)

Opting-out Party

   §5.11

Option

   §2.1

Option Exercise Date

   §2.3

Option Exercise Fee

   §8.3(d)

Option Exercise Notice

   §2.3

Option Exercise Period

   §2.2

 

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Defined Term

  

Section

Panel Identification

   §8.3(a)

Parties

   Preamble

Party

   Preamble

Patent Expenses

   §9.5

Pre-Exercise Milestone

   §8.3

Pre-Exercise Milestone Payment

   §8.3

Product Opt-out Effective Date

   §5.11

Product Trademarks

   §9.9(b)

Promotional Materials

   §6.4

Quarterly Cost Notice

   §5.5

Royalty Term

   §8.8

Royalty-paying Party

   §8.10

Section 5.11 Opt-out Effective Date

   §5.11(a)

Section 5.12 Opt-out Effective Date

   §5.12(a)

Senior Representative

   §4.1

Supplemental Information

   §2.2

Supply Agreement

   §7.7

Tax/Taxes

   §8.11

Third Party Technology

   §3.6(a)

Third Party Technology Agreements

   §3.6(a)

ARTICLE II.

OPTION GRANT AND DEVELOPMENT DURING OPTION PERIOD

2.1. Grant of Option. AVEO hereby grants to Biogen Idec an exclusive option,
exercisable during the Option Exercise Period, as defined in Section 2.2, to
acquire from AVEO the licenses set forth in Section 3.1, subject to the terms
and conditions of this Agreement (the “Option”).

2.2. Option Exercise Period. AVEO shall deliver the Data Package from the first
Proof of Concept Study to Biogen Idec and an initial Development Plan no later
than [**] after the last visit of the last patient to be dosed in such Proof of
Concept Study. During the [**] following delivery of the Data Package,
(i) Biogen Idec may request, and AVEO will provide to Biogen Idec, any other
data and information in AVEO’s possession and Control (and AVEO shall make
reasonable efforts to procure or produce such other data and information that is
not in AVEO’s possession and Control) as Biogen Idec may reasonably request in
connection with its review of the Data Package (the “Supplemental Information”),
(ii) the Parties shall meet in good faith to discuss Biogen Idec’s comments to
the initial Development Plan in accordance with Section 2.9, (iii) AVEO will
deliver to Biogen Idec copies of any AVEO In-Licenses entered into after the
Effective Date, and (iv) AVEO will deliver to Biogen Idec a reasonably detailed
statement of Pre-Option Exercise Phase 3 Manufacturing Costs actually incurred
by AVEO and its Affiliates as of such date and reasonably expected to be
incurred prior to the end of the Option Exercise Period. The Option shall be
exercisable by Biogen Idec at any time during the period commencing on the
Effective Date and ending on the later of (i) [**] after delivery of the Data
Package, or (ii) [**] after the last to be delivered of the Supplemental
Information (the “Option Exercise Period”).

 

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2.3. Option Exercise. In the event Biogen Idec elects to exercise the Option, it
shall, no later than the [**] of the [**] of the Option Exercise Period, deliver
to AVEO (i) written notice specifying that Biogen Idec has elected to exercise
the Option (the “Option Exercise Notice”), and (ii) payment of the Option
Exercise Fee. The date, if any, on which Biogen Idec has properly exercised the
Option in accordance with the preceding sentence shall be the “Option Exercise
Date” for purposes of this Agreement. The Option Exercise Period will be deemed
to have ended, and the License Term will be deemed to have commenced, on the
Option Exercise Date.

2.4. Effectiveness of License. Upon the exercise by Biogen Idec of the Option in
accordance with this Article II, the provisions set forth in Article I and
Articles III—XVI of this Agreement shall constitute the terms and conditions of
the license and sublicense rights granted by AVEO to Biogen Idec with respect to
the AVEO Technology in the Field, and by Biogen Idec to AVEO with respect to
Biogen Idec Collaboration Technology, related to all Licensed Products in the
Field. During the period commencing on the Effective Date and ending on the
expiration of the Option Exercise Period, AVEO will not grant a license or other
rights to any Third Party or take any other action that would prevent AVEO from
being able to grant to Biogen Idec the license set forth in Section 3.1. In the
event Biogen Idec does not exercise the Option during the Option Exercise
Period, the licenses and other rights granted under Articles III shall have no
force or effect.

2.5. Proof of Concept Development Plan. As promptly as practicable after AVEO
has prepared the Proof of Concept Development Plan, AVEO shall provide a copy
thereof to Biogen Idec for its review and comment. Biogen Idec shall have a
period of [**] to review and comment on the Proof of Concept Development Plan.
AVEO shall consider in good faith all reasonable comments made by Biogen Idec to
the Proof of Concept Development Plan. If and to the extent requested by Biogen
Idec, appropriate members of the clinical development and regulatory teams of
AVEO shall meet with appropriate members of the clinical development and
regulatory teams of Biogen Idec to discuss the Proof of Concept Study, including
the design thereof as well as the Licensed Product and indication being studied
in the Proof of Concept Study, and the Development activities and timelines
contemplated under the Proof of Concept Development Plan. AVEO may amend,
modify, supplement or update the Proof of Concept Development Plan at any time
and from time to time in its discretion, provided that AVEO complies with the
foregoing provisions of this Section 2.5 (but with Biogen Idec having a [**]
review period instead of [**]) with respect to any such amendment, modification,
supplement or update of the Proof of Concept Development Plan to the same extent
as AVEO is required in connection with the initial Proof of Concept Development
Plan, and any such amendment, modification, supplement or update of the Proof of
Concept Development Plan is consistent with the parameters set forth in the next
sentence. The Proof of Concept Development Plan proposed by AVEO hereunder,
including any amendment, modification, supplement or update, shall meet the
following parameters: [**].

2.6. Development During Option Period. During the Option Exercise Period, AVEO
shall have sole responsibility for Development and Manufacture of Licensed
Product, at AVEO’s sole cost and expense, and AVEO shall use Commercially

 

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Reasonable Efforts to perform its Development activities as contemplated under
the Proof of Concept Development Plan and to Develop Licensed Product through
completion of the first Proof of Concept Study. For purposes of clarity, Biogen
Idec shall have no right to Develop or Manufacture Licensed Product during the
Option Exercise Period. During the Option Exercise Period, AVEO shall not enter
into any AVEO In-License with respect to any Know-how or Patent Rights as to
which (x) rights thereto in both the AVEO Territory and Licensed Territory will
be necessary, (y) such Know-how is incorporated in any Licensed Product or such
Patent Rights Cover any Licensed Product or (z) such Know-how or Patent Rights
are owned or licensed by a Sublicensee (or any of such Sublicensee’s Affiliates)
to whom AVEO has granted a license or sublicense under AVEO Technology or Biogen
Idec Collaboration Technology to Commercialize Licensed Product in the AVEO
Territory, unless either (i) such AVEO In-License includes rights with respect
to such Know-how and Patent Rights in both the AVEO Territory and the Licensed
Territory and such rights are Controlled by AVEO during the Agreement Term or
(ii) to the extent Control cannot be obtained, licenses are available, as a
matter of course, separately from the licensor of such Know-how or Patent Rights
for Development, Manufacture or Commercialization, as the case may be, of
Licensed Product in both the AVEO Territory and the Licensed Territory on terms
that, at the time AVEO enters into such license, would be substantially the same
as the terms obtained by AVEO with respect to the AVEO Territory, and AVEO
provides written notice to Biogen Idec that Control could not be obtained. For
purposes of clarification and not by way limitation, it is understood and agreed
that the term “necessary” as used in this Section 2.6 shall be deemed to include
any Know-how or Patent Rights as to which rights in both the AVEO Territory and
Licensed Territory would be necessary for Biogen Idec to Develop, Manufacture or
Commercialize, as the case may be, Licensed Product in both the AVEO Territory
and the Licensed Territory under this Agreement, including, without limitation,
under Sections 5.11, 5.12, 7.5, 13.1, 13.3 or 14.5(b).

2.7. Decision-making during Option Period. During the Option Exercise Period,
AVEO shall have sole decision-making authority with respect to Development and
Manufacture of Licensed Product, provided that AVEO complies with the provisions
of Section 2.5 hereof.

2.8. Development Updates. On a quarterly basis during the Option Exercise
Period, AVEO and Biogen Idec will hold an in-person meeting, at either AVEO’s or
Biogen Idec’s headquarters in Massachusetts, at such time as the Parties shall
mutually agree, during which AVEO shall present the results of its Development
activities related to Licensed Product since the last update, and shall describe
its Development plans with respect to Licensed Product for the following three
months and the remainder of the then Calendar Year.

2.9. Initial Development Plan. As soon as AVEO has prepared the initial
Development Plan (even if prior to delivery of the Data Package), AVEO shall
deliver to Biogen Idec the initial Development Plan. During the period between
Data Package delivery by AVEO and Option Exercise Date, AVEO and Biogen Idec,
including appropriate members of the clinical development and regulatory teams
of both AVEO and Biogen Idec shall meet to discuss the initial Development Plan,
including the design thereof as well as the indication being studied, and the
Development activities and timelines contemplated thereunder. In anticipation of
Biogen Idec’s exercise of the Option, AVEO shall (x) consider in good faith all
reasonable Biogen Idec proposals to such initial Development Plan and
(y) deliver to Biogen Idec a revised initial Development Plan (or if no revised
initial Development Plan is delivered, the initial

 

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Development Plan shall be deemed re-delivered) no less than thirty (30) days
prior to the end of the Option Exercise Period (the “Delivered Initial
Development Plan”). The Delivered Initial Development Plan shall meet the
following criteria: (i) such Delivered Initial Development Plan shall be
directed only to the indication that was the subject of the Proof of Concept
Study; (ii) the size of the pivotal trial included in such Delivered Initial
Development Plan shall be reasonable given the scope of the indication, in light
of then prevailing industry standards and regulatory guidance; (iii) such
Delivered Initial Development Plan shall in addition include, at a minimum,
study designs, assignment of responsibilities (both among the Parties and Third
Parties), timelines, decision criteria, supply plans, quality standards,
expected resources, costs and a budget for Development Costs; and (iv) the
budget for Development Costs in such Delivered Initial Development Plan shall be
for no longer than through the end of completion of the pivotal trial for the
indication that was the subject of the Proof of Concept Study.

ARTICLE III.

LICENSE GRANTS

3.1. AVEO Grant to Biogen Idec. Subject to the terms and conditions of this
Agreement, effective immediately upon the Option Exercise Date, AVEO and its
Affiliates grant the following licenses to Biogen Idec: (i) co-exclusive (with
AVEO and its Affiliates), royalty-free license, with the right to grant
sublicenses, to the extent set forth under Section 3.3(a), and subject to AVEO’s
rights under Section 3.3(b), under AVEO Technology, including AVEO’s interest in
Joint Collaboration IP, solely to Develop, have Developed, Manufacture and have
Manufactured, Licensed Product anywhere in the world pursuant to, and in
accordance with, this Agreement, and (ii) an exclusive (including with respect
to AVEO and its Affiliates), royalty-bearing license, with the right to grant
sublicenses, to the extent set forth under Section 3.3(a), under AVEO Technology
solely to Commercialize, have Commercialized, import, and have imported Licensed
Product in the Licensed Territory within the Field.

3.2. Biogen Idec Grant to AVEO.

(a) License. Subject to the terms and conditions of this Agreement, effective
immediately upon the Option Exercise Date, Biogen Idec and its Affiliates grant
the following licenses to AVEO: (i) a co-exclusive (with Biogen Idec and its
Affiliates), royalty-free license, with the right to grant sublicenses, to the
extent set forth under Section 3.3(b), and subject to Biogen Idec’s rights under
Section 3.3(a), under Biogen Idec Collaboration Technology, including Biogen
Idec’s interest in Joint Collaboration IP, solely to Develop, have Developed,
Manufacture and have Manufactured, Licensed Product anywhere in the world
pursuant to, and in accordance with, this Agreement, and (ii) an exclusive
(including with respect to Biogen Idec and its Affiliates), royalty-bearing
license, with the right to grant sublicenses, to the extent set forth under
Section 3.3(b), under Biogen Idec Collaboration Technology, including Biogen
Idec’s interest in Joint Collaboration IP, solely to Commercialize, have
Commercialized, import, and have imported Licensed Product in the AVEO Territory
within the Field.

(b) Covenant Not to Sue. In further consideration of the licenses granted to
Biogen Idec under this Agreement and subject to Section 3.9, Biogen Idec and its
Affiliates grant to AVEO and its present and future Affiliates and Sublicensees
(the “AVEO Group”) a covenant not to sue or bring action against any member of
the AVEO Group claiming or asserting that the Development,

 

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Manufacture or Commercialization of any AVEO Proprietary Composition Licensed
Product by any member of the AVEO Group in the AVEO Territory within the Field
pursuant to, and in accordance with, the provisions of this Agreement infringes
any Patent Rights owned and Controlled by Biogen Idec or any of its Affiliates
(other than any such Patent Rights that are included in Biogen Idec
Collaboration Patent Rights or Joint Collaboration Patent Rights) that Cover the
composition of matter or method of use of such AVEO Proprietary Composition
Licensed Product and that are necessary to the Development, Manufacture or
Commercialization of such AVEO Proprietary Composition Licensed Product in the
AVEO Territory. Notwithstanding anything express or implied in the foregoing
provisions of this Section 3.2(b) to the contrary, the provisions of this
Section 3.2(b) shall not apply with respect to any AVEO Proprietary Composition
Licensed Product that Biogen Idec does not have the right to Develop or
Commercialize under the terms of this Agreement. The provisions of this
Section 3.2(b) shall not apply with respect of Patent Rights or Know-how under
Third Party Technology Agreements entered into by either Party or any of its
Affiliates pursuant to Section 3.6 hereof.

3.3. Licenses and Sublicenses; Contractors.

(a) Biogen Idec Rights. Biogen Idec shall have the right to grant any licenses
or sublicenses under Biogen Idec Collaboration Technology to Develop, have
Developed, Manufacture or have Manufactured Licensed Product anywhere in the
world under the terms of this Agreement or to Commercialize, have
Commercialized, import and have imported Licensed Products in the Licensed
Territory, provided that any such licenses or sublicenses comply with the
provisions set forth in Sections 3.3(c), 3.3(d) and 3.3(e) below, as applicable,
and that Biogen Idec provides prior written notice to AVEO of any such licenses
or sublicenses to any Third Party. In addition, Biogen Idec may sublicense the
rights granted to it by AVEO under Section 3.1, in whole or in part, (i) to any
of its Affiliates or (ii) to a Third Party with prior written notice to AVEO.

(b) AVEO Rights. AVEO shall have the right to grant any licenses or sublicenses
under AVEO Technology to Develop, have Developed, Manufacture or have
Manufactured Licensed Products anywhere in the world under the terms of this
Agreement or to Commercialize, have Commercialized, import and have imported
Licensed Product in the AVEO Territory, provided that (i) during the Option
Exercise Period, AVEO and its Affiliates shall not grant any license or
sublicense to Develop Licensed Product, (ii) after the Option Exercise Period,
AVEO and its Affiliates shall retain final decision-making authority under such
license or sublicense for Development of Licensed Product, (iii) any license or
sublicense granted to a Third Party with respect to Manufacture of Licensed
Product shall be subject to the terms of Article VII, (iv) in no event shall
AVEO grant any such license or sublicense to any Third Party that is Developing
or Commercializing a Directly Competitive Product, (v) AVEO provides prior
written notice to Biogen Idec of such licenses or sublicenses, (vi) AVEO shall
have complied with the provisions of Section 3.7 hereof prior to granting such
license or sublicense, and (vii) such license or sublicense complies with the
provisions set forth in Sections 3.3(c), 3.3(d) and 3.3(e) below. AVEO may only
sublicense the rights granted it by Biogen Idec under Section 3.2(a), in whole
or in part, (x) to any of its Affiliates or (y) to a Third Party to whom AVEO
has granted licenses or sublicenses under AVEO Technology pursuant to this
Section 3.3(b), provided that AVEO provides prior written notice to Biogen Idec
of any sublicense granted under clause (y).

 

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(c) Sublicense Terms. Each permitted license or sublicense and agreement with a
Sublicensee (i) must be consistent with the terms and conditions of this
Agreement, (ii) must contain a provision under which the licensing Party shall
obtain an exclusive or non-exclusive license, with the right to grant a
sublicense to the other Party as set forth under this Agreement, to Develop,
have Developed, Manufacture, have Manufactured, to Commercialize and have
Commercialized Licensed Product in the Territory under Know-how and Patent
Rights owned or licensed by such Sublicensee or any of its Affiliates, that are
(A) necessary to Develop, Manufacture or Commercialize Licensed Product,
(B) incorporated in any Licensed Product, in the case of such Know-how, or that
Cover any Licensed Product, in the case of such Patent Rights, and
(C) reasonably useful to Develop, Manufacture or Commercialize Licensed Product,
provided, however, that notwithstanding the foregoing provisions of this clause
(ii), if the applicable Sublicensee is not granted the right under such license
or sublicense to Commercialize or have Commercialized Licensed Product in the
AVEO Territory or the Licensed Territory, the provisions of the foregoing
subclauses (A) and (B) shall be limited only to Know-how and Patent Rights
generated by such Sublicensee or any of its Affiliates that arise directly out
of the Development or Manufacture of Licensed Product under such license or
sublicense agreement and the provisions of the foregoing subclause (C) shall not
apply, and (iii) must not contain provisions that result in the licensing Party
not having the ability to license or sublicense to the other Party as set forth
in this Agreement any Patent Rights or Know-how owned, licensed, used or
practiced by the licensing Party or any of its Affiliates. Each permitted
license or sublicense by AVEO or any of its Affiliates must contain a provision
that the applicable Sublicensee and its Affiliates shall not Develop,
Manufacture or Commercialize a Directly Competitive Product or collaborate with,
or grant to, any other Third Party any license or right to Develop, Manufacture
or Commercialize a Directly Competitive Product.

(d) Performance by Sublicensees. Each Party shall be responsible for the
performance of all of its Sublicensees, and shall remain fully responsible for
all of its Sublicensees’ obligations under this Agreement. Each license or
sublicense granted by a Party pursuant to this Article III shall be subject and
subordinate to the terms and conditions of this Agreement, and shall contain
terms and conditions consistent with those in this Agreement. Each Party shall
promptly provide the other Party with a copy of the fully executed license or
sublicense agreement covering any license or sublicense granted hereunder, and
such license or sublicense agreement shall contain the following provisions:
(i) a requirement that such Sublicensee submit applicable sales or other reports
to the Party granting the license or sublicense to the extent necessary or
relevant to the reports required to be made or records required to be maintained
under this Agreement; (ii) an audit requirement consistent with that set forth
in Section 8.16; (iii) a requirement that such Sublicensee comply with the
confidentiality provisions and restrictions on use of Confidential Information
contained in Article X with respect to both Parties’ Confidential Information;
and (iv) any other provisions required under any AVEO In-License or Biogen Idec
In-License, as the case may be. If a granting Party becomes aware of a material
breach of any license or sublicense by a Sublicensee of the rights granted to
such Party or the other Party under this Agreement, the granting Party shall
promptly notify the other Party of the particulars of the same and use
Commercially Reasonable Efforts to enforce the terms of such license or
sublicense.

 

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(e) Performance by Contractors. If, and to the extent that, either Party has the
right or obligation pursuant to, and in accordance with, the provisions of this
Agreement to Develop, Manufacture or Commercialize any Licensed Product, such
Party shall be entitled to utilize the services of Third Parties (including
Third Party contract research organizations, Third Party contract manufacturing
organizations (“CMOs”) and Third Party contract sales organizations (“CSOs”)) to
perform the Development, Manufacturing or Commercialization activities that such
Party has the right or obligation to perform under this Agreement with respect
to such Licensed Product; provided that the contracting Party shall remain at
all times fully liable for its responsibilities under this Agreement. Neither
Party shall use Third Party contract resources to perform any activities that
the contracting Party has the right or obligation to perform under this
Agreement unless the contracting Party’s rights under the agreement with the
Third Party contractor guarantee to the other Party the same rights under this
Agreement as if the contracting Party had performed such activities itself, and
any such Third Party contractor agreement includes a requirement that such Third
Party contractor comply with the confidentiality provisions and restrictions on
use of Confidential Information contained in Article X with respect to both
Parties’ Confidential Information and a requirement that such Third Party
contractor comply with any other provisions required under any AVEO In-License
or Biogen Idec In-License, as the case may be. Notwithstanding anything in this
Agreement to the contrary, the contracting Party under this Section 3.3(e) shall
(A) obtain from any Third Party performing any activities of the contracting
Party under this Agreement a license to any Know-how and Patent Rights generated
by such Third Party arising directly out of the contracting activities to the
extent necessary for the Development, Manufacture and Commercialization of
Licensed Product or to the extent such Know-how is incorporated in any Licensed
Product or such Patent Rights Cover any Licensed Product, (B) if such Third
Party or any of its Affiliates is a Sublicensee of the contracting Party to whom
the contracting Party has granted rights to Commercialize Licensed Product in
the contracting Party’s Territory, obtain from such Third Party a license to any
Know-how and Patent Rights generated by such Third Party arising directly out of
the contracting activities to the extent reasonably useful for the Development,
Manufacture and Commercialization of Licensed Product and (C) use Commercially
Reasonable Efforts to obtain from such Third Party (other than a Third Party
referred to in the foregoing clause (B)) a license to any Know-how and Patent
Rights generated by such Third Party arising directly out of the contracting
activities to the extent reasonably useful for the Development, Manufacture and
Commercialization of Licensed Product. Each such license referred to in the
foregoing clause (A), (B) or (C) of this Section 3.3(e) shall include rights to
both the AVEO Territory and the Licensed Territory to the extent such Know-how
and Patent Rights are necessary for the Development, Manufacture or
Commercialization of Licensed Product in each such Territory or to the extent
such Know-how is incorporated in any Licensed Product or such Patent Rights
Cover any Licensed Product. Each such license referred to in the foregoing
clause (A), clause (B) or clause (C) of this Section 3.3(e) shall include the
right to sublicense to the other Party consistent with this Agreement. For
purposes of clarification and not by way of limitation, it is understood and
agreed that the term “necessary” as used in this Section 3.3(e) shall be deemed
to include any Know-how or Patent Rights as to which rights in both the AVEO
Territory and Licensed Territory would be necessary for the contracting Party to
Develop, Manufacture or Commercialize,

 

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as the case may be, Licensed Product in both the AVEO Territory and the Licensed
Territory under this Agreement, including, without limitation, under Sections
5.11, 5.12, 7.5, 13.1, 13.3 or 14.5(b).

3.4. Restrictive Covenants. Except for the Development, Manufacture and
Commercialization of Licensed Products pursuant to, and in accordance with, the
terms and conditions set forth in this Agreement and except for the grant of any
licenses or sublicenses by AVEO with respect to Licensed Products pursuant to
Section 3.3(b) above and except as set forth in Section 3.9, during the
Agreement Term neither AVEO nor any of its Affiliates (i) shall Develop,
Manufacture or Commercialize any ERBB3 Antibody in the AVEO Territory or the
Licensed Territory within the Field, (ii) shall collaborate with any Third
Party, shall grant to any Third Party the right, or shall engage in activities
on behalf of any Third Party, to Develop, Manufacture or Commercialize any ERBB3
Antibody in the AVEO Territory or the Licensed Territory within the Field,
(iii) shall grant to any Third Party any license or other right under any AVEO
Technology to Develop, Manufacture or Commercialize any ERBB3 Antibody in the
AVEO Territory or the Licensed Territory within the Field or (iv) subject to
Section 16.5 hereof, shall sell, assign, convey or otherwise transfer any right,
title or interest in and to any AVEO Technology or any ERBB3 Antibody
(including, without limitation, any Licensed Product), provided that the
foregoing clause (iv) shall not be deemed a restriction on AVEO’s right to
license AVEO Technology for any and all uses other than the Development,
Manufacture or Commercialization of ERBB3 Antibodies or for any and all uses
outside the Field.

3.5. Retained Rights. Subject to Section 3.3(b) and Section 3.4, any rights of a
Party not expressly granted under this Agreement shall be retained by such
Party.

3.6. Third Party Technology.

(a) Process. The Parties agree that it may be necessary or desirable at any time
and from time to time during the License Term to enter into agreements with a
Third Party to acquire, in-license or otherwise obtain or use technology,
intellectual property rights, information, materials, data or know-how,
patentable or otherwise, owned or Controlled by such Third Party (“Third Party
Technology”) in order for either Party to Develop, Manufacture or Commercialize
Licensed Product under this Agreement (such Third Party agreements being
hereinafter referred to, collectively, as the “Third Party Technology
Agreements”). Such Third Party Technology Agreements shall not conflict with the
terms and conditions of this Agreement. In the event that either Party believes
that entering into a Third Party Technology Agreement is necessary or desirable
in connection with the Development, Manufacture or Commercialization of Licensed
Product pursuant to this Agreement, such Party shall notify the JDC and the
other Party promptly and include in such notification a summary of the Third
Party Technology that would be covered by such Third Party Technology Agreement,
the anticipated commercial terms of such Third Party Technology Agreement and
any other relevant information. The JDC shall discuss (i) whether the Third
Party Technology that would be the subject of such Third Party Technology
Agreement is necessary or desirable in connection with the Development,
Manufacture or Commercialization of Licensed Product pursuant to this Agreement,
(ii) the anticipated commercial terms of such Third Party Technology Agreement,
(iii) the advantages and disadvantages associated with entering into such Third
Party Technology Agreement at that time or at a later point in time and (iv) any
other factors the JDC deems relevant. If the JDC determines that such Third
Party Technology Agreement should be pursued, AVEO shall be

 

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responsible for negotiating, in consultation with the JDC and Biogen Idec, any
such Third Party Technology Agreements and, upon final approval of the JDC as
provided below, for entering into such Third Party Technology Agreements. AVEO
shall use Commercially Reasonable Efforts to negotiate as promptly as possible
such Third Party Technology Agreements that the JDC has determined to pursue and
throughout such negotiation AVEO shall consider in good faith and use
Commercially Reasonable Efforts to get the applicable Third Party to agree to
all reasonable comments made by the JDC and Biogen Idec with respect to such
Third Party Technology Agreements and the terms thereof. Prior to execution of
any such Third Party Technology Agreement, AVEO shall present the agreement in
substantially final form to the JDC for review and final approval. Unless Biogen
Idec otherwise agrees, the JDC shall not provide final approval to any such
Third Party Technology Agreement unless (A) the Third Party Technology that is
subject to such Third Party Technology Agreement may be used by, sublicensed to,
or the benefits made available to, Biogen Idec and its Affiliates and
Sublicensees in connection with the Development, Manufacture and
Commercialization of Licensed Product pursuant to, and in accordance with, the
terms of this Agreement, and (B) in the event that such Third Party Technology
may not be used by and sublicensed to Biogen Idec and its Affiliates and
Sublicensees in connection with the Development, Manufacture and
Commercialization of Licensed Product under this Agreement, then such Third
Party Technology is available for licensing, as a matter of course, separately
from the licensor of such Third Party Technology with respect of both the AVEO
Territory and the Licensed Territory on terms that, at the time of final JDC
approval, would be substantially the same as the terms obtained by AVEO with
respect to the AVEO Territory. Upon final review and approval by the JDC of any
Third Party Technology Agreement in accordance with this Section 3.6, AVEO shall
execute and deliver such Third Party Technology Agreement and such Third Party
Technology Agreement shall be an AVEO In-License for purposes of this Agreement.
AVEO shall provide Biogen Idec with an unredacted copy of such fully executed
Third Party Technology Agreement. Notwithstanding anything in this Agreement to
the contrary, in the event the JDC unanimously agrees that Biogen Idec shall
enter into a Third Party Technology Agreement in accordance with the process
outlined in this Section 3.6, then Biogen Idec shall execute and deliver such
Third Party Technology Agreement and provide an unredacted copy of such fully
executed Third Party Technology Agreement to AVEO which such Third Party
Technology Agreement shall be a Biogen Idec In-License. The Know-how and Patent
Rights underlying a Biogen Idec In-License shall be deemed to be Biogen Idec
Collaboration Technology. As promptly as practicable after the execution of such
Third Party Technology Agreement (unless already done prior to the execution of
such Third Party Technology Agreement), the Development Plan shall be amended to
include actions required related to any such Third Party Technology Agreement
and the Third Party Technology that is subject thereto. Except as set forth in
Section 3.6(b) below, unless and until the JDC provides final approval of a
Third Party Technology Agreement as contemplated above in this Section 3.6(a),
neither Party shall enter into such Third Party Technology Agreement. For the
sake of clarity, the terms of this Section 3.6 shall not apply to AVEO
In-licenses entered into prior to the Option Exercise Date.

(b) Failure to Agree. In the event that the JDC determines that a Third Party
Technology Agreement should not be pursued or the representatives of either
Party on the JDC will not agree, or do not agree in a timely manner, to the
terms that the other Party or the representatives of the other Party on the JDC
proposes or propose to accept, and no further discussions are authorized by the
JDC

 

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or are ongoing by the JDC, either Party alone shall have the right to enter into
an agreement with such Third Party on such terms as such Party and the Third
Party shall agree in connection with rights to Develop, Manufacture and/or
Commercialize a Licensed Product in each Party’s respective territory. In
addition, in the event that AVEO is required to negotiate and enter into any
Third Party Technology Agreement pursuant to this Section 3.6 but AVEO does not
do so, or is unable to do so, in a timely manner, then Biogen Idec shall have
the right (but not the obligation) to negotiate and enter into such Third Party
Technology Agreement. In the event AVEO enters into a Third Party Technology
Agreement under this Section 3.6(b), (i) such agreement shall not be considered
an AVEO In-License, (ii) the underlying Patent Rights shall not be considered
AVEO Patent Rights or AVEO Collaboration Patent Rights, and (iii) the underlying
Know-how shall not be considered AVEO Know-how or AVEO Collaboration Know-how.
In the event Biogen Idec or any of its Affiliates enters into a Third Party
Technology Agreement under this Section 3.6(b), (i) such agreement shall not be
considered a Biogen Idec In-License, (ii) the underlying Patent Rights shall not
be considered Biogen Idec Collaboration Patent Rights, and (iii) the underlying
Know-how shall not be considered Biogen Idec Collaboration Know-how.
Notwithstanding anything express or implied in the foregoing provisions of this
Section 3.6(b) to the contrary, (A) AVEO agrees that it and its Affiliates will
not assert any rights acquired under any Third Party Technology Agreement
entered into by AVEO under the terms of this Section 3.6(b) against Biogen Idec
or any of its Affiliates or Sublicensees with respect to the Development,
Manufacture or Commercialization of Licensed Product by Biogen Idec or any of
its Affiliates or Sublicensees pursuant to, and in accordance with, the terms of
this Agreement, and (B) Biogen Idec agrees that it and its Affiliates will not
assert any rights acquired under any Third Party Technology Agreement entered
into by Biogen Idec under the terms of this Section 3.6(b) against AVEO or any
of its Affiliates or Sublicensees with respect to the Development, Manufacture
or Commercialization of Licensed Product by AVEO or any of its Affiliates or
Sublicensees pursuant to, and in accordance with, the terms of this Agreement;
provided, however, that nothing in this sentence shall prevent or restrict, or
be deemed a representation with respect to, the ability of a Third Party
licensor to fully assert its rights against a Party, and notwithstanding
anything express or implied in the foregoing provisions of this sentence to the
contrary, the provisions of clause (A) of this sentence shall not apply with
respect to any Licensed Product if Biogen Idec is not required to pay royalties
to AVEO pursuant to Section 8.5 hereof on Net Sales by Biogen Idec and its
Affiliates and Sublicensees of such Licensed Product in the Licensed Territory,
and the provisions of clause (B) of this sentence shall not apply with respect
to any Licensed Product if the license rights granted by AVEO to Biogen Idec and
its Affiliates pursuant to, and in accordance with, Section 3.1 hereof are not
applicable to such Licensed Product for any reason or if AVEO is not required to
pay royalties to Biogen Idec pursuant to Section 8.6 hereof on Net Sales by AVEO
and its Affiliates and Sublicensees of such Licensed Product in the AVEO
Territory. Each Party that enters into a Third Party Technology Agreement that
is not considered an AVEO In-License or a Biogen Idec In-License, as the case
may be, by virtue of the foregoing provisions of this Section 3.6(b) shall, at
the request of the other Party made at any time during the License Term, agree
to include any rights under such Third Party Technology Agreement that such
Party Controls in the licenses granted to the other Party under Article III, as
AVEO Technology or Biogen Idec Collaboration Technology, as the case may be,
provided that the other Party makes payment to such Party of all amounts that
the other Party would have been required

 

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to pay under this Agreement in connection with such Third Party Technology
Agreement if such Third Party Technology Agreement had been considered an AVEO
In-License or a Biogen Idec In-License, as the case may be, under this Agreement
from and after the date that such Party entered into such Third Party Technology
Agreement, in which case such Third Party Technology Agreement shall be
considered an AVEO In-License or a Biogen Idec In-License, as the case may be.

