Enanta has requested that portions of this document be accorded confidential
treatment pursuant to Rule 24b-2 promulgated under the Securities Exchange Act
of 1934, as amended.

Exhibit 10.1

EXECUTION VERSION

COLLABORATIVE DEVELOPMENT AND LICENSE AGREEMENT

by and between

ENANTA PHARMACEUTICALS, INC.

and

ABBOTT LABORATORIES

November 27, 2006

Confidential materials omitted and filed separately with the Securities and
Exchange

Commission. Asterisks denote such omission.

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1.

 

DEFINITIONS

     1   

2.

 

ADMINISTRATION OF THE RESEARCH PROGRAM, DEVELOPMENT PROGRAM AND
COMMERCIALIZATION

     19     

2.1

 

Joint Steering Committee

     19     

2.2

 

Affiance Managers

     22     

2.3

 

Joint Co-Development and Commercialization Committee

     22   

3.

 

RESEARCH PROGRAM

     25     

3.1

 

Objectives of the Research Program

     25     

3.2

 

Research Plan

     25     

3.3

 

Conduct of Research Program

     25     

3.4

 

Records

     26     

3.5

 

Reports

     26     

3.6

 

Selection of Candidates

     26     

3.7

 

Supply of Proprietary Materials

     27     

3.8

 

Research Program Term

     27   

4.

 

DEVELOPMENT AND COMMERCIALIZATION

     27     

4.1

 

Development of Candidates

     27     

4.2

 

Commercialization of Products

     28     

4.3

 

Development and Commercialization Diligence

     29     

4.4

 

Compliance

     29     

4.5

 

Reports; Information; Updates

     30     

4.6

 

Product Recalls

     31     

4.7

 

Product Labeling

     32   

5.

 

CO-DEVELOPMENT AND PROFIT SHARE OPTION

     32     

5.1

 

Exercise of Co-Development and Profit Share Option

     32     

5.2

 

Effect of Exercise

     32     

5.3

 

Reconciliation and Auditing of Development Costs

     32     

5.4

 

Allocation of Shared Clinical Trial Costs

     33     

5.5

 

Roll-Over Payments

     34     

5.6

 

[*****]

     34     

5.7

 

Co-Promotion

     34   

 

Confidential materials omitted and filed separately with the Securities and
Exchange

Commission. Asterisks denote such omission.

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6.

 

CONSIDERATION AND FUNDING

     35     

6.1

 

Upfront Fee

     35     

6.2

 

Purchase of Equity; Participation Right

     35     

6.3

 

R&D Funding

     35     

6.4

 

Milestone Payments

     37     

6.5

 

Payment of Royalties; Operating Income Payments; Sublicense Income Payments;
Accounting and Records

     39     

6.6

 

No Other Compensation

     43     

6.7

 

Enanta Payments

     43   

7.

 

TREATMENT OF CONFIDENTIAL INFORMATION; PUBLICITY; NON-SOLICITATION

     44     

7.1

 

Confidentiality

     44     

7.2

 

Publicity

     45     

7.3

 

Publications and Presentations

     45     

7.4

 

Prohibition on Solicitation

     46   

8.

 

LICENSE GRANTS; EXCLUSIVITY

     46     

8.1

 

Research Licenses

     46     

8.2

 

Development and Commercialization Licenses

     46     

8.3

 

Right to Sublicense

     47     

8.4

 

No Other Rights

     48     

8.5

 

Exclusivity

     48   

9.

 

INTELLECTUAL PROPERTY RIGHTS

     49     

9.1

 

Disclosure of Program Inventions

     49     

9.2

 

Enanta Intellectual Property Rights

     49     

9.3

 

Abbott Intellectual Property Rights

     49     

9.4

 

Joint Technology Rights

     49     

9.5

 

Patent Coordinators

     49     

9.6

 

Inventorship

     49   

10.

 

FILING, PROSECUTION AND MAINTENANCE OF PATENT RIGHTS

     50     

10.1

 

Patent Filing, Prosecution and Maintenance

     50     

10.2

 

Legal Actions

     51   

 

Confidential materials omitted and filed separately with the Securities and
Exchange

Commission. Asterisks denote such omission.

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10.3

 

Trademark Prosecution

     54   

11.

 

TERM AND TERMINATION

     54     

11.1

 

Term

     54     

11.2

 

Termination

     55     

11.3

 

Consequences of Termination of Agreement

     55     

11.4

 

Surviving Provisions

     60   

12.

 

REPRESENTATIONS AND WARRANTIES

     60     

12.1

 

Mutual Representations and Warranties

     60     

12.2

 

Additional Representations of Enanta

     61   

13.

 

INDEMNIFICATION

     61     

13.1

 

Indemnification of Abbott by Enanta

     61     

13.2

 

Indemnification of Enanta by Abbott

     62     

13.3

 

Conditions to Indemnification

     62     

13.4

 

Warranty Disclaimer

     62     

13.5

 

No Warranty of Success

     62     

13.6

 

Limited Liability

     62     

13.7

 

Insurance

     63   

14.

 

MISCELLANEOUS

     63     

14.1

 

Arbitration

     63     

14.2

 

Change of Control

     63     

14.3

 

Notices

     64     

14.4

 

Governing Law

     64     

14.5

 

Binding Effect

     64     

14.6

 

Headings

     64     

14.7

 

Counterparts

     65     

14.8

 

Amendment; Waiver

     65     

14.9

 

No Third Party Beneficiaries

     65     

14.10

 

Purposes and Scope

     65     

14.11

 

Assignment and Successors

     65     

14.12

 

Force Majeure

     65     

14.13

 

Interpretation

     65   

 

Confidential materials omitted and filed separately with the Securities and
Exchange

Commission. Asterisks denote such omission.

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14.14

 

Integration; Severability

     66     

14.15

 

Further Assurances

     66     

14.16

 

HSR Filing

     66     

14.17

 

Board Approvals

     66   

 

Confidential materials omitted and filed separately with the Securities and
Exchange

Commission. Asterisks denote such omission.

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List of Exhibits and Schedules

 

Exhibit A    Research Plan Exhibit B    Form of Stock Purchase Agreement Exhibit
C    Form of Press Release Exhibit D    ADR Procedure Schedule 1    Abbott
Compounds Schedule 2    Abbott Patent Rights Schedule 3    Excluded Compounds
Schedule 4    Licensed Patent Rights Schedule 5    Material Terms to Be Included
in Co-Promotion Agreement Schedule 6    Calculation of Operating Income

 

Confidential materials omitted and filed separately with the Securities and
Exchange

Commission. Asterisks denote such omission.

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COLLABORATIVE DEVELOPMENT AND LICENSE AGREEMENT

This COLLABORATIVE DEVELOPMENT AND LICENSE AGREEMENT (this “Agreement”) is
entered into as of November 27th, 2006, by and between Enanta Pharmaceuticals,
Inc., with principal offices at 500 Arsenal Street, Watertown, Massachusetts
02472 (“Enanta”) and Abbott Laboratories, having a place of business at 100
Abbott Park Road, Abbott Park, Illinois 60064 (“Abbott”). Each of Abbott and
Enanta is sometimes referred to individually herein as a “Party” and
collectively as the “Parties.”

WHEREAS, Enanta Controls certain Technology and/or Proprietary Materials related
to or otherwise useful in the discovery and development of HCV NS3 or NS3/4A
protease inhibitors (as those terms are defined below);

WHEREAS, Abbott has expertise in discovering, developing, testing, obtaining
regulatory approvals with respect to, manufacturing and marketing human
therapeutic products; and

WHEREAS, Enanta and Abbott desire to enter into a collaboration for the purpose
of identifying, developing and commercializing Enanta’s proprietary HCV NS3 or
NS3/4A protease inhibitors and/or certain of Abbott’s proprietary protease
inhibitors as more fully described herein,

NOW, THEREFORE, in consideration of the mutual covenants contained herein, and
for other good and valuable consideration, the Parties hereto, intending to be
legally bound, hereby agree as follows:

 

1. DEFINITIONS

Whenever used in this Agreement with an initial capital letter, the terms
defined in this Section 1 shall have the meanings specified.

1.1 “Abandoned Compounds” means all Products designated as Abandoned Compounds
by Enanta pursuant to Section 11.3.6.

1.2 “Abbott Background Technology” means any Technology related to the Field
used by Abbott, or provided by Abbott for use, in the Research Program or the
Development Program that is (a) Controlled by Abbott as of the Effective Date or
(b) developed or conceived by employees of, or consultants to, Abbott after the
Effective Date in the conduct of activities outside the Research Program or
Development Program.

1.3 “Abbott Compounds” means the HCV protease inhibitors Controlled by Abbott
and listed on Schedule 1 attached hereto, and any direct analogs thereof created
during the Research Program.

1.4 “Abbott Decision” means any decision that is not an Enanta Decision and
relates solely to the Development of a Candidate or Commercialization of a
Product

 

Confidential materials omitted and filed separately with the Securities and
Exchange

Commission. Asterisks denote such omission.

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1.5 “Abbott Improvement” means any Abbott Program Technology or Abbott’s
interest in any Joint Technology that contains one or more claims that covers
the composition or use of any HCV protease inhibitor. The Parties understand
that the term Abbott Improvement (a) shall not include any Abbott Program
Technology or Abbott’s interest in any Joint Technology that relates to the
[*****] discovered by Abbott and (b) shall include any Abbott Patent Rights that
contain one or more claims that cover Abbott Program Technology and/or Abbott’s
interest in any Joint Technology whether such Abbott Patent Rights are filed
during, or, subject to Section 10.1, following the expiration of the Research
Program Term.

1.6 “Abbott Materials” means any Proprietary Materials that are Controlled by
Abbott and used by Abbott, or provided by Abbott for use, in the Research
Program or the Development Program.

1.7 “Abbott Patent Rights” means any Patent Rights containing one or more claims
that cover Abbott Technology. All Abbott Patent Rights existing as of the
Effective Date are described on Schedule 2 attached hereto. For clarification,
the Abbott Compounds listed in Schedule 1 will be covered under Abbott Patent
Rights.

1.8 “Abbott Program Technology” means any Program Invention conceived or first
reduced to practice by employees of, or consultants to, Abbott, alone or jointly
with any Third Party.

1.9 “Abbott Research Activities” means any research activities specified to be
conducted by Abbott in any Research Plan.

1.10 “Abbott Technology” means, collectively, Abbott Background Technology and
Abbott Program Technology.

1.11 “Adverse Event” means any untoward medical occurrence in a human clinical
trial subject or in a patient who is administered a Product, whether or not
considered related to the Product including, without limitation, any undesirable
sign (including abnormal laboratory findings of clinical concern), symptom or
disease associated with the use of such Product.

1.12 “Affiliate” means, with respect to any Party, any Person that, directly or
through one or more Affiliates, controls, or is controlled by, or is under
common control with, such Party. For purposes of this definition, “control”
means (a) ownership of more than fifty percent (50%) of the shares of stock
entitled to vote for the election of directors, in the case of a corporation, or
more than fifty percent (50%) of the equity interests in the case of any other
type of legal entity, (b) status as a general partner in any partnership, or
(c) any other arrangement whereby a Person controls or has the right to control
the Board of Directors or equivalent governing body of a corporation or other
entity.

1.13 “Annual Net Sales” means the aggregate Net Sales during a particular
Calendar Year.

 

Confidential materials omitted and filed separately with the Securities and
Exchange

Commission. Asterisks denote such omission.

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1.14 “Applicable Laws” means all Federal, state, local, national and
supra-national laws, statutes, rules and regulations, including any rules,
regulations, guidelines or requirements of Regulatory Authorities, national
securities exchanges or securities listing organizations that may be in effect
from time to time during the Term and applicable to a particular activity
hereunder.

1.15 “Approval Date” means the date when both (a) the waiting period (or any
extension thereof) applicable to this Agreement under the HSR Act (as defined in
Section 14.16) has been terminated or has expired, and (b) the Abbott Board,
Abbott’s Chief Executive Officer and the Enanta Board have provided approvals
described in Section 14.17.

1.16 “Calendar Quarter” means the period beginning on the Effective Date and
ending on the last day of the calendar quarter in which the Effective Date
falls, and thereafter each successive period of three (3) consecutive calendar
months ending on March 31, June 30, September 30 or December 31. For purposes of
this definition, the Calendar Quarter for all activities outside the United
States by Abbott shall be the three (3) consecutive calendar months ending
February 28, May 31, August 31 or November 30.

1.17 “Calendar Year” means each successive period of twelve (12) months
commencing on January 1 and ending on December 31; provided, that, the initial
Calendar Year shall commence on the Effective Date and end on December 31, 2007.
For purposes of this definition, the Calendar Year for all activities conducted
outside the United States by Abbott pursuant to this Agreement, shall be the
twelve (12) month period commencing on December 1 and ending on November 30.

1.18 “Candidate” means any Compound and/or any Abbott Compound designated by the
JSC pursuant to Sections 2.1.4(h) and 3.6 to proceed into GLP toxicity studies
and enter the Development Program.

1.19 “Change of Control” means, with respect to a Party (a) a merger,
consolidation, share exchange or other similar transaction involving such Party
and any Third Party which results in the holders of the outstanding voting
securities of such Party immediately prior thereto ceasing to hold more than
fifty percent (50%) of the combined voting power of the surviving, purchasing or
continuing entity immediately after such merger, consolidation, share exchange
or other similar transaction, (b) any transaction or series of related
transactions in which a Third Party, together with its Affiliates, becomes the
beneficial owner of fifty percent (50%) or more of the combined voting power of
the outstanding securities of such Party, other than in connection with a bona
fide financing transaction provided by financial and/or venture capital
investors to such Party, or (c) the sale or other transfer to a Third Party of
all or substantially all of such Party’s assets which relate to this Agreement.

1.20 “CTA” means a notification submitted to EU Regulatory Authorities prior to
the initiation of clinical trials in the EU.

 

Confidential materials omitted and filed separately with the Securities and
Exchange

Commission. Asterisks denote such omission.

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1.21 “CTN” means the notification submitted to the Japanese Ministry of Health,
Labor and Welfare prior to the Initiation of a Clinical Trial in Japan.

1.22 “Co-Developed Product” means any Product with respect to which Enanta has
exercised a Co-Development and Profit Share Option as described in Section 5.1.

1.23 “Co-Development and Profit Share Option Exercise Date” means, with respect
to each Co-Developed Product, the date of exercise by Enanta of the
Co-Development and Profit Share Option applicable to such Co-Developed Product.

1.24 “Co-Development and Profit Share Option Exercise Period” means, with
respect to each Compound or Candidate, as the case may be, the period commencing
on the Approval Date and continuing until [*****] days after Enanta receives a
study summary, including all primary statistical analyses, with respect to the
first Phase Ib/2a Clinical Trial for such Candidate. All raw data, both positive
and negative, which would be reasonable to be considered in formulating such
summary will be made available to Enanta promptly upon Enanta’s request.

1.25 “Co-Development Territory” means the United States of America and its
territories and possessions.

1.26 “Collaboration” means the alliance of Enanta and Abbott established
pursuant to this Agreement for the purpose of identifying Compounds, Developing
Candidates and Commercializing Products in the Field in the Territory.

1.27 “Combination Product” means any commercialized HCV therapeutic that
contains or comprises a Product and one or more other ingredients that are
therapeutically or biologically active and are not themselves Products.

1.28 “Commercialization” or “Commercialize” means any and all activities
directed to the commercialization of a Product, including pre-launch and
post-launch marketing, manufacturing for commercial sale, promoting, Detailing
(as defined in Schedule 5 hereof), distributing, offering to sell and selling a
Product, importing a Product for sale, conducting additional human clinical
studies other than those that are required due to post-approval regulatory
commitments (but not pre-clinical studies) and interacting with Regulatory
Authorities regarding the foregoing. When used as a verb, “Commercializing”
means to engage in Commercialization and “Commercialized” has a corresponding
meaning.

1.29 “Commercially Reasonable Efforts” means (a) with respect to activities of
either Party in the Research Program, the efforts and resources typically used
by companies that are similar in size to such Party in the performance of
research programs of comparable research compounds and (b) with respect to the
Development by Abbott of a particular Candidate or the Commercialization by
Abbott of a particular Product, the efforts and resources typically used by
Abbott in the development of product candidates or the commercialization of
products of

 

Confidential materials omitted and filed separately with the Securities and
Exchange

Commission. Asterisks denote such omission.

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comparable market potential, taking into account all relevant factors including,
as applicable and without limitation, stage of development, mechanism of action,
efficacy and safety relative to competitive products in the marketplace, actual
or anticipated Regulatory Authority approved labeling, the nature and extent of
market exclusivity (including patent coverage and regulatory exclusivity), cost
and likelihood of obtaining Commercialization Regulatory Approval actual or
projected profitability and availability of capacity to manufacture and supply
for commercial sale.

1.30 “Commercialization Regulatory Approval” means, with respect to any Product,
the Regulatory Approval required by Applicable Laws in any country or region in
the Territory in order to sell such Product for use in the Field in such country
or region. “Commercialization Regulatory Approval” in the United States shall
mean final approval of an NDA or sNDA permitting marketing of the applicable
Product in interstate commerce in the United States, “Commercialization
Regulatory Approval” in the European Union shall mean marketing authorization
for the applicable Product, including price reimbursement approval, pursuant to
Council Directive 2001/83/EC, as amended, or Council Regulation 2309/93/EEC, as
amended and “Commercialization Regulatory Approval” in Japan shall mean final
approval of an application submitted to the Ministry of Health, Labor and
Welfare and the publication of a New Drug Approval Information Package
permitting marketing of the applicable Product, including price reimbursement
approval, in Japan, as any of the foregoing may be amended from time to time.

1.31 “Compound” means any HCV NS3 or HCV NS3/4A protease inhibitor Controlled by
Enanta, other than the Excluded Compounds.

1.32 “Co-Promote” or “Co-Promotion” means, with respect to any Co-Developed
Product, the joint promotion and Detailing of such Co-Developed Product in the
Co-Developed Territory using a coordinated sales force consisting of
representatives of both Parties.

1.33 “Confidential Information” means: (a) with respect to Enanta, all tangible
embodiments of Enanta Technology; (b) with respect to Abbott, all tangible
embodiments of Abbott Technology; and (c) with respect to each Party, (i) all
tangible embodiments of Joint Technology and (ii) all information, Technology
and Proprietary Materials disclosed or provided by of on behalf of such Party
(the “Disclosing Party”) pursuant to this Agreement or the Existing Agreements
to the other Party (the “Receiving Party”) or to any of the Receiving Party’s
employees, consultants, Affiliates or sublicensees; provided that none of the
foregoing shall be Confidential Information if: (A) as of the date of
disclosure, it is known to the Receiving Party or its Affiliates, as
demonstrated by credible written documentation, other than by virtue of a prior
confidential disclosure to such Receiving Party or its Affiliates; (B) as of the
date of disclosure it is in the public domain, or it subsequently enters the
public domain through no fault of the Receiving Party or its Affiliates; (C) it
is obtained by the Receiving Party from a Third Party having a lawful right to
make such disclosure free from any obligation of confidentiality to the
Disclosing Party; or (D) it is independently developed by or for the Receiving
Party without reference to or use of any Confidential Information of the
Disclosing

 

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Exchange

Commission. Asterisks denote such omission.

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Party as demonstrated by credible written documentation. Further, (y) any
scientific, technical or financial information of a Disclosing Party disclosed
at any meeting of any of the committees or teams established pursuant to this
Agreement or disclosed through an audit report prepared pursuant to this
Agreement shall constitute Confidential Information of the Disclosing Party and
(z) the terms of this Agreement shall constitute Confidential Information of
each Party.

1.34 “Control” or “Controlled” means (a) with respect to Technology (other than
Proprietary Materials) or Patent Rights, the possession by a Party of the right
to grant a license or sublicense to such Technology or Patent Rights without
violating the terms of any agreement or arrangement with, any Third Party and
(b) with respect to Proprietary Materials, the possession by a Party of the
right to supply such Proprietary Materials to the other Party without violating
the terms of any agreement or arrangement with, any Third Party.

1.35 “Designated Senior Officer” means, with respect to a Party, the senior
officer designated by such Party to have final decision-making authority over
Disputed Matters, which shall be (a) the Chief Executive Officer of Enanta and
(b) the Executive Vice President of the Pharmaceutical Products Group for
Abbott.

1.36 “Development” or “Develop” means, with respect to each Candidate, all
non-clinical and clinical activities required to obtain Regulatory Approval of
such Candidate in accordance with this Agreement on and after the Approval Date
and up to and following the obtaining of Commercialization Regulatory Approval
of such Candidate. These activities include, without limitation, test method
development and stability testing, regulatory toxicology, animal studies,
formulation, process development, manufacturing, manufacturing scale-up,
development-stage manufacturing, quality assurance/quality control development,
statistical analysis and report writing, and clinical trial design and
operations. When used as a verb, “Developing” means to engage in Development and
“Developed” has a corresponding meaning.

1.37 “Development Costs” means, with respect to a Co-Developed Product, the
reasonable out-of-pocket costs and internal costs incurred by either Party (or
for its account by an Affiliate or a Third Party) on and after the exercise by
Enanta of the applicable Co-Development and Profit Share Option that are
generally consistent with the respective Development activities allocated to
such Party in the applicable Development Plan and are specifically attributable
to the Development of such Co-Developed Product in the Co-Development Territory.
For purposes of this definition (a) out-of-pocket costs means the costs
attributable to specific external development activities applicable to a
Co-Developed Product, [*****] and (b) internal costs means all direct labor
costs to the extent attributable to the Development of a Co-Developed Product in
accordance with the Development Plan, [*****]. Development Costs (y) shall
include the costs incurred by Abbott in conducting clinical trials with respect
to a Co-Developed Product, including clinical trials conducted as a result of
post-approval regulatory commitments and (z) shall not include [*****].

1.38 “Development Plan” means, with respect to each Candidate and Calendar Year,
the written plan for the Development activities for such Candidate for such
Calendar Year, as

 

Confidential materials omitted and filed separately with the Securities and
Exchange

Commission. Asterisks denote such omission.

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such written plan may be amended, modified or updated. Each Development Plan
shall include: (a) the specific Development objectives, projected milestones,
resource allocation requirements and activities to be performed over such
period; (b) the Party responsible for such activities; (c) a timeline for such
activities; (d) an estimate of the expected Development costs to be incurred
over such period; (e) the expected Regulatory Filings to be required and
prepared, and the expected timetable for making such Regulatory Filings; and
(f) the manufacturing strategy, budget and proposed timelines for manufacturing
scale-up, formulation, filling and/or shipping. The initial Development Plan
shall be prepared within ninety (90) days of the Approval Date and in any event,
on or prior to the initiation of Development activities with respect to the
initial Candidate. Each Development Plan, amendment and update to the
Development Plan shall be set forth in a written document prepared by Abbott and
reviewed and/or approved by the JSC, shall specifically state that it is an
amendment, modification or update to the Development Plan and shall be attached
to the minutes of the meeting of the JSC at which such amendment, modification
or updated is approved by the JSC. The Development Plan shall be updated at
least once prior to the end of each Calendar Year to describe the Development
activities to be carried out by each Party during the next Calendar Year
pursuant to this Agreement.

1.39 “Development Program” means the set of activities outlined in the
Development Plan aimed at achieving regulatory approval for a Candidate.

1.40 “Drug Approval Application” means, with respect to a Candidate in a
particular country or region, an application for Commercialization Regulatory
Approval for such Candidate in such country or region, including without
limitation: (a) an NDA or sNDA; (b) a counterpart of an NDA or sNDA (including,
without limitation, a CTN) in any country or region in the Territory; and
(c) all supplements and amendments to any of the foregoing.

1.41 “Effective Date” means the date first set forth above.

1.42 “EMEA” means the European Medicines Evaluation Agency, or any successor
thereto, which coordinates the scientific review of human pharmaceutical
products under the centralized licensing procedures of the European Union.

1.43 “Enanta Background Technology” means any Technology used by Enanta, or
provided by Enanta for use, in the Research Program or the Development Program
that is (a) Controlled by Enanta as of the Effective Date or (b) developed or
conceived by employees of, or consultants to, Enanta after the Effective Date in
the conduct of activities outside the Research Program or the Development
Program.

1.44 “Enanta Co-Development Percentage” means forty percent (40%).

1.45 “Enanta Decision” means any decision with respect to the application by
Enanta of FTEs to the research of Compounds under the Research Program.

 

Confidential materials omitted and filed separately with the Securities and
Exchange

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1.46 “Enanta Materials” means any Proprietary Materials that are Controlled by
Enanta and used by Enanta, or provided by Enanta for use, in the Research
Program or the Development Program. For purposes of clarity, (a) Enanta
Materials shall include all Compounds provided by Enanta for use in the Research
Program or Candidates used in the Development Program and (b) all other Enanta
Materials shall be listed in the Research Plan or the Development Plan.

1.47 “Enanta Patent Rights” means any Patent Rights that contain one or more
claims that cover Enanta Technology.

1.48 “Enanta Program Technology” means any Program Invention conceived or first
reduced to practice by employees of, or consultants to, Enanta, alone or jointly
with any Third Party.

1.49 “Enanta Research Activities” means any research activities specified to be
conducted by Enanta in any Research Plan.

1.50 “Enanta Technology” means, collectively, Enanta Background Technology and
Enanta Program Technology.

1.51 “European Union” or “EU” means the member states (whether on the Effective
Date or later admitted) of the European Union.

1.52 “Excluded Compounds” means (a) the compounds listed on Schedule 3 attached
hereto and incorporated herein by reference, and (b) the compounds licensed from
Chiron under the License and Option Agreement between Chiron Corporation and
Enanta, dated May 4th, 2005.

1.53 “Existing Agreements” means the [*****].

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

1.55 “FDCA” means the United States Federal Food, Drug, and Cosmetic Act, as
amended.

1.56 “Field” means the prevention and treatment of viral infections in humans.

1.57 “First Commercial Sale” means, with respect to a Product in any country
after Regulatory Approval in the Territory, the first sale, transfer or
disposition of such Product for value in such country.

1.58 “Force Majeure” means any occurrence beyond the reasonable control of a
Party that (a) prevents or substantially interferes with the performance by such
Party of any of its obligations hereunder and (b) occurs by reason of any act of
God, flood, fire, explosion,

 

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earthquake, strike, lockout, labor dispute, casualty or accident, or war,
revolution, civil commotion, act of terrorism, blockage or embargo, or any
injunction, law, order, proclamation, regulation, ordinance, demand or
requirement of any government or of any subdivision, authority or representative
of any such government.

1.59 “FTE” means one (1) or more qualified employees of a Party who collectively
spend time and effort conducting Enanta Research Activities or Abbott Research
Activities, as the case may be, pursuant to the Research Plan or any Development
Plan equivalent to the time and effort of one (1) full-time employee for one
(1) Calendar Year based on at least [*****] hours of work/[*****] weeks per
Calendar Year/forty (40) hours per week of work (less public holidays).

1.60 “FTE Cost” means, for any Calendar Quarter during the Research Program
Term, the FTE Rate divided by 4, multiplied by the applicable number of FTEs
applied during such Calendar Quarter.

1.61 “FTE Rate” means during the Research Program Term, [*****] per Calendar
Year, or any prorated portion thereof. Notwithstanding the foregoing, if the
Parties agree to any extension of the Research Program pursuant to Section 3.8,
then, as of the date of such extension and on each anniversary thereafter, the
FTE Rate shall be increased by multiplying the FTE Rate applicable on
December 31 of the immediately preceding Calendar Year by 1 + ((CPIx -CPIy) /
CPIy), where CPIx is the Consumer Price Index for All Urban Consumers in the
Boston Metropolitan Area published by the Bureau of Labor Statistics of the
United States Department of Labor for December in the immediately preceding
Calendar Year and CPIy is the Consumer Price Index for All Urban Consumers in
the Boston Metropolitan Area published by the Bureau of Labor Statistics of the
United States Department of Labor for the December in the immediately preceding
Calendar Year less one. Any such increase shall be rounded to the nearest one
hundred US Dollars ($100).

1.62 “GAAP” means generally accepted accounting principles as in effect in the
United States from time to time.

1.63 “GLP” means the then current Good Laboratory Practice Standards promulgated
or endorsed by the FDA or in the case of foreign jurisdictions, comparable
regulatory standards promulgated or endorsed by the applicable Regulatory
Authority, including those procedures expressed or implied in the Regulatory
Filings.

1.64 “GMP” means the then current Good Manufacturing Practices in accordance
with the GMP standards of the European Union and the FDA, as amended from time
to time.

1.65 “Hatch-Waxman Act” means the Drug Price Competition and Patent Term
Restoration Act of 1984, as amended.

 

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1.66 “HCV Tool Patent License Agreement” means any license agreement with
respect to the practice of HCV Tool Patent Rights by and between either Party
and [*****] or any successor entity or predecessor in interest.

1.67 “IND” means: (a) an Investigational New Drug Application, as defined in the
FDCA and the regulations promulgated thereunder, or any successor application or
procedure required to initiate clinical testing of a Compound, Candidate or
Product in humans in the United States; (b) a counterpart of an Investigational
New Drug Application that is required in any other country or region in the
Territory before beginning clinical testing of a Compound, Candidate or Product
in humans in such country or region; and (c) all supplements and amendments to
any of the foregoing.

1.68 “Initiation” means, with respect to a human clinical trial, the first date
that a subject is dosed in such clinical trial.

1.69 “Joint Co-Development and Commercialization Committee” or “JDCC” means the
committee of Enanta and Abbott representatives established pursuant to
Section 2.3 to coordinate the Development and Commercialization activities of
Co-Developed Products within the Co-Development Territory.

1.70 “Joint Patent Rights” means Patent Rights that contain one or more claims
that cover Joint Technology. For clarification, patents filed before or during
the Research Program that cover the Abbott Compounds will be Joint Patent
Rights, but excluding the Abbott Compounds listed in Schedule 1.

1.71 “Joint Steering Committee” or “JSC” means the committee of Enanta and
Abbott representatives established pursuant to Section 2.1 to oversee the
conduct and progress of the Research Program, the Development Program and the
Commercialization of Products.

1.72 “Joint Technology” means any Program Invention (a) conceived or first
reduced to practice jointly by employees of, or consultants to, Abbott and
employees of, or consultants to, Enanta or (b) conceived or first reduced to
practice solely by employees of, or consultants to, one Party with the use in
any material respect of any Technology, Patent Rights or Proprietary Materials
of the other Party. For purposes of clarity, Joint Technology shall include any
and all Technology conceived or reduced to practice by Abbott in its conduct of
any chemistry activities with respect to Compounds or Abbott Compounds (other
than the Abbott Compounds listed in Schedule 1) as part of the Research Program.

1.73 “Knowledge” means the [*****] of the chief executive officer or any vice
president of Enanta.

1.74 “Licensed Patent Rights” means any Enanta Patent Rights and any of Enanta’s
interest in Joint Patent Rights that contain one or more claims that cover any
Compound,

 

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Candidate or Product. All Licensed Patent Rights existing as of the Effective
Date are described on Schedule 4 attached hereto.

1.75 “MAA” means an application filed with the EMEA, or through the mutual
recognition procedures in the European Union, for Regulatory Approval to
Commercialize a Product as a drug in the European Union, or in any country or
territory therein, including decentralized procedures or mutual recognition
procedures.

1.76 “Major Market Country” [*****].

1.77 “Marketing and Sales Plan” means, with respect to each Co-Developed
Product, the written plan for the Commercialization of such Co-Developed Product
in the Co-Development Territory prepared in accordance with Section 4.2.1, which
shall include, without limitation, (a) a regulatory and Commercialization
strategy with proposed timelines and sales forecasts, that are, in each case,
applicable to such Co-Developed Product and (b) the written plan for the
manufacture of such Co-Developed Product in the Co-Development Territory,
including, without limitation, expected manufacturing scale-up, formulating, and
filing activities to be conducted for such Co-Developed Product as well as a
budget and proposed timelines for such activities, as such plan may be amended
or updated from time to time.

1.78 “Materially Used” means, with respect to Shared Clinical Trial Data, the
inclusion of such Shared Clinical Trial Data in the core efficacy registration
package of an NDA or equivalent registration package used outside of the
Co-Development Territory (as defined as Phase II Clinical Trials and Phase DI
Clinical Trials required by a Regulatory Authority to substantiate evidence of
both safety and efficacy).

1.79 “NDA” means a New Drug Application, as defined in the FDCA and applicable
regulations promulgated thereunder, or any successor application or procedure
required to sell a Product in the United States.

1.80 “Net Sales” means the total amount billed or invoiced on sales of the
Product by Abbott or its Affiliates or Sublicensees (including invoiced
royalties and any other compensation of any other kind whatsoever) to
independent, unrelated Third Parties, including wholesalers, in bona fide arm’s
length transactions, less the following deductions, in each case related
specifically to the Product and incurred in the ordinary course of business and
actually allowed or taken by such Third Parties and not otherwise recovered by
or reimbursed to Abbott or its Affiliates:

(i) trade, cash and quantity discounts, allowances, adjustments, and rejections,
rebates, recalls and returns;

(ii) price reductions or rebates, retroactive or otherwise, imposed by
governmental authorities;

 

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(iii) sales, excise, turnover, inventory, value-added, and similar taxes
assessed on sales of the Product, but not including any income tax paid by or
assessed against Abbott or its Affiliates;

(iv) transportation, importation, shipping, insurance and other handling
expenses directly chargeable to the sale of the Product, including any fees for
services provided by wholesalers and warehousing chains related to the
distribution of the Product;

(v) chargebacks granted to Third Party distributors based on sales to their
customers; and

(vi) the portion of any management fees or administration fees paid during the
relevant time period to group purchasing organizations, pharmaceutical benefit
managers and/or Medicare prescription drug plans relating specifically to the
Product.

Subject to the above, Net Sales will be calculated in accordance with Abbott’s
standard internal policies and procedures, which must be in accordance with
GAAP. If consideration in addition to or in lieu of money is received for the
sale of the Product on an arm’s-length transaction, the fair market value of
such consideration must be included in the determination of Net Sales for such a
sale. Net Sales will not include sales between or among Abbott and its
Affiliates.

For purposes of calculating Net Sales, all Net Sales will be converted into
Dollars using the conversion methodology set forth in Section 6.5.7 (Foreign
Currency Exchange) consistent with GAAP. The standard conversion methodology is
based on monthly averages (the spot rate at the end of the month immediately
prior to the reporting month plus the spot rate at the end of the reporting
month, divided by two) using open market rates.

If Abbott or its Affiliates appoint Third Party distributors for the Product or
grant a license or sublicense to any Person (other than Abbott or any of its
Affiliates or Enanta or any of its Affiliates) for manufacturing and selling the
Product, Net Sales will include the Net Sales invoiced by Abbott or its
Affiliates to such third party distributors and the royalties or other
compensation of any other kind whatsoever invoiced by Abbott or its Affiliates
to any such other Person, but it will not include any sales of the Product made
by any such third party distributors or other Person.

In addition, Net Sales are subject to the following:

(i) [*****].

(ii) [*****].

(iii) For purposes of clarity, the use of any Product in (A) clinical trials,
pre-clinical studies or other research or development activities, or disposal or
transfer of Products for purposes of a commercially reasonable sampling program,
shall not give rise to any Net Sales

 

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and (B) a compassionate use program shall not give rise to any deemed sale for
purposes of this definition unless [*****].

1.81 “Patent Rights” means the rights and interests in and to issued patents and
pending patent applications in the HCV protease inhibition area (which, for
purposes of this Agreement, include certificates of invention, applications for
certificates of invention and priority rights) in any country or region,
including all provisional applications, substitutions, continuations,
continuations-in-part, divisions, renewals, all letters patent granted thereon,
and all reissues, reexaminations and extensions thereof including Hatch-Waxman
patent term extensions, Supplemental Protection Certificates, and all foreign
counterparts of any of the foregoing.

1.82 “Person” means an individual, sole proprietorship, partnership, limited
partnership, limited liability partnership, corporation, limited liability
company, business trust, joint stock company, trust, incorporated association,
joint venture or similar entity or organization, including a government or
political subdivision, department or agency of a government.

1.83 “Phase I Clinical Trial” means a clinical trial conducted in any country or
countries that generally provides for the first introduction into humans of an
investigational drug with the purpose of assessing its safety, tolerability,
toxicity, metabolism, absorption, elimination or other pharmacological action as
more fully defined in 21 C.F.R. 312.21(a).

1.84 “Phase Ib/IIa Clinical Trial” means the initial clinical trial conducted
with a Candidate in HCV infected patients designed to assess virologic potency,
pharmacokinetics and tolerability and to support the decision to advance
development to Phase IIb.

1.85 “Phase II Clinical Trial” means a clinical trial conducted in any country
or countries in patients with a particular disease or condition with the purpose
of further assessing the safety and tolerability of an investigational drug and
initially exploring its efficacy for such disease or condition, as more fully
defined in 21 C.F.R. 312.21(b).

1.86 Phase IIb Clinical Trial” means, as to a particular Product and indication,
the portion of a Phase II Clinical Trial which contains a sufficient number of
subjects to generate sufficient data (if successful) to commence a Phase III
Clinical Trial of such Product for such indication.

1.87 “Phase III Clinical Trial” means a clinical trial conducted in any country
or countries in patients with a particular disease or condition with the purpose
of establishing the safety and tolerability of an investigational drug and
confirming or establishing its efficacy for such disease or condition, as more
fully defined in 21 C.F.R. 312.21(c).

1.88 “Product” means any pharmaceutical dosage form that is comprised of a
Candidate that has obtained Commercialization Regulatory Approval (whether or
not such

 

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Candidate is the sole active ingredient). The term Product shall include
Co-Developed Products and Royalty-Bearing Products.

1.89 “Product Trademark” means (a) any trademark or trade name, whether or not
registered, or any trademark application, renewal, extension or modification
thereto, in the Territory, or any trade dress and packaging, that is applied to
or used with Products by Abbott and (b) all goodwill associated therewith, and
any promotional materials relating thereto.

1.90 “Program Invention” means any Technology (including, without limitation,
any process, method of manufacture or composition of matter) that is conceived
or first reduced to practice in the conduct of the Research Program or the
Development Program.

1.91 “Program Patent Rights” means any Patent Rights that contain one or more
claims that cover Program Inventions.

1.92 “Proprietary Materials” means tangible chemical, biological or physical
materials that are furnished by or on behalf of one Party to the other Party in
connection with this Agreement, whether or not specifically designated as
proprietary by the transferring Party.

1.93 “Regulatory Approval” means, with respect to any country or region in the
Territory, any approval (including, without limitation, any pricing approval),
product and establishment license, registration or authorization of any
Regulatory Authority required for the manufacture, use, storage, importation,
export, transport or sale of a Product in such country or region.

1.94 “Regulatory Authority” means the FDA, or any counterpart of the FDA outside
the United States, or any other national, supra-national, regional, state or
local regulatory agency, department, bureau, commission, council or other
governmental entity with authority over the distribution, importation,
exportation, manufacture, production, use, storage, transport, clinical testing
or sale of a Candidate or Product.

1.95 “Regulatory Filings” means, collectively: (a) all INDs, NDAs, establishment
license applications, drug master files, applications for designation of a
Product as an “Orphan Product(s)” under the Orphan Drug Act, for “Fast Track”
status under Section 506 of the FDCA (21 U.S.C. § 356) or for a Special Protocol
Assessment under Section 505(b)(4)(B) and (C) of the FDCA (21 U.S.C.
§ 355(b)(4)(B)) or all other similar filings (including, without limitation, any
counterparts of any of the foregoing in any country region in the Territory) as
may be required by any Regulatory Authority for the Development of a Candidate
or Commercialization of a Product; (b) all supplements and amendments to any of
the foregoing; and (c) all data contained in, and correspondence relating to,
any of the foregoing.

1.96 “Relative Market Size” means (a) with respect to any Shared Clinical Trial
Data derived from a Shared Clinical Trial conducted outside of the
Co-Development Territory and Materially Used in the Co-Development Territory,
the result obtained by [*****] and (b) with

 

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respect to any Shared Clinical Trial Data derived from a Shared Clinical Trial
conducted within the Co-Development Territory and Materially Used in a
Regulatory Filing made in a country outside of the Co-Development Territory, the
result obtained by [*****]. For purposes of clarity, the [*****] as promptly as
possible following the date of the Shared Clinical Trial Notice by a Third Party
entity reasonably acceptable to the Parties that performs such market analyses
for the biotechnology or pharmaceutical industry.

