EXHIBIT 10.6


 


CONFIDENTIAL TREATMENT


 


ASSIGNMENT AND LICENSE AGREEMENT


 


This Agreement
is made this 6th day of October, 2000 (the “Effective Date”), by and between
ELI LILLY & COMPANY having its principal place of business at Lilly
Corporate Center, Indianapolis, Indiana 46285 and its Affiliates (collectively,
“ELI LILLY”) and Cubist Pharmaceuticals Incorporated, a Delaware corporation
having its principal place of business at 24 Emily Street, Cambridge, MA 02139
and its Affiliates (collectively “CUBIST”) as follows:


 


RECITALS


 


WHEREAS,
CUBIST and ELI LILLY have entered into a License Agreement for Daptomycin on November 7,
1997 granting CUBIST limited rights under Lilly patents to make, use and sell
only Daptomycin for use in the Field of infectious disease excluding induced
colitis;


 


WHEREAS,
CUBIST and ELI LILLY now desire to terminate such November 7, 1997,
License Agreement in order that they may enter into this Assignment and License
Agreement whereby CUBIST will obtain expanded rights under the ELI LILLY patents;


 


WHEREBY,
CUBIST will obtain an exclusive license under ELI LILLY Know-How and Patents)
to make, use and sell Daptomycin for use in the Field of infectious disease no
longer excluding induced colitis; and


 


WHEREBY,
CUBIST will obtain an assignment to other ELI LILLY Assigned Patents giving
CUBIST complete ownership, control and all rights to the subject matter claimed
therein for all compounds and all uses;


 


NOW,
THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties intending to be bound, agree as follows:


 


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ARTICLE 1


 


DEFINITIONS


 


As used
throughout this Agreement, the following terms shall have the meanings
indicated in this Article.


 


1.00 “Affiliate”
means any corporation or other entity which directly or indirectly controls, is
controlled by or is under common control with a party to this Agreement. A
corporation or other entity shall be regarded as in control of another
corporation or entity if it owns or directly or indirectly controls more than
fifty percent (50%) of the outstanding voting stock or other ownership interest
of the other corporation or entity, or if it possesses, directly or indirectly,
the power to manage, direct or cause the direction of the management and
policies of the corporation or other entity or the power to elect or appoint fifty
percent (50%) or more of the members of the governing body of the corporation
or other entity. Any such other relationship as in fact results in actual
control over the management, business and affairs of a corporation or other
entity shall also be deemed to constitute control.


 


1.01 “Assigned
Patents” shall mean those patents and patent applications listed in Exhibit 3
which have been assigned to CUBIST by ELI LILLY.


 


1.02 “Average
Market Price” shall mean the average closing price for CUBIST common stock for
twenty consecutive trading days, the last day of which is immediately prior to
five days prior to the event that triggered such payment of CUBIST common stock
to ELI LILLY.


 


1.03 “Compound”
means [ ]* or a pharmaceutically acceptable salt thereof or a pharmaceutically
acceptable formulation thereof which is in Lilly’s possession on November 7,
1997.


 


1.04 “Confidential
Information” means any information and data received by a party from the other
party, as well as the terms of this Agreement. Notwithstanding the foregoing,
Confidential Information shall not include any part of such Confidential Information
that: (i) is or becomes part of the public domain other than by
unauthorized acts of the party obligated not to disclose such Confidential
Information; (u) can be shown by written documents to have been disclosed
to the receiving party by a third party, provided such Confidential Information
was not obtained by such third party directly or indirectly from the disclosing
party with an obligation for such third party to maintain the confidentiality
of such information; (iii) prior to disclosure under this Agreement, was
already in the possession of the receiving party and such possession can be
evidenced by written documents, provided such Confidential Information was not
obtained directly or indirectly from the disclosing party with an obligation to
maintain the confidentiality of such information; (iv) can be shown by
written documents to have been independently developed by the receiving party
without breach of any of the provisions of this Agreement and such independent
development can be evidenced by written documents; or (v) is disclosed by
the receiving party pursuant to interrogatories, requests for information or
documents, subpoena, civil investigative demand issued by a court or
governmental agency or as otherwise required by law, provided, however, that
the receiving party notifies the disclosing party immediately upon receipt
thereof, giving such disclosing party sufficient advance notice to permit it to
seek a protective order or other similar order with respect to such
Confidential Information and provided, further, that the receiving party
furnishes only that portion of the Confidential Information which it is advised
by counsel is legally required whether or not a protective order or other
similar order is obtained by the disclosing party.


 


1.05 “ELI
LILLY Program” shall mean a research, development and/or marketing project that
ELT LILLY, its Affiliates, and/or a third party, pursuant to an Agreement with
ELI LILLY, have been committing non-trivial financial and/or human resources to
advance.


 


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1.06 “Field”
shall mean the treatment of infectious diseases.


 


1.07 “Know-How”
means all information and data reasonably useful for the development, process
development, regulatory approval, manufacture, use, formulation or sale of
Compound in the Field which (i) is in the possession of ELI LILLY as of
the November 7, 1997 or is created by ELI LILLY after the November 7,
1997, (u) ELI LILLY can provide using reasonable efforts and (iii) ELI
LILLY is free to provide without obligation to any third party. Such Know-How
may include information that is secret, whether or not patentable, relating to
materials, methods, processes, procedures, protocols, techniques, formulae and
data reasonably useful for the development, regulatory approval, manufacture or
use of Compound in the Field.


 


1.08 “Major
Market Country” shall mean the United States, Canada, Japan, the United
Kingdom, Germany, France, Italy, Spain, Switzerland, Netherlands and Belgium.


 


1.09 “Net
Sales” means the amounts received by CUBIST and/or its sublicensees on sales or
other transfers for commercial use of Compound, and products incorporating
Compound, to independent third parties in bona fide arms length transactions,
less the following deductions actually allowed and taken by such independent
third parties and not otherwise recovered by or reimbursed by CUBIST or its
sublicensees: 


 


(a) trade, cash and quantity discounts,
including, without limitation, chargebacks and rebates;


 


(b) taxes, duties and other governmental
charges set forth separately in the amount invoiced;


 


(c) freight, insurance and other
transportation expenses to the extent added to the sales prices and set forth
separately as such in the total amount invoiced; and


 


(d) credits or allowances on account of
refunds, returns, rejections, or price adjustments.


 


If CUBIST or
its sublicensees sell or transfer Compound, or any products incorporating
Compound for commercial use, other than (i) reasonable quantities of
promotional samples or (u) to an independent third party in a bona fide
arm’s length transaction, Net Sales shall be determined based upon the resale
or other retransfer to an independent third party in an arm’s length transaction
by the entity to whom such Compound, or product, was sold or transferred by
Cubist or its sublicensee. If there is no such resale or retransfer, Net Sales
shall be determined based on the average Net Sales price as determined in the
immediately preceding royalty accounting period as set forth in Section 4.02.


