**Exhibit 10.1**

 

**EXECUTIONCOPY**

*****Text Omitted and Filed Separatelywith the Securities and Exchange Commission.Confidential Treatment RequestedUnder 17 C.F.R. Sections 200.80(b)(4)and 240.24b-2**

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**COLLABORATION AND LICENSE AGREEMENT**

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**THISCOLLABORATION AND LICENSE AGREEMENT** (the ***“Agreement”***) is entered intoas of August 7, 2008 (the ***“Effective Date”***)by and among **HOFFMANN-LA ROCHE INC.**, a NewJersey corporation located at 340 Kingsland Street, Nutley, New Jersey 07110 (***“Roche Nutley”***), **ROCHE PALO ALTO LLC**, a Delaware limitedliability company located at 3431 Hillview Avenue, Palo Alto, California94304-1397 (***“Roche Palo Alto”***), and**F.HOFFMANN-LA ROCHE LTD**, a Swiss corporation located atGrenzacherstrasse 124, CH-4070, Basel, Switzerland (***“RocheBasel”*** and, collectively with Roche Nutley and Roche Palo Alto,***“Roche”***), and **METABASIS THERAPEUTICS, INC.**, a Delaware corporation locatedat 11119 North Torrey Pines Road, La Jolla, CA 92037 (***“Metabasis”***).

 

**RECITALS**

 

**WHEREAS**, Metabasis has developed Metabasis Technology(as hereinafter defined) for the discovery and optimization of liver targetedcompounds and Roche owns Roche Nucleosides (as hereinafter defined);

 

**WHEREAS**, Roche and Metabasis desire to enter into aresearch collaboration to apply Metabasis Technology to Roche Nucleosides todevelop the Collaboration Compounds (as hereinafter defined) upon the terms andconditions set forth herein; and

 

**WHEREAS**, Roche desiresto obtain licenses under the Metabasis Technology and Metabasis’ interest inthe Joint Technology (as each such term is hereinafter defined) to develop andcommercialize Products in the Field (as hereinafter defined), and Metabasisdesires to grant such licenses, in each case upon the terms and conditions setforth herein.

 

**AGREEMENT**

 

**NOW,THEREFORE,**inconsideration of the foregoing premises and the mutual covenants hereincontained, the parties hereby agree as follows:

 

**1.****                                     ****DEFINITIONS**

 

Unlessspecifically set forth to the contrary herein, the following terms, whetherused in the singular or plural, shall have the respective meanings set forthbelow. References to “Articles”, “Sections” and “subsections” in this Agreementshall be to Articles, Sections and subsections respectively, of this Agreementunless otherwise specifically provided: 

 

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**1.1****                               “AAA”** shall have the meaningprovided in Section 12.6(a).

 

**1.2****                               “Affiliate”**shall mean any company or entity controlled by, controlling, or undercommon control with a party hereto.  Forthe purposes of this definition, the term “control” (including, withcorrelative meanings, the terms “controlled by” and “under common control with”)as used with respect to a party shall mean the possession, directly orindirectly, of more than 50% of the outstanding voting securities of acorporation or comparable equity interest in any other type of entity, orotherwise having the power to govern the financial and the operating policiesor to appoint the management of such entity. With regard to Roche, the term “Affiliate” shall not include: (a) GenentechInc., 1 DNA Way, South San Francisco, California 94080-4990, unless anduntil such time as Roche opts for such inclusion by written notice toMetabasis; or (b) Chugai Pharmaceutical Co., Ltd, 1-9,Kyobashi 2-chome, Chuo-ku, Tokyo, 104-8301, Japan, unless and until suchtime as Roche opts for such inclusion by written notice to Metabasis.

 

**1.3****                               “CollaborationCompound”** shall mean a chemical entity that is invented solely by a partyor jointly by the parties (or on behalf of a party or the parties) prior to orduring the Research Term that covalently incorporates Metabasis ProdrugTechnology and is converted into a Roche Nucleoside (including anymonophosphate, diphosphate or triphosphate thereof) in the body.

 

**1.4****                               “CombinationProduct”**shall mean a Product that is a single pharmaceutical formulationcontaining as its active ingredients both a Licensed Compound and one or moreother ingredients that are therapeutically or prophylactically active in theField.

 

**1.5****                               “Confidential Information”** shallhave the meaning given such term in Section 7.1.

 

**1.6****                               “Confidentiality Agreement”** shallmean the confidentiality agreement, dated January 21, 2008, between theparties.

 

**1.7****                               “Control”**shall mean, with respect to any Information, Patent or other intellectualproperty right, possession by a party of the ability (whether by ownership,license or otherwise) to grant access, a license or a sublicense to suchInformation or intellectual property right without violating the terms of anyagreement or other arrangement with any Third Party (before taking into accountthe effect of any licenses granted by such party to the other party under thisAgreement but after taking into account the effect of Section 9.1(a)).

 

**1.8****                              ****“EMEA”** shall mean the European MedicinesAgency and any successor entity thereto.

 

**1.9****                              ****“FDA”** shall mean the U.S. Food and DrugAdministration and any successor entity thereto.

 

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**1.10****                        “Field”**shall mean the prevention and treatment of chronic hepatitis C viral infectionsin humans.

 

**1.11****                       ****“First Commercial Sale”**shallmean, with respect to any Product, on a country-by-country basis, the firstsale in a country after the governing health regulatory authority of suchcountry has granted Regulatory Approval.  For purposes of clarification, the first salefor end use or consumption of a Product in a country after conditional approvalhas been granted will constitute a First Commercial Sale for purposes of thisAgreement.

 

**1.12****                        “FTE”**shall mean the equivalent of a full-time scientist’s work time over atwelve-month period (including normal vacations, sick days and holidays).  One FTE shall mean a minimum of [***], and nosingle person can perform the work of more than one FTE per year.

 

**1.13****                        “Generic Competition”** shall havethe meaning provided in Section 5.5(c).

 

**1.14****                        “Generic Product”** shall have themeaning provided in Section 5.5(c).

 

**1.15****                        “IND”**shallmean an investigational new drug application, clinical study application,clinical trial exemption, or similar application or submission for approval toconduct human clinical investigations filed with or submitted to a RegulatoryAuthority in conformance with the requirements of such Regulatory Authority.

 

**1.16****                        “Information”**shall mean all tangible and intangible (a) techniques, technology,practices, trade secrets, inventions (whether patentable or not), methods,processes of manufacture, intermediates, dosing regimens, formulations,knowledge, know-how, skill, experience, test data and results (includingpharmacological, toxicological and preclinical and clinical test data andresults), analytical and quality control data, results or descriptions,software and algorithms and (b) compositions of matter, cells, cell lines,assays, animal models and physical, biological or chemical material.

 

**1.17****                        “Invention”**shall mean any invention, conception, actual or constructive reduction topractice, process, method, use, composition of matter, article of manufacture,discovery or finding, whether or not patentable.

 

**1.18****                        “Joint Invention”** shall mean anyInvention conceived jointly by the parties (or on their behalf) in the courseof the Research Program.

 

**1.19****                        “Joint Patents”** shall mean Patentsclaiming any Joint Invention.

 

**1.20****                       ****“Joint Product Patents”** shall mean Joint Patents claiming aCollaboration Compound or Product or a method of making or using aCollaboration Compound or Product.

 

**1.21****                        “Joint Technology”**shall meanJoint Inventions and Joint Patents.

 

**1.22****                        “JRC”**shall mean the joint research committee established to facilitate the ResearchProgram as more fully described in Section 2.1.

 

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**1.23****                        “LicensedCompound”** shall mean any Collaboration Compound that is deemed a “LicensedCompound” in accordance with Section 4.1 hereof.

 

**1.24****                        “Losses”**shall have the meaning provided in Section 11.1.

 

**1.25****                        “MajorEuropean Market**” shall mean: (a) any one of the following countries:the United Kingdom, France, Germany, Italy or Spain; or (b) the EuropeanUnion as a whole.

 

**1.26****                        “Major Market”** shall mean theUnited States of America, the European Union or Japan.

 

**1.27****                        “MajorPharma Company”** shall mean any pharmaceutical company with:  (i) a product in the [***] or (ii) aproduct in the [***] or (iii) annual sales of [***] in its most recentlycompleted fiscal year for which such information is available of [***] (asmeasured by IMS Health or its successor).

 

**1.28****                        “Materials”**shall have the meaning provided in Section 3.8.

 

**1.29****                        “MetabasisIndemnitee”** shall have the meaning provided in Section 11.1.

 

**1.30****                        “Metabasis Know-How”** shall meanany Information or Invention to the extent directed to Metabasis ProdrugTechnology or any Collaboration Compound or Product or a method of making or usingMetabasis Prodrug Technology or any Collaboration Compound or Product, whichInformation or Invention is Controlled by Metabasis as of the Effective Date orfirst becomes Controlled by Metabasis during the Research Term.  For purposes of clarity, Metabasis Know-Howdoes not include Roche Know-How.

 

**1.31****                        “Metabasis Patents”** shall meanMetabasis Platform Patents and Metabasis Product Patents.

 

**1.32****                        “MetabasisPlatform Patents”**shall mean Patents to the extent of claims or portions ofclaims therein directed to any Invention that is Metabasis Prodrug Technologyor a method of making or using Metabasis Prodrug Technology, which Patents areControlled by Metabasis as of the Effective Date or first become Controlled byMetabasis during the Research Term.  For purposesof clarity, Metabasis Platform Patents do not include Metabasis Product Patentsor Roche Patents.  The Metabasis PlatformPatents existing on the Effective Date are listed on ***Schedule I***to the Research Plan.

 

**1.33****                        “MetabasisProdrug Technology”** shall mean (a) any and all cyclic 1,3-propanylesters or amides of phosphates, phosphoramidates and/or phosphonates that areactivated by any P450 enzyme and/or any method of making or using any of theforegoing, and/or (b) any and all compounds containing or producing afteradministration to an animal a cyclic carbonate functional group spanning the 2’-and 3’-hydroxyl groups of a nucleoside or analog or derivative thereof and/orany method of making and using such compounds; in each case, to the extent any ofthe foregoing is either Controlled by Metabasis or constitutes ConfidentialInformation of Metabasis (but is not Joint Technology).

 

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**1.34****                        “MetabasisProduct Patents”**shall mean Patents to the extent of claims or portions ofclaims therein directed to any Invention that is a Collaboration Compound orProduct or a method of making or using a Collaboration Compound or Product,which Patents are Controlled by Metabasis as of the Effective Date or firstbecome Controlled by Metabasis during the Research Term.  For purposes of clarity, Metabasis ProductPatents do not include Roche Patents. The Metabasis Product Patents existing on the Effective Date are listed on ***Schedule I***to the Research Plan.

 

**1.35****                        “MetabasisTechnology”** shall mean the Metabasis Know-How and Metabasis Patents.

 

**1.36****                       ****“NDA”** shall mean a new drug application (asmore fully defined in 21 C.F.R. 314.5 *etseq.*) and all amendments and supplements thereto filed by Roche, itsAffiliates or sublicensees with the FDA, or the equivalent application filed byRoche, its Affiliates or sublicensees with any equivalent agency orgovernmental authority outside the United States of America (including anysupra-national agency such as in the European Union), including all documents,data, and other information concerning a pharmaceutical product which arenecessary for gaining Regulatory Approval to market and sell suchpharmaceutical product.

 

**1.37****                       ****Net Sales”** shall mean the amount remaining afterdeducting from Adjusted Gross Sales [***] of [***] of[***] of those [***] which are not [***] by [***] or [***](which, *solely* for purposes of thisdefinition, and [***] the [***] of [***], shall [***])or [***] on a [***] basis (e.g. [***], [***], [***], [***] for [***] of [***], [***], [***], and [***]than the [***]).  As used herein, the [*****]** shall meanthe [***] of any [***] or [***] and [***]and [***] to [***] that are [***] or [***] of[***] or [***] or [***], [***] of [***] and [***] (including [***]for [***], [***], [***], [***], [***], [***] and [***]),[***] and [***] (including [***], [***] to [***] and[***], [***] or [***] for[***], [***], [***], [***] and [***] of [***],e.g. [***], [***]), [***], and [***](including [***] or [***], [***] and [***] tothe [***]).  Notwithstanding the foregoing, amountsreceived by [***] or [***] for the [***] of [***] and[***] or [***] for [***] shall [***]in the [***] of [***] hereunder.

 

Withrespect to [***], [***] shall [***] the [***] of such [***] by the [***] is the[***] ([***]) [***] of the [***] in the [***] in the [***] in [***] the [***], and [***] is the [***] of the [***] in the [***] in the [***]when [***] in [***] in the [***].  If[***] be [***] for the [***] or the [***] are [***] in a [***] then [***] for[***] of [***] shall [***] the [***] in [***] the [***] by [***], such [***].

 

**1.38****                        “Notice Date”** shall [***] the [***] in [***].

 

**1.39****                        “Patents”**shallmean (a) all patents, certificates of invention, applications forcertificates of invention, priority patent filings and patent applications,including without limitation patent applications under the Patent Cooperationand the European Patent Convention, together with (b) any renewal,division, continuation (in whole or in part), or request for continuedexamination of any of such patents, certificates of invention and patentapplications, and any and all patents or certificates of invention issuingthereon, and any and all reissues, reexaminations, extensions, divisions,renewals, substitutions, confirmations, registrations, 

 

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revalidations, revisions,and additions of or to any of the foregoing, and any foreign counterparts ofany of the foregoing and any other patents and patent applications claimingpriority back to any of the foregoing.

 

**1.40****                        “Phase 1Clinical Trial”**shall mean a human clinical trial in any country that wouldsatisfy the requirements of 21 CFR 312.21(a), as it may be amended.

 

**1.41****                        “Phase 2Clinical Trial”** shall mean a human clinical trial in any country that: (a) wouldsatisfy the requirements of 21 CFR 312.21(b), as it may be amended; (b) isof [***] and [***] (*e.g.*, [***]) to[***] to [***] in the [***]; and (c) [***] as an [***].  For purposes of clarification, but solely byway of example, the term Phase 2 Clinical Trial will not include a trialthat, [***] the [***] of [***], is [***], the [***] is to [***] for [***], suchas a [***] with [***] and [***].

