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EXHIBIT 10.1

EXECUTION COPY

 

Confidential treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as ******. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.

 

License Agreement

between

Hoffmann-La Roche Inc.
Licensor

and

F. Hoffmann-La Roche Ltd
Licensor

and

Ribapharm Inc.
Licensee

Dated as of June 29, 2001

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Page

 

 

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ARTICLE I Definitions and Interpretation

1

 

 

 

1.1

Definitions

1

 

1.2

Interpretation

7

 

 

 

 

ARTICLE II Grant of License

7

 

 

 

2.1

License

7

 

2.2

Sublicense

8

 

2.3

Exclusivity

8

 

2.4

Limit of Grant

8

 

2.5

[******]

8

 

2.6

Provision of Information

8

 

 

 

 

ARTICLE III Licensor Options and Right of First Refusal

9

 

 

 

3.1

Options

9

 

3.2

Development of Products During Option Periods

10

 

3.3

Limits on Sublicensing by Licensee

10

 

3.4

Limits on the Use of Interleukin-12 by Licensor

11

 

 

 

 

ARTICLE IV Compensation

11

 

 

 

4.1

License Fee

11

 

4.2

Milestone Payments

11

 

4.3

Royalties

12

 

4.4

Duration of Royalty Obligations

13

 

4.5

Payment Terms

13

 

4.6

Taxes

13

 

4.7

Reports

14

 

4.8

Records

14

 

4.9

Sales in Foreign Currencies

15

 

 

 

 

ARTICLE V Development Steering Committee

15

 

 

 

5.1

Appointment and Administration of Development Steering Committee

15

 

5.2

Responsibility and Authority of the Development Steering Committee

16

 

 

 

 

ARTICLE VI Development and Marketing Obligations

16

 

 

 

6.1

Commercial Development Obligation

16

 

6.2

Phase II, III and IV Clinical Trials

17

 

6.3

Supply and Manufacture

17

 

6.4

Use of Name

18

 

6.5

Sampling

18

__________
****** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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6.6

Investigator-Initiated Trials; Indigent Sales

18

 

6.7

Foreign Registration and Laws

18

 

 

 

 

ARTICLE VII Patent Matters

19

 

 

7.1

Patent Prosecution and Maintenance

19

 

7.2

Notification of Infringement

19

 

7.3

Patent Enforcement

19

 

7.4

Ownership of Improvements

20

 

7.5

Ownership of Trademarks

21

 

7.6

Adverse Reactions

21

 

 

 

 

ARTICLE VIII Representations, Warranties and Limitation of Liability

21

 

 

8.1

Representations of Licensor

21

 

8.2

Representations of Licensee

22

 

8.3

Mutual Representation and Warranty

23

 

 

 

 

ARTICLE IX Indemnification and Insurance

23

 

 

 

9.1

Indemnification by Licensee

23

 

9.2

Indemnification by Licensor

23

 

9.3

Obligations of the Party Seeking to Be Indemnified

24

 

9.4

Other Indemnification Matters

24

 

 

 

 

ARTICLE X Confidentiality and Publication

25

 

 

 

10.1

Confidentiality

25

 

10.2

Disclosure

25

 

10.3

Publicity

26

 

10.4

Scientific Publications

26

 

 

 

 

ARTICLE XI Term and Termination

27

 

 

 

11.1

Term

27

 

11.2

Termination Without Cause

27

 

11.3

Termination For Cause

27

 

11.4

Rights and Obligations Upon Expiration or Termination

29

 

11.5

Surviving Provisions

29

 

 

 

 

ARTICLE XII Assignment; Successors

30

 

 

 

12.1

Assignment

30

 

12.2

Binding Upon Successors and Assigns

30

 

 

 

 

ARTICLE XIII Dispute Resolution

30

 

 

 

13.1

Arbitration

30

 

13.2

Pre-Litigation Dispute Resolution

31

 

13.3

Provisional Remedy

31

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ARTICLE XIV General Provisions

31

 

 

 

14.1

Relationship of the Parties

31

 

14.2

Excusable Delay

31

 

14.3

Notices

32

 

14.4

Expenses

33

 

14.5

Further Assurances

33

 

14.6

Amendment

33

 

14.7

Waiver

33

 

14.8

No Third Party Beneficiaries

33

 

14.9

Entire Agreement

34

 

14.10

Construction

34

 

14.11

Incorporation of Exhibits

34

 

14.12

Counterparts

34

 

14.13

Severability

34

 

14.14

Joint and Several Liability of Licensor

34

 

14.15

Bankruptcy

34

 

14.16

Remedies Cumulative

35

 

14.17

Governing Law

35

Guaranty by ICN Pharmaceuticals, Inc.
Appendix A - List of Licensor’s Information Relating to Licensed Compounds
Appendix B - Licensor’s Preexisting Agreements

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LICENSE AGREEMENT

          This License Agreement (this Agreement) is made as of June 29, 2001
(the Effective Date) by and among Hoffmann-La Roche Inc., a New Jersey
corporation, and F. Hoffmann-La Roche Ltd, a Swiss corporation (together, the
Licensor), and Ribapharm Inc., a Delaware corporation (the Licensee).

Recitals

          A.     Licensor is engaged in the research, development, manufacture
and sale of therapeutic products and technologies.

          B.     Licensor has acquired or possesses the right to license
worldwide proprietary rights to the Licensed Compounds, including Interleukin-12
(IL-12).

          C.     Licensee or its Affiliates have expertise in researching,
developing, manufacturing, and marketing pharmaceutical products for the
treatment of human diseases and Licensee wishes to develop, manufacture, and
market the Products based on Interleukin-12, which has immunomodulatory
properties with potential for use in virology, immunology, autoimmune diseases,
cancer and other indications.

          D.     Licensor wishes to grant an exclusive license to Licensee and
Licensee wishes to acquire an exclusive license to develop, manufacture, and
market such Products.

Agreement

          In consideration of the above and the mutual covenants set forth in
this Agreement and other valuable consideration received by the Parties, the
Parties agree as follows.

ARTICLE I

DEFINITIONS AND INTERPRETATION

          1.1      Definitions

          In this Agreement, capitalized terms have the respective meanings set
forth below.

          Act means the Federal Food, Drug and Cosmetic Act (21 U.S.C. §301, et
seq.), including any amendments or supplements.

          Accounting Period means a calendar quarter commencing on the first day
of an Accounting Period, respectively January 1, April 1, July 1, and October 1,
each being the first day, and finishing the last day of an Accounting Period,
respectively on March 31, June 30, September 30, and December 31, each being the
last day.

          Adjusted Gross Sales means the amount of gross sales of Products
(whether in active ingredient form, semi-finished form, finished product form,
or otherwise) invoiced by Licensee,

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its Affiliates and its Sublicensees to Third Parties less deductions for returns
(including allowances actually given for spoiled, damaged, out-dated, rejected,
returned Products sold, withdrawals and recalls), rebates (price reductions,
rebates to social and welfare systems, chargebacks, government mandated rebates
and similar types of rebates, such as P.P.R.S., Medicaid), volume (quantity)
discounts, taxes (value added or sales taxes, government mandated exceptional
taxes and other taxes imposed on the gross sales amount), as reported on a
product by product basis in Licensee’s worldwide financial reporting system
measured in United States Dollars for the countries concerned, whereby the
amount of such sales in foreign currencies is converted into United States
Dollars on the basis of the average monthly rate of exchange at the time in
accordance with Licensee’s then current standard practices, which will be in
accordance with GAAP.  Notwithstanding the foregoing, amounts received by
Licensee and its Sublicensees for the sale of Products among Licensee and its
Sublicensees for resale will not be included in the computation of Adjusted
Gross Sales.

          Affiliate of a Party means any corporation or other business entity
that controls, is controlled by, or is under common control with a Party, where
control means direct or indirect ownership of more than fifty percent (50%) of
the voting interest or income interest in a corporation or entity, or such other
relationship as, in fact, constitutes actual control of management.  Anything to
the contrary in this paragraph notwithstanding, Genentech, Inc., a Delaware
corporation, will not be deemed an Affiliate of Licensor.

          Agreement has the meaning set forth in the preamble.

          Approval Authority means a governmental authority whose approval is
required in a country for any Product Registrations.

          Bankruptcy Code means Title 11, U.S. Code.

          Best Efforts of a Party with respect to a product means the standard
of efforts used by the Party for similar products of similar potential at a
similar stage of development on a worldwide basis.

          Breaching Party has the meaning set forth in Section 11.3(a).

          Business Day means a day when banks are open for business in New York
City.

          Claims has the meaning set forth in Section 9.1.

          CMC means Chemistry, Manufacturing & Control.

          Combined Product means a pharmaceutical product with two or more
active ingredients, one of which is a Product and one of which is not, sold as a
single item for one price.

          Composition of Matter Patent means, for a given Product, a Licensed
Patent claiming per se the Licensed Compound of such Product, and all patent
applications and patents based upon or claiming priority thereto. 

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          Commercial Partner means any Third Party involved in a commercial
venture with Licensee or any of its Affiliates for the marketing, offering for
sale or sale of human pharmaceutical products, including any distributor at
least a portion of whose sales force is dedicated to the marketing, offering for
sale, or selling of products of Licensee or any of its Affiliates.

          Commercial Sale means, with respect to a Product in any country in the
Territory, (i) any sale by Licensee or any of its Affiliates or Sublicensees
after Product Registration, which transfers to a Third Party purchaser physical
possession and title to commercial quantities of the Product in such country,
(ii) Compassionate Sales, (iii) Indigent Sales and (iv) those
investigator-initiated Phase IV Clinical Trials on which a royalty is due in
accordance with Section 6.6.

          Compassionate Sales means, with respect to a Product in any country in
the Territory, any sale of the Product by Licensee or any of its Affiliates or
Sublicensees that is required or permitted by a governmental authority to be
made to certain persons or classes of persons in such country, before or after
the Product has been approved for use in such country by the Approval Authority,
but before the price of the Product (or reimbursement for the Product) has been
determined by the applicable governmental authority in such country.

          Development Steering Committee has the meaning set forth in Section
5.1.

          Effective Date has the meaning set forth in the preamble.

          EMEA means the European Medicines Evaluation Agency, or any successor.

          European Union means the amalgamation of European member states
created by the Treaty on European Union (commonly called the Maastricht Treaty)
effective January 1, 1993.

          Executive Officers has the meaning set forth in Section 5.1(c).

          FDA means the United States Food and Drug Administration, or any
successor.

          Field means all human pharmaceutical applications of the Products.

          GAAP means United States generally accepted accounting principles
consistently applied.

          Genetics Institute means Genetics Institute, Inc., a Delaware
corporation, and its successors and permitted assigns.

          Genetics Institute Agreement means the Agreement between Licensor and
Genetics Institute dated July 7, 1994, as may be amended from time to time.

          Handle has the meaning set forth in Section 7.1.

          Immunostimulatory Field means anti-infective, anti-viral, anti-cancer,
or any other therapeutic area susceptible to immunostimulatory action, including
use as an immunostimulant vaccine adjuvant to T-cell vaccine as an
anti-infective or anti-cancer.