3.7. Right of First Negotiation. In the event that AVEO proposes to license or
sublicense or otherwise grant to a Third Party all or any portion of the rights
of AVEO to Commercialize Licensed Product in a particular country of the AVEO
Territory, other than solely for purposes of a relationship of the type
described in Section 3.3(e), regardless of whether AVEO or a Third Party makes
the initial proposal, then AVEO will promptly notify Biogen Idec in writing
thereof. As soon as practicable, Biogen Idec will respond to AVEO in writing
regarding its interest in entering into negotiations to obtain such rights and
the Parties will promptly commence exclusive, good faith negotiations through
and until the [**] following the date that AVEO gives such written notice to
Biogen Idec. Upon commencement of such negotiations, AVEO shall advise Biogen
Idec of the factors that AVEO considers to be commercially material to its
decision to grant Commercialization rights with respect to Licensed Product in
such country of the AVEO Territory. If AVEO and Biogen Idec are unable to agree
on material terms within [**] after receipt by Biogen Idec of AVEO’s notice of
its intent to transfer Commercialization rights, AVEO shall thereafter be free
to negotiate and /or enter into an agreement with any Third Party on such terms
as AVEO may decide in its sole discretion

3.8. No Inconsistent Third Party Agreements; Amendments. During the Agreement
Term, neither Party nor any of its Affiliates shall enter into any in-license of
Third Party intellectual property pursuant to which such Party or any of its
Affiliates grants to such Third Party rights under or to AVEO Technology or
Biogen Idec Collaboration Technology, as the case may be, that would contravene
or be inconsistent or in conflict with the rights of the other Party under this
Agreement. During the Agreement Term, neither Party nor any of its Affiliates
shall amend, modify or terminate any in-license of Third Party intellectual
property (including, without limitation, any such in-license that is in effect
as of the Effective Date) without the prior written consent of the other Party
(which may be granted or withheld by such other Party in its absolute
discretion) if such amendment, modification or termination would materially
adversely affect any of the rights that such other Party or any of its
Affiliates would have under this Agreement if such amendment, modification or
termination were not effected.

3.9. M&A Events. In the event of an M&A Event, as defined below, to which AVEO
is a party, (i) the Patent Rights owned or otherwise Controlled by the Third
Party acquiror or any of its Affiliates immediately prior to the effectiveness
of the M&A Event will be specifically excluded from the definition of AVEO
Patent Rights and AVEO Collaboration Patent Rights, (ii) the Know-how owned or
otherwise Controlled by the Third Party acquiror or any of its Affiliates prior
to the effective date of the M&A Event will be specifically excluded from the
definition of AVEO Know-how, (iii) in no event shall any agreement that such
Third Party acquiror or any of its Affiliates is a party prior to the effective
date of the M&A Event be considered an AVEO In-License, (iv) any product owned
or otherwise Controlled by the Third Party acquiror or any of its Affiliates
immediately prior to the effectiveness of the M&A Event shall be specifically
excluded from the definition of Licensed Product, and (v) the restrictive
covenants set forth in Section 3.4

 

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shall not apply to any ERBB3 Antibody that is not a Licensed Product by reason
of the foregoing clause (iv) (it being understood and agreed that the provisions
of this clause (v) shall not limit Biogen Idec’s rights under Section 13.1 or
Section 14.5(e)). In the event of any M&A Event to which Biogen Idec is a party,
the Patent Rights owned or Controlled by the Third Party acquiror or any of its
Affiliates immediately prior to the effectiveness of the M&A Event and the
Patent Rights covering Know-how developed or acquired after the effective date
of the M&A Event (other than Biogen Idec Collaboration Patent Rights) and any
ERBB3 Antibody that is not a Licensed Product by reason of the foregoing clause
(iv) shall not be subject to the covenant not to sue granted to AVEO under
Section 3.2(b) or Section 3.6(b). For purposes of this Agreement, an M&A Event
with respect to a Party shall mean any of the following: (a) the sale or
disposition of all or substantially all of the assets of such Party or its
direct or indirect parent corporation to a Third Party, (b) the acquisition by a
Third Party which constitutes one person, as such term is used in Section 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), together with any such person’s “affiliates” or “associates”, as such
terms are defined in the Exchange Act, other than an employee benefit plan (or
related trust) sponsored or maintained by such Party or any of its Affiliates,
of more than 50% of the outstanding shares of voting capital stock of such Party
or its direct or indirect parent corporation, or (c) the merger or consolidation
of such Party or its direct or indirect parent corporation with or into another
corporation, other than, in the case of this clause (c), an acquisition or a
merger or consolidation of a Party or its direct or indirect parent corporation
in which holders of shares of the voting capital stock of the Party or its
direct or indirect parent corporation, as the case may be, immediately prior to
the acquisition, merger or consolidation will have at least fifty percent
(50%) of the ownership of voting capital stock of the acquiring Third Party or
the surviving corporation in such merger or consolidation, as the case may be,
immediately after the merger or consolidation.

ARTICLE IV.

GOVERNANCE DURING LICENSE TERM

4.1. Joint Development Committee Formation. As soon as reasonably practicable
after the Option Exercise Date, and in any event not later than thirty (30) days
after the Option Exercise Date, the Parties shall establish a joint development
committee (the “JDC”). The JDC shall consist of three (3) representatives
designated by each Party, or such other number as the Parties may from time to
time mutually agree. Each Party shall appoint its initial representatives on the
JDC at the time of formation, but may, from time to time, substitute one or more
of its representatives, in its sole discretion, effective upon notice to the
other Party of such change. Each Party shall have at least one JDC
representative who is a senior employee (vice president level or above) and
shall designate him/her upon designation to the JDC as its senior representative
(such representative, such Party’s “Senior Representative”). All JDC
representatives shall have appropriate expertise and ongoing familiarity with
Development of biopharmaceutical products. Additional representatives or
consultants may from time to time, by mutual consent of the Parties, be invited
to attend JDC meetings, provided that such representatives and consultants are
subject to written obligations that are no less stringent than the
confidentiality obligations and restrictions on use set forth in Article X. Each
Party shall bear its own expenses relating to attendance at JDC meetings by its
representatives.

 

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4.2. Chairperson. The chairperson of the JDC (the “JDC Chairperson”) shall be a
representative of AVEO. The JDC Chairperson’s responsibilities shall include
(i) scheduling meetings as described in Section 4.3, or more frequently if the
JDC determines it necessary; (ii) setting agendas for meetings with solicited
input from other members; and (iii) confirming and delivering minutes to the JDC
for review and final approval.

4.3. Meetings. The first JDC meeting shall be held within sixty (60) days after
the Option Exercise Date, and the JDC shall meet in accordance with a schedule
established by mutual agreement of the Parties, but, unless the Parties
otherwise agree, the JDC shall meet no less frequently than once each Calendar
Quarter, with the location for such meetings alternating between AVEO and Biogen
Idec facilities in Massachusetts (or such other locations as determined by the
JDC). Alternatively, the JDC may meet by means of teleconference,
videoconference or other similar communications equipment, but at least one
(1) meeting per Calendar Year shall be conducted in person.

4.4. JDC Responsibilities. The JDC shall have the following responsibilities
with respect to the Development of Licensed Product during the License Term:

(i) reviewing and approving (A) the Development Plan, (B) each annual update to
the Development Plan, (C) any other modifications to the Development Plan, in
each case within thirty (30) days after each submission thereof to the JDC (or
sooner as circumstances warrant), and (D) guidelines for conduct of
Territory-Specific Clinical Trials and Post-Approval Clinical Studies;

(ii) monitoring and overseeing Development of Licensed Product in the Field in
the Territory, and monitoring the Parties’ respective commitments relating to
shared Development Costs;

(iii) reviewing updates from AVEO regarding the Development of the Licensed
Product in the Territory, and updates from Biogen Idec regarding the conduct of
Territory-Specific Clinical Trials and Post Approval Clinical Studies,
including, in each case a review of (a) the status of such Development efforts;
(b) the results of pre-clinical and clinical studies of Licensed Product in the
Field completed since the last update; (c) the design of proposed pre-clinical
and clinical studies, and (d) the content of proposed regulatory filings related
to Licensed Product in the Field in the Territory;

(iv) regularly assessing the progress of conduct of the Development Plan against
the timelines and budgets contained therein, and reviewing relevant data, and
considering issues of priority; and

(v) coordinate on issues related to Manufacture of Licensed Product for the
Field in the Territory, subject to Article VII.

For purposes of clarity, it is expected that with respect to the sharing of
information regarding the Licensed Product, each Party will, through the JDC and
through regular communication between each Party’s designated Collaboration
Manager, keep the other Party informed at a detailed level about all activities
related to the Development and Manufacture of the Licensed Product in the Field
under this Agreement, and will provide all information requested by the other
Party related to the Development and Manufacture of the Licensed Product in the
Field.

 

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The JDC shall not have the authority to modify the terms of this Agreement.

4.5. Appointment of Subcommittees, Project Teams and Collaboration Managers. The
JDC shall be empowered to create such subcommittees of itself and project teams
as it may deem appropriate or necessary. Each such subcommittee and project team
shall report to the JDC, which shall have authority to approve or reject
recommendations or actions proposed thereby subject to the terms of this
Agreement. Each Party shall also designate a collaboration manager (each a
“Collaboration Manager”), who shall be responsible for day-to-day coordination
between the Parties and will serve to facilitate communication between the
Parties with respect to Development, Manufacture and Commercialization of
Licensed Product under this Agreement. Each Party may change its designated
Collaboration Manager from time to time upon written notice to the other Party.

4.6. Meeting Materials and Minutes.

(a) Meeting Materials. Each Party will provide the members of the JDC with
copies, which may be in electronic format, of all materials it intends to
present at a JDC meeting. The JDC may also request at any time specific data or
information related to Development activities or any other data to which the JDC
is entitled under this Agreement or that a written report be prepared in advance
of any meeting summarizing certain material data and information arising out of
the conduct of the Development of Licensed Product or any other data to which
the JDC is entitled under this Agreement and the Party or appropriate committee
to whom such request is made shall promptly provide to the other Party or the
JDC such report, data or information.

(b) Minutes. A secretary shall be appointed for each meeting and shall prepare
minutes of the meeting, which such minutes shall be subject to approval by the
JDC.

4.7. Decisions.

(a) Day-to-Day Management. The Parties agree that (i) decisions with respect to
the day-to-day management of Development of Licensed Product in the Field in the
Territory (other than the conduct of Territory-Specific Clinical Trials and
Post-Approval Clinical Studies in the Licensed Territory) shall not be within
the purview of the JDC, but instead shall be the sole responsibility of AVEO,
and (ii) decisions with respect to the day-to-day management of
Territory-Specific Clinical Trials and Post-Approval Clinical Studies in the
Licensed Territory shall not be within the purview of the JDC, but instead shall
be the sole responsibility of Biogen Idec, in each case provided such decisions
are consistent with the Development Plan, and, subject, in each case to the
restrictions contained in Section 4.8(a) and 4.8(b).

(b) JDC Decisions. During the License Term, decisions within the purview of the
JDC shall be made by the JDC by consensus, with the representatives of each
Party collectively having one vote on behalf of such Party. For each meeting of
the JDC, at least two (2) representatives of each Party shall constitute a
quorum. Action on any matter may be taken at a meeting, by teleconference,
videoconference or by written agreement.

 

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4.8. Deadlocks. The JDC shall attempt to resolve any and all disputes relating
to Development of Licensed Product during the License Term by consensus. If the
JDC is unable to reach a consensus with respect to a dispute within its purview
related to Development of Licensed Product then the dispute shall be submitted
to the Senior Representatives for review. If the Senior Representatives cannot
reach an agreement regarding such dispute within thirty (30) days after
submission to them for resolution, then, if the dispute is one over which the
JDC has authority pursuant to this Agreement: (i) Biogen Idec shall have
final-decision-making authority with respect to decisions related to
Territory-Specific Clinical Trials and Post-Approval Clinical Trials required or
reasonably useful in connection with Regulatory Approval or Commercialization of
Licensed Product in the Licensed Territory, and (ii) AVEO shall have the final
decision-making authority with respect to all other decisions related to
Development, subject in each case to paragraphs (a) and (b) of this Section 4.8.
Notwithstanding anything in this Agreement to the contrary, any decision within
the purview of the JDC for which one of the Parties has exercised its final
decision-making authority, as set forth in this Agreement, shall be considered a
decision or approval of the JDC.

(a) Limitations on Decision-Making Authority. Neither Party may exercise its
final decision-making authority during the License Term: (i) to require the
other Party to perform any Development activities for which it is not
responsible under this Agreement or, subject to Section 5.2, to amend the
Development Plan in such a way that it no longer meets the Development Plan
Guidelines set forth in Exhibit B (the “Development Plan Guidelines”); (ii) to
resolve any dispute as to what level of effort constitutes Commercially
Reasonable Efforts; (iii) to decide to conduct, sponsor, fund or otherwise
support a clinical study, including a Territory-Specific Clinical Trial or a
Post-Approval Clinical Study that would materially and adversely affect the
Development or Commercialization of the Licensed Product in the other Party’s
Territory; (iv) to decide to pursue or not to pursue the negotiation and
execution of a Third Party Technology Agreement subject to, and in accordance
with, Section 3.6 hereof; (v) to require a Party to take any action that would,
or fail to take any action where the failure to take such action would, violate
any applicable Law, rule or regulation or infringe the intellectual property
rights of Third Parties; (vi) to expand or narrow the responsibilities of the
JDC; (vii) to increase or change the budget for Development Costs; (viii) to
establish guidelines for the conduct by Biogen Idec of any of the Development
activities contemplated under Section 5.1(b) hereof or (ix) to amend this
Agreement. For the avoidance of doubt, subject to Section 5.2, any decision by
the JDC with respect to any of the items referred to in the foregoing clauses
(i)-(viii) of this Section 4.8(a) must be unanimous and, in the event of any
disagreement or deadlock at the JDC with respect to any of such items, neither
Party may exercise its final decision-making authority with respect to such
matter during the License Term.

(b) Other Disputes. With respect to all disputes between the Parties during the
License Term related to Development or Manufacture of Licensed Product under
this Agreement that are not subject to either Party’s final decision-making
authority as set forth in Section 4.7 or this Section 4.8, the dispute
resolution provisions of Article XV shall apply.

 

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ARTICLE V.

DEVELOPMENT DURING LICENSE TERM

5.1. Development.

(a) General. Except as set forth in paragraph (b), AVEO shall be solely
responsible for Development of Licensed Product in the Field for both the
Licensed Territory and the AVEO Territory during the License Term, and shall use
Commercially Reasonable Efforts during the License Term to Develop Licensed
Product in the Field for both the Licensed Territory and the AVEO Territory.
Each Party shall use Commercially Reasonable Efforts to conduct the Development
activities contemplated under the Development Plan approved by the JDC, as
amended from time-to-time in accordance with Section 5.2, in accordance with the
terms of such Development Plan.

(b) Territory Specific. Biogen Idec shall be solely responsible for conducting
Territory-Specific Clinical Trials and Post-Approval Clinical Studies of
Licensed Product in the Field where the data or other Know-how generated will
have applicability only to the Licensed Territory and, except with respect to
safety data, will only be used in filings for Regulatory Approval in the
Licensed Territory, and shall use Commercially Reasonable Efforts to conduct
such Development activities during the License Term in accordance with
guidelines for such activities established by the JDC.

5.2. Development Plan.

(a) The “Initial Development Plan” shall hereafter mean the Delivered Initial
Development Plan which shall be the Development Plan unless and until amended or
updated by the JDC.

(b) The JDC shall review the Development Plan not less frequently than annually
and shall develop detailed and specific Development Plan updates, which shall
update or include an overall Development multi-year budget for specified
activities and an annual Development budget for Development of Licensed Product
for the upcoming Calendar Year. The JDC’s review shall continue until the
completion of Licensed Product Development activities in both the Licensed
Territory and the AVEO Territory. Either Party may also develop and submit to
the JDC from time to time other proposed substantive amendments to the
Development Plan, including, without limitation, any proposed substantive
amendments to the Development Plan for purpose of Developing new Licensed
Products in any indication or indications or new indications for Licensed
Products already in Development or Commercialization. The JDC shall review such
proposed amendments and may approve such proposed amendments or any other
proposed amendments that the JDC may consider from time to time in its
discretion and, upon such approval by the JDC, the Development Plan shall be
amended accordingly; provided, that in all cases any such amendments are in
accordance with the Development Plan Guidelines. For the sake of clarity, (x) if
the JDC cannot agree on an amendment to a Development Plan, the dispute
resolution mechanism set forth in Section 4.8 shall apply, and (y) if the JDC
cannot agree on an upcoming Calendar Year’s budget for Development Costs under
any Development Plan, the budget for the upcoming Calendar Year shall be
identical in amount to the amount budgeted for the relevant activities included
in the last-approved multi-year budget showing the relevant activities.

 

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5.3. Records and Information. Each Party will maintain scientific records
related to its Development efforts with respect to Licensed Product in the
Field, in sufficient detail and in a good scientific manner appropriate for
patent and regulatory purposes, and which will fully and properly reflect all
work done and results achieved in the performance of the Development activities
with respect to the Licensed Product in the Field under this Agreement. During
the License Term, each Party will have the right, during normal business hours
and upon reasonable notice, at its own expense, to inspect and copy (or request
the other Party to copy) all records of the other Party maintained in connection
with the work done and results achieved in the performance of Development
activities performed under this Agreement, but solely to the extent to which
such records relate to Development of Licensed Product in the Field. All such
records, and the information disclosed therein, as well as all disclosures made
pursuant to Section 5.4, will be maintained in confidence by the Party receiving
the information in accordance with Article X and will only be used for purposes
permitted under Article X.

5.4. Development Costs.

(a) Cost Sharing. The Parties shall share Development Costs during the License
Term as follows: (i) all Development Costs incurred by or on behalf of AVEO,
Biogen Idec and their respective Affiliates with respect to Development of
Licensed Product in the Field, other than those Development Costs specified in
clauses (ii) and (iii) and other than Pre-Option Exercise Phase 3 Manufacturing
Costs (which are covered by Section 5.4(b) below), will be shared equally by the
Parties; (ii) all Development Costs incurred by or on behalf of AVEO or its
Affiliates with respect to Territory-Specific Clinical Trials or Post-Approval
Clinical Studies in the AVEO Territory where the data or other Know-how
generated (other than safety data) will not be used in filings to support
Regulatory Approval in the Licensed Territory, shall be borne one hundred
percent (100%) by AVEO; and (iii) all Development Costs incurred by Biogen Idec
or its Affiliates with respect to Territory-Specific Clinical Trials or
Post-Approval Clinical Studies in the Licensed Territory where the data or other
Know-how generated (other than safety data) will not be used in filings to
support Regulatory Approval in the AVEO Territory, shall be borne one hundred
percent (100%) by Biogen Idec. The Parties shall discuss and attempt to mutually
determine in good faith how specific Development Costs are allocated in
accordance with the foregoing sentence.

(b) Pre-Option Exercise Phase 3 Manufacturing Costs. [**] of Pre-Option Exercise
Phase 3 Manufacturing Costs shall be reimbursed by Biogen Idec to AVEO as an
additional payment upon delivery of the Option Exercise Fee.

5.5. Development Cost Reimbursement.

(a) Cost Reimbursement. No later than [**] prior to the end of each Calendar
Quarter during the License Term, AVEO shall provide Biogen Idec with a
non-binding, good-faith estimate of the Development Costs expected to be
incurred by AVEO and its Affiliates during such Calendar Quarter. Within [**]
after the end of each Calendar Quarter during the License Term, AVEO shall
provide Biogen Idec with a reasonably detailed statement of the Development
Costs actually incurred by AVEO and its Affiliates in

 

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the Calendar Quarter just ended (a “Quarterly Cost Notice”). Within [**] of
Biogen Idec’s receipt of a Quarterly Cost Notice, Biogen Idec shall pay to AVEO
an amount equal to [**] of the total Development Costs shown for such Calendar
Quarter on the Quarterly Cost Notice, except that if any such Development Costs
are to be borne one hundred percent (100%) by Biogen Idec under Section 5.4 then
such costs shall be identified separately in the Quarterly Cost Notice, and
Biogen Idec shall pay AVEO one hundred percent (100%) of such Development Costs
(the “Cost Payment”). Such statement shall include, but not be limited to, the
number of individuals doing the work, the amount of time spent on the work, the
nature of the work and supporting documentation for disbursements, including, to
the extent requested by Biogen Idec, copies of invoices received from Third
Parties. Notwithstanding anything in this Agreement to the contrary, except as
set forth in paragraph (b), the total actual Development Costs incurred by AVEO
or any of its Affiliates for a Calendar Year shall not exceed [**] of the
budgeted Development Costs for such Calendar Year, as shown on the then current
version of the Development Plan, or if no budget has been approved for such
Calendar Year, on the last approved multi-year budget showing the relevant
activities, except to the extent the JDC unanimously approves the increase over
[**] of the budgeted Development Costs. Decisions of the JDC with respect to
Development Cost overruns shall be made in accordance with Section 4.7 and 4.8.
Biogen Idec shall pay invoices received from AVEO under this paragraph within
[**] of receipt.

(b) Product Liability Costs. Notwithstanding anything in this Agreement to the
contrary, Biogen Idec will reimburse AVEO for its share of the Development Costs
specified in clause (iv) of Section 1.34 whether or not such costs are
consistent with the Development Plan or budget, provided that if any settlement
amounts are to be included in Development Costs, both Parties must approve such
settlement in advance.

5.6. Other Expenses. Except as expressly set forth in this Agreement, each of
Biogen Idec and AVEO shall be solely responsible for its own out-of-pocket costs
and disbursements incurred, and for providing the necessary facilities,
supplies, personnel and other resources necessary, in the performance of its
obligations under this Agreement.

5.7. Regulatory. Except as may be otherwise specified by the JDC and except with
respect to Territory-Specific Clinical Trials or Post-Approval Clinical Studies
conducted by or on behalf of Biogen Idec or any of its Affiliates or
Sublicensees, AVEO (or its Affiliates or Sublicensees) shall be responsible for,
and shall be the holder of, all INDs (including IND submissions) for Licensed
Product in the Field in both the AVEO Territory and the Licensed Territory and
for all Regulatory Approvals (including BLA submissions) for Licensed Product in
the Field in the AVEO Territory. Except as may be otherwise specified by the
JDC, after the Option Exercise Date, Biogen Idec (or its Affiliates or
Sublicensees) shall be responsible for, and shall be the holder of, all INDs
(including IND submissions) with respect to Territory-Specific Clinical Trials
or Post-Approval Clinical Studies conducted by or on behalf of Biogen Idec or
any of its Affiliates or Sublicensees, and all Regulatory Approvals (including
BLA submissions) for the Licensed Product in the Field in the Licensed
Territory. Following the Option Exercise Date, Biogen Idec, after an agreed-upon
time (such time to be determined by the JDC), Biogen Idec shall assume
responsibility for the INDs for the Licensed Territory. The Party responsible
for a submission shall (i) oversee, monitor and coordinate all regulatory
actions, communications and filings with each Regulatory Authority related to
such submission, (ii) be responsible for interfacing, corresponding and meeting
with each Regulatory

 

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Authority related to such submission, and (iii) be responsible for maintaining
all regulatory filings; provided, that, the other Party shall have a right to
have one or more of its employees attend, as an observer, any meetings with
Regulatory Authorities for which the other Party is responsible under this
Section 5.7, and to participate in major planning meetings occurring before or
after any such meeting with Regulatory Authorities, and shall be provided in
advance with the materials prepared for any such meeting. Notwithstanding
anything in this Agreement to the contrary, each Party shall have the right to
review and comment on any regulatory submission related to Licensed Product in
the Field made by the other Party under this paragraph, through the JDC, and
such other Party shall consider in good faith the comments made by the
commenting Party. In addition, each Party shall provide the other Party, in a
timely manner, with written notice and copies of: (a) all IND submissions with
respect to Licensed Product; (b) all filings and submissions for Regulatory
Approval regarding the Licensed Product; and (c) all Regulatory Approvals
obtained or denied, with respect to Licensed Product, in each case within the
Field. Except as set forth in Section 5.11 and 5.12, and subject to
Section 5.13, each Party shall have access to all data contained or referenced
in any regulatory submissions or applications for Regulatory Approvals with
respect to Licensed Product made by the other Party, in each case as may be
reasonably necessary to enable the Party accessing such data to exercise its
rights, and fulfill its obligations, under this Agreement to Develop,
Manufacture and Commercialize Licensed Product. Each Party shall provide
appropriate notification of such data access right of the other Party to the
appropriate Regulatory Authorities. In addition, except as set forth in
Section 5.11 and 5.12, and subject to Section 5.13, each Party shall have the
right to cross-reference and make any other use of the other Party’s INDs for
Licensed Product that it would have if it were the owner, including without
limitation access to all data contained or referenced in such INDs, in each case
as may be reasonably necessary to enable such Party exercising such right of
cross-reference to exercise its rights, and fulfill its obligations, under this
Agreement to Develop, Manufacture and Commercialize Licensed Product.
Notwithstanding anything in this Agreement to the contrary, the provisions of
this Section 5.7 shall not apply to regulatory submissions or Regulatory
Approvals for New Licensed Product or New Indication Existing Licensed Product
that a Party Develops pursuant to, and in accordance with, Section 5.11 or
Section 5.12, which such regulatory submissions and Regulatory Approvals shall
be the sole responsibility of and solely owned by such Party.

5.8. Adverse Event and Complaint Reporting Procedures.

(a) Each Party will maintain a record of any and all complaints it or its
Affiliates or Sublicensees receives with respect to Licensed Product in
connection with Development or Commercialization of Licensed Product during the
License Term. Each Party will notify the other Party in reasonable detail of any
complaint received by it or its Affiliates or Sublicensees with respect to
Licensed Product within sufficient time to allow the other Party and its
Affiliates or Sublicensees to comply with any and all regulatory and other
requirements imposed upon them in any jurisdiction in which Licensed Product is
tested in clinical studies, including Post-Approval Studies, or being marketed
or sold.

(b) AVEO will maintain a global safety database for Licensed Product. The cost
of implementing and maintaining the global safety database shall be included as
Development Costs, and shared equally by the Parties. Biogen Idec will have
access to all data in the global safety database, subject to reasonable
procedures to be mutually agreed upon by the Parties and set forth in the Drug

 

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Safety Information Exchange Agreement, as defined below. Biogen Idec will
provide AVEO with all adverse event information and safety data relating to
Licensed Product in its control through access to the global safety database.
Biogen Idec will ensure that each of its Affiliates and Sublicensees will report
to Biogen Idec or directly to AVEO the details around any adverse events and
serious adverse events relating to Licensed Product in its control within the
time periods for such reporting as specified in the Drug Safety Information
Exchange Agreement. The holder of the relevant IND shall be responsible for
submitting adverse event reports with respect to Licensed Product in the Field
to applicable Regulatory Authorities; provided that, upon Regulatory Approval,
Biogen Idec shall be responsible for submitting all required adverse event
reports with respect to Licensed Product to the applicable Regulatory
Authorities in the Licensed Territory. Biogen Idec’s costs associated with
submitting adverse event reports in the Licensed Territory shall be borne by
Biogen Idec. Upon Regulatory Approval, AVEO shall be responsible for submitting
all other required adverse event reports with respect to the Licensed Product to
the applicable Regulatory Authorities in the AVEO Territory. AVEO’s costs
associated with submitting adverse event reports in the Licensed Territory as
the IND holder during Development, to the extent applicable, shall be treated as
a Development Costs to be borne by the Parties as specified in Section 5.4.
AVEO’s costs associated with submitting adverse event reports with respect to
the Licensed Product to the applicable Regulatory Authorities in the AVEO
Territory shall be borne by AVEO.

(c) At such time as is deemed appropriate by the JDC, the Parties will develop
and agree in writing on a Drug Safety Information Exchange Agreement that will
include safety data exchange procedures governing the coordination of
collection, investigation, reporting, and exchange of information concerning any
adverse experiences, and any product quality and product complaints involving
adverse experiences, related to the Licensed Product, sufficient to enable each
Party to comply with its legal and regulatory obligations and consistent with
the terms of this Agreement.

5.9. Recalls, Market Withdrawals or Corrective Actions. If any Regulatory
Authority issues or requests a recall or takes a similar action in connection
with Licensed Product, or if either Party determines that an event, incident or
circumstance has occurred that may result in the need for a recall or market
withdrawal, the Party notified of such recall or similar action, or the Party
that desires such recall, withdrawal or similar action, shall within twenty-four
(24) hours, advise the other Party thereof by telephone or facsimile. Biogen
Idec, in consultation with AVEO (except in the case of a government mandated
recall, when Biogen Idec may, if there is not sufficient time, act without such
consultation, but shall notify AVEO as soon as possible), shall decide whether
to conduct a recall or product withdrawal of Licensed Product in the Licensed
Territory and the manner in which any such recall or withdrawal shall be
conducted. AVEO, in consultation with Biogen Idec (except in the case of a
government mandated recall, when AVEO may, if there is not sufficient time, act
without such advance consultation, but shall notify Biogen Idec as soon as
possible) shall decide whether to conduct a recall or product withdrawal of
Licensed Product in the AVEO Territory and the manner in which any such recall
or withdrawal shall be conducted. Each Party shall make available to the other
Party, upon request, all pertinent records in its control that may reasonably be
needed by the requesting Party in effecting a recall or withdrawal of Licensed
Product.

 

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5.10. Medical Inquiries. Upon Regulatory Approval, Biogen Idec, at its sole
cost, shall handle all medical questions or inquiries from members of the
medical profession in the Licensed Territory regarding Licensed Product in the
Field. AVEO shall handle all medical questions or inquiries from members of the
medical profession regarding the Licensed Product in the Field in the Licensed
Territory prior to Regulatory Approval in the Licensed Territory. The costs of
such activities shall be treated as Development Costs to be borne by the Parties
as specified in Section 5.4. AVEO, at its sole cost, shall handle all medical
questions or inquiries from members of the medical profession in the AVEO
Territory regarding Licensed Product in the Field.

