Document:

Exhibit 10.31

 

	
  

  	
  Southern California Chapter of the

  Society of Industrial and Office Realtors,® Inc.

  	
   

  

INDUSTRIAL REAL
ESTATE LEASE

(SINGLE-TENANT FACILITY)

 

ARTICLE ONE:                    BASIC TERMS

 

This Article One
contains the Basic Terms of this Lease between the Landlord and Tenant named
below.  Other Articles, Sections and
Paragraphs of the Lease referred to in this Article One explain and define
the Basic Terms and are to be read in conjunction with the Basic Terms.

 

Section 1.01.          Date of Lease:  July 20, 2000

 

Section 1.02.          Landlord (include legal entity):  MAJESTIC-MAPA PROPERTIES, LLC., a California
limited liability company and MAJESTIC REALTY CO., a California corporation

 

Address of Landlord:          13191 Crossroads Parkway North, 6th
Floor

City of Industry, CA  91746

 

Section 1.03.         Tenant (include legal entity):  GILEAD SCIENCES, INC. a Delaware corporation

 

Address of Tenant:             333
Lakeside Drive

Foster City, California  94404

 

Section 1.04.         Property (include street address, approximate square
footage-and description): 
that approximately 53,600 square foot building situated on approximately
2.75 acres of land and more commonly known as 542 West Covina Boulevard, San
Dimas, California as outlined in red on Exhibit “A”, subject to the
non-exclusive use of such area outlined in green.

 

Section 1.05.         Lease Term: 
5 years — months beginning on * or
such other date as is specified in this Lease, and ending on **

 

Section 1.06.         Permitted Uses:  (See Article Five)  Only for general office, laboratory
warehousing and manufacturing of pharmaceutical products.

 

Section 1.07.         Tenant’s Guarantor:  (If none, so state)  None

 

Section 1.08.         Brokers: 
(See Article Fourteen)  (If
none, so state)

 

Landlord’s Broker:               Majestic
Realty Co.

Tenant’s Broker:                  Julien
J. Studley, Inc.

 

Section 1.09.         Commission Payable to Landlord’s Broker:
(See Article Fourteen)  $ per
separate agreement

 

Section 1.10.         Initial Security Deposit:  (See Section 3.03) $23,584.00

 

*              the
sixty (60) days after the later to occur of: (i) the date the existing tenant
vacates the Property and (ii) the date Landlord substantially completes
Landlord’s Work.

 

**           the
fifth (5th) anniversary of the Lease Commencement Date.

 

	
  © 1988

  	
   

  	
  Southern California Chapter

  	
  

  	
   

  	
   

  
	
   

  	
   

  	
  of the Society of Industrial

  	
   

  	
   

  
	
   

  	
   

  	
  and Office Realtors,® Inc.

  	
                   (Single-Tenant
  Net Form)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  [Gilead
  Sciences, Inc.]

  
	
   

  	
   

  	
   

  	
   

  	
  [542 West
  Covina Blvd., San Dimas, CA]

  

 

1

 

Section 1.11.          Vehicle Parking Spaces Allocated to Tenant:  per Exhibit “A”

 

Section 1.12.          Rent and
Other Charges Payable by Tenant:

 

(a)           Base Rent: 
Twenty-Three Thousand Five Hundred Eighty-Four and no/100 Dollars
($23,584.00 ) per month for the first twenty-four (24) months, as provided in Section 3.01,
and shall be increased on the first day of the – See Addendum Section 1.12
– month(s) after the Commencement Date.

 

(b)           Other Periodic Payments:  (i) Real Property Taxes (See Section 4.02);
(ii) Utilities (See Section 4.03); (iii) Insurance Premiums (See Section 4.04);
(iv) Impounds for Insurance Premiums and Property Taxes (See Section 4.07);
(v) Maintenance, Repairs and Alterations (See Article Six).

 

Section 1.13.          Landlord’s Share of Profit on Assignment or Sublease:  (See Section 9.05)  fifty percent (50%) of the Profit (the “Landlord’s
Share”).

 

Section 1.14.          Riders: 
The following Riders are attached to and made a part of this Lease:  (If none, so state)  Addendum pages 1 through 10, Option to Extend
Term Lease Rider, and Exhibits “A”, “B’’, “C”, “D” and “E”

 

ARTICLE TWO:                   LEASE TERM

 

Section 2.01.          Lease of Property For Lease Term.  Landlord leases the Property to Tenant and
Tenant leases the Property from Landlord for the Lease Term.  The Lease Term is for the period stated in Section 1.05
above and shall begin and end on the dates specified in Section 1.05
above, unless the beginning or end of the Lease Term is changed under any
provision of this Lease.  The “Commencement
Date” shall be the date specified in Section 1.05 above for the beginning
of the Lease Term, unless advanced or delayed under any provision of this
Lease.

 

Section 2.02.          Delay in Commencement.  Landlord shall not be liable to Tenant if
Landlord does not deliver possession of the Property with Landlord’s Work
substantially completed to Tenant by April 1, 2001.  Landlord’s non-delivery of the Property to
Tenant on that date shall not affect this Lease or the obligations of Tenant
under this Lease except that the Commencement Date shall be delayed until
Landlord delivers possession of the Property to Tenant and the Lease Term shall
be extended for a period equal to the delay in delivery of possession of the
Property with Landlord’s Work substantially completed to Tenant, plus the
number of days necessary to end the Lease Term on the last day of a month.  If Landlord does not deliver possession of
the Property with Landlord’s Work substantially completed to Tenant within one
hundred eighty (180) days, Tenant may elect to cancel this Lease by giving
written notice to Landlord within ten (10) days after the one hundred eighty
(180)-day period ends.  If Tenant gives
such notice, the Lease shall be cancelled and neither Landlord nor Tenant shall
have any further obligations to the other. 
If Tenant does not give such notice, Tenant’s right to cancel the Lease
shall expire and the Lease Term shall commence upon the delivery of possession
of the Property with Landlord’s Work substantially completed to Tenant.  If delivery of possession of the Property to
Tenant is delayed, Landlord and Tenant shall, upon such delivery, execute an
amendment to this Lease setting forth the actual Commencement Date and
expiration date of the Lease.  Failure to
execute such amendment shall not affect the actual Commencement Date and
expiration date of the Lease.

 

Section 2.03.          Early Occupancy.  If Tenant occupies the Property for the
purpose of conducting business therein prior to the Commencement Date, Tenant’s
occupancy of the Property shall be subject to all of the provisions of this
Lease.  Early occupancy of the Property
shall not advance the expiration date of this Lease.  Tenant shall pay Base Rent and all other
charges specified in this Lease for such early occupancy period.

 

Section 2.04.          Holding Over.  Tenant shall vacate the Property upon the
expiration or earlier termination of this Lease.  Tenant shall reimburse Landlord for and
indemnify Landlord against all damages which Landlord incurs from Tenant’s
delay in vacating the Property.  If
Tenant does not vacate the Property upon the expiration or earlier termination
of the Lease and Landlord thereafter accepts rent from Tenant, Tenant’s
occupancy

 

2

 

of the
Property shall be a “month-to-month” tenancy, subject to all of the terms of
this Lease applicable to a month-to-month tenancy, except that the Base Rent
then in effect shall be increased by twenty-five percent (25%).

 

ARTICLE THREE:               BASE RENT

 

Section 3.01.          Time and Manner of Payment.  Upon execution of this Lease, Tenant shall
pay Landlord the Base Rent in the amount stated in Paragraph 1.12(a) above for
the first month of the Lease Term.  On
the first day of the second month of the Lease Term and each month thereafter,
Tenant shall pay Landlord the Base Rent, in advance, without offset, deduction
or prior demand.  The Base Rent shall be
payable at Landlord’s address or at such other place as Landlord may designate
in writing.

 

Section 3.02.          Intentionally Deleted.

 

Section 3.03.          Security
Deposit; Increases.

 

(a)           Upon the execution of
this Lease, Tenant shall deposit with Landlord a cash Security Deposit in the
amount set forth in Section 1.10 above. 
Landlord may apply all or part of the Security Deposit to any unpaid
rent or other charges due from Tenant or to cure any other defaults of
Tenant.  If Landlord uses any part of the
Security Deposit, Tenant shall restore the Security Deposit to its full amount
within ten (10) days after Landlord’s written request.  Tenant’s failure to do so shall be a material
default under this Lease.  No interest
shall be paid on the Security Deposit. 
Landlord shall not be required to keep the Security Deposit separate
from its other accounts and no trust relationship is created with respect to
the Security Deposit.

 

(b)           Each time the Base Rent
is increased, Tenant shall deposit additional funds with Landlord sufficient to
increase the Security Deposit to an amount which bears the same relationship to
the adjusted Base Rent as the initial Security Deposit bore to the initial Base
Rent.

 

Section 3.04.          Termination; Advance Payments.  Upon termination of this Lease under Article Seven
(Damage or Destruction), Article Eight (Condemnation) or any other
termination not resulting from Tenant’s default, and after Tenant has vacated
the Property in the manner required by this Lease, Landlord shall refund or credit
to Tenant (or Tenant’s successor) the unused portion of the Security Deposit,
any advance rent or other advance payments made by Tenant to Landlord, and any
amounts paid for real property taxes and other reserves which apply to any time
periods after termination of the Lease.

 

ARTICLE FOUR:                 OTHER CHARGES PAYABLE BY TENANT

 

Section 4.01.          Additional Rent.  All charges payable by Tenant other than Base
Rent are called “Additional Rent.” 
Unless this Lease provides otherwise, Tenant shall pay all Additional
Rent then due with the next monthly installment of Base Rent.  The term “rent” shall mean Base Rent and
Additional Rent.

 

Section 4.02.          Property
Taxes.

 

(a)           Real Property Taxes.  Tenant shall pay all real property taxes on
the Property (including any fees, taxes or assessments against, or as a result
of, any tenant improvements installed on the Property by or for the benefit of
Tenant) during the Lease Term.  Subject
to Paragraph 4.02(c) and Section 4.07 below, such payment shall be made at
least ten (10) days prior to the delinquency date of the taxes.  Within such ten (10) -day period, Tenant
shall furnish Landlord with satisfactory evidence that the real property taxes
have been paid.  Landlord shall reimburse
Tenant for any real property taxes paid by Tenant covering any period of time
prior to or after the Lease Term.  If
Tenant fails to pay the real property taxes when due, Landlord may pay the
taxes and Tenant shall reimburse Landlord for the amount of such tax payment as
Additional Rent.  Alternatively, Landlord
may elect to bill Tenant in advance for such taxes and Tenant shall pay
Landlord the amount of such taxes, as Additional Rent, at least ten (10) days
prior to delinquency.  Landlord shall pay
such taxes prior to delinquency provided Tenant has timely made such payments
to Landlord.  Any penalty caused by
Tenant’s failure to timely make such payments shall also be Additional Rent
owed by Tenant immediately upon demand.

 

3

 

(b)           Definition of “Real Property Tax.”  “Real property tax” means: (i) any fee,
license fee, license tax, business license fee, commercial rental tax, levy,
charge, assessment, penalty or tax imposed by any taxing authority against the
Property; (ii) any tax on the Landlord’s right to receive, or the receipt of,
rent or income from the Property or against Landlord’s business of leasing the
Property; (iii) any tax or charge for fire protection, streets, sidewalks, road
maintenance, refuse or other services provided to the Property by any
governmental agency; (iv) any tax imposed upon this transaction or based upon a
re-assessment of the Property due to a change of ownership, as defined by
applicable law, or other transfer of all or part of Landlord’s interest in the
Property; and (v) any charge or fee replacing any tax previously included
within the definition of real property tax. 
“Real property tax” does not, however, include Landlord’s federal or
state income, franchise, inheritance or estate taxes.

 

(c)           Joint Assessment.  If the Property is not separately assessed,
Landlord shall reasonably determine Tenant’s share of the real property tax
payable by Tenant under Paragraph 4.02(a) from the assessor’s worksheets or
other reasonably available information. 
Tenant shall pay such share to Landlord within fifteen (15) days after
receipt of Landlord’s written statement.

 

(d)           Personal
Property Taxes.

 

(i)            Tenant shall pay all
taxes charged against trade fixtures, furnishings, equipment or any other
personal property belonging to Tenant.  Tenant
shall try to have personal property taxed separately from the Property.

 

(ii)           If any of Tenant’s
personal property is taxed with the Property, Tenant shall pay Landlord the
taxes for the personal property within fifteen (15) days after Tenant receives
a written statement from Landlord for such personal property taxes.

 

(e)           Tenant’s Right to Contest Taxes.  Tenant may attempt to have the assessed
valuation of the Property reduced or may initiate proceedings to contest the
real property taxes.  If required by law,
Landlord shall join in the proceedings brought by Tenant.  However, Tenant shall pay all costs of the
proceedings, including any costs or fees incurred by Landlord.  Upon the final determination of any
proceeding or contest, Tenant shall immediately pay the real property taxes
due, together with all costs, charges, interest and penalties incidental to the
proceedings.  If Tenant does not pay the
real property taxes when due and contests such taxes, Tenant shall not be in
default under this Lease for nonpayment of such taxes if Tenant deposits funds
with Landlord or opens an interest-bearing account reasonably acceptable to
Landlord in the joint names of Landlord and Tenant.  The amount of such deposit shall be
sufficient to pay the real property taxes plus a reasonable estimate of the
interest, costs, charges and penalties which may accrue if Tenant’s action is
unsuccessful, less any applicable tax impounds previously paid by Tenant to
Landlord.  The deposit shall be applied
to the real property taxes due, as determined at such proceedings.  The real property taxes shall be paid under
protest from such deposit if such payment under protest is necessary to prevent
the Property from being sold under a “tax sale” or similar, enforcement
proceeding.

 

Section 4.03.          Utilities. 
Tenant shall pay, directly to the appropriate supplier, the cost of all
natural gas, heat, light, power, sewer service, telephone, water, refuse
disposal and other utilities and services supplied to the Property.  However, if any services or utilities are
jointly metered with other property, Landlord shall make a reasonable
determination of Tenant’s proportionate share of the cost of such utilities and
services and Tenant shall pay such share to Landlord within fifteen (15) days
after receipt of Landlord’s written statement.

 

Section 4.04.          Insurance Policies.

 

(a)           Liability Insurance.  During the Lease Term, Tenant shall maintain
a policy of commercial general liability insurance (sometimes known as broad
form comprehensive general liability insurance) insuring Tenant against
liability for bodily injury, property damage (including loss of use of
property) and personal injury arising out of the operation, use or occupancy of
the Property.  Tenant shall name Landlord
as an additional insured under such policy. 
The initial amount of such insurance shall be Three Million Dollars
($3,000,000.00) per occurrence and shall be subject to periodic increase based
upon industry standards for similar facilities. 
The liability insurance obtained by Tenant under this Paragraph 4.04(a)
shall (i) be primary and non-contributing; (ii) contain

 

4

 

cross-liability
endorsements; and (iii) insure Landlord against Tenant’s performance under Section 5.05,
if the matters giving rise to the indemnity under Section 5.05 result from
the negligence of Tenant.  The amount and
coverage of such insurance shall not limit Tenant’s liability nor relieve
Tenant of any other obligation under this Lease.  Landlord may also obtain comprehensive public
liability insurance in an amount and with coverage determined by Landlord
insuring Landlord against liability arising out of ownership, operation, use or
occupancy of the Property.  The policy
obtained by Landlord shall not be contributory and shall not provide primary
insurance.

 

(b)           Property and Rental Income Insurance.  During the Lease Term, Landlord shall
maintain policies of insurance covering loss of or damage to the Property in
the full amount of its replacement value. 
Such policy shall contain an Inflation Guard Endorsement and shall
provide protection against all perils included within the classification of
fire, extended coverage, vandalism, malicious mischief, special extended perils
(all risk), sprinkler leakage and any other perils which Landlord deems
reasonably necessary.  Landlord shall
have the right to obtain flood and earthquake insurance if required by any
lender holding a security interest in the Property.  Landlord shall not obtain insurance for
Tenant’s fixtures or equipment or building improvements installed by Tenant on
the Property.  During the Lease Term,
Landlord shall also maintain a rental income insurance policy, with loss
payable to Landlord, in an amount equal to one year’s Base Rent, plus estimated
real property taxes and insurance premiums. 
Tenant shall be liable for the payment of any deductible amount under
Landlord’s or Tenant’s insurance policies maintained pursuant to this Section 4.04;
provided, however, Landlord’s insurance deductible shall not exceed Ten
Thousand Dollars ($10,000).  Tenant shall
not do or permit anything to be done which invalidates any such insurance
policies.  Upon Tenant’s request,
Landlord shall provide Tenant a certificate evidencing such insurance.

 

(c)           Payment of Premiums.  Subject to Section 4.07, Tenant shall
pay all premiums for the insurance policies described in Paragraphs 4.04(a) and
(b) (whether obtained by Landlord or Tenant) within fifteen (15) days after
Tenant’s receipt of a copy of the premium statement or other evidence of the
amount due, except Landlord shall pay all premiums for non-primary
comprehensive public liability insurance which Landlord elects to obtain as
provided in Paragraph 4.04(a).  If
insurance policies maintained by Landlord cover improvements on real property
other than the Property, Landlord shall deliver to Tenant a statement of the
premium applicable to the Property showing in reasonable detail how Tenant’s
share of the premium was computed.  If
the Lease Term expires before the expiration of an insurance policy maintained
by Landlord, Tenant shall be liable for Tenant’s prorated share of the
insurance premiums.  Before the
Commencement Date, Tenant shall deliver to Landlord a copy of any policy of
insurance which Tenant is required to maintain under this Section 4.04.  At least thirty (30) days prior to the
expiration of any such policy, Tenant shall deliver to Landlord a renewal of
such policy.  As an alternative to
providing a policy of insurance, Tenant shall have the right to provide
Landlord a certificate of insurance, executed by an authorized officer of the
insurance company, showing that the insurance which Tenant is required to
maintain under this Section 4.04 is in full force and effect and
containing such other information which Landlord reasonably requires.

 

(d)           General
Insurance Provisions.

 

(i)            Any insurance which
Tenant is required to maintain under this Lease shall include a provision which
requires the insurance carrier to give Landlord not less than thirty (30) days’
written notice prior to any cancellation or modification of such coverage.

 

(ii)           If Tenant fails to
deliver any policy, certificate or renewal to Landlord required under this
Lease within the prescribed time period or if any such policy is cancelled or
modified during the Lease Term without Landlord’s consent, Landlord may obtain
such insurance, in which case Tenant shall reimburse Landlord for the cost of
such insurance within fifteen (15) days after receipt of a statement that
indicates the cost of such insurance.

 

(iii)          Landlord and Tenant
shall maintain all insurance required under this Lease with companies holding a
“General Policy Rating” of A-12 or better, as set forth in the most current
issue of “Best Key Rating Guide”. 
Landlord and Tenant acknowledge the insurance markets are rapidly
changing and that insurance in the form and amounts described in this Section 4.04
may not be available in the future. 
Tenant acknowledges that the insurance described in this Section 4.04
is for the primary benefit of Landlord. 
If at any time during the Lease

 

5

 

Term,
Tenant or Landlord is unable to maintain the insurance required under the
Lease, Landlord and Tenant shall nevertheless maintain insurance coverage which
is customary and commercially reasonable in the insurance industry for Tenant’s
type of business, as that coverage may change from time to time.  Landlord makes no representation as to the
adequacy of such insurance to protect Landlord’s or Tenant’s interests.  Therefore, Tenant shall obtain any such
additional property or liability insurance which Tenant deems necessary to
protect Landlord and Tenant.

 

(iv)          Landlord and Tenant each
hereby waive any and all rights of recovery against the other, or against the
officers, employees, agents or representatives of the other, for loss of or
damage to its property or the property of others under its control, if such
loss or damage is covered by any insurance policy in force (whether or not
described in this Lease) at the time of such loss or damage.  Upon obtaining the required policies of
insurance, Landlord and Tenant shall give notice to the insurance carriers of
this mutual waiver of subrogation. 
Landlord’s and Tenant’s insurance policies described in this Section shall
contain a provision waiving the carrier’s right to subrogation.

 

Section 4.05.          Late Charges.  Tenant’s failure to pay rent promptly may
cause Landlord to incur unanticipated costs. 
The exact amount of such costs are impractical or extremely difficult to
ascertain.  Such costs may include, but
are not limited to, processing and accounting charges and late charges which
may be imposed on Landlord by any ground lease, mortgage or trust deed
encumbering the Property.  Therefore, if
Landlord does not receive any rent payment within ten (10) days after it
becomes due, provided Landlord has given Tenant forty-eight (48) hours written
notice and Tenant has still failed to pay such Base Rent (which forty-eight
(48) hours shall run concurrently with such ten (10) day period), Tenant shall
pay Landlord a late charge equal to ten percent (10%) of the overdue
amount.  The parties agree that such late
charge represents a fair and reasonable estimate of the costs Landlord will
incur by reason of such late payment.

 

Section 4.06.          Interest on Past Due Obligations.  Any amount owed by one party hereunder to the
other which is not paid when due shall bear interest at the rate of fifteen
percent (15%) per annum from the due date of such amount.  However, interest shall not be payable on
late charges to be paid by Tenant under this Lease.  The payment of interest on such amounts shall
not excuse or cure any default under this Lease.  If the interest rate specified in this Lease
is higher than the rate permitted by law, the interest rate is hereby decreased
to the maximum legal interest rate permitted by law.

 

Section 4.07.          Impounds for Insurance Premiums and Real Property
Taxes.  If Tenant is more than
ten (10) days late in the payment of Base Rent more than twice in any consecutive
twelve (12) -month period, Tenant shall pay Landlord a sum equal to one-twelfth
(1/12) of the annual real property taxes and insurance premiums payable by
Tenant under this Lease, together with each payment of Base Rent.  Landlord shall hold such payments in a
non-interest bearing impound account.  If
unknown, Landlord shall reasonably estimate the amount of real property taxes
and insurance premiums when due.  Tenant
shall pay any deficiency of funds in the impound account to Landlord upon
written request.  If Tenant, defaults
under this Lease, Landlord may apply any funds in the impound account to any
obligation then due under this Lease.

 

ARTICLE FIVE:                   USE OF PROPERTY

 

Section 5.01.          Permitted Uses.  Tenant may use the Property only for the
Permitted Uses set forth in Section 1.06 above.

 

Section 5.02.          Manner of Use.  Tenant shall not cause or permit the Property
to be used in any way which constitutes a violation of any law, ordinance, or
governmental regulation or order, which annoys or interferes with the rights of
other tenants of Landlord, or which constitutes a nuisance or waste.  Tenant shall obtain and pay for all permits,
including a Certificate of Occupancy, required for Tenant’s occupancy of the
Property and shall promptly take all actions necessary to comply with all
applicable statutes, ordinances, rules, regulations, orders and requirements
regulating the use by Tenant of the Property, including the Occupational Safety
and Health Act.

 

See Addendum Section 5.02

 

6

 

Section 5.03.          Intentionally
Deleted.

 

See Addendum Section 5.03

 

Section 5.04.          Signs and Auctions.  Tenant shall not place any signs on the
Property without Landlord’s prior written consent.  Tenant shall not conduct or permit any
auctions or sheriff’s sales at the Property.