 

**1.42****                        “Phase 3Clinical Trial”** shall mean a pivotal human clinical trial in any countrythat would satisfy the requirements of 21 CFR 312.21(c), as it may be amended.

 

**1.43****                        “ProdrugImprovement”**shall mean any Invention to the extent directed to the MetabasisProdrug Technology or a method of making or using Metabasis Prodrug Technology,but not directed to any Collaboration Compound or Product or a method of makingor using a Collaboration Compound or Product, which Invention is conceivedsolely by a party (or on its behalf) or jointly by the parties.  Any Prodrug Improvement shall be included inthe term Metabasis Prodrug Technology.

 

**1.44****                        “Product”**shall mean any preparation in final form containing a Licensed Compound forsale or disposition by prescription, over-the-counter or any other method.

 

**1.45****                        “ProjectLeader”** shall have the meaning provided in Section 2.5.

 

**1.46****                        “RegulatoryApproval”**shall mean any and all approvals (including price andreimbursement approvals, if required), licenses, registrations, orauthorizations of any Regulatory Authority in a particular jurisdiction thatare necessary for the manufacture, use, storage, import, transport and/or saleof a Product in such jurisdiction in accordance with applicable laws.

 

**1.47****                        “RegulatoryAuthority”** shall mean any national or supranational governmental authority,including the FDA and the EMEA, that has responsibility in any country or otherregulatory jurisdiction over the development and/or commercialization ofProducts.

 

**1.48****                        “ResearchPlan”**means the plan (the initial form of which has been agreed upon inwriting by the parties by letter agreement dated concurrently herewith) thatsets out the research work to be performed by Metabasis and Roche in conductingthe Research Program, as such plan may be amended or modified by the JRC or bymutual written agreement of the parties as contemplated under this Agreement.

 

**1.49****                        “ResearchProgram”** shall mean the research activities undertaken by either or both ofthe parties hereto as set forth in Article 3 and the Research Plan.

 

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**1.50****                        “ResearchTerm”** shall have the meaning provided in Section 3.6.

 

**1.51****                        “Roche Know-How”** shall mean anyInformation or Invention to the extent directed to a Roche Nucleoside or aCollaboration Compound or Product or a method of making or using a RocheNucleoside or a Collaboration Compound or Product, which Information orInvention is Controlled by Roche as of the Effective Date or during theTerm.  For purposes of clarity, RocheKnow-How does not include Metabasis Know-How.

 

**1.52****                        “RocheIndemnitee”** shall have the meaning provided in Section 11.2.

 

**1.53****                        “RocheNucleoside”** shall mean [***].  One ormore additional nucleosides may be added as “Roche Nucleosides” during theResearch Term by [***] of the [***].

 

**1.54****                        “RocheNucleoside Improvement”**shall mean any Invention directed to a RocheNucleoside or a method of making or using such Roche Nucleoside, but notdirected to any Collaboration Compound or Product or a method of making orusing a Collaboration Compound or Product, which Invention is conceived solelyby a party (or on its behalf) or jointly by the parties.  Any Roche Nucleoside Improvement shall beincluded in the term Roche Nucleoside.

 

**1.55****                        “Roche Patents”** shall mean Patentsto the extent of claims or portions of claims therein directed to any Inventionthat is a Collaboration Compound or Product or a method of making or using aCollaboration Compound or Product, which Patents are Controlled by Roche as ofthe Effective Date or during the Term. For purposes of clarity, Roche Patents do not include Metabasis Patentsor Joint Patents.  The Roche Patentsexisting on the Effective Date are listed on***Schedule II***tothe Research Plan.  For purposesof clarity, Roche Patents do not include Metabasis Patents or any [***] the [***] of [***], orany [***] of [***] or [***], a [***]itself (*i.e.*, without [***]).

 

**1.56****                        “RocheTechnology”** shall mean the Roche Know-How and Roche Patents.

 

**1.57****                        “RoyaltyTerm”**shall mean, in the case of any Product in any country, the period oftime commencing on the First Commercial Sale of such Product in such countryand ending upon the later of (a) 10 years after the date of FirstCommercial Sale of such Product in such country, and (b) the expiration ofthe last to expire of any of the Metabasis Patents, Roche Patents or JointPatents containing a Valid Claim [***]the [***] of [***] of the [***] which is the active ingredient of the Product.

 

**1.58****                        “Section 3.5Information”** shall have the meaning provided in Section 3.5.

 

**1.59****                        “SelectedMetabasis Patents”** shall have the meaning provided in Section 9.2(b)(ii).

 

**1.60****                        “TargetProfile”** shall mean the targeted pharmacological properties specified inthe section entitled “Clinical Candidate Target Profile” in the Research Plan.

 

**1.61****                        “Term”**shallhave the meaning provided in Section 10.1.

 

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**1.62****                        “ThirdParty”** shall mean an entity other than Roche and its Affiliates, andMetabasis and its Affiliates.

 

**1.63****                        “Title 11”**shall have the meaning provided in Section 10.7.

 

**1.64****                       ****“Toxicology Studies”** shall mean IND-enabling goodlaboratory practices toxicology studies.

 

**1.65****                        “ValidClaim”**shall mean a claim of (a) an issued and unexpired patent or asupplementary protection certificate, which claim has not been held invalid orunenforceable by a court or other government agency of competent jurisdictionfrom which no appeal can be or has been taken and has not been held or admittedto be invalid or unenforceable through re-examination or disclaimer, oppositionprocedure, nullity suit or otherwise, or (b) a pending patent application;*provided, however*, that if a claim of apending patent application shall not have issued within [***] after theearliest filing date from which such claim takes priority, such claim shall notconstitute a Valid Claim for the purposes of this Agreement unless and until apatent issues with such claim.

 

**2.****                                     ****RESEARCH PROGRAMGOVERNANCE**

 

**2.1****                               Joint Research Committee.**  Promptly after the Effective Date, theparties will form a joint research committee (the ***“JRC”***) composed of an equal number ofrepresentatives of each of Roche and Metabasis. One member of the JRC shall be selected to act as the chairperson of theJRC, with each chairperson acting for a term of 12 months.  The chairperson shall be selected alternatelyby Metabasis and Roche, and Roche shall designate the first chairperson.  The JRC shall be responsible for:

 

**(a)****                                 **overseeingthe conduct of the Research Program and making decisions regarding scientificand technical matters related to the Research Program, including, approvingamendments to the Research Plan (subject to the limitations set forth in Section 2.4);

 

**(b)****                                 **maintaininga current list of all Collaboration Compounds, which shall be updated at eachJRC meeting (or more frequently as agreed by the parties);

 

**(c)****                                 **duringthe [***] of the [***], [***] in [***] regarding (i) [***] for [***] as[***] to any [***] that is [***] by the [***] or by [***] for [***] as a [***]or that has been [***] a [***] in accordance with [***], and (ii) a [***]for [***] and [***] of such [***];

 

**(d)****                                 **duringthe [***] of the [***], [***] in [***] regarding the [***], in addition to[***], that [***] may wish to[***] in the [***] as [***].  The parties[***] that [***] shall have [***] with respect to the [***] of any such [***]; *provided, however,* that if [***] to select, as a[***] a particular [***] (other than [***]) with respect to which [***] is [***], under a [***] with a [***], from [***] a [***] under [***], [***] shall so [***] in [***]within [***] after [***] to [***] in [***] the identityof such [***], and in suchevent, such [***] will not be [***] for [***] as a [***]hereunder.  For the avoidance of doubt,in [***] shall [***] be [***] to [***] to [***] the [***] of any such [***], any [***] of the [***] and any such [***], orany 

 

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[***] of such [***]relating to the [***], but [***] notice to [***] under this [***] regarding aparticular [***] shall be deemed a [***] by [***] to [***] that [***] issubject to such [***] under its [***] with such [***]; and

 

**(e)****                                 **duringthe [***] of the [***], using [***] to [***] a [***] for the [***] of the[***], if appropriate.

 

**2.2****                               Meetings.** The JRC shall meet at least fourtimes per year during the Research Term or at such greater frequency as the JRCagrees.  Such meetings may be conductedby videoconference, teleconference or in person, as agreed by the parties, andthe parties shall agree upon the time of meetings.  In-person meetings shall alternate betweenthe facilities of Roche in California, and the facilities of Metabasis in La Jolla,California.  No JRC meeting may be conducted unless at least one representative ofeach party is participating.  Each partyshall bear its own expenses related to the attendance of such meetings by itsrepresentatives.  A reasonablenumber of additional representatives of a party may attend meetings of the JRCin a non-voting capacity.

 

**2.3****                               Minutes. **The hosting party shall haveresponsibility for preparing definitive minutes of each JRC meeting, a draft ofwhich shall be circulated for comment to all members of the JRC within10 business days after the relevant meeting.  Such minutes shall provide a description, inreasonable detail, of the Research Program progress to date, and of thediscussions at the meeting, a list of material actions or determinationapproved by the JRC and material disagreements not resolved by the JRC.  The Project Leaders shall discuss anycomments on such minutes and finalize the minutes by no later than30 business days after the meeting.

 

**2.4****                               JRC Decision-Making.**  All decisions of the JRC shall be unanimous,with the representatives of Metabasis on the JRC collectively having one voteand the representatives of Roche on the JRC collectively having one vote.  If the JRC is unable to decide or resolveunanimously any matter properly presented to it for action, then at the writtenrequest of either party, the issue shall be referred to Metabasis’ head ofresearch and development and Roche’s [***] who shall attempt in good faith toresolve such issue as promptly as practicable. If such officers are unable to resolve such issue within [***], then atthe written request of either party, the issue shall be referred to the ChiefExecutive Officer of Metabasis and Roche’s [***].  If such officers are unable to resolve suchissue within [***] of commencing such negotiations, then, except as provided inSection 1.3, the resolution and/or course of conduct shall be determinedby [***].  However, [***] will give [***]to [***], and [***] to [***] in [***] or [***]. Notwithstanding the foregoing or any other provision of this Agreementto the contrary, [***] the [***] with [***] this [***] shall [***]:

 

**(a)****                                 **[***]the [***] of this [***] the [***];

 

**(b)****                                 **[***]which [***] of a [***] or [***] on the [***];

 

**(c)****                                 **[***]the [***] by which [***] the [***] under the [***];

 

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**(d)****                                 **[***]a [***] with the [***] and/or that [***] to the [***] or [***];

 

**(e)****                                 **[***]the [***] in any [***] to [***] the [***] or that would [***] to [***] by[***];

 

**(f)****                                   **[***]the [***] to be [***] to [***] of the [***] by [***]; or

 

**(g)****                                **[***]in a [***] with the [***] and[***] of this [***].

 

In addition,[***] the [***] of any [***] (*e.g.*,[***]) to be [***] to the [***] the [***] of [***] on the [***].

 

**2.5****                               ProjectLeaders**.  Roche and Metabasis eachshall appoint a person (a ***“ProjectLeader”***) from the JRC to coordinate its part of the ResearchProgram.  The Project Leaders shall bethe primary contact between the parties with respect to the ResearchProgram.  Each party shall notify theother party as soon as practicable upon changing this appointment.

 

**3.****                                      RESEARCHPROGRAM**

 

**3.1****                               General. **Metabasis and Roche shall engage in theResearch Program upon the terms and conditions set forth in thisAgreement.  The activities to beundertaken in the course of Research Program are set forth in the Research Planwhich may be amended from time to time upon approval of the JRC, subject to Section 2.4.

 

**3.2****                               Conductof Research. **Subject to the termsand conditions of this Agreement, each party shall be responsible for managingand controlling its respective research obligations under the ResearchPlan.  Each party shall conduct theResearch Program in good scientific manner, and in compliance in all materialrespects with all requirements of applicable laws, rules andregulations.  Each party hereby certifiesthat it will not and has not employed or otherwise used in any capacity theservices of any person debarred under Section 21 USC 335a in performingany services hereunder.  Each party shall[***] and in a [***] with the [***] in the [***] by using [***] to [***], [***],[***] to the [***] and to use [***] and [***] to [***] the [***] with the [***]of this [***].

 

**3.3****                               ResearchCommitment; Metabasis FTEs.** Duringthe Research Term, each party shall use [***] to [***] under the [***] inaccordance with such plan and the terms and conditions of this Agreement.  Without limiting the generality of theforegoing:

 

**(a)****                                  MetabasisYear 1 FTEs. **Metabasis shalldevote to the performance of its responsibilities under the Research Plan [***]FTEs during the first year of the Research Term, all of whom shall be funded byMetabasis.  Notwithstanding theforegoing, if [***] after the [***], [***] has [***] a [***] for [***] of [***]as [***] and [***] has [***], in addition to [***], as a [***] hereunder, then[***] shall [***] its [***] under the [***] on [***] and [***] with respect tothe [***] (or [***] if no [***] has yet been [***]), and the [***] shall [***]in [***] on a [***] and [***] to the [***] of [***] that [***] is [***] todevote to the [***] of its 

 

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[***] underthe [***] during the [***] of the [***] of the [***], unless and until [***] as[***] has [***] such [***] and [***] has [***], in addition to [***], as a[***] hereunder.

 

**(b)****                                  MetabasisYear 2 FTEs. **No later [***] tothe [***] of the [***] of the [***] (unless Roche has previously notifiedMetabasis in writing pursuant to Section 3.6 of Roche’s election toterminate the Research Term effective as of the first anniversary of theEffective Date), Metabasis shall notify Roche in writing of the number ofMetabasis FTEs (which shall not exceed [***] FTEs) that Metabasis believes arereasonably required for performance of Research Plan activities in the secondyear of the Research Term.  Metabasis andRoche [***], through the [***], on the [***] of the [***] and the [***] uponthe [***] after Metabasis provides such notice. If the parties so agree, then the Research Term shall continue for thesecond year, and Roche shall make the payment to Metabasis required under Section 5.2.If Metabasis does not timely provide such notice, or [***] to the [***] for the[***] of the [***] and on the [***], then the Research Term shall expire at theend of the first year of the Research Term.