 


In the event
Compound is sold as a component of a combination of functional elements, Net
Sales for purposes of determining royalty payments on such combination shall be
calculated by multiplying the Net Sales price of such combination by the
fraction A over A+B, in which “A” is the gross selling price of the Compound
portion of the combination when sold separately during the accounting period in
which the sale was made, and “B” is the gross selling price of the non-Compound
portion of the combination sold separately during the accounting period. In the
event no separate sale of either such above-designated Compound or such
above-designated non-Compound portion of the combination is


 


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made during the accounting
period in which the sale of the combination was made. Net Sales shall be
calculated by multiplying the Net Sales price of the combination by the fraction
C over C+D, in which “C” is the standard fully allocated cost of the Compound
portion of such combination, and “D” is the standard fully allocated cost of
the other component(s). For purposes of the foregoing sentence, “fully
allocated cost” shall mean all direct and indirect labor and overhead,
materials and supplies, fringe benefits, taxes and charges and direct and
indirect general and administration charges incurred by CUBIST or its
sublicensees, and accounted for according to CUBIST’s or its sublicensees’ standard
accounting practices consistent with generally accepted accounting principles.


 


1.10 “Patent(s)”
means any of ELI LILLY’s patents, pending patent applications, and future
patent applications, including, but not limited to, those set forth on Exhibit 2
attached hereto, which claim Compound, formulations of Compound, processes for
preparing Compound or use of Compound in the Field, any United States or
foreign counterpart patents and applications, and any continuing, divisional,
reissue, re-examination and substitute patents and applications based, in whole
or in part, on any of the foregoing patents and patent applications, together
with all continuations, continuations-in-part, divisions, patents of addition,
reissues, renewals, extensions, supplementary protection certificates and
complementary protection certificates of any of the foregoing which are owned
by ELI LILLY and under which ELI LILLY has rights to grant a sub-licenses.


 


1.11 “Phase II
Clinical Trial” shall mean clinical studies conducted in accordance with Good
Clinical Practices (“GCPs”) in a small number of healthy volunteers to
establish efficacy and obtain a preliminary indication of the dosage of
Compound.


 


1.12 “Phase BI
Clinical Trial” shall mean large scale clinical studies in patients conducted
in accordance with GCPs primarily to establish safety and efficacy of Compound.


 


1.13 “Valid
Claim” shall mean a claim of an issued and unexpired Assigned Patent and/or
Patent which has not been withdrawn, canceled, revoked, disclaimed, or held
invalid, unenforceable or unpatentable by a final and unappealed (within the
time allowed for appeals) or unappealable judgment or decision of a court or
other governmental agency of competent jurisdiction


 


ARTICLE 2


 


LICENSE GRANT


 


2.00 As of the
Effective Date, ELI LILLY shall assign, transfer, convey and deliver to CUBIST
all rights to Assigned Patents in a separate assignments) for each of such
Assigned Patents. ELI LILLY shall further file copies of such assignments) in
the United States Patent and Trademark Office. Such assignments shall be
treated by both parties as sales for United States federal income tax purposes.



 


2.01 ELI LILLY
grants to CUBIST the following worldwide, exclusive


 


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licenses subject to the
conditions set forth herein below in Section 2.02:


 


(a) Under the Patents, to develop,
manufacture, formulate, have manufactured, import, use, distribute for sale,
market and sell Compound in the Field; and


 


(b) To use the Know-How for the
development, manufacture, formulation, use, distribution for sale, marketing,
and sale of Compound consistent with the terms of this Agreement.


 


2.02 (i) Subject
to Section 2.02(u) below, CUBIST shall have the right to grant
sublicenses under the Patents and Know-How, for use in the Field; provided that
the terms and conditions of such sub-licenses are consistent with and no less
restrictive than the terms and conditions of this Agreement, and any such disclosure
or transfer of Compound shall be limited to use solely in the Field.


 


(ii) In
the event that, during the term of this Agreement, CUBIST actively seeks to
grant a sub-license to a third party for the development of the Compound in the
Field, which sublicense includes, but is not necessarily limited to, the right
to develop and/or commercialize an oral or intravenous formulation of the
Compound, CUBIST agrees to inform ELI LILLY of such determination by written
notice, which notice shall include (a) a description in reasonable detail
of the subject matter of the proposed sub-license and (b) the terms on
which CUBIST would be willing to grant ELI LILLY such rights (the “Sublicense
Notice”). ELI LILLY shall thereupon have a period of [ ]* days (the “Notice
Period”) to either accept CUBIST’s terms in writing or to make a written counter-proposal.
If ELI LILLY accepts CUBIST’s proposal or makes a counter-proposal, the parties
will, for a period of up to [ ]* days from receipt by ELI LILLY of the
Sublicense Notice (the “Negotiation Period”), seek in good faith to enter into
a definitive agreement for such rights. If ELI LILLY does not by the expiration
of the Notice Period either accept CUBIST’S proposal or make a
counter-proposal, or if the parties negotiate in good faith and fail to reach
agreement by the expiration of the Negotiation Period, CUBIST shall be free to
enter into a sub-license for such rights with a third party, provided that such
sub-license is granted on no better terms to the sub-licensee, taken as a
whole, than the terms for such rights, if any, which ELI LILLY last offered to
CUBIST during the Negotiation Period.


 


2.03 CUBIST
shall notify ELI LILLY within [ ]* days of the identity of each sublicensee
together with a summary of the principal terms of any sub-license, and shall
take all reasonable steps in the event of a breach of any sub-license by the
sub-licensee to enforce the same.


 


2.04 CUBIST
acknowledges that ELI LILLY has disclosed certain Know-How to CUBIST prior to
the execution of this Agreement and CUBIST shall treat such Know-How in
accordance with the terms of this Agreement. During the term of this Agreement,
ELI LILLY shall disclose to CUBIST such other Know-How as is directly related
to CUBIST’S activities under the license granted in Article 2.01 and which
ELI LILLY can provide to CUBIST using reasonable efforts.