 

See Addendum Section 5.04

 

Section 5.05.          Indemnity. 
Tenant shall indemnify Landlord against and hold Landlord harmless from
any and all costs, claims or liability arising from:  (a) Tenant’s use of the Property; (b) the
conduct of Tenant’s business or anything else done or permitted by Tenant to be
done in or about the Property, (c) any breach or default in the performance of
Tenant’s obligations under this Lease; (d) any misrepresentation or breach of
warranty by Tenant under this Lease; or (e) other acts or omissions of
Tenant.  Tenant shall defend Landlord
against any such cost, claim or liability at Tenant’s expense with counsel
reasonably acceptable to Landlord or, at Landlord’s election, Tenant shall reimburse
Landlord for any legal fees or costs incurred by Landlord in connection with
any such claim.  As a material part of
the consideration to Landlord, Tenant assumes all risk of damage to property or
injury to persons in or about the Property arising from any cause, and Tenant
hereby waives all claims in respect thereof against Landlord, except for any
claim arising out of Landlord’s or Landlord’s employees’, agents’ or
contractors’ active negligence or willful misconduct.  As used in this Section, the term “Tenant”
shall include Tenant’s employees, agents, contractors and invitees, if
applicable.

 

See Addendum Section 5.05.

 

Section 5.06.          Landlord’s Access.  Landlord or its agents may enter the Property
at all reasonable times to show the Property to potential buyers, investors or
tenants or other parties; to do any other act or to inspect and conduct tests
in order to monitor Tenant’s compliance with all applicable environmental laws
and all laws governing the presence and use of Hazardous Material; or for any
other purpose Landlord deems necessary. 
Landlord shall give Tenant 24-hour prior notice of such entry, except in
the case of an emergency and Landlord agrees to allow a representative of
Tenant to accompany Landlord and further agrees to comply with Tenant’s
reasonable security measures.  Landlord
may place customary “For Sale” or “For Lease” signs on the Property.

 

Section 5.07.          Quiet Possession.  If Tenant pays the rent and complies with all
other terms of this Lease, Tenant may occupy and .enjoy the Property for the
full Lease Term, subject to the provisions of this Lease.

 

ARTICLE SIX:                     CONDITION
OF PROPERTY; MAINTENANCE, REPAIRS AND

ALTERATIONS

 

Section 6.01.          Existing Conditions.  Subject to the provisions of this Lease,
Tenant accepts the Property in its condition as of the execution of the Lease,
subject to all recorded matters, laws, ordinances, and governmental regulations
and orders.  Except as provided herein,
Tenant acknowledges that neither Landlord nor any agent of Landlord has made
any representation as to the condition of the Property or the suitability of
the Property for Tenant’s intended use. 
Tenant represents and warrants that Tenant has made its own inspection
of and inquiry regarding the condition of the Property and is not relying on
any representations of Landlord or any Broker with respect thereto.  If Landlord or Landlord’s Broker has provided
a Property Information Sheet or other Disclosure Statement regarding the
Property, a copy is attached as an exhibit to the Lease.

 

Section 6.02.          Exemption of Landlord from Liability.  Landlord shall not be liable for any damage
or injury to the person, business (or any loss of income therefrom), goods,
wares, merchandise or other property of Tenant, Tenant’s employees, invitees,
customers or any other person in or about the Property, whether such damage or
injury is caused by or results from: (a) fire, steam, electricity, water, gas
or rain; (b) the breakage, leakage, obstruction or other defects of pipes,
sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures
or any other cause; (c) conditions arising in or about the Property or from
other sources or places; or (d) any act or omission of any other tenant of
Landlord.  Landlord shall not be liable
for any such damage or injury even though

 

7

 

the
cause of or the means of repairing such damage or injury are not accessible to
Tenant.  The provisions of this Section 6.02
shall not, however, exempt Landlord from liability for Landlord’s or Landlord’s
employees’, agents’ or contractors’ active negligence or willful misconduct.

 

Section 6.03.          Landlord’s
Obligations.

 

See Addendum Section 6.03.

 

Section 6.04.          Tenant’s
Obligations.

 

(a)           Except as provided in Section 6.03,
Article Seven (Damage or Destruction) and Article Eight
(Condemnation), Tenant shall keep all portions of the Property (including
structural, nonstructural, interior, exterior, and landscaped areas, portions,
systems and equipment) in good order, condition and repair (including interior
repainting and refinishing, as needed). 
If any portion of the Property or any system or equipment in the
Property which Tenant is obligated to repair cannot be fully repaired or
restored, Tenant shall promptly replace such portion of the Property or system
or equipment in the Property, regardless of whether the benefit of such
replacement extends beyond the Lease Term; but if the benefit or useful life of
such replacement extends beyond the Lease Term (as such term may be extended by
exercise of any options), the useful life of such replacement shall be prorated
over the remaining portion of the Lease Term (as extended), and Tenant shall be
liable only for that portion of the cost which is applicable to the Lease Term
(as extended).  Tenant shall maintain a
preventive maintenance contract providing for the regular inspection and
maintenance of the heating and air conditioning system by a licensed heating
and air conditioning contractor.  Subject
to the provisions of Section 4.04(d)(iv), if any part of the Property is
damaged by any act or omission of Tenant, Tenant shall pay Landlord the cost of
repairing or replacing such damaged property, whether or not Landlord would
otherwise be obligated to pay the cost of maintaining or repairing such
property.  It is the intention of
Landlord and Tenant that at all times Tenant shall maintain the portions of the
Property which Tenant is obligated to maintain in an attractive, first-class
and fully operative condition.

 

(b)           Tenant shall fulfill all
of Tenant’s obligations under this Section 6.04 at Tenant’s sole
expense.  If Tenant fails to maintain,
repair or replace the Property as required by this Section 6.04 or is not
using all reasonable efforts to do so, Landlord may, upon ten (10) days’ prior
notice to Tenant (except that no notice shall be required in the case of an
emergency), enter the Property and perform such maintenance or repair
(including replacement, as needed) on behalf of Tenant.  In such case, Tenant shall reimburse Landlord
for all costs incurred in performing such maintenance or repair immediately
upon demand.

 

Section 6.05.          Alterations, Additions, and Improvements.

 

(a)           Tenant shall not make
any alterations, additions, or improvements to the Property without Landlord’s
prior written consent, which shall not be unreasonably withheld, except for
non-structural alterations which do not exceed Forty Thousand Dollars
($40,000.00) in cost per project and which are not visible from the outside of
any building of which the Property is part. 
Landlord may require Tenant to provide demolition and/or lien and
completion bonds in form and amount satisfactory to Landlord.  Tenant shall promptly remove any alterations,
additions, or improvements constructed in violation of this Paragraph 6.05(a)
upon Landlord’s written request.  All
alterations, additions, and improvements shall be done in a good and
workmanlike manner, in conformity with all applicable laws and regulations, and
by a contractor approved by Landlord, which shall not be unreasonably
withheld.  Upon completion of any such
work, Tenant shall provide Landlord with “as built” plans, copies of all
construction contracts, and proof of payment for all labor and materials.

 

(b)           Tenant shall pay when
due all claims for labor and material furnished to or for the Tenant Group at
the Property.  Tenant shall give Landlord
at least twenty (20) days’ prior written notice of the commencement of any work
on the Property, regardless of whether Landlord’s consent to such work is
required.  Landlord may elect to record
and post notices of non-responsibility on the Property.

 

Section 6.06.          Condition upon Termination.  Upon the termination of the Lease, Tenant
shall surrender the Property to Landlord, broom clean and in the same condition
as received except for ordinary wear and

 

8

 

tear
which Tenant was not otherwise obligated to remedy under any provision of this
Lease.  However, Tenant shall not be
obligated to repair any damage which Landlord is required to repair in
accordance with this Lease.  In addition,
Landlord may require Tenant to remove any alterations, additions or
improvements (whether or not made with Landlord’s consent) prior to the
expiration of the Lease and to restore the Property to its prior condition, all
at Tenant’s expense.  All alterations,
additions and improvements which Landlord has not required Tenant to remove
shall become Landlord’s property and shall be surrendered to Landlord upon the
expiration or earlier termination of the Lease, except that Tenant may remove
any of Tenant’s machinery or equipment which can be removed without material
damage to the Property.  Tenant shall
repair, at Tenant’s expense, any damage to the Property caused by the removal
of any such machinery or equipment.  In
no event, however, shall Tenant remove any of the following materials or
equipment (which shall be deemed Landlord’s property) without Landlord’s prior
written consent:  any power wiring or
power panels; lighting or lighting fixtures; wall coverings; drapes, blinds or
other window coverings; carpets or other floor coverings; heaters, air
conditioners or any other heating or air conditioning equipment; fencing or
security gates; or other similar building operating equipment and decorations.

 

See Addendum Section 6.06

 

ARTICLE SEVEN:               DAMAGE OR DESTRUCTION

 

Section 7.01.          Partial Damage to Property.

 

(a)           Tenant shall notify
Landlord in writing immediately upon the occurrence of any damage to the
Property.  If the Property is only
partially damaged (i.e., less than fifty percent (50%) of the Property is
untenantable as a result of such damage or less than fifty percent (50%) of
Tenant’s operations are materially impaired) and if the proceeds received by
Landlord from the insurance policies described in Paragraph 4.04(b) are
sufficient to pay for the necessary repairs, this Lease shall remain in effect
and Landlord shall repair the damage as soon as reasonably possible.  Landlord may elect (but is not required) to
repair any damage to Tenant’s fixtures, equipment, or improvements.

 

(b)           If (i) Landlord has
maintained the insurance required to be maintained under Paragraph 4.04(b) and
the insurance proceeds received by Landlord are not sufficient to pay the
entire cost of repair; (ii) the cause of the damage is not covered by such
insurance policies; or (iii) the holder of any mortgage on the Property
shall require that the insurance proceeds or any portion thereof be used to
retire the mortgage debt, Landlord may elect either to (i) repair damage as
soon as reasonably possible, in which case this Lease shall remain in full
force and effect, or (ii) terminate this Lease as of the date the damage
occurred.  Landlord shall notify Tenant
within thirty (30) days after receipt of notice of the occurrence of the damage
whether Landlord elects to repair the damage or terminate the Lease.  If Landlord elects to repair the damage,
Tenant shall pay Landlord the “deductible amount” (if any) under Landlord’s
insurance policies and, if the damage was due to an act or omission of Tenant,
or Tenant’s employees, agents, contractors or invitees, the difference between
the actual cost of repair and any insurance proceeds received by Landlord.  If Landlord elects to terminate this Lease,
Tenant may elect to continue this Lease in full force and effect, in which case
Tenant shall repair any damage to the Property and any building in which the
Property is located.  Tenant shall pay
the cost of such repairs, except that upon satisfactory completion of such
repairs, Landlord shall deliver to Tenant any insurance proceeds received by
Landlord for the damage repaired by Tenant. 
Tenant shall give Landlord written notice of such election within ten
(10) days after receiving Landlord’s termination notice.

 

(c)           If the damage to the
Property occurs during the last six (6) months of the Lease Term and such
damage will require more than thirty (30) days to repair, either Landlord or
Tenant may elect to terminate this Lease as of the date the damage occurred,
regardless of the sufficiency of any insurance proceeds.  The party electing to terminate this Lease
shall give written notification to the other party of such election within
thirty (30) days after Tenant’s notice to Landlord of the occurrence of the
damage.

 

Section 7.02.          Substantial or Total Destruction.  If the Property is substantially or totally
destroyed by any cause whatsoever (i.e., the damage to the Property is greater
than partial damage as described in Section 7.01), and regardless of
whether Landlord receives any insurance proceeds, this Lease shall terminate
the later of (i) the

 

9

 

date
the destruction occurred or (ii) the date Tenant ceases to do business at
the Property.  Notwithstanding the
preceding sentence, if the Property can be rebuilt within six (6) months after
the date of destruction, Landlord may elect to rebuild the Property at Landlord’s
own expense, in which case this Lease shall remain in full force and
effect.  Landlord shall notify Tenant of
such election within thirty (30) days after Tenant’s notice of the occurrence
of total or substantial destruction.  If
Landlord so elects, Landlord shall rebuild the Property at Landlord’s sole
expense, except that if the destruction was caused by an act or omission of
Tenant, Tenant shall pay Landlord the difference between the actual cost of
rebuilding and any insurance proceeds received by Landlord.

 

Section 7.03.          Temporary Reduction of Rent.  If the Property is destroyed or damaged and
Landlord or Tenant repairs or restores the Property pursuant to the provisions
of this Article Seven, any rent payable during the period of such damage,
repair and/or restoration shall be reduced according to the degree, if any, to
which Tenant’s use of the Property is impaired. 
Except for such possible reduction in Base Rent, insurance premiums and
real property taxes, Tenant shall not be entitled to any compensation,
reduction, or reimbursement from Landlord as a result of any damage,
destruction, repair, or restoration of or to the Property.

 

Section 7.04.          Waiver. 
Tenant waives the protection of any statute, code or judicial decision
which grants a tenant the right to terminate a lease in the event of the
substantial or total destruction of the leased property.  Tenant agrees that the provisions of Section 7.02
above shall govern the rights and obligations of Landlord and Tenant in the
event of any substantial or total destruction to the Property.

 

ARTICLE EIGHT:                CONDEMNATION

 

If all or any portion of
the Property is taken under the power of eminent domain or sold under the
threat of that power (all of which are called “Condemnation”), this Lease shall
terminate as to the part taken or sold on the date the condemning authority
takes title or possession, whichever occurs first.  If more than twenty percent (20%) of the
floor area of the building in which the Property is located, or which is
located on the Property, is taken, either Landlord or Tenant may terminate this
Lease as of the date the condemning authority takes title or possession, by delivering
written notice to the other within ten (10) days after receipt of written
notice of such taking (or in the absence of such notice, within ten (10) days
after the condemning authority takes title or possession).  If neither Landlord nor Tenant terminates
this Lease, this Lease shall remain in effect as to the portion of the Property
not taken, except that the Base Rent and Additional Rent shall be reduced in
proportion to the reduction in the floor area of the Property.  Any Condemnation award or payment shall be
distributed in the following order: (a) first, to any ground lessor, mortgagee
or beneficiary under a deed of trust encumbering the Property; the amount of
its interest in the Property; (b) second, to Tenant, only the amount of any
award specifically designated for loss of or damage to Tenant’s trade fixtures
or removable persona] property; and (c) third, to Landlord, the remainder of
such award, whether as compensation for reduction in the value of the
leasehold, the taking of the fee, or otherwise. 
If this Lease is not terminated, Landlord shall repair any damage to the
Property caused by the Condemnation, except that Landlord shall not be
obligated to repair any damage for which Tenant has been reimbursed by the
condemning authority.  If the severance
damages received by Landlord are not sufficient to pay for such repair,
Landlord shall have the right to either terminate this Lease or make such
repair at Landlord’s expense.

 

ARTICLE NINE:                   ASSIGNMENT AND) SUBLETTING

 

Section 9.01.          Landlord’s Consent Required.  No portion of the Property or of Tenant’s
interest in this Lease may be acquired by any other person or entity, whether
by sale, assignment, mortgage, sublease, transfer, operation of law, or act of
Tenant, without Landlord’s prior written consent, except as provided in Section 9.02
below.  Landlord has the right to grant
or withhold its consent as provided in Section 9.05 below.  Any attempted transfer without consent shall
be void and shall constitute a non-curable breach of this Lease.

 

Section 9.02.          Tenant
Affiliate.

 

See Addendum Section 9.02.

 

10

 

Section 9.03.          No Release of Tenant.  No transfer permitted by this Article Nine,
whether with or without Landlord’s consent, shall release Tenant or change
Tenant’s primary liability to pay the rent and to perform all other obligations
of Tenant under this Lease.  Landlord’s
acceptance of rent from any other person is not a waiver of any provision of
this Article Nine.  Consent to one
transfer is not a consent to any subsequent transfer.  If Tenant’s transferee defaults under this
Lease, Landlord may proceed directly against Tenant without pursuing remedies
against the transferee.  Landlord may
consent to subsequent assignments or modifications of this Lease by Tenant’s
transferee, without notifying Tenant or obtaining its consent.  Such action shall not relieve Tenant’s
liability under this Lease.

 

Section 9.04.          Offer to Terminate.  If Tenant desires to assign the Lease or
sublease all of the Property, and if Landlord elects in writing to terminate
this Lease pursuant to Section 9.5, the Lease shall terminate as of the
commencement date of a new lease between Landlord and the proposed assignee or
subtenant and all the terms and provisions of the Lease governing termination
shall apply.  If Landlord does not so
elect, the Lease shall continue in effect until otherwise terminated and the
provisions of Section 9.05 with respect to any proposed transfer shall
continue to apply.

 

Section 9.05.          Landlord’s Consent.

 

(a)           Tenant’s request for
consent to any transfer described in Section 9.01 shall set forth in
writing the details of the proposed transfer, including the name, business and
financial condition of the prospective transferee, financial details of the
proposed transfer (e.g., the term of and the rent and security deposit payable
under any proposed assignment or sublease), and any other information Landlord
reasonably deems relevant.  Landlord
shall have the right to elect to terminate this Lease, or to withhold consent,
if reasonable, or to grant consent, based on the following factors:  (i) the business of the proposed assignee or
subtenant and the proposed use of the Property; (ii) the net worth and financial
reputation of the proposed assignee or subtenant; and (iii) Tenant’s
compliance with all of its obligations under the Lease.  If Landlord objects to a proposed assignment
solely because of the net worth and/or financial reputation of the proposed
assignee, Tenant may nonetheless sublease (but not assign), all or a portion of
the Property to the proposed transferee, but only on the other terms of the
proposed transfer.

 

(b)           If Tenant assigns or
subleases, the following shall apply:

 

(i)            If Tenant assigns or
subleases more than 37,000 square feet of the Property in the aggregate, then
Tenant shall pay to Landlord as Additional Rent under the Lease the Landlord’s
Share (stated in Section 1.13) of the Profit (defined below) on such
transaction as and when received by Tenant, unless Landlord gives written
notice to Tenant and the assignee or subtenant that Landlord’s Share shall be
paid by the assignee or subtenant to Landlord directly.  The “Profit” means (A) all amounts paid
to Tenant for such assignment or sublease, including “key” money, monthly rent
in excess of the monthly rent payable under the Lease, and all fees and other
consideration paid for the assignment or sublease, including fees under any
collateral agreements, less (B) costs and expenses directly incurred by
Tenant in connection with the execution and performance of such assignment or
sublease for real estate broker’s commissions and costs of renovation or
construction of tenant improvement required under such assignment or
sublease.  Tenant is entitled to recover
such costs and expenses before Tenant is obligated to pay the Landlord’s Share
to Landlord.  The Profit in the case of a
sublease of less than all the Property is the rent allocable to the subleased
space as a percentage on a square footage basis.

 

(ii)           Tenant shall provide
Landlord a written statement certifying all amounts to be paid from any
assignment or sublease of the Property within thirty (30) days after the
transaction documentation is signed, and Landlord may inspect Tenant’s relevant
books and records to verify the accuracy of such statement.  On written request, Tenant shall promptly
furnish to Landlord copies of all the transaction documentation, all of which
shall be certified by Tenant to be complete, true and correct.  Landlord’s receipt of Landlord’s Share shall
not be a consent to any further assignment or subletting.  The breach of Tenant’s obligation under this
Paragraph 9.05(b) shall be a material default of the Lease.

 

Section 9.06.          No Merger. 
No merger shall result from Tenant’s sublease of the Property under this
Article Nine, Tenant’s surrender of this Lease or the termination of this
Lease in any other manner.  In any such

 

11

 

event,
Landlord may terminate any or all subtenancies or succeed to the interest of
Tenant as sublandlord under any or all subtenancies.

 

ARTICLE TEN:                    DEFAULTS; REMEDIES

 

Section 10.01.        Covenants and Conditions.  Tenant’s performance of each obligation under
this Lease is a condition as well as a covenant.  Tenant’s right to continue in possession of
the Property is conditioned upon Tenant’s performance.  Time is of the essence in the performance of
all covenants and conditions.

 

Section 10.02.        Defaults. 
Tenant shall be in material default under this Lease:

 

(a)           If Tenant fails to pay
rent and abandons the Property or if Tenant’s vacation of the Property results
in the cancellation of any insurance described in Section 4.04;

 

(b)           If Tenant fails to pay
rent when due or any other charge within ten (10) days from receipt of such
bill or statement from Landlord;

 

(c)           If Tenant fails to
perform any of Tenant’s non-monetary obligations under this Lease for a period
of thirty (30) days after written notice from Landlord; provided that if more
than thirty (30) days are required to complete such performance, Tenant shall
not be in default if Tenant commences such performance within the thirty (30)
-day period and thereafter diligently pursues its completion.  The notice required by this Paragraph is intended
to satisfy any and all notice requirements imposed by law on Landlord and is
not in addition to any such requirement.

 

(d)           (i) If Tenant makes a
general assignment or general arrangement for the benefit of creditors; (ii) if
a petition for adjudication of bankruptcy or for reorganization or
rearrangement is filed by or against Tenant and is not dismissed within thirty
(30) days; (iii) if a trustee or receiver is appointed to take possession of
substantially all of Tenant’s assets located at the Property or of Tenant’s
interest in this Lease and possession is not restored to Tenant within thirty
(30) days; or (iv) if substantially all of Tenant’s assets located at the
Property or of Tenant’s interest in this Lease is subjected to attachment,
execution or other judicial seizure which is not discharged within thirty (30)
days.  If a court of competent
jurisdiction determines’ that any of the acts described in this subparagraph
(d) is not a default under this Lease, and a trustee is appointed to take
possession (or if Tenant remains a debtor in possession) and such trustee or
Tenant transfers Tenant’s interest hereunder, then Landlord shall receive, as
Additional Rent, the excess, if any, of the rent (or any other consideration)
paid in connection with such assignment or sublease over the rent payable by
Tenant under this Lease.

 

(e)           If any guarantor of the
Lease revokes or otherwise terminates, or purports to revoke or otherwise
terminate, any guaranty of all or any portion of Tenant’s obligations under the
Lease.  Unless otherwise expressly provided,
no guaranty of the Lease is revocable.

 

Section 10.03.        Remedies. 
On the occurrence of any material default by Tenant, Landlord may, at
any time thereafter, following three (3) days written notice or demand (which
may be in the form of a three (3) day notice to pay rent or quit and which time
may run concurrently therewith) and without limiting Landlord in the exercise
of any right or remedy which Landlord may have:

 

(a)           Terminate Tenant’s
right to possession of the Property by any lawful means, in which case this
Lease shall terminate and Tenant shall immediately surrender possession of the
Property to Landlord.  If Tenant shall be
served with a demand for the payment of past due rent or any other charge, any
payments rendered thereafter to cure any default by Tenant shall be made only
by cashier’s check.  In such event,
Landlord shall be entitled to recover from Tenant all damages incurred by
Landlord by reason of Tenant’s default, including (i) the worth at the time of
the award of the unpaid Base Rent, Additional Rent and other charges which
Landlord had earned at the time of the termination; (ii) the worth at the time
of the award of the amount by which the unpaid Base Rent, Additional Rent and
other charges which Landlord would have earned after termination until the time
of the award exceeds the amount of such rental loss that Tenant proves Landlord
could have reasonably avoided; (iii) the

 

12

 

worth
at the time of the award of the amount by which the unpaid Base Rent,
Additional Rent and other charges which Tenant would have paid for the balance
of the Lease term after the time of award exceeds the amount of such rental
loss that Tenant proves Landlord could have reasonably avoided; and (iv) any
other amount necessary to compensate Landlord for all the detriment proximately
caused by Tenant’s failure to perform its obligations under the Lease or which
in the ordinary course of things would be likely to result therefrom,
including, but not limited to, any costs or expenses Landlord incurs in
maintaining or preserving the Property after such default, the cost of
recovering possession of the Property, expenses of reletting, including
necessary renovation or alteration of the Property, Landlord’s reasonable attorneys’
fees incurred in connection therewith, and any real estate commission paid or
payable.  As used in subparts (i) and
(ii) above, the “worth at the time of the award” is computed by allowing
interest on unpaid amounts at the rate of fifteen percent (15%) per annum, or
such lesser amount as may then be the maximum lawful rate.  As used in subpart (iii) above, the “worth at
the time of the award” is computed by discounting such amount at the discount
rate of the Federal Reserve Bank of San Francisco at the time of the award,
plus one percent (1%).  If Tenant has
abandoned the Property, Landlord shall have the option of (i) retaking
possession of the Property and recovering from Tenant the amount specified in
this Paragraph 10.03(a); and/or (ii) proceeding under Paragraph 10.03(b).