1.97 “Research Plan” means the written plan describing the research activities
to be carried out by each Party during each Calendar Year during the Research
Program Term in conducting the Research Program pursuant to this Agreement, as
such written plan may be amended, modified or updated. The initial Research Plan
is attached hereto as Exhibit A, which describes the research activities, and
the specific research objectives, milestones and resource allocation
requirements, to be carried out by each Party during the first full or partial
Calendar Year following the Approval Date. Each amendment, modification and
update to the Research Plan shall be set forth in a written document prepared
by, or at the direction of, the JSC and approved by the JSC, shall specifically
state that it is an amendment, modification or update to the Research Plan and
shall be attached to the minutes of the meeting of the JSC at which such
amendment, modification or updated was approved by the JSC. Without limiting the
nature or frequency of any other amendments, modifications or updates of the
Research Plan that may be approved by the JSC, the Research Plan shall be
updated at least once prior to the end of each Calendar Year to describe the
research activities to be carried out by each Party, and the specific research
objectives, milestones and resource allocation requirements, during the next
Calendar Year during the Research Program Term in conducting the Research
Program pursuant to this Agreement.

1.98 “Research Program” means the collaborative research program commencing on
the Approval Date and conducted by the Parties pursuant to Section 3.1 and the
Research Plan for the purpose of identifying and researching Candidates.

1.99 “Research Program Term” means the period beginning on the Approval Date
and, subject to Section 3.7, ending on the third anniversary of the Approval
Date.

1.100 “Royalty-Bearing Product” means (a) any Product that is not a Co-Developed
Product and (b) any Co-Developed Product to the extent sold outside of the
Co-Development Territory.

1.101 “Royalty-Bearing Territory” means (a) with respect to Co-Developed
Products, all countries outside of the Co-Development Territory and (b) with
respect to Products, all countries within the Territory.

1.102 “Royalty Term” means, with respect to each Royalty-Bearing Product in each
country in the Royalty-Bearing Territory, the period beginning on the date of
First Commercial Sale of such Royalty-Bearing Product in such country and
continuing until the later of (a) the last date on which the manufacture, use or
sale of such Royalty-Bearing Product in such country

 

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would infringe a Valid Claim included in the Licensed Patent Rights but for the
license granted hereunder, (b) ten (10) years from the date of the First
Commercial Sale of such Royalty-Bearing Product in such country.

1.103 “Shared Clinical Trial” means any clinical trial conducted by or on behalf
of a Party the results of which are Materially Used in the Regulatory Filings
for a Co-Developed Product that is Commercialized both in the Co-Development
Territory and outside of the Co-Development Territory.

1.104 “Shared Clinical Trial Costs” means the reasonable out-of-pocket costs and
internal costs incurred by a Party (or for its account by an Affiliate or a
Third Party) that are specifically attributable to the conduct of a Shared
Clinical Trial.

1.105 “Shared Clinical Trial True-Up Percentage” means, (a) with respect to any
Shared Clinical Trial Data derived from a Shared Clinical Trial conducted
outside of the Co-Development Territory and Materially Used in the
Co-Development Territory, the result obtained by [*****], and (b) with respect
to any Shared Clinical Trial Data derived from a Shared Clinical Trial conducted
within the Co-Development Territory and Materially Used outside of the
Co-Development Territory, [*****]. A Shared Clinical Trial will be considered
conducted within the Co-Development Territory if such trial is filed under a US
IND.

1.106 “Shared Clinical Trial Data” means all data, results and information
produced in the conduct of a Shared Clinical Trial.

1.107 “sNDA” means a Supplemental New Drug Application, as defined in the FDCA
and applicable regulations promulgated thereunder.

1.108 “Sublicensee” means any Third Party to which Abbott grants a sublicense in
accordance with Section 8.3.

1.109 “Sublicense Agreement” means any agreement by and between Abbott or its
Affiliates and a Sublicensee with respect to a Product.

1.110 “Sublicense Income” means all payments (including all upfront payments,
milestone payments, other consideration and the reasonable monetary value of all
non-monetary consideration) received by Abbott from any Sublicensee under a
Sublicense Agreement less that portion of the Development Costs incurred by
Abbott that is attributable to the conduct of Development activities with
respect to the Product in the country or countries covered by the Sublicense
Agreement through the date of the grant of the applicable sublicense, and
excluding: (a) royalty payments paid by such Sublicensee to Abbott; (b) payments
made by a Sublicensee to Abbott in consideration of the issuance of equity or
debt securities of Abbott to the extent that the price paid for such equity does
not exceed the then fair market value of such equity; and (c) payments made by a
Sublicensee to support or fund research and development activities to be
undertaken by Abbott pursuant to a budget for sponsored research which has been
agreed to with

 

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the Sublicensee and based on full-time equivalent or other cost-accounting
methodologies that are consistent with then current industry practices.

1.111 “Successful Completion of Phase Ib/IIa Clinical Study” means, with respect
to any Candidate, the date of [*****]with respect to, all [*****]from the
conduct of a Phase Ib/IIa Clinical Trial or other comparable clinical study in
any country in the Territory with respect to such Candidate [*****].

1.112 “Technology” means, collectively, inventions, discoveries, improvements,
trade secrets and proprietary methods, whether or not patentable, including
without limitation: (a) methods of production or use of, and structural and
functional information pertaining to, chemical compounds; and (b) compositions
of matter, data, formulations, processes, techniques, know-how and results
(including any negative results).

1.113 “Territory” means all countries of the world.

1.114 “Third Party” means any Person other than Abbott and Enanta and their
respective Affiliates.

1.115 “Valid Claim” means any claim of an issued unexpired patent that (a) has
not been finally cancelled, withdrawn, abandoned or rejected by any
administrative agency or other body of competent jurisdiction, (b) has not been
permanently revoked, held invalid, or declared unpatentable or unenforceable in
a decision of a court or other body of competent jurisdiction that is
unappealable or unappealed within the time allowed for appeal, (c) has not been
rendered unenforceable through disclaimer or otherwise, and (d) is not lost
through an interference proceeding.

Additional Definitions. In addition, each of the following definitions shall
have the respective meanings set forth in the section of this Agreement
indicated below:

 

Definition

  

Section

Abbott Board    14.17 Abbott Indemnitees    13.1 Acquired Party    14.2(a)
Acquiring Party    14.2(a) Additional Co-Developed Product    6.4.1(d) [*****]
   [*****] Additional Product    6.4.1(b) ADR    Exhibit D Alliance Manager   
2.2 Annual Operating Income    Schedule 6 Annual Research Payment    6.3.1
Applicable Percentage    6.5.3 Arbitration Matter    14.1

 

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Definition

  

Section

Candidate Designation    3.6 Change of Control Notice    14.2(a) Claims    13.1
Co-Development and Profit Share Option    5.1 Co-Development Term    6.5.2
Co-Promotion Agreement    5.7.1 CPR    Exhibit D Disputed Matter    2.1.6 Enanta
Board    14.17 Enanta Indemnitees    13.2 Generic Product    6.5.1(d) HSR Act   
14.16 Indemnified Party    13.3 Indemnifying Party    13.3 Infringement   
10.2.1(a)(i) Infringement Notice    10.2.1(a)(i) Initial Co-Developed Product   
6.4.1(c) Initial Press Release    7.2 Initial Product    6.4.1(a) Losses    13.1
Novartis    3.3.2 Operating Income Payments    6.5.2 [*****]    [*****] [*****]
   [*****] [*****]    [*****] [*****]    [*****] Patent Coordinator    9.5
Quarterly Research Payment    6.3.1 Recipient Party    3.7 Roll-Over Payment   
5.4 Royalty Payments    6.5.1(a) Shared Clinical Trial Notice    5.4.1 Shares   
6.2 Stock Purchase Agreement    6.2 Sublicense Income Payments    6.5.3 Term   
11.1 Third Party Payments    6.5.1(b) Transferring Party    3.7

 

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2. ADMINISTRATION OF THE RESEARCH PROGRAM, DEVELOPMENT PROGRAM AND
COMMERCIALIZATION

2.1 Joint Steering Committee.

2.1.1 Establishment. Enanta and Abbott hereby establish the Joint Steering
Committee. The JSC shall have and perform the responsibilities set forth in
Section 2.1.4.

2.1.2 Membership. Each of Enanta and Abbott shall designate an equal (not less
than two (2)) number of representatives to the JSC who shall be members of
senior management with decision-making authority. Unless otherwise agreed by the
Parties, one (1) representative of each Party shall be designated as Co-Chairs
of the JSC. Each Party shall have the right at any time to substitute
individuals, on a permanent or temporary basis, for any of its previously
designated representatives to the JSC by giving written notice to the other
Party; provided such substitute has similar decision-making authority within
that Party’s organization as the individual being replaced.

2.1.3 Meetings.

(a) Schedule of Meetings; Agenda. The JSC shall establish a schedule of times
for regular meetings, taking into account the planning needs of the Research
Program and Development Program and the responsibilities of the JSC. Special
meetings of the JSC may be convened by any member upon not less than [*****]
business days (or, if such meeting is proposed to be conducted by
teleconference, upon not less than [*****] business days) written notice to the
other members; provided that (i) notice of any such special meeting may be
waived in writing at any time, either before or after such meeting and
(ii) attendance of any member at a special meeting shall constitute a valid
waiver of notice from such member, unless such member attends the meeting for
the express purpose of objecting to its conduct for failure to provide valid
notice. In no event shall the JSC meet less frequently than [*****]. Regular and
special meetings of the JSC may be held in person or by teleconference or
videoconference; provided that (i) meetings held in person shall alternate
between the respective offices of the Parties in Watertown, Massachusetts and
Abbott Park, Illinois, or such other locations mutually agreeable to the JSC
members and (ii) not less than one (1) meeting per Calendar Year shall be held
in person. The Co-Chairs shall alternate responsibility for preparing and
circulating to each JSC member an agenda for each JSC meeting not later than
[*****] week prior to such meeting.

(b) Quorum; Voting; Decisions. At each JSC meeting, (i) the presence in person
of at least one (1) member designated by each Party shall constitute a quorum
and (ii) each member who is present shall have one (1) vote on all matters
before the JSC at such meeting. All decisions of the JSC shall be made by
majority vote; provided, that, any member designated by a Party shall have the
right to cast the votes of any of such Party’s members on the JSC who are absent
from the meeting. Alternatively, the JSC may act by written consent signed by at
least one (1) member designated by each Party. Whenever any action by the JSC is
called for hereunder during a time period in which the JSC is not scheduled to
meet, either Co-Chair

 

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shall cause the JSC to take the action in the requested time period by calling a
special meeting or by circulating a written consent. Representatives of each
Party or of its Affiliates who are not members of the JSC may attend JSC
meetings as non-voting observers with the consent of the other Party, which
consent shall not be unreasonably withheld, conditioned or delayed.

(c) Minutes. The JSC shall keep minutes of its meetings that record all
decisions and all actions recommended or taken in reasonable detail. Drafts of
the minutes shall be prepared and circulated to the members of the JSC within a
reasonable time after the meeting, not to exceed [*****] business days, and the
Chairs shall alternate responsibility for the preparation and circulation of
draft minutes. Each member of the JSC shall have the opportunity to provide
comments on the draft minutes. The minutes shall be approved, disapproved and
revised as necessary at the next JSC meeting or within [*****] days of the
meeting, whichever occurs first. Upon approval, the Chair with responsibility
for preparing minutes shall circulate the final minutes of each meeting to the
members of the JSC.

(d) Expenses. Enanta and Abbott shall each bear all expenses of their respective
JSC representatives related to their participation on the JSC and attendance at
JSC meetings.

2.1.4 Responsibilities. The JSC shall be responsible for overseeing the conduct
and progress of the Research Program, the Development Program and the
Commercialization of Products. Without limiting the generality of the foregoing,
the JSC shall have the following responsibilities:

(a) Reviewing each Research Plan, Development Plan and Marketing and Sales Plan
(including all budgets applicable thereto);

(b) with respect to (i) any Research Plan, (ii) any Development Plan that covers
a Co-Developed Product, or (iii) any Marketing and Sales Plan that covers a
Co-Developed Product, approving such Research Plan, Development Plan and
Marketing and Sales Plan;

(c) directing the preparation of and reviewing any amendment to any Research
Plan, Development Plan and/or Marketing and Sales Plan and/or budget applicable
thereto;

(d) with respect to any amendment to (i) any Research Plan, (ii) any Development
Plan that covers a Co-Developed Product, or (iii) any Marketing and Sales Plan
that covers a Co-Developed Product, approving such amendment;

(e) monitoring the progress of each Research Plan, Development Plan and
Marketing and Sales Plan, and of each Party’s activities thereunder;

 

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(f) providing a forum for consensual decision-making with respect to the
(i) Research Program, (ii) Development Program for Co-Developed Products and
(iii) Commercialization of Co-Developed Products;

(g) reviewing data, reports or other information submitted by either Party with
respect to work conducted in the Research Program and the Development Program;

(h) designating Compounds and Abbott Compounds to be Candidates eligible to
enter the Development Program in accordance with Section 3.6, and reviewing
prioritization of the Development activities in the event multiple Candidates
are selected to enter the Development Program;

(i) monitoring the progress of the Commercialization of each Product in
accordance with the applicable Marketing and Sales Plan, including, without
limitation, reviewing and, to the extent it covers a Co-Developed Product,
approving, each annual update to each Marketing and Sales Plan and reviewing all
sales forecasts and the results of all efforts in the Co-Development Territory
provided by the JDCC;

(j) resolving any dispute as to whether a milestone event for a Product under
this Agreement has occurred;

(k) implementing a mutually acceptable mechanism for reporting Adverse Events
between the Parties for each Candidate and Product;

(l) developing and discussing strategies for the promotion and marketing of all
Co-Developed Products;

(m) implementing the Marketing and Sales Plan that covers any Co-Developed
Product;

(n) resolving all issues referred to the JSC by the Alliance Managers and the
JDCC; and

(o) making any other decisions as may be delegated to the JSC pursuant to this
Agreement or by mutual written agreement of the Parties after the Approval Date
and performing such activities as may be delegated to the JSC pursuant to this
Agreement, or by mutual written agreement of the Parties after the Approval
Date.

2.1.5 Interests of the Parties. Notwithstanding any other provisions of this
Agreement, all decisions made and all actions taken by the JSC shall be made or
taken in the best interest of the Collaboration.

2.1.6 Dispute Resolution. The JSC members shall use reasonable efforts to reach
agreement on any and all matters for which the JSC is responsible pursuant to
Section 2.1.4. In the event that, despite such reasonable efforts, agreement on
a particular matter cannot

 

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be reached by the JSC within [*****] days after the JSC first meets to consider
such matter (each such matter, a “Disputed Matter”), then: (a) if the Disputed
Matter involves an Enanta Decision, one of the Enanta members of the JSC shall
have the right to make the final decision on such Disputed Matter, but shall
only exercise such right in good faith after full consideration of the positions
of both Parties; and (b) if the Disputed Matter involves an Abbott Decision or
any other matter that is not an Enanta Decision, the Disputed Matter shall be
referred to the Designated Senior Officer of each Party, who shall promptly
initiate discussions in good faith to resolve the Disputed Matter. If the
Disputed Matter is not resolved by such Designated Senior Officers within the
first to occur of [*****] days after the date the Designated Senior Officers
first met to consider such Disputed Matter or [*****] days after the date the
JSC first met to consider such Disputed Matter, the Disputed Matter shall be
referred for resolution to the Executive Vice President of Abbott’s
Pharmaceutical Products Group, who shall have the right to make the final
decision on such Disputed Matter, but shall only exercise such right in good
faith after full consideration of the positions of both Parties and shall base
any such decision, in part, on the principle of maximizing the commercial
potential of each Product, but shall not base such decision on providing
economic advantage to one Party over the other Party.

2.2 Affiance Managers. Each Party shall appoint a person with experience in and
abilities with respect to project management and coordination and communication
among various divisions and disciplines who shall oversee contact between the
Parties for all matters related to the Collaboration between meetings of the JSC
(each, an “Alliance Manager”). The Alliance Managers shall have such
responsibilities as the Parties may mutually agree in writing. Each Party may
replace its Alliance Manager at any time by notice in writing to the other
Party.

2.3 Joint Co-Development and Commercialization Committee.

2.3.1 Establishment. As soon as practicable following the exercise by Enanta of
a Co-Development and Profit-Share Option with respect to a Compound or
Candidate, as the case may be, in accordance with Section 5.1, Enanta and Abbott
shall establish the Joint Co-Development and Commercialization Committee which
shall have and perform the responsibilities set forth in Section 2.3.4.

2.3.2 Membership. Each of Enanta and Abbott shall designate an equal (not less
than two (2)) number of representatives to the JDCC. Unless otherwise agreed by
the Parties, Abbott shall designate one (1) of its designees as the Chairman.
Each Party shall have the right at any time to substitute individuals, on a
permanent or temporary basis, for any of its previously designated
representatives to the JDCC by giving written notice to the other Party.

2.3.3 Meetings.

(a) Schedule of Meetings; Agenda. The JDCC shall establish a schedule of times
for regular meetings, taking into account, without limitation, its
responsibilities

 

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hereunder and the planning needs for the Co-Developed Products. Special meetings
may be convened by any member of the JDCC upon [*****] days (or, if such meeting
is proposed to be conducted by teleconference, upon [*****] days) written notice
to the other members; provided that (1) notice of any such special meeting may
be waived in writing at any time, either before or after such meeting, and
(ii) attendance of any member at a special meeting shall constitute a valid
waiver of notice from such member, unless such member attends the meeting for
the express purpose of objecting to its conduct for failure to provide valid
notice. If formed, in no event shall the JDCC meet less frequently than [*****].
Regular and special meetings of the JDCC may be held in person or by
teleconference or videoconference; provided, that, meetings held in person shall
alternate between the respective offices of the Parties in Watertown,
Massachusetts and Abbott Park, Illinois. The Chairman shall prepare and
circulate to each JDCC member an agenda for each JDCC meeting not later than one
(1) week prior to such meeting.

(b) Quorum; Voting; Decisions. At each JDCC meeting, (i) the presence in person
of at least one (1) member designated by each Party shall constitute a quorum
and (ii) each member who is present shall have one (1) vote on all matters
before the JDCC at such meeting. All decisions of the JDCC shall be made by
majority vote; provided, that, any member designated by a Party shall have the
right to cast the votes of any of such Party’s members on the JDCC who are
absent from the meeting. Alternatively, the JDCC may act by written consent
signed by at least one (1) member designated by each Party. Whenever any action
by the JDCC is called for hereunder during a time period in which the JDCC is
not scheduled to meet, the Chairman shall cause the JDCC to take the action in
the requested time period by calling a special meeting or by circulating a
written consent. Representatives of each Party or of its Affiliates who are not
members of the JDCC may attend JDCC meetings as non-voting observers with the
consent of the other Party, which consent shall not be unreasonably withheld,
conditioned or delayed.

2.3.4 Responsibilities. The JDCC shall be responsible for overseeing the
Development and Commercialization of Co-Developed Products in the Co-Development
Territory. Without limiting the generality of the foregoing, the JDCC shall have
the following responsibilities:

(a) the development and discussion of strategies for the Development and
Commercialization of each Co-Developed Product in the Co-Development Territory,
including allocation of responsibilities for such Development and
Commercialization activities;

(b) reviewing and discussing a Marketing and Sales Plan for each Co-Developed
Product in the Co-Development Territory;

(c) coordinating the Development and Commercialization efforts of both Parties
in the Co-Development Territory with respect to Co-Developed Products. For
purposes of clarity, the JDCC shall not be responsible for coordinating
communications with Regulatory Authorities, which is the sole responsibility of
Abbott, however, Abbott will work directly with a regulatory liaison to be
designated by Enanta on coordinating key regulatory FDA

 

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communications on Co-Developed Products and will keep Enanta’s liaison informed
as to other regulatory proceedings on Co-Developed Products that will materially
affect approvals or product labeling in the Co-Developed Territory. For clarity,
this would not apply to routine regulatory submissions or communications
necessary to ensure regulatory compliance with FDA guidelines. Abbott will keep
the JDCC informed of key regulatory communications involving key regulatory
filings and milestone meetings as specified in Section 4.5.5.

(d) reviewing and providing input in the preparation of a Marketing and Sales
Plan containing a Co-Promotion Plan for each Co-Developed Product in the
Co-Development Territory;

(e) reviewing and providing input on the short-term and long-term sales
forecasts for Co-Developed Products in the Co-Developed Territory;

(f) presenting sales forecasts and the results of all efforts in the
Co-Development Territory to the JSC as needed, but no less often than two
(2) times per Calendar Year;

(g) coordinating the Detailing efforts of both Parties in the Co-Development
Territory with respect to Co-Developed Products;

(h) overseeing all recalls, market withdrawals and any other corrective actions
related to Co-Developed Products in the Co-Development Territory;

(i) receiving and providing to the Parties sales reports pertaining to
Co-Developed Products in the Co-Developed Territory;

(j) approving all Third Parties to be engaged by either Party to provide
Representatives to Co-Promote Co-Developed Products in the Co-Developed
Territory;

(k) reviewing and approving any ingredients that are therapeutically or
biologically active that are proposed by either Party for inclusion with a
Co-Developed Product to create a Combination Product; and

(l) performing such activities as may be delegated to the JDCC pursuant to this
Agreement, or by mutual written agreement of the Parties after the Approval
Date.

2.3.5 Dispute Resolution. The JDCC members shall use reasonable efforts to reach
agreement on any and all matters for which the JDCC is responsible pursuant to
Section 2.3.4. In the event that, despite such reasonable efforts, agreement on
a particular matter cannot be reached by the JDCC within [*****] days after the
JDCC first meets to consider such matter, then the Chairman of the JDCC shall
bring such matter to the JSC for a final decision in accordance with Section
2.1.6.

 

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3. RESEARCH PROGRAM

3.1 Objectives of the Research Program. The objectives of the Research Program
shall be the identification of one (1) or more Compounds or Abbott Compounds
suitable for further Development as Candidates and for Commercialization as
Products.

3.2 Research Plan. The initial Research Plan is attached hereto as Exhibit A.
For each Calendar Year during the Research Program Term commencing with the
second full Calendar Year, the Research Plan shall be amended and updated by the
Parties, which amendments and updates shall be submitted to and approved by the
JSC in accordance with Section 2.1.4. Each such amendment shall: (a) set forth
(i) the research objectives and activities to be performed for the Calendar Year
covered by the update with reasonable specificity; (ii) the Party that shall be
responsible for performing such activities; (iii) a timeline and budget for such
activities; and (iv) with respect to Enanta Research Activities, the number of
FTEs estimated to be required to perform such Enanta Research Activities; and
(b) shall be consistent with the terms of this Agreement.

3.3 Conduct of Research Program.

3.3.1 Abbott Responsibilities. During the Research Program Term, Abbott will
(a) use Commercially Reasonable Efforts to conduct the Abbott Research
Activities assigned to it in each Research Plan and (b) commit such other
resources as are reasonably necessary to conduct such Abbott Research Activities
and achieve the goals of the Research Program.

3.3.2 Enanta Responsibilities. During the Research Program Term, Enanta will
(a) use Commercially Reasonable Efforts to conduct the Enanta Research
Activities assigned to it in each Research Plan and (b) commit to the Research
Program at least [*****] FTEs for each of the first [*****] years of the
Research Program Term and such other resources for the remainder of the Research
Term as are reasonably necessary to conduct such Enanta Research Activities and
achieve the goals of the Research Program; provided, that, Enanta shall not be
required to commit FTEs to the Research Program prior to the Approval Date.

3.3.3 Compliance. Each Party shall perform its obligations under each Research
Plan in good scientific manner and in compliance in all material respects with
all Applicable Laws. With respect to each activity performed under the Research
Plan that will or could reasonably be expected to be submitted to a Regulatory
Authority in support of a Regulatory Filing or Drug Application Approval, the
Party performing such activity shall comply in all material respects with the
regulations and guidance of the FDA that constitute Good Laboratory Practice or
Good Manufacturing Practice or, if and as appropriate under the circumstances,
International Conference on Harmonization (ICH) guidance or other comparable
regulation and guidance of any Regulatory Authority in any country or region in
the Territory. Each Party shall be solely responsible for paying the salaries
and benefits of its employees and consultants conducting its activities under
the Research Plan.

 

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3.3.4 Cooperation. Scientists at Enanta and Abbott shall cooperate in the
performance of the Research Program and, subject to the terms of this Agreement
and any confidentiality obligations to Third Parties, shall exchange such data,
information and materials as is reasonably necessary for the other Party to
perform its obligations under the Research Plan.

3.4 Records.

3.4.1 Record Keeping.

(a) Research Program Records. Each Party shall maintain records of its
activities under the Research Program in sufficient detail, in good scientific
manner and otherwise in a manner that reflects all work done and results
achieved in the performance of the Research Program. Subject to Article 7, each
Party shall provide the other Party with access during normal business hours and
upon reasonable advance notice to inspect and copy such records to the extent
reasonably required for the performance of the requesting Party’s obligations
and exercise of its rights under this Agreement.

(b) Record Keeping Policies. Without limiting the generality of
Section 3.4.1(a), each Party agrees to maintain a policy that requires its
employees and consultants to record and maintain data and information developed
during the Research Program in standard laboratory notebooks that are dated and
corroborated by non-inventors on a regular, contemporaneous basis and otherwise
in a manner designed to establish the earliest date of invention or reduction to
practice.

3.5 Reports. The Parties shall keep the JSC regularly informed of the progress
of the Research Program and shall present to the JSC all data and results
generated from such efforts. Without limiting the generality of the foregoing,
each Party shall, at least once each Calendar Quarter during the Research
Program Term, provide: (a) reports to the JSC in reasonable detail regarding the
status of its activities under such Research Program; (b) advise the JSC of its
identification of any Compound or Abbott Compound it reasonably determines
should be Developed as a Candidate and provide the JSC with any supporting data
applicable to such Compound or Abbott Compound so as to enable the JSC to
determine whether such Compound or Abbott Compound should be approved by the JSC
as a Candidate; and (c) provide such additional information that it has in its
possession as may be reasonably requested from time to time by the JSC.

3.6 Selection of Candidates. Within [*****] days after its receipt of each
report from a Party pursuant to Section 3.5(b) identifying a Compound or Abbott
Compound which such Party determines be Developed as a Candidate, the JSC shall
(i) review such supporting data and information using standards and criteria to
be developed by the JSC, and (ii) if it determines that a Candidate has been
identified, notify the Parties in writing of such determination (each, a
“Candidate Designation”). Upon the issuance by the JSC of a Candidate
Designation for a Compound or Abbott Compound, (a) such Compound or Abbott
Compound shall be deemed to be a Candidate for purposes of this Agreement and
(b) the Parties shall, as

 

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promptly as possible, prepare and submit to the JSC for its review and, if such
Candidate is a Co-Developed Product for its approval, a Development Plan with
respect to the Development activities to be conducted with respect to such
Candidate. For purposes of clarity, the Parties hereby acknowledge and agree
that no Compound or Abbott Compound may be Developed under the Development
Program unless and until it is designated as a Candidate by the JSC.

3.7 Supply of Proprietary Materials. From time to time during the Research
Program Term, either Party (a “Transferring Party”) may supply the other Party
(a “Recipient Party”) with Proprietary Materials of the Transferring Party for
use in the Research Program. In connection therewith, each Recipient Party
hereby agrees that: (a) it shall not use such Proprietary Materials for any
purpose other than exercising its rights or performing its obligations
hereunder; (b) it shall use such Proprietary Materials only in compliance with
all Applicable Laws; (c) it shall not transfer any such Proprietary Materials to
any Third Party without the prior written consent of the Transferring Party,
except as expressly permitted hereby; (d) it shall not acquire any right, title
or interest in or to such Proprietary Materials as a result of such supply by
the Transferring Party; and (e) upon the expiration or termination of the
Research Program Term, it shall, if and as instructed by the Transferring Party,
either destroy or return any such Proprietary Materials that are not the subject
of the grant of a continuing license hereunder.

3.8 Research Program Term. Subject to Section 11.2.1, the Research Program may
be extended (a) for an additional period of one (1) year by Abbott by providing
not less than six (6) months’ prior written notice to Enanta and (b) for one
(1) or more periods of one (1) year each thereafter by either Party providing
not less than six (6) months’ prior written notice to the other Party, subject
to the Parties reaching mutual agreement on all of the terms and conditions
applicable to any such extension. In the event this Agreement is terminated
prior to the end of the Research Program Term, the effective date of termination
of the Research Program Term shall be the same date as the termination of this
Agreement.

 

4. DEVELOPMENT AND COMMERCIALIZATION

4.1 Development of Candidates.

4.1.1 Development Plans. A Development Plan and budget for each Candidate for
the balance of the Calendar Year during which the Compound or Abbott Compound is
designated by the JSC as a Candidate shall be prepared by Abbott and submitted
to the JSC promptly after the designation of such Compound or Abbott Compound as
provided in Sections 2.1.4(h) and 3.6. Thereafter, for each Calendar Year during
the Development Program, an updated Development Plan and budget for each
Candidate shall be prepared by Abbott and submitted to the JSC as provided in
Section 2.1.4(a) or (b), as applicable. To the extent JSC approval is required,
the Parties shall manage the preparation of each Development Plan and budget in
a manner designed to obtain such JSC approval no later than [*****] days prior
to the end of the then-current Calendar Year. Each Development Plan and
amendment thereto shall: (a) set forth (i) the Development objectives,
activities, priorities, timelines, budget and resources for the Calendar Year
covered by the Development Plan with reasonable specificity, (ii) the

 

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Development objectives and activities to be performed for each Calendar Year
period covered by the Development Plan with reasonable specificity, broken down
by Calendar Quarters, (iii) the Party that shall be responsible for performing
such activities, (iv) a timeline for such activities and (v) the expected
Development Costs over such Calendar Year; and (b) be consistent with the other
terms of this Agreement.

4.1.2 Responsibility for the Development of Candidates. Unless otherwise set
forth in any Development Plan; Abbott shall have the sole right and
responsibility for all aspects of the Development of Candidates in accordance
with the applicable Development Plan in the Territory, including, without
limitation, (a) the conduct of: (i) all IND-enabling non-clinical studies for
Candidates; and (ii) all activities related to the conduct of human clinical
trials (including, without limitation, Phase I Clinical Trials, Phase II
Clinical Trials and Phase III Clinical Trials), including the manufacture of all
clinical trial materials, (b) making all Regulatory Filings for Candidates and
filing all Drug Approval Applications and otherwise seeking all Regulatory
Approvals for Candidates, as well as all correspondence and communications with
Regulatory Authorities regarding such matters, subject in each case to
Section 4.5.5, and (c) reporting all Adverse Events to Regulatory Authorities,
if and to the extent required by Applicable Laws. Abbott shall own all
Regulatory Filings and Drug Approval Applications for Candidates, subject to
Section 11.3.

4.2 Commercialization of Products.

4.2.1 Marketing and Sales Plans. Within [*****] days of the Initiation of a
Phase III Clinical Trial with respect to each Candidate, Abbott shall prepare
and provide to the JSC for its review a Marketing and Sales Plan for each
Candidate, and approval, if such Marketing and Sales Plan pertains to a
Co-Developed Product. Thereafter, for each Calendar Year during the Term, the
Marketing and Sales Plan for each Candidate or Product, as the case may be,
shall be updated by Abbott and submitted to the JSC for its approval in
accordance with Section 2.1.4(a) or (b), as applicable. Each update to the
Marketing and Sales Plan shall set forth: (a) the Commercialization objectives
and activities to be performed for the Calendar Year covered by the Marketing
and Sales Plan with reasonable specificity; (b) the manufacturing scale-up,
formulating and filing requirements for each Candidate or Product, as the case
may be, to be performed for the Calendar Year with reasonable specificity: and
(c) a timeline for such activities.

4.2.2 Responsibility for Commercialization of Products. Subject to the exercise
by Enanta of a Co-Development and Profit Share Option and unless otherwise set
forth in any Marketing and Sales Plan, Abbott shall have the sole right and
responsibility for all aspects of the Commercialization of Products, in
accordance with the applicable Marketing and Sales Plan in the Field. Without
limiting the foregoing, Abbott shall have the sole right and responsibility for
(a) the conduct of: (i) all activities relating to the manufacture and supply of
Products (including all required process development and scale up work with
respect thereto); and (ii) all pre-marketing, marketing, promotion, FDA DDMAC
interactions, sales, distribution, import and export activities (including
securing reimbursement, sales and marketing and

 

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conducting any post-marketing trials or post-marketing safety surveillance or
maintaining databases), subject to the oversight of the JSC and (b) for:
(i) subject to Section 4.5.5, making all Regulatory Filings for Candidates and
filing all Drug Approval Applications and otherwise seeking all Regulatory
Approvals for Products, as well as all correspondence and communications with
Regulatory Authorities regarding such matters; (ii) reporting all Adverse Events
to Regulatory Authorities if and to the extent required by Applicable Laws; and
(iii) subject to making the Co-Development Payments to Enanta for Co-Developed
Products contemplated by Section 6.4.1(b). Abbott shall own all Regulatory
Approvals for Products, subject to Section 11.3.

4.2.3 Manufacture and Supply of Products. Abbott shall be responsible for
manufacturing or having manufactured through Third Party contract manufacturers,
any materials (including, without limitation, all Candidates) as may be required
for all pre-clinical and clinical studies necessary to obtain Regulatory
Approval of Products and any materials and quantities of each Candidate as may
required for all pre-clinical and clinical studies applicable to such
Candidates.

4.3 Development and Commercialization Diligence. Abbott shall use Commercially
Reasonable Efforts during the Term to Develop Candidates and Commercialize
Products in the Field and in the Territory. Without limiting the foregoing,
Abbott shall seek Regulatory Approvals for, and Commercialize, each Product in
all of the Major Market Countries and in every other country in the Territory
identified in the Marketing and Sales Plan. If Enanta at any time believes that
Abbott is not meeting its diligence obligations pursuant to this Section 4.3,
Enanta may give written notice to Abbott requesting written justification, in
the form of detailed reasons, that would support the proposition that Abbott is
meeting such diligence obligations. In such event, Abbott shall provide such
written justification to Enanta within [*****] days after such notice is given.
In the event that Enanta does not receive such justification within such [*****]
day period or does not agree with such justification, then Enanta shall have the
right, in its sole discretion, to pursue a declaration of breach and seek
available remedies under Section 11.3.6 or any or all other rights or remedies
that it may have under this Agreement, at law or in equity.

4.4 Compliance. Each Party shall perform its obligations under each Development
Plan in good scientific manner and under each Marketing and Sales Plan using
Commercially Reasonable Efforts, and both in compliance in all material respects
with all Applicable Laws; provided that with respect to each activity performed
under a Development Plan and under a Marketing and Sales Plan that will or would
reasonably be expected to be submitted to a Regulatory Authority in support of a
Regulatory Filing or Drug Approval Application, such Party shall comply in all
material respects with, if and as applicable, the regulations and guidance of
the FDA that constitute Good Laboratory Practice, Good Manufacturing Practice or
Good Clinical Practice (or, if and as appropriate under the circumstances,
International Conference on Harmonization (ICH) guidance or other comparable
regulation and guidance of any Regulatory Authority in any country or region in
the Territory).

 

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4.5 Reports; Information; Updates.

4.5.1 Development Reports. Abbott shall keep the JSC regularly informed of the
progress of its efforts to Develop Compounds in the Field and in the Territory.
Without limiting the generality of the foregoing, Abbott shall, at least once
per Calendar Quarter, provide the JSC with reports in reasonable detail
regarding the status of all pre-clinical IND-enabling studies and activities
(including toxicology and pharmacokinetic studies), clinical trials and other
activities conducted under each Development Plan, together with summary data and
results and raw data made available if requested for each such pre-clinical
IND-enabling study or activity, clinical trial and such additional information
that it has in its possession as may be reasonably requested from time to time
by the JSC.

4.5.2 Commercialization Reports. Abbott shall keep the JSC regularly informed of
the progress of its efforts to Commercialize Products in the Field and in the
Territory. Without limiting the generality of the foregoing, Abbott shall
provide Enanta with semi-annual written updates to each Marketing and Sales
Plan, which shall (a) summarize Abbott’s efforts to Commercialize Products,
(b) identify the Regulatory Filings and Drug Approval Applications with respect
to Candidates that Abbott or any of its Affiliates or Sublicensees have filed in
the prior twelve (12) month period or reasonably expect to make in the following
twelve (12) month period, (c) identify the Regulatory Approvals with respect to
Products that Abbott or any of its Affiliates or Sublicensees have obtained in
the prior twelve (12) month period or reasonably expect to obtain in the
following twelve (12) month period, and (d) summarize all clinical and other
data generated by Abbott with respect to Products. In addition, Abbott shall
provide such additional information that it has in its possession as may be
reasonably requested from time to time by the JSC regarding the
Commercialization of any Product.

4.5.3 Supply of Products for Development and Commercialization. Abbott shall be
solely responsible, at its sole cost for manufacturing or having manufactured
through Third Party contract manufacturers, any and all Products for
Commercialization. For purposes of clarification, manufacturing costs for
Co-Developed Products are referenced in Sec. 1.37 “Development Costs” and
Schedule 6 “Cost of Goods”.

4.5.4 Adverse Event Reports. Within ninety (90) days after the date of this
Agreement, the Parties shall enter into an agreement to initiate a process for
the exchange of adverse event safety data in a mutually agreed format,
including, but not limited to, post-marketing spontaneous reports received by
the Party or its Affiliates in order to monitor the safety of the Product and to
meet reporting requirements with any applicable Regulatory Authority.

4.5.5 Preparation and Review of Regulatory Filings and Correspondence.

(a) Preparation of Drug Approval Applications. Abbott shall consult with Enanta
in good faith in the preparation of all Drug Approval Applications for
Candidates.

 

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Abbott shall consider all comments of Enanta in good faith, taking into account
the best interests of the Collaboration and of the Development of the applicable
Candidate and Commercialization of the corresponding Product on a global basis.

(b) Regulatory Meetings; Review of Regulatory Filings and Correspondence. Abbott
shall use Commercially Reasonable Efforts to provide Enanta with at least
[*****] days advance notice of any key meetings with the FDA or other Regulatory
Authority regarding a Drug Approval Application relating to, or Regulatory
Approval for, any Candidate or Product, as the case may be, and provide Enanta
with material related to such meeting. Enanta may elect to send one
(1) individual reasonably acceptable to Abbott to participate as an observer (at
Enanta’s sole cost and expense) in meetings with the FDA. In addition, Abbott
shall provide Enanta with initial IND filings or Drug Approval Applications
sufficiently in advance of submission so that Enanta may review and comment on
the substance of such Regulatory Filing or other document or correspondence. In
addition, Abbott shall promptly provide Enanta with copies of any FDA milestone
meetings or NDA labeling discussions pertaining to any Candidate or Product. If
Enanta has not commented on such Regulatory Filing or other document or
correspondence within [*****] days after it is provided to Enanta, then Enanta
shall be deemed to have no comments on such Regulatory Filing or other documents
or correspondence. Abbott shall consider all comments of Enanta in good faith,
taking into account the best interests of the Collaboration and of the
Development of the applicable Candidate or Commercialization of the
corresponding Product on a global basis.

For a Co-Developed Product, Abbott shall notify Enanta of any material
communication with any Regulatory Authority regarding drug approval, drug
labeling, or safety matters and shall promptly provide copies of any material
document or other material correspondence received from any Regulatory
Authority.

4.6 Product Recalls. In the event that any Regulatory Authority issues or
requests a recall or takes similar action in connection with a Co-Developed
Product, or in the event a Party reasonably believes that an event, incident or
circumstance has occurred that may result in the need for a recall, market
withdrawal or other corrective action regarding a Co-Developed Product, such
Party shall promptly advise the other Party thereof by telephone or facsimile.
Following such notification, Abbott shall decide and have control of whether to
conduct a recall or market withdrawal (except in the event of a recall or market
withdrawal mandated by a Regulatory Authority, in which case it shall be
required) or to take other corrective action in any country and the manner in
which any such recall, market withdrawal or corrective action shall be
conducted; provided that Abbott shall keep Enanta regularly informed regarding
any such recall, market withdrawal or corrective action. Abbott shall bear all
expenses of any such recall, market withdrawal or corrective action (including,
without limitation, expenses for notification, destruction and return of the
affected Co-Developed Product and any refund to customers); provided, that, any
such expenses shall be allocable as Co-Developed Costs or Commercialization
Expenses and shared by the Parties in accordance with Section 5.3.