 


2.05 Promptly
after the Effective Date, ELI LILLY may provide CUBIST with reasonable access
to consult with pertinent ELI LILLY employees that have had prior experience
working with Compound in the Field at ELI LILLY to enhance the preclinical or
clinical development and manufacturing of the Compound, provided that such
consultation shall occur at a mutually agreeable time and place and that ELI
LILLY will only provide such access to current employees


 


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which are reasonably able to provide CUBIST with ELI LILLY Know-How
relating to the scaleup, manufacture, or formulation of Compound for use in the
Field. CUBIST shall be responsible for all reasonable expenses its own
personnel and ELI LILLY personnel incur in association with any such
consultations. Upon CUBIST’s request, ELI LILLY shall provide CUBIST and its
sublicensees with all Know-How, information and data owned by ELI LILLY which
ELI LILLY can provide using reasonable efforts to the extent such Know-How,
information and data is reasonably required to further CUBIST’s or its
sub-licensees’ ability to develop, scale-up, obtain regulatory approval for,
manufacture, distribute, use, formulate or sell Compound for use in the Field.
CUBIST agrees to treat all Know-How disclosed to it as Confidential Information
of ELI LILLY.


 


2.06 ELI LILLY
shall deliver to CUBIST, ELI LILLY’s available inventory of Compound. ELI LILLY
shall not be required to perform any manufacturing of Compound for CUBIST. 


 


ARTICLE 3


 


DILIGENCE AND REGULATORY


 


3.00 CUBIST
shall use commercially reasonable efforts to develop and test the Compound in
the Field, to perform all pre-clinical, clinical and other studies of such
Compound necessary to obtain regulatory approval for the manufacture, use and
sale of Compound, and to market and sell Compound in the Field in all countries
in which it is commercially reasonable to market such Compound. CUBIST shall
fully fund these efforts, as well as any other work that is required for CUBIST
to develop and market Compound in the Field.


 


CUBIST has
prepared and provided to ELI LILLY a preliminary development plan as of November 7,
1997, which contained CUBIST’s estimate, based upon data currently available to
CUBIST concerning the subject matter of this Agreement, of the probable course
of Compound development hereunder. CUBIST will provide ELI LILLY with bi-annual
status reports regarding the development progress of the Compound; however, any
material events or changes in the Compound development plan will be reported to
ELI LILLY as soon as reasonably possible after such event occurs.


 


3.01 CUBIST
represents that it intends to conduct clinical testing of Compounds to the
extent that such testing is supported by safety and efficacy data required by
the applicable regulatory agency.


 


3.02 ELI LILLY
hereby grants CUBIST the right of reference to the Investigational New Drug Application
filed with the United States Food and Drug Administration (“FDA”) relating to
the Compound, and ELI LILLY agrees to provide to CUBIST copies of all related
contact reports, minutes and other regulatory correspondence filed with or
communicated to the FDA. ELI LILLY shall transfer all reasonably transferable
information used in regulatory filings, laboratory data, clinical data,
toxicology data, and scale-up, manufacturing and formulation information
relating to Compound to CUBIST in a commercially reasonable time frame.


 


3.03 CUBIST
shall comply with all applicable laws and regulations regarding the care and
use of experimental animals, in a country where the development is carried out.
All animals used to evaluate Compound shall be provided humane care and
treatment in accordance with the most acceptable veterinary practices.


 


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ARTICLE 4


 


PAYMENTS


 


4.00      CUBIST will pay to ELI LILLY the following
payments:


 


(a) [ ]* as a license fee, to be paid
upon the earlier of (i) completion of CUBIST or CUBIST’S sub-licensee’s first
Phase II Clinical Trial in a Major Market Country or (u) upon the
initiation of CUBIST or CUBIST’s sub-licensees of patient dosing in the first
Phase III Clinical Trial in a Major Market Country; said license fee to be paid
in CUBIST common stock based on the Average Market Price for such CUBIST common
stock;


 


(b) [ ]* as a license fee, to be paid
upon the date of CUBIST’S or CUBIST’S sub-licensee’s first regulatory
submission in a Major Market Country for a license to market Compound, said
license fee to be paid in CUBIST common stock, based on the Average Market
Price for such CUBIST Common Stock; and


 


(c) [ ]* as a license fee, to be paid
upon the date of CUBIST’s or CUBIST’S sub-licensee’s first regulatory approval
in a Major Market Country for their application to market Compound, said
license fee to be paid in CUBIST common stock, based on the Average Market
Price for such CUBIST Common Stock.


 


4.01 During
the first [ ]* months after the first commercial sale of Compound in a Major
Market Country, CUBIST will pay ELI LILLY royalties of [ ]* on the first [ ]*
of aggregate annual Net Sales of Compounds and [ ]* on aggregate Net Sales between
[ ]* and [ ]* on aggregate annual Net Sales in excess of [ ]* in all countries
(“Protected Countries”) for so long as (a) the manufacture, use or sale of
Compound is covered by a Valid Claim, or (b) there is no significant
generic competition which causes a reduction of Net Sales of Compound by [ ]*
percent or more in any twelve month period.


 


4.02 After the
expiration of the first [ ]* months after first commercial sale in a Major
Market Country, CUBIST will pay ELI LILLY royalties of [ ]* on the first [ ]*
of aggregate annual Net Sales of Compound and 13.5% on aggregate annual Net
Sales between [ ]* and [ ]* in aggregate annual Net Sales in excess of [ ]* in
all countries (“Protected Countries”) for so long as (a) the manufacture, use
or sale of a Compound is covered by a Valid Claim, or (b) there is no
significant generic competition which causes a reduction of Net Sales of
Compound by [ ]* percent or more in any twelve month period.


 


4.03 For a
period often [ ]* years following first commercial sale in a Major Market
Country, CUBIST will pay ELI LILLY royalties of [ ]* of aggregate annual Net
Sales in all countries that are not Protected Countries, but where the
manufacture, use, sale or transfer of Compound utilizes Know-How provided to CUBIST
by ELI LILLY. [ ]* of Net Sales in countries that are not Protected Countries
shall be included in aggregate annual Net Sales of Compound calculated pursuant
to Section 4.02 for purposes of determining the appropriate royalty percentage
in Section 4.02.


 


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4.04 In the
event that CUBIST can demonstrate that external factors beyond its control
(such as government-imposed price controls) have materially reduced CUBIST’S
profitability on sales of Compound in any Country, ELI LILLY agrees to consider
in good faith an equitable reduction in the royalty rate applicable to such
country under Section 4.02 or 4.03, as applicable.


 


4.05 The first
payment under Articles 4.01, 4.02 and 4.03 shall be due within [ ]* days after December 31
or June 30, whichever such date occurs first after the first commercial
sale or transfer of Compound. Thereafter, payments under Articles 4.01, 4.02 or
4.03 shall be made within [ ]* days of each of December 31 and June 30
of each year. Payments shall be accompanied by a report showing all facts
necessary to the calculation of amounts due.