5.11. Opt-out Rights for New Products.

(a) Opt-out Process. In the event that either Party proposes an amendment,
modification or update of the Development Plan for purposes of Developing a new
Licensed Product for an existing or a new indication (a “New Licensed Product”),
and the other Party’s representatives on the JDC do not approve or consent to
such amendment, modification or update, then, notwithstanding anything express
or implied elsewhere in this Agreement to the contrary, the Party that proposed
the New Licensed Product (the “Funding Party”) may, by written notice to the
other Party given within [**] of the JDC’s vote, elect to trigger the provisions
of this Section 5.11 with respect to such New Licensed Product, in which case
the provisions of this Section 5.11 shall become applicable to such New Licensed
Product on the date such written notice is given (in each case, the “Section
5.11 Opt-out Effective Date”). From and after the Section 5.11 Opt-out Effective
Date with respect to a New Licensed Product, and subject to the provisions of
Section 5.11(b), (i) the Funding Party may proceed with Development and
Manufacturing of such New Licensed Product in the AVEO Territory and/or the
Licensed Territory at its sole cost, and such Development and Manufacturing
activities with respect to such New Licensed Product shall be the responsibility
and within the control of such Funding Party, (ii) the Funding Party may Develop
or Manufacture such New Licensed Product through Affiliates and Sublicensees and
may grant to Affiliates and Sublicensees the right to Develop or Manufacture
such New Licensed Product, subject to all of the provisions of Article III,
(iii) neither the non-Funding Party nor any of its Affiliates or Sublicensees
shall have any rights in or to the clinical data generated after the
Section 5.11 Opt-out Effective Date by the Funding Party or any of its
Affiliates or Sublicensees with respect to such New Licensed Product,
(iv) neither the Funding Party nor any of its Affiliates or Sublicensees may
Commercialize such New Licensed Product in the non-Funding Party’s Territory and
(v) neither the non-Funding Party nor any of its Affiliates or Sublicensees may
Commercialize such New Licensed Product in the non-Funding Party’s Territory.

(b) Effect of Opt-out. For purposes of clarity the following provisions will
apply with respect to any New Licensed Product from and after the Section 5.11
Opt-out Effective Date:

(i) Responsibility and control over the Development of such New Licensed Product
shall be entirely in the control of the Funding Party and the JDC shall have no
decision-making authority with respect to such Development, provided that the
Funding Party shall keep the JDC reasonably informed of the plan for Development
of the New Licensed Product, the progress of Development activities, and,
subject to the other terms of this Section 5.11, the results of such Development
efforts;

 

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(ii) Neither Party shall have any obligation under Article V hereof with respect
to such New Licensed Product;

(iii) Any and all clinical data related to such New Licensed Product that is
generated by the Funding Party or any of its Affiliates or Sublicensees from and
after the Section 5.11 Opt-out Effective Date shall be specifically excluded
from the definition of AVEO Collaboration Know-how and AVEO Know-how, in the
event AVEO is the Funding Party or from the definition of Biogen Idec
Collaboration Know-how in the event Biogen Idec is the Funding Party;

(iv) Neither the non-Funding Party nor any of its Affiliates or Sublicensees
shall have the right to access any data related to such New Licensed Product
generated solely by or on behalf of the Funding Party or any of its Affiliates
or Sublicensees from and after the Section 5.11 Opt-out Effective Date,
including to the extent contained in any INDs, BLAs or other submissions related
to such New Licensed Product, or to include any such data, in any regulatory
filings or submissions in such Party’s Territory or to cross-reference or
otherwise make use of or use such data, except for any adverse event data
required by Law to be disclosed by the non-Funding Party or any of its
Affiliates or Sublicensees;

(v) If the Funding Party is not at such time responsible for Manufacturing under
Article VII, the Funding Party shall be entitled to Manufacture such New
Licensed Product for its needs, and shall have the right to deal directly with
any Third Party contract manufacturer of the other Party to arrange for such
Third Party contract manufacturer to Manufacture and supply such New Licensed
Product to such Party and its Affiliates and Sublicensees for the purposes
contemplated in this Section 5.11;

(vi) The provisions of Section 8.4 shall not be applicable with respect to such
New Licensed Product; and

(vii) The provisions of Article VIII (other than Section 8.4) and Article IX
shall continue to be applicable with respect to such New Licensed Product.

5.12. Opt-out Rights for New Indications.

(a) Opt-out Process. In the event that either Party proposes an amendment,
modification or update of the Development Plan for purposes of Developing an
existing Licensed Product in a new indication (a “New Indication Existing
Licensed Product”) and such new indication is commercially viable in the AVEO
Territory and EU (a “Commercially Viable Indication”), and the other Party’s
representatives on the JDC do not approve or consent to such amendment,
modification or update, then, notwithstanding anything express or implied
elsewhere in this Agreement to the contrary, the Party that proposed such new
indication (the “New Indication Funding Party”) may, by written notice to the
other Party, given within [**] of the JDC’s vote, elect to trigger the

 

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provisions of this Section 5.12 with respect to such New Indication Existing
Licensed Product, in which case the provisions of this Section 5.12 shall become
applicable to such New Indication Existing Licensed Product on the date such
written notice is given (in each case, the “Section 5.12 Opt-out Effective
Date”). From and after the Section 5.12 Opt-out Effective Date with respect to a
New Indication Existing Licensed Product, and subject to the provisions of
Section 5.12(b) and Section 5.13 below, (i) the New Indication Funding Party may
proceed with Development and Manufacturing of such New Indication Existing
Licensed Product in the AVEO Territory and/or the Licensed Territory at its sole
cost, and such Development and Manufacturing activities with respect to such New
Indication Existing Licensed Product shall be the responsibility and within the
control of the New Indication Funding Party, (ii) the New Indication Funding
Party may Develop or Manufacture such New Indication Existing Licensed Product
through Affiliates and Sublicensees and may grant to Affiliates and Sublicensees
the right to Develop or Manufacture such New Indication Existing Licensed
Product, subject to all of the provisions of Article III, (iii) the non-New
Indication Funding Party and its Affiliates and Sublicensees shall not have any
rights in or to the clinical data generated after the Section 5.12 Opt-out
Effective Date by the New Indication Funding Party or any of its Affiliates or
Sublicensees with respect to such New Indication Existing Licensed Product,
other than safety data; (iv) neither the New Indication Funding Party nor any of
its Affiliates or Sublicensees may Commercialize such New Indication Existing
Licensed Product in the other Party’s Territory; and (v) neither the non-New
Indication Funding Party nor any of its Affiliates or Sublicensees may
Commercialize such New Indication Existing Licensed Product in the non-New
Indication Funding Party’s Territory.

(b) Effect of Opt-out. For purposes of clarity, and subject to Section 5.13
below, the following provisions will apply with respect to any New Indication
Existing Licensed Product from and after the Section 5.12 Opt-out Effective
Date:

(i) Responsibility and control over the Development of such New Indication
Existing Licensed Product shall be entirely in the control of the New Indication
Funding Party and the JDC shall have no decision-making authority with respect
to such Development, provided that the New Indication Funding Party shall keep
the JDC reasonably informed of the plan for Development of the New Indication
Existing Licensed Product, the progress of Development activities, and, subject
to the other terms of this Section 5.12, the results of such Development
efforts;

(ii) Neither Party shall have any obligation under Article V hereof with respect
to such New Indication Existing Licensed Product except under Sections 5.8 and
5.9;

(iii) Any and all clinical data related to such New Indication Existing Licensed
Product that is generated by the New Indication Funding Party or any of its
Affiliates or Sublicensees from and after the Section 5.12 Opt-out Effective
Date shall be specifically excluded from the definition of AVEO Collaboration
Know-how or AVEO Know-how, in the event AVEO is the New Indication Funding
Party, and from the definition of Biogen Idec Collaboration Know-how in the
event Biogen Idec is the New Indication Funding Party, subject, in each case, to
Section 5.8;

 

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(iv) Neither the non-New Indication Funding Party nor any of its Affiliates or
Sublicensees shall have the right to access any data related to such New
Indication Existing Licensed Product generated solely by or on behalf of the New
Indication Funding Party or any of its Affiliates or Sublicensees from and after
the Section 5.12 Opt-out Effective Date, including to the extent contained in
any INDs, BLAs or other submissions related to such New Indication Existing
Licensed Product, or to include any such data, in any regulatory filings or
submissions in such Party’s Territory or to cross-reference or otherwise make
use of or use such data;

(v) If the New Indication Funding Party is not, at such time, responsible for
Manufacturing the applicable Licensed Product under Article VII, at the request
of the New Indication Funding Party, the other Party shall Manufacture and
supply, or cause to be Manufactured and supplied, the reasonable requirements of
the New Indication Funding Party and its Affiliates and Sublicensees for such
New Indication Existing Licensed Product pursuant to, and in accordance with,
the provisions of Article VII;

(vi) The provisions of Section 8.4 shall not be applicable with respect to such
New Indication Existing Licensed Product; and

(vii) The provisions of Article VIII (other than Section 8.4) and Article IX
shall continue to be applicable with respect to such New Indication Existing
Licensed Product.

5.13. Opt-in.

(a) Opt-in. Following a Section 5.12 Opt-out Effective Date with respect to a
New Indication Existing Licensed Product, in the event that (i) the New
Indication Funding Party receives Regulatory Approval to Commercialize such New
Indication Existing Licensed Product in such Commercially Viable Indication in
the New Indication Funding Party’s Territory (such new indication being
hereinafter referred to as the “Opt-in Indication”), and (ii) the pivotal
trial(s) with respect to such New Indication Existing Licensed Product for which
Regulatory Approval was received were initially designed to support Regulatory
Approval in both the AVEO Territory and the Licensed Territory (and the
Regulatory Approval was received from the FDA (in the case that AVEO was the New
Indication Funding Party) or either (A) EMEA or (B) the applicable Regulatory
Authority in any one of Germany, France, Spain, Italy or the United Kingdom (in
the case that Biogen Idec was the New Indication Funding Party)), then the New
Indication Funding Party shall give written notice (in each case, the “Opt-in
Notice”) to the other Party that the New Indication Funding Party has received a
Regulatory Approval to Commercialize such New Indication Existing Licensed
Product in such Opt-in Indication in the New Indication Funding Party’s
Territory under this Agreement, in which case the provisions of this
Section 5.13 shall become applicable to such New Indication Existing Licensed
Product with respect to such Opt-in Indication (in each case, an “Opt-in New
Indication Existing Licensed Product”) on the date such written notice is given
(in each case, the “Opt-in Notice Date”). From and after the Opt-in Notice Date
with respect to an Opt-in New Indication Existing Licensed Product, and subject
to the provisions of Section 5.13(b), the non-New Indication Funding Party (the
“Opt-in Party”) shall be required to make a cash payment to the New Indication
Funding Party, within [**] of the Opt-in Notice Date, equal to one hundred
percent (100%) of the aggregate Development

 

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Costs incurred by the New Indication Funding Party from and after the
Section 5.12 Opt-out Effective Date to the date of the Regulatory Approval that
was the subject of the Opt-in Notice to the extent such Development Costs are
specific to such Opt-in New Indication Existing Licensed Product and would have
been shared equally under Section 5.4 if the Opt-in Party had not opted out
under Section 5.12 (the “Opt-in Payment”). “Development Costs” for purposes of
this paragraph shall mean the category of costs set forth in Section 1.34, but
without the requirement that such costs be set forth in a Development Plan
approved by the JDC, and provided such Development Costs shall be subject to the
auditing provisions of Section 8.16(b) to the same extent as applicable to
Development Costs incurred by AVEO under this Agreement. Commencing upon the
date of full payment of the Opt-in Payment(the “Opt-in Effective Date”), the
Opt-in Party and its Affiliates and Sublicensees shall have rights in or to the
clinical data generated after the Section 5.12 Opt-out Effective Date by the New
Indication Funding Party or any of its Affiliates or Sublicensees with respect
to such Opt-in New Indication Existing Licensed Product for purposes of seeking
and obtaining Regulatory Approval of such Opt-in New Indication Existing
Licensed Product in the Opt-in Party’s Territory under this Agreement, and for
all purposes of this Agreement shall be treated as though the Opt-in Party had
not triggered its rights under Section 5.12(a) hereof in the first place with
respect to such Opt-in New Indication Existing Licensed Product in such Opt-in
Indication.

(b) Effect of Opt-in. For purposes of clarity the following provisions will
apply with respect to any Opt-in New Indication Existing Licensed Product from
and after the Opt-in Effective Date:

(i) Responsibility and control over the Development and Regulatory Approval of
such Opt-in New Indication Existing Licensed Product in the Opt-in Party’s
Territory under this Agreement shall be entirely in the control of the Opt-in
Party and the JDC shall have no decision-making authority with respect to such
Development and Regulatory Approval, provided that the Opt-in Party shall keep
the JDC reasonably informed of the plan for Development and Regulatory Approval
of the Opt-in New Indication Existing Licensed Product, the progress of
Development activities, and, subject to the other terms of this Section 5.13,
the results of such Development efforts;

(ii) Neither Party shall have any obligation under Article V hereof with respect
to such Opt-in New Indication Existing Licensed Product other than under
Section 5.8 and 5.9;

(iii) If Biogen Idec is the Opt-in Party, any and all clinical data related to
such Opt-in New Indication Existing Licensed Product that was generated by AVEO
or any of its Affiliates or Sublicensees from and after the Section 5.12 Opt-out
Effective Date with respect to such Opt-in New Indication Existing Licensed
Product shall be specifically included in the definition of AVEO Collaboration
Know-how or AVEO Know-how;

(iv) If AVEO is the Opt-in Party, any and all clinical data related to such
Opt-in New Indication Existing Licensed Product that was generated by Biogen
Idec or any of its Affiliates or Sublicensees from and after the Section 5.12
Opt-out Effective Date with respect to such Opt-in New Indication Existing
Licensed Product shall be specifically included in the definition of Biogen Idec
Collaboration Know-how;

 

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(v) The Opt-in Party and its Affiliates and Sublicensees shall have the right to
access any data related to such Opt-in New Indication Existing Licensed Product
generated by or on behalf of the other Party or any of its Affiliates or
Sublicensees from and after the Section 5.12 Opt-out Effective Date with respect
to such Opt-in New Indication Existing License Product, including to the extent
contained in any INDs, BLAs or other submissions related to such Opt-in New
Indication Existing Licensed Product, or to include any such data, in any
regulatory filings or submissions in the Opt-in Party’s Territory or to
cross-reference or otherwise make use of or use such data;

(vi) At the request of the Opt-in Party if the other Party is at such time
responsible for Manufacturing under Article VII, such other Party shall
Manufacture and supply, or cause to be Manufactured and supplied, the reasonable
requirements of the Opt-in Party and its Affiliates and Sublicensees for such
Opt-in New Indication Existing Licensed Product pursuant to, and in accordance
with, the provisions of Article VII;

(vii) If Biogen Idec is the Opt-in Party, the provisions of Section 8.4 shall be
applicable with respect to such Opt-in New Indication Existing Licensed Product;
and

(viii) The provisions of Article VIII and Article IX shall continue to be
applicable with respect to such Opt-in New Indication Existing Licensed Product.

ARTICLE VI.

COMMERCIALIZATION DURING LICENSE TERM

6.1. General. Biogen Idec shall be solely responsible for all Commercialization
activities relating to the Licensed Product in the Field in the Licensed
Territory during the License Term, and shall use Commercially Reasonable Efforts
to Commercialize Licensed Products in those countries in the Licensed Territory
in which Regulatory Approval has been obtained, including by providing
appropriate incentives consistent with its normal business practices to Sales
Representatives involved in the Commercialization of the Licensed Product in the
Licensed Territory. AVEO shall be solely responsible for all Commercialization
activities relating to the Licensed Product in the Field in the AVEO Territory
and shall use Commercially Reasonable Efforts to Commercialize Licensed Products
in those countries in the AVEO Territory in which Regulatory Approval has been
obtained, including by providing appropriate incentives consistent with its
normal business practices to Sales Representatives involved in the
Commercialization of the Licensed Product in the AVEO Territory.

6.2. Joint Commercialization Team.

(a) Formation. Commencing with the initiation of the first Phase 3 Clinical
Study of the Licensed Product in the Territory, the Parties shall establish a
joint commercialization team (“JCT”) to serve as a forum to discuss
Commercialization of the Licensed Product in the Field in the Parties’
respective Territory. The JCT shall consist of three (3) representatives
designated by each Party, or

 

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such other number as the Parties may from time to time mutually agree. Each
Party shall appoint its initial representatives on the JCT at the time of
formation, but may, from time to time, substitute one or more of its
representatives, in its sole discretion, effective upon notice to the other
Party of such change. Each Party shall have at least one JCT representative who
is a senior employee (vice president level or above), and all JCT
representatives shall have appropriate expertise and ongoing familiarity with
Commercialization of biopharmaceutical products. Additional representatives or
consultants may from time to time, by mutual consent of the Parties, be invited
to attend JCT meetings, provided such representatives and consultants are
subject to written obligations that are no less stringent than the
confidentiality obligations and restrictions on use set forth in Article X. Each
Party shall bear its own expenses relating to attendance at JCT meetings by its
representatives.

(b) Chairperson. The chairperson of the JCT (the “JCT Chairperson”) shall
alternate at one-year intervals between a representative of AVEO and a
representative of Biogen Idec, with the initial JCT Chairperson being a
representative of AVEO. The JCT Chairperson’s responsibilities shall include
(i) scheduling meetings at such frequency as described in paragraph (c) or as
the JCT otherwise determines is necessary; (ii) setting agendas for meetings
with solicited input from other members; and (iii) confirming and delivering
minutes to the JCT for review and final approval.

(c) Meetings. The JCT shall meet in accordance with a schedule established by
mutual agreement of the Parties, but, unless the Parties otherwise agree, the
JCT shall meet no less frequently than once each Calendar Year, with the
location for such meetings alternating between AVEO and Biogen Idec facilities
in Massachusetts (or such other locations as are determined by the JCT).
Alternatively, the JCT may meet by means of teleconference, videoconference or
other similar communications equipment.

(d) Responsibilities. The responsibilities of the JCT include:

(i) discussing global branding and positioning and publications strategy of
Licensed Product in the Territory;

(ii) receiving updates from each Party regarding the Commercialization of the
Licensed Product in the Territory;

(iii) coordinating with the JDC regarding Development matters as necessary or
appropriate with respect to Commercialization of Licensed Product in the
Territory; and

(iv) to the extent consistent with Article VII, coordinating Manufacturing
activities related to the Commercialization of the Licensed Product in the
Territory.

(e) Decision-Making. Notwithstanding anything in this Agreement to the contrary
the JCT shall have no decision-making authority. Biogen Idec shall have sole
decision-making authority with respect to Commercialization of Licensed Product
in the Field in the Licensed Territory, and AVEO shall have sole decision-making
authority with respect to Commercialization of Licensed Product in the Field in
the AVEO Territory.

 

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6.3. Commercialization Costs. The costs of Commercialization activities in the
Licensed Territory shall be borne one hundred percent (100%) by Biogen Idec. The
costs of Commercialization activities in the AVEO Territory shall be borne one
hundred percent (100%) by AVEO.

6.4. Advertising and Promotional Materials. Biogen Idec will be responsible for
the creation, preparation, production, reproduction and filing with the
applicable Regulatory Authorities, of relevant written sales, promotion and
advertising materials relating to the Licensed Product (“Promotional Materials”)
for use in the Licensed Territory, and AVEO will responsible for the creation,
preparation, production, reproduction and filing with the applicable Regulatory
Authorities, of all Promotional Materials in the AVEO Territory. All such
Promotional Materials will be compliant with all applicable Laws. Subject to any
limitations imposed by applicable Law, all such Promotional Materials and all
documentary information and oral presentations (where practicable) regarding the
marketing and promotion of the Licensed Product in the Field in the Licensed
Territory shall acknowledge the Parties’ license arrangement with respect to the
Licensed Product. Copies of all Promotional Materials used in the Licensed
Territory will be archived by Biogen Idec in accordance with applicable Law.
Copies of all Promotional Materials used in the AVEO Territory will be archived
by AVEO in accordance with applicable Law. Upon AVEO’s reasonable request,
copies of the core Promotional Materials used by Biogen Idec in the Licensed
Territory shall be translated into English (where applicable) and provided to
AVEO. Upon Biogen Idec’s reasonable request, copies of core Promotional
Materials for Licensed Product used by AVEO or any of its Affiliates or
Sublicensees in the Field in the AVEO Territory shall be provided in English to
Biogen Idec.

6.5. Sales and Distribution. Biogen Idec shall be responsible for booking sales
and shall warehouse and distribute the Licensed Product in the Licensed
Territory. AVEO shall be responsible for booking sales and shall warehouse and
distribute Licensed Product in the AVEO Territory. If Biogen Idec or any of its
Affiliates or Sublicensees receive any orders for Licensed Product in the Field
for the AVEO Territory, they shall refer such orders to AVEO. If AVEO or any of
its Affiliates or Sublicensees receive any orders for Licensed Product in the
Field in the Licensed Territory, they shall refer such orders to Biogen Idec.

6.6. Reporting. Commencing upon the first Regulatory Approval of Licensed
Product in the Field in the applicable Territory, each Party shall prepare and
deliver to the JCT, by no later than each March 31 (for the period ending
December 31 of the prior Calendar Year), a written report summarizing such
Party’s Commercialization activities for the Licensed Product in the Field
performed to date (or updating such report for activities performed since the
last such report submitted hereunder, as applicable).

6.7. Other Responsibilities. Without intending to limit in any way Biogen Idec’s
overall responsibility for Commercialization of Licensed Product in the Field in
the Licensed Territory during the License Term and AVEO’s responsibility for
Commercialization of Licensed Product in the AVEO Territory during the License
Term, the Parties agree that Biogen Idec shall be solely responsible for the
following functions in the Licensed Territory and AVEO shall be solely
responsible for the following functions in the AVEO Territory during the License
Term:

(i) handling all returns of the Licensed Product; and

 

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(ii) handling all aspects of Licensed Product order processing, invoicing and
collection, distribution, inventory and receivables.

6.8. Export Monitoring. Biogen Idec and its Affiliates and Sublicensees will use
Commercially Reasonable Efforts to monitor and prevent exports of the Licensed
Product from the Licensed Territory to the AVEO Territory, using methods
commonly used in the industry for such purpose, and shall promptly inform AVEO
of any such exports of the Licensed Product from the Licensed Territory to the
AVEO Territory, and the actions taken to prevent such exports. Biogen Idec
agrees to take any actions reasonably requested in writing by AVEO that are
consistent with applicable Law and regulation to prevent exports of the Licensed
Product from the Licensed Territory to the AVEO Territory. Biogen Idec shall
ensure that it has in effect provisions with those of its Affiliates or
Sublicensees who are Commercializing Licensed Products in the Licensed Territory
that require such Affiliates and Sublicensees to use efforts consistent with
those required of Biogen Idec in this Section 6.8. AVEO and its Affiliates and
Sublicensees will use Commercially Reasonable Efforts to monitor and prevent
exports of the Licensed Product from the AVEO Territory to the Licensed
Territory, using methods commonly used in the industry for such purpose, and
shall promptly inform Biogen Idec of any such exports of the Licensed Product
from the AVEO Territory to the Licensed Territory, and the actions taken to
prevent such exports. AVEO agrees to take any actions reasonably requested in
writing by Biogen Idec that are consistent with applicable Law and regulation to
prevent exports of the Licensed Product from the AVEO Territory to the Licensed
Territory. AVEO shall ensure that it has in effect provisions with those of its
Affiliates or Sublicensees who are Commercializing Licensed Products in the AVEO
Territory that require such Affiliates and Sublicensees to use efforts
consistent with those required of AVEO in this Section 6.8.

ARTICLE VII.

MANUFACTURE

7.1. Development Supply. Subject to the provisions set forth below in this
Section 7.1 and Sections 7.3, 7.5 and 7.6 hereof, AVEO, itself or through an
Affiliate or Third Party contractor, shall have the sole right to, and shall be
solely responsible for, the Manufacture of supplies of Licensed Product required
for all Development of Licensed Product by AVEO, Biogen Idec and their
respective Affiliates and Sublicensees in the AVEO Territory and the Licensed
Territory pursuant to this Agreement. AVEO shall use Commercially Reasonable
Efforts to meet its Manufacturing obligations under this Section 7.1. Subject to
the provisions set forth below in Sections 7.3, 7.5 and 7.6 hereof, at the
written request of Biogen Idec, which request may be made at any time and from
time to time after the Option Exercise Date and shall in any event be made by
Biogen Idec with sufficient advance notice to be commercially reasonable (or
with such other period of advance notice as the Parties may otherwise agree),
AVEO, itself or through an Affiliate or Third Party contractor, shall use
Commercially Reasonable Efforts to Manufacture and supply Licensed Product to
Biogen Idec and its Affiliates and Sublicensees in sufficient quantities to
satisfy their respective reasonable requirements for use thereof in Development
activities of Licensed Product pursuant to this Agreement.

 

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7.2. Commercial Supply. Subject to the provisions set forth below in this
Section 7.2 and Sections 7.4, 7.5, 7.6 and 7.7 hereof, AVEO, itself or through
an Affiliate, shall have the sole right to, and shall be solely responsible for,
the Manufacture of supplies of Licensed Product required for all
Commercialization of Licensed Product by AVEO, Biogen Idec and their respective
Affiliates and Sublicensees in the AVEO Territory and the Licensed Territory
pursuant to this Agreement. AVEO shall use Commercially Reasonable Efforts to
meet its Manufacturing obligations under this Section 7.2. In the event that
AVEO elects not to exercise its right under this Section 7.2 to Manufacture
itself or through an Affiliate and determines to Manufacture supplies of
Licensed Product through a Third Party contractor, AVEO shall provide prompt
written notice to Biogen Idec of its determination (which notice shall be given
not later than [**] prior to the target date of commencement of the first
Phase 3 Clinical Trial with respect to any Licensed Product (or with such other
period of advance notice as the Parties may otherwise agree) (a “Contract
Manufacturer Notice”). Subject to the provisions set forth below in 7.4, 7.5,
7.6 and 7.7 hereof, at the written request of Biogen Idec, which request may be
made at any time and from time to time commencing upon the initiation of the
first Phase 3 Clinical Trial with respect to any Licensed Product (or with such
other period of advance notice as the Parties may otherwise agree), AVEO, itself
or through an Affiliate or Third Party contractor, shall use Commercially
Reasonable Efforts to Manufacture and supply Licensed Product to Biogen Idec and
its Affiliates and Sublicensees in sufficient quantities to satisfy their
respective reasonable requirements for use thereof in Commercialization of such
Licensed Product in the Field in the Licensed Territory.

7.3. Manufacturing Costs for Development. The Cost of Goods Sold of Licensed
Product Manufactured pursuant to Section 7.1 hereof shall be included as
Development Costs and shall be borne by the Parties as set forth in Section 5.4
hereof. Except as set forth in the preceding sentence and except for Pre-Option
Exercise Phase 3 Manufacturing Costs, Biogen Idec and its Affiliates and
Sublicensees shall otherwise have no responsibility or obligation to pay or
reimburse AVEO for quantities of Licensed Product Manufactured by or on behalf
of AVEO pursuant to Section 7.1 hereof.

7.4. Transfer Price for Commercial Supply. The purchase price payable by Biogen
Idec and its Affiliates and Sublicensees for quantities of Licensed Product
Manufactured and supplied by or on behalf of AVEO pursuant to Section 7.2 hereof
shall be equal to the Cost of Goods Sold applicable to such quantities of
Licensed Product.

7.5. Biogen Idec Right to Become Sole Phase 3 and Commercial Supplier.
Notwithstanding the provisions of Section 7.1 or 7.2 above and subject to the
provisions of this Section 7.5 and Sections 5.11, 7.6 and 7.7, Biogen Idec shall
have the option to become the sole manufacturer and supplier of all quantities
of any Licensed Product required for all Phase 3 Clinical Trials with respect to
any Licensed Product and Commercialization of such Licensed Product by AVEO,
Biogen Idec and their respective Affiliates and Sublicensees in the AVEO
Territory and the Licensed Territory pursuant to this Agreement. Biogen Idec may
exercise such option with respect to any Licensed Product by (i) giving written
notice of exercise to AVEO no later than [**] after receipt by Biogen Idec of
the Contract Manufacturer Notice and (ii) executing a Supply Agreement with AVEO
in accordance with Section 7.7, including the

 

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timelines set forth in such Section, in which case Biogen Idec shall become the
sole manufacturer and supplier of such Licensed Product required for Phase 3
Clinical Trials and commercial quantities of such Licensed Product, provided,
that, unless AVEO agrees otherwise, Biogen Idec may not exercise its option to
become the sole manufacturer if, (i) at the time Biogen Idec gives such written
notice of exercise, AVEO is utilizing or planning to utilize a Third Party
contract manufacturer as the commercial manufacturer and supplier of such
Licensed Product and (ii) the per unit price of such Licensed Product quoted by
Biogen Idec is higher than [**] of the lowest quote submitted by any Third Party
contract manufacturer that, at the time of submitting such quote, has capacity
in an FDA-approved manufacturing facility adequate for the manufacture of such
Licensed Product. In the event that, pursuant to the foregoing provisions of
this Section 7.5, Biogen Idec becomes the sole commercial manufacturer and
supplier of any Licensed Product, then the provisions of Sections 7.1, 7.2, 7.3
and 7.4 shall thereafter apply to Biogen Idec with respect to such Licensed
Product to the same extent that they previously applied to AVEO and the rights
of Biogen Idec in Sections 7.1, 7.2, 7.3 and 7.4 shall thereafter apply to AVEO
with respect to such Licensed Product to the same extent they previously applied
to Biogen Idec. Notwithstanding anything in this Agreement, unless the Supply
Agreement otherwise specifies, in the event Biogen Idec becomes the Party
responsible for Manufacturing any Licensed Product pursuant to the terms of this
Section 7.5 during the Option Exercise Period, but elects not the exercise the
Option, Biogen Idec shall have the right to terminate its supply obligation
under this Section effective eighteen (18) months following written notice of
such termination, given after such election, having been provided to AVEO, or
such lesser amount of time as AVEO may specify in writing to Biogen Idec. In
such event, Biogen Idec shall engage in a technology transfer process, at Biogen
Idec’s cost, for the purpose of enabling AVEO or a Third Party contract
manufacturer designated by AVEO to Manufacture Licensed Product by or on behalf
of AVEO and its Affiliates and Sublicensees.

7.6. Back-Up Supply Rights. In the event that, at any time during the period in
which either Party has an obligation to Manufacture and supply Licensed Product
pursuant to Section 7.1 or Section 7.2 hereof, such Party (the “Non-performing
Manufacturing Party”) is unable to Manufacture and supply sufficient quantities
of such Licensed Product pursuant to Section 7.1 and/or Section 7.2, as the case
may be, to meet the requirements therefor of the other Party and its Affiliates
and Sublicensees as indicated in any good faith forecasts to be provided
pursuant to the Supply Agreement or Section 7.1 and/or Section 7.2, as the case
may be, then such other Party shall have the right (but not the obligation) to
Manufacture or have Manufactured such Licensed Product and thereafter to satisfy
all of the requirements of such other Party and its Affiliates and Sublicensees
for quantities of such Licensed Product, except if and to the extent otherwise
provided in the Supply Agreement. Such other Party may exercise its rights under
this Section 7.6 with respect to any Licensed Product by giving thirty (30) days
prior written notice to the Non-performing Manufacturing Party. Upon receipt by
the Non-performing Manufacturing Party of written notice from the other Party to
the effect that such other Party is exercising its rights under this
Section 7.6, the Non-performing Manufacturing Party shall provide reasonable
assistance, at its sole cost and expense, to enable such other Party to
Manufacture or have Manufactured and supplied such Licensed Product. Such
assistance shall include, without limitation, (i) engaging in any technology
transfer process required in order to enable such other Party or any Third Party
contract manufacturer engaged by such other Party to Manufacture such Licensed
Product and/or

 

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(ii) introducing such other Party to any Third Party contract manufacturers
utilized by the Non-performing Manufacturing Party and working with such other
Party and such Third Party contract manufacturers and taking such actions as may
be reasonably required in order to enable such other Party to obtain supply of
such Licensed Product from such Third Party contract manufacturers. The Parties
hereby acknowledge and agree that the Supply Agreement may provide for back-up
supply rights that are different than those set forth in this Section 7.6 and to
the extent of any conflict between any provisions of the Supply Agreement with
respect to back-up supply rights and the provisions of this Section 7.6, the
provisions of the Supply Agreement with respect to back-up supply rights shall
control.