 

(b)           Maintain Tenant’s right
to possession, in which case this Lease shall continue in effect whether or not
Tenant has abandoned the Property.  In
such event, Landlord shall be entitled to enforce all of Landlord’s rights and
remedies under this Lease, including the right to recover the rent as it
becomes due; Landlord shall have the remedy described in California Civil Code Section 1951.4
(lessor may continue lease in effect after lessee’s breach and abandonment and
recover rent as it becomes due, if lessee has the right to sublet or assign
subject only to reasonable limitations);

 

(c)           Pursue any other remedy
now or hereafter available to Landlord under the laws or judicial decisions of
the state in which the Property is located.

 

Section 10.04.        Intentionally
Deleted.

 

Section 10.05.        Automatic Termination.  Notwithstanding any other term or provision
hereof to the contrary, the Lease shall terminate on the occurrence of any act
which affirms the Landlord’s intention to terminate the Lease as provided in Section 10.03
hereof, including the filing of an unlawful detainer action against
Tenant.  On such termination, Landlord’s
damages for default shall include all costs and fees, including reasonable
attorneys’ fees that Landlord incurs in connection with the filing,
commencement, pursuing and/or defending of any action in any bankruptcy court
or other court with respect to the Lease; the obtaining of relief from any stay
in bankruptcy restraining any action to evict Tenant; or the pursuing of any
action with respect to Landlord’s right to possession of the Property.  All such damages suffered (apart from Base
Rent and other rent payable hereunder) shall constitute pecuniary damages which
must be reimbursed to Landlord prior to assumption of the Lease by Tenant or
any successor to Tenant in any bankruptcy or other proceeding.

 

Section 10.06.        Cumulative Remedies.  Landlord’s exercise of any right or remedy
shall not prevent it from exercising any other right or remedy.

 

Section 10.07.        See Addendum

 

ARTICLE ELEVEN:             PROTECTION OF LENDERS

 

Section 11.01.        Subordination.  Landlord shall have the right to subordinate
this Lease to any ground lease, deed of trust or mortgage encumbering the
Property, any advances made on the security thereof and any renewals,
modifications, consolidations, replacements or extensions thereof, whenever
made or recorded.  Tenant shall cooperate
with Landlord and any lender which is acquiring a security interest in the
Property or the Lease.  Tenant shall
execute such further document and assurances as such lender may require in the
form attached hereto as Exhibit “B” or such other form as is then required by
Landlord’s lender, provided that such agreement contains a non-disturbance
agreement in favor of Tenant and provided further that Tenant’s obligations
under this Lease shall not be increased in any material way (the performance of
ministerial acts shall not be deemed material), and Tenant

 

13

 

shall
not be deprived of its rights under this Lease. 
Tenant’s right to quiet possession of the Property during the Lease Term
shall not be distributed if Tenant pays the rent and performs all of Tenant’s
obligations under this Lease and is not otherwise in default.  If any ground lessor, beneficiary or
mortgagee elects to have this Lease prior to the lien of its ground lease, deed
of trust or mortgage and gives written notice thereof to Tenant, this Lease
shall be deemed prior to such ground lease, deed of trust or mortgage whether
this Lease is dated prior or subsequent to the date of said ground lease, deed
of trust or mortgage or the date of recording thereof.

 

See Addendum Section 11.01

 

Section 11.02.        Attornment. 
If Landlord’s interest in the Property is acquired by any ground lessor,
beneficiary under a deed of trust, mortgagee, or purchaser at a foreclosure
sale, Tenant shall attorn to the transferee of or successor to Landlord’s
interest in the Property and recognize such transferee or successor as Landlord
under this Lease.  Tenant waives the
protection of any current or future statute or rule of law which gives or
purports to give Tenant any right to terminate this Lease or surrender
possession of the Property upon the transfer of Landlord’s interest.

 

Section 11.03.        Signing of Documents.  Tenant shall sign and deliver any instrument
or documents necessary or appropriate to evidence any such attornment or
subordination or agreement to do so, provided that such agreement includes a
non-disturbance provision in favor of Tenant. 
If Tenant fails to do so within fifteen (15) days after written request,
Tenant hereby makes, constitutes and irrevocably appoints Landlord, or any
transferee               or successor of Landlord, the
attorney-in-fact of Tenant to execute and deliver any such instrument or
document so long as such instrument complies with the provisions of this Article Eleven.

 

Section 11.04.        Estoppel Certificates.

 

(a)           Upon Landlord’s written
request, Tenant shall execute, acknowledge and deliver to Landlord a written
statement in the form attached hereto as Exhibit “C” or such other form as is
then required by Landlord’s lender, certifying: (i) that none of the terms or
provisions of this Lease have been changed (or if they have been changed,
stating how they have been changed); (ii) that this Lease has not been
cancelled or terminated; (iii) the last date of payment of the Base Rent and
other charges and the time period covered by such payment; (iv) that Landlord
is not in default under this Lease (or, if Landlord is claimed to be in
default, stating why); and (v) such other representations or information with
respect to Tenant or the Lease as Landlord may reasonably request or which any
prospective purchaser or encumbrancer of the Property may require.  Tenant shall deliver such statement to
Landlord within fifteen (15) days after Landlord’s request.  Landlord may give any such statement by
Tenant to any prospective purchaser or encumbrancer of the Property.  Such purchaser or encumbrancer may rely
conclusively upon such statement as true and correct.

 

(b)           If Tenant does not
deliver such statement to Landlord within such fifteen (15) -day period,
Landlord, and any prospective purchaser or encumbrancer, may conclusively
presume and rely upon the following facts: 
(i) that the terms and provisions of this Lease have not been
changed except as otherwise represented by Landlord; (ii) that this Lease
has not been cancelled or terminated except as otherwise represented by
Landlord; (iii) that not more than one month’s Base Rent or other charges
have been paid in advance; and (iv) that Landlord is not in default under the
Lease.  In such event, Tenant shall be
estopped from denying the truth of such facts.

 

Section 11.05.        Tenant’s Financial Condition.  Within ten (10) days after written request
from Landlord, Tenant shall deliver to Landlord Tenant’s then existing
financial statements to verify the net worth of Tenant or any assignee,
subtenant, or guarantor of Tenant.  In
addition, Tenant shall deliver to any lender designated by Landlord any
financial statements required by such lender to facilitate the financing or
refinancing of the Property.  Tenant
represents and warrants to Landlord that each such financial statement is a
true and accurate statement as of the date of such statement.  All financial statements shall be
confidential and shall be used only for the purposes set forth in this Lease.

 

14

 

ARTICLE TWELVE:            LEGAL COSTS

 

Section 12.01.        Legal Proceedings.  If Tenant or Landlord shall be in breach or
default under this Lease, such party (the “Defaulting Party”) shall reimburse
the other party (the “Nondefaulting Party”) upon demand for any costs or
expenses that the Nondefaulting Party incurs in connection with any breach or
default of the Defaulting Party under this Lease, whether or not suit is
commenced or judgment entered.  Such
costs shall include legal fees and costs incurred for the negotiation of a
settlement, enforcement of rights or otherwise. 
Furthermore, if any action for breach of or to enforce the provisions of
this Lease is commenced, the court in such action shall award to the party in
whose favor a judgment is entered, a reasonable sum as attorneys’ fees and
costs.  The losing party in such action
shall pay such attorneys’ fees and costs. 
Tenant shall also indemnify Landlord against and hold Landlord harmless
from all costs, expenses, demands and liability Landlord may incur if Landlord
becomes or is made a party to any claim or action (a) instituted by Tenant
against any third party, or by any third party against Tenant, or by or against
any person holding any interest under or using the Property by license of or
agreement with Tenant; (b) for foreclosure of any lien for labor or
material furnished to or for Tenant Group; (c) otherwise arising out of or
resulting from any act or transaction of Tenant Group; or (d) necessary to
protect Landlord’s interest under this Lease in a bankruptcy proceeding, or
other proceeding under Title 11 of the United States Code, as amended.  Tenant shall defend Landlord against any such
claim or action at Tenant’s expense with counsel reasonably acceptable to
Landlord or, at Landlord’s election, Tenant shall reimburse Landlord for any
legal fees or costs Landlord reasonably incurs in any such claim or action.

 

Section 12.02.        Landlord’s Consent.  Tenant shall pay Landlord’s reasonable
attorneys’ fees incurred in connection with Tenant’s request for Landlord’s
consent under Article Nine (Assignment and Subletting), or in connection
with any other act which Tenant proposes to do and which requires Landlord’s
consent.

 

ARTICLE THIRTEEN:        MISCELLANEOUS PROVISIONS

 

Section 13.01.        Non-Discrimination.  Tenant promises, and it is a condition to the
continuance of this Lease, that there will be no discrimination against, or
segregation of, any person or group of persons on the basis of race, color,
sex, creed, national origin or ancestry in the leasing, subleasing,
transferring, occupancy, tenure or use of the Property or any portion thereof.

 

Section 13.02.        Landlord’s Liability; Certain Duties.

 

(a)           As used in this Lease,
the term “Landlord” means only the current owner or owners of the fee title to
the Property or the leasehold estate under a ground lease of the Property at
the time in question.  Each Landlord is
obligated to perform the obligations of Landlord under this Lease only during
the time such Landlord owns such interest or title.  Any Landlord who transfers its title or
interest is relieved of all liability with respect to the obligations of
Landlord under this Lease to be performed on or after the date of transfer,
provided the transferee assumes all of Landlord’s obligations from the date of
transfer.  However, each Landlord shall
deliver to its transferee all funds that Tenant previously paid if such funds
have not yet been applied under the terms of this Lease.

 

(b)           Tenant shall give
written notice of any failure by Landlord to perform any of its obligations
under this Lease to Landlord and to any ground lessor, mortgagee or beneficiary
under any deed of trust encumbering the Property whose name and address have
been furnished to Tenant in writing. 
Landlord shall not be in default under this Lease unless Landlord (or
such ground lessor, mortgagee or beneficiary) fails to cure such non-performance
within thirty (30) days after receipt of Tenant’s notice.  However, if such non-performance reasonably
requires more than thirty (30) days to cure, Landlord shall not be in default
if such cure is commenced within such thirty (30) -day period and thereafter
diligently pursued to completion.

 

(c)           Notwithstanding any
term or provision herein to the contrary, the liability of Landlord for the
performance of its duties and obligations under this Lease is limited to
Landlord’s interest in the Property, and neither the Landlord nor its partners,
shareholders, officers or other principals shall have any personal liability
under this Lease.

 

15

 

Section 13.03.        Severability.  A determination by a court of competent
jurisdiction that any provision of this Lease or any part thereof is illegal or
unenforceable shall not cancel or invalidate the remainder of such provision or
this Lease, which shall remain in full force and effect.

 

Section 13.04.        Interpretation.  The captions of the Articles or Sections of
this Lease are to assist the parties in reading this Lease and are not a part
of the terms or provisions of this Lease. 
Whenever required by the context of this Lease, the singular shall
include the plural and the plural shall include the singular.  The masculine, feminine and neuter genders
shall each include the other.  In any
provision relating to the conduct, acts or omissions of Tenant, the term “Tenant”
shall include Tenant’s agents, employees, contractors, invitees, successors or
others using the Property with Tenant’s expressed or implied permission.

 

Section 13.05.        Incorporation of Prior Agreements; Modifications.  This Lease is the only agreement between the
parties pertaining to the lease of the Property and no other agreements are
effective.  All amendments to this Lease
shall be in writing and signed by all parties. 
Any other attempted amendment shall be void.

 

Section 13.06.        Notices. 
All notices required or permitted under this Lease shall be in writing
and shall be personally delivered or sent by national overnight carrier or
certified mail, return receipt requested, postage prepaid.  Notices to Tenant shall be delivered to the
address specified in Section 1.03 above. 
Notices to Landlord shall be delivered to the address specified in Section 1.02
above.  All notices shall be effective
upon delivery.  Either party may change
its notice address upon written notice to the other party.

 

Section 13.07.        Waivers. 
All waivers must be in writing and signed by the waiving party.  Landlord’s failure to enforce any provision
of this Lease or its acceptance of rent shall not be a waiver and shall not
prevent Landlord from enforcing that provision or any other provision of this
Lease in the future.  No statement on a
payment check from Tenant or in a letter accompanying a payment check shall be
binding on Landlord.  Landlord may, with
or without notice to Tenant, negotiate such check without being bound to the
conditions of such statement.

 

Section 13.08.        No Recordation.  Tenant shall not record this Lease without
prior written consent from Landlord. 
However, either Landlord or Tenant may require that a “Short Form”
memorandum of this Lease executed by both parties be recorded.  The party requiring such recording shall pay
all transfer taxes and recording fees.

 

Section 13.09.        Binding Effect; Choice of Law.  This Lease binds any party who legally
acquires any rights or interest in this Lease from Landlord or Tenant.  However, Landlord shall have no obligation to
Tenant’s successor unless the rights or interests of Tenant’s successor are
acquired in accordance with the terms of this Lease.  The laws of the state in which the Property
is located shall govern this Lease.

 

Section 13.10.        Corporate Authority; Partnership Authority.  If Tenant is a corporation, such corporation
represents and warrants that each person signing this Lease on behalf of Tenant
has full authority to do so and that this Lease binds the corporation.  Within thirty (30) days after this Lease is
signed, Tenant shall deliver to Landlord a certified copy of a resolution of
Tenant’s Board of Directors authorizing the execution of this Lease or other
evidence of such authority reasonably acceptable to Landlord.  If Tenant is a partnership, each person or
entity signing this Lease for Tenant represents and warrants that he or it is a
general partner of the partnership, that he or it has full authority to sign
for the partnership and that this Lease binds the partnership and all general
partners of the partnership.  Tenant
shall give written notice to Landlord of any general partner’s withdrawal or
addition.  Within thirty (30) days after
this Lease is signed, Tenant shall deliver to Landlord a copy of Tenant’s
recorded statement of partnership or certificate of limited partnership.

 

Section 13.11.        Joint and Several Liability.

 

Section 13.12.        See Addendum Section 13.12

 

16

 

Section 13.13.        Execution of Lease.  This Lease may be executed in counterparts
and, when all counterpart documents are executed, the counterparts shall
constitute a single binding instrument. 
Landlord’s delivery of this Lease to Tenant shall not be deemed to be an
offer to lease and shall not be binding upon either party until executed and delivered
by both parties.

 

Section 13.14.        Survival. 
All representations and warranties of Landlord and Tenant shall survive
the termination of this Lease.

 

ARTICLE FOURTEEN:       BROKERS

 

Section 14.01.        Broker’s Fee.  When this Lease is signed by and delivered to
both Landlord and Tenant, Landlord shall pay a real estate commission to
Landlord’s Broker named in Section 1.08 above, if any, as provided in the
written agreement between Landlord and Landlord’s Broker, or the sum stated in Section 1.09
above for services rendered to Landlord by Landlord’s Broker in this
transaction.  Landlord shall pay Landlord’s
Broker a commission if Tenant exercises any option to extend the Lease Term or
to buy the Property, or any similar option or right which Landlord may grant to
Tenant, or if Landlord’s Broker is the procuring cause of any other lease or
sale entered into between Landlord and Tenant covering the Property.  Such commission shall be the amount set forth
in Landlord’s Broker’s commission schedule in effect as of the execution
of this Lease.  If a Tenant’s Broker is
named in Section 1.08 above, Landlord’s Broker shall pay an appropriate
portion of its commission to Tenant’s Broker if so provided in any agreement
between Landlord’s Broker and Tenant’s Broker. 
Nothing contained in this Lease shall impose any obligation on Landlord
to pay a commission or fee to any party other than Landlord’s Broker.

 

Section 14.02.        Protection of Brokers.  If Landlord sells the Property, or assigns
Landlord’s interest in this Lease, the buyer or assignee shall, by accepting
such conveyance of the Property or assignment of the Lease, be conclusively
deemed to have agreed to make all payments to Landlord’s Broker thereafter
required of Landlord under this Article Fourteen.  Landlord’s Broker shall have the right to
bring a legal action to enforce or declare rights under this provision.  The prevailing party in such action shall be
entitled to reasonable attorneys’ fees to be paid by the losing party.  Such attorneys’ fees shall be fixed by the
court in such action.  This Paragraph is
included in this Lease for the benefit of Landlord’s Broker.

 

Section 14.03.        Broker’s Disclosure of Agency.  Landlord’s Broker hereby discloses to
Landlord and Tenant and Landlord and Tenant hereby consent to Landlord’s Broker
acting in this transaction as the agent of (check one):

 

ý    Landlord
exclusively; or

o    both
Landlord and Tenant.

 

Section 14.04.        No Other Brokers.  Tenant represents and warrants to Landlord
that the brokers named in Section 1.08 above are the only agents, brokers,
finders or other parties with whom Tenant has dealt who are or may be entitled
to any commission or fee with respect to this Lease or the Property.

 

ADDITIONAL PROVISIONS MAY
BE SET FORTH IN A RIDER OR RIDERS ATTACHED HERETO OR IN THE BLANK SPACE
BELOW.  IF NO ADDITIONAL PROVISONS ARE
INSERTED, PLEASE DRAW A LINE THROUGH THE SPACE BELOW.

 

17

 

Landlord and Tenant have signed this Lease at
the place and on the dates specified adjacent to their signatures below and
have initialed all Riders which are attached to or incorporated by reference in
this Lease.

 

 

	
   

  	
   

  	
  “LANDLORD”

  
	
   

  	
   

  
	
  Signed on

  	
   

  	
  , 19

  	
   

  	
   

  	
  MAJESTIC-MAPA PROPERTIES, LLC,

  
	
   

  	
  a California limited liability company

  
	
  at

  	
   

  	
   

  	
   

  
	
  MAJESTIC REALTY CO., a California corporation

  	
  By:

  	
  MAJESTIC REALTY CO.,

  a California corporation,

  its manager

  
	
   

  	
   

  
	
  By:

  	
  /s/ Edward P. Roski, Jr.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  	
  By:

  	
  /s/ David A. Wheeler

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Executive Vice President

  
	
   

  	
   

  
	
  By:

  	
  /s/ David A. Wheeler

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  	
  By:

  	
  /s/ Edward P. Roski Jr.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  “TENANT”

  
	
   

  	
   

  
	
  Signed on

  	
   

  	
  , 19

  	
   

  	
   

  	
  GILEAD SCIENCES, Inc. a Delaware
  corporation

  
	
   

  	
   

  
	
  at

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Crispin G.S. Eley

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  V.P. Pharmaceutical Operations

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Anthony D. Caracciolo

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  V.P. Manufacturing

  
														

 

IN ANY REAL ESTATE
TRANSACTION, IT IS RECOMMENDED THAT YOU CONSULT WITH A PROFESSIONAL, SUCH AS A
CIVIL ENGINEER, INDUSTRIAL HYGIENIST OR OTHER PERSON WITH EXPERIENCE IN
EVALUATING THE CONDITION OF THE PROPERTY, INCLUDING THE POSSIBLE PRESENCE OF
ASBESTOS, HAZARDOUS MATERIALS AND UNDERGROUND STORAGE TANKS.

 

THIS PRINTED FORM LEASE
HAS BEEN DRAFTED BY LEGAL COUNSEL AT THE DIRECTION OF THE SOUTHERN CALIFORNIA
CHAPTER OF THE SOCIETY OF INDUSTRIAL AND OFFICE REALTORS,® INC.  NO REPRESENTATION OR RECOMMENDATION IS MADE
BY THE SOUTHERN CALIFORNIA CHAPTER OF THE SOCIETY OF INDUSTRIAL AND OFFICE
REALTORS,® INC., ITS LEGAL COUNSEL, THE REAL ESTATE BROKERS NAMED HEREIN, OR
THEIR EMPLOYEES OR AGENTS, AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT OR TAX CONSEQUENCES
OF THIS LEASE OR OF THIS TRANSACTION. 
LANDLORD AND TENANT SHOULD RETAIN LEGAL COUNSEL TO ADVISE THEM ON SUCH
MATTERS AND SHOULD RELY UPON THE ADVICE OF SUCH LEGAL COUNSEL.

 

18

 

ADDENDUM
TO INDUSTRIAL REAL ESTATE LEASE

 

This Addendum (“Addendum”) is made and entered into by
MAJESTIC-MAPA PROPERTIES, LLC., a California limited liability company and
MAJESTIC REALTY CO., a California corporation (collectively, “Landlord”) and GILEAD SCIENCES, INC., a Delaware
corporation (“Tenant”), and is
dated as of the date set forth on Section 1.01 of the Industrial
Real Estate Lease between Landlord and Tenant (“Lease”) to which this Addendum is attached.  The promises, covenants, agreements and
declarations made and set forth herein are intended to and shall have the same
force and effect as if set forth at length in the body of the Lease.  To the extent that the provisions of this
Addendum are inconsistent with the terms and conditions of the Lease, the terms
and conditions of this Addendum shall control.

 

SECTION 1.12(a)                  BASE
RENT.

 

Commencing as of the
twenty-fifth (25th) “Lease Month,” as that term is defined below, and
continuing through the thirty-sixth (36th) Lease Month, the monthly Base Rent
shall be an amount equal to TWENTY-FOUR THOUSAND SIX HUNDRED FIFTY-SIX AND
NO/100  DOLLARS ($24,656.00).  Commencing as of the thirty-seventh (37th)
Lease Month and continuing through the sixtieth (60th) Lease Month, the monthly
Base Rent shall be equal to TWENTY-FIVE THOUSAND SEVEN HUNDRED TWENTY-EIGHT AND
NO/100  DOLLARS ($25,728.00).  The term “Lease Month” shall mean each
consecutive month during the Lease Term, with the first Lease Month commencing
on the Lease Commencement Date.

 

SECTION 5.02                       MANNER
OF USE.

 

Section 5.02
is hereby amended by adding the following at the end thereof:

 

“Tenant shall not do
anything or suffer anything to be done in or about the Property which will in
any way conflict with any law, statute, ordinance or other governmental rule,
regulation or requirement now in force or which may hereafter be enacted or
promulgated (collectively, “Applicable Laws”).  Tenant shall, at its sole cost and expense,
promptly comply with any Applicable Laws which relate to (i) Tenant’s specific
use of the Property, (ii) any alteration or any tenant improvements or which
are triggered by any alteration or any tenant improvement made by Tenant.  Should any standard or regulation now or
hereafter be imposed on Landlord or Tenant by any state, federal or local
governmental body charged with the establishment, regulation and enforcement of
occupational, health or safety standards for employers, employees, landlords or
tenants, then Landlord and Tenant, as applicable, agree, at its sole cost and
expense to comply promptly with such standards or regulations.  The judgment of any court of competent jurisdiction
or the admission of Tenant in any judicial action, regardless of whether
Landlord is a party thereto, that Tenant has violated any of said governmental
measures, shall be conclusive of that fact as between Landlord and Tenant.  Landlord shall comply with all Applicable
Laws relating to the Property, as of the Lease Commencement Date if compliance
with such Applicable Laws is required by a governmental agency and provided
that compliance with such Applicable Laws is not the responsibility of Tenant
under this Lease, and provided further that Landlord’s failure to comply
therewith would unreasonably and materially affect the safety of Tenant’s
employees or create a significant health hazard for Tenant’s employees.”