 

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4.7 Product Labeling. All product labels for Products shall include the names
and logos of both Abbott and Enanta, to the extent consistent with the
Applicable Laws of any country in which Products are sold.

 

5. CO-DEVELOPMENT AND PROFIT SHARE OPTION

5.1 Exercise of Co-Development and Profit Share Option. Enanta shall have the
option (the “Co-Development and Profit Share Option”), but not the obligation,
to co-develop and share in the profits of any Product in the Co-Development
Territory by providing written notice to Abbott at any time during the
Co-Development and Profit Share Option Period, which notice shall identify the
Compound or Candidate, as the case may be.

5.2 Effect of Exercise. If Enanta exercises the Co-Development and Profit Share
Option with respect to a Compound or Candidate, as the case may be, as described
in Section 5.1 then: (a) that Compound or Candidate, as the case may be, will
thereafter be deemed to be a Co-Developed Product for purposes of this
Agreement; (b) the Parties shall prepare and provide to the JSC for its review
and approval a Marketing and Sales Plan for such Co-Developed Product within the
Co-Development Territory which shall be updated and submitted by the Parties to
the JSC not less than annually; (c) Abbott shall provide Enanta, as promptly as
possible thereafter, with Abbott’s revised non-binding, good faith estimate of
Development Costs it expects to incur with respect to that Co-Developed Product
within the Co-Development Territory for each Calendar Quarter for the next five
(5) Calendar Years; (d) except with respect to the allocation of Shared Clinical
Trial Costs in accordance with Section 5.4, Enanta shall be responsible for the
Enanta Co-Development Percentage of all Development Costs applicable to that
Co-Developed Product incurred on and after the Co-Development and Profit Share
Option Exercise Date within the Co-Development Territory; (e) Enanta shall have
the right to employ a number of Enanta Representatives to Co-Promote such
Co-Developed Product in the Co-Development Territory equal to the Enanta
Co-Development Percentage; (f) the Parties shall negotiate a Co-Promotion
Agreement for such Co-Developed Product in accordance with Section 5.7; and
(g) Enanta shall receive the Enanta Co-Development Percentage of all Operating
Income derived from that Co-Developed Product in accordance with Section 6.5.2.
The Parties hereby acknowledge and agree that either Party shall have the right
to propose the addition of other therapeutically or biologically active
ingredients for inclusion with a Co-Developed Product to create a Combination
Product. Enanta and Abbott will negotiate in good faith on the terms for the
development and commercialization of a Combination Product created from a
Co-Developed Product that have not been contemplated in this Agreement.

5.3 Reconciliation and Auditing of Development Costs.

5.3.1 Reconciliation of Development Costs. Within [*****] days following the end
of each Calendar Quarter following the exercise of the Co-Development and Profit
Share Option applicable to a given Co-Developed Product, Abbott shall submit to
JSC a written report setting forth in reasonable detail all Development Costs
incurred by Abbott over such Calendar Quarter. Within [*****] days following the
JSC’s receipt of such written reports, the JSC shall

 

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prepare and submit to Enanta a written report setting forth in reasonable detail
the calculation of the net amount owed by Enanta to Abbott in order to ensure
the appropriate sharing of the Development Costs in accordance with the Enanta
Co-Development Percentage and the Abbott Co-Development Percentage,
respectively. Enanta shall pay the net amount to Abbott within [*****] days
after the distribution by the JSC of such written report.

5.3.2 Records; Audit Rights. Abbott shall keep and maintain for [*****] years
complete and accurate records of Development Costs incurred with respect to
Co-Developed Products in sufficient detail to allow confirmation of same by
Enanta. Enanta shall have the right for a period of [*****] years after such
Development Cost is reconciled in accordance with Section 5.2 to inspect or
audit, or to appoint, at its expense, an independent certified public accountant
reasonably acceptable to Abbott to inspect or audit, the relevant records of
Abbott and its Affiliates to verify that the amount of such Development Costs
was correctly determined. Abbott and its Affiliates shall each make its records
available for inspection or audit by such independent certified public
accountant during regular business hours at such place or places where such
records are customarily kept, upon reasonable notice from Enanta, solely to
verify that Development Costs hereunder were correctly determined; provided that
Enanta shall not have the right to inspect or audit any Calendar Year more than
[*****] or more than [*****] years after the end of such Calendar Year or to
conduct more than [*****] such audit in any [*****] month period. All records
made available for inspection or audit shall be deemed to be Confidential
Information of Abbott. The results of each inspection or audit, if any, shall be
binding on both Parties. In the event there was an error in the amount of
Development Costs reported by Abbott hereunder, (a) if the amount of Development
Costs was over-reported, Abbott shall promptly (but in any event no later than
[*****] days after Abbott’s receipt of the independent accountant’s report so
concluding) make payment to Enanta of the over-reported amount and (b) if the
amount of Development Costs was underreported, Enanta shall promptly (but in any
event no later than [*****] days after Enanta’s receipt of the independent
accountant’s report so concluding) make payment to Abbott of the underreported
amount. Enanta shall bear the full cost of such audit unless such audit
discloses an over-reporting by Abbott of more than [*****] of the aggregate
amount of Development Costs reportable in any Calendar Year, in which case
Abbott shall reimburse Enanta for all costs incurred by Enanta in connection
with such inspection or audit.

5.4 Allocation of Shared Clinical Trial Costs.

5.4.1 Use of Shared Clinical Trial Data. On and after the date of exercise by
Enanta of its Co-Development and Profit Share Option for a Co-Developed Product
and continuing for the Term of this Agreement [*****], whichever date is
earlier, each Party shall provide written notice to the other Party to the
extent it Materially Used any Shared Clinical Trial Data (the “Shared Clinical
Trial Notice”).

5.4.2 True- Up of Clinical Trial Costs. Within [*****] days of the end of each
Calendar Year following the date of the Shared Clinical Trial Notice, each Party
shall submit to JSC a written report setting forth in reasonable detail all
Shared Clinical Trial Costs

 

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incurred by such Party over such Calendar Year. Within [*****] days following
the JSC’s receipt of such written reports, the JSC shall prepare and submit to
each Party a written report setting forth in reasonable detail the calculation
of the net amount owed by a Party to the other Party in order to ensure the
appropriate sharing of the Shared Clinical Trial Costs [*****]. The net amount
payable shall be due within [*****] days after receipt of any such accounting.

5.4.3 Data Audit. Promptly following the submission of each Regulatory Filing,
and any amendments or supplements thereto, the Party making such submission
shall provide a full and complete copy of such filing to the other Party for
purposes of determining whether the submitting Party has Materially Used the
other Party’s Shared Clinical Trial Data without having paid its applicable
Shared Clinical Trial Cost Sharing Percentage associated with such Shared
Clinical Trial Data. In the event that a Party Materially Used the other Party’s
Shared Clinical Trial Data in such submission, the submitting Party shall
immediately pay its applicable Shared Clinical Trial Cost Sharing Percentage to
the other Party upon written request by the other Party.

5.5 Roll-Over Payments. If, in any Calendar Quarter, the actual Development
Costs incurred by Enanta with respect to a Co-Developed Product for that
Calendar Quarter exceeds by greater than [*****] Abbott’s good faith estimate of
Development Costs for that Co-Developed Product for that Calendar Quarter,
Enanta may, upon written notice to Abbott, delay payment of its share of any
such excess until the subsequent Calendar Year (the “Roll-Over Payment”). Enanta
shall make the Roll-Over Payment in two (2) equal amounts over the first two
(2) consecutive Calendar Quarters of the subsequent Calendar Year.

5.6 [*****].

5.7 Co-Promotion.

5.7.1 Preparation and Execution of Co-Promotion Agreement. As soon as
practicable but no later than the date of completion of a Phase III Clinical
Trial with respect to a Co-Developed Product, the Parties shall complete and
execute a Co-Promotion Agreement (the “Co-Promotion Agreement”) which shall
provide for the terms applicable to such Co-Promotion and shall conform in all
material respects with the terms and conditions set forth in Schedule 5 attached
hereto and such additional provisions as are usual and customary for inclusion
in a co-promotion agreement between companies in the pharmaceutical industry of
comparable sizes to the respective Parties. Such additional terms shall
supplement and shall not materially expand, limit or change the terms set forth
on Schedule 5. The Parties shall negotiate the Co-Promotion Agreement in good
faith and with sufficient diligence as is required to execute and deliver the
Co-Promotion Agreement within [*****] days of commencing negotiations.

5.7.2 Dispute Resolution. In the event the Parties fail to execute and deliver
the Co-Promotion Agreement within the [*****] day period described in
Section 5.6.1, the Parties shall (a) use reasonable efforts to complete such
negotiations and to execute and deliver the Co-Promotion Agreement as soon as
possible after such [*****] day period and (b) without

 

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limiting the generality of the foregoing, after the expiration of such [*****]
day period, each produce a list of issues on which they have failed to reach
agreement and submit its list to the JSC to be resolve in accordance with
Section 2.1.6. Notwithstanding the foregoing, the Parties shall, upon the
request by either Party during the negotiation period, discuss in good faith
whether to enter into an agreement with a Third Party to Co-Promote the
Co-Developed Product, in which case, Enanta shall share in the consideration
received from such Third Party in accordance with the Enanta Co-Development
Percentage.

5.7.3 Co-Promotion Plan. The JDCC shall prepare a Co-Promotion Plan for each
Co-Developed Product for the Co-Development Territory which shall include, but
not be limited to, (a) demographics and market dynamics, market strategies, and
estimated launch date of such Co-Developed Product in the Co-Development
Territory, (b) a sales and expense forecast (including at least five (5) years
of estimated sales and expenses), manufacturing plans and targeted label claims
for such Co-Developed Product in the Co-Development Territory, (c) a marketing
plan (including five (5) year advertising and Detailing forecasts and pricing
strategies) for such Co-Developed Product in the Co-Development Territory, and
(d) a five (5) year budget for such Co-Developed Product for the Co-Development
Territory. The Co-Promotion Plan and annual written updates thereto shall be
submitted to the JDCC for review by a date to be established by the JDCC, taking
into account Abbott’s and Enanta’s annual budget planning calendars, but no
later than December 31 of each Calendar Year.

 

6. CONSIDERATION AND FUNDING

6.1 Upfront Fee. On the Approval Date, Abbott shall be obligated to pay Enanta a
non-refundable, non-creditable fee in the amount of Forty-Four Million Seven
Hundred Thousand Dollars (US $44,700,000). [*****] of this fee is payable by
wire transfer of immediately available funds on the first business day following
the Approval Date. [*****] of this fee is payable by wire transfer on the first
anniversary of the first business day following the Approval Date.

6.2 Purchase of Equity; Participation Right. In partial consideration of the
rights granted by Enanta to Abbott hereunder, Abbott agrees to purchase from
Enanta, and Enanta hereby agrees to issue and sell to Abbott, shares of Series G
Preferred Stock, $.001 par value per share (the “Shares”), of Enanta for an
aggregate purchase price of Twelve Million Five Hundred Thousand Dollars (US
$12,500,000). Abbott shall be obligated to make such payment to Enanta on the
Approval Date. Such payment is payable by wire transfer of immediately available
funds on the first business day following the Approval Date and pursuant to the
terms and subject to the conditions set forth in the Stock Purchase Agreement
attached hereto as Exhibit B (the “Stock Purchase Agreement”).

6.3 R&D Funding.

6.3.1 FTE Costs. Beginning on the first day of the third year of the Research
Program Term and on the first day of each subsequent Calendar Quarter during the
Research

 

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Program Term, Abbott shall make a payment equal to [*****] (“Quarterly Research
Payment”, which is equal to [*****] per Calendar Year (the “Annual Research
Payment”)). For the third year of the Research Program Term (and any subsequent
years of the Research Program Term, if extended as per Section 3.8), Enanta
shall provide Abbott with an annual reconciliation statement that specifies the
actual number of FTEs for that third (and subsequent, if applicable) year of the
Research Program Tenn. If, with respect to that third (and subsequent, if
applicable) year of the Research Program Term, the FTE Cost attributable to the
number of FTEs specified in the annual reconciliation statement for such third
(and subsequent, if applicable) year of the Research Program Term is less than
the Annual Research Payment for such third (and subsequent, if applicable) year
of the Research Program Term, Abbott shall have the right to apply the excess
paid by it towards the FTE Cost due to Enanta in subsequent years of the
Research Program Teini, if any, until such balance is zero. If the Research
Program Term ends before such balance is zero, Enanta will pay such excess
payment to Abbott within thirty (30) days after the end of the Research Program
Term. If, with respect to that third (and subsequent, if applicable) year of the
Research Program Term, the FTE Cost attributable to the number of FTEs specified
in the annual reconciliation statement for such third (and subsequent, if
applicable) year of the Research Program Term is more than the Annual Research
Payment for such third (and subsequent, if applicable) year of the Research
Program Term, Enanta shall be solely responsible for such excess FTE Cost.

6.3.2 Research Funding Audit Rights. Enanta shall keep complete and accurate
books and financial records pertaining to its costs and expenses of conducting
the Research Program, which books and financial records shall be kept in
accordance with GAAP and shall be retained by Enanta until [*****] years after
the end of the Calendar Year to which they pertain. Abbott shall have the right
to appoint, at its expense, an independent certified public accountant
reasonably acceptable to Enanta to inspect or audit, the books and financial
records of Enanta relating to its costs and expenses of conducting the Research
Program during any Calendar Year; provided that Abbott shall not have the right
to inspect or audit any Calendar Year more than [*****] or more than [*****]
years after the end of such Calendar Year or to conduct more than [*****] such
audit in any [*****] month period. All books and financial records made
available for inspection or audit shall be deemed to be Confidential Information
of Enanta. The results of each inspection or audit, if any, shall be binding on
both Parties. In the event there was an error in the amount of FTE Costs
reported by Enanta hereunder, (a) if the amount of FTE Costs was over-reported,
Enanta shall promptly (but in any event no later than [*****] days after
Enanta’s receipt of the independent accountant’s report so concluding) make
payment to Abbott of the over-reported amount and (b) if the amount of FTE Costs
was underreported, Abbott shall promptly (but in any event no later than [*****]
days after Abbott’s receipt of the independent accountant’s report so
concluding) adjust its records to reduce the balance of any excess payment by
the amount of the under-reported amount. Abbott shall bear the full cost of such
audit unless such audit discloses an over-reporting by Enanta of more than
[*****] of the aggregate amount of FTE Costs reportable in any Calendar Year, in
which case Enanta shall reimburse Abbott for all costs incurred by Abbott in
connection with such inspection or audit.

 

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6.4 Milestone Payments.

6.4.1 Milestones.

(a) First Product. Abbott shall make each of the following non-refundable,
non-creditable payments to Enanta within thirty (30) days after the occurrence
of each of the following milestone events for the first Candidate or Product, as
the case may be, that is not a Co-Developed Product (the “Initial Product”):

 

Milestone Event

   Milestone Payment  

Successful Completion of Phase Ib/IIa Clinical Study

   $ 40 million   

Initiation of first Phase III Clinical Trial

   $ 15 million   

Filing of first NDA in the United States

   $ 20 million   

Filing of first Regulatory filing in the European Union

   $ 20 million   

Commercialization Regulatory Approval in the United States

   $ 75 million   

Commercialization Regulatory Approval in the European Union

   $ 50 million   

Commercialization Regulatory Approval in Japan

   $ 30 million   

(b) Additional Products. To the extent that one (1) or more additional
Candidates or Products, as the case may be, are Developed and Commercialized
following receipt of Commercialization Regulatory Approval of the first Product,
Abbott shall make each of the following non-refundable, non-creditable payments
to Enanta within thirty (30) days after the occurrence of each of the following
milestone events for each additional Product that is not a Co-Developed Product
(each, an “Additional Product”):

 

[*****]

     [*****]   

[*****]

     [*****]   

[*****]

     [*****]   

(c) First Co-Developed Product. In lieu of the payments to be made by Abbott
pursuant to Section 6.4.1(a), Abbott shall make each of the following
non-refundable, non-creditable payments to Enanta within thirty (30) days after
the occurrence of each of the following milestone events in the event the first
Candidate or Product, as the case may be, is a Co-Developed Product (the
“Initial Co-Developed Product”):

 

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Milestone Event

   Milestone Payment  

[*****]

     [***** ] 

[*****]

     [***** ] 

[*****]

     [***** ] 

[*****]

     [***** ] 

Notwithstanding the foregoing, in the event that Enanta exercises a
Co-Development and Profit-Share Option with respect to a Candidate or Product,
as the case may be, the milestone payments applicable under this
Section 6.4.1(c) shall be reduced in the aggregate by [*****] for the first to
occur of (i) filing of the first Regulatory Filing for such Co-Developed Product
in the European Union, (ii) the first Commercialization Regulatory Approval in
Japan received for such Co-Developed Product and (iii) the first
Commercialization Regulatory Approval in the European Union received for such
Co-Developed Product. The forgoing reduction shall only apply to the Initial
Co-Developed Product.

(d) Additional Co-Developed Products. In lieu of the payments to be made by
Abbott pursuant to Section 6.4.1(b), to the extent that one (1) or more
Co-Developed Products are Developed and Commercialized following receipt of
Commercialization Regulatory Approval of the first Product, regardless of
whether the first Product is an Initial Product or an Initial Co-Developed
Product, Abbott shall make each of the following non-refundable, non-creditable
payments to Enanta within thirty (30) days after the occurrence of each of the
following milestone events for each additional Co-Developed Product (each, an
“Additional Co-Developed Product”):

 

[*****]

     [***** ] 

[*****]

     [***** ] 

6.4.2 Milestone Payments and Notices. Abbott shall provide Enanta with prompt
written notice upon each achievement of a milestone event set forth in
Section 6.4.1, which notice shall include a description of the applicable
milestone event. In the event that, notwithstanding the fact that Abbott has not
given such a notice, Enanta believes any such milestone event has occurred, it
shall so notify Abbott in writing and shall provide to Abbott data,
documentation or other information that supports its belief. Any dispute under
this Section 6.4.2 that relates to whether a milestone event has been achieved
shall be referred to the JSC to be resolved in accordance with Section 2.1.6. In
the event Abbott proceeds to the next stage of Development for a Candidate, any
milestone payments that were not paid for any prior stages of Development that
are otherwise applicable to such Candidate, shall also be due and payable. For
example, if a Phase IIb Clinical Trial is initiated without payment of the
Successful Completion of Phase Clinical Study, then the Successful Completion of
Phase Ib/IIa Clinical Study will be deemed to have occurred and will be paid in
full upon payment of the milestone payable upon the submission of the first NDA
filing.

 

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6.5 Payment of Royalties; Operating Income Payments; Sublicense Income Payments;
Accounting and Records.

6.5.1 Payment of Royalties.

(a) Payment of Royalties. Abbott shall pay Enanta a royalty based on Annual Net
Sales of each Royalty-Bearing Product commencing with the Calendar Year (or
partial Calendar Year) in which the First Commercial Sale of such
Royalty-Bearing Product occurs and ending upon the expiration of the Royalty
Term for such Royalty-Bearing Product, at the following rates (such royalty
payments, the “Royalty Payments”):

 

Annual Net Sales

   Royalty Rate  

Up to (but not including) [*****]

     10 % 

Equal to or greater than [*****] and up to (but not including) [*****]

     [***** ] 

Equal to or greater than [*****] and up to (but not including) [*****]

     [***** ] 

Equal to or greater than [*****] and up to (but not including) [*****]

     [***** ] 

Equal to or greater than [*****]

     20 % 

For example, if Annual Net sales of a Royalty-Bearing Product were [*****], the
royalty payment would be [*****].

(b) Offsets for Third Party Payments. In the event Abbott, in order to practice
the license granted to it under Section 8.2.1 of this Agreement in any country
in the applicable portion of the Territory in which royalties are payable as
provided in Section 6.5.1, is required to and actually makes royalty payments to
any Third Party (“Third Party Payments”) in order to obtain a license to an
issued patent or patents in the absence of which the Compound portion of the
Royalty Bearing Product could not legally be researched, Developed,
manufactured, imported, sold, exported, or otherwise exploited in such country
(as evidenced, to the extent reasonably requested by Enanta, by an opinion of
patent counsel), then the royalties payable to Enanta for such Royalty-Bearing
Product under this Agreement with respect to such country may be reduced by
[*****] of the amount of such Third Party Payments. Notwithstanding the
foregoing, (i) [*****], and (ii) such reductions shall in no event reduce the
royalty that would otherwise be payable for such Royalty-Bearing Product under
Section 6.5.1 with respect to such country by more than [*****] of the amount
otherwise payable with respect to Net Sales of such Royalty-Bearing Product in
such country.

(c) No Patent Coverage. Notwithstanding Section 6.5.1(a), if any Royalty-Bearing
Product is sold in a country and is not covered by a Valid Claim of the Licensed

 

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Patent Rights, Abbott Patent Rights or Joint Patent Rights in such country, the
royalty rate in such country shall be reduced by [*****] of the rates set forth
above, continuing until the last day of the Royalty Term with respect to such
Royalty-Bearing Product; provided, that, in the event the royalty rate on a
Royalty-Bearing Product is reduced in a country under this Section 6.5.1(c) and
is subsequently covered by a Valid Claim under the Licensed Patent Rights,
Abbott Patent Rights or Joint Patent Rights in such country, (i) the full
royalty rates otherwise applicable under Section 6.5.1(a) shall be reinstated
for the remainder of the Royalty Term, and (ii) for any period of time that the
royalty rate on a Royalty-Bearing Product is reduced but a pending patent
application exists which subsequently results in such Valid Claim, Abbott shall
make a one-time payment to Enanta in an amount equal to the difference between
(A) the amounts that would have been payable under full royalty rates applicable
under Section 6.5.1(a) during such time, and (B) amounts that were paid under
the royalty rates applicable under this Section 6.5.1(c) during such time.

(d) Generic Products. In the event one or more Third Parties sell a Generic
Product (as defined below) in a country in which a Royalty-Bearing Product is
then being sold, then, during the period in which sales of the Generic Product
by such Third Parties in the aggregate are equal to at least [*****] of Abbott’s
volume-based or revenue-based market share of the Royalty-Bearing Product in
such country (as measured by prescriptions or other similar information
available in such country), all applicable royalties in effect with respect to
such Royalty-Bearing Product in such country as specified in Section 6.4.1 shall
be reduced by [*****]. Notwithstanding the foregoing, Abbott’s obligation to pay
royalties at the full royalty rates shall be reinstated on the first day of the
Calendar Quarter immediately following the Calendar Quarter in which sales of
such Generic Product account for less than [*****] of Abbott’s volume-based or
revenue-based market share in such country. For purposes of this
Section 6.5.1(d), a “Generic Product” means a pharmaceutical product that (i) is
not covered by a Valid Claim under the Licensed Patent Rights, Abbott Patent
Rights or Joint Patent Rights in the relevant country, (ii) contains the same
active ingredient as a Royalty-Bearing Product and (iii) is bioequivalent to
such Royalty-Bearing Product.

(e) Combination Products. For each Royalty-Bearing Product that is a Combination
Product, the Parties shall, on a country-by-country basis, agree to an
appropriate adjustment to Net Sales to reflect a good faith determination of the
relative value of each pharmaceutically active ingredient, based on the
estimated fair market value of each such therapeutically or biologically active
ingredient, as follows: (a) In the case of a Combination Product for which a
Royalty-Bearing Product and each of the other therapeutically or biologically
active ingredients contained in the Combination Product are sold separately in
such country by Abbott, Net Sales shall be determined by [*****]; (b) In the
case of a Combination Product for which the Royalty-Bearing Product is sold
separately in such country but the non-Royalty-Bearing Product therapeutically
or biologically active ingredients contained in the Combination Product are not
sold separately by Abbott in such country, Net Sales shall be calculated by
[*****]; and (c) If in a country neither the Royalty-Bearing Product nor the
therapeutically or biologically active ingredients contained in the combination
product are sold separately in said country by Abbott, Net Sales of the
Royalty-Bearing Product fanning part of

 

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the Combination Product shall be reasonably determined by [*****]. In the case
where the Parties are unable to agree on [*****], the Parties shall agree upon
an internationally recognized independent certified public accountant who shall
make such determination and whose determination shall be final and binding on
the Parties.

(f) Know-How Payments. The Parties hereby acknowledge and agree that any
royalties that are payable for a Royalty-Bearing Product under 6.5.1 (c) for
which no Patent Rights exist shall be in consideration of: (i) Enanta’s
expertise and know-how concerning the identification of Compounds in the Field,
and its other Compound-related development activities conducted prior to the
Effective Date; (ii) the performance by Enanta of the Research Program;
(iii) the disclosure by Enanta to Abbott of results obtained in the Research
Program; (iv) the licenses granted to Abbott hereunder with respect to Licensed
Technology and Joint Technology that are not within the claims of any Patent
Rights Controlled by Enanta; (v) the restrictions on Enanta in Section 8.5; and
(vi) the “head start” afforded to Abbott by each of the foregoing.

(g) Payment Dates and Reports. Abbott shall make Royalty Payments within
[*****]. All payments shall be made by wire transfer to the credit of such bank
account as shall be designated in writing from time to time by Enanta. Abbott
shall also provide, at the same time each such payment is made, a report
showing: (i) the Net Sales of each Royalty-Bearing Product by country in the
Territory; (ii) the basis for any deductions from gross amounts billed or
invoiced to determine Net Sales; (iii) the applicable royalty rates for such
Royalty-Bearing Product; (iv) the exchange rates used in calculating any of the
foregoing; and (v) a calculation of the amount of royalty due to Enanta.

6.5.2 Operating Income Payments. Enanta shall receive from Abbott, in lieu of
receiving any Royalty Payments with respect to each Co-Developed Product in the
Co-Development Territory, the Enanta Co-Development Percentage of all Annual
Operating Income derived from sales of that Co-Developed Product in the
Co-Development Territory (such payments, the “Operating Income Payments”) for as
long as there are sales by Abbott, its Affiliates and Sublicensees of such
Co-Developed Product (the “Co-Development Term”). Within thirty (30) days
following the end of each Calendar Quarter commencing on and after the date of
First Commercial Sale of each Co-Developed Product, (a) Enanta shall submit to
the JSC a statement identifying all Commercialization Expenses and License Fees
incurred by it with respect to such Co-Developed Product in the Co-Development
Territory and (b) Abbott shall submit to the JSC a statement identifying the Net
Sales, Cost of Goods, freight, Third Party Payments, R&D and all
Commercialization Expenses incurred by it with respect to such Co-Developed
Product. Within forty-five (45) days following the end of the Calendar Quarter,
the JSC shall submit to the Parties a written report setting forth in reasonable
detail (c) the calculation of Operating Income, determined in accordance with
Schedule 6 attached hereto and (d) the calculation of the amount of Operating
Income payable to Enanta in accordance with the Enanta Co-Development Percentage
for that Co-Developed Product taking into account Enanta’s expenditures for the
period. Abbott shall make the Operating Income Payments to Enanta within thirty
(30) days following the issuance of such written report.

 

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6.5.3 Sublicense Income Payments. Abbott shall pay Enanta the Applicable
Percentage of all Sublicense Income received by Abbott under Sublicense
Agreements with respect to Products (“Sublicense Income Payments”). As used
herein, the term “Applicable Percentage” shall mean [*****]. Abbott shall make
all Sublicense Income Payments within thirty (30) days of the end of the
Calendar Quarter commencing with the first Calendar Quarter in which any
Sublicense Income is received.

6.5.4 Records; Audit Rights. Abbott and its Affiliates and Sublicensees shall
keep and maintain for [*****] years from the date of each Royalty Payment,
Operating Income Payment and Sublicense Income Payment complete and accurate
records of gross sales and Net Sales by Abbott and its Affiliates and
Sublicensees of each Product, in sufficient detail to allow Royalty Payments,
Operating Income Payments and Sublicense Income Payments to be determined
accurately. Enanta shall have the right for a period of [*****] years after
receiving any such payment to inspect or audit, or to appoint at its expense an
independent certified public accountant reasonably acceptable to Abbott to
inspect or audit the relevant records of Abbott and its Affiliates and
Sublicensees to verify that the amount of such payment was correctly determined.
Abbott and its Affiliates and Sublicensees shall each make its records available
for inspection or audit by such independent certified public accountant during
regular business hours at such place or places where such records are
customarily kept, upon reasonable notice from Enanta, solely to verify that
Royalty Payments and Sublicense Income Payments were correctly accounted for or
determined. Enanta shall not exercise such inspection or audit right [*****].
All records made available for inspection or audit shall be deemed to be
Confidential Information of Abbott. The results of each inspection or audit, if
any, shall be binding on both Parties. In the event there was an underpayment by
Abbott, Abbott shall promptly (but in any event no later than [*****] days after
Abbott’s receipt of the independent accountant’s report so concluding) make
payment to Enanta of any shortfall, together with the interest payment as
provided in Section 6.5.5. In the event that there was an overpayment by Abbott,
Enanta shall promptly (but in any event no later than [*****] days after
Enanta’s receipt of the independent accountant’s report so concluding) refund to
Abbott the excess amount. Enanta shall bear the full cost of such audit unless
such audit discloses an underreporting by Abbott of more than [*****] of the
aggregate amount of Royalty Payment or Sublicense Income Payments payable in any
Calendar Year, in which case Abbott shall reimburse Enanta for all costs
incurred by Enanta in connection with such inspection or audit.

6.5.5 Overdue Royalties, Operating Income Payments and Milestones. All Royalty
Payments, Operating Income Payments and Sublicense Income Payments not made
within the time period set forth in Section 6.5.1, 6.5.2 and 6.5.3, and all
milestone payments not made within the time period specified in Section 6.4.1,
shall bear interest at a rate of [*****] percent ([*****]%) per month from the
due date until paid in full or, if less, the maximum interest rate permitted by
Applicable Laws. Any such overdue Royalty Payment, Sublicense Income Payment,
Operating Income Payment or milestone payment shall, when made, be accompanied
by, and credited first to, all interest so accrued.

 

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6.5.6 Withholding Taxes. All payments made by Abbott hereunder shall be free and
clear of any taxes, duties, levies, fees or charges except for applicable
withholding taxes, if any. Abbott shall make any applicable withholding payments
due from Enanta on its behalf and shall promptly thereafter provide Enanta with
written documentation of any such payment sufficient to enable Enanta to satisfy
the requirements of the United States Internal Revenue Service with regard to an
application for a foreign tax credit for such payment.

6.5.7 Foreign Currency Exchange. All Royalty Payments, Operating Income Payments
and Sublicense Income Payments shall be payable in full in United States
Dollars, regardless of the countries in which sales are made. For the purpose of
computing Net Sales for Products sold in any currency other than United States
Dollars, the quarterly Royalty Payment will be calculated as follows:

(A/B) x C= United States Dollars Royalty Payment on Net Sales sold in any
currency other than United States Dollars during a Calendar Quarter, where

A= foreign “Net Sales” (as defined above) in such Calendar Quarter expressed in
such foreign currency;

B= foreign exchange conversion rate, expressed in local currency of the foreign
country per United States Dollar (using, as the applicable foreign exchange
rate, the average of the monthly average rates for that Calendar Quarter as
published by Bloomberg, and if Bloomberg is not available then another similar
third party source); and

C= the royalty rate(s) applicable to such Net Sales under this Agreement.

6.6 No Other Compensation. The Parties hereby agree that the terms of this
Agreement and the Stock Purchase Agreement fully define all consideration,
compensation and benefits, monetary or otherwise, to be paid, granted or
delivered by each Party to the other Party in connection with the transactions
contemplated herein. Neither Party has previously paid or entered into any other
commitment to pay, whether orally or in writing, any employee of the other
Party, directly or indirectly, any consideration, compensation or benefits,
monetary or otherwise, in connection with the transactions contemplated herein.

6.7 Enanta Payments. Notwithstanding anything to the contrary in any of
Section 6.4 or Section 6.5, Enanta shall be solely responsible for any and all
payments to be made to [*****] pursuant to the terms and conditions set forth in
that certain [*****] by and between Enanta and [*****], other than any payments
for use of [*****] HCV Tool Patent License under the terms of such [*****]
existing on the Effective Date, which will be the sole responsibility of Abbott
to the extent that the HCV Tool Patent License is used by either Party pursuant
to this Agreement.

 

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7. TREATMENT OF CONFIDENTIAL INFORMATION; PUBLICITY; NON-SOLICITATION

7.1 Confidentiality.

7.1.1 Confidentiality Obligations. Enanta and Abbott each recognizes that the
other Party’s Confidential Information constitutes highly valuable assets of
such other Party. Enanta and Abbott each agrees that, subject to Section 7.1.2,
during the Term and for an additional five (5) years thereafter, it will not
disclose or use, and will cause its Affiliates and sublicensees not to disclose
or use, any Confidential Information of the other Party, except as expressly
permitted hereunder. In fulfilling its obligations of confidentiality under this
Article 7, each Party shall take such action, and shall cause its Affiliates and
sublicensees to take such action, to preserve the confidentiality of the other
Party’s Confidential Information as such Party would customarily take to
preserve the confidentiality of its own Confidential Information.

7.1.2 Limited Disclosure. Enanta and Abbott each agrees (a) that disclosure of
its Confidential Information or any transfer of its Proprietary Materials may be
made by the other Party to any employee, consultant, director or Affiliate of
such other Party to enable such other Party to exercise its rights or to carry
out its responsibilities under this Agreement; provided that any such disclosure
or transfer shall only be made to Persons who are bound by written obligations
as described in Section 7.1.3, and (b) disclosure of its Confidential
Information may be made by the other Party (1) on a need-to-know basis to such
other Party’s legal and financial advisors, or (ii) as reasonably necessary in
connection with an actual or potential (A) permitted sublicense of such other
Party’s rights hereunder, (B) debt or equity financing of such other Party or
(C) Change of Control involving such other Party, provided, in any case, the
Person receiving such Confidential Information of the other Party agrees in
writing to maintain the confidentiality of such Confidential Information of the
other Party with terms at least as restrictive as those contained in
Section 7.1.1. In addition, each Party agrees that the other Party may disclose
such Party’s Confidential Information (a) as reasonably necessary to file,
prosecute or maintain Patent Rights, or to file, prosecute or defend litigation
related to Patent Rights, in accordance with this Agreement or (b) as required
by Applicable Laws; provided that, in the case of any disclosure under this
clause (b), the Disclosing Party shall (i) provide the other Party with written
notice not less than five (5) business days prior to such disclosure and provide
the other Party with an opportunity to comment on any such required disclosure,
(ii) if requested by such other Party, seek, or cooperate in all reasonable
respects with such other Party’s efforts to obtain, confidential treatment or a
protective order with respect to any such disclosure to the extent available at
such other Party’s expense, and (iii) use good faith efforts to incorporate the
comments of such other Party in any such disclosure or request for confidential
treatment or protective order.

7.1.3 Employees and Consultants. Enanta and Abbott each represents that all of
its employees and consultants, and all of the employees and consultants of its
Affiliates or sublicensees, who participate in the activities of the
Collaboration or have access to Confidential Information of the other Party are
or will, prior to their participation or access, be bound by written obligations
to maintain such Confidential Information in confidence and not to use such

 

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information except as expressly permitted hereunder. Each Party agrees to use,
and to cause its Affiliates and sublicensees to use, reasonable efforts to
enforce such obligations.

7.2 Publicity. The Parties acknowledge that the terms of this Agreement
constitute Confidential Information of each Party and may not be disclosed
except as permitted by Section 7.1.2. Notwithstanding anything to the contrary
in Section 7.1, the Parties, after approval of this Agreement by the Abbott
Board, Abbott’s Chief Executive Officer and the Enanta Board and agreement by
both Parties, shall file the press release attached hereto as Exhibit C (the
“Initial Press Release”) and, once the Initial Press Release is disclosed by
either Party, then either Party may make subsequent public disclosure of the
specific contents of such press release without further approval of the other
Party. Thereafter, except as may be required by Applicable Laws, neither Party
shall publish, present or otherwise disclose publicly any material related to
the Research Program, the Development of a Candidate or the Commercialization of
a Product without the prior written consent of the other Party; provided, that
notwithstanding the foregoing, (a) either Party shall be permitted to publish
such material in scientific journals or present such material at scientific
conferences in accordance with Section 7.3, (b) Abbott shall control
interactions with the FDA DDMAC regarding publicity of marketed products, as
provided in Section 4.2.2, and (c) Abbott and Enanta agree that it shall not
unreasonably withhold, condition or delay its consent to any request by the
other Party to publish, present or otherwise announce publicly developments in
the Research Program, the Development of Candidates or the Commercialization of
Products.

7.3 Publications and Presentations. The Parties acknowledge that scientific
publications must be strictly monitored to prevent any adverse effect from
premature publication or dissemination of results of the activities hereunder.
Except as required by Applicable Laws, each Party agrees that it shall not
publish or present, or permit to be published or presented, the results of the
Research Program, the Development of a Candidate or the Commercialization of a
Product, including, but not limited to, studies or clinical trials carried out
by such Party as part of the Collaboration, without the prior review by and the
approval of the JSC in accordance with Section 2.1. Each Party shall provide to
the JSC the opportunity to review any of the submitting Party’s proposed
abstracts, manuscripts or presentations (including information to be presented
verbally) which relate to the Research Program, the Development of a Candidate
or the Commercialization of a Product at least [*****] days prior to its
intended presentation or submission for publication, and such submitting Party
agrees, upon written request from the TSC within such [*****] day period, not to
submit such abstract or manuscript for publication or to make such presentation
until the other Party is given up to [*****] days from the date of such written
request to seek appropriate patent protection for any material in such
publication or presentation which the JSC reasonably believes is patentable.
Once such abstracts, manuscripts or presentations have been reviewed by the JSC,
the same abstracts, manuscripts or presentations do not have to be provided
again to the JSC for review for a later submission for publication. Each Party
also shall have the right to require that its Confidential Information that is
disclosed in any such proposed publication or presentation be deleted prior to
such publication or presentation. In any permitted publication or presentation
by a Party, the other Party’s

 

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contribution shall be duly recognized, and co-authorship shall be determined in
accordance with customary industry standards.

7.4 Prohibition on Solicitation. Without the written consent of the other Party,
neither Party nor its Affiliates shall, for a period of [*****] years from the
Approval Date, solicit (directly or indirectly) any employee of the other Party
or its Affiliates who participated in the Research Program at any time. This
provision shall not restrict either Party or its Affiliates from advertising
employment opportunities in any manner that does not directly target the other
Party or its Affiliates.

 

8. LICENSE GRANTS; EXCLUSIVITY

8.1 Research Licenses.

8.1.1 Enanta Grant. Enanta hereby grants to Abbott and its Affiliates during the
Research Term a non-exclusive, royalty-free, worldwide license, with the limited
right to grant sublicenses as provided in Section 8.3.1(a), under Enanta
Technology, Enanta Patent Rights, Licensed Patent Rights and Enanta’s interest
in Joint Technology and Joint Patent Rights for the sole purpose of conducting
Abbott Research Activities under the Research Program in accordance with the
Research Plan.

8.1.2 Abbott Grant. Abbott hereby grants to Enanta and its Affiliates during the
Research Term, a non-exclusive, royalty-free, worldwide license, with the
limited right to grant sublicenses as provided in Section 8.3.1(b), under Abbott
Technology, Abbott Patent Rights and Abbott’s interest in Joint Technology and
Joint Patent Rights for the sole purpose of conducting Enanta Research
Activities under the Research Program in accordance with the Research Plan.

8.2 Development and Commercialization Licenses.

8.2.1 Enanta Grant. Enanta hereby grants to Abbott during the Term an exclusive,
royalty-bearing license, including the right to grant sublicenses as provided in
Section 8.3, under Enanta Technology, Enanta Patent Rights, Licensed Patent
Rights and Enanta’s interest in Joint Technology and Joint Patent Rights, for
the sole purpose of Developing Candidates and Commercializing Products in the
Field in the Territory; provided, that, Enanta shall retain such rights as may
be necessary to Develop and Commercialize Co-Developed Products in the Field and
in the Co-Development Territory.

8.2.2 Abbott Grants.

(a) Commercialization License. Abbott hereby grants to Enanta during the Term a
co-exclusive (together with Abbott), royalty-free, fully paid license, without
the right to grant sublicenses, under Abbott Technology, Abbott Patent Rights
and Abbott’s interest in Joint Technology and Joint Patent Rights for the sole
purpose of Developing and Commercializing Co-Developed Products in the Field in
the Co-Development Territory.