 


4.06 All
royalty payments to ELI LILLY shall be in United States dollars. Royalty
payments based on Net Sales in currencies other than United States dollars
shall be converted to US dollars according to the average official rate of
exchange for that currency as published in the Wall Street Journal on the first
and last days of the six-month period in which that royalty accrued (or, if not
published on that day, the first and last publication days for the Wall Street
Journal during that six month period). If such exchange rate is not published
in the Wall Street Journal, then the rate shall be determined using average conversion
rates that are accepted in the industry on the first and last days of the six
month period in which the royalty accrued. All payments that are not to be made
in CUBIST common stock, as specified herein, shall be paid in United States
dollars.


 


4.07 If by
law, regulation, or fiscal policy of a particular country, conversion into
United States dollars or transfer of funds of a convertible currency to the
United States is restricted or forbidden, CUBIST shall give ELI LILLY prompt
written notice and shall pay the royalty due under this Article 4 through
such means or methods as are lawful in such country as ELI LILLY may reasonably
designate. Failing the designation by ELI LILLY of such lawful means or methods
within [ ]* days after such written notice is given to ELI LILLY, CUBIST shall
deposit such royalty payment in local currency to the credit of ELI LILLY in a
recognized banking institution designated by ELI LILLY, or if none is designated
by ELI LILLY within the [ ]* day period described above, in a recognized
banking institution selected by CUBIST and identified in a written notice to
ELI LILLY by CUBIST, and such deposit shall fulfill all obligations of CUBIST
with respect to such royalties.


 


4.08 CUBIST
and its sub-licensees, if any, shall maintain complete and accurate books and
records with respect to sale and use of Compound and all other information
necessary to permit calculation and verification of amounts due under this Article 4
and Article 5 and Article 6, set forth below. Upon reasonable prior
written notice to CUBIST, ELI LILLY may cause an independent agent to audit the
books and records of CUBIST and its sub- licensees, if any, pertaining to the
payment to ELI LILLY hereunder, for the sole propose of confirming the amounts
due, and the accuracy of the payments and reports; provided that no such audit
shall be permitted for periods exceeding thirty six (36) months prior to the
date CUBIST receives such written notice. Any such audit shall be performed at
ELI LILLY’S expense during normal business hours and shall, if so required by
CUBIST, be performed by a firm of independent public accountants reasonably
acceptable to CUBIST. The independent agent shall report only such information
as would properly be included in such a report. In the event of an
underpayment, CUBIST shall promptly remit to ELI LILLY all amounts due. CUBIST
shall require any sub-licensee to agree to comply with all of the


 


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terms of this paragraph, including but not limited to making such
report, maintaining such records, and permitting such audit.


 


If such audit
reveals that CUBIST has underpaid ELI LILLY by greater than [ ]* then CUBIST
shall reimburse ELI LILLY for the reasonable cost of the audit.


 


4.09 Any late
payments due to ELI LILLY shall be subject to interest charges which rate shall
be established at [ ]* on the date that such payment was first due to ELI
LILLY.


 


ARTICLE 5


 


MINIMUM ROYALTIES


 


5.00 Sixty
(60) days after December 31 or June 30, whichever date occurs first,
following the first twelve (12) month period after the first commercial sale of
Compound in a Major Market Country, CUBIST will pay ELI LILLY the greater of
the balance of payments due for such twelve (12) month period under Articles
4.01 and 4.02 of this Agreement or the balance of [ ]* less royalties already
paid for such twelve (12) month period pursuant to Articles 4.01 and 4.02, as a
minimum royalty.


 


5.01 Sixty
(60) days after December 31 or June 30, whichever date occurs first,
following the second twelve (12) month period after the first commercial sale
of Compound in a Major Market Country, CUBIST will pay to ELI LILLY the greater
of the balance of payments due for such twelve (12) month period Articles 4.01
and 4.02 of this Agreement or the balance of [ ]*, less royalties already paid
for such twelve (12) month period the preceding calendar year pursuant to
Articles 4.01 and 4.02; as a minimum royalty.


 


5.02 Sixty
(60) days after December 31 or June 30, whichever date occurs first,
following the third twelve (12) month period after the first commercial sale of
Compound in a Major Market Country, CUBIST will pay ELI LILLY the greater of
the balance of payments due for such twelve (12) month period under Articles
4.01 and 4.02 of this Agreement or the balance of [ ]* less royalties already
paid for such twelve (12) month period the preceding calendar year pursuant to
Articles 4.01 and 4.02, as a minimum royalty.


 


5.03 CUBIST
shall deduct any withholding taxes from the payments agreed upon under this
Agreement and pay them to the proper tax authorities as required by applicable
law. CUBIST shall maintain official receipts of any withholding taxes and
forward these receipts to ELI LILLY. The parties will exercise their best
efforts to ensure that any withholding taxes imposed are reduced as far as legally
possible under the provisions of any treaties applicable to any payment made
hereunder.


 


ARTICLE 6


 


INDEMNIFICATION, INSURANCE AND LIMITATION OF
DAMAGES


 


6.00 CUBIST
shall indemnify ELI LILLY and its directors, officers, employees and agents, as
set forth in Article 6.02, with respect to (a) any third party claim
or action against ELI LILLY based on CUBIST’S or CUBIST’S sublicensee’s
developing, making, distributing, selling, marketing, using or otherwise
transferring Compound and (b) breach of any representation or warranty contained
in Article 7 by CUBIST, provided, however that CUBIST shall have no


 


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duty to indemnify ELI LILLY to the extent that any such claim or action
is subject to ELI LILLY’s duty of indemnification set forth in Article 6.01.


 


6.01 ELI LILLY
shall indemnify CUBIST, as set forth in Article 6.02, with respect to (a) any
third party claim or action against CUBIST based on (i) activities of ELI
LILLY, its employees, or its agents with respect to Compound prior to the
Effective Date, (u) the negligence or willful misconduct of ELI LILLY, its
employees and agents, and (b) breach of any representation or warranty
contained in Article 7 by ELI LILLY, provided, however, that ELI LILLY shall
have no duty to indemnify CUBIST to the extent that any such claim or action is
subject to CUBIST’S duty of indemnification set forth in Article 6.00. 


 


6.02 With
respect to the claims and actions referenced in Articles 6.00 and 6.01 above,
the indemnifying party shall defend any such claim or action against the
indemnified party and shall pay all damages, judgments, costs, expenses
(including attorneys’ fees, but only to the extent that the indemnifying party
fails to promptly assume the defense of such claims and actions) and liability
awarded against the indemnified party, or settlements entered into, with respect
to such claim or action, provided that the indemnified party (a) provides
prompt written notice to the indemnifying party of any such claim or action; (b) allows
the indemnifying party to assume the defense and settlement thereof, with
counsel of its choice; and (c) provides reasonable assistance to the
indemnifying party in connection with the defense and settlement thereof.