7.7. Supply Agreement. Prior to the initiation of the first Phase 3 Clinical
Trial with respect to any Licensed Product, the Parties shall negotiate in good
faith and enter into a supply agreement pursuant to which AVEO, itself or
through an Affiliate or Third Party contractor, will Manufacture and supply to
Biogen Idec and its Affiliates and Sublicensees such Licensed Product as
required under Section 7.1 or 7.2 hereof, unless the Parties, as contemplated
under Section 7.5 hereof, shall have agreed that Biogen Idec will be the
manufacturer of such Licensed Product, in which case (i) such supply agreement
must be entered into at least [**] prior to commencement of the first Phase 3
Clinical Trial, and (ii) such supply agreement will provide that Biogen Idec,
itself or through an Affiliate or Third Party contractor, will Manufacture and
supply to AVEO and its Affiliates and Sublicensees such Licensed Product as
required under Sections 7.1, 7.2 and 7.5 hereof. Such supply agreement shall
include the applicable terms set forth in Sections 7.1, 7.2, 7.4 and 7.6 and
shall contain such other provisions as the Parties mutually agree upon that are
customary for supply agreements of this type. Pending the execution and delivery
of such supply agreement, each of the Parties shall perform their respective
obligations under this Article VII in accordance with its terms. Any supply
agreement that is entered into by the Parties pursuant to this Section 7.7 is
referred to in this Agreement as the “Supply Agreement.”

ARTICLE VIII.

FINANCIAL PROVISIONS

8.1. Initial Fee. Within five (5) Business Days after the Effective Date, Biogen
Idec shall pay to AVEO a non-creditable, non-refundable up-front option fee of
five million U.S. dollars ($5,000,000).

8.2. Equity Purchase. Concurrent with the execution of this Agreement, Biogen
Idec shall purchase thirty million U.S. dollars ($30,000,000) of AVEO’s Series E
Convertible Preferred Stock, $.001 par value per share, at a purchase price of
$4.00 per share, pursuant to, and in accordance with the terms of, the form of
Stock Purchase Agreement attached to this Agreement as Exhibit C.

8.3. Payments by Biogen Idec During Option Exercise Period. Subject to the terms
and conditions of this Agreement, Biogen Idec shall pay AVEO a milestone payment
(each, a “Pre-Exercise Milestone Payment”) upon occurrence of each of the
following events (each, a “Pre-Exercise Milestone”), on a one-time basis, in the
particular amounts specified below, no later than [**] after written notice from
AVEO of the occurrence of the applicable Pre-Exercise Milestone (which notice
shall be accompanied by supporting documentation and information as is
reasonably necessary and appropriate to demonstrate completion of the applicable
Pre-Exercise Milestone:

(a) Panel Identification. Upon Panel Identification, Biogen Idec shall pay to
AVEO five million U.S. dollars ($5,000,000). “Panel Identification” shall mean
the first identification and in vitro and biochemical characterization of a
panel of erbB3-specific murine antibodies.

 

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(b) [**]. Upon [**], Biogen Idec shall pay to AVEO [**] U.S. dollars ($[**]).
“[**]” shall mean [**] under this Agreement.

(c) [**]. Upon [**], Biogen Idec shall pay to AVEO [**] U.S. dollars ($[**]).
“[**]” shall mean [**].

(d) Option Exercise Fee. In the event Biogen Idec elects to exercise the Option,
it shall pay to AVEO a non-creditable, non-refundable option exercise fee of
[**] U.S. dollars ($[**]) (the “Option Exercise Fee”) on or before the end of
the Option Exercise Period.

(e) One Payment. Each of the Pre-Exercise Milestone Payments shall be payable
only once during the Agreement Term (and for the avoidance of doubt, shall not
be payable on a Licensed Product-by-Licensed Product basis) irrespective of how
many times any of the events specified herein may occur.

8.4. Milestones Payments by Biogen Idec After Exercise of Option. Subject to the
terms and conditions of this Agreement, and only following exercise (if any) of
the Option, Biogen Idec shall pay AVEO a milestone payment (each, an “Event
Milestone Payment”) upon occurrence of each of the following events (each, an
“Event Milestone”), on a Licensed Product-by-Licensed Product basis, in the
particular amounts specified below, no later than [**] after the occurrence of
the Event Milestone:

 

Event Milestone

   Event Milestone Payment  

Receipt of the first Regulatory Approval of a Licensed Product from the EMEA

   $ 25,000,000   

[**]

   $ [**]   

Each Event Milestone Payments shall be payable only once per Licensed Product,
upon the first occurrence of the applicable Event Milestone with respect to such
Licensed Product, regardless of the number of indications for which [**] is
ultimately achieved.

8.5. Royalty Payments by Biogen Idec. Subject to the provisions of Section 8.8
and subject also to the adjustment, if any, to be made under Section 8.9(d),
following exercise (if any) of the Option, Biogen Idec shall pay to AVEO
royalties on Net Sales of Licensed Product in the Field by Biogen Idec and its
Affiliates and Sublicensees in the Licensed Territory, as follows:

 

Net Sales Per Licensed Product

   Royalty Percentage  

On that portion of annual Net Sales Per Licensed Product less than or equal to
$[**]

     [**] % 

On that portion of annual Net Sales Per Licensed Product greater than $[**] but
less than or equal to $[**]

     [**] % 

On that portion of annual Net Sales Per Licensed Product greater than $[**]

     [**] % 

 

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8.6. Royalty Payments by AVEO. Subject to the provisions of Section 8.8 and
subject also to the adjustment, if any, to be made under Section 8.9(d),
following exercise (if any) of the Option, AVEO shall pay to Biogen Idec
royalties on Net Sales by AVEO and its Affiliates and Sublicensees of Licensed
Product in the Field in the AVEO Territory, as follows:

 

Net Sales Per Licensed Product

   Royalty Percentages  

On that portion of annual Net Sales Per Licensed Product less than or equal to
$[**]

     [**] % 

On that portion of annual Net Sales Per Licensed Product greater than $[**] but
less than or equal to $[**]

     [**] % 

On that portion of annual Net Sales Per Licensed Product greater than $[**]

     [**] % 

8.7. Restriction on Bundling. If a Party or its Affiliates or Sublicensees sell
Licensed Product to a Third Party who also purchases other products or services
from such Party or its Affiliates, such Party shall not, and shall require its
Affiliates and Sublicensees not to, (i) bundle or include any Licensed Product
as part of any incentive programs, chargebacks, disease management programs or
similar programs based on multiple product offerings or (ii) discount or price
the Licensed Product, in the case of either of the foregoing clauses (i) or
(ii), such that the applicable rebate, discount, other form of reimbursement
for, or the price of, the Licensed Product in such arrangement is inconsistent
with the rebate, discount, or other form of reimbursement for, or price of, the
Licensed Product when sold separately to such Person from any such other
products or services sold to such Person.

8.8. Royalty Term. On a country-by-country and Licensed Product-by-Licensed
Product basis, royalties shall be payable under Section 8.5 or 8.6, as the case
may be, during the period commencing on the first sale of such Licensed Product
in the Field in such country for any purpose and ending upon the later of
(a) the date of expiration, unenforceability or invalidation of the last Valid
Claim of AVEO Patent Rights or Collaboration Patent Rights Covering Licensed
Product in such country, or (b) expiration of Data Exclusivity in such country
(the “Royalty Term”). The royalties payable with respect to Net Sales of a
Licensed Product shall be reduced, on a country-by-country and Licensed
Product-by-Licensed Product basis, to [**] of the amounts otherwise payable
pursuant to Section 8.5 or 8.6, as the case may be, during any portion of the
Royalty Term when there is no Valid Claim of an AVEO Patent Right or
Collaboration Patent Right Covering such Licensed Product in such country. Upon
expiration of the Royalty Term applicable to a Party in a particular country
with respect to a particular Licensed Product, the license granted to such Party
under Article III with respect to such Licensed Product shall convert to a fully
paid-up, non-royalty-bearing license in the applicable country.

 

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8.9. Third Party Licenses.

(a) Existing Third Party Licenses. As of the Effective Date, there are no AVEO
In-Licenses except as set forth in Exhibit D, and there are no Biogen Idec
In-Licenses.

(b) For Licensed Territory. Subject to Section 8.9(d), Biogen Idec shall bear
[**] of any royalties, upfront fees, milestones and other payments under AVEO
In-Licenses or Biogen Idec In-Licenses to the extent reasonably allocable to the
Commercialization (or Development and Manufacturing in support of
Commercialization) of a Licensed Product in the Field in the Licensed Territory.
Any such amounts shall be paid by Biogen Idec or paid by AVEO and reimbursed by
Biogen Idec; provided that if such amounts are paid by AVEO, AVEO shall invoice
Biogen Idec for the amounts identified on a Calendar Quarter basis, and Biogen
Idec shall pay such invoices within thirty (30) days after receipt of AVEO’s
invoice.

(c) For AVEO Territory. Subject to Section 8.9(d), AVEO shall bear [**] of any
royalties, upfront fees, milestones and other payments under AVEO In-Licenses
and Biogen Idec In-Licenses to the extent reasonably allocable to the
Commercialization (or Development and Manufacturing in support of
Commercialization) of a Licensed Product in the Field in the AVEO Territory. Any
such amounts shall be paid by AVEO or Biogen Idec and reimbursed by AVEO;
provided that if such amounts are paid by Biogen Idec, Biogen Idec shall invoice
AVEO for the amounts identified on a Calendar Quarter basis, and AVEO shall pay
such invoices within thirty (30) days after receipt of Biogen Idec’s invoice.

(d) Reduction. Royalties payable by Biogen Idec to AVEO pursuant to Section 8.5
shall be reduced by an amount equal to [**] of all royalties, upfront fees,
milestones and other payments under (i) the AVEO In-Licenses, (ii) the Biogen
Idec In-Licenses and (iii) any other Third Party Technology Agreement pursuant
to which Biogen Idec or any of its Affiliates or Sublicensees acquired Know-how
or Patent Rights that are necessary for the Development, Manufacture or
Commercialization of Licensed Product in the Licensed Territory, in each case to
the extent actually paid by Biogen Idec or any of its Affiliates; provided that
in no event shall the royalty payable to AVEO under Section 8.5 be reduced to
less than [**] of the full royalty determined at the rates set forth in
Section 8.5. Royalties payable by AVEO to Biogen Idec pursuant to Section 8.6
shall be reduced by an amount equal to [**] of all royalties, upfront fees,
milestones and other payments under (i) the AVEO In-Licenses, (ii) the Biogen
Idec In-Licenses and (iii) any other Third Party Technology Agreement pursuant
to which AVEO or any of its Affiliates or Sublicensees acquired Know-how or
Patent Rights that are necessary for the Development, Manufacture or
Commercialization of Licensed Product in the AVEO Territory, in each case to the
extent actually paid by AVEO or any of its Affiliates; provided that in no event
shall the royalty payable to Biogen Idec under Section 8.6 be reduced to less
than [**] of the full royalty determined at the rates set forth in Section 8.6.
Amounts not otherwise used by a Party to reduce royalties as a result of the
limitations set forth in this Section 8.9(d) in a period incurred may be used to
reduce royalties in future periods until fully utilized.

 

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(e) Disagreements. In the event that a Party disagrees with the other Party’s
assessment of the necessity of a Third Party Technology Agreement that is not a
Biogen Idec In-license or AVEO In-license, the objecting Party shall send
written notice to such effect to the other Party, and the Parties shall appoint
a mutually agreed upon independent Third Party intellectual property lawyer with
expertise in the patenting of biologics, and appropriate professional
credentials in the relevant jurisdiction, to determine the question of the
necessity of the relevant Patent Right, taking into account such Third Party’s
assessment of the validity and enforceability of such Patent Right in addition
to an infringement assessment. The determination of the Third Party expert
engaged under the preceding sentence shall be binding on the Parties solely for
purposes of applying the offsets under this Section 8.9. The costs of any Third
Party expert engaged under this paragraph shall be paid by the Party against
whose position the Third Party’s determination is made.

(f) Exclusions. Notwithstanding anything express or implied in this Section 8.9
to the contrary, the provisions of this Section 8.9 shall not apply to any
royalties, license fees or other fees paid by either Party or any of its
Affiliates to Third Parties in respect of the Manufacture of Licensed Product
and included in Cost of Goods Sold.

8.10. Payments; Reports. Within [**] after the end of each Calendar Quarter for
which royalties are payable by one Party to the other Party under either
Section 8.5 or Section 8.6, the Party that owes the royalty (the “Royalty-paying
Party”) shall submit to the other Party a report, on a country-by-country basis,
providing in reasonable detail an accounting of all Net Sales by the
Royalty-paying Party and its Affiliates and Sublicensees in the Licensed
Territory with respect to Net Sales by Biogen Idec and its Affiliates and
Sublicensees and with respect to the AVEO Territory with respect to Net Sales by
AVEO and its Affiliates and Sublicensees (including, in each case, an accounting
of all unit sales of the Licensed Product and a calculation of the deductions
from gross invoice price to Net Sales in accordance with Section 1.63) made
during such Calendar Quarter and the calculation of the applicable royalties
under Section 8.5 or 8.6, as the case may be. The Royalty-paying Party shall, at
the time the Royalty-paying Party submits the report, pay to the other Party all
amounts due to such other Party under Section 8.5 or 8.6, as the case may be, as
indicated in the applicable report.

8.11. Taxes. The Royalty-paying Party will make all payments to the other Party
under this Agreement without deduction or withholding except to the extent that
any such deduction or withholding is required by applicable Law to be made on
account of Taxes (as that term is defined below). Any Tax required to be
withheld under applicable Law on amounts payable under this Agreement will
promptly be paid by Royalty-paying Party on behalf of the other Party to the
appropriate governmental authority, and the Royalty-paying Party will furnish
the other Party with proof of payment of such Tax. Any such Tax required to be
withheld will be an expense of and borne by the Party receiving the payment. The
Royalty-paying Party will give notice of its intention to begin withholding any
such Tax in advance and cooperate to use reasonable and legal efforts to reduce
such Tax on payments made to the other Party hereunder. Upon the written request
of the Royalty-paying Party, the other Party shall instruct the Royalty-paying
Party as to the applicable withholding rate and related regulations for any
country (or all countries) within the applicable Territory. The Royalty-paying
Party shall be entitled to rely upon the other Party’s withholding instructions
without verification thereof, and shall withhold in accordance therewith and
shall remit payment to the appropriate governmental authority in accordance with
this

 

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Section 8.11. The Parties will cooperate with respect to all documentation
required by any relevant government taxing authority or reasonably requested by
either Party to secure a reduction in the rate of applicable withholding Taxes.
Solely for purposes of this Section 8.11, “Tax” or “Taxes” means any present or
future taxes, levies, imposts, duties, charges, assessments or fees of any
nature (including interest, penalties and additions thereto) that are imposed by
a Government Authority.

8.12. United States Dollars. All dollar ($) amounts specified in this Agreement
are United States dollar amounts.

8.13. Currency Conversion. All payments to be made by either Party to the other
Party shall be made in U.S. Dollars, to a bank account designated by the Party
to be paid. In the case of sales outside the United States, royalty payments
shall be converted to U.S. Dollars in accordance with the following: the rate of
currency conversion shall be calculated using the month-end spot rates as
published by The Wall Street Journal, Eastern Edition.

8.14. Blocked Payments. If, by reason of applicable laws or regulations in any
country, it becomes impossible or illegal for a Party or any of its Affiliates
or Sublicensees to transfer, or have transferred on its behalf, royalties or
other payments to the other Party, the Royalty-paying Party shall promptly
notify the other Party of the conditions preventing such transfer and such
royalties or other payments shall be deposited in local currency in the relevant
country to the credit of the Party to whom the royalty is owed in a recognized
banking institution designated by such Party or, if none is designated by such
Party within a period of thirty (30) days, in a recognized banking institution
selected by the other Party or its Affiliates or Sublicensees, as the case may
be, and identified in a notice given to the Party on whose account the funds are
deposited.

8.15. Late Payments. The paying Party shall pay interest to the receiving Party
on the aggregate amount of any payments that are not paid on or before the date
such payments are due under this Agreement at a simple rate per annum equal to
the lesser of [**] percent ([**]%) per month or the highest rate permitted by
applicable law, calculated on the number of days such payments are paid after
the date such payments are due.

8.16. Records and Audits.

(a) Royalties. Each Party shall keep complete and accurate records of the
underlying revenue and expense data relating to the calculations of Net Sales
and payments required by Sections 8.5, 8.6 and 8.9. Each Party (the “Auditing
Party”) shall have the right, [**] at its own expense, to have an nationally
recognized, independent, certified public accounting firm, selected by it and
reasonably acceptable to the other Party, review any such records of the other
Party and its Affiliates and Sublicensees (the “Audited Party”) in the
location(s) where such records are maintained by the audited Party upon
reasonable notice (which shall be no less than [**] prior notice) and during
regular business hours and under obligations of strict confidence, for the sole
purpose of verifying the basis and accuracy of payments made under Sections 8.5,
8.6 and 8.9 within the [**] period preceding the date of the request for review.
The Audited Party shall receive a copy of each such report concurrently with
receipt by the Auditing Party. Should such inspection lead to the discovery of a
discrepancy to the Auditing Party’s detriment, the Audited Party shall pay
within [**] after its

 

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receipt from the accounting firm of the certificate any undisputed amount of the
discrepancy. The Auditing Party shall pay the full cost of the review unless the
underpayment of royalties is greater than five percent (5%) of the amount due
for the entire period being examined, in which case the Audited Party shall pay
the reasonable cost charged by such accounting firm for such review. Any
overpayment of royalties by the Audited Party revealed by an examination shall
be paid back by the Auditing Party to the Audited Party within [**].

(b) Development Costs. AVEO shall keep complete and accurate records of
Development Costs. Biogen Idec shall have the right, [**] at its own expense, to
have an independent, certified public accounting firm, selected by Biogen Idec
and reasonably acceptable to AVEO, review any such records of AVEO in the
location(s) where such records are maintained by AVEO upon reasonable notice
(which shall be no less than [**] prior notice) and during regular business
hours and under obligations of strict confidence, for the sole purpose of
verifying the basis and accuracy of its reimbursements made for Development
Costs under Sections 5.4 within the [**] period preceding the date of the
request for review. AVEO shall receive a copy of each such report concurrently
with receipt by Biogen Idec. Should such inspection lead to the discovery of a
discrepancy to Biogen Idec’s detriment, AVEO shall pay within [**] after its
receipt from the accounting firm of the certificate any undisputed amount of the
discrepancy. Biogen Idec shall pay the full cost of the review unless there has
been an overpayment of Development Costs by Biogen Idec for the period being
examined in an amount greater than five percent (5%) of the amount due for the
entire period being examined, in which case AVEO shall pay the reasonable cost
charged by such accounting firm for such review. Any underpayment of Development
Costs by Biogen Idec revealed by an examination shall be paid by Biogen Idec
within [**].

ARTICLE IX.

INTELLECTUAL PROPERTY OWNERSHIP, PROTECTION AND RELATED

MATTERS

9.1. Inventorship. Inventorship for patentable inventions conceived or reduced
to practice during the course of the performance of activities pursuant to this
Agreement shall be determined in accordance with United States patent laws for
determining inventorship.

9.2. Ownership. Subject to the licenses and rights granted to Biogen Idec under
this Agreement, AVEO shall own the entire right, title and interest in and to
all inventions and discoveries (and Patent Rights claiming patentable inventions
therein) first made or discovered solely by employees or consultants of AVEO or
acquired solely by AVEO in the course of Development, Manufacture or
Commercialization of Licensed Product. Subject to the licenses and rights
granted to AVEO under this Agreement, Biogen Idec shall own the entire right,
title and interest in and to all inventions and discoveries (and Patent Rights
claiming patentable inventions therein) first made or discovered solely by
employees or consultants of Biogen Idec or acquired solely by Biogen Idec in the
course of Development, Manufacture or Commercialization of Licensed Product. The
Parties shall jointly own any inventions and discoveries (and Patent Rights
claiming patentable inventions therein) first made or discovered jointly in the
course of Development, Manufacture or Commercialization of Licensed Product.

 

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9.3. Prosecution and Maintenance of Patent Rights.

(a) AVEO Technology. AVEO shall have the sole right to, at AVEO’s discretion,
file, conduct prosecution, and maintain (including the defense of any
interference or opposition proceedings), all Patent Rights comprising AVEO
Technology (other than Joint Collaboration IP), in AVEO’s name. AVEO shall
provide to Biogen Idec copies of all prosecution filings related to AVEO Patent
Rights and AVEO Collaboration Patent Rights comprising claims Covering Licensed
Product sent to or received from patent offices in the Licensed Territory,
unless otherwise directed by Biogen Idec, and, with respect to patent
applications having information not previously filed that is intended to be
submitted to patent offices in the Licensed Territory, shall use reasonable
efforts to provide Biogen Idec with a draft of each such filing reasonably in
advance of submission, provide Biogen Idec an opportunity to provide comments on
and make request of AVEO concerning such filings and shall consider in good
faith any comments regarding such draft application that Biogen Idec may timely
provide. In addition, AVEO shall provide to Biogen Idec such other information
related to prosecution of the AVEO Patent Rights and AVEO Collaboration Patent
Rights in the Licensed Territory as Biogen Idec may from time to time reasonably
request to allow Biogen Idec to track prosecution and maintenance of such Patent
Rights. In the event AVEO decides not to file a patent application on AVEO
Know-how or AVEO Collaboration Know-how specific to Licensed Product in a
country of the Licensed Territory, or decides to abandon prosecution of any
claim of an AVEO Patent Right or AVEO Collaboration Patent Right comprising
claims Covering Licensed Product in a country of the Licensed Territory or
decides to not otherwise maintain or extend any AVEO Patent Rights or AVEO
Collaboration Patent Right comprising claims Covering Licensed Product in a
country of the Licensed Territory, AVEO shall give Biogen Idec written notice
sufficiently in advance of any loss of rights to allow Biogen Idec to file,
prosecute, maintain or extend, as the case may be, such AVEO Patent Rights or
AVEO Collaboration Patent Rights, in AVEO’s name, in such country.

(b) Biogen Idec Collaboration Technology. Biogen Idec shall have the sole right,
at Biogen Idec’s discretion, to file, conduct prosecution, and maintain
(including the defense of any interference or opposition proceedings), all
Patent Rights comprising Biogen Idec Collaboration Technology (other than Joint
Collaboration IP), in Biogen Idec’s name. In the event Biogen Idec decides not
to file a patent application on Biogen Idec Collaboration Know-how in a country
of the Territory specific to Licensed Product, or decides to abandon prosecution
of any claim of Biogen Idec Collaboration Patent Right in a country of the
Territory comprising claims Covering Licensed Product or decides to not
otherwise maintain or extend any Biogen Idec Collaboration Patent Right
comprising claims Covering Licensed Product in a country of the Territory,
Biogen Idec shall give AVEO written notice sufficiently in advance of any loss
of rights to allow AVEO optionally to file, prosecute, maintain or extend, as
the case may be, such Biogen Idec Collaboration Patent Rights, in Biogen Idec’s
name, in such country.

(c) Joint Collaboration IP.

(i) AVEO shall have the first right, at AVEO’s discretion, to file, conduct
prosecution, and maintain (including the defense of any interference or
opposition proceedings), all Patent Rights included in Joint Collaboration IP,
in the names of both AVEO and Biogen Idec. Biogen Idec shall use Commercially
Reasonable Efforts to make available to AVEO or its

 

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authorized attorneys, agents or representatives, such of its employees as AVEO
in its reasonable judgment deems necessary in order to assist it in obtaining
patent protection for such Joint Collaboration IP. Each Party shall sign, or use
Commercially Reasonable Efforts to have signed, all legal documents necessary to
file and prosecute patent applications or to obtain or maintain patents in
respect of such Joint Collaboration IP, at its own cost.

(ii) If AVEO elects not to seek or continue to seek or maintain patent
protection on any Joint Collaboration IP in the Licensed Territory, Biogen Idec
shall have the right, at Biogen Idec’s discretion, to seek, prosecute and
maintain in any country in the Licensed Territory patent protection on such
Joint Collaboration IP in the names of both AVEO and Biogen Idec. AVEO shall use
Commercially Reasonable Efforts to make available to Biogen Idec its authorized
attorneys, agents or representatives, such of AVEO’s employees as are reasonably
necessary to assist Biogen Idec in obtaining and maintaining the patent
protection described under this Section 9.3(c)(ii). AVEO shall sign or use
Commercially Reasonable Efforts to have signed all legal documents necessary to
file and prosecute such patent applications or to obtain or maintain such
patents.

(iii) With respect to Patent Rights included in the Joint Collaboration IP, the
Party filing, prosecuting and maintaining such Patent Rights shall provide the
other Party, within ten (10) Business Days after submitting or receiving such
filings or correspondence, with copies of all filings and correspondence
submitted to and received from patent offices in the Licensed Territory and,
with respect to substantive filings and correspondence to be submitted to patent
offices in the Licensed Territory, shall use reasonable efforts to provide the
other Party with drafts of such filings and correspondence reasonably in advance
of submission and shall consider in good faith any comments regarding such
filings and correspondence that the other Party may timely provide.

9.4. Patent Term Extensions. The Parties shall cooperate, if necessary and
appropriate, with each other in gaining patent term extension (including those
extensions available under U.S. Drug Price Competition and Patent Term
Restoration Act of 1984, the Supplementary Certificate of Protection of Member
States of the EU and other similar measures in any other country) wherever
applicable to Patent Rights Controlled by either Party that Cover the Licensed
Product in the Territory. The Parties shall, if necessary and appropriate, use
reasonable efforts to agree upon a joint strategy relating to patent term
extensions, but, in the absence of mutual agreement with respect to any
extension issue, the patent or the claims of the patent shall be selected on the
basis of the scope, enforceability and remaining term of the patent in the
relevant country or region. All filings for such extensions shall be made by the
Party owning such patent or, in the case of Patent Rights included in the Joint
Collaboration IP, by the Party responsible for filing, prosecuting and
maintaining such Patent Rights in accordance with this Section 9.4.

9.5. Patent Expenses. The patent filing, prosecution and maintenance expenses
incurred after the Option Exercise Date under Section 9.3 with respect to AVEO
Patent Rights, AVEO Collaboration Patent Rights, Biogen Idec Collaboration
Patent Rights and Joint Collaboration Patent Rights, in each case with claims
covering Licensed Product in the Licensed Territory shall be borne by

 

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Biogen Idec. The patent filing, prosecution and maintenance expenses incurred
under Section 9.3 with respect to AVEO Patent Rights, AVEO Collaboration Patent
Rights, Biogen Idec Collaboration Patent Rights and Joint Collaboration Patent
Rights in each case with claims covering Licensed Product in the AVEO Territory
shall be borne by AVEO. In all other cases, the patent filing, prosecution and
maintenance expenses incurred during the Agreement Term with respect to Patent
Rights comprised of AVEO Technology and Biogen Idec Collaboration Technology
(“Patent Expenses”) shall be borne by the Party responsible for filing,
prosecuting and maintaining such Patent Rights under this Section 9.5.

9.6. Third Party Infringement.

(a) Notices. Each Party shall promptly report in writing to the other Party any
(i) known or suspected infringement of any AVEO Technology or Biogen Idec
Collaboration Technology, including any Joint Collaboration IP or
(ii) unauthorized use or misappropriation of any Confidential Information or
Know-how of a Party by a Third Party of which it becomes aware, in each case
only to the extent relevant to the Licensed Product or the Development,
Manufacture or Commercialization of the Licensed Product and involving a
competing product (“Competitive Infringement”) in the Territory, and shall
provide the other Party with all available evidence supporting such
infringement, or unauthorized use or misappropriation.

(b) Rights to Enforce.

(i) AVEO’s First Right. Subject to the provisions of any Third Party agreement
under which AVEO’s rights in AVEO Technology are granted and subject to
paragraph (ii), AVEO shall have the sole and exclusive right to initiate an
infringement or other appropriate suit anywhere in the world against any Third
Party who at any time has infringed, or is suspected of infringing, any Patent
Rights, or of using without proper authorization any Know-how comprising AVEO
Technology or Joint Collaboration IP for which AVEO has prosecution
responsibility under Section 9.3.

(ii) Biogen Idec’s First Right. Subject to the provisions of any Third Party
agreement under which Biogen Idec’s rights in Biogen Idec Collaboration
Technology are granted, Biogen Idec shall have the sole and exclusive right to
initiate an infringement or other appropriate suit anywhere in the world against
any Third Party who at any time has infringed, or is suspected of infringing,
any Patent Rights, or of using without proper authorization any Know-how,
comprising Biogen Idec Collaboration Technology or Joint Collaboration IP for
which Biogen Idec has prosecution responsibility under Section 9.3.

(iii) Requests to Initiate Enforcement Action. AVEO will consider in good faith
any request from Biogen Idec to initiate an infringement or other appropriate
suit in the Licensed Territory against any Third Party with respect to a
Competitive Infringement of AVEO Technology or Joint Collaboration I.P. for
which AVEO has prosecution responsibilities under Section 9.3; provided,
however, that AVEO shall not be required to initiate any such suit. If, however,
AVEO elects not to initiate such suit, or otherwise does not commence suit
within one-hundred eighty (180) days of Biogen Idec’s request made under the
preceding sentence, Biogen Idec shall have the right to initiate such suit and
to

 

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join AVEO as a party. Biogen Idec will consider in good faith any request from
AVEO to initiate an infringement or other appropriate suit against any Third
Party with respect to a Competitive Infringement in the AVEO Territory of a
Biogen Idec Collaboration Patent Right or any Joint Collaboration I.P. for which
Biogen Idec has prosecution responsibilities under Section 9.3; provided,
however, that Biogen Idec shall not be required to initiate any such suit. If,
however, Biogen Idec elects not to initiate such suit, or otherwise does not
commence suit within one-hundred eighty (180) days of AVEO’s request made under
the preceding sentence, AVEO shall have the right to initiate such suit and to
join Biogen Idec as a party. For the sake of clarity, in no event shall Biogen
Idec have the right to enforce in the AVEO Territory any AVEO Patent Rights,
AVEO Collaboration Patent Rights or Joint Collaboration IP for which Biogen Idec
has prosecution responsibilities under Section 9.3, and in no event shall AVEO
have the right to enforce in the Licensed Territory Biogen Idec Collaboration
Patent Rights or Joint Collaboration IP for which AVEO has prosecution
responsibilities under Section 9.3.

(c) Procedures; Expenses and Recoveries. The Party having the right to initiate
any infringement suit under Section 9.6(b) above shall have the sole and
exclusive right to select counsel for any such suit and shall pay all expenses
of the suit, including attorneys’ fees and court costs and reimbursement of the
other Party’s reasonable out-of-pocket expense in rendering assistance requested
by the initiating Party; provided that with respect to any such suit, the
Parties may mutually agree to jointly bear such costs and expenses, in which
case the allocation of recoveries described below may be adjusted as mutually
agreed by the Parties. If required under applicable law in order for the
initiating Party to initiate or maintain such suit, or if either Party is unable
to initiate or prosecute such suit solely in its own name or it is otherwise
advisable to obtain an effective legal remedy, in each case, the other Party
shall join as a party to the suit and will execute and cause its Affiliates to
execute all documents necessary for the initiating Party to initiate litigation
to prosecute and maintain such action. In addition, at the initiating Party’s
request, the other Party shall provide reasonable assistance to the initiating
Party in connection with an infringement suit at no charge to the initiating
Party except for reimbursement by the initiating Party of reasonable
out-of-pocket expenses incurred in rendering such assistance. The non-initiating
Party shall have the right to participate and be represented in any such suit by
its own counsel at its own expense. If the Parties obtain from a Third Party, in
connection with such suit, any damages, license fees, royalties or other
compensation (including any amount received in settlement of such litigation) in
respect of a Competitive Infringement, such amounts shall be allocated, subject
to any adjustment to such allocation agreed by the Parties in connection with an
agreement to jointly bear the costs and expenses of the infringement action as
described above, as follows:

(i) first, to reimburse each Party for all expenses of the suit incurred by such
Party, including attorneys’ fees and disbursements, court costs and other
litigation expenses;

(ii) second, [**] percent ([**]%) of the balance to be paid to (x) AVEO, in
respect of a Competitive Infringement in the AVEO Territory, and (y) Biogen
Idec, in respect of a Competitive Infringement in the Licensed Territory, as the
case may be; and

 

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(iii) third, the remainder to be paid to the Party that did not receive the
balance under clause (ii).