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          Immunostimulatory Field Option has the meaning set forth in
Section 3.1(a).

          Immunosuppressive Field means anti-allergy, anti-autoimmune diseases,
or any other therapeutic area susceptible to immunosuppressive action, including
use as an immunosuppressive vaccine adjuvant to anti-allergen in the allergy
desensitization process.

          Immunosuppressive Field Option has the meaning set forth in
Section 3.1(a).

          Improvement means any and all Licensed Technology conceived after the
Effective Date by Licensor solely or jointly.

          IND means an investigational new drug application, as more fully
defined in the Regulations.

          Indemnified Party has the meaning set forth in Section 9.3.

          Indemnifying Party has the meaning set forth in Section 9.3.

          Indigent Sales means, with respect to a Product in any country in the
Territory, any sales or other dispositions of the Product by Licensee or any of
its Affiliates or Sublicensees that are required by a governmental authority to
be made to certain persons or classes of persons in such country at a below
market price to allow such persons access to treatment.

          Joint Inventions means any and all Improvements that are conceived or
reduced to practice jointly by Licensor and Licensee.

          Licensee has the meaning set forth in the preamble.

          Licensed Compounds means all forms of protein that have the function
or activity of the Interleukin-12 protein, including [******].

          Licensed Patents means rights under patents and patent applications,
as well as corresponding certificates of invention or certificates of
protection, substitutes, extensions, supplementary protection certificates,
renewals, continuations-in-part, divisions, patents of addition (re-examination
or re-issue), in any country of the Territory, which (a) but for this Agreement
would be infringed by the developing, making, having made, marketing, importing,
using, offering for sale or sale by Licensee, its Affiliates or Sublicensees of
Products in the Field and (b) are owned by, or licensed to, Licensor as of the
Effective Date or during the Term, to the extent such rights are necessary to
develop, make, have made, market, import, use, offer for sale or sell a Product
in the Field in the Territory.

          Licensed Technology means any and all proprietary information, and all
patentable and non-patentable inventions, discoveries, experience, disclosure
claims, formulas, processes, procedures, compositions of matter, specifications,
methods, techniques, trade secrets, technologies,

__________
****** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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data, know-how, results (including physical, chemical, biological,
toxicological, pharmacological, pre-clinical and clinical data, product forms
and formulations of the Licensed Compounds) which are  owned, possessed,
developed, acquired by, or licensed to Licensor and to which Licensor has the
right to grant licenses or sublicenses (without breach of other agreements to
which Licensor is a party on the Effective Date), before or during the Term, and
which contribute to, or have contributed to, the development, manufacture,
registration, marketing, sale or use of a Product.

          Licensor has the meaning set forth in the preamble.

          Licensor’s Preexisting Agreements means all of Licensor’s preexisting
agreements with Third Parties as of June 12, 2002 granting rights under the
Licensed Technology or Licensed Patents to develop, make, have made, import,
use, sell, or offer to sell any of the Licensed Compounds or any Product, as
listed on Appendix B, but with respect to items 3 and 6 on Appendix B, does not
include any amendments or modifications to such agreements after the Effective
Date except to the extent approved by Licensee.

          Major Market Country means each of the following countries and its
territories and possessions:  (i) Germany; (ii) the United Kingdom; (iii)
France; (iv) Spain; (v) Italy; (vi) Japan; and (vii) the United States.

          Milestone means any event relating to the development and
commercialization of Products set forth in Section 4.2.

          Milestone Payment means any of the payments required under Section
4.2.

          NDA means a New Drug Application filed with the FDA for marketing
approval for a drug pursuant to the Act and the Regulations.

          Net Sales means the amount calculated by subtracting from the amount
of Adjusted Gross Sales a lump sum deduction of [******] of Adjusted Gross Sales
in lieu of those sales related deductions which are not accounted for on a
product by product basis (e.g. outward freights, postage charges, transportation
insurance, packaging materials for dispatch of goods, custom duties, bad debt,
discounts granted later than at the time of invoicing, cash discounts and other
direct sales expenses).  Notwithstanding the foregoing, amounts received by
Licensee and its Affiliates and its Sublicensees for the sale of Products among
Licensee and its Affiliates and its Sublicensees for resale will not be included
in the computation of Net Sales.

          Non-Breaching Party has the meaning set forth in Section 11.3(a).

          Option means each of the Immunostimulatory Field Option and the
Immunosuppressive Field Option.

          Option Period has the meaning set forth in Section 3.1(a).

          Party means each of Licensor and Licensee.

          Phase I Clinical Trial means the initial introduction of an
investigational new drug into humans designed to determine the metabolism and
pharmacologic actions of the drug in humans,

__________
****** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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the side effects associated with increasing doses, and, if possible, to gain
early evidence on effectiveness, and also includes studies of drug metabolism,
structure-activity relationships, and mechanism of action in humans, as well as
a study in which investigational drugs are used as research tools to explore
biological phenomena or disease processes.

          Phase II Clinical Trial means a controlled clinical study conducted to
evaluate the effectiveness of a drug for a particular indication or indications
in patients with the disease or condition under study and to determine the
common short-term side effects and risks associated with the drug.

          Phase III Clinical Trial means an expanded controlled and uncontrolled
clinical trial performed after preliminary evidence suggesting effectiveness of
a drug has been obtained, in order to gather the additional information about
effectiveness and safety that is needed to evaluate the overall benefit-risk
relationship of the drug and to provide an adequate basis for physician
labeling.

          Phase IV Clinical Trial means a post-marketing study, whether
instigated by a Party or by an applicable regulatory authority in the Territory,
to delineate additional information about a drug’s risks, benefits, and optimal
use, including studying different doses or schedules of administration than were
used in a Phase II Clinical Trial, use of the drug in other patient populations
or other stages of the disease, or use of the drug over a longer period of time.

          Product means any human pharmaceutical product containing, in whole or
as a component, one or more of the Licensed Compounds.

          Product License Agreement has the meaning set forth in Section 3.1(b).

          Product Percentage means the proportion of a Combined Product
attributable to a Product, as agreed by the Parties after consideration of (i)
the respective contribution of each active ingredient to the overall efficacy of
the Combined Product, (ii) the respective market value of the Licensed Compound
used alone and the other active ingredients used alone, (iii) the respective
cost of goods for the Licensed Compound and the other active ingredients, and
(iv) other factors customarily used in the pharmaceuticals industry to apportion
value to active ingredients of pharmaceutical products.

          Product Registrations means any and all government approvals required
by any government or regulatory authority in the Territory necessary to permit
the development, manufacture, marketing, pricing, reimbursement, importing, use
or sale of Products in any part of the Territory.

          Recipient has the meaning set forth in Section 10.2(a).

          Regulations means the regulations made under the Act, as amended or
supplemented.

          Scientific Articles has the meaning set forth in Section 10.4(a).

          Sublicensees means any and all Third Parties to whom Licensee has
granted a sublicense under Section 2.2.

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          Term means the term of this Agreement, as set forth in Section 11.1.

          Territory means all the countries of the world and their territories
and possessions.

          Third Party means any person other than Licensor, Licensee or a
Sublicensee, or any of their Affiliates.

          United States means the United States of America and its territories
and possessions.

          1.2      Interpretation

          In this Agreement, unless the context requires otherwise

                    (a)     the singular includes the plural and vice versa;

                    (b)     words denoting persons include corporations,
partnerships and other legal persons;

                    (c)     a reference to a specified section, paragraph or
schedule is a reference to that specified section, paragraph or schedule of this
Agreement;

                    (d)     the article and section headings and the Table of
Contents are for convenience only and do not affect the interpretation of this
Agreement;

                    (e)     “including” means including without limitation; and

                    (f)     a reference to a Party includes its successors and
permitted assigns.

ARTICLE II

GRANT OF LICENSE

          2.1      License

                    (a)     Subject to subsections (b) and (c) below, Licensor
grants to Licensee and its Affiliates, and Licensee accepts on behalf of itself
and its Affiliates, the sole and exclusive right and license under the Licensed
Technology and Licensed Patents within the Field throughout the Territory (with
the right to grant sublicenses in accordance with Section 2.2) to develop,
manufacture, have manufactured, market, import, use, offer for sale, and sell
the Products.  Such license includes a sublicense to Licensee of Licensor’s
rights under the Genetics Institute Agreement in the fields of Gene Therapy and
Vaccine Adjuvant Therapy, each as defined in the Genetics Institute Agreement.

                    (b)     Licensee acknowledges that the license granted to it
under this Section 2.1 is subject to the licenses granted by Licensor under
Licensor’s Preexisting Agreements.

                    (c)     Notwithstanding anything to the contrary herein,
Licensor retains all rights to any consideration, including royalties, that is
or may become due and payable under any of

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Licensor’s Preexisting Agreements.  Nothing in this Agreement shall entitle
Licensee to any of such consideration.

          2.2      Sublicense

                     (a)     Subject to subsection (b) below and Section 3.2,
Licensee has the sole and exclusive right to grant sublicenses under the
Licensed Technology and Licensed Patents within the Field throughout the
Territory to any Third Party (as such, a Sublicensee), to develop, manufacture,
have manufactured, market, import, use, offer for sale, and sell the Products.

                      (b)     Licensee will be fully responsible to Licensor for
the performance of any and all terms of this License Agreement by Licensee’s
Sublicensees.  Licensee is required to obtain the written consent of Licensor
prior to the grant of any sublicense granted under Section 2.2(a), such consent
not to be unreasonably withheld or delayed by Licensor.

          2.3      Exclusivity

                    Except to the extent that Licensor exercises its rights
under Section 3.1, Licensor will not during the Term license or otherwise grant
any right under the Licensed Patents or Licensed Technology to develop,
manufacture, have manufactured, market, import, use, offer to sell, or sell the
Products to any Third Party  in the Territory within the Field.

          2.4      Limit of Grant

          Licensee has no right or license with respect to the Licensed Patents
or Licensed Technology except as expressly granted in this Agreement.

          2.5      [******]

          2.6      Provision of Information

          For a period of ninety (90) days after the date of execution of this
Agreement by Licensee, Licensor will use its Best Efforts to identify and
retrieve all information relating to the Licensed Patents or Licensed Technology
to Licensee to the extent reasonably necessary to enable Licensee to perform its
obligations under this Agreement, including the information acquired or
generated by Licensor prior to the Effective Date as set forth in Appendix A and
any information acquired or generated by Licensor after the Effective Date such
as manufacturing, CMC, pre-clinical and clinical data in respect of the
Products, correspondence with the FDA, and IND’s.  Licensor will promptly
provide such information to Licensee whenever it becomes available during the
Term.  All information disclosed pursuant to this Section 2.6 will be subject to
the confidentiality provisions of Article X.  As soon as practicable after the
Effective Date, Licensor will assign to Licensee all available IND’s previously
filed for Products. Licensor will use Best Efforts to identify and retrieve its
stocks of manufactured IL-12 and provide such
__________
****** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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retrieved stock to Licensee except to the extent that Licensor is required to
retain such stock by regulatory authorities.