 

**3.4****                               Exchangeof Information. **Upon execution ofthis Agreement, and from time to time as necessary during the Research Term,Metabasis shall disclose to Roche such Metabasis Know-How needed for theperformance by Roche of its responsibilities under the Research Program.  Following designation of a CollaborationCompound as a Licensed Compound, Metabasis shall disclose to Roche suchMetabasis Know-How needed for the manufacture, use or sale of such LicensedCompound and Product containing such Licensed Compound in the Field.  Upon execution of this Agreement, and fromtime to time as necessary during the Research Term, Roche shall disclose toMetabasis such Roche Know-How needed for the performance by Metabasis of itsresponsibilities under the Research Program. In addition to the foregoing obligations, each party shall promptlydisclose to the other party any and all Collaboration Compounds invented inwhole or in part by such party.  Nothingherein shall require either party to disclose information that is subject to *bona fide* confidentiality obligations to aThird Party.

 

**3.5****                               Recordsand Reports. **Metabasis and Rocheshall each maintain records, in sufficient detail and in good scientific mannerappropriate for patent and regulatory purposes, which shall fully and properlyreflect all work done and results achieved in the performance of the ResearchProgram by such party.  [***] the [***]of the [***], [***] to the [***] for [***] and/or [***], [***] for the [***] to[***].  In addition, after the ResearchTerm, upon Metabasis’ reasonable request, [***] its [***] to [***] (but [***]),whether [***] were [***] or [***] or [***] (hereinafter, [*****]**), available to [***] either at [***] or[***], at [***].  Metabasis acknowledgesand agrees that all Section 3.5 Information made available to Metabasisshall be Confidential Information of Roche. The provisions of this Section 3.5 shall survive expiration ortermination of the Research Term for so long as any license granted to Rocheunder Section 4.2(a) remains in effect.

 

**3.6****                               ResearchTerm.**  Except as otherwise providedin Section 3.3, the Research Term shall commence on the Effective Date****and continue for a period of two years(the ***“Research Term”***).  Notwithstanding anything to the contrary inthis Section 3.6, Roche may, with or without cause and in its solediscretion, terminate the Research Term, effective as of the first 

 

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anniversary ofthe Effective Date, upon written notice to Metabasis given no later than90 days [***] the [***] of the [***].

 

**3.7****                               Useof Subcontractors. **Each party shallbe entitled to utilize the service of Third Parties to perform their respectiveResearch Program activities [***] the [***] of the [***] or as [***] set forthin the [***].  Notwithstanding any [***],each [***] at [***] for the [***] of its [***] under the [***] and [***] ofeach [***], [***], to [***] of [***] in the [***] to [***], and [***] of such[***] as [***] under [***] hereof.

 

**3.8****                               Materials. **In order to facilitate the ResearchProgram, either party may, in its discretion, provide to the other partycertain biological materials or chemical compounds Controlled by the supplyingparty, including, but not limited to, Collaboration Compounds (collectively, ***“Materials”***) for useby the other party in furtherance of the Research Program; *provided, however,*that each party shallprovide Materials to the other party to the extent required or contemplated bythe Research Plan.  Except as otherwiseprovided under this Agreement, all such Materials delivered to the other partywill remain the sole property of the supplying party, will be used only infurtherance of the Research Program and, if applicable, development,manufacture or commercialization of Products in accordance with this Agreement,will not be used or delivered to or for the benefit of any Third Party withoutthe prior written consent of the supplying party, and will be used incompliance with all applicable laws, rules and regulations.  The Materials supplied under this Agreementmust be used with prudence and appropriate caution in any experimental workbecause not all of their characteristics may be known.  Except as expressly set forth herein, THEMATERIALS ARE PROVIDED “AS IS” AND WITHOUT ANY REPRESENTATION OR WARRANTY,EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY OFMERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE OR ANY WARRANTY THATTHE USE OF THE MATERIALS WILL NOT INFRINGE OR VIOLATE ANY PATENT OR OTHERPROPRIETARY RIGHTS OF ANY THIRD PARTY.

 

**4.****                                      DESIGNATIONOF LICENSED COMPOUNDS; LICENSE GRANTS; DEVELOPMENT AND COMMERCIALIZATION**

 

**4.1****                               Designationof Licensed Compounds.** At any timeduring the Research Term or within 90 days after its expiration or itstermination pursuant to Section 3.6 (but not any other termination of theResearch Term or this Agreement), [***] in [***] of [***] upon which [***] or[***] to [***].  If [***] such [***],then within [***] or [***] of the [***], [***] ([***], as applicable) shall[***] of [***].  [***] of [***], such[***] shall [***] of [***].  The [***]with respect to [***] may be [***], but each [***] with respect to [***] initiatedshall be subject to milestone and royalty payment obligations under Article 5hereof.

 

**4.2****                               LicenseGrants.**

 

**(a)****                                  ByMetabasis.**

 

**(i)****                        ResearchLicense.**Subject to the terms and conditions of this Agreement, Metabasishereby grants to Roche a non-exclusive, worldwide, royalty-free license, 

 

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without theright to sublicense, under such Metabasis Technology as is necessary to performRoche’s obligations under the Research Program, solely to perform suchobligations under the Research Program during the Research Term.

 

**(ii)****                    Developmentand Commercialization License.** Subject to the terms and conditions of this Agreement, and on a LicensedCompound-by-Licensed Compound basis, effective only upon payment in full of thedevelopment event payment under Section 5.3 for Development Event Ior Development Event II (as applicable) with respect to such LicensedCompound, Metabasis hereby grants to Roche: (A) a non-exclusive,worldwide, royalty-bearing license, with the right to sublicense as described below,under the Metabasis Platform Patents and associated Metabasis Know-How, solelyto make, have made, use, sell, have sold, offer for sale and import suchLicensed Compound and Products containing such Licensed Compound in the Fieldduring the Term; and (B) a sole and exclusive (even as to Metabasis),worldwide, royalty-bearing license, with the right to sublicense as describedbelow, under the Metabasis Product Patents and associated Metabasis Know-Howand under Metabasis’ interest in Joint Technology, solely to make, have made,use, sell, have sold, offer for sale and import such Licensed Compound andProducts containing such Licensed Compound in the Field during the Term; *provided, however,* that Metabasis shallretain such rights under the Metabasis Product Patents, associated MetabasisKnow-How and Joint Technology as are necessary to perform its obligations underthe Research Program.

 

**(iii)****                Sublicensing.**  Roche shall have the right to grantsublicenses through multiple tiers of sublicense of the rights granted to Rocheunder Section 4.2(a)(ii).  Within 30days after the grant of a sublicense to [***] in the [***], [***] or a [***],[***] shall [***] in [***] of [***], [***] of the [***] and [***] of the[***].  Except to the extent the partiesotherwise agree in writing, any sublicense agreement must be fully consistentwith the terms and conditions of this Agreement.  Roche shall [***] the [***] of the [***] to[***], but may subcontract activities to be performed by Roche under theResearch Program pursuant to Section 3.7.

 

**(b)****                                  ByRoche. **Subject to the terms andconditions of this Agreement, Roche hereby grants to Metabasis a non-exclusive,worldwide, royalty-free license, without the right to sublicense, under suchRoche Technology and other Patents Controlled by Roche as are necessary toperform Metabasis’ obligations under the Research Program solely to performsuch obligations under the Research Program during the Research Term.

 

**4.3****                               Developmentand Commercialization.** Subject tothe terms and conditions of this Agreement, Roche shall control, and be solelyresponsible for the costs associated with, the worldwide preclinical andclinical development, registration and commercialization of Licensed Compoundsand Products.  Without limiting thegenerality of the foregoing, except as otherwise set forth in the ResearchPlan, Roche shall be responsible for the worldwide supply of all LicensedCompounds and Products necessary for the foregoing activities.

 

**4.4****                               DiligenceObligations.* ***Roche agrees to use commercially reasonable efforts(directly and/or through one or more Affiliates and/or sublicensees) to developand commercialize at least one Product in the Field in each of the MajorMarkets.

 

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**(a)****                                 **Inthe event that Roche: (i) is not conducting development orcommercialization of at least one Licensed Compound or Product in the Field ina particular Major Market, or (ii) decides that it will not develop orcommercialize at least one Licensed Compound or Product in the Field in aparticular Major Market, [***] shall [***] with [***] within [***] thereof, and[***] to it, [***] under [***].

 

**(b)****                                 **Inaddition, if Metabasis in good faith believes that Roche is not using its commerciallyreasonable efforts to develop or commercialize at least one Licensed Compoundor Product in the Field in a particular Major Market, Metabasis may provideRoche with written notice thereof, in which event Roche will have 60 daysfrom the date of such notice in which to reasonably demonstrate to Metabasisthat Roche is meeting such diligence obligation.  Any dispute related to this Section 4.4shall be resolved pursuant to the provisions of Section 12.6.   Neither Party shall have the right to terminatethis Agreement or any portion thereof for any reason (including but not limitedto Section 10.2) unless and until the dispute has been finally resolvedpursuant to Section 12.6.

 

**4.5****                               DisclosureRegarding Roche Efforts.**  Roche willkeep Metabasis appropriately informed about Roche’s progress with respect toLicensed Compounds and Products through the JRC during the Research Term and inwriting thereafter.  Without limiting thegenerality of the foregoing, Roche shall provide Metabasis with written noticeof the following within [***] after the occurrence of the following:

 

**(a)****                                 **[***]of [***] on any [***];

 

**(b)****                                 **[***]for a [***];

 

**(c)****                                 **[***]of a [***], [***] or [***] of a [***];

 

**(d)****                                 **the[***] of the [***], [***] or [***] of a [***] or [***]; [***] shall [***] as[***] for purposes of [***];

 

**(e)****                                 **[***]of [***] for [***] with respect to [***] in [***]; and

 

**(f)****                                   **[***]of [***] for any [***].

 

The provisionsof this Section 4.5 shall survive expiration or termination of theResearch Term for so long as any license granted to Roche under Section 4.2(a) remainsin effect.

 

**4.6****                               Agreements;No Implied Licenses.**

 

**(a)****                                 **Rocheand its Affiliates shall not, and shall not grant to any Third Party any rightsto, conduct clinical development or commercialization activities with respectto any Collaboration Compound that has not been designated or deemed a LicensedCompound pursuant to this Agreement, and Roche further acknowledges and agreesthat it has no right or license under any Metabasis Technology or Metabasis’ interestin any Joint Technology to do

 

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any of theforegoing.  In addition, Roche agreesthat it does not have as a result of this Agreement, any right to license, directlyor indirectly (including through any Affiliate or sublicensee), to use orpractice any Metabasis Technology from or after the expiration or terminationof the Research Term, except as expressly set forth in Section 4.2(a) forso long as the license granted under Section 4.2(a) remains ineffect.  In no event shall Roche as aresult of this Agreement have any right or license from Metabasis to:

 

**(i)****                       **[***],or [***] or [***] ([***] or [***] or [***]), during the [***] any [***] that[***] and is [***] a [***] ([***], [***] or [***] thereof) in the [***],except, in [***], as part of the[***]; or

 

**(ii)****                   **[***], or[***] or [***] ([***] or [***] or [***]), after [***] of the [***] any [***]that [***] and is [***] a [***] ([***], [***] or [***] thereof) in the [***]; *provided, however,*that the [***] to the[***] for [***] to [***] with respect to [***].

 

Except asexpressly set forth in [***] for [***]the [***] in [***], [***] to use any [***]or any [***] ([***] of [***]) to [***] inany of the [***] or to [***] or [***].

 

Notwithstandingany other provision of this Agreement to the contrary, Roche at all timesreserves the exclusive and unrestricted right to use or practice, and to grantits Affiliates and Third Parties the right to use or practice, the RocheTechnology for any purpose other than [***], [***] or [***] ofthe [***], [***] or [***].

 

**(b)****                                 **Exceptto the extent necessary to fulfill Metabasis’ obligations under the ResearchPlan during the Research Term:

 

**(i)****                       **[***],and [***] to [***] to, [***] or [***] the [***] with respect to [***], [***],[***] during the [***]; and

 

**(ii)****                   **[***] to[***], nor [***] of [***] the [***], [***], any [***] (subject, [***]) duringthe [***].

 

In addition, [***] that [***] or [***]under the [***], [***] set forth in [***] and, if applicable, [***], and [***] of [***] or[***] of the [***] for any [***] of [***]under the [***] during [***]. [***] of [***] to the [***], [***] at [***] the [***] and [***] to[***], and to [***] and [***] the [***] or[***], the [***] ([***]) for [***]other than the [***], [***] or [***] of the [***]or [***].

 

**(c)****                                 **Noright or license under any Patents or Information of either party is granted orshall be granted by implication.  Allsuch rights or licenses are or shall be granted only as expressly provided inthe terms of this Agreement.

 

**5.****                                      PAYMENTS**

 

**5.1****                               UpfrontFee.**  Roche shall make a one-time,non-refundable, non-creditable payment to Metabasis of $10,000,000 within15 days after the Effective Date and receipt of an invoice from Metabasis.

 

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**5.2****                               AdditionalPayment.**  If the Research Termcontinues beyond the first anniversary of the Effective Date, Roche shall makea one-time, non-refundable, non-creditable payment to Metabasis of [***] perMetabasis FTE for the number of FTEs agreed upon by the parties pursuant to Section 3.3(b),within [***] after the first anniversary of the Effective Date and receipt ofan invoice from Metabasis.