 

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(b) Abbott Improvements. Subject to Section 8.5, Abbott hereby grants to Enanta
a co-exclusive (together with Abbott), fully paid, royalty-free license,
including the right to grant sublicenses, under Abbott’s interest in Abbott
Improvements to develop, make, have made, use, sell, have sold, offer for sale,
import, have imported, export and have exported, and otherwise exploit for all
uses in the Field, any product that is not a Compound, Candidate or Product.

8.3 Right to Sublicense.

8.3.1 Research Licenses.

(a) Abbott Right to Sublicense. Abbott shall have the right to grant sublicenses
under the license granted to it under Section 8.1.1 solely to Third Party
subcontractors engaged by Abbott to perform designated support functions related
to the conduct of Abbott Research Activities under the Research Program and the
Development of Candidates under the Development Program; provided however, that
(i) Abbott shall obtain the prior approval of the JSC to each sublicense grant;
(ii) Abbott shall remain responsible for the satisfactory accomplishment of such
work in accordance with the teuus and conditions of this Agreement; and
(iii) each such subcontractor shall enter into a written agreement binding such
subcontractor to the obligations Abbott has to Enanta under this Agreement (and
containing such other provisions as are normal and customary for similar types
of agreements).

(b) Enanta Rights to Sublicense. Enanta shall have the right to grant
sublicenses under the license granted to it under Section 8.1.2 solely to Third
Party subcontractors engaged by Enanta to perform designated support functions
related to the conduct of Enanta Research Activities under the Research Program;
provided however, that (i) Enanta shall obtain the prior approval of the JSC to
each sublicense grant; (ii) Enanta shall remain responsible for the satisfactory
accomplishment of such work in accordance with the terms and conditions of this
Agreement; and (iii) each such subcontractor shall enter into a written
agreement binding such subcontractor to the obligations Enanta has to Abbott
under this Agreement (and containing such other provisions as are normal and
customary for similar types of agreements).

8.3.2 Commercialization License. Abbott shall have the right to grant
sublicenses under the license granted to it under Section 8.2.1 to any Affiliate
of Abbott and to any Third Party with respect to any Product, other than any
Co-Developed Product in the Co-Development Territory after which time Enanta has
exercised its Co-Development and Profit Share Option with respect to such
Co-Developed Product; provided, that: (a) it shall be a condition of any such
sublicense that such Sublicensee agrees to be bound by all terms of this
Agreement applicable to the Development of Candidates and the Commercialization
of Products in the Field in the Territory (including, without limitation,
Article 7); (b) Abbott shall provide written notice to Enanta of any such
proposed sublicense at least thirty (30) days prior to such execution; and
(c) Abbott shall not be relieved of any of its obligations pursuant to this
Agreement as a result of such sublicense.

 

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8.4 No Other Rights. Abbott shall have no rights to use or otherwise exploit
Enanta Technology, Enanta Patent Rights or Enanta Materials, and Enanta shall
have no rights to use or otherwise exploit Abbott Technology, Abbott Patent
Rights or Abbott Materials, in each case, except as expressly set forth herein.

8.5 Exclusivity.

8.5.1 Enanta.

(a) Exclusivity. During the Research Term, and thereafter during the remainder
of the Term for so long as a Candidate or Product is being actively Developed or
Commercialized, respectively, for use in the Field, Enanta shall not, and shall
cause each of its Affiliates to not: (a) conduct any activity, either on its
own, or with, for the benefit of, or sponsored by any Third Party, that is
designed to research, Develop or Commercialize any Compound or any Candidate or
Product derived therefrom for use in the Field; (b) grant any license or other
rights to any Third Party to utilize any Technology or Patent Rights Controlled
by Enanta or any of its Affiliates for the express purpose of researching,
Developing or Commercializing any Compound or Candidate or Product derived
therefrom for use in the Field; or (c) in-license from any Third Party any
Technology or Patent Rights Controlled by such Third Party, for the express
purpose of researching, Developing or Commercializing any Compound or any
Candidate or Product derived therefrom for use in the Field, except in any case
as is necessary to advance the Research Program, the Development Program or the
Commercialization of Products as set forth herein. Without limiting the
generality of the foregoing, there shall be no restriction on Enanta hereunder
with regard to (y) the use of Abandoned Compounds outside the Field during the
Term or (b) the use of Abandoned Compounds, whether within or outside of the
Field, after the expiration of the Term.

(b) Exclusivity Exception. Notwithstanding anything to the contrary in this
Agreement, Section 8.5.1(a) shall not be deemed to restrict or prevent Enanta
from conducting any activity under that certain License and Option Agreement
dated as of May 4, 2005 by and between Enanta and Chiron Corporation.

8.5.2 Abbott.

(a) Exclusivity. During the Research Term, and thereafter during the remainder
of the Term for so long as a Candidate or Product is being actively Developed or
Commercialized, respectively, for use in the Field, Abbott shall not, and shall
cause each of its Affiliates to not: (a) conduct any activity, either on its
own, or with, for the benefit of, or sponsored by any Third Party, that is
designed to research, Develop or Commercialize any Compound or any Candidate or
Product derived therefrom for use in the Field; (b) grant any license or other
rights to any Third Party to utilize any Technology or Patent Rights Controlled
by Abbott or any of their respective Affiliates for the express purpose of
researching, Developing or Commercializing any Compound or any Candidate or
Product derived therefrom for use in the Field; or (c) in-license from any Third
Party any Technology or Patent Rights Controlled by such

 

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Third Party, for the express purpose of researching, Developing or
Commercializing any Compound or any Candidate or Product derived therefrom for
use in the Field, except in any case as is necessary to advance the Research
Program, the Development Program or the Commercialization of Products as set
forth herein and as described in Section 8.5.2(b).

(b) Exclusivity Exception. Notwithstanding anything to the contrary in this
Agreement, Section 8.5.2(a) shall not be deemed to restrict or prevent Abbott
from entering into non-exclusive license agreements with Third Parties with
respect to the use of [*****], Abbott shall (i) provide Enanta with written
notice of such license grant and (ii) pay Enanta a royalty equal to [*****] of
all royalty payments received by Abbott under such license agreement for a
co-formulation of an Additional Compound in each country in the Territory in
which a Product is then being Commercialized, commencing with the Calendar Year
(or partial Calendar Year) in which the First Commercial Sale of such Additional
Compound occurs and ending upon the date on which the Product or the Additional
Product is no longer being Commercialized in such country.

 

9. INTELLECTUAL PROPERTY RIGHTS

9.1 Disclosure of Program Inventions. Each of Enanta and Abbott shall promptly
provide the other Party, through the Patent Coordinators (as defined in
Section 9.5), with written notice concerning all Program Inventions that are
conceived or reduced to practice by employees or consultants of such Party or
its Affiliates, alone or jointly with employees or consultants of the other
Party or its Affiliates or any Third Party.

9.2 Enanta Intellectual Property Rights. Enanta shall have sole and exclusive
ownership of all right, title and interest on a worldwide basis in and to any
and all Enanta Technology and Enanta Patent Rights.

9.3 Abbott Intellectual Property Rights. Abbott shall have sole and exclusive
ownership of all right, title and interest on a worldwide basis in and to any
and all Abbott Technology and Abbott Patent Rights,

9.4 Joint Technology Rights. Abbott and Enanta shall jointly own all Joint
Technology and Joint Patent Rights, subject to the rights of, and the licenses
granted to, each Party hereunder.

9.5 Patent Coordinators. Enanta and Abbott shall each appoint a patent
coordinator reasonably acceptable to the other Party (each, a “Patent
Coordinator”), who shall serve as such Party’s primary liaison with the other
Party on matters relating to patent filing, prosecution, maintenance and
enforcement. Each Party may replace its Patent Coordinator at any time by notice
in writing to the other Party.

9.6 Inventorship. In case of a dispute between Enanta and Abbott over
inventorship, such dispute shall be resolved by application of United States
patent law by patent counsel

 

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selected by the JSC who (and whose firm) is not at the time of the dispute, and
was not at any time during the five (5) years prior to such dispute, performing
services for either of the Parties. The Parties shall share equally the expenses
of such patent counsel.

 

10. FILING, PROSECUTION AND MAINTENANCE OF PATENT RIGHTS

10.1 Patent Filing, Prosecution and Maintenance. Subject to the foregoing, the
responsibility for filing, prosecuting and maintaining Patent Rights shall be as
follows:

10.1.1 Licensed Patent Rights. Subject to Section 10.1.3, Enanta, acting through
patent counsel or agents of its choice, shall be solely responsible, at its sole
cost and expense, for the preparation, filing, prosecution and maintenance of
the Licensed Patent Rights. In accordance with Section 10.1.5, Enanta will
collaborate with Abbott on the preparation, filing and prosecution of the
Licensed Patent Rights worldwide by providing Abbott with copies of any
substantive office actions and setting up meetings with respective Patent
Coordinators to discuss strategies and responses.

10.1.2 Enanta Patent Rights. Enanta, acting through patent counsel of its
choice, shall be responsible, at its sole cost and expense, for the preparation,
filing, prosecution and maintenance of all Enanta Patent Rights.

10.1.3 Abbott Patent Rights. Abbott, acting through patent counsel of its
choice, shall be responsible, at its sole cost and expense, for the preparation,
filing, prosecution and maintenance (a) of all Abbott Patent Rights and
(b) commencing on the date of receipt of Commercialization Regulatory Approval
with respect to a Product and continuing for the remainder of the applicable
Royalty Term, of any Licensed Patent Rights that contain one or more claims that
cover such Product.

10.1.4 Joint Patent Rights. The JSC shall determine the jurisdictions within the
Territory in which patent applications will be filed with respect to Joint
Patent Rights and the Party that shall be responsible for the preparation,
filing, prosecution and maintenance of Joint Patent Rights. The Parties will
share equally all expenses incurred by the filing Party for the preparation,
filing, prosecution and maintenance of such Joint Patent Rights.

10.1.5 Information and Cooperation. Each filing Party shall (a) regularly
provide the other Party with copies of all patent applications filed hereunder
and other material submissions and correspondence with the patent offices, in
sufficient time to allow for review and comment by the other Party and
(b) provide the other Party and its patent counsel with an opportunity to
consult with the filing Party and its patent counsel regarding the filing and
contents of any such application, amendment, submission or response. The filing
Party hereby agrees that the advice and suggestions of the other Party and its
patent counsel shall be taken into reasonable consideration by the filing Party
and its patent counsel in connection with each filing. Each Party shall, upon
request from the filing Party and at the filing Party’s sole cost, reasonably
cooperate with the filing Party in connection with such patent filing
activities.

 

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10.1.6 Abandonment. If either Party decides to expressly abandon or to allow to
purposely lapse any of the Patent Rights covering any Program Inventions in any
country or region in the Territory that specifically cover any Compound,
Candidate or Product or specifically cover the manufacture or formulation or the
delivery or use of a Compound, Candidate or Product in the Field, such Party
shall inform the other Party of such decision promptly and, in any event, so as
to provide the other Party a reasonable amount of time to meet any applicable
deadline to establish or preserve such Patent Rights in such country or region.
The other Party shall have the right to assume responsibility for continuing the
prosecution of such Patent Rights in such country or region and paying any
required fees to maintain such Patent Rights in such country or region or
defending such Patent Rights, in the latter case only at the other Party’s sole
expense, through patent counsel or agents of its choice. The Party taking over
the responsibility will not become an assignee of any such Patent Rights as a
result of such Party’s assumption of any such responsibility. Upon transfer of a
Party’s responsibility for prosecuting, maintaining and defending any of the
Patent Rights to the other Party under this Section 10.1.6, the transferring
Party shall promptly deliver to the other Party copies of all necessary files
related to the Patent Rights with respect to which responsibility has been
transferred and shall take all actions and execute all documents reasonably
necessary for the other Party to assume such prosecution, maintenance and
defense.

10.2 Legal Actions.

10.2.1 Third Party Infringement.

(a) In General.

(i) Notice. In the event either Party becomes aware of (A) any possible
infringement of any Licensed Patent Rights, Enanta Program Patent Rights or
Abbott Program Patent Rights through the Development of a Candidate or the
Commercialization of a Product, or (B) the submission by any Third Party of an
abbreviated new drug application under the Hatch-Waxman Act for a product that
includes a Compound, Candidate or a Product (each, an “Infringement”), that
Party shall promptly notify the other Party and provide it with all details of
such Infringement of which it is aware (each, an “Infringement Notice”).

(ii) Licensed Patent Rights. Both Abbott and Enanta shall have the unilateral
right to enforce any and all Licensed Patent Rights on any Product following the
First Commercial Sale of such Product. All costs, including, without limitation,
attorneys’ fees, relating to such legal proceedings or other action shall be
borne by the party enforcing such rights. In the event such an Infringement
relates to any Licensed Patent Rights on any Compound, Candidate or Product
prior to the First Commercial Sale of such Product, Enanta shall have the first
right (not the obligation) to enforce such claim with respect to such
Infringement. All costs, including, without limitation, attorneys’ fees,
relating to such legal proceedings or other action shall be borne by Enanta. If
Enanta does not take or initiate commercially reasonable steps to initiate legal
proceedings or take other actions regarding the Infringement within (A) twenty
(20) days from any Infringement Notice in the case of an

 

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Infringement resulting from the submission by any Third Party of an abbreviated
new drug application under the Hatch-Waxman Act, and (B) one hundred twenty
(120) days from any Infringement Notice that relates to any other Licensed
Patent Rights, then Abbott shall have the right and option to do so at its
expense; provided, that Abbott shall not admit the invalidity or
unenforceability of any such Licensed Patent Rights without Enanta’s prior
written consent.

(iii) Enanta Patent Rights. In the event such an Infringement relates to any
Enanta Patent Rights, Enanta shall have the first right and option to initiate
legal proceedings or take other actions regarding such Infringement by
reasonable steps. All costs, including, without limitation, attorneys’ fees,
relating to such legal proceedings or other action shall be borne by Enanta. If
Enanta does not take or initiate commercially reasonable steps to initiate legal
proceedings or take other actions regarding the Infringement (A) within ten
(10) days from any Infringement Notice if the Infringement relates to a Product
being Commercialized by Abbott; (B) (twenty (20) days in the case of an
Infringement resulting from the submission by any Third Party of an abbreviated
new drug application under the Hatch-Waxman Act); and (C) one hundred twenty
(120) days for any other Infringement, then in each such case, Abbott shall have
the right and option to do so at its expense.

(iv) Abbott Patent Rights. In the event such an Infringement relates to any
Abbott Patent Rights, Abbott shall have the first right and option to initiate
legal proceedings or take other actions regarding such Infringement by
reasonable steps. All costs, including, without limitation, attorneys’ fees,
relating to such legal proceedings or other action shall be borne by Abbott. If
Abbott does not take or initiate commercially reasonable steps to initiate legal
proceedings or take other actions regarding the Infringement within thirty
(30) days from any Infringement Notice (or twenty (20) days in the case of an
Infringement resulting from the submission by any Third Party of an abbreviated
new drug application under the Hatch-Waxman Act), then Enanta shall have the
right and option to do so at its expense.

(v) No Settlement. Neither Party shall settle any Infringement claim or
proceeding under Sections 10.2.1(a)(iii) or (iv) or 10.2.1(b) without the prior
written consent of the other Party, which consent shall not be unreasonably
withheld, conditioned or delayed.

(vi) Representation. Each Party shall have the right to be represented by
counsel that it selects in any legal proceedings or other action instituted
under Sections 10.2.1(a)(iii) or (iv) or 10.2.1(b) by the other Party. If a
Party with the right to initiate legal proceedings under Section 10.2.1
regarding an Infringement lacks standing to do so and the other Party has
standing to initiate such legal proceedings, then the Party with standing shall
initiate such legal proceedings at the request and expense of the other Party.

(b) Joint Patent Rights. In the event of an Infringement of a Joint Patent
Right, the Parties shall enter into discussions as to whether to initiate legal
proceedings or take other actions regarding the Infringement. Unless otherwise
agreed by the Parties: (i) each Party shall bear an equal share of the cost of
any action, suit or proceeding instituted under this

 

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Section 10.2.1(b); and (ii) all amounts recovered shall be allocated pursuant to
Section 10.2.1(e). If the Parties are unable to determine whether and how to
institute an action, suit or proceeding for infringement of any such Joint
Patent Right, either Party shall have the right to prosecute such Infringement,
in which event that Party shall bear all of the expense and be entitled to
retain all amounts that it recovers.

(c) Right to Representation. Each Party shall have the right to participate, and
be represented by counsel that it selects, in any legal proceedings or other
action instituted under this Section 10.2.1 by the other Party. If a Party with
the right to initiate legal proceedings under Section 10.2.1 regarding an
Infringement lacks standing to do so and the other Party has standing to
initiate such legal proceedings, then the Party with standing shall initiate
such legal proceedings at the request and expense of the other Party.

(d) Cooperation. In any action, suit or proceeding instituted under this
Section 10.2.1, the Parties shall cooperate with and assist each other in all
reasonable respects. Upon the reasonable request of the Party instituting such
action, suit or proceeding, the other Party shall join therein and shall be
represented using counsel of its own choice, at the requesting Party’s expense.

(e) Allocation of Recoveries. Any amounts recovered by either Party pursuant to
actions under Sections 10.2.1(a)(iii) or (iv) or 10.2.1(b) with respect to any
Infringement through the development or sale of a Compound or Product, whether
by settlement or judgment, shall be allocated in the following order: (i) first,
to reimburse Enanta and Abbott for their reasonable out-of-pocket expenses in
making such recovery (which amounts shall be allocated pro rata if insufficient
to cover the totality of such expenses); and (ii) then, to Enanta and Abbott in
the same proportion as Abbott’s historic profits on Net Sales of the Product or
Products affected by the Infringement bears to Abbott’s historic royalties
hereunder in respect of such Net Sales, in each case as determined in good
faith.

10.2.2 Defense of Claims. In the event that any action, suit or proceeding is
brought against either Party or any Affiliate or sublicensee of either Party
alleging the infringement of the Technology or Patent Rights of a Third Party by
reason of the conduct of the Research Program, the Development Program or the
Commercialization of any Product: (a) Abbott shall have the obligation to defend
such action, suit or proceeding at its sole expense; (b) Enanta shall have the
right to separate counsel at its own expense in any such action, suit or
proceeding; and (c) the Parties shall cooperate with each other in all
reasonable respects in any such action, suit or proceeding. If such action, suit
or proceeding relates to a Co-Developed Product in the Co-Development Territory,
the cost and expense of the above shall be used to calculate Development Costs
for that Co-Developed Product. Each Party shall provide the other Party with
prompt written notice of the commencement of any such suit, action or
proceeding, or of any allegation of infringement of which such Party becomes
aware, and shall promptly furnish the other Party with a copy of each
communication relating to the alleged infringement that is received by such
Party. Nothing in this Section 10.2.2 shall affect the right of Enanta to defend
itself in any such action, suit or proceeding. Abbott shall not compromise,
settle or otherwise

 

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dispose of any such suit, action or proceeding that involves the use of Enanta
Patent Rights, without Enanta’s prior written consent, which consent shall not
be unreasonably withheld, conditioned or delayed.

10.3 Trademark Prosecution. Abbott, at is sole expense, shall be responsible for
the filing, prosecution, defense and maintenance before all trademark offices of
the Product Trademarks.

 

11. TERM AND TERMINATION

11.1 Term. This Agreement shall commence on the Effective Date and shall
continue in full force and effect until the end of the Research Program Term
and, if Abbott is Developing a Candidate or Commercializing a Product arising
out of the Research Program, thereafter until (a) such time as Abbott is no
longer Developing a Candidate for use in the Field and in the Territory or
(b) if, as of the time Abbott is no longer Developing any Candidates, Abbott is
Commercializing a Product, until such time as all Royalty Terms for all Products
and all Co-Development Terms for all Co-Developed Products have ended, unless
earlier terminated in accordance with the provisions of this Article 11 (the
“Term”).

11.2 Termination. This Agreement may be terminated at any time by either Party,
or by the Party specified, as follows:

11.2.1 Unilateral Right to Terminate. Abbott may terminate this Agreement at any
time by giving written notice to Enanta not less than [*****] months prior to
any anniversary of the Approval Date.

11.2.2 Termination for Breach. Either Party may terminate this Agreement by
providing written notice to the other Party, and such termination will be
effective [*****] days after the written notice, if the other Party commits a
material breach of this Agreement unless the other Party has cured the asserted
material breach during such [*****]-day period. If the breach has been cured
prior to expiration of the [*****]-day cure period, the notice of termination
will be void. In lieu of seeking termination of this Agreement, the Party
asserting the material breach may seek compensatory damages and/or equitable
relief as a remedy of an uncured material breach by the other Party.
Notwithstanding the foregoing, a material breach by a Party shall not give rise
to the termination right under this Section 11.2.2 to the extent such material
breach arises from a Force Majeure event described in Section 14.12; provided,
that the Party allegedly breaching the Agreement shall have the burden of
demonstrating the occurrence of the Force Majeure event.

11.2.3 Termination for Insolvency. In the event either Party files for
protection under the bankruptcy laws, makes an assignment for the benefit of
creditors, appoints or suffers appointment of a receiver or trustee over its
property, files a petition under any bankruptcy or insolvency act or has any
such petition filed against it which is not discharged within sixty (60) days of
the filing thereof, then the other Party may terminate this Agreement effective

 

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immediately upon written notice to such Party. In connection therewith, all
rights and licenses granted under this Agreement are, and shall be deemed to be,
for purposes of Section 365(n) of the United States Bankruptcy Code, licenses of
rights to “intellectual property” as defined under Section 101(56) of the United
States Bankruptcy Code.

11.3 Consequences of Termination of Agreement. In the event this Agreement is
terminated pursuant to Section 11.2, the following provisions shall apply, as
applicable:

11.3.1 Termination by Abbott Pursuant to Section 11.2.1. If this Agreement is
terminated by Abbott pursuant to Section 11.2.1, the following provisions shall
apply:

(a) If Abbott terminates the Agreement prior to the first anniversary of the
first business day following the Approval Date, it shall make a [*****] time
payment to Enanta of [*****] to complete the Upfront Fee as provided in
Section 6.1;

(b) the licenses granted to Abbott pursuant to Sections 8.1.1 and 8.2.1 shall
terminate upon the effective date of such termination;

(c) Abbott shall be deemed to have granted to Enanta, on and after the date of
termination, (i) a non-exclusive, perpetual, fully-paid, worldwide, royalty-free
license, with the rights to sublicense, under Abbott Program Technology and
Abbott Patent Rights and (ii) an exclusive (even as to Abbott), perpetual,
fully-paid, worldwide, royalty-free license, with the rights to sublicense,
under Abbott’s interest in Joint Technology and Joint Patent Rights, in either
case, to Develop and have Developed Candidates resulting from Compounds and
Abbott Compounds, other than Abbott Compounds listed on Schedule 1, and
Commercialize Products derived from such Candidates;

(d) all exclusivity obligations of Enanta under Section 8.5.1 shall terminate
upon the effective date of such termination and Enanta shall thereafter have the
right to Develop Candidates and Commercialize Products for any and all uses
within the Field;

(e) each Party shall promptly return all Confidential Information of the other
Party that is not subject to a continuing license hereunder; provided that each
Party may retain one (1) copy of the Confidential Information of the other Party
in its archives solely for the purpose of establishing the contents thereof and
ensuring compliance with its obligations hereunder;

(f) upon request of Enanta, Abbott shall promptly, and in any event within sixty
(60) days after Enanta’s request: (i) transfer to Enanta all right, title and
interest in and to all Product Trademarks and registrations thereof, if any;
(ii) transfer to Enanta all of its right, title and interest in all Regulatory
Filings, Drug Approval Applications and Regulatory Approvals then in its name
applicable to any Candidate or Product, and all material aspects of Confidential
Information Controlled by it as of the date of termination relating to
Regulatory Filings, Drug Approval Applications and Regulatory Approvals;
provided that Enanta shall as of

 

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the date of such transfer, assume all obligations and liabilities associated
with such Regulatory Filings, Drug Approval Applications and Regulatory
Approvals; (iii) notify the applicable Regulatory Authorities and take any other
action reasonably necessary to effect such transfer; (iv) provide Enanta with
copies of all correspondence between Abbott and such Regulatory Authorities
relating to such Regulatory Filings, Drug Approval Applications and Regulatory
Approvals; (v) unless expressly prohibited by any Regulatory Authority, transfer
control to Enanta of all clinical trials of any Candidate or Product being
conducted as of the effective date of termination, and upon such transfer Enanta
shall assume all obligations and liabilities associated with continuing such
clinical trials; (vi) assign (or cause its Affiliates to assign) to Enanta all
agreements with any Third Party with respect to the conduct of clinical trials
for any Candidate or Product including, without limitation, agreements with
contract research organizations, clinical sites and investigators, unless
expressly prohibited by any such agreement (in which case Abbott shall cooperate
with Enanta in all reasonable respects to secure the consent of such Third Party
to such assignment); (vii) provide Enanta with all supplies of any Candidate or
Product in the possession of Abbott or any Affiliate or contractor of Abbott;
and (viii) provide Enanta with copies of all reports and data generated or
obtained by Abbott or its Affiliates pursuant to this Agreement that relate to
any Candidate or Product that has not previously been provided to Enanta; and

(g) if Abbott has manufactured, is manufacturing or having manufactured any
Candidate or Product or any intermediate thereof as of the effective date of
termination: (i) Abbott shall, if requested by Enanta, supply Enanta with its
requirements for all such Candidate or Product and intermediate for up to
[*****] months following such termination [*****]; and (ii) within sixty
(60) days after Enanta’s request, Abbott shall provide to Enanta or its designee
all information in its possession with respect to the manufacture of each such
Candidate, Product or intermediate.

11.3.2 Termination by Enanta Pursuant to Section 11.2.2. If this Agreement is
terminated by Enanta pursuant to Section 11.2.2, the following provisions shall
apply:

(a) the licenses granted to Abbott pursuant to Sections 8.1.1 and 8.2.1 shall
terminate upon the effective date of such termination;

(b) Abbott shall be deemed to have granted to Enanta, on and after the date of
termination, (i) a non-exclusive, perpetual, fully-paid, worldwide, royalty-free
license, with the rights to sublicense, under Abbott Program Technology and
Abbott Patent Rights with respect to Abbott Program Technology and (ii) an
exclusive (even as to Abbott), perpetual, fully-paid, worldwide, royalty-free
license, with the rights to sublicense, under Abbott’s interest in Joint
Technology and Joint Patent Rights, in either case, to Develop and have
Developed Candidates resulting from Compounds and Abbott Compounds, other than
Abbott Compounds listed on Schedule 1, and Commercialize Products derived from
such Candidates;

 

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(c) all exclusivity obligations of Enanta under Section 8.5.1 shall terminate
upon the effective date of such termination and Enanta shall thereafter have the
right to Develop Candidates and Commercialize Products for any and all uses
within the Field;

(d) each Party shall promptly return all Confidential Information of the other
Party that are not subject to a continuing license hereunder; provided that each
Party may retain one (1) copy of the Confidential Information of the other Party
in its archives solely for the purpose of establishing the contents thereof and
ensuring compliance with its obligations hereunder;

(e) upon request of Enanta, Abbott shall promptly, and in any event within sixty
(60) days after Enanta’s request: (i) transfer to Enanta all right, title and
interest in and to all Product Trademarks and registrations thereof, if any;
(ii) transfer to Enanta all of its right, title and interest in all Regulatory
Filings, Drug Approval Applications and Regulatory Approvals then in its name
applicable to any Candidate or Product, and all material aspects of Confidential
Information Controlled by it as of the date of termination relating to
Regulatory Filings, Drug Approval Applications and Regulatory Approvals;
provided that Enanta shall as of the date of such transfer, assume all
obligations and liabilities associated with such Regulatory Filings, Drug
Approval Applications and Regulatory Approvals; (iii) notify the applicable
Regulatory Authorities and take any other action reasonably necessary to effect
such transfer; (iv) provide Enanta with copies all correspondence between Abbott
and such Regulatory Authorities relating to such Regulatory Filings, Drug
Approval Applications and Regulatory Approvals; (v) unless expressly prohibited
by any Regulatory Authority, transfer control to Enanta of all clinical trials
of any Candidate or Product being conducted as of the effective date of
termination, and upon such transfer Enanta shall assume all obligations and
liabilities associated with continuing such clinical trials; (vi) assign (or
cause its Affiliates to assign) to Enanta all agreements with any Third Party
with respect to the conduct of clinical trials for any Candidate or Product
including, without limitation, agreements with contract research organizations,
clinical sites and investigators, unless expressly prohibited by any such
agreement (in which case Abbott shall cooperate with Enanta in all reasonable
respects to secure the consent of such Third Party to such assignment);
(vii) provide Enanta with all supplies of any Candidate or Product in the
possession of Abbott or any Affiliate or contractor of Abbott; and
(viii) provide Enanta with copies of all reports and data generated or obtained
by Abbott or its Affiliates pursuant to this Agreement that relate to any
Compound or Product that has not previously been provided to Enanta; and

(f) if Abbott has manufactured, is manufacturing or having manufactured any
Candidate or Product or any intermediate thereof as of the effective date of
termination: (i) Abbott shall, if requested by Enanta, supply Enanta with its
requirements for all such Candidate or Product and intermediate for up to
[*****] months following such termination [*****], and (ii) within sixty
(60) days after Enanta’s request, Abbott shall provide to Enanta or its designee
all information in its possession with respect to the manufacture of each such
Candidate, Product or intermediate.

 

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11.3.3 Termination by Abbott Pursuant to Section 11.2.2. If this Agreement is
terminated by Abbott pursuant to Section 11.2.2, the following provisions shall
apply:

(a) Abbott shall continue to have the licenses set forth in Sections 8.1.1 and
8.2.1 to Develop Candidates being Developed by Abbott as of the effective date
of termination, if any, and to Commercialize Products being Commercialized by
Abbott as of the effective date of termination, if any, and to Commercialize
Products that were Candidates at the time of termination, subject to a
determination by the neutral in ADR of the level at which the milestone payments
and Royalty Payments continue, it being understood by the Parties that the
milestone payments and royalty rates set forth in this Agreement shall be
modified with respect to a given Candidate or Product only to the extent the ADR
determines that the material breach that resulted in the termination by Abbott
of this Agreement materially affected the Development of such Candidate and/or
the Commercialization of such Product.

(b) all rights (including, without limitation, the Co-Development and Profit
Share Option) and licenses granted to Enanta pursuant to Article 5 and Sections
8.1.2 and 8.2.2 shall terminate upon the effective date of such termination;

(c) Enanta shall be deemed to have granted to Abbott, on and after the date of
termination, (i) a non-exclusive, perpetual, fully-paid, worldwide, royalty-free
license, with the rights to sublicense, under Enanta Program Technology and
Enanta Patent Rights and (ii) an exclusive (even as to Enanta), perpetual,
fully-paid, worldwide, royalty-free license, with the rights to sublicense,
under Enanta’s interest in Joint Technology and Joint Patent Rights, in either
case, to Develop and have Developed Candidates and Commercialize Products
derived from such Candidates;

(d) all exclusivity obligations of Abbott under Section 8.5.2 shall terminate
upon the effective date of such termination and Abbott shall thereafter have the
right to Develop Candidates and Commercialize Products for any and all uses
within the Field; and

(e) each Party shall promptly return all Confidential Information of the other
Party that are not subject to a continuing license hereunder; provided that each
Party may retain one (1) copy of the Confidential Information of the other Party
in its archives solely for the purpose of establishing the contents thereof and
ensuring compliance with its obligations hereunder.

11.3.4 Termination by Enanta Pursuant to Section 11.2.3. If Enanta terminates
this Agreement pursuant to Section 11.2.3, to the extent not prohibited by
Applicable Laws, the provisions of Section 11.3.1 shall apply to such
termination.

11.3.5 Termination by Abbott Pursuant to Section 11.2.3. If Abbott terminates
this Agreement pursuant to Section 11.2.3, to the extent not prohibited by
Applicable Laws, the provisions of Section 11.3.3 shall apply to such
termination.

 

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11.3.6 Breach of Compound or Product Diligence. If after Enanta followed the
procedure set forth in Section 11.2.2 for asserting a breach of contract and
Abbott does not cure its breach for failure to use Commercially Reasonable
Efforts to Develop a Candidate or Commercialize a Product in any Major Market
Country, then Enanta shall have the right, in its sole discretion upon ten
(10) days written notice to Abbott, to designate such Candidate or Product as a
Abandoned Compound. In such event:

(a) the licenses granted to Abbott under Section 8.2 of this Agreement to
Commercialize such Product shall terminate upon the effective date of such
reversion;

(b) subject to the other terms of this Agreement, Abbott shall be deemed to have
granted to Enanta and its Affiliates (i) an exclusive, royalty-free, paid-up,
worldwide license, with the right to grant sublicenses, under Abbott Patent
Rights and Abbott’s interest in Joint Patent Rights that would be infringed by
the making, using in the Field, importing or selling of such Abandoned Compound
(or, for purposes of clarity, a Product derived therefrom) in the absence of a
license to research, develop, make, have made, use, offer for sale, distribute
for sale, sell, import and have imported Abandoned Compounds in the Field and
(ii) a non-exclusive, royalty-free, paid-up, worldwide license, with the right
to grant sublicenses, under Abbott Technology and Abbott’s interest in Joint
Technology to research, develop, have developed, make, have made, use,
distribute for sale, sell, offer for sale, import and have imported such
Abandoned Compound in the Field, subject in each case to the restrictions on
Enanta pursuant to Section 8.5.1;

(c) upon request of Enanta, Abbott shall promptly, and in any event within sixty
(60) days after Enanta’s request: (i) grant to Enanta an exclusive, worldwide,
royalty-free, paid-up license under all Product Trademarks applicable to such
Product, if any; (ii) provide Enanta with access to, and grant Enanta the right
and license to use and to reference, all Regulatory Filings and Regulatory
Approvals then in its name applicable to the Commercialization of such Product
and all material aspects of Confidential Information Controlled by it as of the
date such Compound or Product relating to such Regulatory Filings and Regulatory
Approvals is designated as a Abandoned Compound; (iii) provide Enanta with
copies of all correspondence between Abbott and such Regulatory Authorities
relating to such Regulatory Filings and Regulatory Approvals; (iv) assign to
Enanta all agreements between Abbott and any Third Party with respect to the
conduct of clinical trials for such Product, including, without limitation,
agreements or contracts with contract research organizations, clinical sites and
investigators, unless expressly prohibited by any such agreement; and
(v) provide Enanta with copies of all reports and data obtained by Abbott or its
Affiliates pursuant to this Agreement that relate to the Commercialization of
such Product; and

(d) if Abbott has manufactured, is manufacturing or is having manufactured such
Product or any intermediate of such Product as of the date such Candidate or
Product is designated as a Abandoned Compound, upon request of Enanta,
(i) Abbott shall supply Enanta with its requirements of such Product or
intermediate for up to twenty-four (24) months following such removal at a
transfer price equal to Abbott’s Cost of Goods for the supply

 

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of such Product or intermediate plus fifteen percent (15%), and (ii) Abbott
shall provide to Enanta or its designee all information in its possession with
respect to the manufacture of such Product.

11.4 Surviving Provisions. Termination or expiration of this Agreement for any
reason shall be without prejudice to:

(a) the rights and obligations of the Parties provided in Sections 5.3.2, 6.3.2,
6.4, 6.5, 6.6, 6.7, 11.3, 11.4 and Articles 7, 12, 13 and 14 (including all
other Sections or Articles referenced in any such Section or Article and
including Article 1), all of which shall survive such termination;

(b) any other rights or remedies provided at law or equity which either Party
may otherwise have.

 

12. REPRESENTATIONS AND WARRANTIES

12.1 Mutual Representations and Warranties. Enanta and Abbott each represents
and warrants to the other, as of the Effective Date, as follows:

12.1.1 Organization. It is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, and has
all requisite power and authority, corporate or otherwise, to execute, deliver
and perform this Agreement.

12.1.2 Authorization. Upon receipt of the approval by the Abbott Board and
Abbott’s Chief Executive Officer, the execution and delivery of this Agreement
and the performance by Abbott of the transactions contemplated hereby will have
been duly authorized by all necessary corporate action. Upon receipt of the
approval by the Enanta Board and Enanta’s Chief Executive Officer, the execution
and delivery of this Agreement and the performance by Enanta of the transactions
contemplated hereby will have been duly authorized by all necessary corporate
action.

12.1.3 No Violations. The transactions contemplated hereby and the performance
by it of the transactions contemplated hereby will not violate (a) such Party’s
certificate of incorporation or bylaws, (b) any agreement, instrument or
contractual obligation to which such Party is bound in any material respect,
(c) any requirement of any Applicable Law, or (d) any order, writ, judgment,
injunction, decree, determination or award of any court or governmental agency
presently in effect applicable to such Party.

12.1.4 Binding Agreement. This Agreement is a legal, valid and binding
obligation of such Party enforceable against it in accordance with its terms and
conditions.

12.1.5 No Inconsistent Obligation. It is not under any obligation, contractual
or otherwise, to any Person that conflicts with or is inconsistent in any
respect with the terms of this

 

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Agreement or that would impede the diligent and complete fulfillment of its
obligations hereunder.

12.2 Additional Representations of Enanta. Enanta further represents and
warrants to Abbott, as of the Effective Date, as follows:

12.2.1 Enanta Licensed Patent Rights. All Licensed Patent Rights are existing
and, to Enanta’s Knowledge, no Licensed Patent Rights are invalid or
unenforceable.

12.2.2 Claims or Judgments. There are no claims, judgments or settlements
against Enanta pending, or to Enanta’s Knowledge, threatened, that invalidate or
seek to invalidate the Licensed Patent Rights.

12.2.3 Right to Technology. Enanta has the right to (a) use the Licensed
Technology and Licensed Patent Rights existing as of the Effective Date as is
necessary to fulfill its obligations under this Agreement; and (b) grant the
licenses under the Licensed Patent Rights granted pursuant to this Agreement;
and (c) without limiting the foregoing, and with respect to both clauses (a) and
(b) of this Section 12.2.3, [*****].

12.2.4 No Infringement. To Enanta’s Knowledge, no Third Party is infringing, or
threatening to infringe, the Licensed Patent Rights.

12.2.5 No Litigation. There is no pending or, to Enanta’s Knowledge, threatened,
litigation that alleges that Enanta’s proposed activities under this Agreement
would infringe or misappropriate any intellectual property rights of any Third
Party.

 

13. INDEMNIFICATION

13.1 Indemnification of Abbott by Enanta. Enanta shall indemnify, defend and
hold harmless Abbott, its Affiliates, their respective directors, officers,
employees and agents, and their respective successors, heirs and assigns (the
“Abbott Indemnitees”), against all liabilities, damages, losses and expenses
(including reasonable attorneys’ fees and expenses of litigation) (collectively,
“Losses”) incurred by or imposed upon the Abbott Indemnitees, or any one of
them, as a direct result of any claims, suits, actions, demands or judgments of
Third Parties, including, without limitation, personal injury and product
liability matters and claims of suppliers and Enanta employees (collectively,
“Claims”) arising out of (a) any action by Enanta in the conduct of the Research
Program other than any action that is a Disputed Matter and is approved by the
JSC as an Abbott Decision pursuant to Section 2.1.6, (b) the Development or
Commercialization of a Co-Developed Product, or (c) a breach of any
representation or warranty made by Enanta pursuant to Section 12.2; provided
that, with respect to any Claim for which Enanta has an obligation to any Abbott
Indenmitee pursuant to this Section 13.1 and Abbott has an obligation to any
Enanta Indemnitee pursuant to Section 13.2, each Party shall indemnify each of
the other Party’s Indemnitees for its Losses to the extent of its responsibility
for the facts underlying the Claim relative to the other Party.

 

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13.2 Indemnification of Enanta by Abbott. Abbott shall indemnify, defend and
hold harmless Enanta, its Affiliates, their respective directors, officers,
employees and agents, and their respective successors, heirs and assigns (the
“Enanta Indemnitees”), against any Losses incurred by or imposed upon the Enanta
Indemnitees, or any one of them, as a direct result of any Claims arising out of
(a) any action by Abbott in the conduct of the Research Program, (b) the
Development (including, without limitation, the conduct of clinical research) by
Abbott of any Candidate, or (c) the Commercialization (including, without
limitation, the production, manufacture, promotion, import, sale or use by any
Person) of any Product that is manufactured or sold by Abbott or by an
Affiliate, Sublicensee, distributor or agent of Abbott; provided that with
respect to any Claim for which Enanta has an obligation to any Abbott Indemnitee
pursuant to Section 13.1 and Abbott has an obligation to any Enanta Indemnitee
pursuant to this Section 13.2, each Party shall indemnify each of the other
Party’s Indemnitees for its Losses to the extent of its responsibility for the
facts underlying the Claim relative to the other Party.