ARTICLE III

LICENSOR OPTIONS AND RIGHT OF FIRST REFUSAL

          3.1      Options

                    (a)     Licensor has (i) an exclusive option to obtain
exclusive rights in the Territory to all Products within the Immunostimulatory
Field, including to practice Improvements to such Products developed by Licensee
(the Immunostimulatory Field Option) and (ii) an exclusive option to obtain
exclusive rights in the Territory to all Products within the Immunosuppressive
Field, including to practice Improvements to such Products developed by Licensee
(the Immunosuppressive Field Option).  Each Option may be exercised at any time
during the Option Period by written notice from Licensor to Licensee.  The
Option Period for the Immunostimulatory Field Option runs for [******] days from
the date when Licensee provides a written report to Licensor of the results of
the finalized clinical study, including an analysis of the data, for Licensee’s
[******] for the first Product in the Immunostimulatory Field for which [******]
are undertaken by Licensee.  The Option Period for the Immunosuppressive Field
Option runs for [******] days from the date when Licensee provides a written
report to Licensor of the results of the finalized clinical study, including an
analysis of the data, for Licensee’s [******]  for the first Product in the
Immunosuppressive Field for which [******] are undertaken by Licensee.  Licensee
will promptly provide Licensor with each such written reports, including details
of all related pre-clinical or clinical data in respect of the applicable
Product possessed by Licensee at the end of such [******].  Licensee will also
promptly provide Licensor with any related pre-clinical or clinical data in
respect of such Product that subsequently becomes available to Licensee.  Each
Option is independent of the other and the failure by Licensor to exercise an
Option, or the waiver by Licensor of any of its rights with respect to an
Option, will not affect Licensor’s rights with respect to the other Option.

                    (b)     If Licensor exercises an Option during the
applicable Option Period, the Parties will negotiate in good faith to conclude
an agreement (a Product License Agreement) under which Licensee will grant
Licensor an exclusive, worldwide, royalty-bearing license to develop,
manufacture, have manufactured, market, import, use, offer for sale, and sell
all Products in the Immunostimulatory Field (in the case of the
Immunostimulatory Field Option) or all Products in the Immunosuppressive Field
(in the case of the Immunosuppressive Field Option).  The terms of each Product
License Agreement will be reasonable and customary for similar products at
similar stages of development with similar market potential and will include the
following provisions (but the only forms of consideration payable by Licensor
under such Product License Agreement will be as set forth in paragraphs (i),
(ii) and (iii)):

 

                 (i)     reimbursement of Licensee by Licensor [******];

__________
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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                 (ii)     milestone payments by Licensor to Licensee on
[******];

 

 

 

                 (iii)     royalties to be paid by Licensor to Licensee; and

 

 

 

                 (iv)     representations and warranties, indemnification and
other standard provisions; and

 

 

 

                 (v)     termination of the license by Licensee if Licensor does
not within a reasonable period of time use Best Efforts to diligently develop,
commercialize, promote and sell a Product.

                    (c)     If after a period of sixty (60) days from the
exercise of an Option by Licensor, the Parties are unable to conclude a Product
License Agreement, the Parties will refer the matter to the Chief Executive
Officer of Licensee and the head of the Pharmaceuticals Division of Licensor so
that they may attempt to reach an agreement on the terms of a Product License
Agreement.

          3.2      Development of Products During Option Periods

                    (a)     The Parties acknowledge and agree that during each
Option Period Licensee will continue with the development of the Product(s)
being considered by Licensor, including the initiation of [******]; provided
that the Development Steering Committee shall oversee all aspects of the
coordination and design of the [******].

                    (b)     Subject to subsection (c) below, [******].

                    (c)     If Licensor exercises an Option in accordance with
Section 3.1(b), [******].

          3.3      Limits on Sublicensing by Licensee

                    (a)     From the Effective Date until an Option Period
expires, Licensee may not (i) sublicense rights which are the subject of the
applicable Option with respect to any Product under Section 2.2, or (ii) license
rights acquired or developed by Licensee after the Effective Date with respect
to any Product (only to the extent that such rights are necessary to develop or
manufacture such Product), in each case unless Licensor waives the Option with
respect to such Product or such sublicense or license is granted to an Affiliate
and is expressly subject to such Option.  Notwithstanding the foregoing, at no
time during the Term may Licensee sublicense its rights under this Agreement to
Genetics Institute without the prior written consent of Licensor.

                    (b)     If at the end of the [******] for any Product,
neither Licensee nor its Affiliates have a Commercial Partner to market, offer
to sell, or sell the Products in any given country in the Territory and an
Option has not been exercised in respect of such

__________
****** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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Product, Licensor will have a right of first refusal to become Licensee’s
Commercial Partner to market, offer to sell, or sell such Product in such
country on terms and conditions to be negotiated in good faith by the Parties. 
In such circumstances, Licensee shall offer to appoint Licensor as a Commercial
Partner at the conclusion of [******] for such Product.  Licensor shall have
[******] days from the receipt of such notice to accept or reject such offer. 
In the event that Licensor rejects such offer or fails to respond thereto within
such [******] day period, Licensee shall be free to appoint a Third Party as its
Commercial Partner with respect to such Product.  In the event that Licensor
accepts Licensee’s offer within such [******] day period, the Parties shall
negotiate in good faith the terms and conditions of such appointment as provided
under this Section 3.3(b).

          3.4      Limits on the Use of Interleukin-12 by Licensor

          From the Effective Date, Licensor and its Affiliates will not develop,
manufacture, have manufactured, market, import, use, offer for sale, or sell any
Licensed Compounds, other than as contemplated by this Agreement or any Product
License Agreement.

ARTICLE IV

COMPENSATION

          4.1      License Fee

          Licensee will pay to Licensor an initial nonrefundable license fee in
the amount of [******] within ten (10) Business Days after the later of (a)
receipt of an invoice for such amount from Licensor, and (b) the Effective Date.

          4.2      Milestone Payments

                    (a)     In addition to the license fee payable under
Section 4.1

 

                    (i)     upon the initiation of the first [******] Clinical
Trial for the first Product for which [******] Clinical Trials are undertaken by
Licensee or any of its Affiliates or any Sublicensee, Licensee will make a
one-time payment to Licensor in the amount of [******];

 

 

 

                    (ii)     upon the initiation of the first [******] Clinical
Trial for the first Product for which [******] Clinical Trials are undertaken by
Licensee or any of its Affiliates or any Sublicensee, Licensee will make a
one-time payment to Licensor in the amount of [******]; provided, however, that
in the event the Approval Authority waives the performance of [******] Clinical
Trials for the first Product for which [******] Clinical Trials are to be
conducted by Licensee or any of its Affiliates or any Sublicensee, Licensee
shall make the one-time payment to Licensor in the amount of  [******] at the
same time Licensee makes the Milestone Payment set forth under subsection
(a)(iii) below;

 

 

 

                    (iii)     upon the filing of the first [******] for the
first Product for which [******] by Licensee or any of its Affiliates or any

__________
****** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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Sublicensee, Licensee will make a one-time payment to Licensor in the amount of
[******]; and

 

 

 

                    (iv)     upon the first approval by [******] for a Product
in respect of which [******] , Licensee will make a one-time payment to Licensor
in the amount of [******] .

                    (b)     Each Milestone Payment due under Section 4.2(a) will
be due only once for the first Product in respect of which the indicated
Milestone occurs.  Licensee will promptly notify Licensor in writing of the
occurrence of each Milestone.  Licensee will make all Milestone Payments within
[******] after the later of (i) receiving an invoice from Licensor for the
applicable amount, and (ii) the occurrence of the Milestone.  The subsequent
occurrence of any similar event in respect of any Product will not give rise to
any additional obligation of Licensee to make any Milestone Payment.

          4.3      Royalties

                    (a)     In addition to the amounts payable under Sections
4.1 and 4.2, Licensee will pay Licensor a royalty, computed on a country by
country basis, in an amount equal to [******] of Net Sales of each Product.  If
a Product is included in a Combined Product, the royalty on the Product will be
calculated as [******] of Net Sales of the Combined Product, multiplied by the
Product Percentage.  The Parties will use their Best Efforts to agree upon the
Product Percentage for a Combined Product prior to the first launch of that
Product.

                    (b)     Royalties on Net Sales will be calculated quarterly
as of March 31, June 30, September 30, and December 31(each being the last day
of an Accounting Period), and will be paid by Licensee quarterly within sixty
(60) days after the end of each Accounting Period in which such Net Sales occur,
commencing with the calendar quarter in which the first Commercial Sale of any
Product is made by Licensee, any of its Affiliates or any Sublicensee.

                    (c)     If Licensee, acting in a commercially reasonable
manner, obtains a license from one or more Third Parties in order to develop,
manufacture, have manufactured, market, import, use, offer for sale or sell the
Products in the Territory, Licensee may reduce the royalties otherwise due to
Licensor under this Agreement by an amount equal to [******] of the total
cumulative consideration paid by Licensee to such Third Party or Third Parties,
including any upfront payments, milestone payments and royalties, provided,
however, that in no event will the royalties due to Licensor under this
Agreement be reduced to less than [******] of Net Sales on account of this
Section 4.3(c).

                    (d)     If a Third Party not under license from Licensor
sells a product which is generically equivalent to a Product in a country or
countries in which Licensee, an Affiliate or Sublicensee is selling such Product
and the units of such Third Party’s sales of such generically equivalent
product, as determined by a reliable independent party, are equal to or greater
than [******] of the total units of such Product and the generically equivalent
product sold in such country or countries for two consecutive calendar quarters,
then the royalty payable by Licensee to Licensor hereunder with respect to such
Product in such country(ies) shall be reduced by [******] of the royalty set
forth in Section 4.3(a), provided, however, that

__________
****** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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subsequent to such reduction if for four (4) consecutive quarters the sales of
such generically equivalent product in such country or countries are less than
[******] of the total units of such Product and the generically equivalent
product sold, then the royalty payable shall be as set forth in Section 4.3(a).

                    (e)     If an Approval Authority imposes a price limitation
for specific indications or patients, and Licensee claims that such limitation
significantly adversely affects its Adjusted Gross Sales for a Product in such
country, Licensor and Licensee will discuss an appropriate reduction in the
applicable royalty which shall apply for so long as such price limitation
continues to have such effect.

          4.4      Duration of Royalty Obligations

          The obligation of Licensee to pay the royalty under Section 4.3 with
respect to each Product will terminate in each country in the Territory upon the
occurrence of the later of:

                    (a)     the expiration or invalidation of the last to expire
or be invalidated Composition of Matter Patents which but for this Agreement
would be infringed by the sale of such Product in such country; and

                    (b)     ten (10) years after the first Commercial Sale in
such country of such Product,  except for countries in the European Union as to
which this requirement will be ten (10) years after the first Commercial Sale in
the European Union of such Product.

          4.5      Payment Terms

          Licensee will make all payments required under this Agreement in
United States Dollars.  Licensor will invoice Licensee for all payments required
under Section 4.1 and 4.2.  Any payments provided for under this Agreement that
are not made when due will bear interest at an annual rate until paid in full,
equal to the 60-day London interbank offered rate (LIBOR) plus [******], as such
rate may from time to time fluctuate.  Licensee will make all payments under
this Agreement to Licensor by wire transfer of immediately available funds to a
bank account of Licensor designated by Licensor from time to time in accordance
with this Agreement.