 

**5.3****                               DevelopmentEvent Payments. **Roche shall pay toMetabasis each of the non-refundable, non-creditable (except as expressly setforth in this Section 5.3) development event payments set forth below(whether such development event is achieved by Roche, its Affiliate or asublicensee):

 
| **Development Event** | ** **                                                                                                                                                                                                                                                                                                                                                                                                   | **Event Payment** | ** ** |
|----------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------|------------|
| ** **                 | ** **                                                                                                                                                                                                                                                                                                                                                                                                   | ** **             | ** ** |
| I.                         | [***] of [***] of the [***]                                                                                                                                                                                                                                                                                                                                                                                  |                   | [***]      |   |
|                       |                                                                                                                                                                                                                                                                                                                                                                                                         |                   |       |   |
| II.                        | [***] of [***] of each [***]                                                                                                                                                                                                                                                                                                                                                                                 |                   | [***]      |   |
|                       |                                                                                                                                                                                                                                                                                                                                                                                                         |                   |       |   |
| III.                       | [***] to [***] of: (a) [***] by the [***] of a [***],  [***] or [***]; or (b) allowance by the [***] of a [***], [***] or  [***] and [***] of the [***]for [***]  (or, if [***], [***] of the [***]); wherein, in each case, such [***] or [***],  [***] or [***] includes a [***] that [***] the [***]  of [***] of a [***] that is in [***] by or on behalf of [***] or [***] of [***] or  [***] |                   | [***]      |   |
|                       |                                                                                                                                                                                                                                                                                                                                                                                                         |                   |       |   |
| IV.                        | [***] of [***]of each [***]or [***]                                                                                                                                                                                                                                                                                                                                                                          |                   | [***]      |   |
|                       |                                                                                                                                                                                                                                                                                                                                                                                                         |                   |       |   |
| V.                         | [***] of [***] of each [***] or [***]                                                                                                                                                                                                                                                                                                                                                                        |                   | [***]      |   |
|                       |                                                                                                                                                                                                                                                                                                                                                                                                         |                   |       |   |
| VI.                        | [***] of [***] of each [***] or [***]                                                                                                                                                                                                                                                                                                                                                                        |                   | [***]      |   |
|                       |                                                                                                                                                                                                                                                                                                                                                                                                         |                   |       |   |
| VII.                       | [***] of [***] for each [***] in any [***]                                                                                                                                                                                                                                                                                                                                                                   |                   | [***]      |   |
|                       |                                                                                                                                                                                                                                                                                                                                                                                                         |                   |       |   |
| VIII.                      | [***] of [***] for each[***]in the [***]                                                                                                                                                                                                                                                                                                                                                                     |                   | [***]      |   |
|                       |                                                                                                                                                                                                                                                                                                                                                                                                         |                   |       |   |
| IX.                        | [***] of [***] for each [***] in the [***]                                                                                                                                                                                                                                                                                                                                                                   |                   | [***]      |   |
|                       |                                                                                                                                                                                                                                                                                                                                                                                                         |                   |       |   |
| X.                         | [***] of [***] for each [***]in [***]                                                                                                                                                                                                                                                                                                                                                                        |                   | [***]      |   |

 

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(1)                                  Suchdevelopment event payment shall be paid only after a Licensed Compound is inclinical development by or on behalf of Roche or any of its Affiliates orsublicenses.

 

(2)                                  Initiationof a clinical trial [***] of the [***] in [***] by or on behalf of Roche, itsAffiliates or sublicensees.

 

With theexception of the payment with respect to Development Event I in the tableabove (which shall be [***] for the [***]on which [***] are [***]) and the payment with respect toDevelopment Event II in the table above (which shall be [***] the [***] on which [***]),each of 

 

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the foregoingdevelopment event payments shall be payable upon achievement of the applicabledevelopment event by each Licensed Compound or Product (as applicable) and [***]. Roche shall notify Metabasis in writing within [***] after the achievement of each development event, and shallmake the appropriate development event payment to Metabasis within [***] after receipt of an invoice fromMetabasis.  If, for any reason, [***] or [***] a [***]without having [***] or [***], then [***] of [***], [***] to [***] and [***] to[***] within [***] after the [***] of [***].

 

**5.4****                               CommercialEvent Payments. **Roche shall pay toMetabasis each of the non-refundable, non-creditable commercial event paymentsset forth below (whether such commercial event is achieved by Roche, itsAffiliate or a sublicensee):

 
| **Commercial Event**            | ** ** | **Event Payment** | ** ** |
|--------------------------------------|------------|------------------------|------------|
| ** **                           | ** ** | ** **             | ** ** |
| [***] than [***] in [***] in a [***] |       | [***]                  |       |
|                                 |       |                   |       |
| [***] than [***] in [***] in a [***] |       | [***]                  |       |
|                                 |       |                   |       |
| [***] than [***] in [***] in a [***] |       | [***]                  |       |

 

Each of thecommercial event payments described in this Section 5.4 shall be payableonly one time for each Product and only for the first calendar year in whichsuch commercial event is achieved by such Product.  Roche shall notify Metabasis in writingwithin [***] after the achievement of each commercial event, and shall make theappropriate event payment to Metabasis within [***] after receipt of an invoicefrom Metabasis.

 

**5.5****                               Royalties.**

 

**(a)****                                 **Rocheshall pay to Metabasis royalties on worldwide annual Net Sales of Products byRoche, its Affiliates and its sublicensees at the following rates:

 
| **Annual Net Sales**                 | ** ** | **Royalty Rate** | ** ** |
|------------------------------------------------|------------|-----------------------|------------|
| Portion of calendar year Net Sales <  [***] |       | [***]                 |       |
| Portion of calendar year Net Sales >  [***] |       | [***]                 |       |

 

Notwithstandingthe foregoing, when aggregate annual Net Sales for a given Product during anycalendar year are greater than [***], Roche will pay Metabasisroyalties of [***] onaggregate Net Sales for that Product by Roche, its Affiliates and itssublicensees for that calendar year.

 

**(b)****                                 **Royaltiesunder this Section 5.5 shall be payable on a Product-by-Product andcountry-by-country basis for a period equal to the Royalty Term for suchProduct in such country.

 

**(c)****                                 **Ona [***] and [***], in the event that there is [***] with respect to such [***]in such [***], then [***] by [***] to [***] pursuant to [***] on [***] of any[***] during any portion of [***] shall be [***] by [***]; *provided, however,*that in [***] shall any[***] for 

 

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any [***] inany [***] in [***] be [***] to [***] of the [***] by [***] to [***] pursuant to[***].  [***] shall mean, with respect toa [***] in a [***], the situation in which [***] takes, in [***] than a [***]of the [***] for such [***] in such [***] based on [***] (as [***] in [***] by[***] or a similar [***] to be [***] to [***] the [***]) for any [***].  [***] shall mean, with respect to a [***],any [***] that is [***] in a [***] by [***] other than [***] or [***] or [***]the same or [***] (by [***] or other [***], on a [***]) [***] as [***] in agiven [***], including, without limitation, any such [***] that is [***] ordetermined to be [***] to a [***] by the [***], or similarly [***] by other[***] outside the [***], on a [***].

 

**(d)****                                 **Regardlessof patent coverage, each Product shall be royalty bearing at the rate set forthin Section 5.5(a), subject to adjustment as provided as provided elsewhereunder this Agreement, for the first [***] years following First Commercial Salein each country.  If following such[***]-year period there is no Metabasis Patents, Roche Patents or Joint Patentscontaining a Valid Claim [***] the [***] of [***] of the [***] which is the[***] of the [***], then sales of such Product shall thereafter be royalty-freein that country.

 

**6.****                                      PAYMENT;RECORDS; AUDITS**

 

**6.1****                               Payment;Reports. **Royalties shall becalculated and reported for each calendar quarter.  All payments due to Metabasis under thisAgreement shall be paid within [***] after the end of each calendar quarter,unless otherwise specifically provided herein. Each payment shall be accompanied by a report of Net Sales of Productsby Roche and its Affiliates and sublicensees in sufficient detail [***] of the[***] of the [***], [***], [***] and [***], the [***], the [***], the [***],the [***], and the [***].

 

**6.2****                               ExchangeRate; Manner and Place of Payment. **Allpayments hereunder shall be payable in U.S. dollars.  When conversion of payments from any currencyother than Swiss Francs or U.S. dollars is required, such conversion shall bemade by conversion of the amount of such sales into Swiss Francs using Roche’sthen current standard practices actually used on a consistent basis inpreparing its audited financial statements and then converting to United Statesdollars using the average quarterly rate (Reuters) for the applicableperiod.  All payments owed under thisAgreement shall be made by wire transfer in immediately available funds to abank and account designated in writing by Metabasis, unless otherwise specifiedin writing by Metabasis.

 

**6.3****                               IncomeTax Withholding. **Metabasis will payany and all taxes levied on account of any payments made to it under thisAgreement.  If any taxes are required tobe withheld by Roche, Roche will (a) deduct such taxes from the paymentmade to Metabasis, (b) timely pay the taxes to the proper taxingauthority, and (c) send proof of payment to Metabasis and certify itsreceipt by the taxing authority within 30 days following such payment.

 

**6.4****                               Audits. **During the Term and for a period of threeyears thereafter, Roche shall keep (and shall cause its Affiliates andsublicensees to keep) complete and accurate records pertaining to the sale orother disposition of Products in sufficient detail to permit Metabasis to confirmthe accuracy of all royalties due hereunder. [***] the [***], [***] to [***] to [***], [***] than the [***].  [***] may be [***] upon [***] to [***].  Prompt adjustments shall be 

 

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made by theparties to reflect the results of such audit. Metabasis shall bear the full cost of such audit unless such auditdiscloses an underpayment by Roche of more than [***] of the aggregate amountof royalties or other payments due under this Agreement, in which case, Rocheshall bear the full cost of such audit and shall remit to Metabasis the amountof any underpayment within [***] after receipt of an invoice from Metabasis.

 

**6.5****                               LatePayments.**  In the event that anypayment due under this Agreement is not made when due, the payment shall accrueinterest from the date due at the rate of [***]; *provided, however*, that in no event shall such rate exceedthe maximum legal annual interest rate. The [***] of [***] shall [***] any [***] as a [***] of the [***].

 

**7.****                                      CONFIDENTIALITYAND PUBLICATION**

 

**7.1****                               ConfidentialInformation. **Except to the extentexpressly authorized by this Agreement or otherwise agreed in writing by theparties, the parties agree that, during the Term and for five years thereafter,the receiving party shall keep confidential and shall not publish or otherwisedisclose and shall not use for any purpose other than as expressly provided forin this Agreement any Information furnished to it by the other party pursuantto this Agreement or pursuant to the Confidentiality Agreement or owned by suchother party as provided herein (collectively, ***“Confidential Information”***).  For clarification, Metabasis Technology isConfidential Information of Metabasis, and Roche Technology is ConfidentialInformation of Roche, and Joint Technology shall be deemed ConfidentialInformation of both parties. Notwithstanding the foregoing, Section 3.5 Information and any dataand information related to Licensed Product that is generated after the Term ofthe Research Program shall be Confidential Information of Roche.  Each party may use such ConfidentialInformation only as permitted by this Agreement.  Each party will use at least the samestandard of care as it uses to protect proprietary or confidential informationof its own (but no less than reasonable care) to ensure that its employees,agents, consultants and other representatives do not disclose or make anyunauthorized use of the Confidential Information.  Each party will promptly notify the otherupon discovery of any unauthorized use or disclosure of the ConfidentialInformation.

 

**7.2****                               Exceptions. **Confidential Information shall notinclude any information which the receiving party can prove by competentevidence: (a) is now, or hereafter becomes, through no act or failure toact on the part of the receiving party, generally known or available; (b) isknown by the receiving party or its Affiliates at the time of receiving suchinformation, as evidenced by its records; (c) is hereafter furnished tothe receiving party or its Affiliates by a Third Party, as a matter of rightand without restriction on disclosure; (d) is independently discovered ordeveloped by the receiving party or its Affiliates without the use ofConfidential Information belonging to the disclosing party; or (e) is thesubject of a written permission to disclose provided by the disclosing party.

 

**7.3****                               AuthorizedDisclosure. **Each party may discloseConfidential Information belonging to the other party as expressly permitted bythis Agreement or if and to the extent such disclosure is reasonably necessaryin the following instances:

 

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**(a)****                                 **filingor prosecuting Patents as permitted by this Agreement with the writtenpermission of such other party;

 

**(b)****                                 **regulatoryfilings for Products such party has a license or right to develop hereunder;

 

**(c)****                                 **prosecutingor defending litigation as permitted by this Agreement;

 

**(d)****                                 **complyingwith applicable court orders or governmental regulations;

 

**(e)****                                 **disclosureto Affiliates, licensees, sublicensees, employees, consultants or agents of thereceiving party who have a need to know such information in order for thereceiving party to exercise its rights or fulfill its obligations under thisAgreement, provided, in each case, that any such Affiliate, licensee,sublicensee, employee, consultant or agent agrees to be bound by terms ofconfidentiality and non-use comparable in scope to those set forth in this Article 7;and

 

**(f)****                                   **[***]to [***] and [***] on a [***] with [***] or [***] by [***] and/or in [***], in[***], to the [***] for such [***] to [***] with respect to [***]; *provided, however,* in each case, that: (i) [***]to [***] or [***]; and (ii) [***] of [***], or of [***], to [***] or [***]that is a [***] (or is [***] by a [***]) will [***].

 

Notwithstandingthe foregoing, in the event a party is required to make a disclosure of theother party’s Confidential Information pursuant to Section 7.3(b) through(d), it will, except where impracticable, give reasonable advance notice to theother party of such disclosure and use efforts to secure confidential treatmentof such information at least as diligent as such party would use to protect itsown confidential information, but in no event less than reasonableefforts.  In any event, the parties agreeto take all reasonable action to avoid disclosure of Confidential Informationhereunder.  The parties will consult witheach other on the provisions of this Agreement to be redacted in any filingsmade by the parties with the Securities and Exchange Commission or as otherwiserequired by law.

 

**7.4****                               Publication. **The parties acknowledge their mutualinterest in publishing the results of the parties’ efforts hereunder in orderto obtain recognition within the scientific and investment communities andexpect that data generated in the course of the Research Program may bepublished jointly. The parties further agree that clinical trial resultsregarding Products may be presented at appropriate scientific conferences in atimely fashion, consistent with Roche’s standard practices.  Each party also recognizes the mutualinterest in obtaining valid patent protection and in protecting businessinterests and trade secret information and, in particular, it is the intent ofthe parties to maintain the confidentiality of Confidential Informationincluded in any patent application until such time as such patent applicationhas been published.  Accordingly:

 

**(a)****                                 **eachparty shall have the right to review and comment on any material proposed fordisclosure or publication by the other party, such as by oral presentation, 

 

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manuscript orabstract, which includes Confidential Information of the other party (excludingConfidential Information of both parties) and/or any results of the ResearchProgram; and

 

**(b)****                                 **Rocheshall have the right to review and comment on any material proposed fordisclosure or publication by Metabasis, such as by oral presentation,manuscript or abstract, which includes any Confidential Information of bothparties, Joint Technology and/or data directed to any Roche Nucleoside,Collaboration Compound or Product.