13.3 Conditions to Indemnification. A Person seeking recovery under this
Article 13 (the “Indemnified Party”) in respect of a Claim shall give prompt
notice of such Claim to the Party from which recovery is sought (the
“Indemnifying Party”) and, provided that the Indemnifying Party is not
contesting its obligation under this Article 13, shall permit the Indemnifying
Party to control any litigation relating to such Claim and the disposition of
such claim; provided that the Indemnifying Party shall (a) act reasonably and in
good faith with respect to all matters relating to the settlement or disposition
of such Claim as the settlement or disposition relates to Parties being
indemnified under Article 13, (b) not settle or otherwise resolve such claim
without the prior written consent of the Indemnified Party (which consent shall
not be unreasonably withheld, conditioned or delayed). The Indemnified Party
shall cooperate with the Indemnifying Party in its defense of any such Claim in
all reasonable respects and shall have the right to be present in person or
through counsel at all legal proceedings with respect to such Claim.

13.4 Warranty Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS
AGREEMENT, NEITHER PARTY MAKES ANY WARRANTY WITH RESPECT TO ANY TECHNOLOGY,
GOODS, SERVICES, RIGHTS OR OTHER SUBJECT MATTER OF THIS AGREEMENT AND EACH PARTY
HEREBY DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT
LIMITATION, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NONINFRINGEIVIENT.

13.5 No Warranty of Success. Nothing contained in this Agreement shall be
construed as a warranty on the part of either Party that (a) the Research
Program will yield any Compound or will otherwise be successful, or (b) the
outcome of the Research Program or the Development Program will be commercially
exploitable in any respect.

13.6 Limited Liability. EXCEPT WITH RESPECT TO INDEMNIFICATION OBLIGATIONS FOR
THIRD PARTY CLAIMS SET FORTH IN SECTION 13.1 AND SECTION 13.2, AND EXCEPT WITH
RESPECT TO A BREACH OF CONFIDENTIALITY

 

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OBLIGATIONS, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY OR ANY OF ITS
AFFILIATES FOR (a) ANY SPECIAL, PUNITIVE, INDIRECT, INCIDENTAL OR CONSEQUENTIAL
DAMAGES, INCLUDING, WITHOUT LIMITATION, LOST PROFITS OR LOST REVENUES, OR
(b) COST OF PROCUREMENT OF SUBSTITUTE GOODS, TECHNOLOGY OR SERVICES, WHETHER
UNDER ANY CONTRACT, WARRANTY, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR
EQUITABLE THEORY.

13.7 Insurance. Not later than thirty (30) days before the date on which Abbott
or any Affiliate or Sublicensee of Abbott shall, on a commercial basis, make,
use, or sell any Products, and at all times thereafter until the expiration of
all applicable statutes of limitation pertaining to any such manufacture,
marketing, possession, use, sale of other disposition of any Products, Abbott
will, at its expense, and Enanta will, at its expense, with respect only to
Co-Developed Products, obtain and maintain in full force and effect,
comprehensive general liability insurance, including product liability insurance
and clinical trial insurance protecting the other Party, subject to Section 13.1
or 13.2, as the case may be, against all claims, obligations, liabilities, and
damages, based upon or arising out of actual or alleged bodily injury, personal
injury, death, or any other damage to or loss of persons or property, cause by
any such manufacture, marketing, possession, use, sale, or other disposition.
Notwithstanding the foregoing, Abbott may elect to self-insure with respect to
any insurance coverage it is required to obtain hereunder.

 

14. MISCELLANEOUS

14.1 Arbitration. In the event of any dispute, difference or question arising
between the Parties in connection with this Agreement, the construction thereof,
or the rights, duties or liabilities of either Party hereunder, other than any
Disputed Matter that is submitted for resolution as provided in Section 2.1.6
(each, an “Arbitration Matter”), the Parties shall initiate an arbitration
proceeding to be conducted in accordance with the procedures set forth in
Exhibit D attached hereto.

14.2 Change of Control.

(a) Notice. If either Enanta or Abbott enters into an agreement that results or,
if the transaction contemplated thereby is completed, would result in a Change
of Control (“Acquired Party”), the Acquired Party shall provide the other Party
with prompt written notice describing such Change of Control in reasonable
detail (the “Change of Control Notice”). The Change of Control Notice shall be
provided by the Acquired Party prior to execution of such agreement, if
permitted under Applicable Laws and not prohibited by the terms of any agreement
between the Acquired Party and any Third Party (the “Acquiring Party”), and
otherwise as soon as practicable thereafter and, in any event, not later than
promptly following the consummation of the transaction contemplated by such
agreement.

(b) Effect of Change of Control. Notwithstanding any provision hereof, in the
event of a Change of Control, the exclusivity obligations of the Acquired Party

 

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described in Section 8.5 shall not apply to any compound or product owned or
controlled by the Acquiring Party as of the date of consummation of the Change
of Control.

14.3 Notices. All notices and communications shall be in writing and delivered
personally or by courier providing evidence of delivery or mailed via certified
mail, return receipt requested, addressed as follows, or to such other address
as may be designated from time to time:

 

If to Abbott:    If to Enanta:

Abbott Laboratories

100 Abbott Park Road

Building AP34, Dept. R50A

Abbott Park, IL 60064-3500

Fax: [*****]

Attention: [*****]

  

Enanta Pharmaceuticals, Inc.

500 Arsenal Street

Watertown, MA 02472

Tel: [*****]

Fax: [*****]

Attention: [*****]

With a copy to:    With a copy to:

Abbott Laboratories

Building AP6D, D-364

100 Abbott Park Road

Abbott Park, IL 60064-3500

Fax: [*****]

Attention: [*****]

   [*****]

Except as otherwise expressly provided in this Agreement or mutually agreed in
writing, any notice, communication or document (excluding payment) required to
be given or made shall be deemed given or made and effective upon actual
receipt, in each case addressed to a Parties at its address stated above or to
such other address as such Party may designate by written notice in accordance
with this Section 14.3.

14.4 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York (USA), without regard to the
application of principles of conflicts of law.

14.5 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the Parties and their respective legal representatives, successors
and permitted assigns.

14.6 Headings. Section and subsection headings are inserted for convenience of
reference only and do not form a part of this Agreement.

 

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14.7 Counterparts. This Agreement may be executed simultaneously in two (2) or
more counterparts, each of which shall be deemed an original and both of which,
together, shall constitute a single agreement.

14.8 Amendment; Waiver. This Agreement may be amended, modified, superseded or
canceled, and any of the terms of this Agreement may be waived, only by a
written instrument executed by each Party or, in the case of waiver, by the
Party or Parties waiving compliance. The delay or failure of any Party at any
time or times to require performance of any provisions shall in no manner affect
the rights at a later time to enforce the same. No waiver by any Party of any
condition or of the breach of any term contained in this Agreement, whether by
conduct, or otherwise, in any one or more instances, shall be deemed to be, or
considered as, a further or continuing waiver of any such condition or of the
breach of such term or any other term of this Agreement.

14.9 No Third Party Beneficiaries. Except as set forth in Sections 13.1, and
13.2, no Third Party (including, without limitation, employees of either Party)
shall have or acquire any rights by reason of this Agreement.

14.10 Purposes and Scope. The Parties hereto understand and agree that this
Collaboration is limited to the activities, rights and obligations as set forth
in this Agreement. Nothing in this Agreement shall be construed (a) to create or
imply a general partnership between the Parties, (b) to make either Party the
agent of the other for any purpose, (c) to alter, amend, supersede or vitiate
any other arrangements between the Parties with respect to any subject matters
not covered hereunder, (d) to give either Party the right to bind the other,
(e) to create any duties or obligations between the Parties except as expressly
set forth herein, or (f) to grant any direct or implied licenses or any other
right other than as expressly set forth herein.

14.11 Assignment and Successors. Neither this Agreement nor any obligation of a
Party hereunder may be assigned by either Party without the consent of the other
which shall not be unreasonably withheld, except that each Party may assign this
Agreement and the rights, obligations and interests of such Party, in whole or
in part, to any of its Affiliates, or subject to Section 14.2(b), to any
purchaser of all of its assets and/or all of its assets to which this Agreement
relates or to any successor corporation resulting from any merger or
consolidation of such Party with or into such corporation.

14.12 Force Majeure. Neither Abbott nor Enanta shall be liable for failure of or
delay in performing obligations set forth in this Agreement, and neither Party
shall be deemed in breach of its obligations, if such failure or delay is due to
a Force Majeure. In event of such Force Majeure event, the Party affected
thereby shall use reasonable efforts to cure or overcome the same and resume
performance of its obligations hereunder.

14.13 Interpretation. The Parties hereto acknowledge and agree that: (a) each
Party and its counsel reviewed and negotiated the terms and provisions of this
Agreement and have contributed to its revision; (b) the rule of construction to
the effect that any ambiguities are

 

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resolved against the drafting Party shall not be employed in the interpretation
of this Agreement; and (c) the terms and provisions of this Agreement shall be
construed fairly as to all Parties and not in a favor of or against any Party,
regardless of which Party was generally responsible for the preparation of this
Agreement.

14.14 Integration; Severability. This Agreement and the Existing Agreements are
the entire agreement with respect to the subject matter hereof and supersedes
all other agreements and understandings between the Parties with respect to such
subject matter. If any provision of this Agreement is or becomes invalid or is
ruled invalid by any court of competent jurisdiction or is deemed unenforceable,
it is the intention of the Parties that the remainder of the Agreement shall not
be affected.

14.15 Further Assurances. Each of Enanta and Abbott agrees to duly execute and
deliver, or cause to be duly executed and delivered, such further instruments
and do and cause to be done such further acts and things, including, without
limitation, the filing of such additional assignments, agreements, documents and
instruments, as the other Party may at any time and from time to time reasonably
request in connection with this Agreement or to carry out more effectively the
provisions and purposes of, or to better assure and confirm unto such other
Party its rights and remedies under, this Agreement.

14.16 HSR Filing. Each Party shall, no later than November 30, 2006 (or such
later time as the Parties mutually agree in writing), file with the Federal
Trade Commission any filing required under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the “HSR Act”), in connection with the
transactions contemplated hereby. The Parties shall cooperate with each other to
the extent necessary in the preparation of any such filing. Each party shall
request early termination of such filing by the Federal Trade Commission.
Neither Party shall be required in connection with any filing under the HSR Act
to commit or agree to any action, to obtain any consents, approvals, permits or
authorizations to remove any impediments or to resort to or respond to
litigation or to agree to hold separate or divest any business or assets.

Abbott shall be responsible for paying any fees required to be paid to
governmental authorities in connection with its filings as a licensee, Enanta
shall be responsible for paying any fees associated with its filings as a
licensor and each Party shall bear its own expenses, including but not limited
to legal fees associated with preparing any such filing, subject to
Section 14.17 below.

14.17 Board Approvals. The obligation of Enanta to effect the transactions
contemplated by this Agreement is subject to the receipt of approval by Enanta’s
Board of Directors (the “Enanta Board”) and Enanta’s Chief Executive Officer.
The obligation of Abbott to effect the transactions contemplated by this
Agreement is subject to the receipt of approval by Abbott’s Board of Directors
(the “Abbott Board”) and Abbott’s Chief Executive Officer. In the event that
such Abbott approvals are not obtained on or before December 8, 2006, (a) Abbott
shall reimburse Enanta for any fees or expenses incurred by Enanta in

 

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connection with the filing under the HSR Act described in Section 14.16,
including but not limited to legal fees associated with preparing such filing,
and (b) this Agreement shall be terminated with no further force and effect.
Each Party shall provide the other with evidence or certification of its Board
of Directors or Chief Executive Officer approval, as applicable, upon request.

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IN WITNESS WHEREOF, The Parties have caused this Agreement, to be executed by
their duly authorized representatives.

 

ENANTA PHARMACEUTICALS, INC. By:  

/s/ Jay R. Luly

Name:  

Jay Luly, Ph.D

Title:  

President and Chief Executive Officer

ABBOTT LABORATORIES By:  

/s/ William G. Dempsey

Name:  

William G. Dempsey

Title:  

Executive Vice President, Pharmaceutical Products Group

 

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EXHIBIT A

RESEARCH PLAN

The Research Program will involve the research and development of Enanta’s
proprietary HCV protease inhibitor program identified in PCT nos. WO 2005010029
Al; WO 2004/093798 A2; WO 2004/072243 A2; WO 2004 113365 A2 and any HCV protease
inhibitors identified by Enanta in the conduct of the Research Program and any
other patent applications included in Schedule 4 as part of the Licensed Patent
Rights.

Enanta, with input from the JSC, will be primarily responsible for discovery
activities including, but not limited to, medicinal chemistry, enzyme, replicon
and cytotoxicity assays, and initial metabolism and pharmacokinetic screens
associated with the identification of [*****] during the Research Program Term.
With approval of JSC, Abbott FTEs may be applied to Candidate identification
research to expand scope of chemistry or to otherwise improve the competitive
position of the program. Abbott will have primary responsibility for Candidate
selection activities including virology, pharmacokinetics, pharmaceutics,
metabolism and safety studies needed for the identification of [*****]. Abbott
will have primary responsibility for process research, and the planning and
execution of all preclinical IND-enabling studies on Candidate compounds.

Abbott personnel will be responsible for preparation of data-summary
documentation and presentations necessary to support internal assignment of
Abbott resources to support characterization of lead Compounds and IND-enabling
pre-clinical research on Candidates.

 

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EXHIBIT B

FORM OF STOCK PURCHASE AGREEMENT

 

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CONFIDENTIAL

SERIES G CONVERTIBLE PREFERRED

STOCK PURCHASE AGREEMENT

by and among

ENANTA PHARMACEUTICALS, INC.

and

THE INVESTORS LISTED ON THE

SCHEDULE OF INVESTORS

attached hereto

Dated [●], 20    

 

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TABLE OF CONTENTS

 

         Page  

SECTION 1.

  FOURTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION      1   

SECTION 2.

  PURCHASE AND SALE OF THE SERIES G PREFERRED STOCK      1   

2.1

 

Initial Series G Shares

     1   

2.2

 

Additional Series G Shares

     1   

SECTION 3.

  CLOSING      2   

3.1

 

Initial Closing

     2   

3.2

 

Additional Closings

     2   

SECTION 4.

  REPRESENTATIONS AND WARRANTIES OF THE CORPORATION      3   

4.1

 

Organization

     3   

4.2

 

Capitalization

     3   

4.3

 

Equity Investments; Subsidiaries

     5   

4.4

 

Financial Statements

     6   

4.5

 

Absence of Undisclosed Liabilities

     6   

4.6

 

Absence of Changes

     6   

4.7

 

Encumbrances

     6   

4.8

 

Intellectual Property Rights

     6   

4.9

 

Litigation

     7   

4.10

 

No Defaults

     7   

4.11

 

Employment of Officers, Employees and Consultants

     8   

4.12

 

Taxes

     8   

4.13

 

[Reserved.]

     8   

4.14

 

Material Agreements

     8   

4.15

 

ERISA

     11   

4.16

 

U.S. Real Property Holding Corporation

     11   

4.17

 

Environmental Protection

     11   

4.18

 

Foreign Corrupt Practices Act

     12   

4.19

 

Federal Reserve Regulations

     12   

 

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4.20

 

Compliance

     12   

4.21

 

Insurance

     13   

4.22

 

Authorization of Transaction Documents

     13   

4.23

 

Authorization of Series G Shares and Reserved Shares

     13   

4.24

 

Related Transactions

     14   

4.25

 

Offerees

     14   

4.26

 

Use of Proceeds

     14   

4.27

 

No Governmental Consent or Approval Required

     14   

4.28

 

Registration Rights

     14   

4.29

 

Employees

     15   

4.30

 

Exemptions from Securities Laws

     15   

4.31

 

[Small Business Concern

     15   

4.32

 

Books and Records

     15   

4.33

 

Disclosure

     15   

SECTION 5.

  REPRESENTATIONS AND WARRANTIES OF THE INVESTORS      15   

5.1

 

Purchase for Investment

     16   

5.2

 

Unregistered Securities; Legend

     16   

5.3

 

Status of the Investors

     16   

5.4

 

Knowledge and Experience; Economic Risk

     16   

5.5

 

Access to Information

     16   

5.6

 

Rule 144

     16   

SECTION 6.

  CONDITIONS PRECEDENT TO CLOSINGS BY THE INVESTORS      16   

6.1

 

Conditions Precedent to Initial Closing by the Initial Investors

     16   

6.2

 

Conditions Precedent to Additional Closing by the Additional Investors

     18   

SECTION 7.

  CONDITIONS PRECEDENT TO CLOSING BY THE CORPORATION      19   

7.1

 

Representations and Warranties

     19   

7.2

 

Tender of Payment

     19   

SECTION 8.

  TRANSFER OF SHARES. RESTRICTED SHARES      20   

8.1

 

Requirements for Transfer

     20   

8.2

 

Legend

     20   

 

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SECTION 9.

 

FEES; BROKERS

     21   

9.1

 

Fees

     21   

9.2

 

Brokers

     21   

SECTION 10.

 

REMEDIES

     21   

SECTION 11.

 

EXCHANGES; LOST, STOLEN OR MUTILATED CERTIFICATES

     22   

SECTION 12.

 

SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS

     22   

SECTION 13.

 

SUCCESSORS AND ASSIGNS

     22   

SECTION 14.

 

ENTIRE AGREEMENT; EFFECT ON PRIOR DOCUMENTS

     22   

SECTION 15.

 

NOTICES

     22   

SECTION 16.

  AMENDMENTS; WAIVERS      23   

SECTION 17.

  COUNTERPARTS      23   

SECTION 18.

  HEADINGS      23   

SECTION 19.

  NOUNS AND PRONOUNS      23   

SECTION 20.

  GOVERNING LAW      23   

SECTION 21.

  SEVERABILITY      24   

SECTION 22.

  FURTHER ASSURANCES      24   

SECTION 23.

  ADDITIONAL INVESTORS      24   

SECTION 24.

  ADJUSTMENTS FOR STOCK SPLITS, ETC.      24   

SECTION 25.

  AGGREGATION OF STOCK      24   

SECTION 26.

  ISSUANCES OF SERIES G PREFERRED STOCK      24   

 

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Schedules     

Schedule of Investors

Schedule 4

  –   

Disclosure Schedules

Exhibits     

Exhibit 1

  –   

Fourth Amended and Restated Certificate of Incorporation of Enanta
Pharmaceuticals, Inc.

Exhibit 4.22A

  –   

Third Amended and Restated Registration Rights Agreement

Exhibit 4.22B

  –   

Third Amended and Restated Voting Agreement

Exhibit 4.22C

  –   

Third Amended and Restated Stock Restriction Agreement

Exhibit 4.22D

  –   

Investor Rights Agreement

Exhibit 4.29A

  –   

Employee Confidentiality, Inventions and Noncompetition Agreement

Exhibit 4.29B

  –   

Consultant Confidentiality and Inventions Agreement

Exhibit 6.1(e)

  –   

Form of Legal Opinion of Palmer & Dodge LLP

 

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SERIES G CONVERTIBLE PREFERRED STOCK

PURCHASE AGREEMENT

THIS SERIES E CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT (“Agreement”) is
made as of [●], 20    , by and among Enanta Pharmaceuticals, Inc., a Delaware
corporation (the “Corporation”), the investors named on the Schedule of
Investors attached hereto (the “Initial Investors”) and the additional investors
added from time to time to the Schedule of Investors in accordance with
Section 23 below (the “Additional Investors,” and together with the Initial
Investors, the “Investors”).

WHEREAS, the Investors wish to purchase from the Corporation, and the
Corporation wishes to sell to the Investors, up to an aggregate of [●] shares of
the Corporation’s Series G Convertible Preferred Stock, par value $.01 per share
(the “Series G Preferred Stock”).

NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements herein contained, the parties hereby agree as follows:

SECTION 1. Fourth Amended and Restated Certificate of Incorporation. On or prior
to the date hereof, the Corporation shall have filed with the Secretary of State
of the State of Delaware its Fourth Amended and Restated Certificate of
Incorporation (the “Restated Certificate”), a copy of which is attached hereto
as Exhibit 1 (the Restated Certificate as in effect on the date hereof being
hereinafter sometimes also referred to as the “Certificate of Incorporation”),
for the purpose of amending the authorized capital stock of the Corporation and
setting forth the designations and the powers, preferences and rights, and the
qualifications, limitations and restrictions thereof, granted to or imposed upon
the capital stock of the Corporation or the holders thereof, including the
Series G Preferred Stock.

SECTION 2. Purchase and Sale of the Series G Preferred Stock.

2.1 Initial Series G Shares. Subject to the terms and conditions of this
Agreement, at the Initial Closing (as defined in Section 3.1), the Corporation
agrees to issue and sell an aggregate of [●] shares of Series G Preferred Stock
(the “Initial Series G Shares”) to the Initial Investors, and each Initial
Investor, acting severally and not jointly, agrees to purchase from the
Corporation the number of Initial Series G Shares set forth opposite the name of
such Initial Investor on the Schedule of Investors under the column heading
“Initial Series G Shares,” at a purchase price of $[●] per share.

2.2 Additional Series G Shares.

(a) Subject to the terms and conditions of this Agreement, at each Scheduled
Additional Closing (as defined in Section 3.2), the Corporation agrees to issue
and sell an aggregate of [●] shares of Series G Preferred Stock (the “Initial
Investor Additional Series G Shares” and, together with the Initial Series G
Shares, the “Initial Investor Series G Shares”) to the Initial Investors, and
each Initial Investor, acting severally and not jointly, agrees to purchase

 

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from the Corporation the number of Initial Investor Additional Series G Shares
set forth opposite the name of such Initial Investor on the Schedule of
Investors under the column headings “Second Closing Series G Shares,” “Third
Closing Series G Shares,” “Fourth Closing Series G Shares” and “Fifth Closing
Series G Shares,” all at a purchase price of $[●] per share.

(b) The Corporation may issue and sell an aggregate of up to [●] shares of
Series G Preferred Stock (the “Additional Investor Series G Shares” and,
together with the Initial Investor Additional Series G Shares, the “Additional
Series G Shares”) to one or more Additional Investors, each of which purchases
Additional Investor Series G Shares at or before the date of the first Scheduled
Additional Closing and agrees to purchase additional shares of the Additional
Investor Series G Shares in proportionate amounts on the same terms as the
Initial Investors. Any Additional Investor shall be either (i) an existing
stockholder of or an affiliate of an existing stockholder of the Corporation or
(ii) a new investor reasonably acceptable to the Corporation with the consent of
the Corporation’s Series C-G Directors (as defined in the Restated Certificate).
The Initial Investor Series G Shares and the Additional Investor Series G Shares
are collectively referred to as the “Series G Shares”.

(c) [The Corporation may, in its discretion, cancel any Additional Closing upon
written notice to the Initial Investors and any Additional Investors who had
previously agreed to participate in such Additional Closing. In the event the
Corporation cancels any Additional Closing, the number of Series G Shares to
have been purchased by each Investor at such Additional Closing shall thereafter
be added to the number of Series G Shares to be purchased by each Investor at
the (next Additional Closing scheduled to take place after such cancelled
Additional Closing.)

SECTION 3. Closing.

3.1 Initial Closing. The closing of the sale and purchase of the Initial Series
G Shares (the “Initial Closing”) shall take place simultaneously with the
execution of this Agreement at the offices of Palmer & Dodge LLP, 111 Huntington
Avenue, Boston, Massachusetts, U.S.A., or at such other location as may be
agreed upon among the Initial Investors and the Corporation. At the Initial
Closing, the Corporation shall issue and deliver to each Initial Investor a
certificate or certificates for shares of Series G Preferred Stock, registered
in the name of such Initial Investor, in the amount representing the number of
Initial Series G Shares being purchased by such Initial Investor at the Initial
Closing, against payment by such Initial Investor to the Corporation of the
aggregate purchase price therefor in the form of (a) a wire transfer to a bank
account designated by the Corporation or (b) such other method of payment as the
Corporation, in its sole discretion, may accept.

3.2 Additional Closings. The closing of the sale and purchase of the Additional
Series G Shares shall occur at (i) [●] additional closings (each, a “Scheduled
Additional Closing”) to take place at the offices of Palmer & Dodge LLP, 111
Huntington Avenue, Boston, Massachusetts, U.S.A., or at such other location as
may be agreed upon among the Investors participating in such Scheduled
Additional Closing, on each of [●] and (ii) one or more

 

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additional closings (each, an “Additional Investor Additional Closing” and
together with the Scheduled Additional Closings, each an “Additional Closing”)
to take place no later than December 15, 2005 at the offices of Palmer & Dodge
LLP, 111 Huntington Avenue, Boston, Massachusetts, U.S.A., or at such other
location as may be agreed upon among the Corporation and the Investors
participating in such Additional Investor Additional Closing. At each Additional
Closing, the Corporation shall issue and deliver to each Investor participating
in such Additional Closing a certificate or certificates for shares of Series G
Preferred Stock, registered in the name of such Investor, in the amount
representing the number of Series G Shares being purchased by such Investor at
such Additional Closing, against payment by such Investor to the Corporation of
the aggregate purchase price therefor in the form of (a) a wire transfer to a
bank account designated by the Corporation or (b) such other method of payment
as the Corporation, in its sole discretion, may accept.

SECTION 4. Representations and Warranties of the Corporation. Except as set
forth on Schedule 4, the Corporation hereby makes the representations and
warranties contained in this Section 4 to the Investors. The information
contained on Schedule 4 shall be deemed to be representations and warranties of
the Corporation and shall make explicit reference to the particular
representation or warranty (by reference to a subsection hereof) as to which
exception is taken, provided that the information on Schedule 4 shall qualify as
disclosure with respect to other representations or warranties for which the
appropriateness of such disclosure is reasonably apparent.

4.1 Organization. The Corporation is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite corporate power and authority to own and lease its properties, to
carry on its business as presently conducted and as proposed to be conducted and
to carry out the transactions contemplated by the Transaction Documents (as
defined in Section 4.22 hereof). The Corporation is duly qualified as a foreign
corporation and is in good standing in all such jurisdictions in which the
conduct of its business or its ownership or leasing of property requires such
qualification.

4.2 Capitalization. The entire authorized capital stock of the Corporation
consists of:

(a) [●] shares of Corporation’s Common Stock, par value $.01 per share (“Common
Stock”), of which (i) 3,794,270 shares have been issued and are outstanding, and
are duly authorized, validly issued, fully paid and nonassessable; (ii) no
shares are held as treasury shares; (iii) 822,830 shares have been reserved for
issuance upon exercise of options granted or to be granted under the
Corporation’s 1998 Equity Performance Plan (the “Equity Performance Plan”), of
which [●] shares have been issued as restricted stock or upon the exercise of
options granted pursuant to the Equity Performance Plan and are included in the
3,794,270 shares of Common Stock that are issued and outstanding; [●] shares are
subject to currently outstanding options to purchase Common Stock; and [●]
shares are reserved for future issuance; (iv) [●] shares have been reserved for
issuance under the Corporation’s 1995 Equity Incentive Plan (the “1995 Equity
Plan”), of which [●] shares have been issued as restricted stock or upon the

 

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exercise of options granted pursuant to the 1995 Equity Plan, all of which are
included in the 3,794,270 shares of Common Stock that are issued and
outstanding; [●] shares are subject to currently outstanding options to purchase
Common Stock; and [●] shares are reserved for future issuance; (v) 379,450
shares have been reserved for issuance upon conversion of the Corporation’s
Series A Convertible Preferred Stock, par value $.01 per share (“Series A
Preferred Stock”); (vi) 187,000 shares have been reserved for issuance upon
conversion of the Corporation’s Series B Convertible Preferred Stock, par value
$.01 per share (“Series B Preferred Stock”); (vii) 2,563,603 shares have been
reserved for issuance upon conversion of the Corporation’s Series C Convertible
Preferred Stock, par value $.01 per share (“Series C Preferred Stock”)
(viii) 116,638 shares have been reserved for issuance upon exercise of certain
Common Stock Purchase Warrants dated December 1998 and May and August of 1999;
(ix) 7,902,121 shares have been reserved for issuance upon conversion of the
Corporation’s Series D Convertible Preferred Stock, par value $.01 per share
(“Series D Preferred Stock”), including [●] additional shares that have been
reserved for issuance as a result of the reduction of the Series D Conversion
Price (as defined in the Restated Certificate) to $[●] as a result of the deemed
issuance and sale by the Corporation of [●] shares of Series G Preferred Stock;
(x) 161,600 shares have been reserved for issuance upon exercise of certain
Common Stock Purchase Warrants dated October 2000 and January and May of 2001;
(xi) 21,238,570 shares have been reserved for issuance upon conversion of the
Corporation’s Series E Convertible Preferred Stock, par value $.01 per share
(“Series E Preferred Stock”) including 2,473,308 shares that have been reserved
for issuance upon conversion of the shares of Series E Preferred Stock issuable
upon exercise of the warrants to purchase shares of Series E Preferred Stock
issued by the Corporation to the holders of Notes issued in March 2002, July,
October and November 2003 and March 2004 and to Silicon Valley Bank in December
2002; (xiii) 6,894,966 shares have been reserved for issuance upon conversion of
the Corporation’s Series F Convertible Preferred Stock par value $.01 per share
(“Series F Preferred Stock”); and [●] shares have been reserved for issuance
upon conversion of the Series G Preferred Stock;

(b) 379,450 shares of Series A Preferred Stock, all of which have been issued
and are outstanding, and are duly authorized, validly issued, fully paid and
nonassessable;

(c) 187,000 shares of Series B Preferred Stock, all of which have been issued
and are outstanding, and are duly authorized, validly issued, fully paid and
nonassessable;

(d) 2,563,603 shares of Series C Preferred Stock, all of which have been issued
and are outstanding, and are duly authorized, validly issued, fully paid and
nonassessable;

(e) 5,988,334 shares of Series D Preferred Stock, all of which have been issued
and are outstanding, and are duly authorized, validly issued, fully paid and
nonassessable;

(f) 16,158,953 shares of Series E Preferred Stock, of which (i) 14,261,598
shares have been issued and are outstanding, and are duly authorized, validly
issued, fully paid and nonassessable and (ii) 1,879,715 shares have been
reserved for issuance upon exercise of the Series E Preferred Stock Warrants;

 

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(g) 6,894,966 shares of Series F Preferred Stock, all of which have been issued
and are outstanding, and are duly authorized, validly issued, fully paid and
nonassessable; and

(h) [●] shares of Series G Preferred Stock, of which (i) [●] shares are being
issued at the Initial Closing and immediately thereafter will be issued and
outstanding, and will be duly authorized, validly issued, fully paid and
nonassessable and will be held of record by the Initial Investors and (ii) [●]
shares have been reserved for issuance to the Initial Investors and one or more
Additional Investors at the Additional Closings and immediately thereafter will
be issued and outstanding, and will be duly authorized, validly issued, fully
paid and nonassessable and will be held of record by the Investors.

Except as set forth in this Section 4.2 or in the Restated Certificate or the
Transaction Documents: (I) there are no outstanding shares of capital stock of
the Corporation or warrants, options, agreements, convertible securities, rights
or other commitments pursuant to which the Corporation is or may become
obligated to issue any shares of its capital stock or other securities of the
Corporation; (II) there are no preemptive or similar rights to purchase or
otherwise acquire shares of capital stock of the Corporation from the
Corporation pursuant to any provision of law, the Certificate of Incorporation
or the by-laws, as amended to date, of the Corporation (the “By-laws”) or, any
agreement to which the Corporation is a party, or otherwise; (III) there are no
redemption or similar rights whereby the Corporation is obligated, contractually
or otherwise, to repurchase, redeem, or otherwise acquire any shares of capital
stock of the Corporation; and (IV) there is no agreement, restriction or
encumbrance with respect to the registration, transfer, sale or voting of any
shares of the Corporation’s capital stock (whether outstanding or issuable upon
conversion or exercise of outstanding securities).

The Corporation has not violated the Securities Act of 1933, as amended (the
“Securities Act”) or any securities law of any state or other jurisdiction in
connection with the issuance of any securities prior to the date hereof. All of
the outstanding shares of the Corporation’s capital stock and all other
securities of the Corporation were offered, issued, and sold, the Series G
Shares (which have been sold at any Closing (as defined in Section 6)) will be
offered, issued and sold, and the Reserved Shares (as defined below) will be
issued in compliance with (i) all applicable preemptive or similar rights of all
persons and (ii) all applicable provisions of the Securities Act and the rules
and regulations thereunder, and all applicable state securities laws and the
rules and regulations thereunder. No person has any valid right to rescind any
purchase of any shares of capital stock or other securities of the Corporation.

4.3 Equity Investments; Subsidiaries. The Corporation does not currently own,
directly or indirectly, any capital stock or other proprietary interest in any
corporation, association, trust, partnership, limited liability company, limited
liability partnership, joint venture or other entity. The Corporation does not
have any subsidiaries or own any legal and/or beneficial interests in any other
person.

 

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4.4 Financial Statements. The audited balance sheet (the “Balance Sheet”) for
the Corporation as of September 30, 2004 (the “Balance Sheet Date”) and the
related audited statements of income, stockholders’ equity and cash flows for
the year then ended (collectively, the “Financial Statements”) (a) are in
accordance with the books and records of the Corporation and (b) present fairly
the financial position and results of operations of the Corporation as of the
date and for the periods indicated in accordance with generally accepted
accounting principles (“GAAP”) applied on a consistent basis.

4.5 Absence of Undisclosed Liabilities. The Corporation has no material
liabilities or obligations of any nature, whether accrued, absolute, contingent,
or otherwise (including without limitation liabilities as guarantor or otherwise
with respect to obligations of others) and whether due or to become due, except
as incurred in the ordinary course of business.

4.6 Absence of Changes. Since the Balance Sheet Date there has not been (a) any
material adverse change in the financial condition, results of operations,
assets, liabilities, business or prospects of the Corporation, (b) any material
asset or property of the Corporation made subject to a lien of any kind, except
liens for taxes not yet due and payable or non-consensual purchase money liens
arising by operation of law and in the ordinary course of business, (c) any
waiver of any valuable right of the Corporation, or the cancellation of any debt
or claim held by the Corporation, (d) any payment of dividends on, or other
distribution with respect to, or any direct or indirect redemption or
acquisition of, any shares of the capital stock of the Corporation, or any
agreement or commitment therefor, (e) any mortgage, pledge, sale, assignment or
transfer of any tangible or intangible assets of the Corporation, except in the
ordinary course of business, (f) any loan by the Corporation to, or any loan to
the Corporation from, any officer, director, employee or stockholder of the
Corporation, or any agreement or commitment therefor, (g) any damage,
destruction or loss (whether or not covered by insurance) materially and
adversely affecting the assets, property or business of the Corporation, or
(h) any change in the accounting methods or practices followed by the
Corporation.

4.7 Encumbrances. The Corporation has good and marketable title to all of its
property and assets, real, personal or mixed, tangible or intangible, free and
clear of all liens, security interests, charges and other encumbrances of any
kind, except liens for taxes not yet due and payable. The Corporation enjoys
peaceful and undisturbed possession under all leases under which it is
operating, and all said leases are valid and subsisting and in full force and
effect.

4.8 Intellectual Property Rights.

(a) The Corporation owns or has the legally enforceable right to use, and has
the right to bring actions for infringement of, all Intellectual Property Rights
(as defined below) necessary or required for the conduct of its business as
presently conducted or as proposed to be conducted.

(b) The Corporation has no obligation to compensate any person for the use of
any of its Intellectual Property Rights and the Corporation has not granted any
person any license

 

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or other rights to use any of such Intellectual Property Rights, whether
requiring the payment of royalties or not.

(c) No product or process presently used, marketed or sold or proposed to be
used, marketed or sold by the Corporation and no Intellectual Property Rights
proposed to be licensed by the Corporation as licensor violate or will violate
any license or infringe or will infringe any Intellectual Property Rights of
another, nor has the Corporation received any notice that any of its
Intellectual Property Rights or the operation or proposed operation of the
Corporation’s business conflicts or will conflict with the rights of others; and
to the Corporation’s knowledge, none of the Intellectual Property Rights have
been or are being infringed or violated by others.

(d) There are no claims pending or, to the Corporation’s knowledge, threatened
to the effect that any of the Intellectual Property Rights owned or licensed by
the Corporation, or which the Corporation otherwise has rights to use, is
invalid or unenforceable, or that would otherwise interfere in any material
respect with the Corporation’s right to use any Intellectual Property Rights
being used in the Corporation’s business as currently conducted or as proposed
to be conducted, nor does there exist any basis therefor.

(e) All personnel of the Corporation, including employees, agents, consultants
and contractors, who have contributed to or participated in the conception or
development of any of the Intellectual Property Rights owned by the Corporation
have entered into an agreement that conveys to the Corporation full, effective
and exclusive ownership of all tangible and intangible property thereby arising.

(f) The Corporation has not entered into any agreement to indemnify any other
person against any charge of infringement of any Intellectual Property Rights.

As used herein, the term “Intellectual Property Rights” means all patents,
trademarks, service marks, trade names, copyrights, inventions, trade secrets,
licenses, know-how, proprietary processes and formulae, applications for
patents, trademarks, service marks and copyrights, and other industrial and
intellectual property rights.

4.9 Litigation. There is no action, suit, claim, proceeding or investigation, at
law, in equity or otherwise, or by or before any governmental instrumentality or
other agency, now pending, or, to the Corporation’s knowledge, threatened
against or affecting the Corporation, nor is there any basis therefor known to
the Corporation.

4.10 No Defaults. The Corporation is not in violation or breach of, or in
default under, any provision of (a) the Certificate of Incorporation or the
By-Laws or (b) any material note, indenture, mortgage, lease, contract, purchase
order or other instrument, document or agreement to which the Corporation is a
party or by which it or any of its property is bound or affected or any ruling,
writ, injunction, order, judgment or decree of any court, administrative agency
or other governmental body. To the Corporation’s knowledge, there exists no
condition, event or

 

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act which, after notice, lapse of time, or both, may constitute a violation or
breach of, or a default under, any of the foregoing.

4.11 Employment of Officers, Employees and Consultants. To the Corporation’s
knowledge, no third party may assert any valid claim against the Corporation,
any Investor, or any Designated Person (as defined below) with respect to
(a) the continued employment by or association with the Corporation of any of
the present officers or employees of, or consultants to, the Corporation
(collectively, the “Designated Persons”), or (b) the use or disclosure by the
Corporation or any Designated Person of any information which the Corporation or
any Designated Person would be prohibited from using or disclosing under any
prior agreements or arrangements or under any laws, including, without
limitation, laws applicable to unfair competition, trade secrets or proprietary
information.

The Corporation is in compliance in all material respects with all applicable
federal and state laws respecting employment and employment practices, terms and
conditions of employment, wages and hours, and nondiscrimination in employment,
and is not engaged in any unfair labor practice. None of the employees of the
Corporation is covered by any collective bargaining agreement, and no collective
bargaining agreement is currently being negotiated by it.

4.12 Taxes. The Corporation has filed all federal, state, local and foreign tax
returns which are required to be filed by it and all such returns are true and
correct. The Corporation has paid all taxes pursuant to such returns or pursuant
to any assessments received by it or which it is obligated to withhold from
amounts owing to any employee, creditor or third party, except, in each case,
for those which are not yet due and payable pursuant to such returns. There are
no liens for taxes (other than current taxes not yet due and payable) on the
assets of the Corporation. The Corporation has established adequate reserves for
all taxes accrued but not yet payable to the extent required by GAAP. All
material tax elections of any type which the Corporation has made as of the date
hereof are set forth in the financial statements referred to in Section 4.4. No
deficiency assessment with respect to or, proposed adjustment of the
Corporation’s federal, state, county or local taxes, domestic and foreign, is
pending or, to the knowledge of the Corporation, threatened. Neither the
Corporation nor any of its present or former stockholders has ever filed an
election pursuant to Section 1362 of the Internal Revenue Code of 1986 (the
“Code”), that the Corporation be taxed as an S corporation.

4.13 [Reserved.]