          4.6      Taxes

                     (a)     All amounts owed under this Agreement will be paid
after deduction as required by law for all applicable taxes, fees, and other
charges except taxes imposed with respect to or based on a Party’s net income. 
In particular, any tax required to be withheld by Licensee under the laws of any
country for the account of Licensor (withholding taxes) will be promptly paid by
Licensee for and on behalf of Licensor to the appropriate governmental
authority, and Licensee will furnish Licensor with proof of payment of such
tax.  All such tax actually paid on Licensor’s behalf will be deducted from
royalty payments due Licensor or promptly reimbursed to Licensee if no further
payments are due Licensor.  Licensee will assist Licensor in minimizing the
withholding taxes applicable to any payment made by Licensee and in claiming tax
refund at Licensor’s request.  Each Party agrees to assist the other Party in
claiming exemption from such withholding of taxes of any type under double
taxation or similar

__________
****** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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agreement or treaty from time to time in force and in minimizing the amount
required to be so withheld or deducted.

                     (b)     In the event of a change in the United
States-Switzerland income tax treaty which results in the imposition by the
United States or any of its political subdivisions of withholding taxes on any
royalty payment hereunder, Licensee will pay to Licensor an amount, in addition
to all royalties payable hereunder, such that after the deduction of all such
taxes (including interest, penalties or additions to tax) Licensor receives the
full amount of the royalty without diminution for such taxes.

          4.7      Reports

                    (a)     Licensee will give Licensor, not more than thirty
(30) calendar days after the end of each Accounting Period, a written report
estimating the Net Sales for such Accounting Period unless Licensee makes the
royalty payment required by Section 4.3 within such thirty (30) day period.

                    (b)     With each royalty payment Licensee will deliver to
Licensor a full and accurate supporting accounting documentation to include at
least the following information:

 

                    (i)      total Adjusted Gross Sales for each Product subject
to royalty sold (by country) by Licensee, its Affiliates and Sublicensees; and

 

 

 

                    (ii)     total royalties payable to Licensor for the
relevant period.

          4.8      Records

          Licensee and its Affiliates will keep, and will require its
Sublicensees to keep, full, true and accurate books of account containing all
particulars that may be necessary for the purpose of calculating all royalties
payable to Licensor with accounting principles consistently applied from period
to period, in accordance with GAAP.  Such books of account will be kept at
Licensee’s principal place of business.  At the expense of Licensor, Licensor or
its authorized independent public accountant has the right to engage Licensee’s
officially appointed worldwide independent public accountant to perform, on
behalf of Licensor or its independent public accountant, an audit, conducted in
accordance with GAAP, of such books and records of Licensee, its Affiliates and
Sublicensees, that are deemed necessary by Licensee’s independent public
accountant to report on Net Sales of Products for the period or periods
requested by Licensor and the correctness of any report or payments made under
this Agreement.  Upon timely request and at least thirty (30) calendar days’
prior written notice from Licensor, such audit will be conducted as an
additional audit work during Licensee’s annual audit of the countries
specifically requested by Licensor, during regular business hours in such a
manner as to not unnecessarily interfere with Licensee’s normal business
activities, and will be limited to results in the two (2) calendar years prior
to audit notification.  Such audit will not be performed more frequently than
once per calendar year nor more frequently than once with respect to records
covering any specific period of time.  All information, data documents and
abstracts herein referred to will be used only for the purpose of verifying
royalty statements or compliance with this Agreement, will be treated by
Licensor as licensee confidential information subject to the obligations of
Article X of this Agreement and need not be retained more than one (1) year
after completion of an audit hereof,

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if an audit has been requested; nor more than two (2) years from the end of the
calendar year to which each will pertain; nor more than one (1) year after the
date of termination of this Agreement.  Audit work papers and results will be
shared by Licensee and Licensor.  If the audit reveals an overpayment, Licensor
will promptly reimburse Licensee for the amount of the overpayment.  If the
audit reveals an underpayment, Licensee will promptly make up such
underpayment.  If the audit reveals that the royalties owed by Licensee to
Licensor for the countries specifically requested and for any calendar year in
total have been understated by more than five percent (5%), Licensee will, in
addition, pay the reasonable costs of such additional audit work.  The failure
of Licensor to request verification of any royalty calculation within the period
during which corresponding records must be maintained will be deemed to be
acceptance of the royalty reporting.

          4.9      Sales in Foreign Currencies

          Whenever for the purpose of calculating royalties, conversion from any
foreign currency is required, such conversion will be made as follows:

                    (a)     for Licensee and its Affiliates, when calculating
the Adjusted Gross Sales, the amount of such sales in foreign currencies will be
converted into United States Dollars as computed in Licensee’s United States
Dollars financial reporting system for the countries concerned, using for
internal foreign currency translation Licensee’s then current standard practices
actually used on a consistent basis in preparing its audited financial
statements in accordance with GAAP; and

                    (b)     for a sublicensee in a country:

 

                    (i)     when calculating the Adjusted Gross Sales, the
amount of such sales estimate will be reported by the sublicensee to Licensee
within thirty (30) days from the end of an Accounting Period, after having
converted each applicable monthly sales in foreign currency into the United
States Dollar (or the applicable reporting currency) using the average rate of
exchange published in the United States Federal Reserve Releases H.10 and G.5
(or some other source agreed upon in writing by the Parties for any particular
country) for each respective month of the applicable Accounting Period; and

 

 

 

                    (ii)     when calculating the royalties on Net Sales, such
conversion will be at the average quarterly rate of exchange of the United
States Dollar to Swiss Francs as retrieved from the United States Federal
Reserve Releases H.10 and G.5 for the applicable Accounting Period, in
accordance with Licensee’s then current standard practices and GAAP.

ARTICLE V

DEVELOPMENT STEERING COMMITTEE

          5.1      Appointment and Administration of Development Steering
Committee

                    (a)     As soon as practicable after the execution of this
Agreement and in no event later than thirty (30) days after the Effective Date,
the Parties will establish a steering

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committee to oversee and review the development of the Products, which will be
composed of two members selected by Licensor and two members selected by
Licensee (the Development Steering Committee). At least one member appointed by
each Party will be a senior officer of such Party responsible for product
development or a person with substantial experience in product development who
is acceptable to the other Party.  Each Party, at its sole discretion, may at
any time during the Term of this Agreement replace a member it has the right to
designate upon prior written notice to the other Party.  Each Party will use
reasonable efforts to cause its respective representatives to attend all
meetings of the Development Steering Committee.  Each Party will bear the travel
and out-of-pocket expenses incurred by its members or representatives in
connection with the Development Steering Committee’s meetings.

                    (b)     The Development Steering Committee will meet at
least once every calendar quarter, or more or less frequently as the Parties
mutually deem appropriate, on dates and at times and places as agreed by the
Parties.  The Development Steering Committee may also convene or be polled or
consulted from time to time by means of telecommunications, video conferences or
correspondence, as deemed by the Parties to be necessary or appropriate.

                    (c)     All recommendations and decisions of the Development
Steering Committee will be made by consensus of the members present at the
meeting.  If the Development Steering Committee is unable to reach consensus
with respect to a particular matter after good faith discussions, the matter
will be referred for further review and resolution by the head of development of
each Party (the Executive Officers).  The Executive Officers will use reasonable
efforts to resolve the matter promptly.  If the Executive Officers are unable to
resolve the matter at hand after good faith discussions, Licensee reserves the
final decision-making authority with respect to such matter and will promptly
inform Licensor in writing of its resolution of the matter.

                    (d)     The Development Steering Committee will exist until
the first approval of a Product by the relevant Approval Authority is obtained
in each of the United States, Japan and the European Union, unless otherwise
agreed by the Parties.

          5.2      Responsibility and Authority of the Development Steering
Committee

          Subject to the other terms of this Agreement, the Development Steering
Committee will be responsible for review and exchange of information concerning
(i) the status of clinical trials of Products, (ii) review of the development of
Products including contracts relating to their development, (iii) coordination
and design of [******] Clinical Trials, and (iv) Licensee’s estimated budget
allocation for development activities relating to the Products.  The Development
Steering Committee will report to the Parties regarding its proceedings.

ARTICLE VI

DEVELOPMENT AND MARKETING OBLIGATIONS

          6.1      Commercial Development Obligation

                    (a)      Licensee will use Best Efforts, at its sole
expense, to diligently develop, commercialize, promote and sell at least one
Product in the Territory in the Field, as promptly as

__________
****** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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is reasonably and commercially feasible.  Notwithstanding the foregoing, with
respect to commercialization, promotion and sale, the standard of Best Efforts
shall be measured on a region by region basis, wherein the regions are (i) the
European Union, (ii) the United States, (iii) Japan and (iv) the rest of the
world.  The standard of Best Efforts with respect to each region shall mean the
standard that Licensee uses for similar products of similar potential and at a
similar stage of development in each of those regions, respectively. Failure to
use Best Efforts to diligently commercialize, promote and sell at least one
Product in any one or more country in a region comprising more than one country
will not in and of itself constitute failure to use such Best Efforts for the
region as a whole.

                    (b)     Licensee will keep the Development Steering
Committee generally informed as to Licensee’s progress in the development of
Products.

                    (c)     If Licensor has a reasonable basis to believe that
Licensee is not using Best Efforts under Section 6.1(a), it may provide written
notice to Licensee specifying the basis for such belief.  On receiving such
notice, Licensee will have the right to reply in writing to Licensor’s notice
within thirty (30) days.  If Licensor does not receive a reply from Licensee
within that period, or if the Parties disagree, either Party may refer the
matter for dispute resolution pursuant to Article XIII.  If the dispute is
referred to arbitration, and the arbitrators conclude that Licensee has not
fulfilled its obligation under Section 6.1(a), and such failure is not cured
within sixty (60) days from the date of the decision, or if Licensee has not
taken the requisite steps to cure such failure within such period (if not
capable of cure within sixty (60) days), or does not diligently pursue such
cure, Licensor may, upon notice to Licensee, (i) convert Licensee’s license with
respect to such Licensed Patent to a non-exclusive license in any or all
countries in the applicable region (but limited to only one additional licensee
in any country) or (ii) terminate Licensee’s license in any or all countries in
the applicable region; provided that for those regions comprised of more than
one country, Licensor may only convert or terminate Licensee’s license as
provided in this Section 6.1(c) with respect to those countries in the region
where Licensee has not used Best Efforts as required to diligently
commercialize, promote and sell at least one Product.

          6.2      Phase II, III and IV Clinical Trials

          After the Effective Date, subject to Article III, Licensee will be
responsible, at its sole expense, for all development costs incurred by
Licensee, and the preparation and filing of any NDA and sNDA, with respect to
any Products.

          6.3      Supply and Manufacture

                    (a)     Licensee will manufacture or arrange the manufacture
of Product and/or identify and contract with a suitable manufacturer of Product.