 


6.03 Prior to
administration of Compound to any human, CUBIST shall provide to ELI LILLY an
endorsement verifying customary levels of insurance for damages, judgments,
costs, expenses (including attorneys’ fees) and liability with respect to any
third party claim or action based on CUBIST’s or CUBIST’S sublicensee’s
manufacture, distribution, use, marketing or sale of Compound, naming Eli Lilly
and Company, its directors, officers and employees as additional insureds on
the policy, and shall have copies of such insurance policies delivered to ELI
LILLY as soon as reasonably practical. In addition, evidence of insurance in
the form of such endorsement shall be furnished to ELI LILLY at the inception
of each subsequent phase of human clinical trials, as well as upon granting of
NDA and PLA, but in no event less than annually upon the insurance policy
renewal date. Such insurance shall remain in effect at customary levels
throughout the term of this Agreement. ELI LILLY shall be informed thirty (30)
days prior to any cancellation of or material decrease in the amount of
coverage of such insurance by CUBIST or any other action that CUBIST reasonably
should believe will result in decrease or cancellation of such insurance, or
immediately upon receipt by CUBIST of a notice of cancellation of such
insurance, on the effective date of which cancellation or decrease, clinical
use of Compound must immediately cease, subject to CUBIST obtaining adequate
replacement insurance. The foregoing shall not be interpreted to limit the
scope or amount of CUBIST’S indemnification obligation under Article 6.00.


 


Notwithstanding
the foregoing, CUBIST shall be entitled to adopt an insurance program
containing self insurance elements, to the extent that CUBIST is able to
demonstrate to the reasonable satisfaction of ELI LILLY that such a program is
not unusual in the industry for companies similarly situated (including
financial condition to support such a program) or with respect to products with
a risk profile similar to products licensed hereunder.


 


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6.04 Other
than as set forth elsewhere in this Agreement, in no event shall either party
be liable for any special, consequential, indirect, or incidental damages,
however caused and on any theory of liability, arising out of this Agreement.
These limitations shall apply notwithstanding any failure of essential purpose
of any limited remedy.


 


ARTICLE 7


 


REPRESENTATIONS, WARRANTIES AND DISCLAIMER


 


7.00 Each
party represents and warrants to the other party that (a) it has the right
to enter into this Agreement; (b) this Agreement has been duly authorized
by all necessary action of such party; and (c) the execution of this Agreement
by the party will not conflict with or breach any other agreement to which it
is a party or by which it is bound.


 


7.01 ELI LILLY
represents that (a) there is no agreement known to ELI LILLY to which it
is a party and by which it is bound that would conflict with or be breached by
ELI LILLY granting the license in Article 2, (b) except as previously
disclosed in writing to CUBIST, no other person or entity has claimed, or to
ELI LILLY’s knowledge has, any rights to or interest in the Patents and the
Know- How in the Field to be licensed hereunder, and that to its knowledge, the
manufacture, use, distribution, marketing or sale of the Compounds) can be
performed without infringing the patent rights of any third party, and (c) as
of the Effective Date ELI LILLY is conducting no development program relating
to analogs or derivatives of the Compound, provided that ELI LILLY shall be
free to commence and conduct any such program at any time hereafter.


 


7.02 ELI LILLY
makes no representation or warranty that Compound made, used, or sold under the
licenses granted herein is or will be free of claims of infringement of the
patent rights of any third party (although it represents and warrants that it
has no knowledge of (i) such infringement not heretofore disclosed to
CUBIST and (u) any payment obligations that CUBIST will have to third
parties in connection with CUBIST’s development, manufacturing, marketing or
sale of Compound) and makes no warranty or representation that any of the Patents
to be licensed hereunder are valid or enforceable.


 


7.03 EXCEPT AS
SET FORTH IN ARTICLES 7.00 AND 7.01 ABOVE, ELI LILLY EXPRESSLY DISCLAIMS ALL
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION WARRANTIES OF
MERCHANTABILTTY, FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT.


 


7.04 CUBIST
acknowledges that the Compounds) are highly experimental in nature and it is
fully aware that Compounds) may prove to be ineffective and/or unsafe when used
in humans.


 


7.05 CUBIST
warrants that all CUBIST common stock to be paid to ELI LILLY pursuant to this
Agreement shall be properly issued and all legal requirements associated with
such issuance to ELI LILLY shall be fulfilled.


 


The number of
shares of CUBIST common stock payable to ELI LILLY shall be determined by
dividing the payment amount by the Average Market Price to determine the number
of shares.


 


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For
illustration purposes only, upon completion of CUBIST’s first Phase II Clinical
Trial, CUBIST shall pay ELI LILLY [ ]* in CUBIST common stock. The number of
shares to be transferred to ELI LILLY shall be determined by dividing [ ]* by
the Average Market Price.


 


ARTICLE 8


 


PATENTS AND KNOW-HOW


 


8.00 In the
event either of the parties shall learn of the infringement, or a challenge to
the validity, enforceability, or title of any Patent (including any action for a
declaratory judgment) right licensed hereunder, or an action for unauthorized
use or misappropriation of Know-How licensed hereunder, such party shall
promptly notify the other party thereof in writing and shall provide the other
party with any evidence in its possession of such infringement, challenge or
action.


 


8.01 (a) During
the term of this Agreement, ELI LILLY shall have the sole right, but no
obligation, to bring or defend any suit or action relative to the patenting or
patent enforcement directly relating to Patent(s), including the right to
recover for past infringement, or the unauthorized use or misappropriation of
Know-How in the Field. If ELI LILLY finds it necessary or desirable to join
CUBIST in such suit or action, CUBIST shall execute all papers and perform such
other acts as may reasonably be required, at ELI LILLY’s expense, to join
CUBIST in such suit or action. CUBIST may, at its option, join as a party to
such suit and be, at its expense, represented by counsel of its choice,
provided that ELI LILLY shall continue to control the prosecution or defense of
such suit. Unless CUBIST and ELI LILLY otherwise agree, any amount recovered in
any such action, whether by judgment or settlement, after deducting ELI LILLY’s
reasonable expenses (including attorneys’ fees), and payment to CUBIST of
damages in respect of CUBIST’S lost profits for which ELI LILLY recovers
payment and CUBIST’s reasonable expenses (including attorneys’ fees) incurred
in connection with an action or suit in which ELI LILLY requested that CUBIST
be joined or in which CUBIST voluntarily joined, shall be paid to or retained
by ELI LILLY.