4.14 Material Agreements. The Corporation has delivered or caused to be
delivered to those Investors who have so requested in writing correct and
complete copies of each Material Agreement (as defined below), each as amended
to date. Each such agreement, instrument, and commitment is a valid, binding and
enforceable obligation of the Corporation, and to the Corporation’s knowledge,
of the other party or parties thereto (in each case, except as enforceability
may be limited by bankruptcy, insolvency, or similar laws and except as the
availability of equitable remedies is subject to the discretion of the court
before they are sought), and is in full force and effect. Neither the
Corporation, nor to the best of its knowledge, any

 

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other party thereto, is, or is considered by any other party thereto to be, in
breach of or not in compliance with any term of any such agreement, instrument,
or commitment (nor, to the Corporation’s knowledge, is there any basis for any
of the foregoing), except for any breach or noncompliance that singly or in the
aggregate would not have a material adverse effect on the financial condition,
results of operations, assets, liabilities, business or prospects of the
Corporation. No claim, change order, request for equitable adjustment, or
request for contract price or schedule adjustment, between the Corporation and
any supplier or customer, relating to any Material Agreement is pending or, to
the Corporation’s knowledge, threatened, nor, to the Corporation’s knowledge, is
there any basis for any of the foregoing. No Material Agreement includes or
incorporates any provision, the effect of which may be to enlarge or accelerate
any of the obligations of the Corporation or to give additional rights to any
other party thereto, or will terminate, lapse, or in any other way be affected,
by reason of the transactions contemplated by this Agreement.

As used in this Agreement, “Material Agreement” means any:

(a) agreement for the purchase, sale, lease, or license by or from it of
services, products, or assets, requiring total payments by or to it in excess of
$50,000 in any instance, or entered into other than in the ordinary course of
business;

(b) agreement requiring it to purchase all or substantially all of its
requirements for a particular product or service from a particular supplier or
suppliers, or requiring it to supply all of a particular customer’s or
customers’ requirements for a certain service or product;

(c) agreement or other commitment pursuant to which it has agreed to indemnify
or hold harmless any other person, other than standard indemnification
obligations with respect to the Corporation’s directors, employees and
consultants;

(d) (i) employment agreement, (ii) consulting agreement, or (iii) agreement
providing for severance payments or other additional rights or benefits (whether
or not optional) in the event of the sale or other change in control of it;

(e) agreement with any current or former “affiliate” (as defined in the
Securities Act), stockholder, officer, director, employee, or consultant of the
Corporation, or with any person in which any such affiliate has an interest;

(f) joint venture or partnership agreement;

(g) agreement with any domestic or foreign government or agency or executive
office thereof or any subcontract between it and any third party relating to a
contract between such third party and any domestic or foreign government or
agency or executive office thereof;

 

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(h) agreement imposing non-competition or exclusive dealing obligations on it;

(i) contract with any labor union;

(j) bonus, pension, profit-sharing, retirement, stock purchase, stock option,
hospitalization, medical insurance or similar plan, contract or understanding in
effect with respect to its employees or the employees of others;

(k) agreement or indenture relating to the borrowing of money or to the
mortgaging, pledging or otherwise placing a lien on any assets of the
Corporation;

(l) guaranty of any obligation for borrowed money or otherwise;

(m) lease or agreement under which the Corporation is lessee of or holds or
operates any property, real or personal, owned by any other party;

(n) lease or agreement under which the Corporation is lessor of or permits any
third party to hold or operate any property, real or personal, owned or
controlled by the Corporation;

(o) license or lease agreement with respect to any Intellectual Property Rights;

(p) agreement or other commitment for capital expenditures in excess of $50,000;

(q) distributor, dealer or manufacturer’s representative contract or agreement
which is not terminable on less than ninety (90) days’ notice without cost or
other liability to the Corporation;

(r) sales agreement which entitles any customer to a rebate or right of set-off,
to return any product to the Corporation after acceptance thereof or to delay
the acceptance thereof, or which varies in any material respect from the
Corporation’s standard form contracts;

(s) agreement with any supplier containing any provision permitting any party
other than the Corporation to renegotiate the price or other terms, or
containing any pay-back or other similar provision, upon the occurrence of a
failure by the Corporation to meet its obligations under the agreement when due
or the occurrence of any other event;

(t) agreement for the future purchase of fixed assets or for the future purchase
of materials, supplies or equipment in excess of its normal operating
requirements;

(u) agreement, or group of related agreements with the same party or any group
of affiliated parties, under which the Corporation has advanced or agreed to
advance money, has agreed to lease any real property as lessee or lessor, or has
agreed to lease any

 

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personal property as lessee or lessor if such lease for personal property was
not entered into in the ordinary course of business;

(v) contract, agreement or commitment under which the Corporation is obligated
to pay any broker’s fees, finder’s fees or any such similar fees, to any third
party;

(w) except as set forth above, any other agreement or group of related contracts
with the same party continuing over a period of more than six months from the
date or dates thereof (including renewals or extensions of options with another
party), which agreement or group of agreements is not terminable by the
Corporation without penalty upon notice of thirty (30) days or less, but
excluding any agreement or group of agreements with a customer of the
Corporation for the sale, lease or rental of the Corporation’s products or
services if such agreement or group of agreements was entered into by the
Corporation in the ordinary course of business; or

(x) any other contract, agreement, arrangement or understanding which is
material to the business of the Corporation or which is material to a prudent
investor’s understanding of the business of the Corporation.

4.15 ERISA. The Corporation does not now sponsor, maintain, have any obligation
to contribute to or have any liability under, and never has sponsored,
maintained, had any obligation to contribute to, or had any liability under, and
is not now and has never otherwise been a party to, any Benefit Plan. For
purposes of this Agreement, “Benefit Plan” shall mean any plan, fund, program,
policy, arrangement or contract, whether formal or informal, which is in the
nature of (i) an employee pension benefit plan (as defined in Section (2) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”)), (ii) an
employee welfare benefit plan (as defined in section 3(1) of ERISA), (iii) a
“multi-employer plan” (as defined in Section 3(37) of ERISA) or (iv) any plan of
deferred compensation, medical plan, life insurance plan, long-term disability
plan, dental plan or other plan instituted with respect to any of the
Corporation’s employees or former employees or beneficiaries thereof.

4.16 U.S. Real Property Holding Corporation. The Corporation is not now, has
never been and has no current plans to become a “United States real property
holding corporation,” as defined in Section 897(c)(2) of the Code and
Section 1.897-2(b) of the Regulations promulgated by the Internal Revenue
Service, and the Corporation has never filed with the Internal Revenue Service a
statement with its United States income tax returns under Section 1.897-2(h) of
such Regulations stating that any shares of its capital stock constitute a U.S.
real property interest within the meaning of Section 897(c)(1) of the Code.

4.17 Environmental Protection. The Corporation has not caused or allowed, or
contracted with any party for, the generation, use, transportation, treatment,
storage or disposal of any Hazardous Substances (as defined below) in connection
with the operation of its business or otherwise. The Corporation, the operation
of its business, and any real property that the Corporation owns, leases or
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all applicable Environmental Laws (as defined below) and orders or directives of
any governmental authorities having jurisdiction under such Environmental Laws,
including, without limitation, any Environmental Laws or orders or directives
with respect to any cleanup or remediation of any release or threat of release
of Hazardous Substances. The Corporation has not received any citation,
directive, letter or other communication, written or oral, or any notice of any
proceeding, claim or lawsuit, from any person arising out of the ownership or
occupation of the Premises, or the conduct of its operations, and the
Corporation is not aware of any basis therefor. The Corporation has obtained and
is maintaining in full force and effect all necessary permits, licenses and
approvals required by all Environmental Laws applicable to the Premises and the
business operations conducted thereon (including operations conducted by tenants
on the Premises), and is in compliance with all such permits, licenses and
approvals. The Corporation has not caused or allowed a release, or a threat of
release, of any Hazardous Substance onto, at or near the Premises, and, to the
Corporation’s knowledge, neither the Premises nor any property at or near the
Premises has ever been subject to a release, or a threat of release, of any
Hazardous Substance. For the purposes of this Agreement, the term “Environmental
Laws” shall mean any federal, state or local law or ordinance or regulation
pertaining to the protection of human health or the environment, including,
without limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. Sections 9601, et seq., the Emergency Planning and
Community Right-to-Know Act, 42 U.S.C. Sections 11001, et seq., and the Resource
Conservation and Recovery Act, 42 U.S.C. Sections 6901, et seq. For purposes of
this Agreement, the term “Hazardous Substances” shall include oil and petroleum
products, asbestos, polychlorinated biphenyls, urea formaldehyde and other
materials classified as hazardous or toxic under any Environmental Laws.

4.18 Foreign Corrupt Practices Act. The Corporation has not taken any action
which would cause it to be in violation of the Foreign Corrupt Practices Act of
1977, as amended, or any rules and regulations thereunder. To the Corporation’s
knowledge, there is not now, and there has never been, any employment by the
Corporation of, or beneficial ownership in the Corporation by, any governmental
or political official in any country in the world.

4.19 Federal Reserve Regulations. The Corporation is not engaged in the business
of extending credit for the purpose of purchasing or carrying margin stock
(within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System), and no part of the proceeds of the sale of Series G Shares will
be used to purchase or carry any margin stock or to extend credit to others for
the purpose of purchasing or carrying any margin stock or in any other manner
which would involve a violation of any of the regulations of the Board of
Governors of the Federal Reserve System.

4.20 Compliance. The Corporation has complied with, and is in compliance in all
material respects with, (i) all laws, statutes, governmental regulations,
judicial or administrative tribunal orders, judgments, writs, injunctions,
decrees, and similar commands applicable to it and its business, (ii) all
unwaived terms and provisions of all agreements, instruments, and commitments to
which it is a party or to which it or any of its assets or properties is
subject, except for any noncompliances that, both individually and in the
aggregate, have not had and

 

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could not reasonably be expected to have a material adverse effect on the
financial condition, results of operations, assets, liabilities, business or
prospects of the Corporation, and (iii) its charter documents and By-Laws, each
as amended to date. The Corporation has all federal, state, local and foreign
governmental licenses, registrations and permits material to or necessary for
the conduct of its business as currently conducted, such licenses, registrations
and permits are in full force and effect, and there have been no material
violations of any such licenses, registrations or permits. No proceeding is
pending or, to the Corporation’s knowledge, threatened, to revoke or limit any
thereof.

4.21 Insurance. No notice from any insurance carrier has been received by the
Corporation claiming that the Corporation is in default with respect to any
provision contained in any insurance policy.

4.22 Authorization of Transaction Documents. The execution, delivery and
performance by the Corporation of (a) this Agreement, (b) the Third Amended and
Restated Registration Rights Agreement of even date herewith by and among the
Corporation, the Investors and the other parties thereto in the form of Exhibit
4.22A (the “Registration Rights Agreement”), (c) the Third Amended and Restated
Voting Agreement of even date herewith by and among the Corporation, the
Investors and the other parties thereto in the form of Exhibit 4.22B (the
“Voting Agreement”), (d) the Third Amended and Restated Stock Restriction
Agreement of even date herewith by and among the Corporation, the Investors and
the other parties thereto in the form of Exhibit 4.22C (the “Stock Restriction
Agreement”) and (e) the Amended and Restated Investor Rights Agreement of even
date herewith by and among the Corporation, the Investors and the other parties
thereto in the form of Exhibit 4.22D (the “Investor Rights Agreement”; together
with this Agreement, the Registration Rights Agreement, the Voting Agreement and
the Stock Restriction Agreement, the “Transaction Documents”) have been duly
authorized by all requisite corporate action. The Corporation has duly
authorized, executed and delivered each Transaction Document, and each
Transaction Document constitutes the valid and binding obligation of the
Corporation, enforceable in accordance with its terms. The execution, delivery
and performance of the Transaction Documents, the issuance, sale and delivery of
the Series G Shares, and the shares of Common Stock issuable upon conversion of
the Series G Shares (the “Reserved Shares”), and compliance with the provisions
hereof and thereof by the Corporation do not and will not, with or without the
passage of time or the giving of notice or both, violate, conflict with or
result in any breach of any of the terms, conditions or provisions of, or
constitute a default (or give rise to any right of termination, cancellation or
acceleration) under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of the Corporation
under, the Certificate of Incorporation or By-Laws, any Material Agreement, or
any provision of law, statute, rule or regulation or any ruling, writ,
injunction, order, judgment or decree of any court, administrative agency or
other governmental body.

4.23 Authorization of Series G Shares and Reserved Shares. The Restated
Certificate has been duly authorized by all requisite corporate action, and has
been filed with the Secretary of State of the State of Delaware. The issuance,
sale and delivery hereunder by the

 

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Corporation of the Series G Shares have been duly authorized by all requisite
corporate action of the Corporation, and when so issued, sold and delivered the
Series G Shares will be validly issued and outstanding, fully paid and
nonassessable, and not subject to preemptive or any other similar rights of the
stockholders of the Corporation or others. The issuance and delivery of the
Reserved Shares have been duly authorized by all requisite corporate action of
the Corporation, and the Reserved Shares have been duly reserved for issuance
upon conversion of any or all of the Series G Shares, and when so issued and
delivered upon conversion of the Series G Shares, the Reserved Shares will be
validly issued and outstanding, fully paid and nonassessable, and not subject to
preemptive or any other similar rights of the stockholders of the Corporation or
others.

4.24 Related Transactions. No director, officer or employee of the Corporation
nor any “associate” (as defined in Rule 405 in the rules and regulations
promulgated under the Securities Act) of any such person is indebted to the
Corporation, nor is the Corporation indebted (or committed to make loans or
extend or guarantee credit) to any such person, nor is any such person a party
to any transaction (other than as an employee or consultant) with the
Corporation providing for the furnishing of services by, or rental of real or
personal property from, or otherwise requiring cash payments to, any such
person.

4.25 Offerees. The Corporation has not, either directly or through any agent,
offered any Common Stock, Series G Preferred Stock, or other securities
convertible into Common Stock, Series G Preferred Stock, or any security or
securities similar to any thereof, for sale to, or solicited any offers to buy
any Common Stock, Series G Preferred Stock, or other securities convertible into
Common Stock, Series G Preferred Stock, or any such similar security or
securities from, or otherwise approached or negotiated in respect thereof with,
any person or entity other than the Investors.

4.26 Use of Proceeds. The net proceeds received by the Corporation from the sale
of the Series G Shares shall be used by the Corporation solely for the purpose
of working capital and such other purposes as may be approved by the Board of
Directors (including the approval of all of the Series C-E Directors (as defined
in the Investor Rights Agreement).

4.27 No Governmental Consent or Approval Required. No authorization, consent,
approval or other order of, declaration to, or filing with, any governmental
agency or body is required to be made or obtained by the Corporation for or in
connection with the valid and lawful authorization, execution and delivery by
the Corporation of the Transaction Documents, for or in connection with the
valid and lawful authorization, issuance, sale and delivery of the Series G
Shares or for or in connection with the valid and lawful authorization,
reservation, issuance, sale and delivery of the Reserved Shares, except
exemptive filings under applicable securities laws that have been made or that
are not required to be made until after the Closing and that shall be made on a
timely basis.

4.28 Registration Rights. Except as contemplated by the Registration Rights
Agreement, no person has any right to cause the Corporation to effect the
registration under the Securities Act of any shares of Common Stock or any other
securities of the Corporation.

 

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4.29 Employees. Each of the officers of the Corporation, each key employee and
each other employee now employed by the Corporation who has access to
confidential information of the Corporation has executed an agreement regarding
confidentiality, inventions and noncompetition, and such agreements are in full
force and effect. No officer or key employee of the Corporation has advised the
Corporation (orally or in writing) that he intends to terminate employment with
the Corporation. The Corporation has complied in all material respects with all
applicable laws relating to the employment of labor, including provisions
relating to wages, hours, equal opportunity, collective bargaining and the
payment of Social Security and other taxes, and with ERISA.

4.30 Exemptions from Securities Laws. Subject to the accuracy of the
representations and warranties of the Investors set forth in Section 5 hereof,
the provisions of Section 5 of the Securities Act are inapplicable to the
offering, issuance, sale and delivery of the Series G Shares and the Reserved
Shares, and no consent, approval, qualification or registration or filing under
any state securities laws is required in connection therewith, except exemptive
filings that have been made or that are not required to be made until after the
Initial Closing or any Additional Closing and that shall be made on a timely
basis.

4.31 [Small Business Concern. The Corporation, taken together with its
“affiliates” (as that term is defined in 13 C.F.R. § 121.103) is a “small
business concern” within the meaning of 15 U.S.C. § 662(5), that is § 103(5) of
the Small Business Investment Act of 1958, as amended (the “SBIC Act”), and the
regulations thereunder, including 13 C.F.R. § 107, and meets applicable size
eligibility criteria set forth in 13 C.F.R. § 121.301(c)(1) or the industry
standard covering the industry in which the Corporation is primarily engaged as
set forth in 13 C.F.R. § 13.301(c)(2). The Corporation does not presently engage
in any activities for which a small business investment company is prohibited
from providing funds by the SBIC Act and the regulations thereunder, including
13 C.F.R. § 107.]

4.32 Books and Records. The books of account, ledgers, order books, records and
documents of the Corporation accurately and completely reflect all material
information relating to the business of the Corporation, the location and
collection of its assets, and the nature of all transactions giving rise to the
obligations or accounts receivable of the Corporation.

4.33 Disclosure. Neither this Agreement nor any other document, certificate or
written statement furnished to the Investors by or on behalf of the Corporation
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein or therein not
misleading. To the Corporation’s knowledge, there is no fact or circumstance
relating specifically to the business or condition of the Corporation that could
reasonably be expected to result in a material adverse effect to the financial
condition, results of operations, assets, liabilities, business or prospects of
the Corporation and that is not disclosed in Schedule 4.

SECTION 5. Representations and Warranties of the Investors. Each of the
Investors, severally and not jointly, represents and warrants to the Corporation
as follows:

 

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5.1 Purchase for Investment. Such Investor is acquiring the Series G Shares
purchasable by it hereunder for its own account, for investment and not for,
with a view to, or in connection with, any distribution or public offering
thereof within the meaning of the Securities Act.

5.2 Unregistered Securities; Legend. Such Investor understands that the Series G
Shares and the Reserved Shares (i) have not been, and will not be, registered
under the Securities Act or any state securities law, by reason of their
issuance in a transaction exempt from the registration requirements of the
Securities Act and such laws, (ii) must be held indefinitely unless they are
subsequently registered under the Securities Act and such laws or subsequent
disposition thereof is exempt from registration and (iii) will be subject to the
restrictions on transfer set forth in Section 8. Such Investor further
understands that such exemption depends upon, among other things, the bona fide
nature of such Investor’s investment intent expressed herein.

5.3 Status of the Investors. Such Investor has not been formed for the specific
purpose of acquiring the Series G Shares pursuant to this Agreement. Such
Investor understands the term “accredited investor” as used in Regulation D
promulgated under the Securities Act and represents and warrants to the
Corporation that such Investor is an “accredited investor” for purposes of
acquiring the Series G Shares purchasable by it hereunder.

5.4 Knowledge and Experience; Economic Risk. Such Investor has sufficient
knowledge and experience in business and financial matters and with respect to
investment in securities of privately held companies so as to enable it to
analyze and evaluate the merits and risks of the investment contemplated hereby
and is capable of protecting its interest in connection with this transaction.
Such Investor is able to bear the economic risk of such investment, including a
complete loss of the investment.

5.5 Access to Information. Such Investor acknowledges that such Investor and its
representatives have had the opportunity to ask questions and receive answers
from officers and representatives of the Corporation concerning the transactions
contemplated by this Agreement, and to obtain any additional information which
the Corporation possesses or can acquire in connection with its purchase of the
Series G Shares purchasable by it hereunder.

5.6 Rule 144. Such Investor understands that the exemption from registration
afforded by Rule 144 (the provisions of which are known to such Investor)
promulgated by the Securities and Exchange Commission (the “Commission”) under
the Securities Act depends upon the satisfaction of various conditions, and that
such exemption is not currently available.

SECTION 6. Conditions Precedent to Closings by the Investors.

6.1 Conditions Precedent to Initial Closing by the Initial Investors. The
obligation of each Initial Investor to purchase and pay for the Initial Series G
Shares being

 

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purchased by such Initial Investor at the Initial Closing is subject to
satisfaction (or waiver by such Initial Investor) of the following conditions
precedent at or before the Initial Closing:

(a) Corporate Proceedings. All corporate and other proceedings to be taken and
all waivers and consents to be obtained in connection with the transactions
contemplated by this Agreement shall have been taken or obtained and all
documents incident to such transactions shall be reasonably satisfactory in form
and substance to the Initial Investors and their counsel, who shall have
received all such originals or certified or other copies of such documents as
they may reasonably request.

(b) Representations and Warranties Correct. The representations and warranties
made by the Corporation in Section 4 hereof shall be true and correct when made,
and shall be true and correct at the time of the Initial Closing with the same
force and effect as if they had been made at and as of the time of the Initial
Closing.

(c) Compliance with Covenants. The Corporation shall have duly complied with and
performed all covenants and agreements of the Corporation herein which are
required to be complied with and performed at or before the Initial Closing.

(d) Certificate of Compliance. The President and Chief Executive Officer of the
Corporation shall have provided to the Initial Investors a certificate, dated
the date of the Initial Closing in form and substance reasonably satisfactory to
the Initial Investors participating in such Closing, confirming compliance with
the conditions set forth in Subsections 6.1(b) and 6.1(c).

(e) Opinion of Counsel. At the Initial Closing, each of the Initial Investors
shall have received an opinion of Palmer & Dodge LLP, counsel for the
Corporation, addressed to the Initial Investors in the form attached hereto as
Exhibit 6.1(e).

(f) Related Agreements and Documents. At or before the Initial Closing, the
parties thereto shall have executed and delivered this Agreement, the
Registration Rights Agreement, the Investor Rights Agreement, the Voting
Agreement and the Stock Restriction Agreement. In addition, the Initial
Investors and their counsel shall have received copies of the following
documents: (i) (A) the Certificate of Incorporation, certified as of a recent
date by the Secretary of State of the State of Delaware and (B) a certificate of
said Secretary dated as of a recent date as to the due incorporation and good
standing of the Corporation, the payment of all excise taxes by the Corporation
and listing all documents of the Corporation on file with said Secretary; (ii) a
certificate of the Secretary or an Assistant Secretary of the Corporation dated
the Initial Closing Date and certifying: (A) that attached thereto is a true and
complete copy of the By-Laws as in effect on the date of such certification;
(B) that attached thereto is a true and complete copy of all resolutions adopted
by the Board of Directors or the stockholders of the Corporation authorizing the
execution, delivery and performance of the Transaction Documents, the issuance,
sale and delivery of the Series G Shares and the reservation, issuance and
delivery of the Reserved Shares, and that all such resolutions are in full force
and effect and are all the

 

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resolutions adopted in connection with the transactions contemplated by the
Transaction Documents; (C) that the Restated Certificate has not been amended;
and (D) to the incumbency and specimen signature of each officer of the
Corporation executing any of the Transaction Documents, the stock certificates
representing the Series G Shares and any certificate or instrument furnished
pursuant hereto, and a certification by another officer of the Corporation as to
the incumbency and signature of the officer signing the certificate referred to
in this clause (ii); and (iii) such additional supporting documents and other
information with respect to the operations and affairs of the Corporation as the
Initial Investors or their counsel reasonably may request.

(g) Securities Matters. All consents, approvals, qualifications, registrations,
notices and filings required to be obtained or effected as of the Initial
Closing under any applicable securities laws of any state or other jurisdiction
in connection with the issuance, sale and delivery of the Series G Shares and
the Reserved Shares shall have been obtained or effected and copies of the same
delivered to each of the Initial Investors.

(h) Delivery of Certificates for Series G Shares. The Corporation shall have
delivered to each Initial Investor a certificate for the Series G Shares being
purchased by such Initial Investor at the Initial Closing, registered in the
name of such Initial Investor.

(i) Purchase by Other Initial Investors. Each Initial Investor shall have
purchased and paid for the Initial Series G Shares being purchased by it at the
Initial Closing and the aggregate investment of all Initial Investors shall be
no less than $[7,000,000].

6.2 Conditions Precedent to Scheduled Additional Closings by the Investors. The
obligation of each Investor to purchase and pay for the Additional Series G
Shares being purchased by such Investor at a Scheduled Additional Closing
(together with the Initial Closing and any other Additional Closing(s), each a
“Closing”) is subject to satisfaction (or waiver by such Initial Investor) of
the following conditions precedent at or before such Scheduled Additional
Closing:

(a) Completion of Initial Closing. The Initial Closing shall have been
consummated in accordance with the terms of this Agreement.

(b) Corporate Proceedings. None of the corporate and other proceedings required
to be taken nor the waivers and consents required to be obtained in connection
with the Initial Closing shall have been rescinded or amended in a manner that
prevents such Scheduled Additional Closing.

(c) Delivery of Certificates for Series G Shares. The Corporation shall have
delivered to each Investor a certificate for the Additional Series G Shares
being purchased by such Investor at the Scheduled Additional Closing, registered
in the name of such Investor.

 

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6.3 Conditions Precedent to First Additional Closing by the Additional
Investors. The obligation of each Additional Investor to purchase and pay for
the Additional Investor Series G Shares being purchased by such Additional
Investor at the first Additional Closing in which such Additional Investor
participates is subject to satisfaction (or waiver by such Additional Investor)
of the following conditions precedent at or before such Additional Closing:

(a) Corporate Proceedings. None of the corporate and other proceedings required
to be taken nor the waivers and consents required to be obtained in connection
with the Initial Closing shall have been rescinded or amended in a manner that
prevents such Additional Closing.

(b) Representations and Warranties Correct. The representations and warranties
made by the Corporation in Section 4 hereof shall be true and correct at the
time of such Additional Closing with the same force and effect as if they had
been made at and as of the time of such Additional Closing, except as set forth
in any supplement or update to the Disclosure Schedules reasonably satisfactory
to such Additional Investor.

(c) Compliance with Covenants. The Corporation shall have duly complied with and
performed all covenants and agreements of the Corporation herein which are
required to be complied with and performed at or before such Additional Closing.

(d) Certificate of Compliance. The President and Chief Executive Officer of the
Corporation shall have provided to such Additional Investor a certificate, dated
the date of such Additional Closing in form and substance reasonably
satisfactory to such Additional Investor, confirming compliance with the
conditions set forth in Subsections 6.3(b) and 6.3(c).

(e) Delivery of Certificates for Series G Shares. The Corporation shall have
delivered to each such Additional Investor a certificate for the Additional
Investor Series G Shares being purchased by such Additional Investor at such
Additional Closing, registered in the name of such Additional Investor.

SECTION 7. Conditions Precedent to Closing by the Corporation. The obligation of
the Corporation to issue and sell the Series G Shares being sold to the
Investors at any Closing is subject to satisfaction (or the waiver by the
Corporation) of the following conditions precedent at or before such Closing:

7.1 Representations and Warranties. The representations and warranties made by
each Investor purchasing shares at such Closing in Section 5 hereof shall be
true and correct when made, and shall be true and correct in all material
respects at the time of such Closing with the same force and effect as if they
had been made at and as of the time of such Closing.

7.2 Tender of Payment. Each Investor purchasing Series G Shares at the Closing
shall have tendered payment for such Series G Shares to the Corporation.

 

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SECTION 8. Transfer of Shares; Restricted Shares. “Restricted Shares” means
(i) the Series G Shares, (ii) the shares of Common Stock issued or issuable upon
conversion of the Series G Shares, (iii) any shares of capital stock of the
Corporation acquired by the Investors pursuant to the Investor Rights Agreement,
and (iv) any other shares of capital stock of the Corporation 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 they become eligible for sale under Rule 144(k) under the
Securities Act.

8.1 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
Corporation first shall have been furnished with an opinion of legal counsel,
reasonably satisfactory to the Corporation, 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) a transfer by an Investor which is a corporation to the
parent or a wholly owned subsidiary of such corporation, (B) a transfer by an
Investor 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 to an affiliated limited partnership
(or other entity) managed by the same management company or managing general
partner of such Investor or by an entity which controls, is controlled by, or is
under common control with, such management company or managing general partner,
(C) a transfer by an Investor which is a trust to any beneficiary of the trust,
(D) a transfer by an Investor 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, or to an
affiliated limited liability company (or other entity) managed by the same
management company or managing member of such Investor or by an entity which
controls, is controlled by, or is under common control with, such management
company or managing member.

8.2 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 (the “Act”), and may not be offered, sold or
otherwise transferred, pledged or hypothecated unless and until such shares are
registered under such Act, or, if requested by the Company, an opinion of
counsel satisfactory to the Company is obtained to the effect that such
registration is not required.”

 

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The foregoing legend shall be removed from the certificates representing any
Restricted Shares, at the request of the holder thereof, at such time as they
become eligible for resale pursuant to Rule 144(k) under the Securities Act.

SECTION 9. Fees; Brokers.

9.1 Fees. The Corporation shall pay, and save the Investors harmless against all
liability for the payment of:

(a) all costs and other expenses incurred by the Corporation in connection with
the preparation of the Transaction Documents and the Corporation’s performance
of and compliance with all agreements and conditions contained herein and
therein on its part to be performed or complied with; and

(b) all costs and other expenses incurred by the Corporation in connection with
delivering to the Investors the Series G Shares and the Reserved Shares.

The Corporation further agrees that it shall pay, and shall save the Investors
harmless from, any and all liability with respect to any stamp, issue or similar
taxes which may be determined to be payable in connection with the execution,
delivery and performance of this Agreement, the issuance of the Series G Shares
or the Reserved Shares or any modification, amendment or alteration of the terms
or provisions of this Agreement.

9.2 Brokers. The Corporation represents and warrants to the Investors that
(a) neither the Corporation nor any of its officers, directors, employees or
stockholders, has employed any broker or finder in connection with the
transactions contemplated by this Agreement, and (b) no person or entity will
have, as a result of the transactions contemplated by this Agreement, any right
to, interest in, or claim against or upon the Corporation or any Investor for,
any commission, fee or other compensation as a finder or broker because of any
act or omission by the Corporation or any agent of the Corporation. The
Corporation agrees that it shall pay, and shall save the Investors harmless
from, any and all liability with respect to any commission, fee or other
compensation payable to any broker or finder in connection with the transactions
contemplated by this Agreement.

SECTION 10. Remedies. In case any one or more of the representations,
warranties, covenants or agreements set forth in this Agreement shall have been
breached by the Corporation, the Investors may proceed to protect and enforce
their rights either by suit in equity or by action at law, including, but not
limited to, an action for damages as a result of any such breach or an action
for specific performance of any such covenant or agreement contained in this
Agreement. No failure or delay on the part of any party to this Agreement in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy hereunder. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.

 

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SECTION 11. Exchanges; Lost, Stolen or Mutilated Certificates. Upon surrender by
any Investor to the Corporation of any certificate representing Series G Shares
or Reserved Shares, the Corporation at its expense shall issue in exchange
therefor, and deliver to such Investor, new certificates representing such
Series G Shares or Reserved Shares, as the case may be, in such amounts or
denominations as may be requested by such Investor. Upon receipt of evidence
satisfactory to the Corporation of the loss, theft, destruction or mutilation of
any certificate representing any Series G Shares or Reserved Shares and in case
of any such loss, theft or destruction, upon delivery of an indemnity agreement
satisfactory to the Corporation, or in case of any such mutilation, upon
surrender and cancellation of such certificate, the Corporation at the
Investor’s expense shall issue and deliver to such Investor a new certificate
for such Series G Shares or Reserved Shares, of like tenor, in lieu of such
lost, stolen or mutilated certificate.

SECTION 12. Survival of Representations, Warranties and Agreements. The
covenants, representations and warranties of the parties contained herein shall
survive the Closings hereunder. Each of the parties may rely on such covenants,
representations and warranties irrespective of any investigation made, or notice
or knowledge held by, it or any other person. All statements contained in any
certificate or other instrument delivered by any party pursuant to this
Agreement or in connection with the transactions contemplated by this Agreement
shall constitute representations and warranties by such party under this
Agreement, subject to the qualifications set forth herein and therein.

SECTION 13. Successors and Assigns. This Agreement shall be binding upon, and
inure to the benefit of, each of the parties hereto and, except as otherwise
expressly provided herein, each other person who shall become a registered
holder named in a certificate evidencing Series G Shares or Reserved Shares
transferred to such holder by any of the Investors or their permitted
transferees, and (except as aforesaid) their respective legal representatives,
successors and assigns. Notwithstanding the foregoing, the Corporation shall not
have the right to assign its rights hereunder with respect to the Investors’
commitment to make an investment at an Additional Closing without the prior
written consent of the holders of at least two-thirds of the voting power of the
then outstanding Series G Shares and Reserved Shares, voting together on an
as-if converted to Common Stock basis.

SECTION 14. Entire Agreement; Effect on Prior Documents. This Agreement and the
other documents referred to herein or delivered pursuant hereto contain the
entire agreement among the parties with respect to the financing transactions
contemplated hereby and supersede all prior negotiations, commitments,
agreements and understandings among them with respect thereto. Nothing in this
Agreement or the transactions hereby contemplated is intended to confer upon any
other person any rights or remedies of any nature whatsoever.

SECTION 15. Notices. All notices, requests, consents and other communications
hereunder (“Notices”) to any party shall be contained in a written instrument
addressed to such party at the address set forth below or such other address as
may hereafter be designated in writing by the addressee to the addressor listing
all parties and shall be deemed given (a) when delivered in person or duly sent
by fax showing confirmation of receipt, (b) three days after being duly sent

 

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by first class mail postage prepaid (other than in the case of Notices to or
from any non-U.S. resident), or (c) two days after being duly sent by DHL,
Federal Express or other recognized express international courier service:

 

  (a) if to the Corporation, to:

Enanta Pharmaceuticals, Inc.

500 Arsenal Street

Watertown, MA 02472

Attn: President

Fax: [*****]

with a copy to:

Nathaniel S. Gardiner

Palmer & Dodge LLP

111 Huntington Avenue

Boston, MA 02199-7613

Fax: 617-227-4420

 

  (b) if to the Investors, to their respective addresses as set forth on the
signature pages of this Agreement.

SECTION 16. Amendments; Waivers. This Agreement may be amended, and compliance
with the provisions of this Agreement may be omitted or waived, only by the
written agreement of the Corporation and Investors or assignees of their rights
hereunder holding two-thirds in voting power of the then outstanding Series G
Shares and Reserved Shares taken as a whole.

SECTION 17. Counterparts. This Agreement may be executed in any number of
counterparts, each such counterpart shall be deemed to be an original
instrument, and all such counterparts together shall constitute but one
agreement. Any such counterpart may contain one or more signature pages.

SECTION 18. Headings. The headings of the various sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed to
be a part of this Agreement.

SECTION 19. Nouns and Pronouns. Whenever the context may require, any pronouns
used herein shall include the corresponding masculine, feminine or neuter forms,
and the singular form of names and pronouns shall include the plural and
vice-versa.

SECTION 20. Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the substantive laws of the Commonwealth of
Massachusetts, without regard to its principles of conflicts of laws.

 

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SECTION 21. Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

SECTION 22. Further Assurances. From and after the date of this Agreement, upon
the request of any Investor, the Corporation shall execute and deliver such
instruments, documents and other writings as may be reasonably necessary or
desirable to confirm and carry out and to effectuate fully the intent and
purposes of this Agreement and the Series G Shares.

SECTION 23. Additional Investors. The Additional Investors shall become parties
to this Agreement, and shall be entitled to all of the benefits to and shall be
subject to all of the obligations of “Investors” under this Agreement, all upon
execution by such Additional Investor of a counterpart signature page to this
Agreement. The Corporation shall be authorized to add the name, amount of
investment and number of Additional Investor Series G Shares purchased by each
Additional Investor at each Additional Closing to the Schedule of Investors.

SECTION 24. Adjustments for Stock Splits, Etc. Wherever in this Agreement there
is a reference to a specific number of shares of Common Stock or Series G
Preferred Stock or any other class or series of capital stock, then, upon the
occurrence of any subdivision, combination or stock dividend of such class or
series of stock, the specific number of shares so referenced in this Agreement
shall automatically be proportionally adjusted to reflect the affect on the
outstanding shares of such class or series of stock by such subdivision,
combination or stock dividend.

SECTION 25. Aggregation of Stock. All shares held or acquired by affiliated
entities or persons shall be aggregated together for the purpose of determining
the availability of any rights under this Agreement.

SECTION 26. Issuances of Series G Preferred Stock. Except as expressly provided
in this Agreement, the Corporation shall not issue or sell any shares of Series
G Preferred Stock.

[Remainder of page intentionally left blank.]

 

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IN WITNESS WHEREOF, the undersigned have executed this Series G Convertible
Preferred Stock Purchase Agreement as of the day and year first written above.

 

ENANTA PHARMACEUTICALS, INC. By:  

 

Name:   Jay R. Luly Title:   President and Chief Executive Officer

[Signature Page to Series G Convertible Preferred Stock Purchase Agreement]

 

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Enanta Pharmaceuticals, Inc.

Investor Signature Page

By his, her or its execution and delivery of this signature page, the
undersigned Investor hereby joins in and agrees to be bound by the terms and
conditions of (i) the Series G Convertible Preferred Stock Purchase Agreement
(the “Purchase Agreement”) dated as of September     , 2005 (the “Effective
Date”), by and among Enanta Pharmaceuticals, Inc. (the “Corporation”), and the
investors named on the Schedule of Investors thereto, as to the number of shares
of Series G Convertible Preferred Stock set forth below, (ii) that certain Third
Amended and Restated Voting Agreement dated as of the Effective Date (the
“Voting Agreement”), by and among the Corporation, the Founders (as defined
therein) and the Investors (as defined therein) as a “Series G Investor”
thereunder, and, if the undersigned is also a “Series C Investor,” and/or a
“Series D Investor” and/or a “Series E Investor” thereunder, as a “Series C
Investor,” and/or as a “Series D Investor” and/or as a “Series E Investor,” as
the case may be, thereunder, (iii) that certain Third Amended and Restated
Registration Rights Agreement dated as of the Effective Date (the “Registration
Rights Agreement”), by and among the Corporation and the Investors (as defined
therein) as a “Series G Investor” thereunder, and, if the undersigned is also a
“Series C Investor,” and/or a “Series D Investor,” and/or a “Series E Investor,”
thereunder, as a “Series C Investor,” and/or as a “Series D Investor” and/or as
a “Series E Investor,” as the case may be, thereunder, (iv) that certain Third
Amended and Restated Stock Restriction Agreement dated as of the Effective Date
(the “Stock Restriction Agreement”), by and among the Corporation, the Founders
(as defined therein) and the Investors (as defined therein) as a “Series G
Investor” thereunder, and, if the undersigned is also a “Series C Investor,”
and/or a “Series D Investor” and/or a “Series E Investor,” thereunder, as a
“Series C Investor” and/or as a “Series D Investor,” and/or as a “Series E
Investor”, as the case may be, thereunder, and (v) that certain Amended and
Restated Investor Rights Agreement dated as of the Effective Date (the “Investor
Rights Agreement”), by and among the Corporation and the Investors (as defined
therein) as a “Series G Investor” thereunder, and, if the undersigned is also a
“Series C Investor,” and/or a “Series D Investor” and/or a “Series E Investor,”
thereunder, as a “Series C Investor,” and/or as a “Series D Investor” and/or as
a “Series E Investor,” as the case may be, thereunder, and authorizes this
signature page to be attached as a counterpart to the Purchase Agreement, the
Voting Agreement, the Registration Rights Agreement, the Stock Restriction
Agreement and the Investor Rights Agreement, or counterparts thereof.

EXECUTED as of this      day of             ,         .

 

By:  

 

 

Title:

 

Print Name of Investor Record Address:  

 

 

 

Telecopy No.:  

 

Number of Shares of Series G Preferred Stock:  

 

 

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Schedule of Investors

 

Name of Investor

   Aggregate
Purchase Price      Initial
Series G Shares     Second Closing
Series G Shares     Third Closing
Series G Shares     Fourth Closing
Series G Shares     Fifth Closing
Series G Shares  

Initial Investors

             

[name]

   $                      [             ]      [             ]     
[             ]      [             ]      [             ] 

[name]

   $                      [             ]      [             ]     
[             ]      [             ]      [             ] 

[name]

   $                      [             ]      [             ]     
[             ]      [             ]      [             ] 

[name]

   $                      [             ]      [             ]     
[             ]      [             ]      [             ] 

Subtotal:

   $                      [             ]      [             ]     
[             ]      [             ]      [             ] 

Additional Investors

             

[name]

   $                      —             

[name]

   $                      —             

Subtotals:

   $                      —             

TOTALS:

   $                      —             

 

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Schedule 4

Disclosure Schedules

 

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Exhibit 1

Fourth Amended and Restated Certificate of Incorporation

of Enanta Pharmaceuticals, Inc.