 

SECTION 5.03                       HAZARDOUS
MATERIALS.

 

5.03.1      DEFINITIONS.

 

A.            “Hazardous Material” means any substance,
whether solid, liquid or gaseous in nature:

 

(i)            the
presence of which requires investigation or remediation under any federal,
state or local statute, regulation, ordinance, order, action, policy or common
law; or

 

(ii)           which
is or becomes defined as a “hazardous waste,” “hazardous substance,”  pollutant or contaminant under any federal,
state or local statute, regulation, rule or ordinance or

 

	
   

  	
   

  	
  542 West Covina
  Blvd., San Dimas, CA

  
	
  September 6,
  2000

  	
   

  	
  [GILEAD SCIENCES, INC.]

  

 

1

 

amendments thereto
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. section 9601 et seq.) and/or the
Resource Conservation and Recovery Act (42 U.S.C. section 6901 et
seq.), the Hazardous Materials Transportation Act (49  U.S.C. section 1801 et seq.), the Federal
Water Pollution Control Act (33 U.S.C. section 1251  et seq.), the Clean Air Act (42 U.S.C. section 7401
et seq.), the Toxic Substances Control Act, as amended (15 U.S.C. section 2601
et seq.), and the Occupational Safety and Health Act (29 U.S.C.  section 651 et seq.), as these laws have
been amended or supplemented; or

 

(iii)          which
is toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic, or otherwise hazardous or is or becomes regulated by
any governmental authority, agency, department, commission, board, agency or
instrumentality of the United States, the State of California or any
political subdivision thereof; or

 

(iv)          the
presence of which on the Property causes or threatens to cause a nuisance upon
the Property or to adjacent properties or poses or threatens to pose a hazard
to the health or safety of persons on or about the Property; or

 

(v)           the
presence of which on adjacent properties could constitute a trespass by Tenant;
or

 

(vi)          without
limitation which contains gasoline, diesel fuel or other petroleum
hydrocarbons; or

 

(vii)         without
limitation which contains polychlorinated biphenyls (PCBs), asbestos or urea
formaldehyde foam insulation; or

 

(viii)        without
limitation which contains radon gas.

 

B.            “Environmental Requirements” means all
applicable present and future:

 

(i)            statutes,
regulations, rules, ordinances, codes, licenses, permits, orders, approvals,
plans, authorizations, concessions, franchises, and similar items (including,
but not limited to those pertaining to reporting, licensing,
permitting, investigation and remediation), of all Governmental Agencies; and

 

(ii)           all
applicable judicial, administrative, and regulatory decrees, judgments, and
orders relating to the protection of human health or the environment, including,
without limitation, all requirements pertaining to emissions, discharges,
releases, or threatened releases of Hazardous Materials or chemical substances
into the air, surface water, groundwater or land, or relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of Hazardous Materials or chemical substances.

 

C.            “Environmental Damages” means all claims,
judgments, damages, losses, penalties, fines, liabilities (including strict
liability), encumbrances, liens, costs, and expenses (including the expense of
investigation and defense of any claim, whether or not such claim is ultimately
defeated, or the amount of any good faith settlement or judgment arising
from any such claim) of whatever kind or nature, contingent or
otherwise, matured or unmatured, foreseeable or unforeseeable (including without
limitation reasonable attorneys’ fees and disbursements and consultants’ fees)
any of which are incurred at any time as a result of the existence of Hazardous
Material upon, about, or beneath the Property or migrating or threatening to
migrate to or from the Property, or the existence of a violation of
Environmental Requirements pertaining to the Property and the activities
thereon, regardless of whether the existence of such Hazardous Material or the
violation of Environmental Requirements arose prior to the present ownership or
operation of the Property.  Environmental
Damages include, without limitation:

 

(i)            damages
for personal injury, or injury to property or natural resources occurring upon
or off of the Property, including, without limitation, lost profits,
consequential damages, the cost of demolition and rebuilding of any
improvements on real property, interest, penalties and damages arising
from claims brought by or on behalf of employees of Tenant (with
respect to which Tenant waives any right to raise as a defense against
Landlord any immunity to which it may be entitled under any
industrial or worker’s compensation laws);

 

2

 

(ii)           fees,
costs or expenses incurred for the services of attorneys, consultants, contractors,
experts, laboratories and all other costs incurred in connection with the
investigation or remediation of such Hazardous Materials or violation of such
Environmental Requirements, including, but not limited to, the preparation
of any feasibility studies or reports or the performance of any cleanup,
remediation, removal, response, abatement, containment, closure, restoration or
monitoring work required by any Governmental Agency or reasonably necessary to
make full economic use of the Property or any other property in a manner
consistent with its current use or otherwise expended in connection with such
conditions, and including, without limitation, any attorneys’ fees, costs
and expenses incurred in enforcing the provisions of this Lease or collecting
any sums due hereunder;

 

(iii)          liability
to any third person or Governmental Agency to indemnify such person or
Governmental Agency for costs expended in connection with the items referenced
in subparagraph (ii) above; and

 

(iv)          diminution
in the fair market value of the Property, including, without limitation, any
reduction in fair market rental value or life expectancy of the Property or the
improvements located thereon or the restriction on the use of or adverse impact
on the marketing of the Property or any portion thereof.

 

D.            “Governmental Agency” means all governmental
agencies, departments, commissions, boards, bureaus or instrumentalities of the
United States, states, counties, cities and political subdivisions thereof.

 

E.             The
“Tenant Group” means Tenant,
Tenant’s successors, assignees, guarantors, officers, directors, agents,
employees, invitees, permitees or other parties under the supervision or
control of Tenant or entering the Property during the term of this Lease with
the permission or knowledge of Tenant other than Landlord or its agents or
employees.

 

5.03.2      PROHIBITIONS.

 

A.            Other
than normal quantities of general office supplies and except as specified on
Exhibit ”D” attached hereto, Tenant shall not cause, permit or suffer any
Hazardous Material to be brought upon, treated, kept, stored, disposed of,
discharged, released, produced, manufactured, generated, refined or used upon,
about or beneath the Property by the Tenant Group, or any other
person without the prior written consent of Landlord.  From time to time during the term of this
Lease, Tenant may request Landlord’s approval of Tenant’s use of other
Hazardous Materials, which approval may be withheld in Landlord’s sole
discretion.  Tenant shall, prior to the
Commencement Date, provide to Landlord for those Hazardous Materials
described on Exhibit “D” (a) a description of handling, storage,
use and disposal procedures, and (b) all “community right to know” plans or
disclosures and/or emergency response plans which Tenant is required to supply
to local Governmental Agencies pursuant to any Environmental Requirements.

 

B.            Tenant
shall not cause, permit or suffer the existence or the commission by the Tenant
Group, or by any other person, of a violation of any Environmental Requirements
upon, about or beneath the Property.

 

C.            Tenant
shall neither create or suffer to exist, nor permit the Tenant Group to create
or suffer to exist any lien, security interest or other charge or
encumbrance of any kind with respect to the Property, including, without
limitation, any lien imposed pursuant to section 107(f) of the Superfund
Amendments and Reauthorization Act of 1986 (42 U.S.C. section 9607(1)) or
any similar state statute.

 

D.            Tenant
shall not install, operate or maintain any above or below grade tank, sump,
pit, pond, lagoon or other storage or treatment vessel or device on the
Property without Landlord’s prior written consent.

 

5.03.3      INDEMNITY.

 

A.            Tenant,
its successors, assigns and guarantors, agree to indemnify, defend, reimburse
and hold harmless:

 

(i)            Landlord;
and

 

3

 

(ii)           any
other person who acquires all or a portion of the Property in any manner
(including purchase at a foreclosure sale) or who becomes entitled to exercise
the rights and remedies of Landlord under this Lease; and

 

(iii)          the
directors, officers, shareholders, employees, partners, agents, contractors,
subcontractors, experts, licensees, affiliates, lessees, mortgagees, trustees,
heirs, devisees, successors, assigns and invitees of such persons, from and
against any and all Environmental Damages which exist as a result of the
activities or negligence of the Tenant Group or which exist as a result of the
breach of any warranty or covenant or the inaccuracy of any representation of
Tenant contained in this Lease, or by Tenant’s remediation of the Property or
failure to meet its obligations contained in this Lease.

 

B.            The
obligations contained in this Section 5.03 shall include, but not
be limited to, the burden and expense of defending all claims, suits and
administrative proceedings, even if such claims, suits or proceedings are
groundless, false or fraudulent, and conducting all negotiations of any
description, and paying and discharging, when and as the same become due, any
and all judgments, penalties or other sums due against such indemnified
persons.  Landlord, at its sole expense,
may employ additional counsel of its choice to associate with counsel
representing Tenant.

 

C.            Landlord
shall have the right but not the obligation to join and participate in, and
control, if it so elects, any legal proceedings or actions initiated in
connection with Tenant’s Hazardous Material activities.  Landlord may also negotiate, defend, approve
and appeal any action taken or issued by any applicable governmental authority
with regard to contamination of the Property by a Hazardous Material.

 

D.            The
obligations of Tenant in this paragraph shall survive the expiration or
termination of this Lease.

 

E.             The
obligations of Tenant under this paragraph shall not be affected by any investigation
by or on behalf of Landlord, or by any information which Landlord may have or
obtain with respect thereto.

 

5.03.4      OBLIGATION
TO REMEDIATE.

 

In addition to the
obligation of Tenant to indemnify Landlord pursuant to this Lease, Tenant
shall, upon approval and demand of Landlord, at its sole cost and expense and
using contractors approved by Landlord, promptly take all actions to remediate
the Property which are required by any Governmental Agency, or which are
reasonably necessary to mitigate Environmental Damages or to allow full
economic use of the Property, which remediation is necessitated from the
presence upon, about or beneath the Property, at any time during or upon
termination of this Lease, of a Hazardous Material or a violation of
Environmental Requirements existing as a result of the activities or negligence
of the Tenant Group.  Such actions shall
include, but not be limited to, the investigation of the environmental
condition of the Property, the preparation of any feasibility studies, reports
or remedial plans, and the performance of any cleanup, remediation,
containment, operation, maintenance, monitoring or restoration work, whether on
or off the Property, which shall be performed in a manner approved by
Landlord.  Tenant shall take all actions
necessary to restore the Property to the condition existing prior to the Tenant
Group’s introduction of Hazardous Material upon, about or beneath the Property,
notwithstanding any lesser standard of remediation allowable under applicable
law or governmental policies.

 

5.03.5      RIGHT
TO INSPECT.

 

Landlord shall have the
right in its sole and absolute discretion, but not the duty, to enter and
conduct an inspection of the Property, including invasive tests, at any
reasonable time to determine whether Tenant is complying with the terms of the
Lease, including, but not limited to, the compliance of the Property and the
activities thereon with Environmental Requirements and the existence of
Environmental Damages as a result of the condition of the Property or
surrounding properties and activities thereon. 
Landlord shall have the right, but not the duty, to retain any
independent professional consultant (the “Consultant”)
to enter the Property to conduct such an inspection or to review any report
prepared by or for Tenant concerning such compliance.  The cost of the Consultant shall be paid by
Landlord unless such investigation discloses a violation of any Environmental
Requirement by the Tenant Group or the existence of a Hazardous Material on the
Property or any other property caused by the activities or negligence of the
Tenant Group (other than

 

4

 

Hazardous Materials used in compliance with all Environmental
Requirements and previously approved by Landlord), in which case Tenant shall
pay the cost of the Consultant.  Tenant
hereby grants to Landlord, and the agents, employees, consultants and
contractors of Landlord the right to enter the Property and to perform such
tests on the Property as are reasonably necessary to conduct such reviews and
investigations.  Landlord shall use
commercially reasonable efforts to minimize interference with the business of
Tenant.

 

5.03.6      NOTIFICATION.

 

If Tenant shall become
aware of or receive notice or other communication concerning any actual,
alleged, suspected or threatened violation of Environmental Requirements, or liability
of Tenant for Environmental Damages in connection with the Property or pastor
present activities of any person thereon, including, but not limited to, notice
or other communication concerning any actual or threatened investigation,
inquiry, lawsuit, claim, citation, directive, summons, proceeding, complaint,
notice, order, writ, or injunction, relating to same, then Tenant shall deliver
to Landlord within ten (10) days of the receipt of such notice or communication
by Tenant, a written description of said violation, liability, or actual or
threatened event or condition, together with copies of any documents evidencing
same.  Receipt of such notice shall not
be deemed to create any obligation on the part of Landlord to defend or
otherwise respond to any such notification.

 

If requested by Landlord,
Tenant shall disclose to Landlord the names and amounts of all Hazardous
Materials other than general office supplies referred to in Section 5.03.2
of this Addendum, which were used, generated, treated, handled, stored or
disposed of on the Property or which Tenant intends to use, generate, treat,
handle, store or dispose of on the Property. 
The foregoing in no way shall limit the necessity for Tenant obtaining
Landlord’s consent pursuant to Section 5.03.2 of this Addendum.

 

5.03.7      SURRENDER
OF PROPERTY.

 

In the ninety (90) days
prior to the expiration or termination of the Lease Term, and for up to ninety
(90) days after Tenant fully surrenders possession of the Property, Landlord
may have an environmental assessment of the Property performed in accordance
with Section 5.03.5 of this Addendum.  Tenant shall perform, at its sole cost and
expense, any clean-up or remedial work recommended by the Consultant which is
necessary to remove, mitigate or remediate any Hazardous Materials and/or
contamination of the Property caused by the activities or negligence of the
Tenant Group.

 

5.03.8      ASSIGNMENT
AND SUBLETTING.

 

In the event the Lease
provides that Tenant may assign the Lease or sublet the Property subject to Landlord’s
consent and/or certain other conditions, and if the proposed assignee’s or
sublessee’s activities in or about the Property involve the use, handling,
storage or disposal of any Hazardous Materials other than general office
supplies or those used by Tenant and in quantities and processes similar to
Tenant’s uses in compliance with the Addendum, (i) it shall be reasonable for Landlord
to withhold its consent to such assignment or sublease in light of the risk of
contamination posed by such activities and/or (ii) Landlord may impose an
additional condition to such assignment or sublease which requires Tenant to
reasonably establish that such assignee’s or sublessee’s activities pose no
materially greater risk of contamination to the Property than do Tenant’s
permitted activities in view of (a) the quantities, toxicity and other
properties of the Hazardous Materials to be used by such assignee or sublessee,
(b) the precautions against a release of Hazardous Materials such assignee
or sublessee agrees to implement, (c) such assignee’s or sublessee’s
financial condition as it relates to its ability to fund a major clean-up and
(d) such assignee’s or sublessee’s policy and historical record respecting
its willingness to respond to the clean up of a release of Hazardous Materials.

 

5.03.9      SURVIVAL
OF HAZARDOUS MATERIALS OBLIGATION.

 

Tenant’s breach of any of
its covenants or obligations under this Addendum shall constitute a material
default under the Lease.  The obligations
of Tenant under this Addendum shall survive the expiration or earlier
termination of the Lease without any limitation, and shall constitute
obligations that are independent and severable from Tenant’s covenants and
obligations to pay rent under the Lease.

 

5

 

5.03.10    LANDLORD’S
HAZARDOUS MATERIALS OBLIGATIONS.

 

Landlord shall be solely
responsible to remediate claims, judgments, damages, penalties, fines, costs,
liabilities and losses which arise as a result of any contamination directly
arising from the introduction of Hazardous Materials into the Property by
Landlord, its agents, employees or contractors in compliance with applicable
law.  Notwithstanding the foregoing,
Landlord shall not be responsible or liable for any consequential damages.  The obligation of Landlord in this Section 5.03.10
shall survive the expiration or termination of this Lease.

 

SECTION 5.04                       SIGNS.

 

Notwithstanding the
foregoing, subject to Landlord’s prior written approval, which shall not be
unreasonably withheld, delayed or conditioned, and provided all signs are in
keeping with the quality, design and style of the industrial park within which
the Property is located, Tenant, at its sole cost and expense, may install
identification signage (limited to one monument sign (“Monument Sign”) and two property building
signs (“Building Sign”) per street
frontage (collectively, “sign(s)”)
in the Property; provided, however, that (i) the size, color, location,
materials and design of such sign shall be subject to Landlord’s prior written
consent, which shall not be unreasonably withheld, delayed or conditioned; (ii)
such sign shall comply with all applicable governmental rules and regulations
and the Property’s covenants, conditions and restrictions; (iii)  such sign shall be personal to the original
Tenant named in Section 1.03 of this Lease (and not any other
assignee, sublessee or transferee of Tenant’s interest in this Lease) (“Original Tenant”); (iv)  such Building Sign shall not be painted
directly on the building or attached or placed on the roof of the building; (v)
such sign shall only advertise Gilead Sciences, and its pharmaceutical
business; (vi)  consistent with Landlord’s
signage program and rules; (vii) Tenant’s continuing signage right shall be
contingent upon the Original Tenant actually occupying the entire Property; and
(viii) Tenant’s continuing signage right shall be contingent upon Tenant
maintaining such sign in a first-class condition.  Tenant shall be responsible for all costs
incurred in connection with the design, construction, installation, repair and
maintenance of Tenant’s sign(s).  Upon
the expiration or earlier termination of this Lease, Tenant shall cause Tenant’s
sign(s) to be removed and shall repair any damage caused by such removal.  Any signs, notices, logos, pictures, names or
advertisements which are installed and that have not been separately approved
by Landlord may be removed by Landlord without notice by Landlord to Tenant at
Tenant’s sole cost and expense.”

 

SECTION 5.05                       LANDLORD’S
INDEMNITY.

 

Landlord agrees to
indemnify and hold harmless Tenant against and from any and all claims and
costs, reasonable attorneys’ fees or liabilities incurred as a direct result of
any claim or any action or proceeding directly arising from the following, except
to the extent of Tenant’s actions or omissions: (i) any breach or default in
the performance of any obligation of Landlord hereunder; or (ii) any active
negligence or willful misconduct of Landlord, or any of its agents, employees,
invitees, licensees or contractors. 
Notwithstanding anything to the contrary set forth in this Lease, either
party’s agreement to indemnify the other party as set forth in this Section 5.05
shall be ineffective to the extent the matters for which such party agreed to
indemnify the other party are covered by insurance required to be carried by
the non-indemnifying party pursuant to this Lease.  Further, Tenant’s agreement to indemnify
Landlord and Landlord’s agreement to indemnify Tenant pursuant to this Section 5.05,
are not intended to and shall not relieve any insurance carrier of its
obligations under policies required to be carried pursuant to the provisions of
this Lease, to the extent such policies cover, or if carried, would have
covered the matters, subject to the parties’ respective indemnification
obligations; nor shall they supersede any inconsistent agreement of the parties
set forth in any other provision of this Lease. 
Notwithstanding anything to the contrary contained in this Lease,
nothing in this Lease shall impose any obligations on Tenant or Landlord to be
responsible or liable for, and each hereby releases the other from all
liability for, consequential damages other than those consequential damages
incurred by Landlord in connection with a holdover of the Property by Tenant
after the expiration or earlier termination of this Lease, incurred by Landlord
in connection with the contamination of the Property or any property resulting
from the presence or use of Hazardous Materials caused or permitted by the Tenant
Group or incurred by Landlord in connection with any repair, physical
construction or improvement work performed by or on behalf of Tenant in the
Property.  If either party breaches this
Lease by its failure to carry the required insurance hereunder, such failure
shall automatically be deemed to be a covenant and agreement by the failing
party to self-insure such required coverage, with full waiver of subrogation in
favor of the other party.

 

6

 

SECTION 6.03          LANDLORD’S
OBLIGATIONS.

 

Subject to the provisions
of Article Seven (Damage or Destruction) and Article Eight (Condemnation),
and except for damage caused by any act or omission of Tenant, or Tenant’s
employees, agents, contractors or invitees, or as a result of Tenant’s
alterations, Landlord shall keep the structural portions of the building
foundation, roof structure and the exterior walls on the Property in good
order, condition and repair.  However,
Landlord shall not be obligated to maintain or repair roof membrane, windows,
doors, plate glass or the surfaces of walls. 
Landlord shall not be obligated to make any repairs under this Section 6.03
until a reasonable time after receipt of a written notice from Tenant of the
need for such repairs.  Tenant waives the
benefit of any present or future law which might give Tenant the right to
repair the Property at Landlord’s expense or to terminate the Lease because of
the condition of the Property.  Landlord
hereby assigns to Tenant all warranties and guaranties by the contractor who
constructed the building and Tenant Improvements located on the Property and
Tenant waives all claims against Landlord relating thereto.

 

SECTION 6.06                       CONDITION
UPON TERMINATION.

 

Section 6.06
is hereby amended by adding the following at the end thereof:

 

“Notwithstanding the
foregoing, Tenant may request at the time it seeks Landlord’s consent to any
alterations, additions or improvements (collectively, the “Alterations”), that Landlord state at the
time it grants approval, whether or not removal will be required at the end of
the Lease Term.  Such request shall
specifically cite this Lease provision and Landlord’s obligation to make such
statement.”

 

SECTION 9.02                       TENANT
AFFILIATE.

 

Notwithstanding anything
to the contrary contained in Section 9.01 of this Lease, an
assignment or subletting of all or a portion of the Property to an affiliate of
Tenant (an entity which is controlled by, controls, or is under common control
with, Tenant) or to any corporation resulting from a merger of, consolidation
with or acquisition of Tenant (collectively, “Tenant
Affiliate”), shall not be deemed a transfer under Section 9.01
for which consent is required, provided that: (i)  Tenant notifies Landlord of any such
assignment or sublease; (ii) promptly supplies Landlord with any documents or
information requested by Landlord regarding such assignment or sublease or such
affiliate; (iii) if requested by Landlord, guaranty this Lease using Landlord’s
standard guaranty form;  (iv) Tenant
Affiliate assumes all of Tenant’s obligations under this Lease; and (v) such
assignment or sublease is not a subterfuge by Tenant to avoid its obligations
under this Lease.  “Control,” as used herein, shall mean the
ownership, directly or indirectly, of at least fifty-one percent (51%) of the
voting securities of, or possession of the right to vote, in the ordinary
direction of its affairs, of at least fifty-one percent (51%) of the voting
interest in, any person or entity.  In
such instance, Tenant shall not be obligated to pay Landlord the increased Base
Rent described in Section 9.05(b)(i)  resulting from a Profit derived from Tenant’s
Affiliate.

 

SECTION 10.07                     ARBITRATION.