 


(b) In the event ELI LILLY fails to take action with respect to such
Patents) infringement, or challenge to validity, enforceability or title, or
action for unauthorized use or misappropriation of Know-How in the Field which
materially affect intellectual property rights of ELI LILLY that relate to an
active ELI LILLY program, within a reasonable period, no less than three (3) months,
following receipt by ELI LILLY of reliable evidence of infringement, CUBIST
shall have the right, but no obligation, to bring, or defend any such suit or
action. ELI LILLY may, at its option, join as a party to such suit and be, at
its expense, represented by counsel of its choice, provided that CUBIST shall
continue to control the prosecution or defense of such suit. If CUBIST finds it
necessary to join ELI LILLY in such suit or action, ELI LILLY shall execute all
papers and perform such other acts as may be reasonably required at CUBIST’s
expense. Unless CUBIST and ELI LILLY otherwise agree, any amount recovered in
any such action or suit, whether by judgment or settlement, after deducting
CUBIST’S reasonable expenses (including attorneys’ fees) and, after payment to
ELI LILLY of damages in respect of ELI LILLY’s lost royalties for which CUBIST
recovers payment and after payment to ELI LILLY of its reasonable expenses
(including reasonable attorneys’ fees) incurred in connection with an action or
suit in which CUBIST requested that ELI LILLY be joined or which ELI LILLY
voluntarily joined, shall be paid to or retained entirely by CUBIST.


 


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(iii) Notwithstanding
anything to the contrary in this Section 8.01, should ELI LILLY receive a
certification pursuant to the Drug Price Competition and Patent Restoration Act
of 1984 (Public Law 98-417) as amended; or its equivalent in a country other
than the United States of America with respect to a Patent, then (i) ELI
LILLY shall immediately provide CUBIST and its sublicensee with a copy of such
certification and identify the date on which ELI LILLY received such
certification (the “Certification Date”), and (u) ELI LILLY shall have twenty
(20) days from the Certification Date to provide CUBIST and its sublicensee
with written notice whether ELI LILLY will bring suit within a forty five (45)
day period (or any other mandatory time period) from the Certification Date.
Should such twenty (20) day period pass without ELI LILLY bringing suit, then
CUBIST or its sublicensee shall be free to immediately bring suit for patent
infringement in its name and, at its sole option, in the name of ELI LILLY.
Accordingly, ELI LILLY hereby agrees to become party to the suit, at CUBIST’s
request. If CUBIST or its sublicensee initiates suit pursuant to this section,
it will promptly notify ELI LILLY.


 


8.02 If CUBIST
determines in good faith in consultation with ELI LILLY that the manufacture,
use or sale of Compound in the Field would infringe the intellectual property
rights of a third party unaffiliated with either CUBIST or ELI LILLY, and it
therefore becomes necessary to pay a royalty, license fee or other compensation
to that party to avoid a claim of infringement, then CUBIST and ELI LILLY shall
each bear one-half of that royalty, license fee or other compensation
obligation provided that ELI LILLY’s share of such obligation shall be deducted
from CUBIST’s royalty payments due to ELI LILLY, and further provided that
CUBIST’S payment, pursuant to this Agreement, to ELI LILLY in any one (1) year
would never be reduced by more than [ ]*. If, as a result of the preceding
sentence, CUBIST bears more than [ ]* of the royalty, license fee or other
compensation due to a third party under this Section 8.04, the amount of the
excess may be carried forward and used by CUBIST as a credit against royalties
due ELI LILLY in subsequent royalty periods, provided that in no event shall
CUBIST’s royalty payments to ELI LILLY be reduced by more than [ ]*.


 


8.03 Each
patty agrees to cooperate with the other in legal action taken to enforce,
defend or maintain a Patent licensed hereunder or concerning Know-How licensed
hereunder, including litigation proceedings.


 


8.04 ELI LILLY
shall take all steps necessary to maintain the Patents in the Field, including
without limitation the preparation, filing and prosecution of new patent
applications, through an attorney of their choice.


 


(a) If CUBIST reasonably believes that
ELI LILLY is failing to maintain one or more of its Patents in the Field,
CUBIST shall provide ELI LILLY sixty (60) days written notice of its intent to
assume maintenance of such Patents itself. If ELI LILLY fails to resume maintenance
of the Patents in the Field that CUBIST reasonably believes that ELI LILLY is
failing to maintain or to provide reasonable evidence demonstrating that ELI
LILLY is maintaining these Patents in the Field at the expiration of such sixty
(60) day period, CUBIST may, through an attorney of their choice, take all
necessary actions to maintain the Patents, and shall be entitled to deduct [ ]*
of the costs and expenses incurred from any of CUBIST’s payments pursuant to Article 4.04.
In such event, ELI LILLY shall complete all acts and execute and deliver all
instruments and other documents and render CUBIST assistance as is necessary or
desirable for CUBIST to assume the filing, prosecution and maintenance of such


 


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Patents in the Field that ELI LILLY has not resumed maintenance of or demonstrated
that it is maintaining.


 


(b) ELI LILLY shall keep CUBIST
currently advised as to the status of all patents and patent applications which
relate to Patents and to supply CUBIST promptly with copies of all patents,
patent applications, substantive patent office actions, substantive responses received
or filed in connection with such applications. CUBIST may itself or through its
attorney offer comments and suggestions with respect to the matters that are
the subject of this Article 8.06, and ELI LILLY agrees to consider
carefully such comments and suggestions; however, nothing herein shall obligate
ELI LILLY to follow such comments or suggestions.


 


(c) ELI LILLY shall notify CUBIST of
their intention to abandon a patent or patent application which relates to
Patents (either a total series of Patents or patent applications or on a
country by country basis). At CUBIST’s option, CUBIST may maintain such patent
or patent application relating to Patent that ELI LILLY plans to abandon (either
a total series of Patents or patent applications or on a country by country
basis) at CUBIST’s sole expense, and CUBIST shall receive title to such patent
or patent application and such patent shall no longer then be considered a
Patent for purposes of this Agreement.


 


8.05 (a) CUBIST
shall take all steps necessary to maintain its Assigned Patents.


 


(b) CUBIST shall keep ELI LILLY
currently advised as to the status of all Assigned Patents.


 


ARTICLE 9


 


ASSIGNMENT


 


9.00 Neither
party may assign or delegate any of its rights or duties under this Agreement
without the prior written consent of the other, except that either party may
assign this Agreement to a person or party that has purchased or succeeded to
all or substantially all of the business and assets of the assignor to which
the Agreement relates, and that has assumed in writing or by operation of law
such party’s obligations under this Agreement, provided that CUBIST shall be permitted
to sub-license its rights hereunder as provided under Section 2.01 above.
This Agreement shall inure to the benefit of, and shall be binding upon, the
parties hereto and their respective successors and assigns insofar as this
Agreement is assignable. The assignor of this Agreement shall guarantee the
performance of the obligation of this Agreement by such successor or assigns.
Nothing herein is intended to confer on any person other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement. 