 

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Exhibit 4.22A

Third Amended and Restated

Registration Rights Agreement

 

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Exhibit 4.22B

Third Amended and Restated

Voting Agreement

 

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Exhibit 4.22C

Third Amended and Restated

Stock Restriction Agreement

 

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Exhibit 4.22D

Amended and Restated Investor Rights Agreement

 

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Exhibit 6.1(e)

Form of Legal Opinion

of Palmer & Dodge LLP

 

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EXHIBIT C

FORM OF PRESS RELEASE

ABBOTT AND ENANTA FORM WORLDWIDE ALLIANCE TO DEVELOP &

COMMERCIALIZE HCV PROTEASE INHIBITORS

ABBOTT PARK, Ill., and WATERTOWN, Mass., Dec XX, 2006 – Abbott and Enanta
Pharmaceuticals announced today that the companies have signed a worldwide
agreement to develop and commercialize hepatitis C virus (HCV) NS3 and NS3/4A
protease inhibitors. Enanta has discovered several HCV protease inhibitors that
have demonstrated attractive efficacy and pharmacokinetic profiles in
pre-clinical studies.

“Abbott’s innovative work in the protease inhibitor field against the Human
Immunodeficiency Virus (HIV) has provided the momentum and the foundation for
our research interest in HCV infection,” said John Leonard, M.D., vice
president, Global Pharmaceutical Research and Development, Abbott. “Enanta has
done compelling work in its HCV protease inhibitor program, and we look forward
to working together on the advancement of this global program.”

“Abbott is a market leader in the field of antiviral therapies, and we have a
shared vision and commitment to the discovery and development of promising HCV
therapies that address this high unmet medical need globally,” stated Jay R.
Luly, President and CEO of Enanta Pharmaceuticals.

Under the terms of the agreement, Abbott gains worldwide access to Enanta’s
substantial intellectual property position for a variety of different types of
compounds, which includes several issued U.S. patents. Abbott also gains access
to Enanta’s drug discovery capabilities in the HCV NS3 and NS3/4A protease
inhibitor field.

Additionally, Enanta will receive an upfront payment of $57 million, which
includes a cash payment and an equity investment. If all potential clinical and
regulatory milestones are met, additional payments of up to $250 million will be
made to Enanta, and further payments will be due if multiple products develop
from the program. Enanta will receive double-digit royalties and holds an option
to fund 40 percent of development costs and U.S. commercialization efforts
(sales and promotion costs) in exchange for a 40-percent profit share in the
U.S. on medicines from this alliance that result in commercial approval.

“Through this alliance, we will enhance our HCV protease inhibitor program and
allow both companies to participate in the long-term value creation of these
compounds, by leveraging Enanta’s core expertise in chemistry and drug
discovery, with Abbott’s proven track-record in the discovery, development, and
commercialization of antiviral therapies,” stated Yujiro S. Hata, Senior Vice
President of Business Development at Enanta Pharmaceuticals.

 

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About Hepatitis C Virus

Hepatitis C is a liver disease affecting over 170 million people worldwide. The
virus is spread through direct contact with the blood of an infected person.
Hepatitis C increases a person’s risk of developing chronic liver disease,
cirrhosis, liver cancer and death. Liver disease associated with HCV infection
is growing rapidly, and current therapies only provide sustained benefit in
about half of patients with the genotypel form of the virus. Specifically
targeted antiviral therapies for HCV, such as NS3/4a protease inhibitors, may
have the potential to increase the proportion of patients in whom the virus can
be eradicated.

About Enanta

Enanta Pharmaceuticals is a research and development company that uses its novel
chemistry approach and drug discovery capabilities to create best in class small
molecule drugs in the anti-infective field. At the heart of Enanta is its
commitment to innovative chemistry that surpasses traditional medicinal
chemistry approaches. The Company’s successful integration of chemistry with
biology has created a new class of macrolide antibiotics that overcome bacterial
resistance. Antibacterial focus areas include community respiratory tract
infections as well as hospital and community infections relating to MRSA.
Additionally, Enanta has discovered antiviral agents targeted against the
Hepatitis C virus (HCV). Enanta is a privately held company with offices in
Watertown, MA. More information about the company can be found at
www.enanta.com.

About Abbott

Abbott is a global, broad-based health care company devoted to the discovery,
development, manufacture and marketing of pharmaceuticals and medical products,
including nutritionals, devices and diagnostics. The company employs 65,000
people and markets its products in more than 130 countries.

Abbott’s news releases and other information are available on the company’s web
site at www.abbott.com.

 

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EXHIBIT D

ARBITRATION PROCEDURES

The Parties recognize that from time to time a dispute may arise relating to
either Party’s rights or obligations under this Agreement. The Parties agree
that any such dispute shall be resolved by the Alternative Dispute Resolution
(“ADR”) provisions set forth in this Exhibit, the result of which shall be
binding upon the Parties.

To begin the ADR process, a Party first must send written notice of the dispute
to the other Party for attempted resolution by good faith negotiations between
their respective presidents (or their designees) of the affected subsidiaries,
divisions, or business units within twenty-eight (28) days after such notice is
received (all references to “days” in this ADR provision are to calendar days).
If the matter has not been resolved within twenty-eight (28) days of the notice
of dispute, or if the Parties fail to meet within such twenty-eight (28) days,
either Party may initiate an ADR proceeding as provided herein. The Parties
shall have the right to be represented by counsel in such a proceeding.

1. To begin an ADR proceeding, a Party shall provide written notice to the other
Party of the issues to be resolved by ADR. Within fourteen (14) days after its
receipt of such notice, the other Party may, by written notice to the Party
initiating the ADR, add additional issues to be resolved within the same ADR.

2. Within twenty-one (21) days following the initiation of the ADR proceeding,
the parties shall select a mutually acceptable neutral to preside in the
resolution of any disputes in this ADR proceeding. If the parties are unable to
agree on a mutually acceptable neutral within such period, either party may
request the President of the CPR Institute for Dispute Resolution (“CPR”), 366
Madison Avenue, 14th Floor, New York, New York 10017, to select a neutral
pursuant to the following procedures:

(a) The CPR shall submit to the parties a list of not less than five
(5) candidates within fourteen (14) days after receipt of the request, along
with a Curriculum Vitae for each candidate. No candidate shall be an employee,
director, or shareholder of either party or any of their subsidiaries or
affiliates.

(b) Such list shall include a statement of disclosure by each candidate of any
circumstances likely to affect his or her impartiality.

(c) Each Party shall number the candidates in order of preference (with the
number one (1) signifying the greatest preference) and shall deliver the list to
the CPR within seven (7) days following receipt of the list of candidates. If a
Party believes a conflict of interest exists regarding any of the candidates,
that Party shall provide a written explanation of the conflict to the CPR along
with its list showing its order of preference for the candidates. Any

 

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Party failing to return a list of preferences on time shall be deemed to have no
order of preference.

(d) If the Parties collectively have identified fewer than three (3) candidates
deemed to have conflicts, the CPR immediately shall designate as the neutral the
candidate for whom the Parties collectively have indicated the greatest
preference. If a tie should result between two candidates, the CPR may designate
either candidate. If the Parties collectively have identified three (3) or more
candidates deemed to have conflicts, the CPR shall review the explanations
regarding conflicts and, in its sole discretion, may either (i) immediately
designate as the neutral the candidate for whom the Parties collectively have
indicated the greatest preference, or (ii) issue a new list of not less than
five (5) candidates, in which case the procedures set forth in subparagraphs
2(a) - 2(d) shall be repeated.

3. No earlier than twenty-eight (28) days or later than fifty-six (56) days
after selection, the neutral shall hold a hearing to resolve each of the issues
identified by the Parties. The ADR proceeding shall take place at a location
agreed upon by the parties. If the Parties cannot agree, the neutral shall
designate a location other than the principal place of business of either Party
or any of their subsidiaries or affiliates.

4. At least seven (7) days prior to the hearing, each Party shall submit the
following to the other party and the neutral:

(a) a copy of all exhibits on which such Party intends to rely in any oral or
written presentation to the neutral;

(b) a list of any witnesses such Party intends to call at the hearing, and a
short summary of the anticipated testimony of each witness;

(c) a proposed ruling on each issue to be resolved, together with a request for
a specific damage award or other remedy for each issue. The proposed rulings and
remedies shall not contain any recitation of the facts or any legal arguments
and shall not exceed one (1) page per issue. The parties agree that neither side
shall seek as part of its remedy any punitive damages.

(d) a brief in support of such party’s proposed rulings and remedies, provided
that the brief shall not exceed twenty (20) pages. This page limitation shall
apply regardless of the number of issues raised in the ADR proceeding.

Except as expressly set forth in subparagraphs 4(a) - 4(d), no discovery shall
be required or permitted by any means, including depositions, interrogatories,
requests for admissions, or production of documents.

5. The hearing shall be conducted on two (2) consecutive days and shall be
governed by the following rules:

 

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(a) Each Party shall be entitled to five (5) hours of hearing time to present
its case. The neutral shall determine whether each Party has had the five
(5) hours to which it is entitled.

(b) Each Party shall be entitled, but not required, to make an opening
statement, to present regular and rebuttal testimony, documents or other
evidence, to cross-examine witnesses, and to make a closing argument.
Cross-examination of witnesses shall occur immediately after their direct
testimony, and cross-examination time shall be charged against the Party
conducting the cross-examination.

(c) The Party initiating the ADR shall begin the hearing and, if it chooses to
make an opening statement, shall address not only issues it raised but also any
issues raised by the responding Party. The responding Party, if it chooses to
make an opening statement, also shall address all issues raised in the ADR.
Thereafter, the presentation of regular and rebuttal testimony and documents,
other evidence, and closing arguments shall proceed in the same sequence.

(d) Except when testifying, witnesses shall be excluded from the hearing until
closing arguments.

(e) Settlement negotiations, including any statements made therein, shall not be
admissible under any circumstances. Affidavits prepared for purposes of the ADR
hearing also shall not be admissible. As to all other matters, the neutral shall
have sole discretion regarding the admissibility of any evidence.

6. Within seven (7) days following completion of the hearing, each Party may
submit to the other Party and the neutral a post-hearing brief in support of its
proposed rulings and remedies, provided that such brief shall not contain or
discuss any new evidence and shall not exceed ten (10) pages. This page
limitation shall apply regardless of the number of issues raised in the ADR
proceeding.

7. The neutral shall rule on each disputed issue within fourteen (14) days
following completion of the hearing. Such ruling shall adopt in its entirety the
proposed ruling and remedy of one of the parties on each disputed issue but may
adopt one Party’s proposed rulings and remedies on some issues and the other
Party’s proposed rulings and remedies on other issues. The neutral shall not
issue any written opinion or otherwise explain the basis of the ruling.

8. The neutral shall be paid a reasonable fee plus expenses. These fees and
expenses, along with the reasonable legal fees and expenses of the prevailing
Party (including all expert witness fees and expenses), the fees and expenses of
a court reporter, and any expenses for a hearing room, shall be paid as follows:

(a) If the neutral rules in favor of one Party on all disputed issues in the
ADR, the losing Party shall pay 100% of such fees and expenses.

 

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(b) If the neutral rules in favor of one Party on some issues and the other
Party on other issues, the neutral shall issue with the rulings a written
determination as to how such fees and expenses shall be allocated between the
Parties. The neutral shall allocate fees and expenses in a way that bears a
reasonable relationship to the outcome of the ADR, with the Party prevailing on
more issues, or on issues of greater value or gravity, recovering a relatively
larger share of its legal fees and expenses.

9. The rulings of the neutral and the allocation of fees and expenses shall be
binding, non-reviewable, and non-appealable, and may be entered as a final
judgment in any court having jurisdiction.

10. Except as provided in paragraph 9 or as required by law, the existence of
the dispute, any settlement negotiations, the ADR hearing, any submissions
(including exhibits, testimony, proposed rulings, and briefs), and the rulings
shall be deemed Confidential Information. The neutral shall have the authority
to impose sanctions for unauthorized disclosure of Confidential Information.

11. All ADR hearings shall be conducted in the English language.

 

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SCHEDULE 1

ABBOTT COMPOUNDS

[*****]

 

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SCHEDULE 2

ABBOTT PATENT RIGHTS

None.

 

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SCHEDULE 3

EXCLUDED COMPOUNDS

[*****]

 

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SCHEDULE 4

LICENSED PATENT RIGHTS

 

Title

  

ENP-

Numbers

  

Application
Number/ Patent
Number

  

Country

  

Filing

Date

  

Patent Issue

Date

  

Status

Azapeptide

   ENP-057    7,125,845    US (Utility)    03-Jul-2003    24-Oct-2006    Granted
      05010029A1   

PCT

Nationalization

   19-May-2004    NA    Published       [*****]    [*****]    [*****]    [*****]
   [*****]

Quinoxaline

   ENP-060    10/826,743    US (Utility)    16-Apr-2004    NA    Allowed      
[*****]    [*****]    [*****]    [*****]    [*****]       [*****]    [*****]   
[*****]    [*****]    [*****]       [*****]    [*****]    [*****]    [*****]   
[*****]       2004800129286    China    16-Apr-2004    NA    Published      
04750236.4    European Patent Convention    16-Apr-2004    NA    Published      
06104304.7    Hong Kong    10-Apr-2004    NA    Published       2006-513078   
Japan    16-Apr-2004    NA    Pending       1020057019856    Korea   
16-Apr-2004    NA    Published       US04/11841    PCT    16-Apr-2004    NA   
Published

Tripeptide

   ENP-065    10/849,107    US (Utility)    15-May-2004    NA    Allowed      
[*****]    [*****]    [*****]    [*****]    [*****]

Heteroaryl

   ENP-066    10/774,047    US (Utility)    06-Feb-2004    NA    Published      
[*****]    [*****]    [*****]    [*****]    [*****]       [*****]    [*****]   
[*****]    [*****]    [*****]       0480009268.6    China    06-Feb-2004    NA
   Published       047090204    European Patent Convention    06-Feb-2004    NA
   Published       [*****]    [*****]    [*****]    [*****]    [*****]

[*****]

   [*****]    [*****]    [*****]    [*****]    [*****]    [*****]

 

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Title

  

ENP-

Numbers

  

Application
Number/ Patent
Number

  

Country

  

Filing

Date

  

Patent Issue

Date

  

Status

      [*****]    [*****]    [*****]    [*****]    [*****]       [*****]   
[*****]    [*****]    [*****]    [*****] [*****]    [*****]    [*****]   
[*****]    [*****]    [*****]    [*****]       [*****]    [*****]    [*****]   
[*****]    [*****] [*****]    [*****]    [*****]    [*****]    [*****]   
[*****]    [*****] [*****]    [*****]    [*****]    [*****]    [*****]   
[*****]    [*****] [*****]    [*****]    [*****]    [*****]    [*****]   
[*****]    [*****] [*****]    [*****]    [*****]    [*****]    [*****]   
[*****]    [*****] [*****]    [*****]    [*****]    [*****]    [*****]   
[*****]    [*****] [*****]    [*****]    [*****]    [*****]    [*****]   
[*****]    [*****] [*****]    [*****]    [*****]    [*****]    [*****]   
[*****]    [*****] [*****]    [*****]    [*****]    [*****]    [*****]   
[*****]    [*****] [*****]    [*****]    [*****]    [*****]    [*****]   
[*****]    [*****] [*****]    [*****]    [*****]    [*****]    [*****]   
[*****]    [*****] [*****]    [*****]    [*****]    [*****]    [*****]   
[*****]    [*****] [*****]    [*****]    [*****]    [*****]    [*****]   
[*****]    [*****]

 

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SCHEDULE 5

MATERIAL TERMS TO BE INCLUDED IN

CO-PROMOTION AGREEMENT

The Co-Promotion Agreement to be negotiated by the Parties upon exercise by
Enanta of a Co-Promotion Option shall contain the following material terms.
Capitalized terms used in this Schedule 5 and not otherwise defined have the
meanings given to them in the Agreement.

1. Co-Promotion Rights.

(a) Enanta and Abbott hereby acknowledge and agree that the overall objective of
co-promotion is to reach a broad customer audience, avoid confusion and
redundancy of the marketing message for Co-Promoted Products and maximize the
particular strengths that the Parties bring to the Co-Promotion of Co-Promoted
Products. In connection therewith, it is the expectation of the Parties that
each Marketing and Sales Plan shall provide that Enanta will perform up to the
Enanta Co-Development Percentage of the total Detailing effort made each
Calendar Year applicable to Co-Promoted Products in the Co-Promotion Territory
(the “Co-Promotion Detailing Target”); provided, that, the allocation of the
Detailing obligations between the Parties shall take into account the position
of the Detail, the number of calls and the quality/difficulty and relative
importance of the target audience. All such Detailing calls shall be made in
such markets as the JDCC reasonably considers to be appropriate for the
successful Commercialization of such Co-Promoted Product based on objective,
quantifiable information and market research data with the objectives of
allocating to each of Enanta and Abbott target audience and accounts from which
each such Party will have the opportunity to attain its Co-Promotion Detailing
Target. Notwithstanding the commercially reasonable and diligent efforts of the
Parties to effect an objective allocation of individual accounts and target
audience between the Parties, the Parties recognize that it may be necessary
from time to time to reassign individual accounts and/or target audience between
the Parties and the JDCC shall be entitled to review the allocation of accounts
as it reasonably determines to be appropriate.

(b) The object of Co-Promotion is to increase Co-Promotion efforts to the
Co-Promotion Target Audience with a consistent marketing message. It is
recognized that the Parties bring particular strengths to the ongoing
Commercialization of Co-Promoted Products in the Co-Promotion Territory. With
respect to each Co-Promoted Product, the JDCC will assign to each Party a role
in Commercialization functions and activities as the JDCC considers to be
reasonably appropriate for the successful Commercialization of such Co-Promoted
Product.

(c) Abbott shall grant to Enanta a co-exclusive (together with Abbott and its
Affiliates), royalty-free license, with the right to grant sublicenses solely to
Affiliates, under the Abbott Technology and Abbott Patent Rights, to Co-Promote
Co-Promoted Products in the Co-Promotion Territory.

 

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(d) Enanta and Abbott shall use an integrated sales force to Detail each
Co-Promoted Product. In connection therewith, neither Party will, without the
other Party’s prior written consent, use a Representative to Detail a
Co-Promoted Product if that Representative is also Detailing a product that is
approved for an indication that is directly competitive with the Co-Promoted
Product. Enanta and Abbott hereby agree that each such Party shall be
responsible for ensuring that its Representatives Detail each Co-Promoted
Product in a manner consistent with the Marketing and Sales Plan and/or the
decisions of the JDCC. Notwithstanding the foregoing, in performing their
respective Detailing obligations hereunder, each of the Parties agrees to
(a) use Representatives with an experience profile appropriate for the target
audience and Detailing role as described in the Marketing and Sales Plan;
(b) provide its own sales management organization and infrastructure for its
Representatives and (c) Detail the Co-Promoted Product in the first or second
position.

2. Commercialization Efforts. Each Party shall use commercially reasonable
efforts to execute its obligations under each Co-Promotion Marketing and Sales
Plan, consistent with the applicable Co-Promotion Commercialization Budget, and
to cooperate diligently with each other in carrying out such Co-Promotion
Marketing and Sales Plan.

3. Co-Promotion Marketing and Sales Plan and Budget.

(a) Preparation of Plan and Budget. Abbott, in good faith consultation with
Enanta, shall develop a Marketing and Sales Plan (“Co-Promoted Product Marketing
and Sales Plan”) for each Co-Promoted Product for the Co-Promotion Territory,
and each such Co-Promotion Marketing and Sales Plan shall be reviewed and
approved by the JDCC; provided that each such Co-Promotion Marketing and Sales
Plan shall be consistent with Enanta’s rights under the Agreement. Each
Co-Promotion Marketing and Sales Plan shall include but not be limited to:
(i) demographics and market dynamics, market strategies, estimated launch
date(s) in the Co-Promotion Territory, a sales and expense forecast (including
at least three (3) years of estimated sales and expenses) for the Co-Promotion
Territory, manufacturing plans and expected product profile; (ii) a market plan
(including Advertising (to be defined in the Co-Promotion Agreement) and
Detailing forecasts and pricing strategies pertaining to discounts, samples and
nominal price sales) for the Co-Promotion Territory; (iii) a commercialization
budget (“Co-Promotion Commercialization Budget”) for each Co-Promoted Product
for the Co-Promotion Territory, including the Third Parties proposed to be
utilized and, to the extent practicable, any proposed Third Party arrangements.
Each Co-Promotion Commercialization Budget shall include a budget of the
expenses expected to be incurred in connection with performing the corresponding
Co-Promotion Marketing and Sales Plan. Each Co-Promotion Marketing and Sales
Plan and Co-Promotion Commercialization Budget shall be submitted to the JDCC
for review and approval by a date to be established by the JDCC, taking into
account Abbott’s and Enanta’s annual budget planning calendars, but no later
than December 31 of each year. It is contemplated that each Co-Promotion
Marketing and Sales Plan and Co-Promotion Commercialization Budget will become
more comprehensive as the Co-Promotion of the applicable Co-Promoted Product
evolves.

(b) Changes to Plans/Budgets. Any significant change in a Co-Promotion Marketing
and Sales Plan or Co-Promotion Commercialization Budget during the course of the

 

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year will be communicated promptly to the JDCC. In addition, Abbott shall
provide an update on each Co-Promotion Marketing and Sales Plan and Co-Promotion
Commercialization Budget to the JDCC in a manner consistent (with respect to
timing and content) with such updates as are reported internally by Abbott or
its Affiliates on its or their other products at such time, but no less
frequently than semi-annually.

(c) Detail Audit Rights. Each of Abbott and Enanta shall maintain electronic
records of Details performed for a period of [*****] years from the date of
performance. Each such Party shall have the right to inspect such records of the
other Party to verify Detailing reports provided to the JDCC under this
Agreement. Each Audited Party shall make its records available for inspection by
appropriate representatives of the Auditing Party during regular business hours
at such place or places where such records are customarily kept, upon reasonable
notice from the Auditing Party, solely to verify the accuracy of such
statements. All information concerning such statements, and all information
learned in the course of any audit or inspection, shall be Confidential
Information of the Audited Party. The Auditing Party shall pay the costs of such
inspections, except that in the event there is any downward adjustment in the
number of Details shown by such inspection of more than [*****] of the number of
Details reported in such statement, the Audited Party shall pay the costs of
such inspection.

4. Control Over Advertising and Detailing.

(a) Neither Party shall engage in any Advertising or use any label, package,
literature or other written material (other than General Public Relations (to be
defined in the Co-Promotion Agreement) in connection with a Co-Promoted Product
in the Co-Promotion Territory, unless the specific form and content thereof is
approved by the JDCC.

(b) General Public Relations on the part of either Party need to be approved by
the JDCC, and all representations and statements pertaining to Co-Promoted
Products that appear in General Public Relations of Enanta or Abbott and include
subject matter not previously approved by the JDCC shall be subject to the
approval of the JDCC.

(c) All Advertising and Detailing undertaken by either Party hereto shall be
undertaken in good faith with a view towards maximizing the sales of the
applicable Co-Promoted Product.

(d) Except with the prior written consent of the other Party, neither Party
shall use the name of the other Party or any Affiliate of the other Party in
Advertising, Detailing or General Public Relations.

(e) Abbott shall have the sole responsibility for (i) deciding on pricing and
for obtaining all pricing approvals as may be required for all Co-Promoted
Products, (ii) conducting all billing and collections for Co-Promoted Products;
and (iii) overseeing and implementing all other reimbursement matters but shall,
in all such cases, consult with, and reasonably consider the views of, the JDCC
with respect to the foregoing.

(f) Abbott shall have sole responsibility for arranging for the distribution and
warehousing of Co-Promoted Products.

 

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(g) Neither Party shall engage in any Advertising or use any label, package,
literature or other written material (other than General Public Relations) in
connection with a Co-Promoted Product unless the specific form and content
thereof is approved by the JDCC. Without the prior written consent of the other
party, no Party shall use the name of the other Party or any Affiliate of the
other Party in General Public Relations.

5. Sales Efforts in the Co-Promotion Territory. As part of each Co-Promotion
Marketing and Sales Plan for the Co-Promotion Territory, the JDCC shall
determine the targeted level of sales of the applicable Co-Promoted Product for
the Co-Promotion Target Audience for the Calendar Year covered by such
Co-Promotion Marketing and Sales Plan. Each Co-Promotion Marketing and Sales
Plan shall provide each Party the opportunity to perform a percentage of the
Detailing calls to the Co-Promotion Target Audience each calendar year as the
JDCC reasonably considers to be appropriate for the successful Commercialization
of such Co-Promoted Product. The Parties shall allocate physicians in the
Co-Promotion Target Audience in an unbiased manner based on objective,
quantifiable information and market research data with the objectives of
allocating to each Party those physicians in the Co-Promotion Target Audience
with the appropriate Detailing frequency to optimize the penetration of such
Co-Promoted Product and achieve such Co-Promotion’s sales target.
Notwithstanding the commercially reasonable efforts of the Parties to effect an
objective allocation between them, the Parties recognize that it may be
necessary from time to time to reassign individual medical professionals in the
Co-Promotion Target Audience to optimize the targeted market opportunity, and,
as a result, the JDCC shall be entitled to review the allocation of medical
professionals in the Co-Promotion Target Audience as it reasonably determines to
be appropriate.

6. Training Program. The Parties shall (a) develop a training program for the
promotion of all Products (including, without limitation, all Co-Promoted
Products in the Co-Promotion Territory) and (b) train all Representatives of
both Parties to be used for the Co-Promotion of Co-Promoted Products in the
Co-Promotion Territory as soon as practicable after the approval of the
Marketing and Sales Plan by the JDCC. The Parties agree to utilize such training
programs on an ongoing basis to assure a consistent, focused promotional
strategy and all such training shall be carried out at a time that is mutually
acceptable to Enanta and Abbott. No Representative of either Party may Detail a
Co-Promotion Product unless such representative successfully completes the
training program described in this Section 6. Except as provided herein, it is
agreed that for the Product specific training, the internal costs and the
out-of-pocket costs of such training programs (including without limitation the
out-of-pocket costs of the development, production, printing of such training
materials) shall not be included as a Development Cost under this Agreement and
shall be treated as a Commercialization Expense.

7. Trademarks. Abbott shall select the Product Trademark under which each
Co-Promoted Product shall be marketed. The Parties shall market each Co-Promoted
Product in the Co-Promotion Territory exclusively under such Product Trademark
(all such trademarks being hereinafter referred to as the “Co-Promotion
Trademarks”), and Abbott shall grant Enanta a license to use such Co-Promotion
Trademarks solely for such Co-Promotion. Abbott shall register the Co-Promotion
Trademarks in the Co-Promotion Territory and shall take all such actions as are
required to continue and maintain in full force and effect in the Co-Promotion
Territory the Co-Promotion Trademarks and the registrations thereof, and shall
be solely

 

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responsible for all expenses incurred in connection therewith. As between the
Parties, Abbott shall be the exclusive owner of the Co-Promotion Trademarks in
the Co-Promotion Territory.

8. Product Recalls. In the event that any Regulatory Authority issues or
requests a recall or takes similar action in connection with a Co-Promoted
Product, or in the event a Party reasonably believes that an event, incident or
circumstance has occurred that may result in the need for a recall, market
withdrawal or other corrective action regarding a Co-Promoted Product, such
Party shall promptly advise the other Party thereof by telephone or facsimile.
Following such notification, Abbott shall decide and have control of whether to
conduct a recall or market withdrawal (except in the event of a recall or market
withdrawal mandated by a Regulatory Authority, in which case it shall be
required) or to take other corrective action in any country and the manner in
which any such recall, market withdrawal or corrective action shall be
conducted, subject to the oversight of the JDCC and provided that Abbott shall
keep Enanta regularly informed regarding such recall, market withdrawal or
corrective action. In the event of a dispute about whether to recall a
Co-Promoted Product or to conduct a market withdrawal or take other corrective
action, the final decision on such matter shall be made by Abbott. In the event
that Enanta disagrees with any such decision for reasons related to safety of a
Co-Promoted Product, Enanta may elect to terminate its Co-Promotion of such
Co-Promoted Product immediately by written notice to Abbott. Abbott shall bear
all expenses of any such recall, market withdrawal or corrective action
(including, without limitation, expenses for notification, destruction and
return of the affected Co-Promoted Product and any refund to customers of
amounts paid for such Co-Promoted Product).

9. Co-Promotion Mechanism.

(a) Sales. All sales of Co-Promoted Products in the Co-Promotion Territory shall
be booked by Abbott. If, during the term of the Co-Promotion Agreement, Enanta
receives orders from customers for a Co-Promoted Product, it shall refer such
orders to Abbott.

(b) Processing of Orders for Co-Promoted Products.

(i) All orders for Co-Promoted Products received and accepted by Abbott during
the term of the Co-Promotion Agreement shall be executed by Abbott in a
reasonably timely manner consistent with the general practices applied by it in
executing orders for other pharmaceutical products sold by it or its Affiliates.

(ii) Abbott shall have the discretion to reject any order received by it for a
Co-Promoted Product; provided, however, that Abbott shall not reject such orders
on an arbitrary basis, but only with reasonable justification and consistent
with the general policies applied by it with respect to orders for other
pharmaceutical products sold by it or its Affiliates.

(iii) Abbott shall comply with all Applicable Laws in selling any Co-Promoted
Product.

10. Termination of Co-Promotion Participation. In addition to its termination
right under Section 8, at the end of any Calendar Quarter, Enanta shall have the
right, exercisable

 

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upon three (3) Calendar Quarters prior written notice (the “Co-Promotion
Termination Notice Period”) to Abbott, to terminate its Co-Promotion of any
Co-Promoted Product.

 

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SCHEDULE 6

CALCULATION OF OPERATING INCOME

“Advertising” means the advertising and promotion of the Co-Developed Products
in the Co-Development Territory through any means, including, without
limitation, (i) television and radio advertisements; (ii) advertisements
appearing in journals, newspapers, magazines or other media; (iii) seminars and
conventions; (iv) packaging design; (v) professional education programs;
(vi) samples (including related costs for manufacturing, shipping, and use
taxes), visual aids and other selling materials; (vii) hospital formulary
committee presentations; and (viii) presentations to state and other
governmental formulary committees; provided, however, that Advertising shall
exclude Detailing and General Public Relations. With regard to advertising and
promotion that include products other than Co-Developed Products, the JDCC shall
determine the percentage of such advertising and promotion that will be deemed
Advertising for the purposes of this Agreement.

“Annual Operating Income” means the Operating Income derived in any Calendar
Year.

“Commercialization Expense” means the sum of (a) Promotion Expense;
(b) Marketing Expense; (c) any reasonable internal and out-of-pocket costs,
expenses and fees incurred in prosecuting, maintaining, enforcing and defending
the Product Trademark, Licensed Patent Rights, and/or Abbott Patent Rights
covering a Co-Developed Product; (d) the cost of preparing and filing Drug
Approval Applications with respect to Co-Developed Products; and (e) any other
out-of-pocket cost or expense expressly stated to be a Commercialization Expense
in this Agreement or under the Marketing and Sales Plan.

“Cost of Goods” will be consistent with Abbott’s accounting practices used for
its other products and means the fully absorbed manufacturing costs attributable
to the manufacture of a Co-Developed Product calculated in accordance with GAAP
and consistent with the Marketing and Sales Plan and includes, without
limitation, [*****].

“Detail” means, with respect to a Co-Developed Product, an interactive, live,
face-to-face contact of a Representative within the Co-Development Territory
with a medical professional with prescribing authority or other individuals or
entities that have a significant impact or influence on prescribing decisions,
in an effort to increase physician prescribing preferences of such Co-Developed
Product for its approved uses within the Co-Development Territory, which shall
involve (a) a primary product presentation (i.e. a Detail in which the
Co-Developed Product is given an important emphasis) or (b) a secondary product
presentation (i.e. a non-primary product presentation; provided, however, the
emphasis is not less than that placed upon other products presented), in each
case as measured by the relevant Party’s internal recording of such activity.
When used as a verb, “Detailing” means performing Details. When used as an
adjective, “Detailing” means of or related to performing Details.

 

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“Distribution Costs” means all freight and distribution costs incurred in
connection with, and directly attributable to, the distribution of a
Co-Developed Product to the extent not otherwise included in Commercialization
Expense.

“General Public Relations” means any public relations activity (including a
press release or image piece) which (i) promotes generally the business of a
company or deals in a general manner with the activities of such company in a
general pharmaceutical market; and (ii) mentions in an incidental manner the
fact that such company or its Affiliates markets or sells one or more of the
Co-Developed Products or provides other incidental information concerning one or
more of the Co-Developed Products. Announcements related to this Agreement or
that concern primarily the relationship of either Party to each other are not
General Public Relations and must be agreed upon by both Parties in writing
prior to release.

“Marketing Expense” means all reasonable out-of-pocket costs and all internal
costs on an FTE basis equal to Abbott’s then applicable FTE Rate, annually for
those individuals fully dedicated to the Product incurred by the Parties that
are directly attributable to the following functions for the sale, promotion and
marketing of a Co-Developed Product in the Co-Development Territory: (a) market
research on such Co-Developed Product, (b) marketing communications,
(c) corporate accounts, (d) managed care, (e) sales force training, (f) product
hotlines, (g) reimbursement support, (h) contracting, (i) pricing,
(j) conducting compassionate use programs and for domestic Phase IV studies for
Co-Developed Products (including without limitation fully absorbed manufacturing
costs for any Co-Developed Product utilized in such compassionate use programs)
and (k) telemarketing services. Marketing Expense shall not include any General
Public Relations or any other activities that promote the business of Abbott or
Abbott as a whole without specifically referencing any Co-Developed Product.

“Operating Income” means, with respect to a Co-Developed Product, Net Sales
minus (a) Cost of Goods of such Co-Developed Product; (b) any Commercialization
Expense applicable to the Co-Developed Product; (c) Third Party Royalties and
(d) Distribution Costs, in each case, incurred in that Calendar Quarter for that
Co-Developed Product. For purposes of clarity, “Net Sales” with respect to
Co-Developed Products shall not include [*****].

“Net Sales” has the meaning provided in Article 1.

“Personnel Costs” means the reasonable costs of employment of personnel employed
by or under contract to a Party including, but not limited to, salaries,
benefits (including the costs of cars or allowances therefore), travel, lodging,
meals and office and computing supplies.

“Product Trademark” has the meaning provided in Article 1.

“Promotion Expense” means all reasonable out-of-pocket costs and expenses
incurred by Abbott and directly attributable to the promotion of a Co-Developed
Product in the Co-Development Territory to the extent that such costs are not
included in Marketing Expense including, but not limited to (i) marketing,
Advertising and promoting of Co-Developed Products (including, without
limitation, educational expenses, advocate development programs and symposia,
sales meetings, direct to consumer/patient advertising, samples, agency fees for
the

 

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development of promotional materials and printing of promotional materials) and
(ii) training and communication materials for the Co-Developed Products.

“Representative” means an individual (a) employed and trained by Abbott or
Enanta or (b) employed by a Third Party or self-employed and trained by or on
behalf of Abbott or Enanta, in either case, to Detail a Product.

“Third Party Royalties” means royalty payments made to any Third Party pursuant
to an agreement by and between a Party and such Third Party that are necessary
to make, use, or sell such Co-Developed Product in the Co-Development Territory.

An example of a calculation of Operating Income is set forth in Exhibit I to
this Schedule         . In calculating the Operating Income the following
principles shall apply:

 

1. There shall be no double counting of any costs or expenses or of any
revenues, and to the extent a cost or expense has been included in one category
or sub-category, it shall not be included in another; similarly, to the extent
any revenue has been taken into account in one category or sub-category it shall
not be taken into account in another.

 

2. When allocating costs and expenses under this Agreement, each Party shall
utilize the same policies and principles as it utilizes consistently within its
group and business units when making internal cost allocations.

 

3. To the extent an item of income or revenue is received by a Party or a cost
or expense is incurred by a Party, and is necessary and specifically and
directly identifiable, attributable and allocable to the Commercialization of
Co-Developed Product and is not otherwise accounted for in the calculation of
Operating Income, such Party shall credit such income or revenue and shall be
permitted to charge such cost or expense to the Operating Income.

 

4. All costs and expenses shall be determined, and all calculations shall be
made, in accordance with GAAP.

 

5. [*****].

 

6. To the extent a Co-Developed Product that is sold in the Co-Development
Territory contains or comprises a Product and one or more other ingredients that
were [*****], the Parties shall negotiate in good faith whether an adjustment
should be made to the determination of Net Sales for such Co-Developed Product,
and the amount of any such adjustment, based upon [*****]. In the case where the
Parties are unable to agree on whether, or the amount of, such adjustment, the
Parties shall submit the matter to arbitration in accordance with Section 14.1.

 

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EXAMPLE OF OPERATING INCOME/OPERATING LOSS CALCULATION FOR

CO-DEVELOPED PRODUCT

[*****]

 

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EXECUTION COPY

FIRST AMENDMENT TO COLLABORATIVE DEVELOPMENT AND LICENSE AGREEMENT

This First Amendment (this “First Amendment”), made this 27th day of January,
2009 to the Collaborative Development and License Agreement dated November 27,
2006 (the “Agreement”), is entered into by and between Abbott Laboratories,
having its principal office at 100 Abbott Park Road, Abbott Park, IL 60064-3500
(together with its affiliates, “Abbott”) and Enanta Pharmaceuticals, Inc., with
principal offices at 500 Arsenal Street, Watertown, Massachusetts 02472
(“Enanta”).

NOW THEREFORE, in consideration of the mutual covenants contained herein, and
for other good and valuable consideration, the Parties hereto intending to be
legally bound hereby agree as follows:

A. Any capitalized terms used and not otherwise defined herein shall have the
meanings set forth in the Agreement,

B. In Sections 1.18, 1.72, 2.1.4(h), 3.1, 3.5, 3,6, 4.1.1, 11.3.1(c), and
11.3.2(b) of the Agreement, any occurrence of the words (whether in the singular
or the plural) “Compound or Abbott Compound” or “Compound and/or Abbott
Compound” (and in the case of Sections 1.67, 1.74, 2.3.1, 4.5.1, 5.1, 5.2,
6.5.1(b), 10.2.1, and 11.3.6(c) the occurrence of the word “Compound”) shall be
changed to the words “Compound, Abbott Compound, compound covered by Joint
Patent Rights or compound covered by Joint Technology.” In addition, each
occurrence of the word “Compound” in Sections 8.2.2(b), 8.5.1(a), 8.5.2(a),
10.1.6, 11.3.2(e) and 12.2.3 shall be changed to “Compound or compound covered
by Joint Patent Rights or compound covered by Joint Technology.”