 

10.07.1    General
Submittals to Arbitration.  The
submittal of all matters to arbitration in accordance with the terms of this Section 10.07
is the sole and exclusive method, means and procedure to resolve any and all
claims, disputes or disagreements arising under this Lease, including, but not
limited to, any matter relating to Landlord’s failure to approve an assignment,
sublease or other transfer of Tenant’s interest in the Lease under the terms of
this Lease, any other defaults by Landlord, or any default by Tenant, except
for (i) the determination of the Fair Rental Value, which determination shall
be made pursuant to Option to Extend Term Lease Rider attached to this Lease,
(ii) all claims by either party which (A) seek anything other than enforcement
of rights under this Lease, including, without limitation, a claim of
constructive eviction, or (B) are primarily founded upon matters of fraud,
willful misconduct, bad faith or any other allegations of tortious action, and
seek the award of punitive or exemplary damages, (iii) Landlord’s exercise of
any unlawful detainer rights pursuant to California law or rights or remedies
used by Landlord to gain possession of the Property or terminate Tenant’s right
of possession to the Property, and disputes relating thereto, which matters
shall be resolved by suit filed in the Superior Court of Los Angeles County,
California, the decision of which court shall be subject to appeal pursuant to
applicable law, and (iv) claims for restraining orders or other injunctive
relief.  The parties hereby irrevocably
waive any and all rights to the contrary and shall at all times conduct
themselves in strict, full, complete

 

7

 

and timely
accordance with the terms of this Section 10.07 and all attempts to
circumvent the terms of this Section 10.07 shall be absolutely null
and void and of no force or effect whatsoever. 
As to any matter submitted to arbitration (except with respect to the
payment of money) to determine whether a matter would, with the passage of
time, constitute a default under this Lease, such passage of time shall not
commence to run until any such affirmative arbitrated determination, as long as
it is simultaneously determined in such arbitration that the challenge of such
matter as a potential default by Tenant or Landlord, as the case may be, was
made in good faith.  As to any matter
submitted to arbitration with respect to the payment of money, to determine
whether a matter would, with the passage of time, constitute a default under
this Lease, such passage of time shall not commence to run in the event that the
party which is obligated to make the payment does in fact make the payment to
the other party.  Such payment can be
made “under protest,” which shall occur when such payment is accompanied by a
good faith notice stating the reasons that the party has elected to make a
payment under protest.  Such protest will
be deemed waived unless the subject matter identified in the protest is
submitted to arbitration as set forth in this Section 10.07.

 

10.07.2    Retired
Judges.  Any dispute to be arbitrated
pursuant to the provisions if this Section 10.07 shall be
determined by binding arbitration before a retired judge of the Superior Court
of the State of California, or a retired judge from the California Court of
Appeal (the “Arbitrator”).   Such
arbitration shall be initiated by the parties, or either of them, within ten
(10) days after either party sends written notice (the “Arbitration Notice”) of a demand to
arbitrate by registered or certified mail to the other party.  The Arbitration Notice shall contain a description
of the subject matter of the arbitration, the dispute with respect thereto, the
amount involved, if any, and the remedy or determination sought.  The parties shall thereupon select a retired
judge from either the Superior Court of California or the California Court of
Appeal to serve as the Arbitrator.  If
the parties are unable to promptly agree on the identity of the Arbitrator,
then the retired judge which shall serve as Arbitrator shall be selected by the
Presiding Judge of the Los Angeles County Superior Court.  Upon selection of the Arbitrator, the parties’
dispute shall be resolved by binding arbitration under the commercial
arbitration rules of the American Arbitration Association then in effect.

 

10.07.3    Arbitration
Procedure.

 

10.07.3.1             Pre-Decision
Actions.  The Arbitrator shall schedule a
pre-hearing conference to resolve procedural matters, arrange for the exchange
of information, obtain stipulations, and narrow the issues.  The parties will submit proposed discovery
schedules to the Arbitrator at the pre-hearing conference.  The scope and duration of discovery will be
within the sole discretion of the Arbitrator. 
The Arbitrator shall have the discretion to order a pre-hearing exchange
of information by the parties, including, without limitation, production of
requested documents, exchange of summaries of testimony of proposed witnesses,
and examination by deposition of parties and third-party witnesses.  This discretion shall be exercised in favor
of discovery reasonable under the circumstances.

 

10.07.3.2             The
Decision.  The arbitration shall be
conducted in Los Angeles, California. 
Any party may be represented by counsel or other authorized
representative.  In rendering a
decision(s), the Arbitrator shall determine the rights and obligations of the
parties according to the substantive and procedural laws of California and the
terms and provisions of this Lease.  The
Arbitrator’s decision shall be based on the evidence introduced at the hearing,
including all logical and reasonable inferences therefrom.  The Arbitrator may make any determination,
and/or grant any remedy or relief that is just and equitable.  The decision must be based on, and
accompanied by, a written statement of decision explaining the factual and legal
basis for the decision as to each of the principal controverted issues.  The decision shall be conclusive and binding,
and it may thereafter be confirmed as a judgment by the Superior Court of the
State of California, subject only to challenge on the grounds set forth in
California Code of the Civil Procedure Section 1286.2.  The validity and enforceability of the
Arbitrator’s decision is to be determined exclusively by the California courts
pursuant to the provisions of this Lease. 
The Arbitrator may award costs, including, without limitation, attorneys’
fees, and expert and witness costs, to the prevailing party, if any, as
determined by the Arbitrator in the Arbitrator’s discretion.   The
Arbitrator’s fees and costs shall be paid by the non-prevailing party as
determined by the Arbitrator in the Arbitrator’s discretion.  A party shall be determined by the Arbitrator
to be the prevailing party if its proposal for the resolution of dispute is the
closer to that adopted by the Arbitrator.

 

8

 

SECTION 11.01     NON-DISTURBANCE.

 

Landlord shall use
commercially reasonable efforts to provide Tenant with a non-disturbance
agreement, in such form as attached hereto as Exhibit “B” from Landlord’s
presently existing lender.

 

SECTION 13.12                     FORCE
MAJEURE.

 

If Landlord or Tenant
cannot perform any of its obligations due to events beyond such applicable
party’s control, except with respect to the obligations imposed with regard to
Base Rent, Additional Rent and other charges to be paid by Tenant pursuant to
this Lease, the time provided for performing such obligations shall be extended
by a period of time equal to the duration of such events.  Events beyond Landlord’s or Tenant’s control
include, but are not limited to, acts of God, war, civil commotion, labor
disputes, strikes, fire, flood or other casualty, shortages of labor or
material, government regulation or restriction, waiting periods for obtaining
governmental permits or approval or weather conditions.

 

ARTICLE FIFTEEN

REVENUE AND EXPENSE ACCOUNTING

 

Landlord and Tenant agree
that, for all purposes (including any determination under Section 467 of
the Internal Revenue Code), rental income will accrue to the Landlord and
rental expenses will accrue to the Tenant in the amounts and as of the dates
rent is payable under the Lease.

 

ARTICLE SIXTEEN

LANDSCAPE MAINTENANCE

 

Notwithstanding the
provisions of Sections 6.03 and 6.04, Landlord shall maintain, at
Tenant’s expense, the landscaping of the Property and, if applicable, the
common areas.  Such maintenance shall
include gardening, tree trimming, replacement or repair of landscaping,
landscape irrigation systems and similar items. 
Such maintenance shall also include sweeping and cleaning of asphalt,
concrete or other surfaces on the driveway, parking areas, yard areas, loading
areas or other paved or covered surfaces. 
In connection with Landlord’s obligations under this Article, Landlord
may enter into a contract with a landscape contractor of Landlord’s choice to
provide some (but not necessarily all) of the maintenance services listed
above.  Tenant’s monthly cost of such
contract, hereinafter referred to as the “Landscape Fee” is currently SIX
HUNDRED FIFTY AND NO/100 DOLLARS ($650.00). 
Landlord shall use its commercially reasonable efforts to maintain competitive
contracts and shall promptly notify Tenant of any increase in the Landscape
Fee.  Tenant agrees to pay monthly to
Landlord, as Additional Rent, the Landscape Fee.  Tenant shall make such payment together with
Tenant’s monthly rental payment, without the necessity of notice from
Landlord.  It is the understanding of the
parties that the Landscape Fee only pertains to routine landscape maintenance
on the Property and that Landlord may incur expenses in addition to the
Landscape Fee (which shall not include Landlord’s overhead and Landlord’s
administrative expenses) in meeting its obligations set forth above.  Tenant shall pay to Landlord, as Additional
Rent, within ten (10) days after demand therefore, the cost of such additional
expenses.

 

ARTICLE SEVENTEEN

PURCHASE OPTION - RIGHT OF FIRST REFUSAL

 

Landlord hereby grants to
the original Tenant, whose name is set forth in Section 1.03 of
this Lease (“Original Tenant”) and
Tenant Affiliate, a one-time right of first refusal to purchase the Property,
in accordance with the terms of this Article 17.  Landlord agrees that provided Tenant has not
been in default under this Lease, Landlord shall deliver written notice to
Tenant (“Landlord’s First Refusal Notice”)
prior to the time Landlord intends to submit to a “third party,” or accept from
a “third party,” a bona fide proposal to purchase the entire Property.  For purposes of this Article 17  a “third party” shall not include a party
affiliated or related to Landlord. 
Landlord shall identify in Landlord’s First Refusal Notice the economic
terms upon which Landlord would sell the Property to Tenant, including, without
limitation, the anticipated closing date and the purchase price to be paid for
the Property (collectively, the “Economic
Terms”).

 

9

 

SECTION 17.1                       PROCEDURE
FOR ACCEPTANCE.

 

On or before the date
which is seven (7) days after Tenant’s receipt of Landlord’s First Refusal
Notice (the “Election Day”),
Tenant shall deliver written notice to Landlord (“Tenant’s Election Notice”) pursuant to which Tenant shall have
the one-time right to elect either to (i)  purchase the Property upon the Economic Terms
set forth in the First Refusal Notice, or (ii) refuse to purchase the
Property.  If Tenant does not respond in
writing to Landlord’s First Refusal Notice by the Election Date, Tenant shall
be deemed to have elected not to purchase the Property.

 

SECTION 17.2                       TENANT’S
ELECTION NOT TO PURCHASE.

 

If Tenant elects or is deemed
to have elected not to purchase the Property, then Tenant’s first refusal
rights set forth in this Article 17 shall terminate with respect to
the Property, and Landlord shall have the right to sell the Property to anyone
to whom Landlord desires on any terms Landlord desires, provided, however, if
Tenant sends a notice in accordance with Section 17.1(ii) above
then Tenant’s right of first refusal may arise again if Landlord intends to
sell the Property at a purchase price that is ten percent (10%) below such
purchase price set forth in the Landlord First Refusal Notice or on other
economic terms that are materially more favorable than such set forth in
Landlord’s First Refusal Notice.

 

SECTION 17.3                       CONDITION
OF PROPERTY.

 

If Tenant elects to
purchase the Property pursuant to this Article 17, Landlord and
Tenant shall promptly execute the proper documents necessary to memorialize
Tenant’s purchase of the Property upon the terms and conditions set forth in
this Article 17.  If Tenant
purchases the Property pursuant to the terms of this Article 17,
Tenant shall take the Property in its “AS-IS” condition, unless otherwise
specified as part of the Economic Terms in Landlord’s First Refusal Notice,
subject, however, to Tenant’s review and approval of a preliminary title report
within ten (10) days after receipt thereof.

 

SECTION 17.4                       SUSPENSION
OF RIGHT OF FIRST REFUSAL.

 

Tenant shall not have the
right to purchase the Property as provided in this Article 17 if,
as of the date of attempted exercise of this right of first refusal by Tenant
or as of the date escrow closes, Tenant has been in default under this Lease
beyond applicable notice and cure periods. 
In addition, and notwithstanding anything to the contrary contained in
this Article 17, the rights to purchase the Property contained in
this Article 17 shall be personal to the Original Tenant and Tenant
Affiliate and may only be exercised by the Original Tenant (and not any
assignee, sublessee or other transferee of Tenant’s interest in this Lease) and
Tenant Affiliate if, at the time of the attempted exercise of any such right of
first refusal, the Original Tenant and Tenant Affiliate occupies the entire
Property.

 

SECTION 17.5                       MULTIPLE
BUILDING TRANSACTIONS.

 

Notwithstanding anything
to the contrary herein, Tenant’s right of first refusal shall not apply to and
shall not include: (i) “REIT” transactions; (ii) if the Property is part of
multiple properties included within a “package sale”; (iii) any sale or
transfer that is not for 100% of the Property; and (iv) any sale or transfer
that is with a party affiliate or related to Landlord.

 

SECTION 17.6                       1031
EXCHANGE.

 

As an accommodation to
Landlord, Tenant agrees to cooperate with Landlord in effectuating a like-kind
exchange of the Property pursuant to Section 1031 of the Internal Revenue
Code of 1986, as amended (the “Exchange”),
including the execution of documents related thereto.

 

10

 

FIRST
AMENDMENT TO INDUSTRIAL REAL ESTATE LEASE

 

This FIRST AMENDMENT TO
INDUSTRIAL REAL ESTATE LEASE (“First
Amendment”) is made and entered into as of March 3, 2003 (the “First Amendment Date”), by and between
MAJESTIC-MAPA PROPERTIES, LLC, a California limited liability company (“Landlord”), and GILEAD SCIENCES, INC., a
Delaware corporation (“Tenant”).

 

R
E C I T A L S

 

A.            Tenant
and Landlord entered into that certain Industrial Real Estate Lease (the “Lease”), dated July 20, 2000, whereby
Landlord leased to Tenant and Tenant leased from Landlord approximately 53,600
square feet of space (the “Property”)
more commonly known as 542 West Covina Boulevard, San Dimas,
California.

 

B.            The
parties desire to amend the Lease on the terms and conditions set forth in this
First Amendment.

 

A
G R E E M E N T

 

NOW, THEREFORE, in
consideration of the foregoing recitals and the mutual covenants contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as follows:

 

1.             Terms. 
All undefined terms when used herein shall have the same respective
meanings as are given such terms in the Lease unless expressly provided
otherwise in this First Amendment.

 

2.             Lease Term.

 

2.1           Extended Lease Term.  The Lease Term is currently scheduled to
expire on May 31, 2006 (the “Lease
Expiration Date”).  As of the
First Amendment Date, the Lease Term is extended to November 30, 2013 (the
“Revised Lease Expiration Date”),
and, unless sooner terminated under the terms of the Lease, as amended by this
First Amendment, will expire on the Revised Lease Expiration Date.  The period of time beginning on the day
following the Lease Expiration Date and continuing through the Revised Lease
Expiration Date is the “Extended Lease Term.”

 

2.2           Termination Right.  Tenant shall have the one-time right to
terminate the Lease, as amended, effective as of December 1, 2009 (the “Termination Date”), provided that:  (a) Landlord receives written notice
(the “Termination Notice”) from
Tenant on or before the date which is twelve (12) months prior to the
Termination Date stating that Tenant intends to terminate the Lease, as
amended, pursuant to the terms and conditions of this Section 2.2;
(b) concurrent with Landlord’s receipt of the Termination Notice, Landlord
receives from Tenant the sum of ONE HUNDRED FIFTY-FIVE THOUSAND SIX HUNDRED
FIFTY-FOUR AND 40/100 DOLLARS ($155,654.40) as consideration for and as a
condition precedent to such early termination; and (c) Tenant has not been in
default under the Lease, as amended, as of the date of

 

	
   

  	
   

  	
  542 West Covina
  Blvd., San Dimas, CA

  
	
  April 7,
  2003

  	
   

  	
  (GILEAD
  SCIENCES, INC.)

  

 

1

 

Tenant’s
delivery of the Termination Notice or Termination Date.  Provided that Tenant terminates the Lease, as
amended, pursuant to the terms of this Section 2.2, the Lease, as
amended, shall automatically terminate and be of no further force or effect as
of the Termination Date, and Landlord and Tenant shall be relieved of their
respective obligations under the Lease, as amended, specifically including,
without limitation, any right, if any, Tenant may have to audit or review
Landlord’s books and records or to contest Tenant’s payment of Additional Rent;
provided, however, notwithstanding anything to the contrary contained in the
Lease, as amended, with respect to any obligation of Tenant under the Lease, as
amended, which accrues prior to the Termination Date and is not satisfied by
Tenant prior to the Termination Date (e.g., Tenant’s payment of Rent and Tenant’s
maintenance and repair obligations), and Tenant’s obligations that survive the
termination of the Lease, as amended (including, without limiting to, Tenant’s
obligation to remediate any Environmental Damages), Landlord shall have all the
rights and remedies with respect to such obligations as set forth in the Lease,
as amended.  Tenant shall vacate the
Property pursuant to the Lease, as amended, and surrender and deliver exclusive
possession thereof to Landlord on or before the Termination Date in accordance
with the provisions of the Lease, as amended. 
In the event Tenant retains possession of the Property or any part
thereof after the Termination Date, then the provisions of Section 2.04
of the Lease, as amended, shall apply. 
The rights contained in this Section 2.2 shall be personal
to the Tenant named in the Summary (and not any assignee, sublessee or other
transferee of Tenant’s interest in the Lease, as amended) (the “Original Tenant”) and may only be exercised
by the Original Tenant if the Original Tenant occupies the entire Property.

 

3.             Rent.

 

3.1           Base Rent.  Commencing as of June 1, 2006 and
continuing until May 31, 2011, Tenant will pay an amount equal to
TWENTY-FIVE THOUSAND NINE HUNDRED FORTY-TWO AND 40/100 DOLLARS ($25,942.40) per
month as Base Rent due under the Lease, as amended by this First
Amendment.  Commencing as of June 1,
2011 and continuing until the Revised Lease Expiration Date, Tenant will pay an
amount equal to TWENTY-EIGHT THOUSAND FIVE HUNDRED THIRTY-SIX AND 64/100
DOLLARS ($28,536.64) per month as Base Rent due under the Lease, as amended by
this First Amendment.

 

3.2           Security Deposit; Termination; Advance Payment.  Section 3.04 of the Lease shall be
deleted and replaced as follows:

 

“Upon termination of this Lease under Article Seven
(Damage or Destruction), Article Eight (Condemnation) or any other
termination not resulting from Tenant’s default, and after Tenant has vacated
the Property in the manner required by this Lease, Landlord shall (within sixty
(60) days from Tenant delivering exclusive possession of the Property to
Landlord) refund to Tenant (or Tenant’s successor) the unused portion of the
Security Deposit, any advance rent or other advance payments made by Tenant to
Landlord, and any amounts paid for real property taxes and other reserves which
apply to any time periods after termination of the Lease.”

 

2

 

3.3           Real Estate Taxes.  Tenant shall, as set forth in Section 4.02(a)
of the Lease, pay the real property taxes directly to the respective taxing
authority.

 

3.4           Real Property Tax Penalty.  Section 4.02(a) of the Lease shall be
revised that Tenant shall only be responsible for any real property tax penalty
to the extent such penalty is caused by Tenant’s acts or omissions.

 

3.5           Late Charge.  Effective as of the commencement of the
Extended Lease Term, the late charge as set forth in Section 4.05 of the
Lease shall be reduced to eight percent (8%).

 

3.6           Landlord’s Books and Records.  In the event that Tenant disputes the amount
of any statement (“Statement”)
delivered by Landlord, then within six (6) months after receipt of such
Statement by Tenant, Tenant shall have the right to request and receive from
Landlord any reasonable backup information in Landlord’s possession regarding
such Statement.

 

4.             Hazardous Material.  Effective as of the commencement of the
Extended Lease Term, the following revisions shall be made to Section 5.03
of the Lease as set forth below:

 

4.1           Section 5.03.3.C
of the Lease shall be deleted and replaced as follows:

 

“Landlord shall have the right, but not the
obligation, to join and participate in control, with Tenant’s commercially
reasonable consent, which consent shall not be unreasonably withheld, if it so
elects, any legal proceedings or actions initiating connection with Tenant’s
Hazardous Material activities on the Property. 
Landlord may also negotiate, defend, approve and appeal any action taken
or issued by any applicable governmental authority with regard to contamination
of the Property by a Hazardous Material.”

 

4.2           The following shall be
added to the end of Section 5.03.3.E of the Lease:

 

“Landlord shall provide Tenant with copies of any
information, report or related document that Landlord acquires, within thirty
(30) days from completion and receipt of said report.”

 

4.3           The first sentence of Section 5.03.5
of the Lease shall be deleted and replaced as follows:

 

“Landlord shall have the right in its sole and
absolute discretion, but not the duty, to enter (upon twenty-four (24) hours
notice, except no notice is required if Landlord has a reasonable belief that
Tenant is creating Environmental Damage on the Property) and conduct an
inspection of the Property, including invasive tests, during regular operative
hours, to determine whether Tenant is complying with the terms of the Lease,
including but not

 

3

 

limited to the compliance
of the Property and the activities thereon with Environmental Requirements and
the existence of Environmental Damages as a result of the condition of the
Property or surrounding properties and activities thereon.”

 

4.4           The first paragraph of Section 5.03.6
of the Lease shall be deleted and replaced as follows:

 

“If Tenant or Landlord shall become aware of or
receive notice or other communication concerning any actual, alleged, suspected
or threatened violation of Environmental Requirements, or liability of Tenant
or Landlord for Environmental Damages in connection with the Property or past
or present activities of any person thereon, including but not limited to
notice or other communication concerning any actual or threatened
investigation, inquiry, lawsuit, claim, citation, directive, summons,
proceeding, complaint, notice, order, writ, or injunction, relating to same,
then Tenant or Landlord shall deliver to the other party within ten (10) days
of the receipt of such notice or communication, a written description of said
violation, liability, or actual or threatened event or condition, together with
copies of any documents evidencing same. 
Receipt of such notice shall not be deemed to create any obligation on
the part of Landlord to defend or otherwise respond to any such notification.”

 

4.5           The following shall be
added to the end of Section 5.03.7 of the Lease:

 

“Tenant shall have the right to observe Landlord’s
environmental assessment.”

 

4.6           Section 5.03.10 of
the Lease shall be deleted and replaced as follows:

 

“Landlord shall be solely responsible to remediate
claims, judgments, damages, penalties, fines, costs, liabilities and losses
which arise as a result of any contamination directly arising from the
introduction of Hazardous Materials into the Property prior to Tenant’s
occupancy or by Landlord, its agents, employees or contractors, in compliance
with applicable law.  Notwithstanding the
foregoing, Landlord shall not be responsible or liable for any consequential
damages.  The obligation of Landlord in
this Section 5.03.10 shall survive the expiration or termination of
this Lease.”

 

5.             Alterations, Additions and Improvements.  Effective as of the commencement of the
Extended Lease Term, the first sentence of Section 6.05 of the Lease shall
be deleted and replaced as follows:

 

4

 

“Tenant shall not make any alterations, additions, or
improvements to the Property without Landlord’s prior written consent, which
shall not be unreasonably withheld, except for non-structural alterations which
do not exceed Sixty Thousand Dollars ($60,000) in cost per project and which
are not visible from the outside of any building of which the Property is part.”

 

6.             Estoppel Certificate.  Effective as of the commencement of the
Extended Lease Term, the following shall be added to Section 1 1.04(c) of
the Lease:

 

“Upon Tenant’s written request, Landlord shall execute
an estoppel certificate certifying to Landlord’s actual knowledge without any
duty to investigate whether or not:  (i)
this Lease has been modified; (ii) this Lease has been canceled; and (iii)
Tenant is in default under this Lease.”

 

7.             Tenant’s Financial Condition.  Effective as of the commencement of the
Extended Lease Term, the following shall be added to Section 11.05 of the
Lease:

 

“If the Original Tenant has not been in monetary
default under this Lease then Landlord’s right to request financial statements
shall not exceed one (1) time per calendar year (except if such financial
statement is requested from Landlord’s lender).”

 

8.             Tenant’s Acceptance of the Property.  Landlord and Tenant acknowledge that Tenant
has been occupying the Property pursuant to the Lease, since on or about April 2,
2001, and therefore Tenant continues to accept the Property in its presently
existing, “as is” condition and Landlord has made no representation or warranty
with regard to the condition of the Property or the suitability thereof for
Tenant’s business, nor shall Landlord be obligated to provide or pay for any
improvement work or services related to the improvement of the Property.

 

9.             Deletions.  Effective as of the First Amendment Date the
Option to Extend Term Lease Rider, attached to the Lease is hereby deleted and
shall be of no further force or effect.