 


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ARTICLE 10


 


TERM AND TERMINATION


 


10.00 The term
of this Agreement shall be for the period commencing as of the Effective Date
and ending on the later of (a) the expiration of the last of the Assigned
Patents or Patents to expire or (b) the end of the tenth year from the date
of first sale in the first Major Market Country where Know-How royalties are
due, unless and until earlier terminated as provided in this Article. Upon the
expiration of this Agreement, CUBIST shall retain a fully paid-up, royalty free
license under the Know-How for purposes consistent with this Agreement and limited
to use in the Field.


 


10.01 If both
CUBIST and any sub-licensees substantially cease all development activities
pursuant to the then-current development plan for a period of [ ]*, then ELI
LILLY shall have an exclusive right to acquire back all rights relating to
Compound pursuant to this Agreement. The terms under which ELI LILLY shall
acquire back such rights shall be the subject of a separate agreement to be
negotiated in good faith by the parties.


 


10.02 If
either party defaults in the performance of its material obligations hereunder,
including but not limited to CUBIST’s failure to use commercially reasonable
efforts to develop Compound (provided, however, that this shall not be
construed as a guarantee that any Compound will be successfully developed), and
if any such default is not corrected within sixty (60) days after it shall have
been called to the attention of the defaulting party, in writing, by the other
party, then the other party, at its option, may, in addition to any other remedies
it may have, thereupon terminate this Agreement by giving written notice of
termination to the defaulting party.


 


10.03 This
Agreement may be terminated by either party, on notice, (i) upon the
institution by the other party of insolvency, receivership or bankruptcy
proceedings, (u) upon the institution of such proceedings against the other
party, which are not dismissed or otherwise resolved in such party’s favor within
sixty (60) days thereafter, and (iii) upon the other party’s dissolution or
ceasing to do business in the normal course. 


 


10.04 CUBIST
may terminate this Agreement at any time, upon thirty (30) days prior written
notice to ELI LILLY and upon a reasonable determination by CUBIST that
continued development of the Compound hereunder is not commercially reasonable.
In such event, CUBIST shall refrain from the manufacture, marketing or sale of
a Compound for a period of at least [ ]*.


 


10.05
Termination of this Agreement for any reason shall not result in any obligation
by ELI LILLY to repay any payments made to it by CUBIST prior to such
termination.


 


10.06 Upon
termination of this Agreement for any reason, the sub-licenses shall be
automatically assigned to ELI LILLY, and ELI LILLY shall be bound by the terms
of such sublicenses provided that the sub-licensees continue to perform in
accordance with their respective sub-license agreements. Notwithstanding the
foregoing, ELI LILLY’s obligations to any such sub-licensee shall not be
interpreted to extend beyond any obligations to CUBIST hereunder with respect
to the subject matter of the sub-license.


 


10.07 (a) Upon
termination of this Agreement for any reason, except for termination caused by
material breach by ELI LILLY, all licenses granted to CUBIST pursuant to Section 2.01
shall terminate, CUBIST furthermore shall,


 


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except subject to Section 10.01 where applicable, transfer to ELI
LILLY all regulatory filings and regulatory correspondence, patent filings and
patent office correspondence, any and all other clinical and non-clinical data,
records and tabulations related to the Compound; and shall execute any and all
documents of such patent offices and/or patent receiving offices, and/or
regulatory agencies, including the US FDA, so as to allow ELI LILLY to make
immediate use of such data, records, patent applications and/or patents and
regulatory filings. ELI LILLY shall not be obligated to treat such information
received pursuant to this Section 10.06 as Confidential Information and
may use such information, data and know-how for any purpose at ELI LILLY’s
discretion.


 


(b) If CUBIST terminates this Agreement due to ELI LILLY’s material
breach, CUBIST’S licenses pursuant to Article 2 shall continue for so long
as CUBIST continues to fulfill their payment obligations pursuant to Articles 4
and 5.


 


10.08
Termination of this Agreement for any reason shall not terminate the provisions
set forth in Article 6 with respect to actions arising with respect to
periods prior to termination, as well as Articles 7, 10, 13, 15, and 17 hereof.
The obligations of those Articles shall continue in full force and effect
following any such termination. 


 


10.09 Upon
termination of this Agreement for any reason, neither party shall be relieved
of obligations with respect to periods prior thereto, including any obligation
to make payments, including but not limited to obligations pursuant to Articles
4, 5, 6 or 10, or reports regarding sale prior to such termination.


 


10.10 If
CUBIST determines that it will not develop or market Compound in one or more
countries, either by itself or through the efforts of a sublicensee, or if ELI
LILLY makes written request to CUBIST to develop or sell Compound in one or
more countries and in which countries CUBIST either by itself or through the
efforts of a sublicensee, has taken no action, all rights including rights to
develop, market and sell Compound in that country(ies) shall revert to ELI
LILLY one year after CUBIST receives written notice of ELI LILLY’s intent to
pursue those rights is received by CUBIST if CUBIST either by itself or through
the efforts of a sublicensee, has taken no action toward such development or
marketing prior to the end of that year.


 


ARTICLE 11


 


FORCE MAJEURE


 


11.00 If the
performance of this Agreement or any obligations hereunder, except the making
of payments, is prevented, restricted or interfered with by reason of fire or
other casualty or accident, earthquake, supplier delay, strikes or labor
disputes, war or other violence, any law, order, proclamation, regulations,
ordinance, demand or requirement of any government agency, or any other act or
condition beyond the reasonable control of the parties hereto (“Event of Force
Majeure”), the party so affected upon giving prompt notice to the other party
shall be excused from such performance to the extent of such prevention,
restriction, or interference; provided that the party so affected shall use its
reasonable best efforts to avoid or remove such causes of nonperformance and
shall continue performance hereunder with the utmost dispatch and that such
party exercises due diligence to overcome such circumstances.


 


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11.01 The
party suffering an Event of Force Majeure shall notify the other party within
fifteen (15) days of the occurrence of such Events of Force Majeure and within
thirty (30) days shall furnish the other party with a recovery plan of action.
Without limiting the foregoing, a party suffering an Event of Force Majeure
shall use its reasonable best efforts to limit the impact of the Event of Force
Majeure on such party’s performance of this Agreement.


 


ARTICLE 12


 


NOTICES


 


12.00 Any
notice required or permitted to be given under this Agreement shall be in
writing and shall be deemed to have been sufficiently given for all purposes
five (5) days after having been mailed by first class certified or registered
mail, postage prepaid or by fax which is confirmed by certified mail. Unless
otherwise specified in writing, the mailing addresses of the parties shall be
as described below.