9.7. Third Party Infringement Claims. If a Party becomes aware of any claim that
the Development, Manufacture or Commercialization of the Licensed Product in the
Field infringes the Patent Rights of any Third Party in the Licensed Territory,
such Party shall promptly notify the other Party. In any such instance, the
Parties shall cooperate and shall mutually agree upon an appropriate course of
action which may include settlement of such claim. Each Party shall have an
equal right to participate in any settlement discussions that are held with such
Third Parties.

9.8. Patent Marking. Each Party agrees to comply with the patent marking
statutes in each country in which the Licensed Product is sold by such Party or
its Affiliates or Sublicensees.

9.9. Trademarks.

(a) Corporate Names and Logos. Each Party and its Affiliates shall retain all
right, title and interest in and to its and their respective corporate names and
logos.

(b) Creation and Registration of Trademarks. AVEO or its Affiliates or
Sublicensees will create and register product trademarks for use with Licensed
Product throughout the AVEO Territory, and Biogen Idec or its Affiliates or
Sublicensees will create and register product trademarks for use with Licensed
Product throughout the Licensed Territory (collectively, the “Product
Trademarks”). Each Party (or its Affiliates or Sublicensees, as appropriate)
shall own all rights to its Product Trademarks, and all goodwill associated
therewith, throughout the world, and to any Internet domain names incorporating
the applicable Product Trademarks or any variation or part of such Product
Trademarks used as its URL address or any part of such address.

(c) License to Trademarks. AVEO shall grant to Biogen Idec and its Affiliates
and Sublicensees an exclusive license to use AVEO’s Product Trademarks to
Commercialize the Licensed Product in the Field in the Licensed Territory, and
Biogen Idec shall grant to AVEO and its Affiliates and Sublicensees an exclusive
license to use Biogen Idec’s Product Trademarks to Commercialize the Licensed
Product in the Field in the AVEO Territory. If a Party uses the Product
Trademark of the other Party with respect to Licensed Product, as permitted
under this Agreement, such Party agrees that the quality of the Licensed Product
and the Commercialization thereof shall be consistent with the quality standards
applied by the owner of the Product Trademark thereto. In addition, the Party
using the Product Trademark of the other Party under this Section 9.9 shall
comply strictly with the trademark style and usage standards of the Party that
owns the Product Trademark as communicated to such Party from time to time with
respect to the Product Trademarks. The Party using the Product Trademark of the
other Party, shall, at the request and expense of the Party that owns the
Product Trademark, from time to time, submit to the Party that owns the Product
Trademark for approval a reasonable

 

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number of production samples of the Licensed Product and related packaging
materials. If the Party that owns the Product Trademark reasonably objects to
the quality of the Licensed Product or the usage of the Product Trademarks in
connection with any sample, it shall give written notice of such objection to
the other Party within sixty (60) days after receipt of the relevant sample,
specifying the way in which such usage of the Product Trademarks fails to meet
the style, usage or quality standards for the Licensed Product set forth in the
second and third sentences of this Section 9.9(c), and such Party shall
immediately cease sale and distribution of the Licensed Product using such
Product Trademark. If the Party using such Product Trademark wishes to continue
to distribute and sell the Licensed Product, it must remedy the failure and
submit further samples to the Party that owns the Product Trademark for
approval.

(d) Maintenance and Costs. If a Product Trademark owned by AVEO or any of its
Affiliates or Sublicensees is used by Biogen Idec or any of its Affiliates or
Sublicensees to promote and sell the Licensed Product in the Licensed Territory,
then AVEO will use Commercially Reasonable Efforts to establish, maintain and
enforce such Product Trademarks in the applicable countries of the Licensed
Territory. Biogen Idec shall be responsible for [**] of the costs of such
efforts in the Licensed Territory and Biogen Idec shall reimburse AVEO for all
such costs incurred by AVEO within [**] after receiving any invoice from AVEO
for such costs. If a Product Trademark owned by Biogen Idec or any of its
Affiliates or Sublicensees is used by AVEO or any of its Affiliates or
Sublicensees to promote and sell the Licensed Product in the AVEO Territory,
then Biogen Idec will use Commercially Reasonable Efforts to establish, maintain
and enforce such Product Trademarks in the applicable countries in the AVEO
Territory. AVEO shall be responsible for [**] of the costs of such efforts in
the AVEO Territory and AVEO shall reimburse Biogen Idec for all such costs
incurred by Biogen Idec within [**] after receiving any invoice from AVEO for
such costs.

(e) Infringement of Trademarks. If either Party becomes aware of any
infringement of any Product Trademark by a Third Party in the Licensed
Territory, such Party shall promptly notify the other Party and the Parties
shall consult with each other and jointly determine the best way to prevent such
infringement, including by the institution of legal proceedings against such
Third Party.

ARTICLE X.

CONFIDENTIALITY

10.1. Confidential Information. During the Agreement Term and for a period of
ten (10) years after any termination or expiration hereof, each Party agrees to
keep in confidence and not to disclose to any Third Party, or use for any
purpose, except pursuant to, and in order to carry out, the terms and objectives
of this Agreement, any Confidential Information of the other Party. The terms of
this Agreement shall be considered Confidential Information of both Parties
hereunder. The restrictions on the disclosure and use of Confidential
Information set forth in the first sentence of this Section 10.1 shall not apply
to any Confidential Information that:

(i) was known by the receiving Party prior to disclosure by the disclosing Party
hereunder (as evidenced by the receiving Party’s written records or other
competent evidence);

 

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(ii) is or becomes part of the public domain through no fault of the receiving
Party;

(iii) is disclosed to the receiving Party by a Third Party having a legal right
to make such disclosure without violating any confidentiality or non-use
obligation that such Third Party has to the disclosing Party and provided such
third party is not disclosing such information on behalf of the disclosing
Party; or

(iv) is independently developed by personnel of the receiving Party who did not
have access to the relevant Confidential Information of the other Party (as
evidenced by the receiving Party’s written records or other competent evidence).

In addition, if either Party is required to disclose Confidential Information of
the other Party by regulation, law or legal process, including by the rules or
regulations of the United States Securities and Exchange Commission, or similar
regulatory agency in a country other than the United States, or of any stock
exchange or Nasdaq, such Party shall provide prior written notice and a copy of
such intended disclosure to such other Party if possible under the circumstances
to enable such other Party to seek a protective order or other appropriate
remedy concerning any such disclosure, shall consider in good faith the other
Party’s comments and reasonably cooperate (at the expense of the Party seeking
to restrict such disclosure) to obtain any such order or other remedy, and shall
disclose only such Confidential Information of such other Party as is legally
required to be disclosed. In addition, either Party may disclose to bona fide
potential investors or lenders, potential acquirors/acquirees, existing or
potential collaborators or licensees or to such Party’s consultants and
advisors, the existence and terms of this Agreement to the extent necessary in
connection with a proposed equity or debt financing of such Party, or a proposed
acquisition or business combination, so long as such recipients are bound in
writing to maintain the confidentiality of such information in accordance with
the terms of this Agreement

10.2. Permitted Disclosures. Each Party agrees that it and its Affiliates shall
provide or permit access to Confidential Information received from the other
Party and such Party’s Affiliates and representatives only to the receiving
Party’s employees, consultants, advisors and permitted subcontractors,
Sublicensees and sub-distributors, and to the employees, consultants, advisors
and permitted subcontractors, Sublicensees and sub-distributors of the receiving
Party’s Affiliates, who in such Party’s reasonable judgment have a need to know
such Confidential Information to assist the receiving Party with the activities
contemplated by this Agreement and who are subject to obligations of
confidentiality and non-use with respect to such Confidential Information
similar to the obligations of confidentiality and non-use of the receiving Party
pursuant to Section 10.1; provided that AVEO and Biogen Idec shall each remain
responsible for any failure by its Affiliates, and its and its Affiliates’
respective employees, consultants, advisors and permitted subcontractors,
Sublicensees and sub-distributors, to treat such Confidential Information as
required under Section 10.1 (as if such Affiliates, employees, consultants,
advisors and permitted subcontractors, Sublicensees and sub-distributors were
Parties directly bound to the requirements of Section 10.1). Each Party may also
disclose Confidential Information of the other Party to Regulatory Authorities,
but solely in connection with the activities contemplated by this Agreement.

 

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10.3. Publicity. Upon the execution of this Agreement, AVEO shall be entitled to
issue a mutually agreed press release regarding the subject matter of this
Agreement in the form attached as Exhibit E (the “Initial Release”). After such
Initial Release, neither Party shall issue a press release or public
announcement relating to this Agreement without the prior written approval of
the other Party, which approval shall not be unreasonably withheld or delayed,
except that (i) a Party may issue such a press release or public announcement if
the contents of such press release or public announcement have been previously
been made public pursuant to the Initial Release or otherwise, other than
through a breach of this Agreement by the issuing Party, (ii) a Party may issue
such a press release or public announcement if required by applicable Law,
including by the rules or regulations of the United States Securities and
Exchange Commission (SEC) or similar regulatory agency in a country other than
the United States or of any stock exchange or Nasdaq, (iii) either Party may, to
the extent required by applicable Law, disclose in SEC filings or filings with a
similar regulatory agency in a country other than the United States or with any
stock exchange or Nasdaq, the terms of this Agreement, including by filing a
copy of this Agreement, or the amounts paid to or received from the other Party
under this Agreement, and (iv) AVEO may issue such a press release or public
announcement regarding Development of Licensed Product (without use of Biogen
Idec’s or any of its Affiliates name), subject in each case to the next
sentence. In the event of disclosures under clause (ii) or (iii) of the
foregoing sentence, and during the License Term, under clause (iv), the Party
planning to make such disclosure shall first notify the other Party of such
planned press release or public announcement at least three Business Days in
advance of issuing such press release or making such public announcement (or,
with respect to press releases and public announcements made pursuant to the
foregoing clause (ii) or (iii), with as much advance notice as possible under
the circumstances if it is not possible to provide notice at least three
Business Days in advance) for the sole purpose of allowing the other Party to
review the proposed press release or public announcement for the inclusion of
its Confidential Information or the use of its name; provided that the Party
subject to the requirement shall include in such press release or public
announcement made pursuant to the foregoing clause (ii) or (iii) only such
information relating to the Licensed Product or this Agreement as is required by
such applicable Law.

10.4. Publications.

(a) Option Exercise Period. During the Option Exercise Period, AVEO shall be
free to publish the results of Development carried out on the Licensed Product.

(b) License Term. During the License Term, subject to the restrictions provided
below, the JDC shall determine the publication strategy for the Territory. In
the event, either Party, consistent with the publication strategy adopted by the
JDC, proposes to publish or present the results of Development carried out on
the Licensed Product, such publication or presentation shall be subject to the
prior review by the other Party for patentability and protection of such other
Party’s Confidential Information. Each Party shall provide to the other Party
the opportunity to review any proposed abstracts, manuscripts or summaries of
presentations that cover the results of Development of the Licensed Product
during the License Term. Each Party shall designate a person or persons who
shall be responsible for reviewing such publications. Such designated person
shall respond in writing promptly and in no event later than thirty (30) days
after receipt of the proposed material with either approval of the proposed
material or a specific statement of concern, based upon either the need to seek
patent protection or concern regarding competitive disadvantage arising from the
proposal. In the

 

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event of concern, the submitting Party agrees not to submit such publication or
to make such presentation that contains such information until the other Party
is given a reasonable period of time (not to exceed sixty (60) days) to seek
patent protection for any material in such publication or presentation that it
believes is patentable or to resolve any other issues, and the submitting Party
shall remove from such proposed publication any Confidential Information of the
other Party as requested by such other Party. With respect to any proposed
abstracts, manuscripts or summaries of presentations by investigators or other
Third Parties, including Affiliates or Sublicensees, such materials shall be
subject to review under this Section 10.4 to the extent that the contracting
Party has the right to do so, provided that each Party agrees to use
Commercially Reasonable Efforts to include in any agreement with investigators
and other Third Parties a right for both Parties to review publications and
presentations consistent with the terms of this Section 10.4.

ARTICLE XI.

REPRESENTATIONS AND WARRANTIES; CERTAIN COVENANTS

11.1. Representations of Authority. AVEO and Biogen Idec each represents and
warrants to the other Party that, as of the Effective Date, it has full right,
power and authority to enter into this Agreement and to perform its respective
obligations under this Agreement and that it has the right to grant to the other
the licenses and sublicenses granted pursuant to this Agreement.

11.2. Consents. AVEO and Biogen Idec each represents and warrants to the other
Party that, except for any Regulatory Approvals, pricing or reimbursement
approvals, manufacturing approvals or similar approvals necessary for the
Development, Manufacture or Commercialization of Licensed Product, all necessary
consents, approvals and authorizations of all government authorities and other
persons required to be obtained by it as of the Effective Date in connection
with the execution, delivery and performance of this Agreement have been
obtained by the Effective Date.

11.3. No Conflict. AVEO and Biogen Idec each represents and warrants to the
other Party that, notwithstanding anything to the contrary in this Agreement,
the execution and delivery of this Agreement by such Party, the performance of
such Party’s obligations hereunder and the licenses and sublicenses to be
granted by such Party pursuant to this Agreement (a) do not conflict with or
violate any requirement of applicable Laws existing as of the Effective Date and
applicable to such Party and (b) do not conflict with, violate, breach or
constitute a default under any contractual obligations of such Party or any of
its Affiliates existing as of the Effective Date.

11.4. Compliance with Laws. Each Party shall comply with all Laws applicable to
the Development, Manufacture and Commercialization of Licensed Product,
including applicable Drug Regulation Laws.

11.5. Enforceability. AVEO and Biogen Idec each represents and warrants to the
other Party that, as of the Effective Date, this Agreement is a legal and valid
obligation binding upon it and is enforceable against it in accordance with its
terms.

 

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11.6. Additional Representations and Warranties of AVEO. AVEO represents and
warrants to Biogen Idec that, as of the Effective Date:

(a) Patent Rights. Exhibit A sets forth a complete and accurate list of AVEO
Patent Rights owned by AVEO in the (i) Licensed Territory and (ii) the AVEO
Territory that Cover AVEO Know-how necessary for the Development, Manufacture or
Commercialization of Licensed Product as contemplated on the Effective Date.
AVEO owns all right, title and interest in and to the AVEO Patent Rights listed
on Exhibit A.

(b) No Conflict. AVEO has not granted, and will not grant during the term of
this Agreement, rights to any Third Party under the AVEO Technology that
conflict with the rights granted to Biogen Idec hereunder. AVEO has not granted
rights to any Third Party under the AVEO Technology to Develop, Manufacture or
Commercialize Licensed Product in the Field in the AVEO Territory or the
Licensed Territory.

(c) U.S. Government Funding. Neither AVEO nor any of its Affiliates is or has
been a party to any agreement with the U.S. federal government or an agency
thereof pursuant to which the U.S. federal government or such agency provided
funding for the Development of Licensed Product.

(d) No Infringement. To the knowledge of AVEO, except as otherwise disclosed to
Biogen Idec, the use or practice of AVEO Technology and the Development,
Manufacture and Commercialization of Licensed Product in the manner contemplated
under this Agreement will not infringe any Patent Rights or result in the
misappropriation or misuse of Know-How of any Third Party. No claim of
infringement of the Patent Rights of any Third Party has been made, nor to
AVEO’s knowledge threatened, against AVEO or any of its Affiliates with respect
to the Development, Manufacture or Commercialization of Licensed Product, and
there are no other claims, judgments or settlements against or owed by AVEO or
any of its Affiliates or to which AVEO or any of its Affiliates is a party or,
to AVEO’s knowledge, pending or threatened claims or litigation, in either case
relating to the AVEO Technology or Licensed Product. To AVEO’s knowledge, (i) no
claim of infringement of the Patent Rights of any Third Party has been made, nor
threatened, against any of AVEO’s Sublicensees with respect to the Development,
Manufacture or Commercialization of Licensed Product and (ii) there are no other
claims, judgments or settlements against or owed by any of AVEO’s Sublicensees,
nor any pending or threatened claims or litigation, in either case relating to
the AVEO Technology or Licensed Product.

(e) Available Information. AVEO has made available to Biogen Idec all material
information in AVEO’s possession or Control relating to Licensed Product that is
material to an assessment of the feasibility of the Development, Manufacture and
Commercialization of Licensed Product as conducted by or on behalf of AVEO to
date.

(f) Compliance with Law. To AVEO’s knowledge, all of the studies, tests and
pre-clinical and clinical trials of Licensed Product conducted prior to, or
being conducted as of, the Effective Date by or on behalf of AVEO have been and
are being conducted in all material respects in accordance with applicable laws,
rules and regulations.

 

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(g) In-licenses. Except as set forth in Exhibit D, there are no agreements
between AVEO or any of its Affiliates, on the one hand, and any Third Party, on
the other hand, pursuant to which AVEO has (i) in-licensed any Patent Rights or
Know-how owned or Controlled by such Third Party to the extent that such Patent
Rights or Know-how are included in AVEO Technology, or (ii) agreed to make any
payments (including royalties) to any Third Party or agreed to undertake or
observe any restrictions or obligations with respect to the Development,
Manufacture or Commercialization of Licensed Product.

11.7. No Warranties. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN, NEITHER
PARTY MAKES ANY REPRESENTATION OR EXTENDS ANY WARRANTIES OF ANY KIND, EITHER
EXPRESS OR IMPLIED, TO THE OTHER PARTY, AND EACH PARTY HEREBY DISCLAIMS ALL
IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NONINFRINGEMENT WITH RESPECT TO LICENSED PRODUCT. EACH PARTY HEREBY DISCLAIMS
ANY REPRESENTATION OR WARRANTY THAT THE DEVELOPMENT, MANUFACTURE AND
COMMERCIALIZATION OF THE LICENSED PRODUCT PURSUANT TO THIS AGREEMENT WILL BE
SUCCESSFUL OR THAT ANY PARTICULAR SALES LEVEL WITH RESPECT TO LICENSED PRODUCT
WILL BE ACHIEVED.

11.8. No Debarment. Neither Party nor any of its Affiliates has been debarred or
is subject to debarment and neither Party nor any of its Affiliates will use in
any capacity, in connection with the Development, Manufacture or
Commercialization of the Licensed Product, any Person who has been debarred
pursuant to Section 306 of the United States Federal Food, Drug, and Cosmetic
Act, or who is the subject of a conviction described in such section. Each Party
agrees to inform the other Party in writing immediately if it or any Person who
is performing services hereunder is debarred or is the subject of a conviction
described in Section 306, or if any action, suit, claim, investigation or legal
or administrative proceeding is pending or, to the best of such Party’s
knowledge, is threatened, relating to the debarment or conviction of such Party
or any Person used in any capacity by such Party or any of its Affiliates in
connection with the Development, Manufacture or Commercialization of the
Licensed Product.

11.9. Additional Representation of Biogen Idec. Biogen Idec represents and
warrants to AVEO that, as of the Effective Date, Biogen Idec is an indirect
wholly-owned subsidiary of Biogen Idec Inc., a corporation organized and
existing under the laws of the State of Delaware.

ARTICLE XII.

INDEMNIFICATION

12.1. Indemnification by Biogen Idec. Biogen Idec shall indemnify, hold
harmless, and defend AVEO, its Affiliates, and their respective directors,
officers, employees and agents (the “AVEO Indemnitees”) from and against any and
all Losses incurred or suffered by the AVEO Indemnitees in connection with any
third party claim arising out of or resulting from, directly or indirectly,
(i) any breach of, or inaccuracy in, any representation or warranty made by
Biogen Idec in this Agreement, or any breach or violation of any covenant or
agreement of Biogen Idec in or pursuant to this Agreement, (ii) the negligence
or willful misconduct by or of Biogen Idec, its Affiliates and their respective
Sublicensees, or their respective directors, officers, employees and agents in
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performance of Biogen Idec’s obligations under this Agreement, (iii) the
Commercialization or use of Licensed Product in the Licensed Territory or any
other activities of Biogen Idec or any of its Affiliates or Sublicensees in the
Licensed Territory or (iv) AVEO’s observance of, or reliance upon, Biogen Idec’s
withholding instructions provided pursuant to Section 8.11 of this Agreement.
Biogen Idec shall have no obligation to indemnify the AVEO Indemnitees to the
extent that the Losses arise out of or result from, directly or indirectly,
(a) any breach of, or inaccuracy in, any representation or warranty made by AVEO
in this Agreement, (b) any breach or violation of any covenant or agreement of
AVEO in or pursuant to this Agreement, (c) the negligence or willful misconduct
by or of any of the AVEO Indemnitees or any of AVEO’s Sublicensees, distributors
or contractors or any of their respective employees or agents, (d) any
manufacturing defect in any Licensed Product supplied to Biogen Idec or its
Affiliates, Sublicensees, distributors or contractors by or on behalf of AVEO as
defined in and subject to the terms of the Supply Agreement, (e) actual or
alleged infringement or misappropriation by Biogen Idec or any of its
Affiliates, Sublicensees, distributors or contractors of the Patent Rights or
Know-how of any Third Party to the extent arising from the use or practice of
AVEO Technology or Joint Collaboration IP pursuant to, and in accordance with,
the provisions of this Agreement or (f) any Loss arising from or related to the
Commercialization or use of Licensed Product in the AVEO Territory.

12.2. Indemnification by AVEO. AVEO shall indemnify, hold harmless, and defend
Biogen Idec, its Affiliates and their respective directors, officers, employees
and agents (the “Biogen Idec Indemnitees”) from and against any and all Losses
incurred or suffered by the Biogen Idec Indemnitees arising out of or resulting
from, directly or indirectly, (i) any breach of, or inaccuracy in, any
representation or warranty made by AVEO in this Agreement, or any breach or
violation of any covenant or agreement of AVEO in or pursuant to this Agreement,
(ii) the negligence or willful misconduct by or of AVEO, its Affiliates and
their respective Sublicensees, or their respective directors, officers,
employees and agents in the performance of AVEO’s obligations under this
Agreement, or (iii) the Commercialization or use of Licensed Product in the AVEO
Territory or any other activities of AVEO or any of its Affiliates or
Sublicensees in the AVEO Territory, or (iv) Biogen Idec’s observance of, or
reliance upon, AVEO’s withholding instructions provided pursuant to Section 8.11
of this Agreement. AVEO shall have no obligation to indemnify the Biogen Idec
Indemnitees to the extent that the Losses arise out of or result from, directly
or indirectly, (a) any breach of, or inaccuracy in, any representation or
warranty made by Biogen Idec in this Agreement, (b) any breach or violation of
any covenant or agreement of Biogen Idec in or pursuant to this Agreement,
(c) the negligence or willful misconduct by or of any of the Biogen Idec
Indemnitees, or any of Biogen Idec’s Sublicensees, distributors or contractors
or any of their respective employees or agents, (d) any manufacturing defect in
any Licensed Product supplied to AVEO or any of its Affiliates, Sublicensees,
distributors or contractors by or on behalf of Biogen Idec as defined in and
subject to the terms of the Supply Agreement, (e) actual or alleged infringement
or misappropriation by AVEO or any of its Affiliates, Sublicensees, distributors
or contractors of the Patent Rights or Know-how of any Third Party to the extent
arising from the use or practice of Biogen Idec Collaboration Technology or
Joint Collaboration IP pursuant to, and in accordance with, the provisions of
this Agreement or (f) any Loss arising from or related to the Commercialization
or use of Licensed Product in the Biogen Idec Territory.

 

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12.3. Indemnification Procedure. In the event of any such claim against any
Biogen Idec Indemnitee or AVEO Indemnitee (individually, an “Indemnitee”), the
Indemnitee shall promptly notify the other Party in writing of the claim and the
indemnifying Party shall manage and control, at its sole expense, the defense of
the claim and its settlement. The Indemnitee shall cooperate with the
indemnifying Party and may, at its option and expense, be represented in any
such action or proceeding. The indemnifying Party shall not be liable for any
settlements, litigation costs or expenses incurred by any Indemnitee without the
indemnifying Party’s written authorization. Notwithstanding the foregoing, if
the indemnifying Party believes that any of the exceptions to its obligation of
indemnification of the Indemnitees set forth in this Article XII may apply, the
indemnifying Party shall promptly notify the Indemnitees, and the Indemnitees
shall then have the right to be represented in any such action or proceeding by
separate counsel at their expense; provided that the indemnifying Party shall be
responsible for payment of such expenses if the Indemnitees are ultimately
determined to be entitled to indemnification from the indemnifying Party.

12.4. Limitation of Liability. NEITHER PARTY HERETO WILL BE LIABLE FOR SPECIAL,
INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES ARISING OUT OF THIS AGREEMENT OR
THE EXERCISE OF ITS RIGHTS HEREUNDER, INCLUDING LOST PROFITS ARISING FROM OR
RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF ANY NOTICE OF SUCH
DAMAGES, EXCEPT AS A RESULT OF A PARTY’S WILLFUL MISCONDUCT OR WILLFUL BREACH OF
THE CONFIDENTIALITY AND NON-USE OBLIGATIONS IN ARTICLE X. NOTHING IN THIS
SECTION 12.4 IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR
OBLIGATIONS OF EITHER PARTY.

12.5. Insurance. Each Party shall maintain insurance during the License Term and
for a period of at least [**] after the last commercial sale of a Licensed
Product in the Field in the Territory under this Agreement, or, if Development
of Licensed Products ceases prior to Regulatory Approval, [**] after termination
of such Development, with a reputable, solvent insurer in an amount appropriate
for its business and products of the type that are the subject of this
Agreement, and for its obligations under this Agreement. Specifically, each
Party shall maintain product and clinical trial liability insurance of at least
[**] per occurrence on a worldwide basis. Notwithstanding the foregoing, either
Party may satisfy its obligations under this Section 12.5 through a program of
self-insurance, provided such Party has assets and earnings sufficient to cover
the potential indemnified Losses. Each Party will further ensure compliance with
all foreign local clinical trial liability insurance requirements that may apply
with respect to Licensed Product(s). Upon request, each Party shall provide the
other Party with evidence of the existence and maintenance of such insurance
coverage.

ARTICLE XIII.

CONTROL ASSUMPTION OPTIONS

13.1. M&A Event Control Assumption Option. If, at any time during the Agreement
Term, an M&A Event occurs involving AVEO (or any of its Affiliates) and a Person
that, at the time of the consummation of such M&A Event, directly or indirectly
(including by any Affiliate of such Person), is Developing or Commercializing a
Directly Competitive Product in the AVEO Territory or the Licensed Territory
within the Field or, at any time after such consummation of the M&A Event,
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Competitive Product (such Person being hereinafter referred to as a “Competing
Acquiror”) and such Competing Acquiror has not, within six (6) months of either
consummation of the M&A Event in the event the Directly Competitive Product is
being Developed or Commercialized as of such consummation date or otherwise
within six (6) months of the date of first development or acquisition of such
Directly Competitive Product (the “Divestiture Period”) divested the Directly
Competitive Product, terminated Development and Commercialization of such
Directly Competitive Product or assigned this Agreement pursuant to Section 16.5
to a Third Party that is not itself Developing or Commercializing a Directly
Competitive Product, then Biogen Idec may exercise, in the manner set forth
further below in this Section 13.1, its right to trigger the provisions of this
Section 13.1 (the “M&A Control Assumption Option”), whereupon (A) Biogen Idec
shall assume the rights, responsibilities and obligations of AVEO under Articles
IV and V of this Agreement with AVEO assuming the rights, responsibilities and
obligations of Biogen Idec under such provisions, provided that notwithstanding
anything to the contrary contained in Section 4.8(b), in the event the M&A
Control Assumption Option is triggered, Biogen Idec will have final
decision-making authority to increase or change the budget for Development
Costs, and (B) Biogen Idec shall have the right (but not the obligation) to
assume any or all of the rights, responsibilities and obligations of AVEO under
Article VII and/or Article IX by giving AVEO at least 30 days prior written
notice at any time and from time to time after the exercise of the M&A Control
Assumption Option, which written notice shall specify the rights,
responsibilities and obligations of AVEO under Article VII and/or IX being
assumed by Biogen Idec. In the event that Biogen Idec exercises the M&A Control
Assumption Option prior to the Option Exercise Date, (i) the provisions of
Article II shall terminate (except to the extent otherwise provided in clause
(iii) below), (ii) the exercise of the M&A Control Assumption Option shall be
deemed, for all purposes of this Agreement, to be the exercise of the Option by
Biogen Idec, (iii) Biogen Idec shall be responsible for preparing and delivering
to AVEO the Delivered Initial Development Plan and, if at the time of delivery
of such plan, AVEO has not previously delivered the Data Package to Biogen Idec,
such plan shall set forth Biogen Idec’s Development efforts in connection with
the Proof of Concept Study, and, if at the time of the delivery of such plan,
AVEO has previously delivered the Data Package to Biogen Idec, such plan shall
meet the criteria therefor set forth in clauses (ii) and (iii) of Section 2.9
and (iv) if the Delivered Initial Development Plan provides for the conduct of
the Proof of Concept Study in accordance with the provisions of the foregoing
clause (iii), AVEO shall be obligated to pay and reimburse Biogen Idec for all
costs and expenses incurred by Biogen Idec in connection with the Development
and Manufacture of Licensed Product through the completion of the Proof of
Concept Study for a single indication, and upon completion of the Proof of
Concept Study Biogen Idec shall reimburse AVEO for [**] of the Pre-Phase 3
Manufacturing Costs. For purposes of this Section 13.1, (x) any reference in the
definition of “Proof of Concept Study” to the Proof of Concept Development Plan
shall be deemed to be a reference to the Delivered Initial Development Plan
provided pursuant to this Section 13.1, and (y) any reference in the definition
of “Pre-Phase 3 Manufacturing Costs” to the Option Exercise Date shall be deemed
to be a reference to the date of the completion of the Proof of Concept Study.
In addition, upon exercise of the M&A Control Assumption Option, the royalties
payable by Biogen Idec under Section 8.5 shall be reduced by [**]. The M&A
Control Assumption Option shall be exercised by providing written notice to AVEO
no later than [**] after the date that AVEO and/or the Competing Acquiror sends
written notice to Biogen Idec stating that the Divestiture Period has expired
and that Biogen Idec may exercise its rights under this Section 13.1. In
addition to the foregoing

 

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obligations, in the event Biogen Idec exercise its M&A Control Assumption Option
under this paragraph, it shall thereafter provide to AVEO copies of filings,
submissions and correspondence with respect to AVEO Technology under
Section 9.3(a) in the AVEO Territory and consider AVEO’s comments to the same
extent as AVEO provides such information and considers Biogen Idec’s comments
with respect to AVEO Technology under Section 9.3(a) prior to the exercise of
the M&A Control Assumption Option.

13.2. Termination Right. The provisions of Section 13.1 shall not be deemed to
limit Biogen Idec’s right under Section 14.5 with respect to consummation of an
M&A Event involving AVEO or any of its Affiliates and a Competing Acquiror.