                    (b)     Licensor shall deliver to Licensee upon Licensee’s
request all information regarding the formulation, manufacture or use of the
Licensed Compounds and such other information as Licensor, or any Third Party
manufacturer that Licensor has appointed to manufacture Interleukin-12, may have
or may hereafter develop as Licensee shall reasonably

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require in order to manufacture or have manufactured the Products.  Licensor
will use reasonable commercial efforts to introduce Licensee to any such Third
Party manufacturer of Interleukin-12.

          6.4      Use of Name

          Except as required under applicable law, regulation or rule in the
Territory, Licensor may not use the name of Licensee or any variant, and
Licensee may not use the name of Licensor or any variant, in each case in
connection with the advertising or sale of any Product, without the prior
written consent of the other.

          6.5      Sampling

          Each of Licensee, any of its Affiliates and any Sublicensees may
provide customary royalty free sampling for a Product for use in the treatment
of any indication in a country within the Territory.  After the commercial
launch of the Product in any country, the amount of royalty free sampling of the
Product in that country will be limited to [******].  If the aggregate amount of
sampling by Licensee, any of its Affiliates and Sublicensees exceeds this
percentage with respect to any calendar quarter, the amount of Net Sales will be
multiplied by a percentage equal to the sum of [******] plus a fraction
(expressed as a percentage) in which the numerator is [******] and the
denominator is [******].

          6.6      Investigator-Initiated Trials; Indigent Sales

                    (a)     Other than in the case of specific
investigator-initiated Phase IV Clinical Trials to which the Parties mutually
agree, and subject to Section 6.6(b), Licensee shall have the right to provide
Product on up to an aggregate of [******] patients free of royalty to the extent
it is provided in investigator-initiated Phase IV Clinical Trials at any time
prior to the date which is two years after the later of the launch of a Product
in (i) the United States and (ii) the European Union.  Beyond such number of
patients, [******] of the royalty due under Section 4.3 shall be due on all
investigator-initiated Phase IV Clinical Trials.  For purposes of the
immediately preceding sentence, if the Product is provided in exchange for a
price the royalty will be determined as if the Product were sold in an Indigent
Sale in accordance with Section 6.6(b); if the Product is provided free of
charge the royalty will be determined as if the Product were distributed as a
sample in accordance with Section 6.5.

                    (b)     For purposes of determining the royalty due under
Section 4.3 with respect to Indigent Sales in any country in the Territory, the
computation of Net Sales shall be based on the actual sales price received for
such Indigent Sales but in no event on a sales price less than [******] of the
sales price received for ordinary sales of the Product in the same country.

          6.7      Foreign Registration and Laws

          Licensee agrees to register this Agreement with any foreign
governmental agency and otherwise comply with applicable law within the
Territory affecting this Agreement and pay all

__________
****** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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related costs and legal fees. If such law requires registration by Licensor,
Licensee will so inform Licensor which will pay the applicable costs.

ARTICLE VII

PATENT MATTERS

          7.1      Patent Prosecution and Maintenance

          Licensor may, but is not obligated to, at its own expense, (i)
prepare, file, prosecute and maintain (collectively, Handle) all Licensed
Patents in the Territory, (ii) consult with Licensee as to the Handling of such
Licensed Patents in Major Market Countries as it relates to Products, and (iii)
furnish to Licensee copies of all documents relevant to any such Handling.
Licensor will furnish such documents and consult with Licensee in sufficient
time before any action by Licensor is due to allow Licensee to provide comments
thereon, which comments Licensor must consider. At Licensor’s expense and
reasonable request, Licensee shall cooperate, in reasonable ways in connection
with the preparing, filing, prosecution and maintaining of all Licensed Patents.
Should Licensor decide that it does not desire to Handle a patent or patent
application within a Licensed Patent in a country of the Territory, as it
relates to Product, it will promptly advise Licensee thereof. In such
circumstances, Licensee may, but is not obligated to, Handle the same at
Licensee’s own cost, to the extent that Licensee desires to do so.

          7.2      Notification of Infringement

          If a Party learns of infringement or threatened infringement or
misappropriation by a Third Party of any Licensed Patent, Licensed Technology or
Improvement relating to Product within the Territory, it will promptly notify
the other Party and provide the other Party with all available evidence.

          7.3      Patent Enforcement

                    (a)     Licensee has the first right, but not the duty, to
institute actions against Third Parties for past, current and future
infringement or misappropriation based on any Licensed Patent or Licensed
Technology or Improvement to the extent related to Product; provided, however,
that with respect to any such action against Genetics Institute, Licensor has
the first right, but not the duty, to institute such action.  If, within thirty
(30) days of receipt of the notice referred to in Section 7.2, Licensee does not
give notice to Licensor of Licensee’s election to institute an action against an
offending Third Party, Licensor may, but is not required to, institute such an
action; provided, however, that with respect to any such action against Genetics
Institute, if, written thirty (30) days of receipt of the notice referred to in
Section 7.2 as it relates to an action against Genetics Institute, Licensor does
not give notice to License of Licensor’s election to institute an action against
Genetics Institute, Licensee may, but is not required to, institute such an
action.  The costs and expenses of any such action (including fees of attorneys
and other professionals) will be borne by the Party instituting the action or,
if the Parties elect to cooperate in instituting and maintaining the action, by
the Parties in such proportions as they may agree in writing.  Each Party will
execute all necessary and proper documents and take appropriate action to allow
the other Party to institute and prosecute such

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actions.  Any award paid by Third Parties as a result of an action (whether by
way of settlement or otherwise) will be paid to the Party who instituted and
maintained the action or, if all Parties instituted and maintained the action,
allocated among the Parties in proportion to their respective contributions to
the costs and expenses incurred in the action.

                    (b)     The instituting Party may not settle the action or
proceeding in a manner which restricts the scope or affects the enforceability
of the Licensed Patents or any intellectual property of the other Party, without
the prior written consent of the other Party, which consent shall not be
unreasonably withheld.  Notwithstanding the foregoing, nothing in this Agreement
shall prohibit Licensor from settling with Genetics Institute any such action or
proceeding, at Licensor’s sole discretion and without Licensee’s prior consent;
provided such settlement does not restrict the scope or affect the
enforceability of the Licensed Patents with respect to Licensee or any Third
Party other than Genetics Institute.

          7.4      Ownership of Improvements

                    (a)     The Parties will jointly own any and all Joint
Inventions, as well as all patent rights in and to all Joint Inventions. 
Licensor will solely own all Improvements (other than Joint Inventions), as well
as all patent rights in and to such Improvements except as licensed herein. 
Each Party will promptly inform the other Party in writing as soon as it
concludes that it has made an Improvement, but may do so promptly after filing a
priority patent application for such Improvement if a Party faces a possible
loss of rights in a Major Market Country.

                    (b)     As soon as a Party concludes that it wishes to file
a patent application claiming a Joint Invention, it will immediately inform the
other Party in writing and consult about filing procedures and allocation of
costs concerning such patent application.  The Party will as early as possible
also provide the other Party with a copy of a draft specification, the scope of
claims and a determination of inventors for such claims, but may do so promptly
after filing a priority patent application for such Improvement if a Party faces
possible loss of rights in a Major Market Country.

                    (c)     The Party performing the priority filing preparation
agrees to (i) prepare, file and prosecute and maintain such priority,
corresponding foreign patents, and resulting patents, (ii) consult with the
other Party as to the preparing, filing, prosecuting and maintaining of such
patent applications and resulting patents in the Major Market Countries, and
(iii) furnish the other Party with copies of all documents relevant to the
preparation, filing, prosecution and maintenance.  Unless otherwise agreed, the
filing Party will furnish such documents to and consult with the other Party in
sufficient time before any action by the filing party is due to allow the other
party to provide comments, which comments the filing Party must consider.  If
the filing Party decides that it does not desire to file, prosecute or maintain
such a patent application or resulting patent in any country of the Territory,
it will promptly advise the other Party in writing, and the other Party will
then have the right, but not the obligation, to file, prosecute and/or maintain
the same at its own cost, to the extent it desires to do so.

                    (d)     Section 7.1 will govern patent prosecution and
maintenance of Improvements other than Joint Inventions.

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          7.5      Ownership of Trademarks

          Licensee will own all trademarks associated with or used in connection
with the manufacture, marketing and sale of any Product, together with
associated goodwill.  Licensee will be responsible for obtaining, maintaining
and protecting all applicable trademarks in connection with the manufacture,
marketing and sale of Product.

          7.6      Adverse Reactions

          Before the commercial launch of each Product, each Party will inform
the other Party promptly of any adverse reactions, reports and information
regarding the Product occurring in the Territory which comes to its knowledge
and which may have to be reported to the appropriate health authorities within
the Territory.  After the commercial launch of any Product, each Party will
inform the other Party promptly of any adverse reactions, reports and
information regarding the Product of which it gains knowledge, provided,
however, that if a Product License Agreement is entered into in respect of such
Product, neither Party will have any further obligation to so inform the other
Party unless Licensor has become a Commercial Partner of Licensee as provided
for in Section 3.3(b).

ARTICLE VIII

REPRESENTATIONS, WARRANTIES AND LIMITATION OF LIABILITY

          8.1      Representations of Licensor

          Licensor represents and warrants to Licensee as follows.

                    (a)     Hoffmann-La Roche Inc. is a corporation duly
organized under the laws of the State of New Jersey, and F. Hoffmann-La Roche
Ltd is a corporation duly organized under the laws of Switzerland.  Each of such
corporations has all requisite legal and corporate power and authority to carry
on its business and to perform its obligations under this Agreement.  All action
on the part of Licensor necessary for the execution and delivery of this
Agreement and the performance of Licensor’s obligations under this Agreement has
been taken.  The person(s) executing this Agreement on behalf of Licensor have
all necessary corporate powers and have been duly authorized by Licensor to
execute, and deliver this Agreement on its behalf.  This Agreement constitutes a
valid and binding obligation of Licensor, enforceable in accordance with its
terms.  Except as have been or will be obtained by Licensor and except for
Product Registrations, no permit, consent, approval or authorization of, or
declaration to or filing with, any person, party or governmental authority is
required in connection with the delivery, consummation, or performance by
Licensor of this Agreement.

                    (b)     The execution, delivery and performance of this
Agreement by Licensor will not, with or without notice or the passage of time or
both, result in any violation of, be in conflict with or constitute a default
under any material contract, obligation or commitment to which Licensor is a
Party or by which it is bound, or, to the best knowledge of Licensor, any
statute, rule or governmental regulation applicable to Licensor.

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                    (c)     Licensor owns or controls under valid licenses with
the right of sublicense all right, title and interest in and to the Licensed
Patents and Licensed Technology.  As of the Effective Date of this Agreement, to
the best knowledge of Licensor, there are no adverse actions, suits, or claims
pending or threatened against Licensor in any court or by or before any
governmental body or agency with respect to the Licensed Technology or the
Licensed Patents and, to the best knowledge of Licensor, there are no Third
Party patents which might give rise to such actions, suits or claims.

                    (d)     Licensor has used its Best Efforts to identify and
retrieve all information that Licensor has acquired or generated as of the
Effective Date relating to the Licensed Patents or Licensed Technology that is
reasonably necessary for Licensee to perform its obligations under the
Agreement.  Such information is listed on Appendix A.  Licensor has provided
such information to Licensee to the extent available.