 

Before any suchmaterial is submitted for publication, the party proposing publication shalldeliver a complete copy to the other party at least [***] prior to submitting the materialto a publisher or initiating any other disclosure.  Such other party shall review any suchmaterial and give its comments to the party proposing publication within [***] after the delivery of suchmaterial to such other party.  Withrespect to oral presentation materials and abstracts, such other party shallmake reasonable efforts to expedite review of such materials and abstracts, andshall return such items as soon as practicable to the party proposingpublication with appropriate comments, if any, but in no event later than [***] from the date of delivery to thenon-publishing party.  The publishingparty: (a) shall comply with the other party’s request to deletereferences to the other party’s Confidential Information in any such material; (b) whereMetabasis is the publishing party and the proposed publication containsConfidential Information of both parties, Joint Technology and/or data directedto any Roche Nucleoside, Collaboration Compound or Product, Metabasis shalldelete any such Confidential Information of both parties, Joint Technologyand/or data directed to any Roche Nucleoside Collaboration Compound, or Productat Roche’s request; and (c) agrees to delay any submission for publicationor other public disclosure for the purpose of preparing and filing appropriatepatent applications.  Notwithstanding theabove, but subject to Sections 7.3(d) and 7.3(e), any data andinformation related to Toxicology Studies conducted during the Research Programshall not be disclosed by Metabasis without the prior written consent ofRoche.  Subject to Section 7.5, anydata and information related to Licensed Product that is generated after theTerm of the Research Program shall be solely owned by Roche and shall not bedisclosed by Metabasis without the prior written consent of Roche.

 

**7.5****                               Publicity. **It is understood that each party may desireor be required to issue press releases relating to this Agreement or activitieshereunder.  Without limiting thegenerality of the foregoing, but subject to the other provisions of this Section 7.5,[***] or [***] for which a [***] or [***], Metabasis shall have the right to:

 

**(a)****                                 **issuea press release announcing such achievement, if and only if such press releaseor publication has been approved by Roche in writing, which approval shall notbe unreasonably withheld or delayed; and

 

**(b)****                                 **[***]or [***] (*i.e.*, [***] and [***]of the [***] and [***]) of any [***] of a [***], [***] has [***] or [***] or[***] or [***] by [***], which [***] shall [***].  For [***], if [***] or [***] under this [***]from [***] at an [***] at which [***] to [***] or to [***] in a [***], then[***] of [***] or [***] have [***] or [***], and [***].

 

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Metabasis shall provide a copy thereof to Roche at least [***] beforethe proposed date of issuance for Roche’s review, comment and approval.  During such review period, the parties agreeto consult with each other reasonably and in good faith with respect to thetext and timing of any such press release. If Roche proposes to issue a press release relating to this Agreement oractivities hereunder, Roche shall deliver a copy of such press release toMetabasis on or before the time such press release is issued.  Notwithstanding the foregoing, a party mayissue such press releases and make such disclosures as it determines, based onadvice of counsel, are reasonably necessary to comply with applicable laws orregulations, including without limitation the rules or regulations of theUnited States Securities and Exchange Commission or a similar regulatory agencyin a country other than the United States or of any stock exchange on whichsuch party’s securities are traded; *provided, however,*that the party seeking to make the disclosure in order to comply withapplicable laws or regulations shall endeavor to provide a copy of the proposeddisclosure to the other party at least [***] prior to [***], or if [***] is[***] the [***], then with [***] as [***]. In addition, following the initial press release announcing thisAgreement, each party, [***] (as [***] by [***]), shall [***], without the[***], the [***], the [***] of the [***] and [***] of [***] which have already[***] in [***].

 

**8.****                                      REPRESENTATIONSAND WARRANTIES; LIMITATION OF LIABILITY**

 

**8.1****                               MutualRepresentations and Warranties. **Eachparty represents and warrants to the other that: (a) it is duly organizedand validly existing under the laws of its jurisdiction of incorporation orformation, and has full corporate or other power and authority to enter intothis Agreement and to carry out the provisions hereof; (b) it is dulyauthorized to execute and deliver this Agreement and to perform its obligationshereunder, and the person or persons executing this Agreement on its behalf hasbeen duly authorized to do so by all requisite corporate or partnership action;(c) this Agreement is legally binding upon it, enforceable in accordancewith its terms; and (d) neither this Agreement nor such party’sperformance of its obligations hereunder conflicts with any agreement,instrument or understanding, oral or written, to which it is a party or bywhich it may be bound, or violates any material law or regulation of any court,governmental body or administrative or other agency having jurisdiction overit.

 

**8.2****                               MetabasisRepresentations and Warranties.** Metabasis represents and warrants to Roche that: (a) MetabasisControls the Metabasis Technology; and (b) as of the Effective Date,Metabasis has not received any written communication challenging the validityor enforceability of any Metabasis Product Patent.  In addition, Metabasis represents andwarrants to Roche that, as of the Effective Date, there are no pending legalactions of which Metabasis has received written notice with respect to theMetabasis Technology, and Metabasis has not received written notice of anypending or threatened claims or litigation seeking to invalidate any MetabasisPatents or claiming that the practice of the Metabasis Technology infringes theintellectual property rights of any Third Party.

 

**8.3****                               RocheRepresentations and Warranties.** Roche represents and warrants to Metabasis that: (a) Roche Controlsthe Roche Nucleosides; and (b) [***], to the [***] of [***] at [***],[***] listed on [*****]** to the [***]and [***] only the [***] of [***] of, or [***] of [***], a [***] itself (i.e.,[***]), [***] any [***] the [***] of [***]. [***] and [***] to [***] that, as of

 

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the [***], there [***] of which [***] with [***] to the [***], and[***] of any [***] or [***] or [***] to [***] or [***] the [***] the [***] ofany [***].

 

**8.4****                               Disclaimer. **Exceptas expressly set forth herein, THE TECHNOLOGY AND INTELLECTUAL PROPERTYRIGHTS PROVIDED BY EACH PARTY HEREUNDER ARE PROVIDED “AS IS” AND EACH PARTYEXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED,INCLUDING WITHOUT LIMITATION THE WARRANTIES OF DESIGN, MERCHANTABILITY, FITNESSFOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTSOF THIRD PARTIES, OR ARISING FROM A COURSE OF DEALING, USAGE OR TRADEPRACTICES, IN ALL CASES WITH RESPECT THERETO. Without limiting the generality of the foregoing, each party expressly doesnot warrant (a) the success of any study or test commenced under theResearch Program or (b) the safety or usefulness for any purpose of thetechnology it provides hereunder.

 

**8.5****                               Limitationof Liability. **EXCEPT FOR PAYMENTSUNDER ARTICLE 5 OR LIABILITY FOR BREACH OF ARTICLE 7, NEITHER PARTYSHALL BE ENTITLED TO RECOVER FROM THE OTHER PARTY ANY SPECIAL, INCIDENTAL,CONSEQUENTIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THIS AGREEMENT OR ANYLICENSE GRANTED HEREUNDER; *provided,however,* that this Section 8.5 shall not be construed to limiteither party’s indemnification obligations under Article 11.

 

**9.****                                      INTELLECTUALPROPERTY**

 

**9.1****                               Ownership. **Inventorship of Inventions shall be determined in accordance with the rules ofinventorship under United States patent laws. Except as expressly set forth below, a party shall own all Inventionsinvented solely by one or more employees or contractors of such party, and theparties shall jointly own all Joint Inventions. Notwithstanding the foregoing:

 

**(a)****                                 **Allright, title, and interest in and to Roche Technology shall, as between theparties, be solely owned by Roche. Metabasis hereby assigns to Roche all right, title and interest it mayhave in any Roche Nucleoside Improvements (including, without limitation,Patents claiming such Roche Nucleoside Improvements).

 

**(b)****                                 **Allright, title, and interest in and to Metabasis Technology shall, as between theparties, be solely owned by Metabasis. Roche hereby assigns to Metabasis all right, title and interest it mayhave in any Prodrug Improvements (including, without limitation, Patentsclaiming such Prodrug Improvements).

 

Each party shall promptly disclose to the other inventions within theJoint Technology made in connection with this Agreement.  In addition, Roche shall promptly discloseall Prodrug Improvements to Metabasis, and Metabasis shall promptly discloseall Roche Nucleoside Improvements.  Eachparty shall promptly execute all papers and instruments, and/or require itsemployees or contractors to execute such papers and instruments, as applicable,so as to

 

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effectuate the ownership of technology set forth in this Section 9.1and to enable the other party to apply for and to prosecute Patents ascontemplated by Section 9.2.

 

**(c)****                                  Limitations.**  Subject to the terms of this Agreement,including, without limitation, the license grants set forth in Section 4.2and the agreements set forth in Section 4.6 and subject to the provisionsof Section 12.2 regarding assignment, [***] shall [***] to [***], and[***], [***] or [***] to its [***] or [***], its [***] without the [***], and[***] to, the [***].

 

**9.2****                               PatentProsecution.**

 

**(a)****                                  RochePatents.**  Roche shall have the soleright to control the preparation, filing, prosecution and maintenance of RochePatents using patent counsel of Roche’s choice. Roche shall promptly notify Metabasis in writing of the filing of anyRoche Patent.  [***], with [***] to the[***] on [***], the [***] and [***] in [***] (which [***], include the [***] by[***] to the [***]) that [***] with [***], and [***] and [***], [***], [***]of, those [***] that are [***] other than [***].

 

**(b)****                                  MetabasisPatents.**

 

**(i)****                                   **Metabasisshall have the sole right to control the preparation, filing, prosecution andmaintenance of Metabasis Platform Patents usingpatent counsel of Metabasis’ choice. Metabasis shall have the first right to control the preparation, filing,prosecution and maintenance of Metabasis Product Patents using patent counsel of Metabasis’ choice.  Metabasisshall promptly notify Roche in writing of the filing of any Metabasis ProductPatent.

 

**(ii)****                               **Metabasisshall give timely notice to Roche of any decision not to file applications for,or to cease prosecution and/or maintenance of, or not to continue to pay theexpenses of prosecution and/or maintenance of, any Metabasis Product Patent ona country-by-country and patent-by-patent basis and, in such case, shall permitRoche, at its sole discretion and expense, to file or to continue prosecutionor maintenance of such Metabasis Product Patent, in which event Metabasis shallin a timely manner execute such documents and perform such acts at its expenseas may be reasonably necessary to enable Roche to take such actions.  [***], any [***] by [***] (including the[***]) with respect to [***], to the [***] that it [***] or [***] be [***] any[***] of a [***] that has [***] or [***] or that has [***] by [***], shall[***] (such [***] to be [***] and [***] to be [***] with [***] to [***]),[***].

 

**(c)****                                  JointPatents.**

 

**(i)****                                   **Rocheshall have the first right, but not the obligation, to prepare, file, prosecuteand maintain: (A) Joint Product Patents, using outside counsel and/orRoche’s in-house counsel, at Roche’s election; and (B) other JointPatents, [***] to [***] or, upon [***], [***]; *provided,however,*that [***] to [***] of [***] with [***] to [***] (otherthan [***]), then [***] of [***] with [***] to [***].*** ***Roche shall consult withMetabasis in good faith as to the preparation, filing, prosecution andmaintenance of each Joint Patent reasonably prior to any deadline or actionwith the U.S. Patent & Trademark Office or any foreign patent office,and shall furnish to Metabasis copies of all relevant documents reasonably inadvance of such consultation.

 

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The parties shall mutually agree which jurisdictions to make JointPatent filings in, and how to proceed in response to any request for, or filingor declaration of, any interference, opposition or reexamination relating toany Joint Patent, provided that if the parties disagree as to whether to do anyof the foregoing, then the party wishing to do so may do so at its own expense.

 

**(ii)****                               **Rocheshall give timely notice to Metabasis of any decision not to file applicationsfor, or to cease prosecution and/or maintenance of, or not to continue to paythe expenses of prosecution and/or maintenance of, any Joint Patents on acountry-by-country and patent-by-patent basis and, in such case, shall permitMetabasis, at its sole discretion and expense, to file or to continueprosecution or maintenance of such Joint Patents, in which event Roche shall ina timely manner execute such documents and perform such acts at its expense asmay be reasonably necessary to enable Metabasis to take such actions.  [***] the [***], any [***] by [***] ([***])with [***], to the [***] or [***] any [***] of a [***] that has [***] or [***]or that [***] by [***], shall [***] (such [***] and [***] in [***] with all[***]), [***].

 

**(iii)****                           **Neitherparty shall file any Joint Patent that claims Roche Know-How or MetabasisKnow-How, except upon the other party’s prior written consent.

 

**(d)****                                  PatentFees.**

 

**(i)****                                   **Allcosts associated with filing, prosecuting, issuing and maintaining JointPatents, including interference, opposition, reexamination and reissue actions,shall be borne by Roche.

 

**(ii)****                               **Allcosts associated with filing, prosecuting, issuing and maintaining MetabasisPlatform Patents, including interference, opposition, reexamination and reissueactions, shall be borne by Metabasis; and all costs associated with filing,prosecuting, issuing and maintaining Metabasis Product Patents, includinginterference, opposition, reexamination and reissue actions, shall be borne bythe party that is responsible for such activities with respect to theapplicable Metabasis Product Patents under Section 9.2(b).

 

**9.3****                               Enforcementand Defense.**

 

**(a)****                                  Responseto Alleged Infringement, Misappropriation or Misuse.**  If either party learns of any infringement ofRoche Patents, Metabasis Patents or Joint Patents, or any misappropriation ormisuse of Roche Know-How, Metabasis Know-How or Joint Inventions, such partyshall promptly notify the other party of such infringement, misappropriation ormisuse.