C. Section 1.29(a) of the Agreement is hereby deleted in its entirety, and the
following Section 1.29(a) is inserted in lieu of the deleted Section:

“(a) with respect to activities of either Party in the Research Program and/or
the conduct by Abbott of evaluation activities pursuant to Section 3.9, the
efforts and resources typically used by companies that are similar in size to
such Party in the performance of research programs with respect to, and/or the
evaluation of, comparable research compounds, and”

D. A new section 3.9 shall be added to the Agreement, as follows:

3.9 Evaluation Period. Notwithstanding anything in this Agreement to the
contrary, during the period commencing upon the termination or expiration of the
Research Program Term (including any extensions thereto) continuing for a period
of six (6) months (as so extended, the “Evaluation Period”), Abbott shall have
the right to analyze any Compounds, Abbott Compounds, compounds

 

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covered by Joint Patent Rights or compound covered by Joint Technology that were
synthesized prior to the termination or expiration of the Research Program Term
(each, an “Evaluation Compound”) solely for the purpose of identifying one or
more Compounds, Abbott Compounds, compounds covered by Joint Patent Rights or
compounds covered by Joint Technology suitable for further Development as
Candidates. Either Party may nominate any Evaluation Compound as a Candidate by
providing written notice to the JSC pursuant to Section 3.5 and the JSC may
select any Evaluation Compound so nominated as a Candidate pursuant to
Section 3.6, subject to all applicable provisions of this Agreement (including,
but not limited to, applicable provisions in Article 2 and Sections 3.3, 3.4,
3.5, 3.6 and 3.7 and this Section 3.9), which provisions shall survive the
termination or expiration of the Research Program Term. During the Evaluation
Period, (a) chemistry scale-up of Evaluation Compounds is permitted (including,
but not limited to, the use of Enanta Technology and/or Program Technology), but
no further medicinal chemistry will be conducted by Abbott under this Agreement;
and (b) Section 8.1.1 and Section 8.3.1 shall apply to the evaluation activities
conducted pursuant to this Section 3.9. Abbott shall pay Enanta a
non-refundable, non-creditable evaluation fee in the amount of [*****] by wire
transfer of immediately available funds on the date of commencement of the
Evaluation Period and fund [*****] Enanta FTEs during the Evaluation Period at
an annualized rate of [*****] per FTE. All amounts due hereunder for FTEs shall
be payable on the first day of each calendar quarter occurring during the
Evaluation Period. In addition to the foregoing:

(a) As to each patent or patent application of a Joint Patent Right, Abbott and
Enanta shall agree to apportion each such patent or patent application into:
(i) patent(s) and application(s) claiming only HCV NS3 or HCV NS3/4A protease
inhibitor compounds, pharmaceutical compositions containing such compounds,
methods for manufacturing such compounds and/or methods of using such compounds
in treating HCV infections; and/or (ii) patent(s) and application(s) claiming
subject matter not set forth in the foregoing subsection 3.9(a)(i), including,
without limitation, formulation technology, compounds other than compounds set
forth in subsection 3.9(a)(i), compositions containing compounds other than
compounds set forth in subsection 3.9(a)(i), and/or methods of manufacturing
compounds other than compounds set forth in subsection 3.9(a)(i). Upon the
expiration or termination of the Term (except if the Agreement is terminated
pursuant to Section 11.3.3, 11.2.3, or is otherwise terminated for reasons of a
Party’s bankruptcy or insolvency), Abbott shall be deemed to have assigned, and
hereby does assign, to Enanta all of Abbott’s right, title and interest solely
to patents/patent applications set forth in subsection 3.9(a)(i) above, Patents
and patent applications set forth in subsection 3.9(a)(ii) shall be jointly
owned upon the expiration or termination of the Term. Upon expiration or
termination of the Term (except if the Agreement is terminated pursuant to
Section 11.3.3, 11.2.3, or is otherwise terminated for reasons of a Party’s
bankruptcy or insolvency), Abbott shall grant Enanta an exclusive (even as to
Abbott), perpetual, fully-paid, royalty-free, world-wide license, with the

 

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right to sublicense, under the patents and patent applications set forth in
subsection 3.9(a)(ii) to Develop and Commercialize HCV NS3 or HCV NS3/4A
protease inhibitor compounds claimed by such patents and patent applications as
set forth in subsection 3.9(a)(i) in the Field. In the event that Abbott
commercializes in the Field any HCV protease inhibitors conceived after the Term
as a result of utilizing the technology claimed in patents/patent applications
set forth in subsection 3.9(a)(ii), Abbott shall pay Enanta a royalty on
products containing such HCV protease inhibitors as described in section 6.5.1;
and in such event, Enanta shall grant Abbott an exclusive (even as to Enanta),
perpetual, world-wide license, with the right to sublicense, under the
patents/patent applications set forth in subsection 3.9(a)(ii) to make, use,
sell, offer to sell, or have made the aforesaid HCV protease inhibitors. In the
event that Abbott and Enanta do not agree in apportioning claims in such patents
and patent applications, then such dispute shall be resolved by joint patent
counsel selected by the JSC who (and whose firm) is not at the time of the
dispute, and was not at any time during the five (5) years prior to the dispute,
performing services for either of the Parties. The Parties shall share equally
in the expenses of such patent counsel.

(b) During the Evaluation Period, at Abbott’s request: (i) Enanta shall render
reasonable assistance (including, but not limited to, providing to Abbott
available quantities of Compounds, compounds covered by Joint Patent Rights and
compounds covered by Joint Technology) to Abbott to facilitate Abbott’s
activities undertaken pursuant to this Section 3.9; and (ii) the words
“Evaluation Period” shall be inserted after the words “Research Term” in each of
Sections 8.5.1(a) and 8.5.2(a).

(c) During the Evaluation Period, Abbott shall use Commercially Reasonable
Efforts to undertake its activities pursuant to this Section 3.9 and shall
comply with the reporting requirements of Section 3.5 of this Agreement.

(d) After expiration of the Evaluation Period and continuing for the remainder
of the Term, the Parties may nominate and designate Evaluation Compounds as
Candidates under the applicable provisions set forth in this Agreement,
including, but not limited to Section 3.6. Upon the termination or expiration of
the Term, the Parties’ respective rights to nominate and designate Evaluation
Compounds under Section 3.9 shall terminate.

E. A new section 3.10 shall be added to the Agreement, as follows:

3.10 External Compounds. Either Party (a “Providing Party”) may, in its sole
discretion, provide the other Party (a “Receiving Party”) with access to any
proprietary compound Controlled by such Providing Party that is not a Compound,
Abbott Compound, compound covered by Joint Patent Rights or compound covered by
Joint Technology (each an “External Compound” and collectively, the “External
Compounds”) solely to enable the Receiving Party to

 

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conduct research activities involving the combination of such External Compound
with a Compound, Abbott Compound, compound covered by Joint Patent Rights or
compound covered by Joint Technology (“Combination Activities”). In addition, a
Providing Party may, in its sole discretion, conduct Combination Activities
itself with an External Compound Controlled by such Providing Party. Prior to
conducting any Combination Activities hereunder the Parties shall obtain
approval from the other Party. Notwithstanding anything in this Agreement to the
contrary: (i) the Providing Party shall retain all right, title and interest in
and to any such External Compound; (ii) the Receiving Party shall receive no
right, title or interest in or to, nor any express or implied license to use,
such External Compound in any way, other than to perform Combination Activities
expressly authorized by the Providing Party; (iii) the Providing Party shall
have no limitation on its ability, in its sole discretion, to withhold access
under this Section 3.10 to any of its External Compounds, or to withdraw the
Receiving Party’s access to any of its External Compounds at any time for any or
no reason immediately upon written notice; (iv) the Providing Party shall have
sole and exclusive ownership of all right, title and interest in and to any
Technology other than technology covered by Joint Combination Patent Rights (as
defined below), that is conceived or first reduced to practice by either Party
in the conduct of Combination Activities that relates solely to the External
Compound of the Providing Party or its use; (v) the Providing Party and the
Receiving Party shall jointly own any patent right that is conceived or first
reduced to practice by either Party in the conduct of Combination Activities
that relates solely to the use of an External Compound specifically in
combination with a Compound, Abbott Compound, compound covered by Joint Patent
Rights or compound covered by Joint Technology (“Joint Combination Patent
Right”); (vi) no Joint Technology, Joint Patent Rights or Abbott Improvements
shall result from any activities conducted by any Party with External Compounds;
and (vii) the Providing Party, acting through patent counsel of its choice,
shall be solely responsible for the preparation, filing, prosecution and
maintenance of Joint Combination Patent Rights; provided, that, for purposes of
determining the remaining rights and obligations of the Parties with respect to
the filing, prosecution and maintenance of any such patent rights by the
Providing Party, such patent rights shall be deemed to be Joint Patent Rights
for purposes of this Agreement and shall be governed by Article 10 . Subject to
Article 8 of this Agreement, the Providing Party shall have no limitation on its
ability, in its sole discretion, to conduct or direct any research, development,
commercialization or any other activities with respect to any External Compound.
In addition to the foregoing:

(a) all data and results (including raw data and reports) produced or generated
by either Party in the conduct of Combination Activities will be shared with the
other Party as soon as it is available and may be used by both Parties subject
to the limitations set forth in this Agreement. In addition, if the Receiving
Party or the Providing Party will be conducting Combination Activities with
respect to an External Compound, the Providing Party shall provide the Receiving
Party with detailed scientific data relating to such External Compound,
including

 

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any preclinical and clinical data, but excluding compound structure with respect
to the type of Combination Activities to be conducted at least [*****] business
days in advance of proposed start date of the Combination Activities; provided,
that all such data shall be treated as Confidential Information of the Providing
Party. By way of example, it is the understanding of the Parties that the
Providing Party will be obligated under this Section 3.9(a) to provide virology
data to the Receiving Party only to the extent that the Combination Activities
to be conducted by the Receiving Party involve virology activities and to
provide toxicology data to the Receiving Party only to the extent that the
Combination Activities to be conducted by the Receiving Party involve toxicology
activities.

(b) The Providing Party or Receiving Party, as the case may be, shall provide
written notice to the other Party at least [*****] business days in advance of
the proposed start date of any proposed Combination Activities.

F. A new section 3.11 shall be added to the Agreement, as follows:

3.11 Confidentiality of Information Concerning External Compounds. For purposes
of clarity, subject to Section 1.33, all information provided by a Providing
Party to a Receiving Party regarding any External Compound pursuant to
Section 3.10, and any information regarding any External Compound ascertained in
connection with activities authorized under Section 3.10, shall be Confidential
Information of the Providing Party for purposes of this Agreement.
Notwithstanding Article 7 of the Agreement, each of Abbott and Enanta agree that
during the Term and for an additional [*****] years thereafter, they shall not
disclose (except only to employees to the extent necessary to enable such
employees to perform the activities authorized under Section 3.10 above) or use
(except as specifically allowed under Section 3.10 above and Section 7.1.2), any
Confidential Information provided by the Providing Party regarding any External
Compound, or any Confidential Information regarding any External Compound
ascertained in connection with activities authorized under Section 3.10 without,
in either case, the prior written authorization of the Providing Party.

G. Section 10.1.4 of the Agreement is hereby deleted in its entirety, and the
following Section 10.1.4 is inserted in lieu of the deleted Section:

10.1.4 Joint Patent Rights. The JSC shall determine the jurisdictions within the
Territory in which patent applications will be filed with respect to Joint
Patent Rights as well as the patent counsel that shall represent both Enanta and
Abbott for the preparation, filing, prosecution and maintenance of Joint Patent
Rights. Each Party will independently select which countries it will financially
support with respect to the preparation, filing, prosecution and maintenance of
Joint Patent Rights. The Parties shall share (at a rate of [*****] of the total
costs with respect to each country) in the expenses incurred for the
preparation, filing prosecution and maintenance of Joint Patent Rights in each
country independently selected by both Parties. The expenses incurred for the
preparation, filing,

 

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prosecution and maintenance of Joint Patent Rights in any country that is
selected by one Party but not by the other Party shall be borne solely by the
Party selecting that country. For purposes of clarity, (a) neither Party shall
be obligated to share in the expenses incurred in the preparation, filing,
prosecution and maintenance of any Patent Rights under this Agreement and
(b) any decision by a Party not to share in the expenses incurred for the
preparation, filing, prosecution and maintenance of Joint Patent Rights in any
country shall not affect the rights of such Party with respect to such Joint
Patent Rights in such country.

H. Section 11.1 of the Agreement is hereby deleted in its entirety, and the
following Section 11.1 is inserted in lieu of the deleted Section:

11.1 Term. This Agreement shall commence on the Effective Date and shall
continue in full force and effect until the end of the Evaluation Period and, if
at the end of the Evaluation Period, Abbott is Developing a Candidate or
Commercializing a Product arising out of the Research Program, thereafter until
(a) such time as Abbott is no longer Developing a Candidate for use in the Field
and in the Territory or (b) if, as of the time Abbott is no longer Developing
any Candidates, Abbott is Commercializing any Product, until such time as all
Royalty Terms for all Products and all Co-Development Terms for all Co-Developed
Products have ended, unless earlier terminated in accordance with the provisions
of this Article 11 (the “Term”).

I. Abbott and Enanta agree that this First Amendment shall be annexed to and
made part of the Agreement. Any conflicts arising between this First Amendment
and the Agreement shall be resolved in favor of the provisions of this First
Amendment. Except as herein provided, all of the terms and conditions in the
Agreement remain unchanged and are hereby reaffirmed.

J. This First Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together will constitute one
and the same instrument.

IN WITNESS WHEREOF, Abbott and Enanta have each caused this First Amendment to
be executed by a duly authorized representative as of the day and year first
above written.

 

ABBOTT LABORATORIES     ENANTA PHARMACEUTICALS, INC. By:  

/s/ John M. Leonard

    By:  

/s/ Jay R. Luly

Name:  

/s/ John M. Leonard

    Name:  

Jay R. Luly

Title:  

Senior VP, Global Pharmaceutical Research and Development

    Title:  

President and CEO

 

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SECOND AMENDMENT TO COLLABORATIVE DEVELOPMENT AND LICENSE AGREEMENT

This Second Amendment (this “Second Amendment”), made this 9th day of December,
2009 (“Second Amendment Effective Date”) to the Collaborative Development and
License Agreement dated November 27, 2006 (as previously amended, the
“Agreement”), is entered into by and between Abbott Laboratories, having its
principal office at 100 Abbott Park Road, Abbott Park, IL 60064-3500 (together
with its affiliates, “Abbott”) and Enanta Pharmaceuticals, Inc., with principal
offices at 500 Arsenal Street, Watertown, Massachusetts 02472 (“Enanta”).

WHEREAS on November 27, 2006, the parties entered into a Collaborative
Development and License Agreement;

WHEREAS on January 27, 2009, the parties amended the November 27, 2006
Collaborative Development and License Agreement in a First Amendment to
Collaborative Development and License Agreement;

WHEREAS under the terms of the Agreement, the Research Program Term is set to
expire and Abbott and Enanta both desire to extend the Research Program Term;

NOW THEREFORE, in consideration of the mutual covenants contained herein, and
for other good and valuable consideration, the Parties hereto intending to be
legally hound hereby agree as follows:

A. Any capitalized term used and not otherwise defined herein shall have the
meaning set forth in the Agreement.

B. Section 1.99 of the Agreement is hereby deleted in its entirety and replaced
by the following Section 1.99:

1.99 “Research Program Term” means the period beginning on the Approval Date
and, subject to Section 3.8, ending on December 15, 2010.

C. Notwithstanding anything in the Agreement to the contrary, Enanta shall
commit to the Research Program at least [*****] FTEs during the period beginning
on the Second Amendment Effective Date and ending December 15, 2010.

D. The words “if extended as per Section 3.8” shall be deleted from the second
sentence of Section 6.3.1 in the Agreement.

E. [*****].

F. Abbott and Enanta agree that this Second Amendment shall be annexed to and
made part of the Agreement. Any conflicts arising between this Second Amendment
and the Agreement shall be resolved in favor of the provisions of this Second
Amendment. Except as herein provided, all of the terms and conditions in the
Agreement remain unchanged.

 

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G. This Second Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together will constitute one
and the same instrument.

IN WITNESS WHEREOF, Abbott and Enanta have each caused this Second Amendment to
be executed by a duly authorized representative as of the day and year first
above written.

 

ABBOTT LABORATORIES     ENANTA PHARMACEUTICALS, INC. By:  

/s/ John M. Leonard

    By:  

/s/ Yujiro Hata

Name:  

John M. Leonard, M.D.

    Name:  

Yujiro Hata

Title:  

Senior Vice President, Pharmaceuticals Research and Development

    Title:  

Chief Business Officer

 

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THIRD AMENDMENT TO THE COLLABORATIVE

DEVELOPMENT AND LICENSE AGREEMENT

This THIRD AMENDMENT TO THE COLLABORATIVE DEVELOPMENT AND LICENSE AGREEMENT
(this “Third Amendment”) is entered into as of October 20, 2014, by and between
Enanta Pharmaceuticals, Inc., with principal offices at 500 Arsenal Street,
Watertown, Massachusetts 02472 (“Enanta”) and AbbVie Inc., having a place of
business at 1 North Waukegan Road, North Chicago, Illinois 60064 (“AbbVie”).
AbbVie and Enanta are sometimes referred to herein individually as a “Party” and
collectively as the “Parties.”

WHEREAS, Enanta and AbbVie’s predecessor, Abbott Laboratories (“Abbott”),
entered into the Collaborative Development and License Agreement (the “Original
Agreement”), dated November 27, 2006, for the purpose of identifying, developing
and commercializing Enanta’s proprietary HCV NS3 or NS3/4A protease inhibitors
and/or certain of Abbott’s proprietary protease inhibitors as more fully
described within the Original Agreement;

WHEREAS, Enanta and Abbott entered into a First Amendment to the Original
Agreement, dated January 27, 2009, and a Second Amendment to the Original
Agreement dated December 9, 2009 (such amendments, together with the Original
Agreement, being collectively the “Agreement”);

WHEREAS, pursuant to the Agreement, the Parties intend to develop and
commercialize Combination Products containing Products and one or more other
ingredients that are therapeutically or biologically active and are not
themselves Products, as those terms are defined in the Agreement; and

WHEREAS, the Parties wish to define further the terms for the co-development and
commercialization of Combination Products created from a Product and for
appropriate adjustments to Net Sales to reflect a good faith determination of
the relative value of each pharmaceutically active ingredient in a Combination
Product.

NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and for other good and valuable consideration, the Parties
hereto, intending to be legally bound, hereby agree as follows:

A. Any capitalized terms used and not otherwise defined herein shall have the
meanings set forth in the Agreement.

B. When used in the Agreement and this Third Amendment, “Abbott” or “Abbott
Laboratories” shall mean AbbVie.

C. The following new terms and definitions shall be added to Section 1
(Definitions) of the Agreement:

1.116 “DAA” means any protease inhibitor, NS5A inhibitor, non-nuc polymerase
inhibitor, nucleoside or nucleotide polymerase inhibitor, or any other

 

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direct acting antiviral agent, but for clarity does not include, without
limitation, ritonavir, interferon, or ribavirin.

1.117 “Non-DAA” means any active pharmaceutical ingredient other than a DAA. For
purposes of clarity, a non-DAA includes, without limitation, ritonavir,
interferon, and ribavirin.

1.118 “First Generation Product” means any Combination Product containing or
comprising the compound known as ABT-450 (parataprevir), a Product that is an
HCV NS3/4 protease inhibitor, and one or more other ingredients that are
therapeutically or biologically active and are not themselves Products. For
purposes of clarity, the First Generation Product may consist of more than one
combination, each containing ABT-450, including, without limitation, the 3D
Regimen and the 2D Regimen, each as defined below.

1.119 “3D Regimen” means the First Generation Product combination comprising the
co-formulation of the compounds ABT-450, ABT-267 (ombitasvir), and ritonavir
(the “Co-Formulation”), plus the co-administered compound ABT-333 (dasabuvir)
[*****].

1.120 “2D Regimen” means the First Generation Product combination comprising the
Co-Formulation for use in the treatment of HCV without co-administration of the
compound ABT-333 (dasabuvir).

1.121 [*****].

1.122 “Second Generation Product” means any Combination Product containing or
comprising the compound known as ABT-493, a Product that is an HCV NS3/4A
protease inhibitor, and one or more other ingredients that are therapeutically
or biologically active and are not themselves Products. For purposes of clarity,
a Second Generation Product may consist of more than one combination, each
containing ABT-493.

D. Section 1.44 (Enanta Co-Development Percentage) of the Agreement is hereby
deleted in its entirety, and the following Section 1.44 is inserted in lieu of
the deleted Section:

1.44 “Enanta Co-Development Percentage” means forty percent (40%) for any
Co-Developed Product. Notwithstanding the foregoing, for the Second Generation
Product, the Parties agree that the Enanta Co-Development Percentage means forty
percent (40%) divided by the total number of DAAs comprising the Second
Generation Product. If one or more Non-DAAs is added to the Second Generation
Product, then the Parties will negotiate in good faith further adjustments to
the Enanta Co-Development Percentage for the Second Generation Product based on
the relative value of the Non-DAA(s) to the product, using the same formulas as
set forth in Section 6.5.1(e)(iii) to the extent applicable.

 

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E. Section 1.78 (Materially Used) of the Agreement is hereby deleted in its
entirety, and the following Section 1.78 is inserted in lieu of the deleted
Section:

1.78 “Materially Used” means, with respect to Shared Development Costs, the
inclusion in the core efficacy registration package in the NDA of any data,
results, and/or information produced in the conduct of a clinical trial.

F. Section 1.96 (Relevant Market Size) of the Agreement is hereby deleted in its
entirety, and the following Section 1.96 is inserted in lieu of the deleted
Section:

1.96 “U.S. Relative Market Size” means the result obtained by [*****].

G. Section 1.103 (Shared Clinical Trial) of the Agreement is hereby deleted in
its entirety, and the following Section 1.103 is inserted in lieu of the deleted
Section:

1.103 “Global Development Costs” means any Development Costs incurred by a Party
(or for its account by an Affiliate or a Third Party) that are intended to
support approval both in the Co-Development Territory and outside of the
Co-Development Territory, regardless of where those costs are physically
incurred. For purposes of clarity, Global Development Costs do not include
(a) any filing fees required for, and other costs associated with, any
Regulatory Filings for a particular country or (b) clinical studies conducted
solely to support approval in a specific country or countries (i.e., U.S.
Development Costs or Ex-U.S. Development Costs as defined below).

H. Section 1.104 (Shared Clinical Trial Costs) of the Agreement is hereby
deleted in its entirety, and the following Section 1.104 is inserted in lieu of
the deleted Section:

1.104 “U.S. Development Costs” means any Development Costs (including, without
limitation, any filing fees required for, and other costs associated with, any
Regulatory Filings) incurred by a Party (or for its account by an Affiliate or a
Third Party) that are solely intended to support approval of the Co-Developed
Product within the Co-Development Territory, regardless of where those costs are
physically incurred.

I. Section 1.105 (Shared Clinical Trial True-Up Percentage) of the Agreement is
hereby deleted in its entirety, and the following Section 1.105 is inserted in
lieu of the deleted Section:

1.105 “Sharing Percentage” means [*****]. For purposes of clarity, the Sharing
Percentage will be [*****] and solely for purposes of calculating what portion
of Global Development Costs are Shared Development Costs.

J. Section 1.106 (Shared Clinical Trial Data) of the Agreement is hereby deleted
in its entirety, and the following Section 1.106 is inserted in lieu of the
deleted Section:

 

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1.106 “Shared Development Costs” for a Co-Developed Product means the sum of
(a) the Global Development Costs times the Sharing Percentage [*****] and
(b) the U.S. Development Costs, in each case only to the extent such costs
applicable to the Co-Developed Product were incurred on or after its
Co-Development and Profit Share Option Exercise Date. For purposes of clarity,
Shared Development Costs will not include any Development Costs incurred by a
Party (or for its account by an Affiliate or a Third Party) that are solely
intended to support approval of the Co-Developed Product outside the
Co-Development Territory, regardless of where those costs are physically
incurred (“Ex-U.S. Development Costs”).

K. Section 4.1.1 (Development Plans) of the Agreement is hereby deleted in its
entirety, and the following Section 4.1.1 is inserted in lieu of the deleted
Section:

4.1.1 Development Plans. A Development Plan and budget for each Candidate for
the balance of the Calendar Year during which the Compound or Abbott Compound is
designated by the JSC as a Candidate shall be prepared by Abbott and submitted
to the JSC promptly after the designation of such Compound or Abbott Compound as
provided in Sections 2.1.4(h) and 3.6. Thereafter, for each Calendar Year during
the Development Program, an updated Development Plan and budget for each
Candidate shall be prepared by Abbott and submitted to the JSC as provided in
Section 2.1.4(a) or (b), as applicable. To the extent JSC approval is required,
the Parties shall manage the preparation of each Development Plan and budget in
a manner designed to obtain such JSC approval no later than [*****] days prior
to the end of the then-current Calendar Year. Each Development Plan and
amendment thereto shall: (a) set forth (i) the Development objectives,
activities, priorities, timelines, budget and resources for the Calendar Year
covered by the Development Plan with reasonable specificity, (ii) the
Development objectives and activities to be performed for each Calendar Year
period covered by the Development Plan with reasonable specificity, broken down
by Calendar Quarters, (iii) the Party that shall be responsible for performing
such activities, (iv) a timeline for such activities and (v) the expected
Development Costs over such Calendar Year, including the U.S. Development Costs
and the Global Development Costs; and (b) be consistent with the other terms of
this Agreement.

L. Section 5.2 (Effect of Exercise) of the Agreement is hereby deleted in its
entirety, and the following Section 5.2 is inserted in lieu of the deleted
Section:

5.2 Effect of Exercise. If Enanta exercises the Co-Development and Profit Share
Option with respect to a Compound or Candidate, as the case may be, as described
in Section 5.1 then: (a) that Compound or Candidate, as the case may be, will
thereafter be deemed to be a Co-Developed Product for purposes of this
Agreement; (b) the Parties shall prepare and provide to the JSC for its review
and approval a Marketing and Sales Plan for such Co-Developed Product within the
Co-Development Territory which shall be updated and submitted by the Parties to

 

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the JSC not less than annually; (c) Abbott shall provide Enanta, as promptly as
possible thereafter, with Abbott’s revised non-binding, good faith estimate of
Development Costs it expects to incur with respect to that Co-Developed Product
within the Co-Development Territory for each Calendar Quarter for the next five
(5) Calendar Years; (d) except in accordance with Section 5.4, Enanta shall be
responsible for the Enanta Co-Development Percentage of all Shared Development
Costs applicable to that Co-Developed Product incurred on and after the
Co-Development and Profit Share Option Exercise Date; (e) Enanta shall have the
right to employ a number of Enanta Representatives to Co-Promote such
Co-Developed Product, such number to equal the Enanta Co-Development Percentage
of the total sales force the JDCC has reasonably determined is appropriate for
the successful commercialization of the Co-Developed Product in the
Co-Development Territory; (f) the Parties shall negotiate a Co-Promotion
Agreement for such Co-Developed Product in accordance with Section 5.7; and
(g) Enanta shall receive the Enanta Co-Development Percentage of all Operating
Income derived from that Co-Developed Product in accordance with Section 6.5.2.
The Parties hereby acknowledge and agree that either Party shall have the right
to propose the addition of other therapeutically or biologically active
ingredients for inclusion with a Co-Developed Product to create a Combination
Product. Enanta and Abbott will negotiate in good faith on the terms for the
development and commercialization of a Combination Product created from a
Co-Developed Product that have not been contemplated in this Agreement.

M. Section 5.3.1 (Reconciliation of Development Costs) of the Agreement is
hereby deleted in its entirety, and the following Section 5.3.1 is inserted in
lieu of the deleted Section:

5.3.1 Reconciliation of Development Costs. Within [*****] days following the end
of each Calendar Quarter following the exercise of the Co-Development and Profit
Share Option applicable to a given Co-Developed Product, Abbott shall submit to
JSC a written report setting forth in reasonable detail all Shared Development
Costs incurred by Abbott over such Calendar Quarter. Within [*****] days
following the JSC’s receipt of such written reports, the JSC shall prepare and
submit to Enanta a written report setting forth in reasonable detail the
calculation of the net amount owed by Enanta to Abbott in order to ensure the
appropriate sharing of the Shared Development Costs in accordance with the
Enanta Co-Development Percentage. Enanta shall pay the net amount to Abbott
within [*****] days after the distribution by the JSC of such written report.

N. Section 5.4 (Allocation of Shared Clinical Trial Costs) of the Agreement is
hereby deleted in its entirety, and the following Section 5.4 is inserted in
lieu of the deleted Section:

5.4 Allocation of Shared Development Costs.

5.4.1 Development Plan Corrections. On and after the date of exercise by Enanta
of its Co-Development and Profit Share Option for a Co-Developed

 

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Product and continuing for the Term of this Agreement [*****], whichever date is
earlier, Abbott shall provide written notice to Enanta to the extent any Shared
Development Cost (a) previously designated as a Global Development Cost is now
intended solely to support approval in the Co-Development Territory or solely to
support approval outside of the Co-Development Territory; or (b) previously
designated as a U.S. Development Cost or an Ex-U.S. Development Cost is now
intended to support approval both in the Co-Development Territory and outside of
the Co-Development Territory and otherwise qualifies as a Shared Development
Cost (the “Development Plan Correction Notice”). Further, [*****], Abbott shall
provide a Development Plan Correction Notice within [*****] days following the
filing of the core efficacy registration package for a Co-Developed Product in
the Co-Development Territory (1) if any clinical trials (a) intended to support
approval both in the Co-Development Territory and outside of the Co-Development
Territory or (b) intended to support approval solely in the Co-Development
Territory was not Materially Used in that core efficacy registration package, or
(2) if any clinical trial intended to support approval solely outside the
Co-Development Territory was Materially Used in that core efficacy registration
package. Within [*****] days after the end of the quarter in which Abbott
provides a Development Plan Correction Notice (or as soon as reasonably possible
thereafter), Abbott will include in its reconciliation of Shared Development
Costs report pursuant to Section 5.3.1 (or in a separate report as soon as
reasonably possible thereafter) a statement indicating any amounts owed by
Abbott or Enanta necessary to adjust Enanta’s contribution to Shared Development
Costs to reflect the amount Enanta would have paid had the Development Costs
subject to the Development Plan Correction Notice been correctly allocated from
the date of exercise by Enanta of its Co-Development and Profit Share Option.
For example, for purposes of clarity, if the Development Plan Correction Notice
identifies a Development Cost previously designated as a Global Development Cost
that should now be designated as an Ex-U.S. Development Cost, then Enanta would
receive a credit in the next quarterly cost statement provided pursuant to
Section 5.3.1 (or in a separate report as soon as reasonably possible
thereafter) in the amount of its prior contribution to those Shared Development
Costs and would not share in those costs going forward.

5.4.2 Initial True-Up of Shared Development Costs. Within [*****] days after the
end of the Calendar Year following the filing of the core efficacy registration
package in the NDA for a Co-Developed Product in the Co-Development Territory, a
Third Party entity reasonably acceptable to the Parties that performs such
market analyses for the biotechnology or pharmaceutical industry will determine
the U.S. Relative Market Size. Within [*****] days of that determination, Abbott
shall submit to JSC a written report setting forth in reasonable detail all
Shared Development Costs incurred through the end of the Calendar Year in which
the filing of the core efficacy registration package in the NDA for the
Co-Development Territory occurred (the “Initial Period”) and the amount Enanta
has paid in Shared Development Costs for the Initial Period under Section 5.2.
Within [*****] days following the JSC’s receipt of such written

 

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reports, the JSC shall prepare and submit to each Party a written report setting
forth in reasonable detail the calculation of the net amount owed by a Party to
the other Party in order to ensure the appropriate sharing of Shared Development
Costs [*****]. The net amount payable shall be due within [*****] days after
receipt of any such accounting. [*****].

5.4.3 Annual True-Up of Shared Development Costs. Within [*****] days of the end
of each Calendar Year following the year in which the core efficacy registration
package was filed in the Co-Development Territory (the “Subsequent Calendar
Year”), to the extent Shared Development Costs are incurred during the
Subsequent Calendar Year, a Third Party entity reasonably acceptable to the
Parties that performs such market analyses for the biotechnology or
pharmaceutical industry will determine whether any changes to the U.S. Relative
Market Size are warranted. If any changes are warranted, Abbott shall submit to
JSC a written report setting forth in reasonable detail all Shared Development
Costs incurred during that Subsequent Calendar Year and the amount Enanta has
paid in Shared Development Costs for that Subsequent Calendar Year under
Section 5.2. Within [*****] days following the JSC’s receipt of such written
report, the JSC shall prepare and submit to each Party a written report setting
forth in reasonable detail the calculation of the net amount owed by a Party to
the other Party in order to ensure the appropriate sharing of Shared Development
Costs as if the adjusted U.S. Relative Market Size had been the Sharing
Percentage during the entire Subsequent Calendar Year. The net amount payable
shall be due within [*****] days after receipt of any such accounting. The U.S.
Relative Market Size so determined for the Annual-True Up for any year would be
the U.S. Relative Market Size for the subsequent calendar year, subject to
annual true-up as provided above, which process would repeat for as long as
Shared Development Costs are incurred.

O. Section 5.5 (Roll-Over Payments) of the Agreement is hereby deleted in its
entirety, and the following Section 5.5 is inserted in lieu of the deleted
Section:

5.5 Roll-Over Payments. If, in any Calendar Quarter, the actual amount of Shared
Development Costs incurred and owed by Enanta with respect to a Co-Developed
Product for that Calendar Quarter exceeds by greater than [*****] Abbott’s good
faith estimate of Shared Development Costs for that Co-Developed Product for
that Calendar Quarter, Enanta may, upon written notice to Abbott, delay payment
of its share of any such excess until the subsequent Calendar Year (the
“Roll-Over Payment”). Enanta shall make the Roll-Over Payment in two (2) equal
amounts over the first two (2) consecutive Calendar Quarters of the subsequent
Calendar Year. For purposes of clarity, this Section does not affect the timing
of any true-up payments owed by Enanta pursuant to Section 5.4 above.

P. Section 5.6 ([*****]) of the Agreement is hereby deleted in its entirety, and
the following Section 5.6 is inserted in lieu of the deleted Section:

 

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5.6 [*****].

Q. The following provision shall be inserted at the end of Section 6.4.1
(Milestones) of the Agreement:

(e) Next Generation Products. If Enanta elects to exercise the Co-Development
and Profit Share Option with respect to any Next Generation Product (such as the
Second Generation Product) [*****].

R. Section 6.5.1(e) (Combination Products) of the Agreement is hereby deleted in
its entirety, and the following Section 6.5.1(e) is inserted in lieu of the
deleted Section:

(e) Combination Products.

(i) In calculating royalties owed on the First Generation Product in the form of
the 2D Regimen and the 3D Regimen, Net Sales throughout the world shall be
adjusted as follows: (A) the total Net Sales of the 3D Regimen shall be
multiplied by 0.3, and (B) the total Net Sales of the 2D Regimen shall be
multiplied by 0.45. [*****]. If the Parties cannot agree on such an adjustment,
a Third Party entity that is reasonably acceptable to the Parties and that
performs such market estimates of pharmaceutical usage for the biotechnology or
pharmaceutical industry shall make such determination, which determination shall
be final and binding upon the Parties.

(ii) In calculating royalties owed on the Second Generation Product, Net Sales
shall be divided by the total number of DAAs comprising the Second Generation
Product. In the event that the Second Generation Product comprises or contains
one or more Non-DAAs, then the Parties will negotiate in good faith further
adjustments to the Net Sales for the Second Generation Product based on the
relative value of the Non-DAA(s) to the product using the same formulas as set
forth in Section 6.5.1(e)(iii) to the extent applicable.

(iii) For any Royalty-Bearing Product that is a Combination Product other than a
First Generation Product addressed in Section 6.5.1(e)(i) above or a Second
Generation Product addressed in Section 6.5.1(e)(ii) above, the Parties shall,
on a country-by-country basis, agree to an appropriate adjustment to Net Sales
to reflect a good faith determination of the relative value of each
pharmaceutically active ingredient, based on the estimated fair market value of
each such therapeutically or biologically active ingredient, as follows: (a) In
the case of a Combination Product for which the Royalty-Bearing Product and each
of the other therapeutically or biologically active ingredients contained in the
Combination Product are sold separately in such country by Abbott, Net Sales
shall be determined by [*****]; (b) In the case of a Combination Product for
which the Royalty-Bearing Product is sold separately in such country but the
non-Royalty-Bearing Product therapeutically or biologically active ingredients
contained in the Combination Product are not sold separately by Abbott in such
country, Net Sales shall be calculated by [*****]; and (c) If in a country
neither

 

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the Royalty-Bearing Product nor all of the therapeutically or biologically
active ingredients contained in the combination product are sold separately in
said country by Abbott, Net Sales of the Royalty-Bearing Product forming part of
the Combination Product shall be reasonably determined by [*****]. In the case
where the Parties are unable to agree on [*****], the Parties shall agree upon
an internationally recognized independent certified public accountant who shall
make such determination and whose determination shall be final and binding on
the Parties.

S. Section 6.5.1(g) (Payment Dates and Reports) of the Agreement is hereby
deleted in its entirety, and the following Section 6.5.1(g) is inserted in lieu
of the deleted Section:

(g) Payment Calculation, Dates and Reports. Abbott shall make Royalty Payments
within [*****] days after the end of each Calendar Quarter commencing with the
Calendar Quarter in which the First Commercial Sale of each Royalty-Bearing
Product occurs. The Royalty Payment for each Calendar Quarter [*****] is to be
calculated as the total royalties due Enanta for the Calendar Year through the
end of that Calendar Quarter (“Calendar Year To Date”) less any Royalty Payments
made by Abbott for any prior Calendar Quarter of the same Calendar Year. For
example, the Royalty Payment for the Third Quarter will be the total royalties
owed for the Calendar Year To Date less Royalty Payments made for the First and
Second Calendar Quarters. If the total Royalty Payments for the prior Calendar
Quarters of the same Calendar Year exceed the royalties due Enanta for the
Calendar Year To Date, then Abbott will receive a credit in following Calendar
Quarter, unless no further royalties are owed under the Agreement for any
Royalty-Bearing Product, in which case Enanta would pay any outstanding credits
owed to Abbott within [*****] days of receipt of an invoice therefor. All
payments shall be made by wire transfer to the credit of such bank account as
shall be designated in writing from time to time by Enanta. Abbott shall also
provide, at the same time each such payment is made, a report showing: (i) the
Net Sales of each Royalty-Bearing Product by country in the Territory; (ii) an
explanation of the methodology Abbott used to calculate Net Sales from gross
amounts billed or invoiced (and for clarity not including transaction-level
data); (iii) the applicable royalty rates for such Royalty-Bearing Product;
(iv) the exchange rates used in calculating any of the foregoing; and (v) a
calculation of the amount of royalty due to Enanta. For the First Generation
Product, this report shall include [*****].

T. Section 6.5.2 (Operating Income) of the Agreement is hereby deleted in its
entirety, and the following Section 6.5.2 is inserted in lieu of the deleted
Section:

6.5.2 Operating Income Payments. Enanta shall receive from Abbott, in lieu of
receiving any Royalty Payments with respect to each Co-Developed Product in the
Co-Development Territory, the Enanta Co-Development Percentage of all Annual
Operating Income derived from sales of that Co-Developed Product in the
Co-Development Territory (such payments, the

 

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“Operating Income Payments”) for as long as there are sales by Abbott, its
Affiliates and Sublicensees of such Co-Developed Product (the “Co-Development
Term”). For purposes of clarity, if Operating Income is negative for any
Co-Developed Product in any Calendar Quarter, for example, due to
commercialization expenses incurred before sales of the Co-Developed Product,
Enanta shall pay its applicable share of the negative Operating Income; [*****].
Within thirty (30) days following the end of each Calendar Quarter commencing on
and after the date of First Commercial Sale of each Co-Developed Product,
(a) Enanta shall submit to the JSC a statement identifying all Commercialization
Expenses and License Fees incurred by it with respect to such Co-Developed
Product in the Co-Development Territory and (b) Abbott shall submit to the JSC a
statement identifying the Net Sales, Cost of Goods, freight, Third Party
Payments, R&D and all Commercialization Expenses incurred by it with respect to
such Co-Developed Product. Within forty-five (45) days following the end of the
Calendar Quarter, the JSC shall submit to the Parties a written report setting
forth in reasonable detail (c) the calculation of Operating Income, determined
in accordance with Schedule 6 attached hereto and (d) the calculation of the
amount of Operating Income payable to Enanta in accordance with the Enanta
Co-Development Percentage for that Co-Developed Product taking into account
Enanta’s expenditures for the period. Abbott shall make the Operating Income
Payments to Enanta within thirty (30) days following the issuance of such
written report.

U. Enanta hereby waives its Co-Development and Profit Share Option with respect
to ABT-493.

V. Enanta and Abbott agree that this Third Amendment shall be annexed to and
made part of the Original Agreement. Any conflicts arising between this Third
Amendment and the Agreement shall be resolved in favor of the provisions in this
Third Amendment, including any terms and/or definitions modified and/or made
obsolete by this Third Amendment. Except as herein provided, all of the terms
and conditions in the Agreement remain unchanged and are hereby reaffirmed.

W. This Third Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together will constitute one
and the same instrument.

IN WITNESS WHEREOF, AbbVie and Enanta have each caused this Third Amendment to
be executed by a duly authorized representative as of the day and year first
above written.

 

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ABBVIE INC.     ENANTA PHARMACEUTICALS, INC. By:  

/s/ William J. Chase

    By:  

/s/ Jay R. Luly

Name:  

William J. Chase

    Name:  

Jay R. Luly

Title:  

Executive Vice President, CFO

    Title:  

President and CEO

 

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