                    (e)     The licenses granted by Licensor under Licensor’s
Preexisting Agreements (including, for the purposes of this Section 8.1(e), any
amendments thereto after the Effective Date, whether or not approved by
Licensee) do not prevent License from exercising its rights under this Agreement
to develop, manufacture, have manufactured, market, import, use, offer for sale
or sell the Products, and if permitted Licensor has provided Licensee on or
before the Effective Date with copies or complete and accurate summaries of such
provisions of Licensor’s Preexisting Agreements relevant to the exercise of such
rights.

          EXCEPT AS SET FORTH IN SECTIONS 8.1(a) THROUGH (e), LICENSOR MAKES NO
WARRANTY CONCERNING THE LICENSED PATENTS, THE LICENSED TECHNOLOGY OR THE
PRODUCTS INCLUDING THE FOLLOWING:  (I) ANY EXPRESS OR IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WITH REGARD TO THE
PRODUCTS; (II) ANY WARRANTY AS TO THE VALIDITY OR SCOPE OF THE LICENSED PATENTS,
OR THAT ANY PRODUCT WILL BE FREE FROM INFRINGEMENT OF INTELLECTUAL PROPERTY
RIGHTS OF THIRD PARTIES; OR (III) ANY WARRANTY THAT NO THIRD PARTY IS INFRINGING
THE LICENSED PATENTS.  IN NO EVENT WILL LICENSOR OR ITS AFFILIATES OR AGENTS BE
LIABLE FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, OR LOST PROFITS, OF
LICENSEE.

          8.2      Representations of Licensee

          Licensee represents and warrants to Licensor as follows.

                    (a)     Ribapharm Inc. is a corporation duly organized under
the laws of the State of Delaware.  Licensee has all requisite legal and
corporate power and authority to carry on its business and perform its
obligations under this Agreement.  All action on the part of Licensee necessary
for the execution and delivery of this Agreement and the performance of
Licensee’s obligations under this Agreement has been taken.  The person(s)
executing this Agreement on behalf of Licensee have all necessary corporate
powers and have been duly authorized by Licensee to execute this Agreement on
its behalf.  This Agreement constitutes a valid and binding obligation of
Licensee, enforceable in accordance with its terms.  Except as have been or

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will be obtained by Licensee and except for Product Registrations, no permit,
consent, approval or authorization of, or declaration to or filing with, any
person, party or governmental authority is required in connection with the
delivery, consummation or performance by Licensee of this Agreement.

                    (b)     The execution, delivery and performance of this
Agreement by Licensee will not, with or without notice or the passage of time or
both, result in any violation of, be in conflict with or constitute a default
under any material contract, obligation or commitment to which Licensee is a
party or by which it is bound, or, to the best knowledge of Licensee, any
statute, rule or governmental regulation applicable to Licensee.

          8.3      Mutual Representation and Warranty

          Each Party has disclosed all information in its possession or control
(other than information which is subject to confidentiality or non-disclosure
obligations) which is material to the other Party entering into this Agreement,
and such information does not contain any untrue statement of material fact or
omit to state a material fact.

ARTICLE IX

INDEMNIFICATION AND INSURANCE

          9.1      Indemnification by Licensee

          Licensee will at all times, during and after the Term, indemnify,
defend and hold harmless Licensor, its Affiliates, and its directors, officers,
employees, and agents against any and all claims, demands, actions and
liabilities, including reasonable attorneys’ fees and costs (collectively,
Claims), arising out of or resulting from

                    (a)     any breach of any representation, warranty or
covenant of Licensee under this Agreement; or

                    (b)     any Third Party claim or suit resulting from the
development, manufacture, marketing, import, use, or sale of Products by
Licensee, its Affiliates, or its Sublicensees pursuant to this Agreement.

          This indemnity obligation will not apply to the extent that the claim,
loss, damage, liability or Third Party claim or suit is the result of any
grossly negligent act or willful misconduct of Licensor, its Affiliates, or its
Sublicensees, or their directors, officers, employees or agents.

          9.2      Indemnification by Licensor

          Licensor will at all times, during and after the Term, indemnify,
defend and hold harmless Licensee, its Affiliates, and its Sublicensees and
their respective directors, officers, employees and agents against any and all
claims, demands, actions, and liabilities, including reasonable attorneys’ fees
and costs, arising out of or resulting from

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                    (a)     any breach of any representation, warranty or
covenant of Licensor under this Agreement; or

                    (b)     the use of active ingredients supplied by Licensor
or its Affiliates to Licensee for use in clinical trials of any Product.

          This indemnity obligation will not apply to the extent that the claim,
loss, damage, liability or Third Party claim or suit is the result of any
grossly negligent act or willful misconduct of Licensee, its Affiliates, or
their directors, officers, employees or agents.

          9.3      Obligations of the Party Seeking to Be Indemnified

          If Licensor, Licensee, any Affiliate or any Sublicensee (in each case,
an Indemnified Party) receives any written Claim which it believes is the
subject of indemnity under this Agreement by Licensor or Licensee, as the case
may be (in each case, an Indemnifying Party), the Indemnified Party will, as
soon as reasonably practicable after forming such belief, give notice to the
Indemnifying Party, including full particulars of such claim to the extent known
to the Indemnified Party.  Failure to give timely notice to the Indemnifying
Party will not release the Indemnifying Party from any liability to the
Indemnified Party except to the extent that the Indemnifying Party is injured by
such delay.  The Indemnifying Party will have the right, by prompt notice to the
Indemnified Party, to assume the defense of the claim at the cost of the
Indemnifying Party.  If the Indemnifying Party does not assume the defense of
the claim or, having done so, does not pursue the defense, the Indemnified Party
may assume the defense, with counsel of its choice, but at the cost and for the
account of the Indemnifying Party.  If the Indemnifying Party so assumes such
defense, the Indemnified Party may participate through counsel of its choice,
but the cost of such counsel will be for the account of the Indemnified Party. 
The Party not assuming the defense of the claim will render all reasonable
assistance to the Party assuming the defense, and all out-of-pocket costs of
such assistance will be for the account of the Indemnifying Party.  No such
claim will be settled other than by the Party defending the claim, and then only
with the consent of the other Party, which will not be unreasonably withheld.

          9.4      Other Indemnification Matters

                    (a)     All Claims for indemnification by an Indemnified
Party must be made within the following time periods or will be irrevocably
barred

                              (i)     for all Claims arising out of or based on
an alleged breach by a Party of a representation or warranty of a material
contract, obligation or commitment adversely affecting the Licensed Patents,
Licensed Technology, or Licensed Compounds (the Material Contract Claims), one
(1) year plus the period of the statute of limitations applicable to the claim
for the breach of contract, measured from the Effective Date; and

                              (ii)    for all other Claims, eighteen (18) months
measured from the Effective Date.

                    (b)     The maximum aggregate liability of an Indemnifying
Party to an Indemnified Party with respect to all Claims under Section 9.2(a) is
the total aggregate amount of

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all payments theretofore made by Licensee to Licensor (including the license fee
specified in Section 4.1, Milestone Payments, and royalties set forth in Article
III) plus [******] of Licensee’s development costs for the Product to date. Such
liability for Material Contract Claims may, at the election of the Indemnifying
Party, be paid in equal installments over a period of up to five (5) years. The
maximum aggregate liability of an Indemnifying Party with respect to Claims
(other than Material Contracts Claims) based on Sections 9.2(a) and 9.2(b) is
the sum of [******].

                      (c)     In the event of Material Contract Claims, Licensor
and Licensee will, as soon as practicable after the notice described in Section
9.3 is given, meet and confer with respect to assessing the stage of development
of Product and commitments of Licensee with respect to the development.

                      (d)     No Indemnified Party will make any Claims until
the aggregate of all Claims to date first equals or exceeds Two Hundred Thousand
Dollars (US$200,000), at which time all Claims to date and all Claims arising
thereafter may be asserted.

ARTICLE X

CONFIDENTIALITY AND PUBLICATION

          10.1      Confidentiality

          Subject to Section 10.2, during the Term and for three  (3) years
after the Term, each Party will maintain in confidence, to the same extent to
which such Party maintains its own proprietary information, all information and
materials disclosed by the other Party, including Licensed Patents, Licensed
Technology, or Improvements, whether provided prior to or after the Effective
Date, and will not use such information or materials for any purpose except as
permitted by this Agreement, and will not disclose such information and
materials to anyone other than those of its Sublicensees, Affiliates, potential
sublicensees, employees, consultants, agents or subcontractors as are necessary
in connection with such Party’s activities pursuant to this Agreement.  Each
Party will obtain a written agreement from its Sublicensees, potential
sublicensees, consultants, agents and subcontractors (if any), prior to
disclosure, to hold in confidence and not make use of such trade secrets or
other proprietary information for any purpose other than as permitted by this
Agreement. Licensee will be responsible to Licensor for compliance with this
Article X by all parties to which Licensee may disclose such information or
materials.

          10.2      Disclosure

          The obligation of confidentiality in this Agreement does not apply to
the extent that

                      (a)     either Party (as such, the Recipient) is required
to disclose information by order or regulation of a governmental agency or a
court of competent jurisdiction, except that the Recipient will not make any
such disclosure (other than as required under the securities laws of any
jurisdiction, any filing of information or materials with a stock exchange upon
which its securities are listed, or a filing of information or materials
required by a governmental regulatory agency), without first notifying the other
Party and allowing such other Party a reasonable

__________
****** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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opportunity to seek injunctive relief from (or protective order with respect to)
the obligation to make such disclosure;

                      (b)     the Recipient can demonstrate that (i) the
disclosed information was at the time of such disclosure to the Recipient
already in (or later enters) the public domain other than as a result of actions
of the Recipient, Recipient’s Affiliates, employees, Sublicensees, agents or
subcontractors in violation of this Agreement; (ii) the disclosed information
was rightfully known by the Recipient or its Affiliates (as shown by its written
records) prior to the date of disclosure to the Recipient in connection with the
negotiation, execution or performance of this Agreement or independently
generated by the Recipient or its Affiliates at any time; or (iii) the disclosed
information was received by the Recipient or its Affiliates on an unrestricted
basis from a source unrelated to either Party to this Agreement and not under a
duty of confidentiality to the other Party;

                      (c)     disclosure is made to a government regulatory
agency as part of such agency’s product license approval process; or

                      (d)     disclosure is necessary to obtain or secure patent
protection of any Licensed Patents or Licensed Technology.

          10.3      Publicity

          Except as otherwise provided in this Agreement or required by law, no
Party will originate any publication, news release or other public announcement,
written or oral, whether in the public press, stockholders reports or otherwise,
relating to this Agreement or to any sublicense under this Agreement, or to the
performance under this Agreement or under any sublicense under this Agreement,
without the prior written approval of the other Party, which approval will not
be unreasonably withheld or delayed.

          10.4      Scientific Publications

                      (a)     If Licensor exercises an Option:

                                (i)      Licensor may publish scientific
articles about Products in scientific publications (Scientific Articles), but
only those Products subject to the Option; and

                                (ii)     Licensee may only publish Scientific
Articles with the consent of Licensor.