 

**(i)****                                   **Rocheshall have the sole right to initiate and prosecute any legal action to enforceRoche Technology at its own expense and in the name of Roche, to control thedefense of any declaratory judgment action relating to Roche Technology, and toretain any recovery obtained by it as a result of any such legal action orsettlement thereof.

 

**(ii)****                               **Metabasisshall have the sole right to initiate and prosecute any legal action to enforceMetabasis Platform Patents and Metabasis Know-How at its own expense and in

 

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the name of Metabasis, to control the defense of any declaratoryjudgment action relating to Metabasis Platform Patents and Metabasis Know-How,and to retain any recovery obtained by it as a result of any such legal actionor settlement thereof.  Roche shall havethe first right to initiate and prosecute any legal action to enforce MetabasisProduct Patents and to control the defense of any declaratory judgment actionrelating to Metabasis Product Patents. Any recovery obtained by Roche in connection with or as a result of anysuch action relating to the Metabasis Product Patents, whether by settlement orotherwise, [***] to [***] and [***] in connection with [***] and [***] and[***] in connection with [***].  The[***] of any [***] by [***] shall [***] for purposes of [***] (including,[***], the [***]).  If, within90 days following a request by Metabasis to Roche to initiate andprosecute such legal action with respect to, or to control the defense of anydeclaratory judgment action relating to, any Metabasis Product Patent, Rochefails to take such action, or if Roche informs Metabasis that it elects not totake such action with respect to any Metabasis Product Patent, Metabasis (orits designee) thereafter shall have the right either to initiate and prosecutesuch action or to control the defense of such declaratory judgment with respectto such Metabasis Product Patent in the name of Metabasis and, if necessary,Roche, at Metabasis’ expense.  [***] by[***] in connection with [***] of [***] to the [***], whether by [***], shall[***].  Neither party shall settle anyaction regarding Metabasis Product Patents without the prior written consent ofthe other party (which shall not be unreasonably withheld).

 

**(iii)****                           **Withrespect to Joint Patents that are not Joint Product Patents, the parties shallmutually agree on a case-by-case basis whether to initiate and prosecute anylegal action to enforce any such Joint Patent or to defend any declaratoryjudgment action relating to any such Joint Patent, and, if the parties agree toinitiate and prosecute, or to defend (as applicable), any such action, whichparty will be responsible for initiating and prosecuting, or defending (asapplicable), such action.  Any recoveryobtained by either party in connection with or as a result of any action withrespect to any such Joint Patent, whether by settlement or otherwise, [***] to[***] and [***] of the [***] in connection with [***] and then to [***] and[***] in connection with [***].  The[***] by [***] that [***] shall [***] by [***]. Roche shall have the first right to initiate and prosecute any legalaction to enforce Joint Product Patents or to control the defense of anydeclaratory judgment action relating to Joint Product Patents.  [***] by [***] in connection with [***] withrespect to [***], whether [***] or [***], shall [***] and [***] in connectionwith [***] and [***] and [***] in connection with [***].  The [***] of any [***] by [***] after [***]shall [***] for [***] (including, [***], the [***].  If, within 90 days following a request byMetabasis to Roche to initiate and prosecute, or to defend (as applicable),such legal action with respect to any Joint Product Patent, Roche fails to takesuch action, or if Roche informs Metabasis that it elects not to take suchaction with respect to any Joint Product Patent, Metabasis (or its designee)thereafter shall have the right to initiate and prosecute, or to control thedefense of (as applicable), such action with respect to such Joint ProductPatent in the name of Metabasis and, if necessary, Roche, at Metabasis’expense.  [***] by [***] in connectionwith or [***] of [***] to [***], [***] or [***], [***] to [***].  Neither party shall settle any actionregarding Joint Technology without the prior written consent of the other party(which shall not be unreasonably withheld).

 

**(b)****                                  Noticeof Certification.**  Each party shallinform the other party of any certification regarding any Metabasis Patents,Roche Patents or Joint Patents it has received

 

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pursuant to either 21 U.S.C. §§ 355(b)(2)(A)(iv) or (j)(2)(A)(vii)(IV) orits successor provisions, or Canada’s Patented Medicines (Notice of Compliance)Regulations Article 5, or any similar provisions in a country other thanthe United States and Canada, and shall provide the other party with a copy ofsuch certification within [***] of receipt by such party.  Metabasis’ and Roche’s rights with respect tothe initiation and prosecution of any legal action as a result of suchcertification or any recovery obtained as a result of such legal action shallbe as defined in Section 9.3(a).

 

**9.4****                               Patent Term Restoration.**  The parties shall cooperate in obtainingpatent term restoration or supplemental protection certificates or theirequivalents in any country where applicable to Joint Patents.  If elections with respect to obtaining suchpatent term restoration for a Joint Patent are to be made, Metabasis shall havethe right to make the election to seek patent term restoration or supplementalprotection and Roche shall abide by such election.  For the purposes of clarity, the decision ofwhether to seek patent term restoration or supplemental protection for anyMetabasis Patent shall be made solely by Metabasis at Metabasis’ solediscretion, and the decision of whether to seek patent term restoration or supplementalprotection for any Roche Patent shall be made solely by Roche at Roche’s solediscretion.

 

**9.5****                               Infringementof Third Party Rights. **Each partyshall promptly notify the other in writing of any allegation by a Third Partythat the activity of either of the parties pursuant to this Agreement infringesor may infringe the intellectual property rights of such Third Party.  Roche shall have the sole right to controlany defense of any such claim involving alleged infringement of Third Partyrights by Roche’s activities at its own expense and by counsel of its ownchoice, and Metabasis shall have the right, at its own expense, to berepresented in any such action by counsel of its own choice.  Metabasis shall have the sole right tocontrol any defense of any such claim involving alleged infringement of ThirdParty rights by Metabasis’ activities at its own expense and by counsel of itsown choice, and Roche shall have the right, at its own expense, to berepresented in any such action by counsel of its own choice.  Neither party shall have the right [***]under [***] in a [***] the [***] of the [***] the [***] of such [***] ([***] be[***]).

 

**10.****                               TERM;TERMINATION**

 

**10.1****                        Term. **The term of this Agreement (the ***“Term”***) shall commence on theEffective Date and continue until the expiration of the last Royalty Term forany Product with respect to which Roche has a license under this Agreement,unless earlier terminated pursuant to Section 10.2 or 10.3; *provided, however,* that [***] upon which [***] to [***] by the[***] of the [***] or [***] pursuant to [***], or if [***] upon any [***] by[***] or [***] of the [***], then this Agreement shall expire at suchtime.  Upon expiration (but not earlytermination) of the Royalty Term, on a Product-by-Product and country-by-countrybasis, the licenses granted by Metabasis to Roche under Section 4.2(a) withrespect to such Product and country shall remain in effect on a perpetual,non-exclusive, sublicensable and fully paid basis; provided, however, that if Roche does not make any payment owedpursuant to Section 5 with respect to such Product and country within therelevant timeframe for such payment, then such license shall lapse until suchpayment is made.

 

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**10.2****                        Terminationfor Cause.**

 

**(a)****                                  MaterialBreach.**  Each party shall have theright to terminate the Research Program and/or this Agreement upon 60 days’prior written notice to the other upon the occurrence of any of the following:

 

**(i)****                                   **Uponor after the bankruptcy, insolvency, dissolution, or winding up of the otherparty (other than a dissolution or winding up for the purpose of reconstructionor amalgamation); or

 

**(ii)****                               **Uponor after the breach of any material provision of this Agreement by the otherparty if the breaching party has not cured such breach within the 60-day periodfollowing written notice of material breach by the non-breaching party.

 

**(b)****                                  PatentChallenge.**

 

**(i)****                                   **Metabasisshall have the right to terminate this Agreement effective [***] afterMetabasis provides written notice to Roche if Roche or any of its Affiliates orsublicensees directly, or indirectly through any Third Party, commences anyopposition proceeding with respect to, challenges the validity or enforceabilityof, or opposes any extension of or the grant of a supplementary protectioncertificate with respect to, any Metabasis Patent that has issued or beenpublished or that has been disclosed by Metabasis to Roche (a “Patent Challenge”);provided, however, that if such Patent Challenge is terminated during such[***] period, then Metabasis shall not have the right to terminate thisAgreement.  For the avoidance of doubt,any action commenced by the U.S. Patent and Trademark Office or any foreignpatent office on its own initiative and without any attempt by a party to causesuch action to be commenced shall not be considered a Patent Challenge forpurposes of this Section 10.2(b).

 

**(ii)****                               **Rocheshall have the right to terminate this Agreement effective [***] after Rocheprovides written notice to Metabasis if Metabasis or any of its Affiliates orsublicensees directly, or indirectly through any Third Party, commences anyPatent Challenge with respect to, any Roche Patent that has issued or beenpublished or that has been disclosed by Roche to Metabasis; provided however,that if such Patent Challenge is terminated during such [***] period, thenRoche shall not have the right to terminate this Agreement.

 

**(c)****                                  Failureto Initiate Toxicology Studies. **Metabasisshall have the right to terminate this Agreement effective upon written noticeto Roche if Roche timely notifies Metabasis in writing pursuant to Section 4.1of at least one Collaboration Compound uponwhich Roche or any of its Affiliates or sublicensees intends to initiate [***], but Roche (or its Affiliate, asapplicable) does not initiate [***] of [***] after [***] of the [***].

 

**10.3****                        Terminationby Roche.**

 

**(a)****                                 **Rocheshall have the right to terminate this Agreement in its entirety for any reasonor for no reason at any time after the expiration of the Research Term upon60 days’ prior written notice to Metabasis.

 

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**(b)****                                **Rocheshall have the right to terminate the licenses granted to it under Section 4.2(a)(ii),on a Major Market-by-Major Market basis (or in the case of markets other thanthe Major Markets, on a country-by-country basis), Product-by-Product orpatent-by-patent basis, for any reason or for no reason at any time after theexpiration of the Research Term upon 60 days’ prior written notice toMetabasis.  In the event of any suchtermination, this Agreement, except for the terminated license, shall remain infull force and effect in accordance with its terms.

 

**10.4****                        Effect ofTermination or Expiration; Surviving Obligations.**

 

**(a)****                                **Upontermination of this Agreement by Roche pursuant to Section 10.2(a) orSection 10.2(b)(ii):

 

**(i)****                                   **thelicense granted under Section 4.2(b), if then in effect, shallautomatically terminate and revert to Roche;

 

**(ii)****                               **thelicense granted under Section 4.2(a)(i), if then in effect, shallautomatically terminate and revert to Metabasis; and

 

**(iii)****                           **anylicense granted by Metabasis to Roche under Section 4.2(a)(ii) shallremain in effect in accordance with its terms, subject to compliance by Rochewith all applicable provisions of this Agreement (including, withoutlimitation, the payment obligations set forth in Articles 5 and 6).

 

**(b)****                                **Upontermination of this Agreement by Roche pursuant to Section 10.3(a) orby Metabasis pursuant to Section 10.2(c):

 

**(i)****                                   **alllicenses granted under Sections 4.2, if then in effect, shallautomatically terminate and revert to the granting party;

 

**(ii)****                               **effectiveupon such termination, Roche shall, and it hereby does, grant to Metabasis anon-exclusive, worldwide, royalty-bearing (as set forth below) license, withthe right to sublicense through multiple tiers of sublicense except asexpressly set forth below, [***].  [***]shall [***] a [***] of [***] of [***] (as defined herein but applied to [***],[***]) of [***] and [***] by [***], its [***] and permitted [***] in accordancewith [***], [***] and [***], as applied to [***], [***].  Notwithstanding the [***], if (A)  a[***] or [***] has achieved [***] prior to such [***] and (B) such [***] or [***] is [***] or [***] in a [***] or requires any other [***] from [***], then the [***] set forth in this clause (ii) [***] be [***] or [***] (includingpursuant to [***]) without [***], which [***] may [***] for any reason.  [***] acknowledges that the foregoing [***], if [***], will not [***] any [***] or [***] under anyother [***], including any [***] or [***] under any [***] of [***]of, or any [***] of [***] or [***], a [***] itself (*i.e.*,without [***]).  Metabasis further acknowledges that theforegoing license, if granted, will not include any right or license withrespect to any [***] that [***] a [***] at the time of such termination;

 

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**(iii)****                           **Rocheshall promptly, to the extent permitted by applicable laws, (A) transferto Metabasis all non-clinical and clinical data with respect to LicensedCompound(s) and Products; (B) transfer and assign to Metabasis allIND filings and Regulatory Approvals with respect to Licensed Compound(s) andProducts, together with copies of all related regulatory correspondence; and (C) atMetabasis’ request, sell and transfer to Metabasis Roche’s existing inventoryof Licensed Compound(s) and Products and a transfer price equal to Roche’scost; in each case, to the extent the foregoing are within Roche’s Control asof the date of such termination. Metabasis may use such transferred and/or assigned data and documentssolely for the purpose of developing and commercializing Licensed Compounds andProducts in the Field; and

 

**(iv)****                              **[***],and [***], [***], from and [***] and [***], [***], [***] or [***] ([***] or[***]), [***] or [***] or [***].