13.3. Insolvency Control Assumption Option. Without limiting any legal or
equitable remedies that Biogen Idec may have, including under this Article XIII,
if, at any time during the Agreement Term, an Insolvency Event involving AVEO
occurs, then Biogen Idec may exercise, in the manner set forth further below in
this Section 13.3, its right to trigger the provisions of this Section 13.3 (the
“Insolvency Control Assumption Option”), whereupon (A) Biogen Idec shall assume
the rights, responsibilities and obligations of AVEO under Articles IV and V of
this Agreement with AVEO assuming the rights, responsibilities and obligations
of Biogen Idec under such provisions, provided that notwithstanding anything to
the contrary contained in Section 4.8(b), in the event the Insolvency Control
Assumption Option is triggered, Biogen Idec will have final decision-making
authority to increase or change the budget for Development Costs, and (B) Biogen
Idec shall have the right (but not the obligation) to assume any or all of the
rights, responsibilities and obligations of AVEO under Article VII and/or
Article IX by giving AVEO at least 30 days prior written notice at any time and
from time to time after the exercise of the Insolvency Control Assumption
Option, which written notice shall specify the rights, responsibilities and
obligations of AVEO under Article VII and/or IX being assumed by Biogen Idec. In
the event that Biogen Idec exercises the Insolvency Control Assumption Option
prior to the Option Exercise Date, (i) the provisions of Article II shall
terminate (except to the extent otherwise provided in clause (iv) below),
(ii) the exercise of the Insolvency Control Assumption Option shall be deemed,
for all purposes of this Agreement, to be the exercise of the Option by Biogen
Idec, (iii) the royalties payable by Biogen Idec under Section 8.5 shall be
reduced by [**], (iv) Biogen Idec shall be responsible for preparing and
delivering to AVEO the Delivered Initial Development Plan and, if at the time of
delivery of such plan, AVEO has not previously delivered the Data Package to
Biogen Idec, such plan shall set forth Biogen Idec’s Development efforts in
connection with the Proof of Concept Study, and, if at the time of the delivery
of such plan, AVEO has previously delivered the Data Package to Biogen Idec,
such plan shall meet the criteria therefor set forth in clauses (ii) and
(iii) of Section 2.9 and (v) if the Delivered Initial Development Plan provides
for the conduct of the Proof of Concept Study in accordance with the provisions
of the foregoing clause (iv), AVEO shall be obligated to pay and reimburse
Biogen Idec for all costs and expenses incurred by Biogen Idec in connection
with the Development and Manufacture of Licensed Product through the completion
of the Proof of Concept Study for a single indication, and upon completion of
the Proof of Concept Study Biogen Idec shall reimburse AVEO for [**] of the
Pre-Phase 3 Manufacturing Costs. For purposes of this Section 13.3, (x) any
reference in the definition of “Proof of Concept Study” to the Proof of Concept
Development Plan shall be deemed to be a reference to the Delivered Initial
Development Plan provided pursuant to this Section 13.3, and (y) any

 

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reference in the definition of “Pre-Phase 3 Manufacturing Costs” to the Option
Exercise Date shall be deemed to be a reference to the date of the completion of
the Proof of Concept Study. The Insolvency Control Assumption Option shall be
exercised by providing written notice to AVEO no later than [**] after the
Insolvency Event with respect to AVEO. In addition to the foregoing obligations,
in the event Biogen Idec exercise its Insolvency Control Assumption Option under
this paragraph, it shall thereafter provide to AVEO copies of filings,
submissions and correspondence with respect to AVEO Technology under
Section 9.3(a) in the AVEO Territory and consider AVEO’s comments to the same
extent as AVEO provides such information and considers Biogen Idec’s comments
with respect to AVEO Technology under Section 9.3(a) prior to the exercise of
the Insolvency Control Assumption Option. For purposes of this Agreement, the
term “Insolvency Event” means that AVEO (i) commits an act of bankruptcy, is
declared bankrupt, voluntarily files or has filed against it a petition for
bankruptcy or reorganization unless such petition is dismissed within sixty
(60) days of filing or such petition is for a reorganization under Chapter 11 of
the Bankruptcy Code (as defined below) or any relevant foreign equivalent
thereof and AVEO is not in default at the time of the filing of such petition or
at any time during such reorganization of any of its obligations under this
Agreement, (ii) enters into a procedure of winding up or dissolution, or
(iii) should a trustee or receiver be appointed for its business assets or
operations. All rights and licenses granted under or pursuant to this Agreement
are, and shall otherwise be deemed to be, for the purposes of Section 365(n) of
Title 11, U.S. Code (“Bankruptcy Code”) license rights to “intellectual
property” as defined under Section 101(60) of the Bankruptcy Code. The Parties
agree that any Party, as a licensee hereunder, shall retain and may fully
exercise all of its rights and elections under the Bankruptcy Code or any
relevant foreign equivalent thereof.

ARTICLE XIV.

TERM; TERMINATION AND REMEDIES FOR BREACH

14.1. Term. This Agreement shall become effective as of the Effective Date, and,
in the event Biogen Idec does not exercise the Option by the end of the Option
Exercise Period, shall terminate at the end of the Option Exercise Period,
unless earlier terminated in accordance with this Article XIV. In the event
Biogen Idec exercises the Option in accordance with Article II (or is deemed to
have exercised the Option pursuant to Sections 13.1, 13.3 or 14.5(b)), this
Agreement shall continue in full force until the later of (a) the last to expire
Royalty Term and (b) such time as any Development activities that were pending
before the expiration of the last to expire Royalty Term are no longer being
conducted by either Party under this Agreement.

14.2. Termination for Convenience. Biogen Idec shall have the right to terminate
this Agreement with respect to any Licensed Product at any time upon at least
three months (3) months’ prior written notice to AVEO.

14.3. Remedies for Breach.

(a) Breach in Respect of Monetary Obligation. In the event that a Party is in
material breach of this Agreement with respect to one of its financial
obligations hereunder and has not cured such material breach within [**] after
written notice describing the nature of such material breach is provided to the
breaching Party, the non-breaching Party shall have the immediate right to elect
its remedies for material breach set forth in Section 14.5.

 

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(b) Breach in Respect of Non-Monetary Obligation. In the event a Party (the
“Notifying Party”) is concerned that there has been or may be a failure by the
other Party (the “Notified Party”) to meet one or more of its non-financial
obligations under this Agreement and such failure constitutes, or could
reasonably be expected to give rise to, a material breach of this Agreement, the
Notifying Party shall send written notice to the Notified Party specifying in
detail the nature of the concern and specifically referencing this
Section 14.3(b) (a “Section 14.3 Notice”). Within [**] of delivery of such
Section 14.3 Notice, the Parties shall meet to discuss the circumstances
surrounding the perceived failure, the impediments that are impacting
performance, the actions that the Parties believe are reasonably necessary to
address such failure, and each Party’s view of the plan and timeline within
which such failure could reasonably be remedied. If not originally provided with
the Section 14.3 Notice, within [**] after the meeting held under the preceding
sentence, the Notifying Party shall provide the Notified Party with a written
plan that is prepared with a good faith intent to allow the Notified Party an
adequate amount of time to address the perceived performance issues as
determined in the reasonable discretion of the Notifying Party, and which shall
include specific activities to be performed and the timeline for performance of
such activities (the “Cure Plan”). Within [**] of receipt, the Notified Party
shall provide written notice to the Notifying Party of its election to implement
or not implement the Cure Plan. In the event the Notified Party either (A) fails
to respond within such [**] period, (B) elects not to implement the Cure Plan
within [**] of receipt of such Cure Plan, or (C) elects to implement the Cure
Plan, and thereafter fails to meet any milestone included in the Cure Plan,
following written notice thereof by the Notifying Plan, and a one-time [**]
opportunity to cure such milestone failure, then the Notifying Party shall have
the right to elect its remedies for material breach as set forth in
Section 14.5; provided that (i) the failure giving rise to the Section 14.3
Notice constitutes a material breach of this Agreement by the Notified Party and
(ii) such material breach has not otherwise been cured on or prior to the [**]
following the delivery of the Section 14.3 Notice applicable to such material
breach. In the event the Notified Party elects to implement the Cure Plan within
[**] of receipt thereof, and is continuing to execute in full compliance with
such Cure Plan (subject to the one-time cure period for the first failed
milestone under such Cure Plan), the Notifying Party’s right to elect its
remedies for material breach as set forth in Section 14.5 shall be suspended
until such time, if any, as the Notified Party fails to continue to execute in
full compliance with the Cure Plan (e.g., such suspension shall immediately
terminate upon the second failure to meet a milestone). Notwithstanding anything
in this Agreement to the contrary, a Party’s decision whether or not to
implement the Cure Plan shall not be deemed an admission or acknowledgement of
breach nor will a failure to execute in accordance with the Cure Plan be
considered a separate and independent breach of this Agreement.

14.4. Termination by Biogen Idec Upon Certain M&A Events. Without limiting any
legal or equitable remedies that Biogen Idec may have, including under
Section 13.1, in the event an M&A Event occurs involving AVEO (or any of its
Affiliates) and a Person that, at the time of the consummation of such M&A
Event, or at any time thereafter during the Agreement Term, directly or
indirectly (including by any Affiliate), is Developing or Commercializing any
Directly Competitive Product in the AVEO Territory or the Licensed Territory
within the Field, then Biogen Idec shall have the right under this Section 14.4
to terminate this Agreement in

 

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its entirety by giving written notice of termination to AVEO and/or such Person.
Such written notice of termination shall specify that it is being given by
Biogen Idec pursuant to this Section 14.4 and must be given within [**] after
the later of (i) the date of the consummation of the M&A Event and (ii) the date
that AVEO and/or such Person sends written notice to Biogen Idec stating that
the M&A Event has been consummated and that Biogen Idec may terminate this
Agreement pursuant to this Section 14.4. Any termination of this Agreement
pursuant to this Section 14.4 shall become effective on the date (the “Section
14.4 Termination Effective Date”) that is the later of (i) the effective date of
termination specified in such written notice of termination given by Biogen Idec
pursuant to this Section 14.4 or (ii) the last [**] of the [**] following the
date in which such written notice of termination is given by Biogen Idec
pursuant to this Section 14.4, if on or prior to such Section 14.4 Termination
Effective Date such Person has not divested such Directly Competitive Product,
terminated Development and Commercialization of such Directly Competitive
Product or assigned this Agreement pursuant to Section 16.5 to a Third Party
that is not itself Developing or Commercializing a Directly Competitive Product.

14.5. Special Remedies for Breach.

(a) AVEO Remedy for Breach by Biogen Idec. Without limiting any other legal or
equitable remedies that AVEO may have, in the event of any material breach of
the Agreement by Biogen Idec that occurs during the Option Exercise Period, that
has not been cured by Biogen Idec in accordance with the provisions of
Section 14.3 and in respect of which AVEO elects, in accordance with the
provisions of Section 14.3, to pursue its remedies under this Section 14.5(a),
the Option shall immediately terminate, and Biogen Idec shall have no further
right to exercise the Option. Without limiting any other legal or equitable
remedies that AVEO may have, in the event of any material breach of the
Agreement by Biogen Idec that occurs during the License Term, that has not been
cured by Biogen Idec in accordance with the provisions of Section 14.3 and in
respect of which AVEO elects, in accordance with the provisions of Section 14.3,
to pursue its remedies under this Section 14.5(a), this Agreement shall continue
in full force and effect subject to the automatic modification thereof as
follows:

(i) Biogen Idec shall no longer have the right under Section 5.11 or 5.12 to
proceed with Development of New Licensed Products or a New Indication Existing
Licensed Products in the event the JDC does not approve or consent to such
Development;

(ii) The licenses and rights granted to Biogen Idec under Section 3.1 hereof
shall immediately terminate with respect to the Licensed Product that was the
subject of the applicable breach (each such Licensed Product being referred to
as a “Breached Licensed Product”);

(iii) The licenses and rights granted to AVEO pursuant to Section 3.2(a) shall
continue with respect to the Breached Licensed Product and be converted
automatically to worldwide licenses and rights with respect to the Breached
Licensed Product such that AVEO and its Affiliates and Sublicensees shall have
the right under such converted worldwide licenses and rights to Develop,
Manufacture and Commercialize such Breached Licensed Product in the AVEO
Territory and the

 

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Licensed Territory, and AVEO shall continue to have the right to grant
sublicenses (subject to provisions similar to those set forth in Section 3.3
(other than subclauses (i), (ii) and (vi) of Section 3.3(b)) that are applicable
to sublicenses of licenses granted by Biogen Idec to AVEO pursuant to
Section 3.2(a) hereof);

(iv) Responsibility and control over the Development of the Breached Licensed
Product shall rest solely with AVEO and the JDC shall have no decision-making
authority with respect to such Breached Licensed Product and AVEO shall use
Commercially Reasonable Efforts during the License Term to Develop the Breached
Licensed Product in the Field for both the Licensed Territory and the AVEO
Territory;

(v) Responsibility and control over the Commercialization of the Breached
Licensed Product in the AVEO Territory and the Licensed Territory shall rest
solely with AVEO and AVEO shall use Commercially Reasonable Efforts to
Commercialize such Breached Licensed Products in those countries in the AVEO
Territory and the Licensed Territory in which Regulatory Approval has been
obtained, including by providing appropriate incentives consistent with its
normal business practices to Sales Representatives involved in the
Commercialization of the Licensed Product in the AVEO Territory;

(vi) Neither Party shall have any further obligation under Article V or Article
VI with respect to the Breached Licensed Product;

(vii) Biogen Idec’s obligations under Article VIII with respect to the Breached
Licensed Product shall terminate;

(viii) AVEO’s obligations under Article VIII with respect to the Breached
Licensed Product shall continue (including, without limitation, the obligation
thereunder to make payment of royalties), provided that the royalties that AVEO
is required to pay Biogen Idec under Article VIII with respect to the Breached
Licensed Product shall be increased by [**] if AVEO exercises its rights under
this Section 14.5(a) with respect to the Breached Licensed Product prior to
Regulatory Approval thereof in the Licensed Territory and shall be increased by
[**] if AVEO exercises its rights under this Section 14.5(a) with respect to the
Breached Licensed Product after Regulatory Approval thereof in the Licensed
Territory;

(ix) AVEO shall make payment to Biogen Idec of royalties on Net Sales of the
Breached Licensed Product in the Licensed Territory by AVEO and its Affiliates
and Sublicensees (the terms of Article VIII and the foregoing clause
(viii) shall apply to AVEO’s obligation to pay royalties under this clause
(ix) to the same extent as they apply to AVEO’s obligation to pay royalties on
Net Sales of the Breached Licensed Product in the AVEO Territory by AVEO and its
Affiliates and Sublicensees);

(x) AVEO shall have the right (but not the obligation) to assume any or all of
the rights, responsibilities and obligations of Biogen Idec under Article IX
with respect to the Breached Licensed Product by giving Biogen Idec at least
[**] prior written notice at any time and from time to time after the exercise
by AVEO of its special remedies under this

 

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Section 14.5(a), which written notice shall specify the rights, responsibilities
and obligations of Biogen Idec under Article IX with respect to the Breached
Licensed Product being assumed by AVEO;

(xi) Biogen Idec shall as promptly as practicable transfer to AVEO or AVEO’s
designee (A) possession and ownership of all governmental or regulatory
correspondence, conversation logs, filings and approvals (including all
Regulatory Approvals and pricing and reimbursement approvals) relating to the
Development, Manufacture or Commercialization of the Breached Licensed Product
in the Licensed Territory, (B) copies of all data, reports, records and
materials, commercialization plans, marketing plans, Promotional Materials, and
other sales and marketing related information in Biogen Idec’s possession or
Control to the extent that such data, reports, records, materials or other
information relate to the Commercialization of the Breached Licensed Product in
the Licensed Territory, including customer lists and customer contact
information and all Safety Data and other adverse event data in Biogen Idec’s
possession or Control, and (C) all records and materials in Biogen Idec’s
possession or Control containing Confidential Information of AVEO with respect
to the Breached Licensed Product;

(xii) If the Breached Licensed Product is being Commercialized by Biogen Idec in
any country in the Licensed Territory, then, if requested by AVEO, Biogen Idec
shall appoint AVEO as its exclusive distributor of the Breached Licensed Product
in the Licensed Territory and grant AVEO the right to appoint sub-distributors,
until the earlier of (A) such time as all Regulatory Approvals in the Licensed
Territory with respect to the Breached Licensed Product have been transferred to
AVEO or its designee and (B) [**] after AVEO has exercised its special remedies
under this Section 14.5(a) with respect to the Breached Licensed Product;

(xiii) If AVEO so requests, Biogen Idec shall transfer to AVEO any Third Party
agreements to which Biogen Idec is a party relating to the Development,
Manufacture or Commercialization of the Breached Licensed Product in the AVEO
Territory or the Licensed Territory, subject to any required consents of such
Third Party;

(xiv) The provisions of Section 12.1(clauses (iii) and (f) thereof) shall apply
to both the AVEO Territory and the Licensed Territory with respect to such
Breached Licensed Product;

(xv) The provisions of Section 13.1 shall not apply with respect to such
Breached Licensed Product;

(xvi) The provisions of Section 3.7 shall not apply with respect to such
Breached Licensed Product; and

(xvii) Each Party shall execute all documents and take all such further actions,
including, where applicable, the prompt assignment by Biogen Idec of regulatory
submissions and Third Party agreements, as may be reasonably requested by the
other Party in order to give effect to the foregoing clauses (i) through
(xvi) as soon as practicable and in order to enable AVEO to Develop, Manufacture
and Commercialize the Breached Licensed Product in the AVEO Territory and the
Licensed Territory.

 

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(b) Biogen Idec Remedy for Breach by AVEO. Without limiting any other legal or
equitable remedies that Biogen Idec may have, in the event of any material
breach of the Agreement by AVEO that occurs during the Agreement Term, that has
not been cured by AVEO in accordance with the provisions of Section 14.3 and in
respect of which Biogen Idec elects, in accordance with the provisions of
Section 14.3, to pursue its remedies under this Section 14.5(b), this Agreement
shall continue in full force and effect subject to the automatic modification
thereof as follows:

(i) AVEO shall no longer have the right under Section 5.11 or 5.12 to proceed
with Development of New Licensed Products or New Indication Existing Licensed
Products in the event the JDC does not approve or consent to such Development;

(ii) In the event that Biogen Idec pursues its remedies under this
Section 14.5(b) prior to the Option Exercise Date, (i) the provisions of Article
II shall terminate, (ii) the exercise by Biogen Idec of its rights and remedies
under this Section 14.5(b) shall be deemed, for all purposes of this Agreement,
to be the exercise of the Option by Biogen Idec and (iii) the provisions of
Section 8.3 shall terminate and Biogen Idec shall have no obligation to make any
of the payments contemplated thereunder;

(iii) The licenses and rights granted to AVEO under Section 3.2 shall
immediately terminate with respect to the Breached Licensed Product;

(iv) The licenses and rights granted to Biogen Idec pursuant to Section 3.1
shall continue with respect to the Breached Licensed Product and be converted
automatically to worldwide licenses and rights with respect to the Breached
Licensed Product such that Biogen Idec and its Affiliates and Sublicensees shall
have the right under such converted worldwide licenses and rights to Develop,
Manufacture and Commercialize such Breached Licensed Product in the AVEO
Territory and the Licensed Territory, and Biogen Idec shall continue to have the
right to grant sublicenses (subject to provisions similar to those set forth in
Section 3.3 that are applicable to sublicenses of licenses granted by AVEO to
Biogen Idec pursuant to Section 3.1 hereof);

(v) Responsibility and control over the Development of the Breached Licensed
Product shall rest solely with Biogen Idec and the JDC shall have no
decision-making authority with respect to such Breached Licensed Product and
Biogen Idec shall use Commercially Reasonable Efforts during the License Term to
Develop the Breached Licensed Product in the Field for both the Licensed
Territory and the AVEO Territory;

(vi) Responsibility and control over the Commercialization of the Breached
Licensed Product in the AVEO Territory and the Licensed Territory shall rest
solely with Biogen Idec and Biogen Idec shall use Commercially Reasonable
Efforts to Commercialize such Breached Licensed Products in those countries in
the AVEO Territory and the Licensed Territory in

 

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which Regulatory Approval has been obtained, including by providing appropriate
incentives consistent with its normal business practices to Sales
Representatives involved in the Commercialization of the Licensed Product in the
Licensed Territory;

(vii) Neither Party shall have any further obligation under Article V or Article
VI with respect to the Breached Licensed Product;

(viii) AVEO’s obligations under Article VIII with respect to the Breached
Licensed Product shall terminate;

(ix) Biogen Idec’s obligations under Section 8.4 with respect to the Breached
Licensed Product shall terminate;

(x) Biogen Idec’s obligations under Section 8.5 and Sections 8.7-8.16 with
respect to the Breached Licensed Product shall continue, provided that the
royalties that Biogen Idec is required to pay AVEO under Article VIII with
respect to the Breached Licensed Product shall be increased by [**] if Biogen
Idec exercises its rights under this Section 14.5(b) with respect to the
Breached Licensed Product prior to Regulatory Approval thereof in the AVEO
Territory and shall be increased by [**] if Biogen Idec exercises its rights
under this Section 14.5(b) with respect to the Breached Licensed Product after
Regulatory Approval thereof in the AVEO Territory;

(xi) Biogen Idec shall make payment to AVEO of royalties on Net Sales of the
Breached Licensed Product in the AVEO Territory by Biogen Idec and its
Affiliates and Sublicensees (the terms of Article VIII and the foregoing clause
(x) shall apply to Biogen Idec’s obligation to pay royalties under this clause
(xi) to the same extent as they apply to Biogen Idec’s obligation to pay
royalties on Net Sales of the Breached Licensed Product in the Licensed
Territory by Biogen Idec and its Affiliates and Sublicensees);

(xii) Biogen Idec shall have the right (but not the obligation) to assume any or
all of the rights, responsibilities and obligations of AVEO under Article IX
with respect to the Breached Licensed Product by giving AVEO at least [**] prior
written notice at any time and from time to time after the exercise by Biogen
Idec of its special remedies under this Section 14.5(b), which written notice
shall specify the rights, responsibilities and obligations of AVEO under Article
IX with respect to the Breached Licensed Product being assumed by Biogen Idec;

(xiii) AVEO shall as promptly as practicable transfer to Biogen Idec or Biogen
Idec’s designee (A) possession and ownership of all governmental or regulatory
correspondence, conversation logs, filings and approvals (including all
Regulatory Approvals and pricing and reimbursement approvals) relating to the
Development, Manufacture or Commercialization of the Breached Licensed Product
in the AVEO Territory, (B) copies of all data, reports, records and materials,
commercialization plans, marketing plans, Promotional Materials, and other sales
and marketing related information in AVEO’s possession or Control to the extent
that such data, reports, records, materials or other information

 

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relate to the Commercialization of the Breached Licensed Product in the AVEO
Territory, including customer lists and customer contact information and all
Safety Data and other adverse event data in AVEO’s possession or Control, and
(C) all records and materials in AVEO’s possession or Control containing
Confidential Information of Biogen Idec with respect to the Breached Licensed
Product;

(xiv) If the Breached Licensed Product is being Commercialized by AVEO in any
country in the AVEO Territory, then, if requested by Biogen Idec, AVEO shall
appoint Biogen Idec as its exclusive distributor of the Breached Licensed
Product in the AVEO Territory and grant Biogen Idec the right to appoint
sub-distributors, until the earlier of (A) such time as all Regulatory Approvals
in the AVEO Territory with respect to the Breached Licensed Product have been
transferred to Biogen Idec or its designee and (B) [**] after Biogen Idec has
exercised its special remedies under this Section 14.5(b) with respect to the
Breached Licensed Product;

(xv) If Biogen Idec so requests, AVEO shall transfer to Biogen Idec any Third
Party agreements to which AVEO is a party relating to the Development,
Manufacture or Commercialization of the Breached Licensed Product in the AVEO
Territory or the Licensed Territory, subject to any required consents of such
Third Party;

(xvi) The provisions of Section 12.2 (clauses (iii) and (f) thereof) shall apply
to both the AVEO Territory and the Licensed Territory with respect to such
Breached Licensed Product; and

(xvii) Each Party shall execute all documents and take all such further actions,
including, where applicable, the prompt assignment by AVEO of regulatory
submissions and Third Party agreements, as may be reasonably requested by the
other Party in order to give effect to the foregoing clauses (i) through
(xvi) as soon as practicable and in order to enable Biogen Idec to Develop,
Manufacture and Commercialize the Breached Licensed Product in the AVEO
Territory and the Licensed Territory.

(c) Termination by Biogen Idec for Convenience. If Biogen Idec terminates this
Agreement for convenience under Section 14.2 during the Option Exercise Period,
the Option shall immediately terminate, and Biogen Idec shall have no further
right to exercise the Option. If Biogen Idec terminates this Agreement for
convenience under Section 14.2 with respect to any Licensed Product during the
License Term, then (i) Biogen Idec shall continue to pay its share of all
Development Costs for such Licensed Product for a period of [**] following the
date of such termination, and, if longer, shall also continue to pay its share
of the Development Costs for such Licensed Product related to any ongoing
clinical trials included in the then current Development Plan until such trials
are completed, (ii) the licenses and rights granted to AVEO pursuant to
Section 3.2(a) with respect to such Licensed Product shall survive and be
converted automatically to worldwide licenses and rights such that AVEO and its
Affiliates and Sublicensees shall have the right under such converted worldwide
licenses and rights to Develop, Manufacture and Commercialize such Licensed
Product in the AVEO Territory and the Licensed Territory, and AVEO shall
continue to have the right to grant sublicenses (subject to provisions similar
to those set forth in Section 3.3), (iii) Biogen Idec’s obligations under
Article VIII shall

 

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terminate with respect to such Licensed Product, (iv) AVEO’s obligations under
Article VIII shall survive with respect to such Licensed Product (including,
without limitation, the obligation thereunder to make payment of royalties);
(v) AVEO shall make payment to Biogen Idec of royalties on Net Sales of such
Licensed Product in the Licensed Territory by AVEO and its Affiliates and
Sublicensees (the terms of Article VIII shall apply to AVEO’s obligation to pay
royalties under this clause (v) to the same extent as it applies to AVEO’s
obligation to pay royalties on Net Sales of Licensed Product in the AVEO
Territory by AVEO and its Affiliates and Sublicensees), (vi) the rights and
obligations of each Party under Article IX with respect to such Licensed Product
shall survive with respect to any intellectual property rights that are subject
to surviving licenses granted by, or for the benefit of, AVEO under this
Agreement, (vii) Biogen Idec shall as promptly as practicable transfer to AVEO
or AVEO’s designee (A) possession and ownership of all governmental or
regulatory correspondence, conversation logs, filings and approvals (including
all Regulatory Approvals and pricing and reimbursement approvals) relating to
the Development, Manufacture or Commercialization of such Licensed Product in
the Licensed Territory, (B) copies of all data, reports, records and materials,
commercialization plans, marketing plans, Promotional Materials, and other sales
and marketing related information in Biogen Idec’s possession or Control to the
extent that such data, reports, records, materials or other information relate
to the Commercialization of such Licensed Product in the Licensed Territory,
including customer lists and customer contact information and all Safety Data
and other adverse event data in Biogen Idec’s possession or Control, and (C) all
records and materials in Biogen Idec’s possession or Control containing
Confidential Information of AVEO with respect to such Licensed Product,
(viii) if the effective date of termination is after the First Commercial Sale
of such Licensed Product in any country in the Licensed Territory, then, if
requested by AVEO, Biogen Idec shall appoint AVEO as its exclusive distributor
of such Licensed Product in the Licensed Territory and grant AVEO the right to
appoint sub-distributors, until the earlier of (1) such time as all Regulatory
Approvals in the Licensed Territory with respect to such Licensed Product have
been transferred to AVEO or its designee and (2) [**] after the effective date
of termination, (ix) if AVEO so requests, Biogen Idec shall transfer to AVEO any
Third Party agreements relating to the Commercialization of such Licensed
Product in the Licensed Territory to which Biogen Idec is a party, subject to
any required consents of such Third Party, and (x) all rights and obligations of
the Parties under this Agreement (except for those contemplated in this
Section 14.5(c) and those contemplated below in Sections 14.7, 14.8, 14.9 and
14.10) shall terminate with respect to such Licensed Product. Each Party shall
execute all documents and take all such further actions, including, where
applicable, the prompt assignment by Biogen Idec of regulatory submissions and
Third Party agreements, as may be reasonably requested by AVEO in order to give
effect to the foregoing clauses (i) through (x) as soon as practicable and in
order to enable AVEO to Develop, Manufacture and Commercialize such Licensed
Product in the AVEO Territory and the Licensed Territory.

(d) Termination by Biogen Idec Upon Certain M&A Events. If Biogen Idec
terminates this Agreement under Section 14.4 during the Agreement Term, then
(i) Biogen Idec shall continue to pay its share of all Development Costs for a
period of [**] following the date of such termination, (ii) the licenses and
rights granted to Biogen Idec under Section 3.1 hereof shall survive; (iii) the
license and rights granted to AVEO under Section 3.2 shall survive; (iv) the
rights and obligations of the Parties under Article III shall survive (other
than Section 3.6(a) and the first four sentences of Section 3.6(b), which shall
not survive); (v) AVEO’s

 

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obligations under Article VIII shall survive (including, without limitation, the
obligation thereunder to make payment of royalties) provided that such royalty
obligations shall be reduced by [**]; (vi) Biogen Idec’s obligations under
Article VIII shall survive (including, without limitation, the obligation
thereunder to make payment of royalties), provided that such royalty obligations
shall be reduced by [**]; (vii) the rights and obligations of each Party under
Article IX shall survive with respect to any intellectual property rights that
are subject to surviving licenses granted by, or for the benefit of, such Party
under this Agreement; and (viii) all rights and obligations of the Parties under
this Agreement except for those contemplated by this Section 14.5(d), those set
forth in Section 5.8 and 5.9, those set forth in Section 5.4 as they related to
Development Costs incurred in connection with Section 5.8, and those
contemplated below in Sections 14.6, 14.7, 14.8 and 14.9) shall terminate. For
purposes of clarification, if Biogen Idec terminates this Agreement under
Section 14.4 during the Agreement Term, then (a) each Party and its Affiliates
and Sublicensees shall have the right to engage in Development and Manufacture
of Licensed Product in the AVEO Territory and the Licensed Territory, and the
JDC shall have no decision-making authority or oversight with respect to the
Development or Manufacturing activities of the Parties, (b) AVEO and its
Affiliates and Sublicensees shall have the right to Commercialize Licensed
Product in the AVEO Territory but not the Licensed Territory and (c) Biogen Idec
and its Affiliates and Sublicensees shall have the right to Commercialize
Licensed Product in the Licensed Territory but not the AVEO Territory.

14.6. Manufacturing. In the event that this Agreement terminates for any reason
or that a Party exercises its special remedies under Section 14.5 as a result of
the material breach of this Agreement by the other Party, and in the event that
the Party that is not then responsible for Manufacturing under Article VII
and/or the Supply Agreement retains rights to Develop and Commercialize Licensed
Product under this Agreement following such termination or the exercise by such
Party of its special remedies under Section 14.5, (A) the obligations under such
Article VII and/or the Supply Agreement of the Party that is then responsible
for Manufacturing shall continue in effect for a period of at least [**]
following such termination or the exercise by the other Party of its special
remedies under Section 14.5, as the case may be, or such longer period as the
Parties may mutually agree, and (B) the Party that is not responsible for
Manufacturing (the “non-Manufacturing Party”) shall have the right to require
the Party responsible for Manufacturing (the “Manufacturing Party”) to engage in
a technology transfer process, at the Manufacturing Party’s costs, in the event
the cause of the termination is breach by the Manufacturing Party, or at Biogen
Idec’s cost for a termination under Section 14.2, otherwise at the cost of the
non-Manufacturing Party, for purposes of enabling the non-Manufacturing Party or
any of its Affiliates or Third Party contract manufacturers to Manufacture
Licensed Product by or on behalf of the non-Manufacturing Party and its
Affiliates and Sublicensees for purposes of enabling the non-Manufacturing Party
to exercise its rights under this Agreement, and the non-Manufacturing Party
shall have the right to deal directly with any Third Party contract manufacturer
of the Manufacturing Party or any of its Affiliates to arrange for such Third
Party contract manufacturer to Manufacture and supply Licensed Product to the
non-Manufacturing Party and its Affiliates and Sublicensees for the purposes of
enabling the non-Manufacturing Party to exercise its rights under this
Agreement.

 

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14.7. Accrued Obligations. Expiration or termination of this Agreement shall not
relieve the Parties of any obligation accruing prior to such expiration or
termination.