                      (b)     If Licensor becomes a Commercial Partner of
Licensee under Section 3.3(b), each Party may only publish Scientific Articles
with the consent of the other Party.

                      (c)     If Sections 10.4(a) and 10.4(b) do not apply:

                                (i)      Licensee may publish Scientific
Articles; and

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                                (ii)     Licensor may only publish Scientific
Articles with the consent of Licensee.

                      (d)     Consent by a Party to the publication of
Scientific Articles by the other Party must not be unreasonably withheld or
delayed.

ARTICLE XI

TERM AND TERMINATION

          11.1      Term

                      (a)     This Agreement commences as of the Effective Date
and, unless sooner terminated in accordance with this Agreement, will expire in
each country in the Territory upon the occurrence of the later of

 

 

          (i)      the expiration or invalidation of the last to expire or be
invalidated of the Composition of Matter Patent(s) which but for this Agreement
would be infringed by the sale of such Product using such Licensed Patents in
such country, including any extension of such Licensed Patents; and

 

 

 

 

 

          (ii)     ten (10) years after the first Commercial Sale in such
country of such Product, except for countries in the European Union as to which
this requirement will be ten (10) years after the first Commercial Sale in the
European Union of such Product.

                      (b)     Upon expiration of this Agreement in a country
with respect to any Product, Licensee will have a perpetual, fully paid-up,
royalty free, non-exclusive license within the Field in such country (with the
right to grant sublicenses in accordance with Section 2.2) to develop,
manufacture, have manufactured, market, import, use, offer for sale, and sell
such Product.

          11.2      Termination Without Cause

          Licensee may terminate this Agreement without cause, on a product by
product and country by country basis, upon six (6) months’ prior written notice
to Licensor; provided that such termination will not release Licensee of any of
its obligations to Licensor up to the date of effect of termination, including
payment of all amounts owed to Licensor up to such date. 

          11.3      Termination For Cause

                      (a)     Either Party (as such, the Non-Breaching Party)
may terminate this Agreement if

 

 

          (i)     the other Party, its Affiliates or its Sublicensees (as such,
the Breaching Party) does not comply with any of its material obligations
contained in this Agreement;

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          (ii)    the Non-Breaching Party gives notice to the Breaching Party
specifying the nature of the default, requiring the Breaching Party to cure the
default, and referring to the Non-Breaching Party’s right to terminate this
Agreement pursuant to this Section 11.3; and

 

 

 

 

 

          (iii)   the default is not cured within sixty (60) days after the
receipt of such notice.

                      (b)     In addition to its right of termination in
accordance with Section 6.1(c), Licensor may terminate this Agreement if at any
time:

 

 

          (i)     Licensee files in any court or agency pursuant to any statute
or regulation of the United States or of any foreign country, a petition in
bankruptcy or insolvency or for reorganization or for an arrangement or for the
appointment of a receiver or trustee of Licensee or of its assets;

 

 

 

 

 

          (ii)    Licensee proposes a written agreement of composition or
extension of its debts;

 

 

 

 

 

          (iii)   Licensee is served with an involuntary petition against it,
filed in any insolvency proceeding, and the petition is not dismissed within
sixty (60) days after filing; or

 

 

 

 

 

          (iv)   Licensee makes an assignment for the benefit of creditors.

                      (c)     Upon the occurrence of any event under
Section 11.3(a)(iii) or Section 11.3(b) that entitles a Party to terminate this
Agreement, such Party may deliver to the other Party written notice of
termination of this Agreement, and the termination will be effective upon
delivery of such notice.  The right to terminate will be in addition to and not
in substitution for any other available remedy.

                      (d)     If Licensor has the right to terminate this
Agreement under Section 11.3(a) or (b), Licensor at its option, instead of
terminating this Agreement, may by written notice to Licensee convert the
license granted under Section 2.1 (including the right to sublicense under
Section 2.2) into a non-exclusive license (but limited to only one additional
licensee in any country).  All other provisions of this Agreement will otherwise
remain in effect.

                      (e)     A Party entitled to terminate this Agreement, or
convert the license under this Agreement, under this Section 11.3 may elect to
terminate or convert with respect to a particular country or countries in the
Territory rather than the entire Territory by giving written notice of such
election in the notice of intent to terminate or convert the license.

                      (f)     Waiver by either Party of any event or succession
of events giving rise to the right of termination will not deprive the waiving
Party of the right to terminate this Agreement under this Section 11.3 on the
basis of any subsequent event giving rise to such right.

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             11.4    Rights and Obligations Upon Expiration or Termination

                      (a)      Upon the termination or expiration of this
Agreement:

 

                    (i)     if termination or expiration occurs prior to Product
Registration of a Product in any country in the Territory, Licensee will provide
to Licensor all reports, data, samples and, if specifically required by an
Approval Authority, other information, necessary or useful to allow Licensor to
file for any Production Registrations of any Product in such country; and

 

 

 

 

 

                    (ii)    if termination or expiration occurs after Product
Registration of a Product in any country in the Territory, Licensee will provide
to Licensor all reports, data, samples and, if specifically required by an
Approval Authority, other information, necessary or useful to allow Licensor to
file for Product Registrations of any Product in the Territory, and grant
Licensor reference to any Product Registrations and pricing or reimbursement
approvals relating to any Products.

 

 

 

 

 

         The Parties will negotiate in good faith a fair price for any items
that Licensee is required to provide Licensor under this Section 11.4(a).

                      (b)     Upon termination of this Agreement under Section
11.2 or 11.3, the Party retaining continuing rights with respect to a Product
will be entitled to buy from the other Party any active ingredients on hand and
trade marks in respect of the Product held by the other Party.  The Parties will
negotiate such sale in good faith.

                      (c)     Upon termination of this Agreement by Licensor
pursuant to Section 11.2 or by Licensee pursuant to Section 11.3, Licensee will
transfer and assign to Licensor all such trademarks relating to Product for
which termination has occurred.  The Parties will negotiate in good faith the
appropriate price therefor.

            11.5      Surviving Provisions

          The Parties’ rights and obligations under Sections 4.5, 4.6, 4.8, 6.4,
and Articles VII-XIV will survive any termination of this Agreement. 
Termination or expiration of this Agreement for any reason will be without
prejudice to any rights accrued to the benefit of either Party prior to
termination or expiration and will not relieve either Party from obligations
expressly indicated to survive termination or expiration of this Agreement. 
Termination or expiration of this Agreement will not terminate Licensee’s
obligation to pay all royalties accrued.  Any other provisions of this Agreement
required to interpret and enforce the Parties’ rights and obligations under this
Agreement will also survive to the extent required for the full observation and
performance of this Agreement by the Parties.

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ARTICLE XII

ASSIGNMENT; SUCCESSORS

          12.1      Assignment

                      (a)     Subject to Section 12.1(d), neither this Agreement
nor any interest under this Agreement may be assigned by Licensee, its
Affiliates, or its Sublicensees, without the prior written consent of Licensor.

                      (b)     Subject to Section 12.1(d), neither this Agreement
nor any interest under this Agreement may be assigned by Licensor or its
Affiliates without the prior written consent of Licensee.

                      (c)     No assignment will release Licensee, its
Affiliates or its Sublicensees from any liability under this Agreement.

                      (d)     Licensee and Licensor may assign this Agreement or
any rights under this Agreement to any wholly owned Affiliate or to any
successor by merger, consolidation or sale of substantially all of the assets
used in the business which is the subject of this Agreement.

                      (e)     Any assignment not made in accordance with this
Section 12.1 will be void.

          12.2      Binding Upon Successors and Assigns

          Subject to the limitations on assignment under Section 12.1, this
Agreement binds all successors in interest and assigns of Licensor and
Licensee.  Any successor or assignee of Licensee’s interest will expressly
assume in writing the performance of all the terms and conditions of this
Agreement to be performed by Licensee.

ARTICLE XIII

DISPUTE RESOLUTION

          13.1      Arbitration

          Subject to Section 13.2, any dispute, controversy or claim arising
under, out of or in connection with this Agreement, including any subsequent
amendments, will be referred to and finally be settled under the Rules of
Arbitration of the International Chamber of Commerce, Paris, France, in force on
the date of commencement of the arbitration by three arbitrators appointed in
accordance with those Rules.  The place of arbitration will be New York City,
New York, and New York law will be applied.  The language to be used in the
arbitral proceedings will be English.

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          13.2      Pre-Litigation Dispute Resolution

          No dispute under this Agreement will be referred to arbitration under
Section 13.1 until the following procedures have been satisfied.  The head of
the Pharmaceuticals Division of Licensor and the Chief Executive Officer of
Licensee will meet as soon as practicable, as reasonably requested by either
Party, to review any dispute with respect to the interpretation of any provision
of this Agreement or with respect to the performance of either Party under this
Agreement.  If the dispute is not resolved by the designated representatives by
mutual agreement within thirty (30) calendar days after a meeting to discuss the
dispute, either Party may at any time provide written notice to the other Party
specifying the terms of the dispute in reasonable detail and notifying the other
Party of its decision to institute arbitration proceedings under Section 13.1.

          13.3      Provisional Remedy

          Nothing in this Agreement limits the right of either Party to seek to
obtain in any court of competent jurisdiction any interim relief or provisional
remedy, including injunctive relief.  Seeking or obtaining any interim relief or
provisional remedy in a court will not be deemed a breach or waiver of the
agreement in this Agreement to arbitrate.

ARTICLE XIV

GENERAL PROVISIONS

          14.1      Relationship of the Parties

          For purposes of this Agreement, the relationship of Licensor to
Licensee is that of an independent contractor.  Licensor and Licensee are not
joint venturers, partners, principal and agent, master and servant or employer
and employee.  With respect to the subject matter of this Agreement, Licensor
and Licensee have no power to bind or obligate each other in any manner, other
than as expressly set forth in this Agreement.  A change of this relationship is
not excluded by this Agreement.

          14.2      Excusable Delay

          The failure or omission by a Party in the performance of any
obligation under this Agreement will not be deemed a breach of this Agreement or
create any liability if it arises from any cause or causes beyond the control of
the Party, such as strikes, riots, war, acts of God, invasion, fire, explosion,
floods, delay of carrier, shortage or failure in the supply of materials, energy
shortage and acts of government or governmental agencies or instrumentalities. 
If due to such an event either Party is delayed or hindered in or prevented from
the performance of its duties or doing acts required under the terms of this
Agreement, the performance of such act will be excused for the period of the
delay not to exceed ninety (90) days.  A Party subject to such an excusable
delay will take all reasonable steps to resolve any condition forming the basis
of the delay.