 

**(c)****                                 **Upontermination of this Agreement by Metabasis pursuant to Section 10.2(a) orSection 10.2(b)(i):

 

**(i)****                                   **alllicenses granted under Sections 4.2, if then in effect, shallautomatically terminate and revert to the granting party;

 

**(ii)****                               **effectiveupon such termination, Roche shall, and it hereby does, grant to Metabasis anexclu effective upon such termination, Roche shall, and it hereby does, grantto Metabasis an exclusive (even as to Roche), worldwide, royalty-bearing (asset forth below)  license, with the rightto sublicense through multiple tiers of sublicense except as expressly setforth below, under [***] and [***] interest in [***], solely to [***], [***],[***], [***], [***], [***], have [***] and [***] and [***] in [***].  [***] shall [***] a [***] of [***] of [***](as defined herein but applied to [***], [***]) of [***] and [***] by [***],its [***] and permitted [***] in accordance with [***], as [***] to [***],[***].  Notwithstanding the [***], if (A) a[***] or [***] has [***] prior to such [***] and(B) such [***] or [***] is [***] or [***] in a [***] or requires any other [***] from [***], then the [***] setforth in this clause (ii) shall [***] or [***] (includingpursuant to [***]) without [***] prior [***], which [***] may [***]for any [***]. Metabasis acknowledges that the foregoing license, if granted, will notinclude any right or license with respect to any Collaboration Compound thatwas not a Licensed Compound at the time of such termination;

 

**(iii)****                           **Rocheshall promptly, to the extent permitted by applicable laws, (A) transferto Metabasis all non-clinical and clinical data with respect to LicensedCompound(s) and Products; (B) transfer and assign to Metabasis allIND filings and Regulatory Approvals with respect to Licensed Compound(s) andProducts, together with copies of all related regulatory correspondence; and (C) atMetabasis’ request, sell and transfer to Metabasis Roche’s existing inventoryof Licensed Compound(s) and Products and a transfer price equal to Roche’scost; in each case, to the extent the foregoing are within Roche’s Control asof the date of such termination. Metabasis may use such transferred and/or assigned data and documentssolely for the purpose of developing and commercializing Licensed Compounds andProducts in the Field; and

 

*** ConfidentialTreatment Requested

 

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**(iv)****                  **[***] by[***] with [***], [***], and it [***], [***], [***], [***], [***] ([***] or[***]), [***] or [***] any [***] that [***] at [***] of [***], [***] as [***]: (A) [***]of the [***], the [***] or the [***]; and (B) [***] of the [***].

 

**(d)****                                 **Inthe event of any expiration or termination of this Agreement:

 

**(i)****                       **allJoint Technology shall continue to be owned jointly by the parties in equal,undivided shares, and, except as expressly set forth in Sections 10.4(c)(ii) (including,without limitation, any surviving provision listed herein), each party shall befree to practice and grant licenses under its interest in Joint Technologywithout the other party’s consent and without accounting to the other party;and

 

**(ii)****                   **[***], andit [***], [***], [***] or [***], [***] to [***] of [***] or any [***] ([***] of[***] and [***]) to [***] or [***], or [***] to [***] or [***] ([***] or [***]or [***]), any [***] and is [***] a [***] ([***], [***] or [***]) in the [***].

 

**(e)****                                 **Expirationor termination of this Agreement shall not relieve the parties of anyobligation accruing prior to such expiration or termination.  Except as set forth below or elsewhere inthis Agreement, the obligations and rights of the parties under the followingprovisions of this Agreement shall survive expiration or termination of thisAgreement:

 

Section 3.8 – Materials Transfer (last sentence only)

Section 6.4 – Audits

Section 6.5 – Late Payments

Section 7.1 – Confidential Information

Section 7.2 – Exceptions

Section 7.3 – Authorized Disclosure

Section 7.4 – Publications

Section 8.4 – Disclaimer

Section 8.5 – Limitation of Liability

Section 9.1 – Ownership of Inventions

Section 9.2 – Patent Prosecution and Maintenance (so long as Rocheretains a license from Metabasis under Section 10.4)

Section 9.3 – Cooperation of the Parties (so long as Roche retainsa license from Metabasis under Section 10.4)

Section 9.4 – Infringement by Third Parties (so long as Rocheretains a license from Metabasis under Section 10.4)

Section 9.5 – Infringement of Third Party Rights (so long as Rocheretains a license from Metabasis under Section 10.4)

Section 10.1 – Term (so long as Roche retains a license fromMetabasis under Section 10.4)

Section 10.2 – Termination for Cause (so long as Roche retains alicense from Metabasis under Section 10.4)

Section 10.1 – Termination by Roche (so long as Roche retains alicense from Metabasis under Section 10.4)

Section 10.4– Effect of Termination; Surviving Obligations

 

*** Confidential Treatment Requested

 

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Section 10.5 – Exercise of Right to Terminate

Section 10.6 – Damages; Relief

Section 10.7 – Rights in Bankruptcy (so long as Roche retains alicense from Metabasis under Section 10.4)

Article 11 – Indemnification

Article 12 – Miscellaneous

 

**(f)****                                   **Within90 days following the expiration or termination of this Agreement, exceptto the extent and for so long as a party retains license rights under Section 10.4(a),  10.4(b) or 10.4(c), each party shalldeliver to the other party or destroy (and certify in writing the destructionof) any and all Confidential Information of the other party in its possession.

 

**10.5****                        Exerciseof Right to Terminate. **The exerciseby either party of a termination right provided for under this Agreement shallnot give rise to the payment of damages or any other form of compensation orrelief to the other party with respect thereto.

 

**10.6****                        Damages;Relief. **Subject to Section 10.5above, termination of this Agreement shall not preclude either party fromclaiming any other damages, compensation or relief that it may be entitled toupon such termination.

 

**10.7****                        Rights inBankruptcy. **The Parties agree thatin the event a party becomes a debtor under Title 11 of the U.S. Code (***“Title 11”***), thisAgreement shall be deemed to be, for purposes of Section 365(n) ofTitle 11, a license to rights to “intellectual property” as definedtherein.  Each party as a licenseehereunder shall have the rights and elections as specified inTitle 11.  Any agreementssupplemental hereto shall be deemed to be “agreements supplementary to” thisAgreement for purposes of Section 365(n) of Title 11.

 

**11.****                               INDEMNIFICATION**

 

**11.1****                        Indemnificationby Roche. **Roche hereby agrees tosave, defend and hold Metabasis and its Affiliates and their respectivedirectors, officers, employees and agents (each, a ***“Metabasis Indemnitee”***)harmless from and against any and all claims, suits, actions, demands,liabilities, expenses and/or loss, including reasonable legal expense andattorneys’ fees (collectively, ***“Losses”***), to which any Metabasis Indemnitee may becomesubject as a result of any claim, demand, action or other proceeding by anyperson or entity other than a party or its Affiliates to the extent such Lossesarise directly or indirectly out of: (i) the practice by Roche or itsAffiliate or sublicensee of any license granted to it hereunder, (ii) themanufacture, use, handling, storage, sale or other disposition of any LicensedCompound or Product by Roche or its Affiliate or sublicensee, or (iii) thebreach by Roche of any warranty, representation, covenant or agreement made byRoche in this Agreement; except, in each case, to the extent such Losses resultfrom the negligence or willful misconduct of any Metabasis Indemnitee or thebreach by Metabasis of any warranty, representation, covenant or agreement madeby Metabasis in this Agreement.

 

**11.2****                        Indemnificationby Metabasis. **Metabasis herebyagrees to save, defend and hold Roche and its Affiliates and their respectivedirectors, officers, employees and agents (each, an ***“Roche Indemnitee”***)harmless from and against any and all Losses to which any Roche

 

32

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Indemnitee maybecome subject as a result of any claim, demand, action or other proceeding byany person or entity other than a party or its Affiliates to the extent suchLosses arise directly or indirectly out of: (i) the practice by Metabasis,its Affiliates or sublicensees (excluding Roche and its Affiliates andsublicensees) of any license granted to it hereunder, (ii) themanufacture, use, handling, storage, sale or other disposition of any productby Metabasis, its Affiliates or sublicensees (excluding Roche and itsAffiliates and sublicensees) pursuant to rights granted by Roche to Metabasisunder this Agreement, or (iii) the breach by Metabasis of any warranty,representation, covenant or agreement made by Metabasis in this Agreement;except, in each case, to the extent such Losses result from the negligence orwillful misconduct of any Roche Indemnitee or the breach by Roche of anywarranty, representation, covenant or agreement made by Roche in thisAgreement.

 

**11.3****                        Control ofDefense.**  Any entity entitled toindemnification under this Article 11 shall give notice to theindemnifying party of any Losses that may be subject to indemnification,promptly after learning of such Losses, and the indemnifying party shall assumethe defense of such Losses with counsel reasonably satisfactory to theindemnified party.  If such defense isassumed by the indemnifying party with counsel so selected, the indemnifyingparty will not be subject to any liability for any settlement of such Lossesmade by the indemnified party without its consent (but such consent will not beunreasonably withheld or delayed), and will not be obligated to pay the feesand expenses of any separate counsel retained by the indemnified party withrespect to such Losses.  The indemnifiedparty shall provide the indemnifying party with all information in itspossession and all assistance reasonably necessary to enable the indemnifyingparty to carry on the defense of any such Losses.  Without the prior written consent of theother party, neither the indemnified party nor the indemnifying party shallagree to any settlement that does not include a complete release of such otherparty from all liability with respect thereto or that imposes any liability,obligation or restriction on such other party.

 

**11.4****                        Insurance. **Each party, at its own expense, shallmaintain product liability insurance (or self-insure) in an amount consistentwith industry standards during the Term.

 

**12.****                               MISCELLANEOUS**

 

**12.1****                        ForceMajeure. **Neither party shall be heldliable to the other party nor be deemed to have defaulted under or breachedthis Agreement for failure or delay in performing any obligation under thisAgreement (other than failure to make payment when due) when such failure ordelay is caused by or results from causes beyond the reasonable control of theaffected party including, but not limited to, embargoes, war, acts of war(whether war be declared or not), insurrections, riots, civil commotions,strikes, lockouts or other labor disturbances, fire, floods, or other acts ofGod, or acts, omissions or delays in acting by any governmental authority or theother party.  The affected party shallnotify the other party of such force majeure circumstances as soon asreasonably practical, and shall promptly undertake all reasonable effortsnecessary to cure such force majeure circumstances.  Such excuse from liability shall be effectiveonly to the extent and duration of the event(s) causing the failure ordelay in performance and provided that the party has not caused such event(s) tooccur.

 

**12.2****                        Assignment. **Except as expressly provided hereunder,neither this Agreement nor any rights or obligations hereunder may be assignedor otherwise transferred by either party

 

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**12.3****                       **withoutthe prior written consent of theother party (which consent shall not be unreasonably withheld).  Notwithstanding the foregoing, either partymay assign this Agreement and its rights and obligations hereunder without theother party’s consent:

 

**(a)****                                 **[***]with the [***] or [***] or [***] of the [***] of [***] to [***] to a [***],whether [***], [***], [***] or [***]; *provided,however,*[***] of any [***] (whether [***] is [***] or [***] by the[***] by [***] (*e.g.*, [***] of a[***])), [***] of the [***] to [***] ([***] of the [***] to this [***]) [***]in the [***]; and *provided, further,*[***] of [***] to [***] that [***] the [***] and [***] is the [***], [***]: (i) [***]([***]) hereof, [***] by [***] the [***] of such [***]; (ii) [***] to[***] of this [***] ([***], [***], [***]), which [***] by [***] to [***] the[***] of [***] ([***]); and (iii) to [***], [***], [***] and [***], inwhich [***] and [***] as are [***] to [***]; or

 

**(b)****                                 **toan Affiliate, provided that the assigning party shall remain liable andresponsible to the non-assigning party hereto for the performance and observanceof all such duties and obligations by such Affiliate.

 

The rights andobligations of the parties under this Agreement shall be binding upon and inureto the benefit of the successors and permitted assigns of the parties.  Any assignment not in accordance with thisAgreement shall be void.

 

**12.4****                        Severability **If any one or more of the provisionscontained in this Agreement is held invalid, illegal or unenforceable in anyrespect, the validity, legality and enforceability of the remaining provisionscontained herein shall not in any way be affected or impaired thereby, unlessthe absence of the invalidated provision(s) adversely affects thesubstantive rights of the parties.  Theparties shall in such an instance use their best efforts to replace the invalid,illegal or unenforceable provision(s) with valid, legal and enforceableprovision(s) which, insofar as practical, implement the purposes of thisAgreement.

 

**12.5****                        Notices. **All notices which are required orpermitted hereunder shall be in writing and sufficient if delivered personally,sent by facsimile (and promptly confirmed by personal delivery, registered orcertified mail or overnight courier), sent by nationally-recognized overnightcourier or sent by registered or certified mail, postage prepaid, returnreceipt requested, addressed as follows:

 
| if to  Metabasis, to: |   | Metabasis  Therapeutics, Inc.  |
|-----------------------|--------|-------------------------------------|
|                  |   | 11119 North  Torrey Pines Road      |
|                  |   | La Jolla, CA  92037                 |
|                  |   | Attention:  Chief Executive Officer |
|                  |   | Facsimile  No.: (858) 587-2770      |
|                  |   |                                |
| with a copy  to:      |   | Cooley Godward  Kronish LLP         |
|                  |   | 4401  Eastgate Mall                 |
|                  |   | San Diego,  CA 92121                |
|                  |   | Attention:  Kay Chandler            |
|                  |   | Facsimile  No.: (858) 550-6420      |

 

*** Confidential Treatment Requested

 

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| if to Roche,  to: |   | Hoffmann-La Roche Inc.            |
|-------------------|--------|-----------------------------------|
|              |   | 340 Kingsland Street         |
|              |   | Nutley, New  Jersey 07110         |
|              |   | Attention:  Corporate Secretary   |
|              |   | Facsimile  No.: +1 (973) 235-3500 |
|              |   |                              |
| with copies  to:  |   | F.Hoffmann-La Roche Ltd           |
|              |   | Grenzacherstrasse 124             |
|              |   | CH-4070                           |
|              |   | Basel,  Switzerland               |
|              |   | Attention:  Corporate Law         |
|              |   | Facsimile  No.: +41 61 688 13 96  |
|              |   |                              |
| and to:           |   | Roche Palo Alto LLC               |
|              |   | 3431 Hillview Avenue              |
|              |   | Palo Alto, CA 94304               |
|              |   | USAAttention: General Counsel     |
|              |   | Facsimile: 650-852-1338           |

 

or to suchother address as the party to whom notice is to be given may have furnished tothe other party in writing in accordance herewith.  Any such notice shall be deemed to have beengiven: (a) when delivered if personally delivered or sent by facsimile ona business day; (b) on the business day after dispatch if sent by nationally-recognizedovernight courier; and/or (c) on the fifth business day following the dateof mailing if sent by mail.