 

10.           Brokers.  The parties recognize that the only broker
involved in the negotiation of this First Amendment is Majestic Realty Co. and
agree that Landlord shall be solely responsible for the payment of any “Brokerage
Commission” to such broker.  Each party
represents and warrants to the other that they have not dealt with any other
broker in connection with the negotiation and consummation of this First
Amendment and they each know of no other real estate broker, agent or finder
who is, or might be, entitled to a commission or compensation in connection
with this First Amendment.  Each party
agrees to indemnify and defend the other party against, and hold the other
party harmless from, any and all claims, demands, losses, liabilities, damages,
lawsuits, judgments, and costs and expenses (including, without limitation,
reasonable attorneys’ fees and costs) with respect to any leasing commission or
equivalent compensation alleged to be owing on account of the indemnifying
party’s dealings with any other real estate broker or agent.

 

5

 

11.           No Other Modifications.  Except as otherwise provided herein, all
other terms and provisions of the Lease shall remain in full force and effect,
unmodified by this First Amendment.

 

12.           Binding Effect.  The provisions of this First Amendment shall
be binding upon and inure to the benefit of the heirs, representatives, successors
and permitted assigns of the parties hereto.

 

13.           Authority.  The parties represent and warrant that they
have the requisite authority to bind the entity on whose behalf they are
signing.

 

14.           Counterparts.  This First Amendment may be executed in any
number of original counterparts.  Any
such counterpart, when executed, shall constitute an original of this First
Amendment, and all such counterparts together shall constitute one and the same
First Amendment.

 

[Signatures on
next page.]

 

6

 

IN WITNESS WHEREOF, the parties have entered
into this First Amendment as of the date first set forth above.

 

	
  “LANDLORD”

  	
  “TENANT”

  
	
   

  	
   

  
	
  MAJESTIC-MAPA PROPERTIES, LLC,

  a California limited liability company,

  	
  GILEAD SCIENCES, INC.,

  a Delaware corporation

  
	
   

  	
   

  
	
  By:

  	
  MAJESTIC REALTY CO.,

  a California corporation

  Its Manager

  	
  By:

  	
  /s/ Anthony D. Caracciolo

  
	
   

  	
  Its:

  	
   

  
	
   

  	
   

  
	
   

  	
  By: :

  	
  /s/ David A. Wheeler, President

  	
   

  	
  By:

  	
  /s/ Mark L. Perry

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jay H. Bradford

  	
   

  	
   

  	
  Its:

  	
  Executive Vice President, Operations

  
	
   

  	
   

  	
  Executive Vice President and Chief
  Financial Officer

  	
   

  	
   

  	
   

  	
   

  
									

 

7Exhibit 10.76

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED.

 

 

COLLABORATION AGREEMENT

 

 

by and among

 

 

GILEAD SCIENCES, INC.,

 

GILEAD HOLDINGS, LLC,

 

 

BRISTOL-MYERS SQUIBB COMPANY,

 

E.R. SQUIBB & SONS, L.L.C.,

 

and

 

BRISTOL-MYERS SQUIBB & GILEAD
SCIENCES, LLC

 

 

Dated as of December 17,
2004

 

 

TABLE OF CONTENTS

 

	
  SECTION 1.

  	
  DEFINITIONS

  	
   

  
	
  SECTION 2.

  	
  COLLABORATION
  MANAGEMENT

  	
   

  
	
  2.1

  	
  General

  	
   

  
	
  2.2

  	
  Role of the Joint Executive
  Committee

  	
   

  
	
  2.3

  	
  Joint Development
  Committee

  	
   

  
	
  2.4

  	
  Joint
  Commercialization Committee

  	
   

  
	
  2.5

  	
  Joint Finance
  Committee

  	
   

  
	
  2.6

  	
  Procedural
  Rules of the Operating Committees

  	
   

  
	
  2.7

  	
  Alliance
  Managers

  	
   

  
	
  2.8

  	
  Dispute
  Resolution

  	
   

  
	
  2.9

  	
  Collaboration
  Principles

  	
   

  
	
  2.10

  	
  Commercialization
  Budget/Plan Deadlocks

  	
   

  
	
  2.11

  	
  Expenses

  	
   

  
	
  SECTION 3.

  	
  DEVELOPMENT
  ACTIVITIES

  	
   

  
	
  3.1

  	
  General

  	
   

  
	
  3.2

  	
  Clinical
  Development

  	
   

  
	
  3.3

  	
  Formulation and
  CMC Data

  	
   

  
	
  3.4

  	
  Regulatory
  Matters

  	
   

  
	
  3.5

  	
  Performance;
  Subcontracting

  	
   

  
	
  3.6

  	
  Records

  	
   

  
	
  3.7

  	
  Updates to
  Development Plan and Development Budget

  	
   

  
	
  3.8

  	
  Development
  Expenses

  	
   

  
	
  3.9

  	
  Reports

  	
   

  
	
  3.10

  	
  New Products

  	
   

  
	
  3.11

  	
  Publication

  	
   

  
	
  3.12

  	
  Certain
  Inspections

  	
   

  
	
  3.13

  	
  Medical
  Affairs and Medical Communications

  	
   

  
	
  SECTION 4.

  	
  MANUFACTURING
  AND SUPPLY

  	
   

  
	
  4.1

  	
  Clinical Supply

  	
   

  
	
  4.2

  	
  Commercial
  Supply

  	
   

  
	
  SECTION 5.

  	
  COMMERCIALIZATION
  ACTIVITIES

  	
   

  
	
  5.1

  	
  Co-Promotion
  Obligations

  	
   

  
	
  5.2

  	
  Distribution
  Obligations

  	
   

  
	
  5.3

  	
  Pricing of
  Combination Product

  	
   

  
	
  5.4

  	
  National
  Accounts

  	
   

  
	
  5.5

  	
  Performance;
  Subcontracting

  	
   

  
	
  5.6

  	
  Conflict
  Avoidance

  	
   

  
	
  5.7

  	
  Marketing
  Materials

  	
   

  
	
  5.8

  	
  Development and
  Use of Trademarks

  	
   

  
	
  5.9

  	
  Insurance

  	
   

  
	
  5.10

  	
  Records

  	
   

  
	
  5.11

  	
  Commercialization
  Plan and Budget

  	
   

  
	
  5.12

  	
  Commercialization
  Expenses

  	
   

  
				

 

i

 

	
  5.13

  	
  Reports

  
	
  SECTION 6.

  	
  LICENSE GRANTS

  
	
  6.1

  	
  Technology
  Licenses by Member Parties to the JV

  
	
  6.2

  	
  Licenses
  and Sublicenses by the JV to Member Parties

  
	
  6.3

  	
  Licenses
  and Rights of Reference Between Member Parties

  
	
  6.4

  	
  Rights
  of Reference to and from the JV and Related Matters

  
	
  6.5

  	
  Other Sublicenses

  
	
  6.6

  	
  Trademark
  Licenses by Member Parties to the JV

  
	
  6.7

  	
  Trademark
  License by the JV to Gilead

  
	
  6.8

  	
  Retained Rights

  
	
  6.9

  	
  Combination
  Product Sales for Outside the Territory, Canada and Europe

  
	
  6.10

  	
  Combination Product
  Sales for Europe

  
	
  6.11

  	
  EFV License Agreement

  
	
  6.12

  	
  JV Obligations as
  Sublicensee

  
	
  SECTION 7.

  	
  PAYMENTS
  AND THIRD PARTY ROYALTIES

  
	
  7.1

  	
  Payments to Member
  Parties

  
	
  7.2

  	
  Royalty Payments
  to Third Parties

  
	
  7.3

  	
  Authorized
  Other Expenses; Mode and Timing of Payment

  
	
  7.4

  	
  Taxes

  
	
  SECTION 8.

  	
  FINANCIAL RECORDS

  
	
  8.1

  	
  Financial Records

  
	
  8.2

  	
  Audit of Records

  
	
  8.3

  	
  Certain Reports

  
	
  SECTION 9.

  	
  ADVERSE
  EVENT AND OTHER INFORMATION EXCHANGE

  
	
  9.1

  	
  Pharmacovigilance

  
	
  9.2

  	
  Material Communications

  
	
  SECTION 10.

  	
  PRODUCT RECALL

  
	
  10.1

  	
  Notification and Recall

  
	
  10.2

  	
  Recall Expenses

  
	
  SECTION 11.

  	
  INTELLECTUAL
  PROPERTY RIGHTS

  
	
  11.1

  	
  Ownership of
  Intellectual Property

  
	
  11.2

  	
  Prosecution of Patents

  
	
  11.3

  	
  Enforcement of Patents

  
	
  11.4

  	
  Infringement of
  Third Party Rights

  
	
  11.5

  	
  Trademarks

  
	
  SECTION 12.

  	
  CONFIDENTIALITY

  
	
  12.1

  	
  Treatment of
  Confidential Information

  
	
  12.2

  	
  Permitted Disclosure

  
	
  12.3

  	
  Confidential
  Information.

  
	
  12.4

  	
  Use of Name

  
	
  12.5

  	
  Publicity; Terms of
  Agreement

  
	
  12.6

  	
  Notification

  
	
  12.7

  	
  Permitted Uses

  
	
  12.8

  	
  Remedies

  
	
  SECTION 13.

  	
  WARRANTIES; INDEMNITIES

  
	
  13.1

  	
  Representations,
  Warranties and Covenants

  
			

 

ii

 

	
  13.2

  	
  Additional
  Representations, Warranties and Covenants of BMS

  	
   

  
	
  13.3

  	
  Additional
  Representations, Warranties and Covenants of Gilead

  	
   

  
	
  13.4

  	
  Disclaimer

  	
   

  
	
  13.5

  	
  Indemnification by the
  JV

  	
   

  
	
  13.6

  	
  Indemnification
  by the Member Parties in General

  	
   

  
	
  13.7

  	
  Indemnification
  for Certain Product Liability Related Matters

  	
   

  
	
  13.8

  	
  Indemnification
  Procedure

  	
   

  
	
  13.9

  	
  Limitation on Damages

  	
   

  
	
  13.10

  	
  Ancillary Agreements

  	
   

  
	
  13.11

  	
  Employees

  	
   

  
	
  SECTION 14.

  	
  TERM AND TERMINATION

  	
   

  
	
  14.1

  	
  Term

  	
   

  
	
  14.2

  	
  Certain Litigation

  	
   

  
	
  14.3

  	
  Termination for
  NDA Filing Delay

  	
   

  
	
  14.4

  	
  Material Default

  	
   

  
	
  14.5

  	
  Termination Upon
  Generic Launch

  	
   

  
	
  14.6

  	
  Consequences of Termination

  	
   

  
	
  14.7

  	
  Rights in Bankruptcy

  	
   

  
	
  14.8

  	
  Accrued
  Rights; Surviving Obligations

  	
   

  
	
  SECTION 15.

  	
  GENERAL PROVISIONS

  	
   

  
	
  15.1

  	
  Force Majeure

  	
   

  
	
  15.2

  	
  Notice

  	
   

  
	
  15.3

  	
  Further Assurances

  	
   

  
	
  15.4

  	
  Successors and Assigns

  	
   

  
	
  15.5

  	
  Governing Law

  	
   

  
	
  15.6

  	
  Arbitration

  	
   

  
	
  15.7

  	
  Waiver

  	
   

  
	
  15.8

  	
  Severability

  	
   

  
	
  15.9

  	
  Counterparts

  	
   

  
	
  15.10

  	
  Construction

  	
   

  
	
  15.11

  	
  Status of the Parties

  	
   

  
	
  15.12

  	
  Standstill

  	
   

  
	
  15.13

  	
  Nonsolicitation of
  Employees

  	
   

  
	
  15.14

  	
  Entire Agreement

  	
   

  
	
  15.15

  	
  Consent to Jurisdiction

  	
   

  
	
  15.16

  	
  Third Parties

  	
   

  
				

 

iii

 

Annexes:

 

Annex A – Initial Committee Members and Alliance
Managers

 

Annex B – Development Plan and Development Budget
as of Effective Date

 

Annex C – Commercialization Plan and
Commercialization Budget as of Effective Date

 

Annex D – BMS Patents

 

Annex E – Gilead Patents

 

Annex F – Gilead Licensed Trademarks

 

Annex G – BMS Licensed Trademarks

 

Annex H – Quarterly Detail Report

 

Annex I – Manner of Calculation of Net Selling
Price

 

Annex J – Calculation of Cost of Goods

 

Annex K – Calculation of Transfer Price

 

Annex L – Joint Press Release

 

Annex M – Certain
Financial Data

 

Annex N – Data to be Provided to Independent
Accounting Expert Pursuant to Section 7.1

 

Annex O – JV Obligations as Sublicensee

 

Annex P – Key Terms of Services Agreement

 

Annex Q – Pricing [*]

 

Annex R – List of Countries Comprising the
Developing World

 

iv

 

THIS COLLABORATION AGREEMENT
(this “Agreement”) is made as of December 17, 2004 (the “Effective Date”),
by and among Gilead Sciences, Inc., a corporation organized and existing under
the laws of the State of Delaware and having its principal place of business at
333 Lakeside Drive, Foster City, CA 94404 (“Gilead Parent”), Gilead Holdings, LLC, a Delaware
limited liability company and wholly-owned subsidiary of Gilead Parent (“Gilead
Sub” and, collectively with Gilead Parent, “Gilead”), Bristol-Myers Squibb
Company, a corporation organized and existing under the laws of the State of
Delaware and having its principal place of business at 345 Park Avenue, New
York, NY 10154 (“BMS Parent”), E.R.
Squibb & Sons, L.L.C., a Delaware limited liability company and
wholly-owned subsidiary of BMS Parent (“BMS Sub” and, collectively with BMS
Parent, “BMS”), and Bristol-Myers Squibb & Gilead Sciences, LLC, a limited
liability company organized and existing under the laws of the State of
Delaware  and having its principal place
of business at 333 Lakeside Drive, Foster City, CA 94404 (the “JV”) (Gilead,
BMS and the JV, collectively, the “Parties” and each a “Party”).

 

RECITALS

 

WHEREAS, Gilead has
developed and is marketing a proprietary nucleotide reverse transcriptase
inhibitor, Viread® (known under the generic name of tenofovir disoproxil
fumarate (“TDF”)), a proprietary nucleoside reverse transcriptase inhibitor,
Emtriva® (known under the generic name of emtricitabine (“FTC”)), and a
fixed-dose co-formulated product containing TDF and FTC as its only active
pharmaceutical ingredients, Truvada®, for the treatment of HIV infection in
adults;

 

WHEREAS, BMS has developed
and is marketing a proprietary non-nucleoside reverse transcriptase inhibitor,
Sustiva® (known under the generic name of efavirenz (“EFV”)) for the treatment
of HIV infection in adults;

 

WHEREAS, Gilead and BMS
desire to develop and commercialize in the United States, through a joint
venture entity, a fixed-dose, co-formulated combination product containing TDF,
FTC and EFV as its only active pharmaceutical ingredients;

 

WHEREAS, for that purpose,
Gilead and BMS have formed the JV pursuant to that certain Operating Agreement
entered into as of the Effective Date by and between Gilead Sub and BMS Sub
(the “Operating Agreement”);

 

WHEREAS, the Parties wish to
allocate among themselves certain rights and duties relating to the development
and commercialization of such a combination product, upon the terms and
conditions of this Agreement, the Operating Agreement and the Ancillary Agreements
(as defined below); and

 

WHEREAS, pursuant to the BMS
Guarantee Agreement and the Gilead Guarantee Agreement (as such terms are
defined below), each dated as of the Effective Date, BMS Parent and Gilead
Parent are guaranteeing the performance of all of the obligations of

 

CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

1

 

BMS
Sub and Gilead Sub, respectively, under this Agreement, the Operating Agreement
and all Ancillary Agreements to which the applicable Affiliate (as defined
below) is or becomes a party;

 

NOW, THEREFORE, in
consideration of the mutual promises and covenants set forth below and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties agree as follows:

 

SECTION 1.

DEFINITIONS

 

1.1                                 “Act”
shall mean the United States Food, Drug and Cosmetic Act, as amended.

 

1.2                                 “Actual
BMS Percentage” shall mean, for each Calendar Year, the percentage applicable
to BMS for such Calendar Year based on historical data and determined pursuant
to Section 7.1(b).

 

1.3                                 “Actual
Gilead Percentage” shall mean, for each Calendar Year, the percentage
applicable to Gilead for such Calendar Year based on historical data and
determined pursuant to Section 7.1(b).

 

1.4                                 “Actual
Percentage” shall mean, with respect to BMS, the Actual BMS Percentage and,
with respect to Gilead, the Actual Gilead Percentage.

 

1.5                                 “Actual
Yield” shall have the meaning set forth in Annex K.

 

1.6                                 “Affiliate”
of a Person shall mean any other Person that, directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with such Person.  For purposes
of this definition only, “control” and, with correlative meanings, the terms “controlled
by” and “under common control with” shall mean (a) the possession, directly or
indirectly, of the power to direct the management or policies of a Person,
whether through the ownership of voting securities or by contract relating to
voting rights or corporate governance, or (b) the ownership, directly or
indirectly, of more than fifty percent (50%) of the voting securities or other
ownership interest of a Person; provided, however, that if local
law restricts foreign ownership, control shall be established by direct or
indirect ownership of the maximum ownership percentage that may, under such
local law, be owned by foreign interests. 
For purposes of this Agreement, the Operating Agreement and the
Ancillary Agreements, the JV shall not be deemed to be an Affiliate of either
Gilead or BMS.

 

1.7                                 “Agreement”
shall have the meaning set forth in the first paragraph above.

 

1.8                                 “Alliance
Manager” shall have the meaning set forth in Section 2.7(a).

 

1.9                                 “Allocated
Costs” shall have the meaning set forth in Section 5.12.

 

1.10                           “AMP”
shall have the meaning set forth in Annex Q.

 

2

 

1.11                           “Ancillary
Agreements” shall mean, collectively, the BMS Supply Agreement, the Gilead
Supply Agreement, the Services Agreement and the SDEA.

 

1.12                           “[*]” shall have the meaning set forth in Section 5.1(f).

 

1.13                           “Applicable
EFV Territory” shall mean (a) with respect to any BMS Technology licensed to
BMS by the EFV Licensor or licensed to the EFV Licensor by BMS, in each case under
the EFV License Agreement, the EFV License Agreement Territory, and (b) with respect
to all other BMS Technology, worldwide.

 

1.14                           “Applicable
Law” shall mean the applicable laws, rules, and regulations, including, without
limitation, any rules, regulations, guidelines or other requirements of the
Regulatory Authorities, that may be in effect from time to time in the
Territory.

 

1.15                           “Approvals”
shall mean, collectively, the approvals granted by the Regulatory Authorities
for the Manufacture, Marketing, sale and/or use of the Combination Product in
the Field in the Territory, including, without limitation, pricing and
reimbursement approvals (if any).

 

1.16                           “Approved
Marketing Materials” shall have the meaning set forth in Section 5.7(a).

 

1.17                           “[*] Representative” shall have the meaning set forth in Section 5.3(b).

 

1.18                           “Authorized
Commercialization Expenses” shall have the meaning set forth in Section 5.12.

 

1.19                           “Authorized
Development Expenses” shall have the meaning set forth in Section 3.8.

 

1.20                           “Authorized
Expenses” shall mean, collectively, the Authorized Commercialization Expenses,
Authorized Development Expenses and Authorized Other Expenses.

 

1.21                           “Authorized
Other Expenses” shall mean all JV Expenses expressly stated in this Agreement
or the Operating Agreement or any Ancillary Agreement to be Authorized Other
Expenses or agreed by the JEC to be Authorized Other Expenses.

 

1.22                           “AWP”
shall have the meaning set forth in Annex Q.

 

1.23                           “BMS”
shall have the meaning set forth in the first paragraph of this Agreement.

 

1.24                           “BMS
Core Improvement” shall mean any Improvement pertaining specifically to BMS
Core Technology, which Improvement is conceived, discovered, developed, or
otherwise made, as necessary to establish authorship or inventorship under
United States copyright or patent law, as the case may be, solely or jointly, by
or on behalf of Gilead or its Affiliates or the JV in the course of, as a
result of, or in connection with the Project Activities

 

3

 

conducted pursuant to the
Development Plan or in connection with Co-Funded Clinical Trials; provided,
however, that BMS Core Improvements shall not include any Dual
Improvements.

 

1.25                           “BMS
Core Technology” shall mean all BMS proprietary technologies relating
specifically to the Exploitation of EFV.

 

1.26                           “BMS
Guarantee Agreement” shall mean the guarantee agreement executed by BMS Parent
in favor of Gilead and the JV, dated as of the Effective Date, as such
agreement may be amended from time to time.

 

1.27                           “BMS Indemnified Party” shall mean
BMS Sub, BMS Parent and any of their Affiliates, officers, directors and
employees.

 

1.28                           “BMS
Inventions” shall mean any Information and Inventions (whether or not
patentable; and Improvements thereto, including Gilead Core Improvements to the
extent owned by BMS) conceived,
discovered, developed or otherwise made, as necessary to establish authorship
or inventorship under United States copyright or patent law, as the case may
be, solely (or, in the case of Gilead Core Improvements, solely or jointly) by
or on behalf of BMS or its Affiliates, in the course of, as a result of or in
connection with the Project Activities conducted pursuant to the Development
Plan or in connection with Co-Funded Clinical Trials, but excluding any Joint
Inventions.

 

1.29                           “BMS
Know-How” shall mean any and all Information and Inventions under the Control
of BMS or its Affiliates as of the Effective Date or at any time during the
term of this Agreement that are necessary or reasonably useful for the
Exploitation of the Combination Product and are not generally known, but
excluding any and all (a) such Information and Inventions to the extent claimed
by the BMS Patents and (b) Joint Know-How.

 

1.30                           “BMS
Licensed Trademarks” shall have the meaning set forth in Section 6.6(b).

 

1.31                           “BMS
Parent” shall have the meaning set forth in the first paragraph of this
Agreement.

 

1.32                           “BMS
Patents” shall mean all of the Patents that BMS or its Affiliates Control as of
the Effective Date or at any time during the term of this Agreement that would,
in the absence of the license granted by BMS in Section 6.1(b) and
assuming that the EFV active pharmaceutical ingredient therein was not
purchased from BMS, be infringed by the Exploitation of the Combination Product
by the JV in any country in the world.  A
list of the BMS Patents in the Territory as of the Effective Date is attached
hereto as Annex D.

 

1.33                           “BMS
Regulatory Documentation” shall mean all Regulatory Documentation applicable to
Sustiva (or EFV) but not Sustiva (or EFV) in co-formulation with Viread (or
TDF), Emtriva (or FTC), or Truvada (or TDF and FTC), that is or was developed
by or on behalf of BMS or any of its Affiliates or sublicensees prior to the
Effective Date or during the term of this Agreement.

 

4

 

1.34                           “BMS
Sub” shall have the meaning set forth in the first paragraph of this Agreement.

 

1.35                           “BMS Supply Agreement” shall
mean the supply agreement entered into between BMS Sub and the JV concurrently
with the execution and delivery of this Agreement, as such agreement may be
amended from time to time.

 

1.36                           “BMS
Technology” shall mean, collectively, the BMS Know-How and the BMS Patents.

 

1.37                           “BMS
Transfer Price” shall have the meaning set forth in Section 7.1(a).

 

1.38                           “Breaching
Member Party” shall have the meaning set forth in Section 14.4(a).

 

1.39                           “Business
Day” shall mean a day that is not a Saturday, Sunday or day on which banking
institutions in New York, New York or San Francisco, California are required by
law to remain closed.

 

1.40                           “[*] Representative” shall have the meaning set forth in Section 5.3(b).

 

1.41                           “Calendar
Quarter” shall mean a period of three (3) consecutive calendar months ending on
March 31, June 30, September 30 or December 31.

 

1.42                           “Calendar
Year” shall mean a period of twelve (12) consecutive calendar months commencing
on January 1 and ending on December 31.