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          14.3      Notices

          All notices, consents, requests, waivers and other communications in
connection with this Agreement:

                      (a)     must be in writing, signed by an authorized
officer of the sender (in the case of Licensor, an authorized officer of either
of Hoffmann-La Roche Inc. or F. Hoffmann-La Roche Ltd will be sufficient, and in
the case of Licensee, an authorized officer of Ribapharm Inc. will be
sufficient), and sent by personal delivery, fax (with confirmation copy),
internationally recognized courier, or certified or registered mail, postage
prepaid (airmail where applicable);

                      (b)     will be deemed to be given when actually received;
and

                      (c)     must be sent to the receiving Party at the address
or fax number, as applicable, set forth below, or any replacement address or fax
number notified to the sender by notice actually received by the sender:

 

if to Licensor, to:

 

 

 

 

 

Hoffmann-La Roche Inc.

 

 

340 Kingsland Street

 

 

Nutley, New Jersey  07110

 

 

United States of America

 

 

Attention:

Corporate Secretary

 

Fax:

1 (973) 235-3500

 

 

 

 

 

 

 

with a copy to:

 

 

 

 

 

F. Hoffmann-La Roche Ltd

 

 

Grenzacherstrasse 124

 

 

4070 Basel, Switzerland

 

 

Attention:

Corporate Law Department

 

Fax:

41-62- 688-1396

 

 

 

 

 

 

 

if to Licensee, to:

 

 

 

 

 

Ribapharm Inc.

 

 

3300 Hyland Avenue

 

 

Costa Mesa, California  92626

 

 

United States of America

 

 

Attention:

President

 

Fax:

1 (714) 641-7207

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with a copy to:

 

 

 

 

 

Coudert Brothers LLP

 

 

1114 Avenue of the Americas

 

 

New York, New York 10036-7703

 

 

United States of America

 

 

Attention:

Anthony C. Kahn, Esq.

 

Fax:

1 (212) 626-4120

          14.4      Expenses

          Except as expressly provided otherwise in this Agreement, all legal
and other costs and expenses incurred in connection with the negotiation and
entering into of this Agreement and the transactions contemplated by this
Agreement will be paid by the Party incurring such costs or expenses.

          14.5      Further Assurances

          Except as expressly provided elsewhere in this Agreement, each Party
will at its expense promptly execute and deliver any further instruments and
documents and take any further action as the other Party may reasonably request
in order to give effect to the transactions contemplated by this Agreement.

          14.6      Amendment

          This Agreement may not be altered or otherwise amended except by an
instrument in writing signed by each of the Parties.

          14.7      Waiver

          A Party may extend the time for the performance of any obligations of
the other Party, waive any inaccuracies and representations by the other Party
in this Agreement or in any document delivered pursuant to this Agreement or
waive compliance by the other Party with any of the covenants, conditions or
performance of any of its obligations under this Agreement.  Any such waiver or
failure to insist upon strict compliance with such covenant, condition or
obligation will not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.

          14.8      No Third Party Beneficiaries

          This Agreement does not confer any rights, remedies, agreements,
undertakings, obligations or liabilities on any person other than their
Affiliates, Sublicensees and successors-in-interest and permitted assigns.

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          14.9      Entire Agreement

          This Agreement constitutes the entire agreement between the Parties
with respect to its subject matter and supersedes all prior discussions,
negotiations, correspondence, agreements, and understandings, both oral and
written, between the Parties with respect to its subject matter.

          14.10    Construction

          The Parties have participated jointly in the negotiation and drafting
of this Agreement.  If a question of intent or interpretation arises, this
Agreement will be construed as if drafted jointly by the Parties and no
presumption or burden of proof will arise favoring or disfavoring a party
because of the authorship of any provision of this Agreement.

          14.11    Incorporation of Exhibits

          The Exhibits identified in this Agreement are incorporated by
reference and made a part of this Agreement.

          14.12    Counterparts

          This Agreement may be executed in any number of counterparts and by
facsimile, each of which will be deemed to be an original and all of which
together will constitute one and the same agreement.

          14.13    Severability

          If any provision of this Agreement is finally determined to be
invalid, unlawful or incapable of being enforced in a jurisdiction, (i) it will
be deemed to be severed from this Agreement in such jurisdiction, (ii) every
other provision of this Agreement will remain in full force and effect in such
jurisdiction, and (iii) the Parties will negotiate in good faith to modify this
Agreement so as to achieve the original intent of the Parties as closely as
possible in an acceptable manner with respect to such jurisdiction and (iv) such
invalidity, unlawfulness or unenforceability will not affect the interpretation
or enforcement of this Agreement in any other jurisdiction.

          14.14    Joint and Several Liability of Licensor

          The representations, warranties, covenants and liabilities of
Hoffmann-La Roche Inc. and F. Hoffmann-La Roche Ltd, as Licensor, under this
Agreement are joint and several.

          14.15    Bankruptcy

          All rights and licenses granted under or pursuant to this Agreement by
Licensor to Licensee are, and will otherwise be deemed to be, for purposes of
Section 365(n) of the Bankruptcy Code, licenses of rights to “intellectual
property” as defined under Section 101(35A) of the Bankruptcy Code.  Licensee,
as a licensee of such rights under this Agreement, will retain and may fully
exercise all of its rights and elections under the Bankruptcy Code.

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          14.16    Remedies Cumulative

          The rights and remedies of the Parties under this Agreement are in
addition to any other rights available to them at law or in equity.  The use of
any right or remedy by a Party does not preclude or waive the right to use any
other remedies.  This Section 14.16 does not limit the obligations of the
Parties under Section 13.1 and Section 13.2.

          14.17    Governing Law

          This Agreement will be governed by and construed in accordance with
the laws of the State of New York.

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          IN WITNESS WHEREOF, the Parties have executed this Agreement by their
duly authorized representatives as of the date set forth above.

 

HOFFMANN-LA ROCHE INC.

 

 

 

 

By:

                         /s/    Frederick C. Kentz III

 

 

 

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

 

 

Name:

Frederick C. Kentz III

 

 

Title:

Vice President

 

 

 

 

 

 

F. HOFFMANN-LA ROCHE LTD

 

 

 

 

By:

                             /s/    Rudolph [Illegible]

 

 

 

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

 

 

Name:

Rudolph [Illegible]

 

 

Title:

VP Licensing

 

 

 

 

 

 

By:

                               /s/    Stefan Arnold

 

 

 

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

 

 

Name:

Stefan Arnold

 

 

Title:

Vice Director – Corporate Law

 

 

 

 

 

 

RIBAPHARM INC.

 

 

 

 

 

 

By:

                            /s/     Johnson Y.N. Lau

 

 

 

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

 

 

Name:

Johnson Y.N. Lau

 

 

Title:

President and Chief Executive Officer

 

 

 

 

 

 

 

By:

                         /s/     Roger D. Loomis, Jr.

 

 

 

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

 

 

Name:

Roger D. Loomis, Jr.

 

 

Title:

Senior Vice President,

 

 

 

General Counsel and Secretary

 

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GUARANTY

          THIS GUARANTY dated as of June 29, 2001, is made by ICN
Pharmaceuticals, Inc. (the “Guarantor”), in favor of Hoffmann-La Roche Inc. and
F. Hoffmann-La Roche Ltd (together, the “Licensor”).  All capitalized terms used
herein without definition shall have the meaning ascribed to them in that
certain License Agreement (the “License Agreement”), of even date, between
Licensor and Ribapharm Inc. (the “Licensee”).

          The Guarantor, in consideration of the benefits inuring to the
Guarantor by virtue of the execution and delivery of the License Agreement,
hereby agrees as follows:

          1.     The Guarantor, for itself and its successors and assigns,
hereby unconditionally guarantees, as secondary and not as primary obligor, the
full performance by Licensee of all of its obligations under the License
Agreement.  This Guaranty and the rights of Licensor hereunder shall terminate
and be of no further force or effect upon the completion of an initial public
offering by the Licensee.

          2.     Notice of acceptance of this Guaranty is hereby waived.

          3.     The Licensor shall call upon the Guarantor hereunder only after
first making all reasonable efforts to collect obligations due from the Licensee
or pursue other actions to enforce the same or elect any remedy available
against the Licensee.

          4.     The Guarantor hereby represents and warrants to the Licensor as
follows:

 

 

          (a)     The Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.

 

 

 

 

 

          (b)     The execution, delivery and performance by Guarantor of this
Guaranty are within the Guarantor’s corporate powers, have been duly authorized
by all necessary action on the part of the Guarantor, do not contravene (i) the
Guarantor’s articles of incorporation or by-laws or (ii) any law or any
contractual restriction binding on or affecting the Guarantor, and do not result
in or require the creation of any lien upon or with respect to any of its
properties.

 

 

 

 

 

          (c)     No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by the Guarantor of this Guaranty.

 

 

 

 

 

          (d)     This Guaranty is the legal, valid and binding obligation of
the Guarantor, enforceable against the Guarantor in accordance with its terms,
except as may be limited by bankruptcy, insolvency or other laws of general
application relating to or affecting the enforcement of creditors’ rights
generally and by general principles of equity.

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          (e)     There is no pending or threatened action or proceeding
affecting the Guarantor before any court, governmental agency or arbitrator,
which would materially adversely affect the ability of the Guarantor to perform
its obligations under this Guaranty.

          5.     This Guaranty, and the respective rights, duties and
obligations of the parties hereunder, shall be governed in accordance with the
laws of the State of New York, without giving effect to the conflicts of laws
thereunder.

          6.     All notices and other communications required or permitted
under this Guaranty shall be in writing and shall be deemed to have been fully
given if sent by registered mail, return receipt requested or Federal Express or
other courier service, in each case to the addresses shown below.

 

If to Guarantor:

ICN Pharmaceuticals, Inc.

 

 

3300 Hyland Avenue

 

 

Costa Mesa, California  92626

 

 

United States of America

 

 

Attention:

General Counsel

 

 

Fax:

1 (714) 641-7206

 

 

 

 

If to Licensor:

Hoffmann-La Roche Inc.

 

 

340 Kingsland Street

 

 

Nutley, New Jersey  07110

 

 

United States of America

 

 

Attention:

Corporate Secretary

 

 

Fax:

1 (973) 235-3500

 

 

 

 

with a copy to:

F. Hoffmann-La Roche Ltd

 

 

Grenzacherstrasse 124

 

 

4070 Basel, Switzerland

 

 

Attention:

Corporate Law Department

 

 

Fax:

41-62-688 1396

          IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
executed and delivered as of the first date above written.

.

ICN PHARMACEUTICALS, INC.

 

 

 

 

By:

 

 

 

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

 

 

Name:

Bill A. MacDonald

 

 

Title:

Executive Vice President

 

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APPENDIX A

LIST OF LICENSOR’S INFORMATION RELATING
TO THE LICENSED COMPOUNDS

 

[******]

__________
****** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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APPENDIX B

LICENSOR’S PREEXISTING AGREEMENTS

1.

The Genetics Institute Agreement.

 

 

2.

An agreement with BD PharMingen dated December 21, 1992, as amended.

 

 

3.

An agreement with The Jackson Laboratory dated November 25, 1996, as amended.

 

 

4.

An agreement with Endogen, Inc. dated December 20, 1996.

 

 

5.

An agreement with Protein Design Labs, Inc. dated February 7, 2000.

 

 

6.

Material transfer agreements between Licensor and research organizations and/or
universities under which Licensor agreed to provide research quantities of
material related to IL-12 for non-commercial, non-clinical research.

40