14.8. Treatment of Sublicensees. In the event the license granted to Biogen Idec
under Section 3.1 terminates for any reason or in the event that the license
granted to AVEO under Section 3.2(a) terminates for any reason, each Sublicensee
at such time under any such license that terminates shall continue to have the
rights and licenses set forth in their sublicense agreements; provided, that
such Sublicensee agrees in writing that (i) the Party that is the licensor in
connection with such terminated license is entitled to enforce all relevant
provisions of the applicable sublicense agreement directly against such
Sublicensee and (ii) the Party that is the licensor in connection with such
terminated license shall not assume, and shall not be responsible to such
Sublicensee for, any representations, warranties or obligations made to such
Sublicensee by the Party that was the licensee in connection with such
terminated license, other than to permit such Sublicensee to exercise any rights
to Licensed Product that are sublicensed under such sublicense agreement.

14.9. Survival. Any expiration or termination of this Agreement shall be without
prejudice to the rights of either Party against the other accrued or accruing
under this Agreement prior to expiration or termination, including payment
obligations arising prior to such expiration or termination. The provisions of
Section 8.16, Articles X, XII, XIV, XV and XVI shall survive any expiration or
termination of this Agreement and all other provisions contained in this
Agreement that by their explicit terms survive expiration or termination of this
Agreement, shall survive. In addition, in the event of an expiration of this
Agreement in accordance with the provisions of Section 14.1, the licenses
granted in Sections 3.1 and 3.2(a) shall survive as perpetual, fully paid-up,
non-royalty-bearing licenses. Except as set forth in this Article XIV, upon
expiration of this Agreement in accordance with the provisions of Section 14.1
all other rights and obligations of the Parties under this Agreement terminate.

ARTICLE XV.

DISPUTE RESOLUTION

15.1. Continuance of Rights and Obligations During Pendency of Dispute
Resolution. If there are any disputes in connection with this Agreement,
including termination of this Agreement under Article XIV, all rights and
obligations of the Parties shall continue until such time as any dispute has be
resolved in accordance with the provisions of this Article XV.

15.2. Referral of Unresolved Matters to Senior Representatives. In the event
that the Parties are unable to resolve a dispute within thirty (30) days from
the date such dispute is first brought to the other Party’s attention, the
matter shall be referred to the Senior Representatives of each Party to be
resolved by negotiation in good faith as soon as is practicable but in no event
later than thirty (30) days after referral. A resolution, if any, of an issue
referred to the Senior Representatives set forth in a writing signed by both
Parties shall be final and binding on the Parties.

15.3. Equitable Relief. Notwithstanding anything to the contrary, each of the
Parties hereby acknowledges that a breach of their respective obligations under
this Agreement may cause irreparable harm and that the remedy or remedies at law
for any such breach may be inadequate. Each of the Parties hereby agrees that,
in the event of any such breach, in addition to all other available remedies
hereunder, the non-breaching Party shall have the right to seek equitable relief
to enforce the provisions of this Agreement.

 

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ARTICLE XVI.

MISCELLANEOUS

16.1. Governing Law and Jurisdiction. The validity, construction and performance
of this Agreement will be governed by and construed in accordance with the
substantive laws of the Commonwealth of Massachusetts excluding any conflicts or
choice of law rule or principle that might otherwise refer construction or
interpretation of this Agreement to the substantive law of another jurisdiction.

16.2. Force Majeure. Neither Party shall be held liable or responsible to the
other Party nor be deemed to have defaulted under or breached this Agreement for
failure or delay in fulfilling or performing any term, other than an obligation
to make payments hereunder, when such failure or delay is caused by or results
from fire, floods, embargoes, government regulations, prohibitions or
interventions, war, acts of war (whether war be declared or not), insurrections,
riots, civil commotions, acts of God or any other cause beyond the reasonable
control of the affected Party to anticipate, prevent, avoid or mitigate (a
“Force Majeure Event”); provided that (i) the affected Party provides prompt
notice to the other Party of such failure or delay, (ii) the affected Party uses
commercially reasonable efforts to mitigate the effects of the Force Majeure
Event, and (iii) the affected Party immediately resumes performance upon
cessation of the Force Majeure Event. Notwithstanding the foregoing, any failure
or delay in fulfilling a term shall not be considered a result of a Force
Majeure Event if it arises from a failure of Biogen Idec or AVEO to comply with
applicable Laws.

16.3. Further Assurances. Each Party hereto agrees to perform such acts, execute
such further instruments, documents or certificates, and provide such
cooperation in proceedings and actions as may be reasonably requested by the
other Party in order to carry out the intent and purpose of this Agreement,
including the registration or recordation of the rights granted hereunder.

16.4. Notices. Any notice required or permitted to be given hereunder shall be
in writing and shall be deemed to have been properly given if delivered in
person by a internationally recognized overnight courier, or by facsimile (and
promptly confirmed by an overnight courier delivery), to the addresses given
below or such other addresses as may be designated in writing by the Parties
from time to time during the Agreement Term. Any notice sent by internationally
recognized overnight courier as aforesaid shall be deemed to have been given
three (3) days after being sent.

In the case of AVEO:

AVEO Pharmaceuticals, Inc.

75 Sidney St.

Cambridge, MA 02139

Facsimile: 617-995-4995

Attention: Chief Business Officer

 

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With a copy to:

AVEO Pharmaceuticals, Inc.

75 Sidney St.

Cambridge, MA 02139

Facsimile: 617-995-4995

Attention: Corporate Counsel

In the case of Biogen Idec:

Biogen Idec International GmbH

Landis+Gyr-Strasse 3

6300 Zug

Switzerland

  Attention: VP, Chief International Counsel

  Facsimile: +41-41-392-1718

With a copy (which shall not constitute notice) to:

Biogen Idec Inc.

14 Cambridge Center

Cambridge, MA 02142

Attention: General Counsel

Facsimile: 617-679-3112

With an additional copy (which shall not constitute notice) to:

Bingham McCutchen LLP

One Federal Street

Boston, MA 02110

  Attention: Julio E. Vega

William S. Perkins

  Facsimile: 617-951-8736

16.5. Assignment. This Agreement may not be assigned or otherwise transferred by
either Party, without the written consent of the other Party, such consent not
to be unreasonably withheld, conditioned or delayed; provided, however, that
either Party may, without such consent, assign this Agreement, in whole or in
part, (i) to any of its Affiliates (provided the assigning Party continues at
all times to remain liable for all obligations of such Party under this
Agreement without regard to such assignment) and (ii) either Party, without such
consent, may assign its rights and delegate its duties under this Agreement,
whether by contract or operation of law, to a Third Party successor or purchaser
of all or substantially all of such Party’s business and assets, whether in a
merger, sale of stock, sale of assets or other similar transaction, provided
that the Third Party successor or purchaser provides written notice to the other
Party that such Third Party agrees to be bound by the terms of this Agreement.
Any purported assignment in violation of this

 

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Section 16.5 shall be void. Any permitted assignee shall assume all obligations
of its assignor under this Agreement. Without limiting the generality or
applicability of any other provision of this Agreement that may be applicable,
the rights of AVEO under this Section 16.5 shall be subject to the rights of
Biogen Idec under Sections 13.1 and 14.5 hereof.

16.6. Affiliate Performance. Any obligation of either Party under or pursuant to
this Agreement may be satisfied, met or fulfilled, in whole or in part, at such
Party’s sole and exclusive option, either by such Party directly or by any
Affiliate of such Party that such Party causes to satisfy, meet or fulfill such
obligation, in whole or in part.

16.7. Amendment. The Parties hereto may amend, modify or alter any of the
provisions of this Agreement, but only by a written instrument duly executed by
both Parties hereto.

16.8. Entire Agreement. This Agreement, along with all schedules and exhibits
attached hereto, contains the entire understanding of the Parties with respect
to the subject matter hereof and supersedes all prior agreements, whether
written or oral. Each Party confirms that it is not relying on any
representations, warranties or covenants of the other Party except as
specifically set out in this Agreement.

16.9. No Benefit to Third Parties. The provisions of this Agreement are for the
sole benefit of the Parties and their successors and permitted assigns, and they
shall not be construed as conferring any rights in any other Persons.

16.10. Waiver. The failure of a Party to enforce at any time for any period any
of the provisions hereof shall not be construed as a waiver of such provisions
or of the rights of such Party thereafter to enforce each such provision.

16.11. No Implied Licenses. Except as expressly and specifically provided under
this Agreement, the Parties agree that neither Party is granted any implied
rights to or under any of the other Party’s current or future patents, trade
secrets, copyrights, moral rights, trade or service marks, trade dress, or any
other intellectual property rights.

16.12. Relationship of the Parties. The Parties agree that their relationship
established by this Agreement is that of independent contractors. Furthermore,
the Parties agree that this Agreement does not, is not intended to, and shall
not be construed to, establish a partnership or joint venture, and nor shall
this Agreement create or establish an employment, agency or any other
relationship. Except as may be specifically provided herein, neither Party shall
have any right, power or authority, nor shall they represent themselves as
having any authority to assume, create or incur any expense, liability or
obligation, express or implied, on behalf of the other Party, or otherwise act
as an agent for the other Party for any purpose.

16.13. Severability. If any provision of this Agreement is held unenforceable by
a court or tribunal of competent jurisdiction in a final unappealable order
because it is invalid or conflicts with any Law of any relevant jurisdiction,
then such provision shall be inoperative in such jurisdiction and the remainder
of this Agreement shall remain binding upon the Parties hereto.

 

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16.14. Interpretation.

(a) General. Unless the context of this Agreement otherwise requires, (a) words
of one gender include the other gender; and (b) words using the singular or
plural number also include the plural or singular number, respectively. Whenever
this Agreement refers to a number of days, unless otherwise specified, such
number shall refer to calendar days.

(b) Other Definitional and Agreement References. References to any agreement,
contract, statute, act, or regulation are to that agreement, contract, statute,
act, or regulation as amended, modified or supplemented from time to time in
accordance with the terms hereof and thereof.

(c) Capitalization. Any capitalized terms used in any Exhibit or Schedule but
not otherwise defined therein, shall have the meaning as defined in this
Agreement.

(d) Date References. References from or through any date mean, unless otherwise
specified, from and including or through and including, respectively.

(e) Schedules and Exhibits. All Schedules and Exhibits annexed hereto or
referred to herein are hereby incorporated in and made a part of this Agreement
as if set forth in full herein.

(f) Person References. References to any Person include the successors and
permitted assigns of that Person.

(g) References to Parts of this Agreement. References to Articles, Sections,
Schedules, and Exhibits are to Articles, Sections, Schedules, and Exhibits of
this Agreement unless otherwise specified.

(h) Other Definitional and Interpretative Provisions. The words “hereof”,
“herein” and “hereunder” and words of like import used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement. Whenever the words “include”, “includes” or “including” are used in
this Agreement, they shall be deemed to be followed by the words “without
limitation”, whether or not they are in fact followed by those words or words of
like import. The word “or” is used in the inclusive sense (and/or). Writing”,
“written” and comparable terms refer to printing, typing and other means of
reproducing words (including electronic media) in a visible form.

(i) Headings. The Article and Section headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

(j) Expenses. Except as otherwise expressly provided in this Agreement, each
Party shall pay the fees and expenses of its respective lawyers and other
experts and all other expenses and costs incurred by such Party incidental to
the negotiation, preparation, execution and delivery of this Agreement.

 

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16.15. Counterparts. This Agreement may be executed in any number of
counterparts (including by facsimile), each of which shall be deemed an
original, but all of which together shall constitute one and the same document.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, AVEO and Biogen Idec have caused this Agreement to be duly
executed by their authorized representatives under seal, in duplicate on the
Effective Date.

 

AVEO PHARMACEUTICALS, INC.

By:  

  /s/ Tuan Ha-Ngoc

Name:  

  Tuan Ha-Ngoc

Title:  

  President and Chief Executive Officer

BIOGEN IDEC INTERNATIONAL GMBH

By:  

  /s/ Hans Peter Hasler

Name:  

  Hans Peter Hasler

Title:  

  Geschaftsführer

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

Exhibit A

List of Existing AVEO Patent Rights

None

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Exhibit B

Development Plan Guidelines

For purposes of this Agreement, a Development Plan, or any amendment,
modification or update thereto, shall be deemed to meet the “Development Plan
Guidelines” on any date if the Development activities contemplated in such
Development Plan are designed and selected so that, to the maximum extent
possible, [**].

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Exhibit C

Stock Purchase Agreement

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EXECUTION

AVEO PHARMACEUTICALS, INC.

SERIES E CONVERTIBLE PREFERRED STOCK

PURCHASE AGREEMENT

Dated as of March 18, 2009

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

TABLE OF CONTENTS

 

         PAGE NO.  

1. SALE OF SHARES; AUTHORIZATION

     1      1.1 Sale of Shares      1      1.2 Use of Proceeds      1      1.3
Authorization      1   

2. CLOSINGS

     2      2.1 The Initial Closing      2      2.2 Additional Closings      3
  

3. REPRESENTATIONS OF THE COMPANY

     4      3.1 Organization and Standing      4      3.2 Subsidiaries, Etc     
4      3.3 Capitalization      4      3.4 Issuance of Shares      6      3.5
Authority for Agreement; No Conflict      6      3.6 Governmental Consents     
7      3.7 Litigation      7      3.8 Financial Statements      7      3.9
Absence of Undisclosed Liabilities      8      3.10 Property and Assets      8
     3.11 Intellectual Property      8      3.12 Material Contracts and
Obligations      9      3.13 Compliance      10      3.14 Books and Records     
10      3.15 Disclosures      10      3.16 Taxes      10      3.17 ERISA      11
     3.18 Transactions With Affiliates      11      3.19 Employees      11     
3.20 Certain Agreements of Officers and Key Employees      11      3.21
Assumptions or Guaranties of Indebtedness of Other Persons      12      3.22
Insurance      12      3.23 Environmental Matters      12   

4. REPRESENTATIONS OF THE PURCHASERS

     12      4.1 Investment      12      4.2 Authority      12      4.3
Experience      13   

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5. TRANSFER OF SHARES

     13      5.1 Restricted Shares      13      5.2 Requirements for Transfer   
  13      5.3 Legend      14      5.4 Rule 144A Information      14   

6. MISCELLANEOUS

     14      6.1 Successors and Assigns      14      6.2 Survival of
Representations and Warranties      15      6.3 Brokers      15      6.4
Severability      15      6.5 Specific Performance      15      6.6 Governing
Law      15      6.7 Notices      15      6.8 Complete Agreement      16     
6.9 Amendments and Waivers      16      6.10 Pronouns      16      6.11
Counterparts; Facsimile Signatures      16      6.12 Section Headings and
References      16   

EXHIBITS

 

Exhibit A    – List of Purchasers and Shares Purchased Exhibit B-1    –
Investment Financing Signature Page Exhibit B-2    – Existing Investor Financing
Signature Page Exhibit C    – Certificate of Amendment Exhibit D    – Investor
Rights Agreement Exhibit E    – Voting Agreement Exhibit F    – Co-Sale
Agreement Exhibit G    – Opinion of Counsel Exhibit H    – Exceptions to
Representations

 

-ii-

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AVEO PHARMACEUTICALS, INC.

SERIES E CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT

This Agreement dated as of March 18, 2009, is entered into by and among AVEO
Pharmaceuticals, Inc., a Delaware corporation (the “Company”), the individuals
and entities listed on Exhibit A hereto under the heading “Initial Purchasers”
(the “Initial Purchasers”), who shall become parties to this Agreement by
executing and delivering a financing signature page in the form of Exhibit B-1
hereto or such other form as may be acceptable to the Company (the “Investment
Financing Signature Page”), and the individuals and entities who become parties
to this Agreement after the date hereof in accordance with Section 2.2 hereof by
executing and delivering (i) in the case of individuals and entities that were
not holders of Preferred Stock, $0.001 par value per share (“Preferred Stock”),
of the Company prior to the date of the applicable Closing (as defined below)
(the “New Investors”), an Investment Financing Signature Page or (ii) in the
case of individuals and entities that were holders of Preferred Stock of the
Company prior to the date of the applicable Closing (as defined below)
(“Existing Investors” and, collectively with the New Investors, the “Additional
Purchasers”), a financing signature page in the form of Exhibit B-2 hereto or
such other form as may be acceptable to the Company (the “Existing Investor
Financing Signature Page”). Investment Financing Signature Pages and Existing
Investor Financing Signature Pages are collectively referred to as “Financing
Signature Pages”. The Initial Purchasers and any Additional Purchasers are
collectively referred to as the “Purchasers”.

In consideration of the mutual promises and covenants contained in this
Agreement, the parties hereto agree as follows:

1. Sale of Shares; Authorization.

1.1 Sale of Shares. Subject to the terms and conditions of this Agreement, at
the Closings (as defined in Section 2.2), the Company will sell and issue to
each of the Purchasers, and each of the Purchasers will purchase, the number of
shares of the Company’s Series E Convertible Preferred Stock, $0.001 par value
per share (the “Series E Preferred”), set forth opposite such Purchaser’s name
on Exhibit A, for the purchase price of $4.00 per share (the “Purchase Price”).
The shares of Series E Preferred sold under this Agreement are referred to as
the “Shares.”

1.2 Use of Proceeds. The Company will use the proceeds from the sale of the
Shares for product development and other general corporate purposes.

1.3 Authorization. Before the Initial Closing (as defined in Section 2.1), the
Company will have duly authorized the sale and issuance, pursuant to the terms
of this Agreement, of up to 15,000,000 shares of Series E Preferred, having the
rights, privileges, preferences and restrictions set forth in the Certificate of
Amendment of Certificate of Incorporation attached hereto as Exhibit C (the
“Certificate of Amendment”). Before the Initial Closing, the Company will have
adopted and filed the Certificate of Amendment with the Secretary of State of
the State of Delaware.

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2. Closings.

2.1 The Initial Closing. Subject to the terms and conditions of this Agreement,
the initial closing (the “Initial Closing”) of the sale and purchase of
7,500,000 Shares under this Agreement shall take place at the offices of Wilmer
Cutler Pickering Hale and Dorr LLP, 60 State Street, Boston, Massachusetts (or
remotely via the exchange of documents and signatures) on a date mutually agreed
to by the Company and the Initial Purchasers, provided that the Company and the
Initial Purchasers agree that such Initial Closing shall be consummated on or
prior to May 31, 2009, in the event that the Company has completed the actions
set forth in this Section 2.1 on or prior to such date (the “Initial Closing
Date”). Prior to or at the Initial Closing:

(a) the Company and the other parties named therein shall execute and deliver
the Fourth Amended and Restated Investor Rights Agreement in the form attached
hereto as Exhibit D (the “Investor Rights Agreement”);

(b) the Company and the other parties named therein shall execute and deliver
the Fourth Amended and Restated Stockholders’ Voting Agreement in the form
attached hereto as Exhibit E (the “Voting Agreement”);

(c) the Company and the other parties named therein shall execute and deliver
the Fourth Amended and Restated Right of First Refusal and Co-Sale Agreement in
the form attached hereto as Exhibit F (the “Co-Sale Agreement”);

(d) the Company shall deliver to the Initial Purchasers certificates, as of the
most recent practicable dates, (i) as to the corporate good standing of the
Company issued by the Secretary of State of the State of Delaware and (ii) as to
the due qualification of the Company as a foreign corporation issued by the
Commonwealth of Massachusetts;

(e) the Company shall deliver to the Initial Purchasers the Certificate of
Incorporation of the Company, as amended and in effect as of the Initial Closing
Date (including the Certificate of Amendment), certified by the Secretary of
State of the State of Delaware;

(f) the Company shall deliver to the Initial Purchasers a Certificate of the
Secretary or Assistant Secretary of the Company attesting as to (i) the By-laws
of the Company; (ii) the signatures and titles of the officers of the Company
executing this Agreement or any of the other agreements to be executed and
delivered by the Company at the Initial Closing; and (iii) resolutions of the
Board of Directors and stockholders of the Company, authorizing and approving
all matters in connection with this Agreement and the transactions contemplated
hereby;

(g) Wilmer Cutler Pickering Hale and Dorr LLP, counsel for the Company, shall
deliver to the Initial Purchasers an opinion, dated the Initial Closing Date, in
substantially the form attached hereto as Exhibit G;

 

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(h) the Company shall deliver to the Initial Purchasers a Certificate of the
President of the Company certifying that (i) each of the representations and
warranties made by the Company in Section 3 hereof is true and correct as of the
Initial Closing Date as if then made, except to the extent that such
representations and warranties were made as of a specific date; and (ii) the
Company has performed and complied with all agreements and conditions contained
in this Agreement required to be performed or complied with by the Company prior
to or at the Initial Closing;

(i) the Company shall deliver to each Initial Purchaser a certificate for the
Shares being purchased at the Initial Closing by such Initial Purchaser,
registered in the name of such Initial Purchaser; and

(j) each Initial Purchaser shall pay to the Company, by wire transfer of
immediately available funds, the Purchase Price for the Shares being purchased
at the Initial Closing by such Initial Purchaser.

2.2 Additional Closings. Additional sales of up to an aggregate of 7,500,000
Shares may be made by the Company to Additional Purchasers at one or more
additional closings (each, an “Additional Closing”) up to 120 days after the
Initial Closing Date; provided, however, that the composition of the Additional
Purchasers (other than any Existing Investor) shall be subject to the approval
of a majority of the members of the Board of Directors. Each Additional Closing
and the Initial Closing are collectively referred to as the “Closings” and the
date of each Additional Closing and the Initial Closing Date are collectively
referred to as the “Closing Dates.” Each Additional Closing shall take place at
the offices of Wilmer Cutler Pickering Hale and Dorr LLP, 60 State Street,
Boston, Massachusetts (or remotely via the exchange of documents and
signatures). At each Additional Closing, (i) each Additional Purchaser that is a
New Investor shall execute and deliver an Investment Financing Signature Page,
and each Additional Purchaser that is an Existing Investor shall execute and
deliver an Existing Investor Financing Signature Page, and upon acceptance by
the Company of such Financing Signature Page, such Additional Purchaser shall
become a “Purchaser” hereunder; (ii) the Company shall (A) issue and deliver to
each Additional Purchaser a certificate for the number of Shares being purchased
at such Additional Closing by such Additional Purchaser, registered in the name
of such Additional Purchaser, against payment to the Company of the Purchase
Price for the number of Shares being purchased by such Additional Purchaser,
(B) deliver to each of the Additional Purchasers, the documents set forth in
Sections 2.1(a) through (c) and (f) and (C) deliver to each of the Additional
Purchasers, the certificates set forth in Sections 2.1(d) and (e) and a
certificate, executed by the President of the Company, certifying that each
representation and warranty contained in Section 3 shall be true on and as of
the Additional Closing with the same effect as though such representation and
warranty had been made on and as of that date, except as set forth on Exhibit H
hereto, which shall be supplemented as of the date of such Additional Closing,
and certifying to the fulfillment of the conditions specified in Section 2.1(h),
dated as of the date of each such Additional Closing; (iii) Wilmer Cutler
Pickering Hale and Dorr LLP shall deliver to each of the Additional Purchasers
an opinion, dated as of the date of such Additional Closing, in substantially
the form attached hereto as Exhibit G; and (iv) the Company shall cause Exhibit
A to this Agreement and Exhibit A to each of the Ancillary Agreements (as
defined in

 

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Section 3.1) to be amended to include each Additional Purchaser and all
corresponding information specified in each such Exhibit. The Purchase Price
shall be paid by wire transfer of immediately available funds.

3. Representations of the Company. Except as disclosed by the Company in Exhibit
H hereto, the Company hereby represents and warrants to each Purchaser that the
statements contained in this Section 3 are complete and accurate as of the date
of this Agreement. Exhibit H shall be arranged in sections corresponding to the
numbered and lettered sections and subsections contained in this Section 3, and
the disclosures in any section or subsection of Exhibit H shall qualify only the
corresponding section or subsection of this Section 3 unless otherwise
specified.

3.1 Organization and Standing. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has full corporate power and authority to conduct its business as presently
conducted and as presently proposed to be conducted by it and to enter into and
perform this Agreement and all other agreements required to be executed by the
Company at or prior to the Initial Closing pursuant to Section 2.1 (the
“Ancillary Agreements”) and to carry out the transactions contemplated by this
Agreement and the Ancillary Agreements. The Company is duly qualified to do
business as a foreign corporation and is in good standing in the Commonwealth of
Massachusetts and in any other jurisdictions wherein the character of the
property owned or leased, or the nature of the activities conducted, by it makes
such licensing or qualification necessary. The Company has furnished to the
Purchaser complete and accurate copies of its Certificate of Incorporation and
By-laws, each as amended to date and presently in effect. The Company has at all
times complied with all provisions of its Certificate of Incorporation and
By-laws in all material respects and is not in default under, or in violation
of, any such provision.

3.2 Subsidiaries, Etc. The Company has no subsidiaries and does not own or
control, directly or indirectly, any shares of capital stock of any other
corporation or any interest in any partnership, limited liability company, joint
venture or other non-corporate business enterprise.

3.3 Capitalization.

(a) The authorized capital stock of the Company (immediately prior to the
Initial Closing) consists of (i) 102,000,000 shares of Common Stock, $0.001 par
value per share (“Common Stock”), of which 6,367,751 shares are issued and
outstanding and no shares are held in the treasury of the Company,
(ii) 12,448,000 shares of Series A Convertible Preferred Stock, $0.001 par value
per share, of which 12,400,000 shares are issued and outstanding,
(iii) 27,215,385 shares of Series B Convertible Preferred Stock, $0.001 par
value per share, of which 26,906,354 shares are issued and outstanding,
(iv) 4,166,668 shares of Series C Convertible Preferred Stock, $0.001 par value
per share, all of which are issued and outstanding, (v) 21,794,310 shares of
Series D Convertible Preferred Stock, $0.001 par value per share, of which
21,165,510 are issued and outstanding, and (vi) 15,000,000 shares of Series E
Preferred, none of which are issued or outstanding.

 

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(b) Exhibit H includes a complete and accurate list, as of the date of the
Agreement, of the holders of capital stock of the Company, showing the number of
shares of capital stock, and the class or series of such shares, held by each
stockholder and (for shares other than Common Stock) the number of shares of
Common Stock (if any) into which such shares are convertible. Exhibit H also
indicates all outstanding shares of Common Stock that constitute restricted
stock or that are otherwise subject to a repurchase or redemption right,
indicating the name of the applicable stockholder, the vesting schedule
(including any acceleration provisions with respect thereto), and the repurchase
price payable by the Company. All of the issued and outstanding shares of
capital stock of the Company have been duly authorized and validly issued and
are fully paid and nonassessable. All of the issued and outstanding shares of
capital stock of the Company have been offered, issued and sold by the Company
in compliance with all applicable federal and state securities laws.

(c) Exhibit H includes a complete and accurate list, as of the date of this
Agreement of: (i) all stock option plans and other stock or equity-related plans
of the Company (the “Company Stock Plans”), indicating for each Company Stock
Plan the number of shares of Common Stock issued to date under such Plan, the
number of shares subject to outstanding options under such Plan and the number
of shares reserved for future issuance under such Plan; (ii) all holders of
outstanding options to purchase shares of Common Stock (“Company Stock
Options”), indicating with respect to each Company Stock Option the Company
Stock Plan under which it was granted, the number of shares of Common Stock
subject to such Company Stock Option, the exercise price and the date of grant;
and (iii) all holders of warrants or other rights (other than Company Stock
Options and convertible preferred stock) to purchase or acquire shares of
capital stock of the Company (“Company Warrants”), indicating with respect to
each Company Warrant the agreement or other document under which it was granted,
the number of shares of capital stock, and the class or series of such shares,
subject to such Company Warrant, the exercise price, the date of issuance and
the expiration date thereof. The Company has furnished to the Purchaser complete
and accurate copies of all Company Stock Plans, forms of all stock option
agreements evidencing Company Stock Options and all Company Warrants. All of the
shares of capital stock of the Company subject to Company Stock Options and
Company Warrants will be, upon issuance pursuant to the exercise of such
instruments, duly authorized, validly issued, fully paid and nonassessable.

(d) Except as set forth in this Section 3.3 or Exhibit H, (i) no subscription,
warrant, option, convertible security or other right (contingent or otherwise)
to purchase or acquire any shares of capital stock of the Company is authorized
or outstanding, (ii) the Company has no obligation (contingent or otherwise) to
issue any subscription, warrant, option, convertible security or other such
right, or to issue or distribute to holders of any shares of its capital stock
any evidences of indebtedness or assets of the Company, (iii) the Company has no
obligation (contingent or otherwise) to purchase, redeem or otherwise acquire
any shares of its capital stock or any interest therein or to pay any dividend
or to make any other distribution in respect thereof, and (iv) there are no
outstanding or authorized stock appreciation, phantom stock or similar rights
with respect to the Company.

 

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(e) Except for the Ancillary Agreements, there is no agreement, written or oral,
between the Company and any holders of its securities, or, to the best of the
Company’s knowledge, among any holder of its securities, relating to the sale or
transfer (including without limitation agreements relating to rights of first
refusal, co-sale rights or “drag-along” rights), registration under the
Securities Act of 1933, as amended (the “Securities Act”), or voting, of the
capital stock of the Company.

3.4 Issuance of Shares. The issuance, sale and delivery of the Shares in
accordance with this Agreement, and the issuance and delivery of the shares of
Common Stock issuable upon conversion of the Shares, have been, or will be on or
prior to the applicable Closing, duly authorized by all necessary corporate
action on the part of the Company, and all such shares have been duly reserved
for issuance. The Shares when so issued, sold and delivered against payment
therefor in accordance with the provisions of this Agreement, and the shares of
Common Stock issuable upon conversion of the Shares, when issued upon such
conversion, will be duly and validly issued, fully paid and nonassessable with
no personal liability attaching to the ownership thereof and will be free and
clear of all liens, charges, restrictions, claims and encumbrances imposed by or
through the Company except as set forth in the Investor Rights Agreement.

3.5 Authority for Agreement; No Conflict. The execution, delivery and
performance by the Company of this Agreement and the Ancillary Agreements, and
the consummation by the Company of the transactions contemplated hereby and
thereby, have been duly authorized by all necessary corporate action. This
Agreement has been, and the Ancillary Agreements when executed at the Initial
Closing will be, duly executed and delivered by the Company and constitute valid
and binding obligations of the Company enforceable in accordance with their
respective terms, subject as to enforcement of remedies to applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
generally the enforcement of creditors’ rights and subject to a court’s
discretionary authority with respect to the granting of a decree ordering
specific performance or other equitable remedies.

The execution and delivery of this Agreement and the Ancillary Agreements, the
consummation of the transactions contemplated hereby and thereby and the
compliance with their respective provisions by the Company will not (a) conflict
with or violate any provision of the Certificate of Incorporation or By-laws of
the Company, (b) require on the part of the Company any filing with, or any
permit, order, authorization, consent or approval of, any court, arbitrational
tribunal, administrative agency or commission or other governmental or
regulatory authority or agency (each of the foregoing is hereafter referred to
as a “Governmental Entity”) except for any filing, permit, order, authorization,
consent or approval, the absence of which would not reasonably be expected to
have a material adverse effect on the Company’s business, financial condition or
results of operations (a “Company Material Adverse Effect”), (c) conflict with,
result in a breach of, constitute (with or without due notice or lapse of time
or both) a default under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify or cancel, or require any notice, consent
or waiver under, any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, Security Interest (as defined below) or other arrangement to which
the

 

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Company is a party or by which the Company is bound or to which its assets are
subject except for any of the foregoing events listed in this clause (c) which,
individually or in the aggregate, would not reasonably be expected to have a
Company Material Adverse Effect, (d) result in the imposition of any Security
Interest upon any assets of the Company or (e) violate any order, writ,
injunction, decree, statute, rule or regulation specifically naming the Company
or applicable to any of its assets. For purposes of this Agreement, “Security
Interest” means any mortgage, pledge, security interest, encumbrance, charge, or
other lien (whether arising by contract or by operation of law).

3.6 Governmental Consents. No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any
Governmental Entity is required on the part of the Company in connection with
the offer, issuance, sale and delivery of the Shares, the issuance and delivery
of the shares of Common Stock issuable upon conversion of the Shares or the
other transactions to be consummated at the Initial Closing, as contemplated by
this Agreement and the Ancillary Agreements, except such filings as shall have
been made prior to and shall be effective on and as of the Initial Closing and
such filings required to be made after the Initial Closing under applicable
federal and state securities laws. Based on the representations made by each of
the Purchasers in Section 4 of this Agreement, the offer and sale of the Shares
to each of the Purchasers will be in compliance with applicable federal and
state securities laws.