 


For ELI LILLY:


 


ELI LILLY &
COMPANY


Attn: Legal
Division


Lilly
Corporate Center


Indianapolis,
Indiana 46285


 


For CUBIST:


 


Alan D. Watson,
Ph.D.


Senior Vice
President, Corporate Development


Cubist
Pharmaceuticals Incorporated


24 Emily
Street


Cambridge, MA
02139


 


with a copy
to:


 


CUBIST’S Legal
Counsel:


Michael Lytton


Palmer &
Dodge


One Beacon
Street


Boston, MA
02108 


 


ARTICLE 13


 


GOVERNING LAW


 


13.00 This
Agreement shall be governed by and interpreted in accordance with the laws of
the State of Indiana, United States of America, without reference to conflict
of laws principles.


 


In the event
of any action, controversy or claim arising out of or relating to any provision
of this Agreement or the breach, termination or


 


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enforceability thereof, ELI
LILLY and CUBIST shall make all efforts to settle those conflicts amicably
between themselves. Should they fail to agree, the parties may assert any
remedy available at law or in equity to enforce its rights under this
Agreement.


 


ARTICLE 14


 


PARTIAL VALIDITY


 


14.00 If any
provision of this Agreement shall be found or be held to be invalid or
unenforceable by a court of competent jurisdiction in which this Agreement is
being performed, then the meaning of said provision shall be construed, to the
extent feasible, so as to render the provision enforceable, and if no feasible
interpretation would save such provision, it shall be severed from the
remainder of this Agreement, which shall remain in full force and effect. In
such event, the parties shall negotiate, in good faith, a substitute, valid and
enforceable provision which most nearly effects the parties’ intent in entering
into this Agreement.


 


ARTICLE 15


 


CONFIDENTIALITY.


 


15.00 Except
as otherwise provided in this Article 15, during the term of this
Agreement and for a period of [ ]* years thereafter, the parties shall maintain
the Confidential Information in confidence and use it only for purposes specifically
authorized under this Agreement. To the extent it is reasonably necessary or
appropriate to fulfill its obligations or exercise its rights under this
Agreement: (i) a party may disclose Confidential Information it is otherwise
obligated under this Article 15 not to disclose to third parties, on a need-to-
know basis and on condition that such entities or persons agree to keep the
Confidential Information confidential for the same time periods and to the same
extent as such party is required to keep the Confidential Information confidential
hereunder; and (ii) a party may disclose such Confidential Information to
government or other regulatory authorities as required by law or statute. The
parties hereto understand and agree that remedies at law may be inadequate to
protect against any breach of any of the provisions of this Article 15 by
either party or their employees, agents, officers or directors or any other
person acting in concert with it or on its behalf. Accordingly, each party
shall be entitled to, but not limited to, the granting of injunctive relief by
a court of competent jurisdiction against any action that constitutes any such
breach of this Article 15.


 


15.01
Notwithstanding the provisions of Section 15.00 above, CUBIST shall be
free to make disclosures to third parties of Confidential Information of ELI
LILLY consisting of data regarding the Compound in the Field under circumstances
where, in CUBIST’S reasonable business judgment, such disclosures will (i) further
the development and commercialization of the Compound and (u) not adversely
affect any patent rights of ELI LILLY of which it is aware; PROVIDED, HOWEVER,
that in the case of (a) technical papers disclosing such Confidential
Information, or (b) other disclosures where ELI LILLY’S name is used or
would reasonably be implied from the context, CUBIST will provide a copy of the
proposed paper or disclosure to ELI LILLY at least two (2) weeks in advance
of publication and will not proceed with such publication or disclosure without
the consent of ELI LILLY, which consent will not be unreasonably withheld; and
FURTHER, PROVIDED, that in the case of all other written disclosures of Confidential
Information, CUBIST will provide to ELI LILLY a copy


 


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of the material incorporating
such disclosure as promptly as is practicable, and in no event later than one (1) week
after the disclosure takes place.


 


15.02 ELI
LILLY will make no public pronouncements referencing this Agreement or CUBIST
without CUBIST’s express written approval. No license or rights are granted to
either party to use the name of the other without express written approval.
CUBIST shall not release any information regarding the existence or terms of
this Agreement that is not required by law.


 


ARTICLE 16


 


ENTIRE AGREEMENT


 


16.00 The
terms and conditions herein contained, including the Exhibits hereto,
constitute the entire agreement and understanding of the parties relating to
the subject matter of this Agreement and supersedes all previous communications,
proposals, representations, and agreements (including the License Agreement
dated November 7, 1997) whether oral or written, relating to the subject
matter of this Agreement. 


 


No agreement
or understanding varying or extending the same shall be binding upon either
party hereto unless in a written document which expressly refers to this
Agreement and which is signed by both parties to be bound thereby.


 


ARTICLE 17


 


MISCELLANEOUS


 


17.00 It is
understood and agreed that each party shall have the status of an independent
contractor under this Agreement and that nothing in this Agreement shall be
construed as authorization for either ELI LILLY or CUBIST to act as agent for
the other. Nothing contained herein or done in pursuance of this Agreement
shall constitute either party the agent of the other party for any purpose or
in any sense whatsoever, or constitute the parties as partners or joint
venturers.


 


17.01 The
failure of either party to enforce at any time any of the provisions of this
Agreement, or the failure to require at any time performance by the other party
of any of the provisions of this Agreement, shall in no way be construed to be
a present or future waiver of such provisions, nor in any way affect the
validity of either party to enforce each and every such provision thereafter.


 


17.02 The
headings set forth at the beginning of the various Articles of this Agreement
are for reference and convenience and shall not affect the meanings of the
provisions of this Agreement.


 


17.03 During
the term of this Agreement, ELI LILLY shall not, directly or indirectly through
or in connection with any third party, conduct research, develop, make or
market Compound for use in the Field.


 


17.04 This
Agreement may not be amended, supplemented, or otherwise modified except by an
instrument in writing signed by both parties. 


 


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IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be signed in
duplicate by duly authorized officers or representatives as of the date first
above written. 


 


 


	
  ELI LILLY & COMPANY

  	
   

  	
  CUBIST PHARMACEUTICALS

  
	
   

  	
   

  	
  INCORPORATED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ M.E. DANIELS, JR.

  	
   

  	
  By:

  	
  /s/ ALAN WATSON

  
	
   

  	
   

  	
   

  
	
  Print name: M.E. Daniel, Jr.

  	
   

  	
  Print name:  Alan Watson

  
	
   

  	
   

  	
   

  
	
  Title:  Sr. Vice President

  	
   

  	
  Title: Senior Vice President

  
					



 


*Confidential treatment requested: Material has been omitted and filed
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