 

1.43                           “Change
of Control” shall mean, with respect to a Person, any of the following
transactions with a Third Party (a “Third Party Acquirer”): (a) a merger or
consolidation of such Person with the Third Party Acquirer which results in the
holders of the voting securities of such Person outstanding immediately prior
thereto (other than the Third Party Acquirer, its “affiliates” and “associates”
(as such terms are used in the Exchange Act)) ceasing to represent at least fifty
percent (50%) of the combined voting power of the surviving entity (or, if
applicable, its parent company) immediately after such merger or consolidation;
(b) the sale to the Third Party Acquirer of all or substantially all of the
business of such Person to which this Agreement relates (whether by merger,
consolidation, sale of stock, sale of assets or other similar transaction); or
(c) the Third Party Acquirer (which shall not be any trustee or other fiduciary
holding securities under an employee benefit plan of such Person, or any
corporation owned directly or indirectly by the stockholders of such Person, in
substantially the same proportion as their ownership of stock of such Person),
together with any of the Third Party Acquirer’s “affiliates” or “associates”,
as such terms are used in the Exchange Act, becoming the beneficial owner of
fifty percent (50%) or more of the combined voting power of the outstanding
securities of such Person or by contract or otherwise having the right to
control the Board of Directors or equivalent governing body of such Person or
the ability to cause the direction of management of such Person.

 

1.44                           “Clinical
Data” shall mean any and all data (together with the results of analysis
thereof) derived or generated from any clinical trial of a pharmaceutical
product or from

 

5

 

testing or analysis of subjects
or samples from such a clinical trial (e.g. in vitro testing of tissue samples
from subjects enrolled in such a clinical trial), in each case where such
clinical trial involves either or both of (i) any Single Agent Product or
Double Agent Product, whether alone or in combination with any other product,
and (ii) the Combination Product, whether alone or in combination with any
other product.

 

1.45                           “Clinical
Trial Registry” shall have the meaning set forth in Section 3.11(b).

 

1.46                           “Clinical
Trial Results Database” shall have the meaning set forth in Section 3.11(b).

 

1.47                           “CMC
Data” shall mean any and all information contained in, as well as data
supporting, the “Chemistry, Manufacturing and Control” and facilities sections
(or sections corresponding thereto) of an NDA, including, without limitation,
any drug master files referenced in the NDA.

 

1.48                           “Co-Funded
Clinical Trial” shall have the meaning set forth in Section 3.2(b).

 

1.49                           “Collaboration
Principles” shall have the meaning set forth in Section 2.9.

 

1.50                           “Combination
Product” shall mean the fixed-dose co-formulated product developed pursuant to
this Agreement containing, as its only active pharmaceutical ingredients per
single daily dose, 300 mg TDF, 200 mg FTC and 600 mg EFV.

 

1.51                           “Combination
Product Regulatory Documentation” shall mean all Regulatory Documentation
applicable to the Combination Product that is developed by or on behalf of any
Party pursuant to, and during the term of, this Agreement, but excluding all
BMS Regulatory Documentation and all Gilead Regulatory Documentation.

 

1.52                           “Combination
Product Trademarks” shall mean the trademark or trademarks selected by the JCC
for the Combination Product, all packaging designs and other trade dress used
in connection with the Combination Product, other Trademarks relating thereto
and any registrations thereof or any pending applications relating
thereto.  For the avoidance of doubt, the
following shall not be considered Combination Product Trademarks: (a) BMS
Licensed Trademarks, (b) Gilead Licensed Trademarks and (c) the names, logos
and other Trademarks of the Member Parties.

 

1.53                           “Commercialization
Activities” shall mean Marketing and other activities for the commercialization
of the Combination Product including those set forth in the Commercialization
Plan and any other of the following conducted for the Combination Product:  execution of product positioning, preparation
of promotional and marketing materials, market research and advertising
activities, Promotion, advocacy, national accounts, government relations
activities, pricing, reimbursement and patient assistance programs.

 

1.54                           “Commercialization
Budget” shall have the meaning set forth in Section 5.11(b).  The initial Commercialization Budget is
attached hereto as Annex C.

 

6

 

1.55                           “Commercialization
Budget Deadlock” shall have the meaning set forth in Section 2.10(d).

 

1.56                           “Commercialization
Plan” shall mean the plan for Marketing and otherwise commercializing the
Combination Product as described in Section 5.11(b), as updated from time
to time pursuant to Section 5.11(c).  The initial Commercialization Plan is attached
hereto as Annex C.

 

1.57                           “Commercialization
Plan Deadlock” shall have the meaning set forth in Section 2.10(d).

 

1.58                           “Commercially
Reasonable Efforts” shall mean, with respect to (a) the Development Activities
that a Member Party is required to perform with respect to the Combination
Product pursuant to the Development Plan, or (b) the Commercialization
Activities that a Member Party is required to perform with respect to the
Combination Product pursuant to the Commercialization Plan, as the case may be,
the level of effort that would generally be used by a Member Party to conduct
such development or commercialization activities in a manner consistent with
the minimum level of expenditure contemplated for such activities by the
Development Budget or Commercialization Budget, as the case may be, for a
product or compound owned by it or to which it has rights, which is of
comparable market potential, profit potential or strategic value to such Member
Party and is at a similar stage in its development or product life, taking into
account, without limitation, issues of safety and efficacy, product profile,
the proprietary position, the then-current competitive environment for such
product or compound (and any individual agent comprising part of such product
or compound), the likely timing of the product’s or compound’s (and any such
individual agent’s) entry into the market, the then-current market penetration,
the return on investment potential of such product (and any individual agent
comprising part of such product), the regulatory environment and status of the
product (and any individual agent comprising part of such product), and other
relevant scientific, technical and commercial factors, in each case as measured
by the facts and circumstances at the time such efforts are due.

 

1.59                           “Commercial Record Request” shall have the
meaning set forth in Section 5.10(b).

 

1.60                           “Competing
Product” shall mean (a) in the case of Gilead as the assigning Member Party, a [*], and (b) in the case of BMS as the assigning Member
Party, a [*].

 

1.61                           “Confidential
Information” shall have the meaning set forth in Section 12.3(a).

 

1.62                           “Continuing
Member Party” shall mean a Member Party as so designated pursuant to Section 14.5.

 

1.63                           “Control”
or “Controlled” shall mean, with respect to any item of Information and
Inventions, Patents or other intellectual property rights, the right, whether
by ownership, license or otherwise, to grant a license, sublicense or other
right to or under such item, Patent or right as provided for in this Agreement
without violating the terms of any agreement or other binding arrangement with
any Third Party.  For purposes of this Section 1.63,

 

7

 

the consent referred to in Section 6.12
shall be deemed to have been obtained as of the Effective Date.

 

1.64                           “Core
Technology” shall mean the BMS Core Technology or the Gilead Core Technology,
as the case may be.

 

1.65                           “Cost
Allocation Proposal” shall have the meaning set forth in Section 5.12.

 

1.66                           “Cost
of Goods” shall have the meaning set forth in Annex J hereto.

 

1.67                           “Court”
shall have the meaning set forth in Section 15.15.

 

1.68                           “Detail”
shall mean an in-person presentation to a health care provider specializing in
treatment of HIV infection or AIDS, and who has prescribing authority, by a
sales representative who is fully equipped with knowledge of, and (subject to Section 5.7)
Approved Marketing Materials and product labels and inserts with respect to,
the Combination Product, in which the characteristics of the Combination
Product are described by such sales representative in a fair and balanced
manner consistent with the requirements of Applicable Law and of this
Agreement, and in a manner that is customary in the industry for the purpose of
promoting a prescription pharmaceutical product, but without regard to the
position of the presentation within a call to the health care provider.  For the avoidance of doubt, a promotional
material drop or product reminder shall not constitute a Detail.  When used as a verb, to “Detail” shall mean to engage in a
Detail.

 

1.69                           “Detail
Equivalent Amount” shall mean, for the 2005 Calendar Year and the 2006 Calendar
Year, [*], and for each successive Calendar
Year thereafter, such amount as adjusted by the [*]
for each such Calendar Year.

 

1.70                           “Developing
World” shall mean the territory comprising the countries listed in Annex R and
any additional countries outside the Territory, Canada and Europe that Gilead
includes in its Gilead Access Program, as indicated at the website for the
program, www.gileadaccess.org.

 

1.71                           “Development
Activities” shall mean the activities set forth in the Development Plan, as
updated from time to time pursuant to Section 3.7 and, only with respect
to periods prior to the Effective Date, activities pursuant to the MTTA.

 

1.72                           “Development
Budget” shall mean the budget with respect to any expenses relating to
Development Activities for the Combination Product that are chargeable to the
JV, as updated from time to time pursuant to Section 3.7.  The initial Development Budget is attached
hereto as Annex B.

 

1.73                           “Development
Plan” shall mean the plan for the regulatory, clinical, formulation,
Manufacturing Process and CMC Data development activities to be conducted for
the Combination Product, including any Phase IV clinical studies and medical
information and medical education programs, as updated from time to time
pursuant to Section 3.7.  The
initial  Development Plan is attached
hereto as Annex B.

 

8

 

1.74                           “Development Record Request” shall have the
meaning set forth in Section 3.6(b).

 

1.75                           “Disclosing
Party” shall have the meaning set forth in Section 12.1.

 

1.76                           “[*]”
shall have the meaning set forth in Annex Q.

 

1.77                           “Double Agent Product” shall
mean Truvada, the co-formulated product developed by Gilead containing, as its
only active pharmaceutical ingredients, TDF and FTC.

 

1.78                           “Dual
Improvement” shall mean an Improvement that constitutes both an Improvement pertaining
specifically to the Gilead Core Technology and an Improvement pertaining
specifically to the BMS Core Technology, which Improvement is conceived,
discovered, developed, or otherwise made, as necessary to establish authorship
or inventorship under United States copyright or patent law, as the case may
be, solely or jointly, by or on behalf of BMS or its Affiliates, Gilead or its
Affiliates, the JV or jointly any combination of them, in the course of, as a
result of, or in connection with the Project Activities conducted pursuant to
the Development Plan or in connection with Co-Funded Clinical Trials.  Any Dual Improvement shall constitute a Joint
Invention.

 

1.79                           “Effective
Date” shall have the meaning set forth in the first paragraph of this
Agreement.

 

1.80                           “EFV”
shall have the meaning set forth in the recitals to this Agreement.

 

1.81                           “EFV
License Agreement” shall mean that certain license agreement, dated as of September 1,
1994, as amended, between the EFV Licensor and E.R. Squibb & Sons, L.L.C.,
as successor in interest to DuPont Pharmaceuticals Company (formerly named The
DuPont Merck Pharmaceutical Company).

 

1.82                           “EFV
License Agreement Territory” shall mean BMS’ territory under the EFV License
Agreement, which, as of the Effective Date, consists of the United States
(including its territories and possessions), Canada, France (continental area),
Germany, Italy, Spain, United Kingdom and the Republic of Ireland, provided,
however, that (a) should the EFV License Agreement be amended to expand
BMS’ territory, then EFV License Agreement Territory shall forthwith mean BMS’
territory as so expanded; and (b) should the EFV License Agreement be
terminated as a result of BMS’ acquisition of all the rights of the EFV
Licensor thereunder, then EFV License Agreement Territory shall forthwith mean
all countries in the world.

 

1.83                           “EFV
Licensor” shall mean, collectively, Merck & Co., Inc., a New Jersey
corporation, and Merck and Company Incorporated, a Delaware corporation, and
their respective successors in interest.

 

1.84                           “Estimated
Net Selling Price” shall have the meaning set forth in Section 7.1(c)(ii).

 

1.85                           “Exchange
Act” shall have the meaning set forth in Section 15.12(b).

 

9

 

1.86                           “Exploitation”
shall mean the making, having made, importation, use, sale, offering for sale
or disposition of a product or process, including, without limitation, the
research, development, registration, modification, enhancement, Improvement,
Manufacturing, storage, formulation, optimization, import, export, transport,
distribution, promotion or Marketing of a product or process.  When used as a verb, “Exploit” shall mean to
engage in any of the foregoing activities.

 

1.87                           “Europe”
shall mean all countries comprising the European Union as it may be constituted
from time to time.

 

1.88                           “FDA”
shall mean the United States Food and Drug Administration and any successor
agency thereto.

 

1.89                           “Field”
shall mean the treatment of HIV infection in adult humans.

 

1.90                           “Field
Force” shall mean sales representatives, and regional or other subnational
managers of the foregoing.

 

1.91                           “Final
Invoice Date” shall have the meaning set forth in Section 7.3(a).

 

1.92                           “Finished
Product Manufacturing Data” shall mean any and all data and information
necessary or useful for the Manufacture of a finished product, packaged and
labeled, from the active pharmaceutical ingredients thereof, in tablet, capsule
or other form (but expressly excluding the Manufacture of such active
pharmaceutical ingredients), that is not included in any CMC Data for such
finished product.

 

1.93                           “[*] Customers” shall have the meaning set forth in Annex Q.

 

1.94                           “FTC”
shall have the meaning set forth in the recitals to this Agreement.

 

1.95                           “GAAP”
shall mean United States generally accepted accounting principles as in effect
from time to time, as consistently applied.

 

1.96                           “Generic
Version” shall mean, with respect to the Combination Product or a Single Agent
Product or Double Agent Product, a product containing the same active
pharmaceutical ingredients as the Combination Product or the Single Agent
Product or Double Agent Product, as the case may be, with those being the only
active pharmaceutical ingredients in such product, and which product is
approved in the United States under an Abbreviated New Drug Application (i.e.,
an ANDA).

 

1.97                           “Generic
Version Launch” shall have the meaning set forth in Section 14.5.

 

1.98                           “Gilead”
shall have the meaning set forth in the first paragraph of this Agreement.

 

1.99                           “Gilead
Core Improvement” shall mean any Improvement pertaining specifically to Gilead
Core Technology, which Improvement is conceived, discovered,

 

10

 

developed, or otherwise made, as
necessary to establish authorship or inventorship under United States copyright
or patent law, as the case may be, solely or jointly, by or on behalf of BMS or
its Affiliates or the JV in the course of, as a result of, or in connection
with the Project Activities conducted pursuant to the Development Plan or in
connection with Co-Funded Clinical Trials; 
provided, however, that Gilead Core Improvements shall not
include any Dual Improvements.

 

1.100                     “Gilead Core
Technology” shall mean all Gilead proprietary technologies relating specifically
to the Exploitation of FTC, TDF, or any combination of FTC and TDF (including,
without limitation, the Double Agent Product, but excluding the Combination
Product).

 

1.101                     “Gilead
Guarantee Agreement” shall mean the guarantee agreement executed by Gilead
Parent in favor of BMS and the JV, dated as of the Effective Date, as such
agreement may be amended from time to time.

 

1.102                     “Gilead Indemnified Party” shall
mean Gilead Sub, Gilead Parent and any of their Affiliates, officers, directors
and employees.

 

1.103                     “Gilead
Inventions” shall mean any Information and Inventions (whether or not
patentable; and Improvements thereto, including BMS Core Improvements to the
extent owned by Gilead) conceived, discovered, developed or otherwise made, as
necessary to establish authorship or inventorship under United States copyright
or patent law, as the case may be, solely (or, in the case of BMS Core
Improvements, solely or jointly) by or on behalf of Gilead or its Affiliates,
in the course of, as a result of or in connection with the Project Activities
conducted pursuant to the Development Plan or in connection with Co-Funded
Clinical Trials, but excluding any Joint Inventions.

 

1.104                     “Gilead
Know-How” shall mean any and all Information and Inventions under the Control
of Gilead or its Affiliates as of the Effective Date or at any time during the
term of this Agreement that are necessary or reasonably useful for the
Exploitation of the Combination Product and are not generally known, but
excluding any and all (a) such Information and Inventions to the extent claimed
by the Gilead Patents and (b) Joint Know-How.

 

1.105                     “Gilead
Licensed Trademarks” shall have the meaning set forth in Section 6.6(a).

 

1.106                     “Gilead
Parent” shall have the meaning set forth in the first paragraph of this
Agreement.

 

1.107                     “Gilead
Patents” shall mean all of the Patents that Gilead or its Affiliates Control as
of the Effective Date or at any time during the term of this Agreement that
would, in the absence of the license granted by Gilead in Section 6.1(a)
and assuming that the TDF and FTC active pharmaceutical ingredients therein
were not purchased from Gilead, be infringed by the Exploitation of the
Combination Product by the JV in any country in the world.  A list of the Gilead Patents in the Territory
as of the Effective Date is attached hereto as Annex E.

 

1.108                     “Gilead
Regulatory Documentation” shall mean all Regulatory Documentation applicable to
Viread (or TDF), Emtriva (or FTC), or Truvada (or TDF in co-

 

11

 

formulation with FTC) but not
Viread (or TDF), Emtriva (or FTC) or Truvada (or TDF and FTC) in co-formulation
with Sustiva (or EFV), that is or was developed by or on behalf of Gilead or
any of its Affiliates or sublicensees prior to the Effective Date or during the
term of this Agreement.

 

1.109                     “Gilead Sub”
shall have the meaning set forth in the first paragraph of this Agreement.

 

1.110                     “Gilead
Supply Agreement” shall mean the supply agreement entered into between Gilead
Parent and the JV concurrently with the execution and delivery of this
Agreement, as such agreement may be amended from time to time.

 

1.111                     “Gilead
Technology” shall mean, collectively, the Gilead Know-How and the Gilead
Patents.

 

1.112                     “Gilead
Transfer Price” shall have the meaning set forth in Section 7.1(a).

 

1.113                     “[*]” shall have the meaning set forth in [*].

 

1.114                     “[*]” shall have the meaning set forth in Section 5.3(d).

 

1.115                     “Good
Clinical Practice” or “GCP” shall mean the then-current standards for clinical
trials for pharmaceutical products, as set forth in the Act and applicable
regulations promulgated thereunder, as the same may be amended from time to
time.

 

1.116                     “Good
Laboratory Practice” or “GLP” shall mean the then-current standards for
laboratory activities for pharmaceutical products, as set forth in the Act and
applicable regulations promulgated thereunder, as the same may be amended from
time to time.

 

1.117                     “Good
Manufacturing Practice” or “GMP” shall mean the regulatory requirements for
current good manufacturing practices for pharmaceutical products promulgated by
the FDA, including as set forth in U.S. Food, Drug and Cosmetic Act, 21 C.F.R.
(parts 210, 211, 600 and 610), as the same may be amended from time to time.

 

1.118                     “Improvement”
shall mean any modification to a compound, composition, product or technology
or to any discovery, device, process or formulation related to such compound,
composition, product or technology, whether or not patented or patentable,
including, without limitation, any enhancement in the efficiency, operation,
Manufacture, ingredients, preparation, presentation, formulation, means of
delivery, packaging or dosage of a compound, composition, product or
technology, or of any discovery, device, process or formulation related
thereto; any discovery or development of any new or expanded indications or
applications for a compound, composition, product or technology; any discovery
or development that improves the stability, safety or efficacy of a compound,
composition, product or technology; or any discovery or development of a new
dosage regimen for a product or method of use or administration for a compound,
composition, product or technology.

 

1.119                     “IND” shall
mean an Investigational New Drug Application to be filed with the FDA in
accordance with Applicable Law.

 

12

 

1.120                     “Indemnified Party” shall
mean a Person seeking indemnification for Losses pursuant to Section 13.8.

 

1.121                     “Indemnifying Member Party” shall
have the meaning set forth in Section 13.6.

 

1.122                     “Indemnifying
Party” shall mean a Party from which indemnification is sought pursuant to Section 13.8.

 

1.123                     “Independent Accounting Expert”
shall have the meaning set forth in Section 7.1(d).

 

1.124                     “Information
and Inventions” shall mean all technical, scientific and other know-how and
information, trade secrets, knowledge, technology, means, methods, processes,
practices, formulas, instructions, skills, techniques, procedures, experiences,
ideas, technical assistance, designs, drawings, assembly procedures, computer
programs, apparatuses, specifications, data, results and other material,
including, without limitation, pre-clinical and clinical trial results,
Manufacturing procedures, test procedures, and purification and isolation
techniques, (whether or not confidential, proprietary, patented or patentable)
in written, electronic or any other form now known or hereafter developed, and
all Improvements, whether to the foregoing or otherwise, and all other discoveries,
developments, inventions (whether or not confidential, proprietary, patented or
patentable), and tangible embodiments of any of the foregoing.

 

1.125                     “Infringement” shall have the
meaning set forth in Section 11.3(a).

 

1.126                     “Infringing Combination Product”
shall have the meaning set forth in Section 11.3(a).

 

1.127                     “Initial
Launch Period” shall mean the first [*] commencing
with the Launch of the Combination Product in the Territory.

 

1.128                     “Initiating
Member” shall have the meaning set forth in Section 7.1(e).

 

1.129                     “Interim BMS
Unit Transfer Price” shall have the meaning set forth in Section 7.1(a).

 

1.130                     “Interim
Gilead Unit Transfer Price” shall have the meaning set forth in Section 7.1(a).

 

1.131                     “Interim Unit
Transfer Price” shall mean, for each Calendar Year, with respect to BMS, the
Interim BMS Unit Transfer Price and with respect to Gilead, the Interim Gilead
Unit Transfer Price.

 

1.132                     “Joint
Commercialization Committee” or “JCC” shall have the meaning set forth in Section 2.4(a).

 

13

 

1.133                     “Joint
Development Committee” or “JDC” shall have the meaning set forth in Section 2.3(a).

 

1.134                     “Joint
Executive Committee” or “JEC” shall have the meaning set forth in Section 6.1
of the Operating Agreement.

 

1.135                     “Joint
Finance Committee” or “JFC” shall have the meaning set forth in Section 2.5(a).

 

1.136                     “Joint
Inventions” shall mean (a) any and all Information and Inventions pertaining specifically
to the Combination Product (whether or not patentable; and Improvements
thereto) conceived, discovered, developed or otherwise made, as necessary to
establish authorship or inventorship under United States copyright or patent
law, as the case may be, by or on behalf of BMS or its Affiliates, Gilead or
its Affiliates, the JV, or jointly any combination of them, in the course of,
as a result of or in connection with the Project Activities conducted pursuant
to the Development Plan or in connection with Co-Funded Clinical Trials; and
(b) any Dual Improvement.

 

1.137                     “Joint
Know-How” means all Information and Inventions included in the Joint Inventions
that are not generally known, but excluding any Information and Inventions to
the extent claimed by the Joint Patents. 
For the avoidance of doubt, “Joint Know-How” shall include all Clinical
Data from the proposed bioequivalence study contemplated by the Development
Plan.

 

1.138                     “Joint
Patents” shall mean any Patents to the extent that such Patents claim Joint
Inventions.

 

1.139                     “Joint
Technology” shall mean, collectively, the Joint Know-How and the Joint Patents.

 

1.140                     “JV” shall
have the meaning set forth in the first paragraph of this Agreement.

 

1.141                     “JV Expenses”
shall mean all direct, out-of-pocket expenses that Gilead or BMS may incur (or
cause their Affiliates to incur) in performing the Project Activities on behalf
of the JV.  For the avoidance of doubt,
with respect to any JV Expenses incurred by a Member Party (or its Affiliates),
such expenses are chargeable to the JV by such Member Party only if such expenses
constitute Authorized Expenses.

 

1.142                     “Key
Regulatory Submissions” shall have the meaning set forth in Section 3.4(a).

 

1.143                     “Launch”
shall mean, with respect to the Territory, either (a) the date on which the
Combination Product is first shipped by or on behalf of the JV for commercial
sale to Third Parties or (b) for any Generic Version product referred to in Section 14.5,
the date on which it is first available for commercial sale and purchase, as
the case may be.