3.7 Litigation. There is no action, suit or proceeding, or governmental inquiry
or investigation, pending, or, to the Company’s knowledge, any basis therefor or
threat thereof, against the Company, any of which, singly or in the aggregate,
could reasonably be expected to have a Company Material Adverse Effect. There is
no litigation pending, or, to the Company’s knowledge, any basis therefor or
threat thereof, against the Company by reason of the proposed activities of the
Company, or negotiations by the Company with possible investors in the Company.
Neither the Company, nor, to the Company’s knowledge, any of its officers is
subject to any outstanding judgment, order or decree specifically naming the
Company. There is no action, suit or proceeding initiated by the Company
currently pending or which the Company currently intends to initiate.

3.8 Financial Statements. The Company has furnished to each of the Purchasers a
complete and accurate copy of the (i) audited balance sheet of the Company at
December 31, 2007 and the related audited statements of operations and cash
flows for the fiscal year then ended and (ii) the unaudited balance sheet (the
“Balance Sheet”) of the Company at November 30, 2008 the (“Balance Sheet Date”)
and the related unaudited statements of operations and cash flows for the
11-month period then ended (collectively, the “Financial Statements”). The
Financial Statements are in accordance with the books and records of the
Company, present fairly the financial condition and results of operations of the
Company, at the dates and for the periods indicated, and have been prepared in
accordance with generally accepted accounting principles (“GAAP”) consistently
applied, except that the unaudited Financial Statements may not be in accordance
with GAAP (x) due to non-cash adjustments related to Financial Accounting
Standards Board Statement 123R, and (y) because of the absence of footnotes
normally contained therein and are subject to normal year-end audit adjustments
which in the aggregate will not be material.

 

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3.9 Absence of Undisclosed Liabilities. The Company does not have any liability
(whether known or unknown and whether absolute or contingent), except for
(a) liabilities shown on the Balance Sheet, (b) liabilities not in excess of
$500,000 in the aggregate, which have arisen since the Balance Sheet Date in the
ordinary course of business and which are similar in nature and amount to the
liabilities which arose during the comparable period of time in the immediately
preceding fiscal period and (c) contractual and other liabilities incurred in
the ordinary course of business which are not required by GAAP to be reflected
on a balance sheet and which would not, either individually or in the aggregate,
have or result in a Company Material Adverse Effect.

3.10 Property and Assets. The Company has good title to, or a valid leasehold
interest in, all of its material properties and assets, including all properties
and assets reflected in the Balance Sheet, except those disposed of since the
date thereof in the ordinary course of business.

3.11 Intellectual Property.

(a)

(i) Exhibit H lists each patent, patent application, copyright registration or
application therefor, mask work registration or application therefor, and
trademark, service mark and domain name registration or application therefor
owned by the Company. Except as set forth in Exhibit H, there is no pending
adverse claim that would interfere with the Company’s right to use the licenses,
software or any Intellectual Property (as defined in Section 3.11(e) hereof)
being used in the Company’s business as now operated. Except as set forth in
Exhibit H, the conduct of the Company’s business as now operated does not
conflict and to the best of the Company’s knowledge will not conflict with any
license, or other Intellectual Property of any other Person. Except as set forth
in Exhibit H, to the best of the Company’s knowledge, no product or process
presently used or under development by the Company infringes or will infringe on
any Intellectual Property of any other Person.

(ii) Except pursuant to an agreement set forth in Schedule 3.11(a) (ii) in
Exhibit H, the Company has no obligation to compensate any Person for the use of
any Intellectual Property.

(b) Except as identified in Exhibit H, to the best of the Company’s knowledge,
the Company owns or has the right to use all Intellectual Property necessary in
the conduct of its business as contemplated on the date hereof. Except as
identified in Exhibit H, the Company has the right to bring actions for
infringement of all Intellectual Property owned or exclusively licensed by the
Company. Except as identified in Exhibit H, the Company has taken reasonable
measures to protect the proprietary nature of each item of Company Intellectual
Property (as defined in Section 3.11(e) hereof); to perfect the Company’s title
in Company Intellectual Property, including recording in the U.S. Patent and
Trademark Office invention assignments for each of the named inventors on

 

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each of the U.S. patents and patent applications owned by the Company; and to
maintain in confidence all trade secrets and confidential information, that it
owns or uses and desires to retain in confidence. No other person or entity has
any rights to any of the Company Intellectual Property owned by the Company
(except pursuant to an agreement or license specified in Exhibit H), and, to the
Company’s knowledge, no other person or entity is infringing, violating or
misappropriating any of the Company Intellectual Property. No claim is pending
or, to the Company’s knowledge, threatened to the effect that any Company
Intellectual Property is invalid or unenforceable by the Company, and, to the
Company’s knowledge, except as set forth in Exhibit H, there is no basis for any
such claim (whether or not pending or threatened).

(c) Exhibit H identifies each license or other agreement pursuant to which the
Company has licensed, distributed or otherwise granted any rights to any third
party with respect to, any Company Intellectual Property. Except as disclosed on
Exhibit H, the Company has not agreed to indemnify any person or entity against
infringement, violation or misappropriation of any Intellectual Property with
respect to any Company Intellectual Property.

(d) Exhibit H identifies each license or other agreement pursuant to which the
Company uses Company Intellectual Property that is owned by a party other than
the Company (excluding off the shelf software programs licensed by the Company
pursuant to “shrink wrap” licenses).

(e) For purposes of this Agreement, the following terms shall have the following
meanings:

(i) “Intellectual Property” shall mean (A) patents, patent applications, patent
disclosures and all related continuation, continuation-in-part, divisional,
reissue, reexamination, utility model, certificate of invention and design
patents, patent applications, registrations and applications for registrations;
(B) trademarks, service marks, trade dress, trade names and corporate names and
registrations and applications for registration thereof; (C) copyrights and
registrations and applications for registration thereof; (D) mask works and
registrations and applications for registration thereof; (E) trade secrets;
(F) inventions, know how and improvements; and (G) all rights relating to or
associated with any of the foregoing.

(ii) “Company Intellectual Property” shall mean all Intellectual Property
necessary in the conduct of its business as contemplated on the date hereof and
owned by or licensed to the Company, or to which the Company otherwise has a
right to use.

3.12 Material Contracts and Obligations. Exhibit H sets forth a list of all
material agreements or commitments of any nature (whether written or oral) to
which the Company is a party or by which it is bound, including without
limitation (a) any employment and consulting agreements, employee benefit,
bonus, pension, profit-sharing, stock option, stock purchase and similar plans
and arrangements, (b) any agreement with any current or former stockholder,
officer or director of the Company, or any “affiliate” or “associate” of such
persons (as such terms are defined in the rules and regulations promulgated
under the Securities Act), including without limitation any agreement or other
arrangement providing for the furnishing of services by, rental of real or

 

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personal property from, or otherwise requiring payments to, any such person or
entity, or (c) any agreement relating to indebtedness for borrowed money
(including any assumptions, guarantees, endorsements or other direct or
contingent liability), or (d) any agreement which requires future expenditures
by the Company in excess of $250,000 in the aggregate or which might result in
payments to the Company in excess of $250,000 in the aggregate. Neither the
Company, nor, to the Company’s knowledge, any other party thereto, is in default
of any of its obligations under any of the agreements or contracts listed on any
Schedule in Exhibit H, in a manner which could have a Company Material Adverse
Effect, nor does the Company have a reasonable basis to believe that it will not
continue to remain in compliance with its obligations (including milestone
obligations) under such agreements or contracts. To the Company’s knowledge, all
agreements and contracts listed on any Schedule in Exhibit H are valid, binding
and in full force and effect in all material respects, subject to laws of
general application relating to bankruptcy, insolvency and the relief of debtors
and rules of law governing specific performance, injunctive relief or other
equitable remedies and to general principles of equity.

3.13 Compliance. The Company has, in all material respects, complied with all
laws, regulations and orders applicable to its present business and has all
material permits and licenses required thereby.

3.14 Books and Records. The minute books of the Company contain complete and
accurate records, in all material respects, of all meetings and other corporate
actions of its stockholders and its Board of Directors and committees thereof.
The stock ledger of the Company is complete and accurate in all material
respects and reflects all issuances, transfers, repurchases and cancellations of
shares of capital stock of the Company.

3.15 Disclosures. Neither this Agreement nor any Exhibit hereto, nor any
Ancillary Agreement nor any report, certificate or instrument furnished to the
Purchasers or their counsel in connection with the transactions contemplated by
this Agreement, when read together, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements contained herein or therein, in light
of the circumstances under which they were made, not misleading. To the
Company’s knowledge, there is no material fact directly relating to the
business, operations or financial condition of the Company (including any
competitive developments but other than facts that relate to general economic or
industry trends or conditions or are otherwise generally known through publicly
available information) that materially adversely affect the same that has not
been disclosed to the Purchasers.

3.16 Taxes. The Company has filed or has obtained presently effective extensions
with respect to all federal, state, county, local and foreign tax returns which
are required to be filed by it, such returns are complete and accurate in all
material respects and all taxes shown thereon to be due have been timely paid
with exceptions not material to the Company. Federal income tax returns of the
Company have not been audited by the Internal Revenue Service, and no
controversy with respect to taxes of any type is pending or, to the best of the
Company’s knowledge, threatened. The Company has established adequate reserves
for all taxes accrued but not

 

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yet payable to the extent required by generally accepted accounting principles.
There is no tax lien (other than for current taxes not yet due and payable),
whether imposed by any Federal, state, county or local taxing authority,
outstanding against the assets, properties or business of the Company. Neither
the Company nor any of its present or former stockholders has ever filed an
election pursuant to Section 1362 of the Internal Revenue Code of 1986, as
amended, that the Company be taxed as an S corporation.

3.17 ERISA. Except as set forth on Exhibit H, the Company does not have or
otherwise contribute to or participate in any employee benefit plan subject to
the Employee Retirement Income Security Act of 1974, as amended, or any plan of
deferred compensation, medical plan, life insurance plan, long-term disability
plan, dental plan, excess benefit plan, bonus or incentive plan (including but
not limited to stock options, restricted stock, stock bonus and deferred bonus
plans), salary reduction agreement, change-of-control agreement, consulting
agreement or any other benefit program or contract, except as required by law.
The Company has complied in all material respects with all applicable laws
relating to wages, hours and collective bargaining.

3.18 Transactions With Affiliates. Except as set forth on Exhibit H, no
director, officer, employee or stockholder of the Company, or member of the
family of any such person, or any corporation, partnership, trust or other
entity in which any such person, or any member of the family of any such person,
has a substantial interest or is an officer, director, trustee, partner or
holder of more than 5% of the outstanding capital stock thereof, is a party to
any transaction with the Company, including any contract, agreement or other
arrangement providing for the employment of, furnishing of services by, rental
of real or personal property from or otherwise requiring payments to any such
person or firm, other than employment-at-will arrangements in the ordinary
course of business.

3.19 Employees. All current and former employees of the Company who have or have
had access to confidential or proprietary information of the Company have
executed and delivered non-disclosure and assignment of inventions agreements in
the form provided to the Purchasers and all of such agreements are in full force
and effect. All current and former Key Employees (as defined in Section 7 of the
Co-Sale Agreement) of the Company have executed and delivered non-competition
and non-solicitation agreements in the form provided to the Purchasers and all
of such agreements are in full force and effect.

3.20 Certain Agreements of Officers and Key Employees.

(a) Except as listed in Exhibit 3.12, the Company is not a party to or obligated
in connection with its business with respect to (i) outstanding contracts with
employees, agents, consultants, advisers, sales representatives, distributors,
sales agents or dealers or (ii) collective bargaining agreements or contracts
with any labor union or other representative of employees or any employee
benefits provided for by any such agreement.

(b) To the knowledge of the Company, no officer or Key Employee of the Company
is in violation of any term of any employment contract, patent disclosure
agreement, proprietary information agreement, noncompetition agreement, or any
other

 

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contract or agreement or any restrictive covenant relating to the right of any
such officer or Key Employee to be employed by the Company because of the nature
of the business conducted or to be conducted by the Company or relating to the
use of trade secrets or proprietary information of others, and to the knowledge
of the Company, the continued employment of the Company’s officers and Key
Employees does not subject the Company or any Purchaser to any liability to
third parties.

3.21 Assumptions or Guaranties of Indebtedness of Other Persons. Except as
contemplated hereby or consented to by the Purchaser in accordance with this
Agreement, the Company has not assumed, guaranteed, endorsed or otherwise become
directly or contingently liable on (including, without limitation, liability by
way of agreement, contingent or otherwise, to purchase, to provide funds for
payment, to supply funds to or otherwise invest in the debtor or otherwise to
assure the creditor against loss), any indebtedness of any other person.

3.22 Insurance. The Company has in full force and effect general liability
insurance policies and any other insurance policies the Company deems necessary
and as set forth on Exhibit H, with extended coverage, which the Company deems
reasonably sufficient in amount (subject to reasonable deductibles) to allow it
to replace any of its current properties that might be damaged or destroyed or
otherwise to protect the current assets of the Company.

3.23 Environmental Matters. To the Company’s knowledge, (i) no material quantity
of hazardous wastes, substances or materials or oil or petroleum products have
been generated, transported, used, disposed, stored or treated by the Company
and (ii) no material quantity of hazardous wastes, substances or materials, or
oil or petroleum products have been released, discharged, disposed, transported,
placed or otherwise caused by the Company to enter the soil or water in, under
or upon any real property owned, leased or operated by the Company.

4. Representations of the Purchasers. Each of the Purchasers severally
represents and warrants to the Company as follows:

4.1 Investment. Such Purchaser is acquiring the Shares, and the shares of Common
Stock into which the Shares may be converted, for his, her or its own account
for investment and not with a view to, or for sale in connection with, any
distribution thereof, nor with any present intention of distributing or selling
the same; and, except as contemplated by this Agreement and the Exhibits hereto,
such Purchaser has no present or contemplated agreement, undertaking,
arrangement, obligation, indebtedness or commitment providing for the
disposition thereof. Such Purchaser is an “accredited investor” as defined in
Rule 501(a) under the Securities Act.

4.2 Authority. Such Purchaser has full power and authority to enter into and to
perform this Agreement and the Ancillary Agreements in accordance with their
terms. Any Purchaser that is a corporation, limited liability company,
partnership or trust represents that it has not been organized, reorganized or
recapitalized specifically for the purpose of investing in the Company.

 

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4.3 Experience. Such Purchaser has carefully reviewed the representations
concerning the Company contained in this Agreement, has made detailed inquiry
concerning the Company, its business and its personnel; the officers of the
Company have made available to such Purchaser any and all written information
which he, she or it has requested and have answered to such Purchaser’s
satisfaction all inquiries made by such Purchaser; and such Purchaser has
sufficient knowledge and experience in finance and business that he, she or it
is capable of evaluating the risks and merits of his, her or its investment in
the Company and such Purchaser is able financially to bear the risks thereof.

5. Transfer of Shares.

5.1 Restricted Shares. “Restricted Shares” means (i) the Shares, (ii) the shares
of Common Stock issued or issuable upon conversion of the Shares, (iii) any
shares of capital stock of the Company acquired by the Purchasers pursuant to
the Investor Rights Agreement or Co-Sale Agreement, and (iv) any other shares of
capital stock of the Company issued in respect of such shares (as a result of
stock splits, stock dividends, reclassifications, recapitalizations, or similar
events); provided, however, that shares of Common Stock which are Restricted
Shares shall cease to be Restricted Shares (x) upon any sale pursuant to a
registration statement under the Securities Act, Section 4(1) of the Securities
Act or Rule 144 under the Securities Act or (y) at such time as (i) a period of
at least one year, as determined in accordance with paragraph (d) of Rule 144
under the Securities Act, has elapsed since the later of the date the Restricted
Shares were acquired from the Company or an affiliate of the Company, and
(ii) they become eligible for sale under Rule 144(b)(1)(i) under the Securities
Act.

5.2 Requirements for Transfer.

(a) Restricted Shares shall not be sold or transferred unless either (i) they
first shall have been registered under the Securities Act, or (ii) the Company
first shall have been furnished with an opinion of legal counsel, reasonably
satisfactory to the Company, to the effect that such sale or transfer is exempt
from the registration requirements of the Securities Act.

(b) Notwithstanding the foregoing, no registration or opinion of counsel shall
be required for (i) a transfer by a Purchaser to an affiliate (as such term is
defined in the Securities Act) of such Purchaser, (ii) a transfer by a Purchaser
which is a partnership to a partner of such partnership or a retired partner of
such partnership who retires after the date hereof, or to the estate of any such
partner or retired partner, or (iii) a transfer by a Purchaser which is a
limited liability company to a member of such limited liability company or a
retired member who resigns after the date hereof or to the estate of any such
member or retired member, provided that the transferee in each case agrees in
writing to be subject to the terms of this Section 5 to the same extent as if it
were the original Purchaser hereunder, or (iv) a transfer made in accordance
with Rule 144 under the Securities Act.

 

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5.3 Legend. Each certificate representing Restricted Shares shall bear a legend
substantially in the following form:

“The shares represented by this certificate have not been registered under the
Securities Act of 1933, as amended, and may not be offered, sold or otherwise
transferred, pledged or hypothecated unless and until such shares are registered
under such Act or an opinion of counsel satisfactory to the Company is obtained
to the effect that such registration is not required.”

The foregoing legend shall be removed from the certificates representing any
Restricted Shares, at the request of the holder thereof, at such time as (a) a
period of at least one year, as determined in accordance with paragraph (d) of
Rule 144 under the Securities Act, has elapsed since the later of the date the
Restricted Shares were acquired from the Company or an affiliate of the Company,
and (b) the Restricted Shares become eligible for resale pursuant to Rule
144(b)(1)(i) under the Securities Act.

5.4 Rule 144A Information. The Company shall, at all times during which it is
neither subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor exempt
from reporting pursuant to Rule 12g3-2(b) under the Exchange Act, upon the
written request of any Purchaser, provide in writing to such Purchaser and to
any prospective transferee of any Restricted Shares of such Purchaser the
information concerning the Company described in Rule 144A(d)(4) under the
Securities Act (“Rule 144A Information”). The Company also shall, upon the
written request of any Purchaser, cooperate with and assist such Purchaser or
any member of NASDAQ’s PORTAL system in applying to designate and thereafter
maintain the eligibility of the Restricted Shares for trading through PORTAL.
The Company’s obligations under this Section 5.4 shall at all times be
contingent upon receipt from the prospective transferee of Restricted Shares of
a written agreement to take all reasonable precautions to safeguard the
Rule 144A Information from disclosure to anyone other than persons who will
assist such transferee in evaluating the purchase of any Restricted Shares.

6. Miscellaneous.

6.1 Successors and Assigns. This Agreement, and the rights and obligations of
each party hereunder shall inure to the successors and assigns of each party
hereto, provided that, this Agreement and the rights and obligations of any
Purchaser may be assigned by such Purchaser only to (a) any person or entity to
which Shares are transferred by such Purchaser in accordance with this
Agreement, or (b) to any affiliate, partner, member, stockholder or subsidiary
of such Purchaser, and, in each case, such transferee shall be deemed a
“Purchaser” for purposes of this Agreement; and further provided that such
assignment of rights shall be contingent upon the transferee providing a written
instrument to the Company notifying the Company of such transfer and assignment
and agreeing in writing to be bound by the terms of this Agreement. The Company
may not assign its rights under this Agreement.

 

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6.2 Survival of Representations and Warranties. All representations and
warranties contained herein shall survive the execution and delivery of this
Agreement and the closing of the transactions contemplated hereby for a period
of one year following the Initial Closing.

6.3 Brokers. Each of the Company and each Purchaser (i) represents and warrants
to the other parties hereto that he, she or it has not retained a finder or
broker in connection with the transactions contemplated by this Agreement, and
(ii) will indemnify and save the other parties harmless from and against any and
all claims, liabilities or obligations with respect to brokerage or finders’
fees or commissions, or consulting fees in connection with the transactions
contemplated by this Agreement asserted by any person on the basis of any
statement or representation alleged to have been made by such indemnifying
party.

6.4 Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.

6.5 Specific Performance. In addition to any and all other remedies that may be
available at law in the event of any breach of this Agreement, each Purchaser
shall be entitled to specific performance of the agreements and obligations of
the Company hereunder and to such other injunctive or other equitable relief as
may be granted by a court of competent jurisdiction.

6.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the Commonwealth of Massachusetts (without
reference to the conflicts of law provisions thereof).

6.7 Notices. All notices, requests, consents, and other communications under
this Agreement shall be in writing and shall be deemed delivered (i) three
business days after being sent by registered or certified mail, return receipt
requested, postage prepaid or (ii) one business day after being sent via a
reputable nationwide overnight courier service guaranteeing next business day
delivery, in each case to the intended recipient as set forth below:

If to the Company, at AVEO Pharmaceuticals, Inc., 75 Sidney Street, Fourth
Floor, Cambridge, Massachusetts 02139, Attention: President, or at such other
address as may have been furnished in writing by the Company to the other
parties hereto, with a copy to Wilmer Cutler Pickering Hale and Dorr LLP, 60
State Street, Boston, MA 02109, Attention: Steven D. Singer, Esq.; or

If to a Purchaser, at its address set forth on Exhibit A, or at such other
address as may have been furnished in writing by such Purchaser to the other
parties hereto.

Any party may give any notice, request, consent or other communication under
this Agreement using any other means (including, without limitation, personal
delivery, messenger service, telecopy, first class mail or electronic mail), but
no such notice, request, consent or other communication shall be deemed to have
been duly given unless and until it is actually received by the party for whom
it is intended. Any party may change the address to which notices, requests,
consents or other communications hereunder are to be delivered by giving the
other parties notice in the manner set forth in this Section.

 

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6.8 Complete Agreement. This Agreement (including its Exhibits) constitutes the
entire agreement and understanding of the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings
relating to such subject matter.

6.9 Amendments and Waivers. This Agreement may be amended or terminated and the
observance of any term of this Agreement may be waived with respect to all
parties to this Agreement (either generally or in a particular instance and
either retroactively or prospectively), with the written consent of the Company
and the holders of at least 51% of the Shares then held by all Purchasers.
Notwithstanding the foregoing, (a) except as provided in clause (c) below, this
Agreement may not be amended or terminated and the observance of any term
hereunder may not be waived with respect to any Purchaser without the written
consent of such Purchaser unless such amendment, termination or waiver applies
to all Purchasers in the same fashion, (b) Exhibit A hereto may be amended by
the Company from time to time in accordance with Section 2.2 to add information
regarding Additional Purchasers without the consent of the other parties hereto,
and (c) Section 2.2 may, without the consent of the other parties hereto, be
(i) waived with respect to a particular Additional Purchaser with the written
consent of the Company and such Additional Purchaser, and (ii) amended by the
Company from time to time to extend the time period in which Additional Closings
may occur. The Company shall give prompt written notice of any amendment or
termination hereof or waiver hereunder (other than under clause (c) above) to
any party hereto that did not consent in writing to such amendment, termination
or waiver. Any amendment, termination or waiver effected in accordance with this
Section 6.9 shall be binding on all parties hereto, even if they do not execute
such consent. No waivers of or exceptions to any term, condition or provision of
this Agreement, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such term, condition or
provision.

6.10 Pronouns. Whenever the context may require, any pronouns used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns and pronouns shall include the plural, and vice
versa.

6.11 Counterparts; Facsimile Signatures. This Agreement may be executed in any
number of counterparts (including, in the case of the Purchasers, Financing
Signatures Pages), each of which shall be deemed to be an original, and all of
which shall constitute one and the same document. This Agreement (including the
Financing Signature Pages) may be executed by facsimile signatures.

6.12 Section Headings and References. The section headings are for the
convenience of the parties and in no way alter, modify, amend, limit or restrict
the contractual obligations of the parties. Any reference in this agreement to a
particular section or subsection shall refer to a section or subsection of this
Agreement, unless specified otherwise.

[Remainder of Page Intentionally Left Blank]

 

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Executed as of the date first written above.

 

COMPANY:

AVEO PHARMACEUTICALS, INC.

By:

 

 

Name: Tuan Ha-Ngoc

Title: President and Chief Executive Officer

PURCHASERS:

[Signature Pages Follow]

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Exhibit A

List of Purchasers and Shares Purchased

Initial Purchasers

 

Name and Address

of Initial Purchasers

  

No. of Shares of

Series E Preferred

    

Aggregate

Purchase Price

 

Biogen Idec Inc.

14 Cambridge Center

Cambridge, MA 02142

Attn: General Counsel

 

With a copy to:

Bingham McCutchen LLP

One Federal Street

Boston, MA 02110

Attn: William S. Perkins

     7,500,000       $ 30,000,000.00      

 

 

    

 

 

 

Total:

     7,500,000       $ 30,000,000.00      

 

 

    

 

 

 

Additional Purchasers

 

Name and Address

of Additional Purchasers

  

No. of Shares of

Series E Preferred

  

Aggregate

Purchase Price

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EXHIBIT B-1

Investment Financing Signature Page

By execution and delivery of this signature page, the undersigned hereby agrees
to become a Purchaser, as defined in that certain Series E Convertible Preferred
Stock Purchase Agreement (the “Purchase Agreement”) by and among AVEO
Pharmaceuticals, Inc., a Delaware corporation (the “Company”), and the
Purchasers (as defined in the Purchase Agreement), dated as of March     , 2009,
acknowledges having read the representations in the Purchase Agreement section
entitled “Representations of the Purchasers,” and hereby represents that the
statements contained therein are true and correct with respect to the
undersigned as a Purchaser. The undersigned further hereby agrees to be bound by
the terms and conditions of (i) the Purchase Agreement as a “Purchaser”
thereunder, (ii) the Stockholders’ Voting Agreement (as defined in the Purchase
Agreement) as a “Purchaser” thereunder, (iii) the Investor Rights Agreement (as
defined in the Purchase Agreement) as a “Purchaser” thereunder and (iv) the
Co-Sale Agreement (as defined in the Purchase Agreement) as a “Purchaser”
thereunder, and authorizes this signature page to be attached to the Purchase
Agreement, the Stockholders’ Voting Agreement, the Investor Rights Agreement and
the Co-Sale Agreement, or counterparts thereof.

Executed, in counterpart, as of the date set forth below.

 

PURCHASER: By:  

 

Title: Date:  

 

Contact Person: Telephone No.: Telecopy No.: Email Address:

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EXHIBIT B-2

Existing Investor Financing Signature Page

By execution and delivery of this signature page, the undersigned hereby agrees
to become a Purchaser, as defined in that certain Series E Convertible Preferred
Stock Purchase Agreement (the “Purchase Agreement”) by and among AVEO
Pharmaceuticals, Inc., a Delaware corporation (the “Company”), and the
Purchasers (as defined in the Purchase Agreement), dated as of March     , 2009,
acknowledges having read the representations in the Purchase Agreement section
entitled “Representations of the Purchasers,” and hereby represents that the
statements contained therein are true and correct with respect to the
undersigned as a Purchaser. The undersigned further hereby agrees to be bound by
the terms and conditions of the Purchase Agreement as a “Purchaser” thereunder,
and authorizes this signature page to be attached to the Purchase Agreement, or
counterparts thereof.

Executed, in counterpart, as of the date set forth below.

 

PURCHASER: BIOGEN IDEC INC. By:  

 

Title: Date:  

 

Contact Person: Telephone No.: Telecopy No.: Email Address:

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Exhibit D

List of Existing AVEO In-licenses

Research and Commercialization License Agreement between Evogenix Pty Limited
(now Arana Therapeutics) and AVEO Pharmaceuticals, Inc., dated as of
September 25, 2007.

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Exhibit E

Form of Initial Release

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Exhibit E

(Form of Initial Release)

 

LOGO [g319404logo-exaapg115.jpg]    NEWS RELEASE

DRAFT NOT FOR IMMEDIATE RELEASE

Contacts:

Michael Christiano, AVEO Pharmaceuticals, Inc.

(617) 299-5925

Sheryl Seapy, Pure Communications

(949) 608-0841

AVEO and Biogen Idec Form Strategic Alliance for Development and
Commercialization

of ErbB3-Targeted Antibodies

Biogen Idec to Obtain to Commercialize ErbB3 Antibodies Outside of North America

CAMBRIDGE, Mass., February xx, 2009 – AVEO Pharmaceuticals, Inc., a
biopharmaceutical company leveraging breakthrough discoveries in cancer biology
to discover, develop and commercialize targeted oncology therapies, today
announced a definitive agreement with Biogen Idec, Inc. (NASDAQ:BIIB), for the
development and commercialization of AVEO’s novel discovery-stage ErbB3-targeted
antibodies (the “ErbB3 program”) for the potential treatment of cancer and other
diseases.

Under the terms of the agreement, AVEO will receive an up-front payment and is
eligible to receive milestone payments based upon the achievement of specified
development goals. Biogen Idec will have an option exercisable at proof of
concept to development and commercialization rights to ErbB3 binding antibodies
for territories outside of North America. AVEO retains all North American
commercialization rights, and is responsible for leading global development of
the ErbB3 program. Financial terms of the transaction were not disclosed.

“We are very please to enter into this alliance with Biogen Idec,” stated Tuan
Ha-Ngoc, president and chief executive officer of AVEO. “This agreement for the
development and commercialization of our discovery-stage ErbB3-targeted
antibodies facilitates our strategy to develop a balanced portfolio of small
molecule drugs and antibodies for the treatment of cancer. These alliances
highlight AVEO’s ability to generate value from our antibody discovery programs
and advance these candidates to the clinic, reinforcing the broad potential of
our rapidly maturing proprietary antibody pipeline and the quality of our
science. The terms of this alliance with Biogen Idec support our strategy to
become a fully-integrated company offering first- and best-in-class cancer
medicines through AVEO’s own North American-based commercial organization.”

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ErbB3 is a type 1 tyrosine kinase receptor of the EFGR family that is widely
expressed in human carcinomas, with demonstrated overexpression – correlated
with poor prognosis – in several different tumor types, including breast,
ovarian, prostate, colorectal, pancreatic, gastric and head & neck cancers. In
vivo studies conducted by AVEO demonstrated that elevated ErbB3 levels can
potently drive breast tumor growth and may provide an escape mechanism to
Herceptin® treatment. ErbB3 is also implicated in the development of resistance
to EGFR tyrosine kinase inhibitors in non small cell lung cancer. AVEO has
focused its ErbB3 antibody discovery efforts on identifying high affinity, high
specificity antibodies that recognize ErbB3 on the cell surface and inhibit its
activity. The market attractiveness of AVEO’s ErbB3 portfolio is bolstered by
the success of other EFGR family inhibitors such as erlotinib, gefitinib and
transtuzumab, which have unique patterns of resistance that may be addressed by
an effective ErbB3 antibody.

About AVEO

AVEO is a late-stage biopharmaceutical company focused on the discovery and
development of novel, targeted cancer therapeutics. AVEO’s proprietary,
integrated cancer biology platform enables the company to pursue highly
efficient drug development strategies in oncology that increase the probability
of clinical success and provides a discovery engine for high-value targets. This
approach has resulted in a balanced pipeline of novel cancer therapies focused
on well-validated targets (VEGFR, EGFR) and promising novel targets (HGF, FGFR,
ERBB3), as well as collaborations with Eli Lilly, Merck, OSI Pharmaceuticals,
Schering-Plough and Biogen Idec. The company’s lead product, AV-951, a potential
best-in-class triple VEGF receptor inhibitor, is in a Phase 2 clinical trial in
patients with metastatic renal cell cancer and is expected to enter Phase 3
development in 2009. Through a combination of internal drug discovery and
selective in-licensing of targeted therapeutics, AVEO is building a diversified
product pipeline and moving toward its vision of becoming a fully integrated
pharmaceutical company. For more information, please visit the company’s website
at www.aveopharma.com.

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