 

**12.6****                        ApplicableLaw. **This Agreement shall begoverned by and construed in accordance with the laws of the State of Delaware,and the patent laws of the United States without reference to any rules ofconflict of laws.  The United NationsConvention on the Sale of Goods shall not apply.

 

**12.7****                        DisputeResolution.**

 

**(a)****                                 **Theparties shall negotiate in good faith and use reasonable efforts to settle anydispute, controversy or claim arising from or related to this Agreement or thebreach thereof.  If the parties cannotresolve the dispute, controversy or claim (other than any such matter to beresolved by the JRC, which shall not be subject to this Section 12.6 butshall be resolved solely pursuant to the procedures set forth in Section 2.4)within [***] of a written request by either party to the other party, theparties agree to hold a meeting, attended by the Chief Executive Officer ofMetabasis and the [***], as appropriate in light of the subject matter of thedispute, to attempt in good faith to negotiate a resolution of the disputeprior to pursuing other available remedies. If, within [***] after such written request, the parties have notsucceeded in negotiating a resolution of the dispute, and a party wishes topursue the matter, each such dispute, controversy or claim that is not an “ExcludedClaim” shall be resolved by binding arbitration in accordance with theCommercial Arbitration Rules and Supplementary Procedures for LargeComplex Disputes of the American Arbitration Association (***“AAA”***) as then ineffect,

 

*** Confidential Treatment Requested

 

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and judgmenton the arbitration award may be entered in any court having jurisdictionthereof.  The decision rendered in anysuch arbitration will be final and not appealable.  If either party intends to commence bindingarbitration of such dispute, controversy or claim, such party will providewritten notice to the other party informing the other party of such intentionand the issues to be resolved.  Within30 days after the receipt of such notice, the other party may by writtennotice to the party initiating binding arbitration, add additional issues to beresolved.

 

**(b)****                                 **Thearbitration shall be conducted by a panel of three persons experienced in thepharmaceutical business, none of whom shall be a current or former employee ordirector, or a then-current stockholder, of either party, their respectiveAffiliates or any Roche sublicensee. Within [***] after receipt of the original notice of binding arbitration(the ***“Notice Date”***),each party shall select one person to act as arbitrator and the twoparty-selected arbitrators shall select a third arbitrator within [***] oftheir appointment.  If the arbitratorsselected by the parties are unable or fail to agree upon the third arbitrator,the third arbitrator shall be appointed by the AAA.  The place of arbitration shall be [***] andall proceedings and communications shall be in English.

 

**(c)****                                 **[***]the [***] of the [***], [***], will be [***] in [***].  The [***] such [***] for an [***] of any[***] in the [***], [***].  [***] afterselection of the third arbitrator, the parties and their representatives shallhold a preliminary meeting with the arbitrators, to mutually agree upon andthereafter follow procedures seeking to assure that the arbitration will beconcluded within six (6) months from such meeting.  Failing any such mutual agreement, thearbitrators will design and the parties shall follow procedures to such effect.

 

**(d)****                                 **Thearbitrators will, in rendering their decision, apply the substantive law of theState of Delaware, without giving effect to its principles of conflicts of law,and without giving effect to any rules or laws relating to arbitration.

 

**(e)****                                 **Eitherparty may apply to the arbitrators for interim injunctive relief until thearbitration award is rendered or the controversy is otherwise resolved.  Either party also may, without waiving anyremedy under this Agreement, seek from any court having jurisdiction anyinjunctive or provisional relief necessary to protect the rights or property ofthat party pending the arbitration award. [***] shall [***] to [***] or [***], [***] as may be [***].  Each party shall bear its own costs andexpenses and attorneys’ fees and an equal share of the arbitrators’ and anyadministrative fees of arbitration.

 

**(f)****                                   **Exceptto the extent necessary to confirm or enforce an award or as may be required bylaw, neither a party nor an arbitrator may disclose the existence, content, orresults of an arbitration without the prior written consent of bothparties.  In no event shall anarbitration be initiated after the date when commencement of a legal or equitableproceeding based on the dispute, controversy or claim would be barred by theapplicable****statute of limitations.

 

**(g)****                                **As used in this Section, the term ***“Excluded Claim”***shall mean a dispute, controversy or claim that concerns (i) [***], [***]of a [***] or [***]; or (ii) [***], [***] or [***] or [***], [***] or[***].

 

*** Confidential Treatment Requested

 

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**12.8****                        EntireAgreement; Amendments. **ThisAgreement, together with the exhibit hereto, contains the entire understandingof the parties with respect to the subject matter hereof and supersedes andcancels all previous express or implied agreements and understandings,negotiations, writings and commitments, either oral or written, in respect tothe subject matter hereof, except that the letter agreement between the partiesdated concurrently herewith (including the Research Plan and the Schedulesattached thereto) shall continue in full force and effect during the Term.  This Agreement may be amended, or any termhereof modified, only by a written instrument duly executed by authorizedrepresentatives of both parties hereto.

 

**12.9****                        Headings. **The captions to the several Articles andSections hereof are not a part of this Agreement, but are merely for convenienceto assist in locating and reading the several Articles and Sections hereof.

 

**12.10****                 IndependentContractors. **It is expressly agreedthat Metabasis and Roche shall be independent contractors and that therelationship between the two parties shall not constitute a partnership, jointventure or agency.  Neither Metabasis norRoche shall have the authority to make any statements, representations orcommitments of any kind, or to take any action, which shall be binding on theother party, without the prior written consent of the other party.

 

**12.11****                 Waiver. **The waiver by either party hereto of anyright hereunder, or the failure of the other party to perform, or a breach bythe other party, shall not be deemed a waiver of any other right hereunder or ofany other breach or failure by such other party whether of a similar nature orotherwise.

 

**12.12****                 CumulativeRemedies. **No remedy referred to inthis Agreement is intended to be exclusive, but each shall be cumulative and inaddition to any other remedy referred to in this Agreement or otherwiseavailable under law.

 

**12.13****                 Waiver of Rule ofConstruction. **Each party has had theopportunity to consult with counsel in connection with the review, drafting andnegotiation of this Agreement. Accordingly, the rule of construction that any ambiguity in thisAgreement shall be construed against the drafting party shall not apply.

 

**12.14****                 Interpretation.**  All references in this Agreement to anArticle, Section or Exhibit shall refer to an Article, Section orExhibit in or to this Agreement, unless otherwise stated.  Any reference to any federal, national,state, local, or foreign statute or law shall be deemed also to refer to all rules andregulations promulgated thereunder, unless the context requires otherwise.  The word “including” and similar words meansincluding without limitation.  The words “herein,”“hereof” and “hereunder” and other words of similar import refer to thisAgreement as a whole and not to any particular Article, Section or othersubdivision.  All references to days,months, quarters or years are references to calendar days, calendar months,calendar quarters, or calendar years, unless stated otherwise.  References to the singular include theplural.

 

**12.15****                 No Third PartyBeneficiaries. **This Agreement isneither expressly or impliedly made for the benefit of any party other thanMetabasis and Roche, except for the persons expressly entitled toindemnification as provided in Article 11.

 

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**12.16****                 English Language.**  This Agreement is in the English language,and the English language shall control their interpretation.  In addition, all notices required orpermitted to be given under this Agreement, and all written, electronic, oralor other communications between the parties regarding this Agreement, shall bein the English language.

 

**12.17****                 Counterparts. **This Agreement may be executed inmultiple counterparts, each of which shall be deemed an original, but all ofwhich together shall constitute one and the same instrument.

 

38

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**INWITNESS WHEREOF,** the parties hereto have duly executedthis **COLLABORATION AND LICENSE AGREEMENT**as of the Effective Date.

 
| **HOFFMANN-LA ROCHE INC.**   |                                               | **METABASIS THERAPEUTICS, INC.** |
|------------------------------|----------------------------------------------------|----------------------------------|
|                         |                                               |                             |
|                         |                                               |                             |
| By:                          |    /S/FREDERICK  C. KENTZ, III |                             | By: |    /S/  PAUL LAIKIND, PH.D. |
|                         |                                               |                             |   |   |
| Name:                        |    Frederick  C. Kentz, III    |                             | Name: |    Paul  Laikind, Ph.D. |
|                         |                                               |                             |   |   |
| Title:                       |    Vice  President                  |                             | Title: |    President  and CEO |
|                         |                                               |                             |
|                         |                                               |                             |
| **F. HOFFMANN-LA ROCHE LTD** |                                               |                             |
|                         |                                               |                             |
|                         |                                               |                             |
| By:                          |    /S/ STEFAN ARNOLD                |                             |   |
|                         |                                               |                             |   |
| Name:                        |    Stefan Arnold                    |                             |   |
|                         |                                               |                             |   |
| Title:                       |      Stv. Direktor        |                             |   |
|                         |                                               |                             |
|                         |                                               |                             |
| By:                          |    /S/ DAN ZABROWSKI                |                             |   |
|                         |                                               |                             |   |
| Name:                        |    Dan Zabrowski                    |                             |   |
|                         |                                               |                             |   |
| Title:                       |    Global Head of Pharma Partnering |                             |   |
|                         |                                               |                             |
|                         |                                               |                             |
| **ROCHE PALO ALTO LLC**      |                                               |                             |
|                         |                                               |                             |
|                         |                                               |                             |
| By:                          |    /S/  KEVIN A. MARKS              |                             |   |
|                         |                                               |                             |   |
| Name:                        |    Kevin  A. Marks                  |                             |   |
|                         |                                               |                             |   |
| Title:                       |      Vice  President      |                             |   |
|                              |                                                    |                                  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

39

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August 7,2008

 

Hoffmann-LaRoche Inc.

340 KingslandStreet

Nutley, NewJersey 07110

USA

Attention:  Corporate Secretary

 

F.Hoffmann-LaRoche Ltd

Grenzacherstrasse124

CH-4070

Basel,Switzerland

 

Roche PaloAlto LLC

3431 HillviewAvenue

Palo Alto, CA94304

USA

 
| **Re:** | **Collaboration and License Agreement dated as of August 7, 2008  (the “Agreement”) between Hoffmann-La Roche Inc. and F.Hoffmann-La Roche Ltd  (collectively, “Roche”), and Metabasis Therapeutics, Inc. (“Metabasis”)** |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

Ladies andGentlemen:

 

This letteragreement (the ***“LetterAgreement”***) will confirm the understanding of Roche andMetabasis regarding certain matters relating to the Agreement and is intendedto be legally binding on both parties. Capitalized terms used but not otherwise defined in this LetterAgreement shall have the meanings provided in the Agreement.  The parties hereby agree, for purposes of theAgreement, as follows:

 

**1.****                                     **TheResearch Plan as of the Effective Date shall be as set forth in ***Exhibit A*** tothis Letter Agreement (the ***“ResearchPlan”***).

 

**2.****                                     **TheMetabasis Patents as of the Effective Date are listed in ***Schedule I*** tothe Research Plan.

 

**3.****                                     **TheRoche Patents as of the Effective Date are listed in ***Schedule II*** tothe Research Plan.

 

**4.****                                     **Theparties hereby agree that this Letter Agreement, together with the Schedulesand Exhibits attached hereto, shall be subject to the terms and conditions ofthe Agreement.  In the event that anyconflict exists between the terms of this Letter Agreement and the terms of theAgreement, the terms of the Agreement shall control.

 

1

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**5.****                                     **ThisLetter Agreement may be executed (including, without limitation, by facsimilesignature) in two counterparts, each of which shall be deemed an original, butboth of which together shall constitute one and the same instrument.

 

If theforegoing is acceptable to you, please sign this Letter Agreement in the spaceprovided below and return it to me.

 
|   | Sincerely,                       |
|--------|----------------------------------|
|   |                             |
|   | **METABASIS THERAPEUTICS, INC.** |
|   |                             |
|   |                             |
|   | By:                              |    /S/  PAUL LAIKIND, PH.D. |
|   | Name:                            |    Paul  Laikind, Ph.D. |
|   | Title:                           |    President  and CEO |
|        |                                  |  |  |  |

 

*Agreed to and accepted as of the Effective Date:*

 

**HOFFMANN-LAROCHE INC.**

 

 
| By:    |    /S/FREDERICK  C. KENTZ, III |   |
|--------|----------------------------------------------------|--------|
| Name:  |    Frederick  C. Kentz, III    |   |
| Title: |       Vice President |   |
|        |                                                    |        |  |  |

 

 

**F.HOFFMANN-LA ROCHE LTD**

 

 
| By:    |    /S/ STEFAN ARNOLD               |   |
|--------|---------------------------------------------------|--------|
| Name:  |    Stefan Arnold                   |   |
| Title: |       Stv. Direktor |   |
|        |                                                   |        |  |  |

 
| By:    |    /S/ DAN ZABROWSKI                |   |
|--------|----------------------------------------------------|--------|
| Name:  |    Dan Zabrowski                    |   |
| Title: |    Global Head of Pharma Partnering |   |
|        |                                                    |        |  |  |

 

 

**ROCHE PALO ALTO LLC**

 

 
| By:    |    /S/  KEVIN A. MARKS               |   |
|--------|-----------------------------------------------------|--------|
| Name:  |    Kevin  A. Marks                   |   |
| Title: |       Vice  President |   |
|        |                                                     |        |  |  |

 

2

----

 

**EXHIBIT A**

 

**Research Plan**

 

**ClinicalCandidate Target Profile**

 

[***]

 

**Responsibilities**

Metabasis

 

[***]

 

Roche

 

[***]

 

**ResearchPlan**

 

General workplan:

 

[***]

 

Resources:

 

[***]

 

*** Confidential Treatment Requested

 

A-1

----

 

**Schedule I**

**Metabasis Patents**

 

**METABASISPLATFORM PATENTS:**

 

[***]

 

*** Confidential Treatment Requested

 

1-1

----

 

**METABASISPRODUCT PATENTS:**

 

[***]

 

*** Confidential Treatment Requested

 

I-2

----

 

**Schedule II**

**Roche Patents**

 

[***]

 

*** Confidential Treatment Requested

 

II-1

----