 

14

 

1.144                     “Losses”
shall mean judgments, fines, amounts paid in settlement, and out-of-pocket
expenses (including reasonable attorneys’ fees) reasonably incurred by a Party
(or other indemnitee as provided in Section 13) in a Proceeding.

 

1.145                     “[*]” shall have the meaning set forth in Annex Q.

 

1.146                     “Manufacture”
or “Manufacturing” means, with respect to a product or compound, the
manufacturing, processing, formulating, packaging, labeling, holding, and
quality control testing of such product or compound.

 

1.147                     “Manufacturing
Process” shall mean any process or step thereof that is necessary or useful for
Manufacturing the Combination Product from bulk active pharmaceutical
ingredients, any Improvements thereto or any intermediate of the foregoing.

 

1.148                     “Market” or “Marketing”
shall mean all programs and activities relating to the Promotion and sale and
other commercialization of the Combination Product in the Territory, including,
without limitation, Detailing and advertising, as well as selling, contracting
for sale of, and distributing the Combination Product.

 

1.149                     “Material
Default” shall have the meaning set forth in Section 14.4(a).

 

1.150                     “Member
Parties” shall mean, collectively, Gilead and BMS.

 

1.151                     “Members”
shall mean, collectively, Gilead Sub and BMS Sub.

 

1.152                     “Member Vote”
shall have the meaning set forth in Section 2.6(f).

 

1.153                     “[*]” shall have the meaning set forth in Section 5.1(f).

 

1.154                     “[*]” shall have the meaning set forth in Section 5.1(f).

 

1.155                     “MTTA” shall
have the meaning set forth in Section 15.14.

 

1.156                     “NDA” shall
mean a New Drug Application to be filed with the FDA in accordance with
Applicable Law for the purpose of obtaining marketing approval for a
pharmaceutical product in the United States.

 

1.157                     “[*]”
shall have the meaning set forth in Annex Q.

 

1.158                     “Net Sales” shall mean, with
respect to a product for any period, the gross amount invoiced for commercial
sales of that product in such period by or on behalf of the selling Party to
Third Parties (provided that amounts invoiced for product sold or provided for
use in the Developing World, if any, shall not be included), less deductions
for:  (a) normal and customary quantity
and/or cash discounts and sales returns and allowances, including, without limitation,
those granted on account of price adjustments, billing errors, rejected goods,
damaged goods, returns, rebates, administrative or other fees or reimbursements
or similar payments to wholesalers or other distributors (including without
limitation pursuant to inventory management agreements), buying groups, AIDS
Drug Assistance Programs, pharmacy benefit management

 

15

 

organizations, health care
insurance carriers or other institutions, allowances, rebates, fees paid to
distributors and chargebacks actually allowed or given; (b) freight, postage,
shipping and insurance expenses (if separately identified in such invoice); (c)
customs or excise duties or other duties related to the sales making up the gross
invoice amount (if separately identified in such invoice); (d) any rebates or
similar payments accrued with respect to sales paid for by any governmental or
regulatory authority such as, by way of illustration and not in limitation of
the foregoing in this clause (d), United States Federal or state Medicaid,
Medicare or similar state program or any government imposed retroactive price
reduction; and (e) sales and other taxes and duties directly related to the
sale, to the extent that such items are included in the gross invoice price
(but not including taxes assessed against the income derived from such
sale).  Any of the deductions listed
above that involves a payment by such Party shall not be taken as a deduction
prior to the date accrued in accordance with GAAP as consistently applied in
such Party’s audited financial statements. 
For purposes of determining Net Sales pursuant to Section 14.6(b)(ii),
the Combination Product shall be deemed to be sold when invoiced.

 

For
purposes of calculating Net Sales, sales between or among a Party and/or
Affiliates shall be excluded from the computation of Net Sales, but sales by
such Party and its Affiliates to Third Parties shall be included in the
computation of Net Sales.

 

1.159                     “Net Selling
Price” shall mean the price of a pharmaceutical product as calculated in
accordance with Annex I hereto.

 

1.160                     “Non-Breaching
Member Party” shall have the meaning set forth in Section 14.4(a).

 

1.161                     “Operating
Agreement” shall have the meaning set forth in the recitals to this Agreement.

 

1.162                     “Operating
Committees” shall mean, collectively, the JCC, the JDC and the JFC.

 

1.163                     “Optional
Update” shall have the meaning set forth in Section 5.7(d).

 

1.164                     “Paragraph
(iv) Certification” shall have the meaning set forth in Section 11.3(a).

 

1.165                     “Party” and “Parties”
shall have the meanings set forth in the first paragraph of this Agreement.

 

1.166                     “Patents”
shall mean (a) all patents and patent applications (including, without
limitation, provisional applications), (b) any substitutions, divisions,
continuations, continuations-in-part, reissues, renewals, registrations,
confirmations, re-examinations, extensions, supplementary protection
certificates and the like, and (c) any foreign or international equivalents of
any of the foregoing.

 

1.167                     “PCT” shall
mean the Patent Cooperation Treaty, opened for signature June 19, 1970, 58
U.S.T. 7645.

 

16

 

1.168                     “Permitted
Assignee” shall have the meaning set forth in Section 15.4(a).

 

1.169                     “Person”
shall mean an individual, sole proprietorship, partnership, limited
partnership, limited liability partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated
association, joint venture or other similar entity or organization, including,
without limitation, a government or political subdivision, department or agency
of a government.

 

1.170                     “Prescription
Drug Marketing Act” or “PDMA” shall have the meaning set forth in Section 5.1(d).

 

1.171                     “Pricing
Committee” shall have the meaning set forth in Section 5.3(b).

 

1.172                     “Pricing
Information” shall have the meaning set forth in Section 5.3(h).

 

1.173                     “Proceeding”
shall mean a civil, criminal, administrative or investigative proceeding
brought by or a demand made by a Third Party.

 

1.174                     “Product
Detail Period” shall have the meaning set forth in Section 5.1(e).

 

1.175                     “Product EFV
Yield” shall have the meaning set forth in Annex K.

 

1.176                     “Product FTC
Yield” shall have the meaning set forth in Annex K.

 

1.177                     “Product TDF
Yield” shall have the meaning set forth in Annex K.

 

1.178                     “Project
Activities” shall mean any and all activities undertaken or performed by or on
behalf of any of the Parties, pursuant to this Agreement or the MTTA, in the
course of, as a result of or in connection with the research, development,
Marketing, sale or use of the Combination Product, including, without
limitation, the Development Activities and the Commercialization
Activities;  provided, however,
that Project Activities shall not include any activities undertaken or
performed by or on behalf of either Member Party or its Affiliates or
sublicensees to the extent that they arise in the course of, as a result of or
in connection with the Exploitation of the Combination Product for use outside
the Territory (including, without limitation, any activities undertaken or
performed by Gilead in the exercise of its rights under the license granted in Section 6.2(d)).

 

1.179                     “Promotion”
shall mean the conduct of activities normally undertaken by a pharmaceutical
company’s Field Force to implement plans and strategies for marketing and other
commercialization aimed at encouraging the approved use of a pharmaceutical
product, including but not limited to Detailing.  When used as a verb, “Promote” shall mean to
engage in any of the foregoing activities.

 

1.180                     “PSUR” means
a periodic safety update report required to be submitted to the FDA.

 

1.181                     “Publication
Standards” shall have the meaning set forth in Section 3.11(a).

 

17

 

1.182                     “[*]” shall have the meaning set forth in Section 5.1(f).

 

1.183                     “Recalculated
Transfer Price” shall have the meaning set forth in Section 7.1(c)(iii).

 

1.184                     “Receiving
Party” shall have the meaning set forth in Section 12.1.

 

1.185                     “Regulatory
Authorities” shall mean any applicable supra-national, federal, national,
regional, state, provincial or local regulatory agencies, departments, bureaus,
commissions, councils or other government entities, including, without
limitation, the FDA, or other entity exercising regulatory authority with
respect to the Exploitation of the Combination Product in the Territory.

 

1.186                     “Regulatory
Documentation” shall mean all submissions to Regulatory Authorities in the
Territory, including, without limitation, all INDs, NDAs, sNDAs, CMC Data, drug
master files, correspondence with regulatory agencies (registrations and
licenses, regulatory drug lists, advertising and promotion documents), PSURs,
adverse event files, complaint files and manufacturing records.

 

1.187                     “Relevant
Experience Information” shall mean adverse experience reports, reports based on
marketing data and other documentation of relevant drug experience.

 

1.188                     “Requesting
Member” shall have the meaning set forth in Section 5.3(g).

 

1.189                     “Required
Update” shall have the meaning set forth in Section 5.7(b).

 

1.190                     “Respective
Percentage” shall mean, with respect to Gilead, the Actual Gilead Percentage,
and with respect to BMS, the Actual BMS Percentage; provided, however,
that whenever this Agreement provides that an amount shall be allocated between
the Member Parties based on their Respective Percentages, such allocation shall
first be made on the basis of the Member Parties’ respective Working
Percentages at the time of the relevant event, which allocation shall then be
adjusted, if applicable, after the determination of the Member Parties’
respective Actual Percentages for the Calendar Year in which the relevant event
occurs, which adjustments shall occur no later than April 1 of the next
Calendar Year unless otherwise provided in this Agreement or the Operating
Agreement, or otherwise agreed in writing by the Member Parties.

 

1.191                     “Right of
Reference” shall have the meaning set forth in 21 C.F.R. § 314.3(b) or alternatively
shall mean equivalents thereto in jurisdictions outside the Territory.  For the avoidance of doubt, as used in this
Agreement “Right of Reference” shall refer to the right of Regulatory
Authorities to rely upon and otherwise use the applicable information, but
shall not confer on the Member Party to which such Right of Reference is
granted any right to receive or access such information.

 

1.192                     “[*]” shall have the meaning set forth in Section 5.3(a).

 

1.193                     “SDEA” or “Safety
Data Exchange Agreement” shall have the meaning set forth in Section 9.1.

 

18

 

1.194                     “Selected
Product Liability Claim” shall have the meaning set forth in Section 13.7(c).

 

1.195                     “Services
Agreement” shall mean the distribution services agreement to be entered into
between Gilead Parent and the JV after the Effective Date, the key terms of
which are outlined in Annex P hereto, as such agreement may be amended from
time to time.

 

1.196                     “Single Agent
Product” shall mean each of Viread, Emtriva, and Sustiva.

 

1.197                     “Study 934”
shall mean the clinical study initiated by Gilead prior to the Effective Date
under Gilead’s clinical study protocol entitled “A Phase 3, Randomized,
Open-Label, Multicenter Study of the Treatment of Antiretroviral-Naïve,
HIV-1-Infected Subjects comparing Tenofovir Disoproxil Fumarate and
Emtricitabine in Combination with Efavirenz Versus Combivir®
(lamivudine/zidovudine) and Efavirenz” (as such protocol may be revised and
such study may be extended or expanded from time to time, in each case by
Gilead).  For the avoidance of doubt, the
conduct of Study 934 shall not be deemed a Development Activity or Project
Activity for purposes of this Agreement, and Clinical Data derived or generated
from Study 934 or from testing or analysis of subjects or samples from Study
934 shall be Gilead Know-How, not Joint Know-How.

 

1.198                     “Subsequent
Launch Period” shall mean the [*] after the
Launch of the Combination Product in the Territory.

 

1.199                     “Supplier”
shall mean each Person selected as a commercial supplier of the Combination
Product pursuant to Section 4.2(a).

 

1.200                     “Supply
Agreements” shall mean, collectively, the BMS Supply Agreement and the Gilead
Supply Agreement.

 

1.201                     “Supply Party”
shall mean, with respect to any Supplier, (a) if a Member Party is the
Supplier, such Member Party, or (b) if a Third Party is the Supplier, the
Member Party that is designated pursuant to Section 4.2(a) to manage the
relationship with such Supplier.

 

1.202                     “TDF” shall
have the meaning set forth in the recitals to this Agreement.

 

1.203                     “Technology”
shall mean the BMS Technology or the Gilead Technology, as the case may be.

 

1.204                     “Terminated
Member Party” shall mean a Member Party as so designated pursuant to Section 14.5.

 

1.205                     “Territory”
shall mean the United States, the Commonwealth of Puerto Rico and any other
territories and possessions of the United States.

 

1.206                     “Third Party”
shall mean any Person other than Gilead, BMS, the JV and their respective
Affiliates.

 

1.207                     “Third Party
Acquirer” shall have the meaning set forth in Section 1.43.

 

19

 

1.208                     “Trademark”
shall include any word, name, symbol, color, designation or device or any
combination thereof, including, without limitation, any trademark, trade dress,
service mark, service name, brand mark, trade name, brand name, logo or
business symbol.

 

1.209                     “Transfer
Price” shall mean the BMS Transfer Price or the Gilead Transfer Price, as the
case may be.

 

1.210                     “Transferring
Member Party” shall have the meaning set forth in Section 15.4(b).

 

1.211                     “[*]” shall have the meaning set forth in Section 5.3(d).

 

1.212                     “WAC” shall
have the meaning set forth in Annex Q.

 

1.213                     “Working BMS
Percentage” shall mean, for each Calendar Year, the preliminary percentage
applicable to BMS for such Calendar Year determined pursuant to Section 7.1(c)(i).

 

1.214                     “Working
Gilead Percentage” shall mean, for each Calendar Year, the preliminary
percentage applicable to Gilead for such Calendar Year determined pursuant to Section 7.1(c)(i).

 

1.215                     “Working
Percentage” shall mean, with respect to BMS, the Working BMS Percentage and,
with respect to Gilead, the Working Gilead Percentage.

 

SECTION 2.

COLLABORATION MANAGEMENT

 

2.1                                 General.  As set forth in this Agreement and in the
Operating Agreement, the Member Parties desire to establish a Joint Executive
Committee which shall oversee the Member Parties’ collaboration under this
Agreement and facilitate communications between the Member Parties with respect
to the development, Approval, Manufacturing and commercialization of the
Combination Product in the Territory. 
Subject to the foregoing, the Member Parties also desire to establish
specialized committees to focus more closely on the Parties’ Development Activities,
Commercialization Activities and finance activities hereunder.  Each such committee shall have only the
responsibilities and authority delegated to or vested in such committee in this
Section 2 or elsewhere in this Agreement and the Operating Agreement.

 

2.2                                 Role
of the Joint Executive Committee. 
The establishment, composition, governance, powers and limitations on
powers of the Joint Executive Committee (or “JEC”) are governed by Section 6
of the Operating Agreement and by this Section 2.2.  The initial JEC members are identified in
Annex A hereto.  The JEC shall have
overall authority and responsibility with respect to the Development Activities
and Commercialization Activities for the Combination Product (except for those
matters reserved to the Member Parties pursuant to this Agreement or the
Operating Agreement).  Without limitation
of the foregoing, the JEC shall have the following powers and duties:

 

20

 

(i)                                     to
oversee the work of the Operating Committees and, if possible, resolve disputes
referred to it by the Alliance Managers pursuant to Section 2.8;

 

(ii)                                  to oversee the
activities of Gilead in keeping the JV’s books and records pursuant to Section 8.1;

 

(iii)                               to adopt guidelines for
compliance by the Parties with antitrust laws in connection with the JV
activities;

 

(iv)                              to
approve the initial Capital Contributions (as defined in the Operating
Agreement) of the Members, to approve each Capital Contribution planning
schedule, and to issue certain requests for additional Capital Contributions,
in each case pursuant to Section 4.1 of the Operating Agreement;

 

(v)                                 to
approve (x) each annual update of the Development Plan and the Development
Budget and (y) any interim update of the Development Plan or Development
Budget, as the case may be, as to which the JDC is unable to reach agreement;

 

(vi)                              to
approve (x) each annual update of the Commercialization Plan and the
Commercialization Budget and (y) any interim update of the Commercialization
Plan or Commercialization Budget, as the case may be, as to which the JCC is
unable to reach agreement;

 

(vii)                           to
approve unit volume forecasts as to which the JCC is unable to reach agreement
for use in preparation of Commercialization Plans and Commercialization Budgets
and (regardless of whether there is a Commercialization Plan or
Commercialization Budget) for use in planning for Manufacture of the
Combination Product,  planning for
Commercialization Activities and for the Member Parties’ own financial planning
purposes;

 

(viii)                        to approve
Cost Allocation Proposals;

 

(ix)                                to
approve the JFC’s reports on financial matters that the JEC determines to be
reasonably necessary or appropriate for the implementation of the financial
aspects of the JV;

 

(x)                                   to
review recommendations of the JFC with respect to, and approve, one or more
means of reconciling, one to the other, the internal reporting and accounting
standards of each of the Member Parties where reasonably necessary, and methods
of charging costs and expenses of each of the Member Parties;

 

(xi)                                to
review and, if applicable, recommend to the Member Parties changes to the [*] pursuant to Section 5.3(i);

 

(xii)                             to
resolve disputes within the JDC with respect to (A) any required approval of
publications or presentations pursuant to Section 3.11(a), and (B) a
Member Party’s obligation under Section 3.6(b), if any, to provide the
other Member Party with access to certain of such Member Party’s records,
documentation and data;

 

21

 

(xiii)                          to resolve disputes within
the JCC with respect to (A) the initially proposed marketing materials for the
Combination Product for the Territory, and thereafter, updates of any Approved
Marketing Materials, (B) a Member Party’s obligation, if any, pursuant to Section 5.10
to provide the other Member Party with access to certain of such Member Party’s
records, documentation and data, (C) issues relating to the patient assistance
programs arising under Section 2.4(b)(vii) and (D) issues relating to Suppliers
and alternate suppliers arising under Section 2.4(b)(ix);

 

(xiv)                         to decide major strategic
issues and any other matters relating to the JV that are not (i) within the
purview of the Operating Committees or (ii) reserved to the Member Parties
pursuant to this Agreement or the Operating Agreement; and

 

(xv)                            to take such other actions
as are reserved to the JEC in this Agreement or the Operating Agreement or as
the Parties may mutually agree in writing, except that the JEC may not amend or
take any action that would conflict with any provision of this Agreement, the
Operating Agreement or any Ancillary Agreement and may not resolve any issue
regarding termination of this Agreement for a potential or actual Material
Default.

 

2.3                                 Joint
Development Committee.

 

(a)                                  Each
Member shall appoint four (4) members of a joint development oversight and
management committee (the “Joint Development Committee” or “JDC”).  Gilead Sub shall appoint one (1) of the
members designated by Gilead Sub, to serve as chairperson of the JDC through
the first anniversary of the Effective Date. 
Thereafter a member designated by BMS Sub and then a member designated
by Gilead Sub shall serve alternately as chairperson, on a rotating annual
basis from each anniversary of the Effective Date.  The initial JDC members and the chairperson
are identified in Annex A hereto.

 

(b)                                 Subject to the oversight of the JEC, the JDC
shall have the following powers and duties:

 

(i)                                     to
(x) review and propose to the JEC for its approval each annual update of the
Development Plan and Development Budget and (y) review and approve each interim
update of the Development Plan and Development Budget, in each case proposed
pursuant to Section 3.7;

 

(ii)                                  to
oversee and coordinate the Parties’ activities under the Development Plan;

 

(iii)                               to
oversee and manage matters relating to clinical supply of the Combination
Product, including, without limitation, Manufacturing requirements, inventory
projections and inventory control;

 

(iv)                              with
the Alliance Managers, (x) to assist in coordinating scientific interactions
between the Parties during the course of implementing the Development Plan and
(y) to facilitate the exchange among the Parties of data, information,
materials and results relating to clinical manufacturing, clinical trials, and
communications and filings with Regulatory Authorities for the Combination
Product (in each case solely to the extent that such

 

22

 

data, information and materials
are required to be exchanged among the Parties, or with respect to which one
Member Party has the right to gain access from the other Member Party or the
JV, pursuant to this Agreement or the Operating Agreement);

 

(v)                                 to
oversee regulatory matters for the JV, including, without limitation, approving
all Combination Product Regulatory Documentation to the extent required
pursuant to Section 3.4, overseeing Gilead’s activities as the JV’s
liaison with Regulatory Authorities in the Territory, and overseeing the
activities conducted pursuant to the SDEA and other pharmacovigilance and
safety reporting;

 

(vi)                              to
oversee the Member Parties’ activities pursuant to their respective Supply
Agreements and to oversee and coordinate with the JCC with respect to matters
relating to the monitoring of Manufacturing capacity, forecasts and orders for
the active pharmaceutical ingredients of the Combination Product;

 

(vii)                           to
resolve  disputes between the Member
Parties with respect to (A) any required approval of publications or
presentations pursuant to Section 3.11(a), and (B) a Member Party’s
obligation under Section 3.6(b), if any, to provide the other Member Party
with access to certain of such Member Party’s records, documentation and data;

 

(viii)                        to oversee
medical affairs and medical communications activities;

 

(ix)                                to
review and approve or reject proposals for Phase IV clinical studies of the
Combination Product;

 

(x)                                   to
provide updates on the JDC’s activities and achievements to the JEC each
Calendar Quarter;  and

 

(xi)                                to
perform such other functions as the Member Parties may mutually agree in
writing from time to time.

 

2.4                                 Joint
Commercialization Committee.

 

(a)                                  Each Member shall appoint four (4) members of
a joint commercialization oversight and management committee (the “Joint Commercialization
Committee” or “JCC”).  BMS Sub shall
appoint one (1) of the members designated by BMS Sub, to serve as chairperson
of the JCC through the first anniversary of the Effective Date.  Thereafter a member designated by Gilead Sub
and then a member designated by BMS Sub shall serve alternately as chairperson,
on a rotating annual basis from each anniversary of the Effective Date.  The initial JCC members and the chairperson
are identified in Annex A hereto.

 

(b)                                 Subject to the oversight of the JEC, the JCC
shall have the following powers and duties:

 

(i)                                     to
oversee and coordinate the Parties activities under the Commercialization Plan;

 

23

 

(ii)                                  to
(x) review and propose to the JEC for its approval each annual update of the
Commercialization Plan and Commercialization Budget and (y) review and approve
each interim update of the Commercialization Plan and Commercialization Budget,
in each case proposed pursuant to Section 5.11(c);

 

(iii)                               to
oversee Gilead’s activities pursuant to the Services Agreement;

 

(iv)                              to
develop and approve (x) initial marketing materials for the Combination Product
for the Territory, and (y) updates to such materials from time to time as may
be reasonably necessary or appropriate, all in accordance with Section 5.7;

 

(v)                                 to
develop and approve unit volume forecasts for use in preparation of
Commercialization Plans and Commercialization Budgets and (regardless of
whether there is a Commercialization Plan or Commercialization Budget) for use
in planning for Manufacture of the Combination Product, planning for
Commercialization Activities and for the Member Parties’ own financial planning
purposes;

 

(vi)                              to
coordinate with the JDC with respect to Manufacturing and labeling matters;

 

(vii)                           to (x) determine how the JV will respond
to requests from health care providers or from individual patients who have or
may obtain prescriptions for the Combination Product but are unable to afford
it, and (y) to establish the appropriate procedures and response times that
shall apply in responding to such requests, in each case ((x) and (y)) in
accordance with Section 5.2(a);

 

(viii)                        to make
recommendations to the JEC with respect to Cost Allocation Proposals;

 

(ix)                                to
maintain one Supplier and one or more alternate suppliers pursuant to Section 4.2(a)
for Manufacture of commercial supplies of the Combination Product;

 

(x)                                   oversee
and coordinate with the JDC with respect to matters relating to the
Manufacturing and labeling of the Combination Product for commercial supply,
including, in the case of Manufacturing, with respect to quality control
matters, and the monitoring of Manufacturing capacity, forecasts and orders for
the Combination Product to ensure adequate commercial supply to meet the demand
therefor in the Territory as projected by the JCC and approved by the JEC;

 

(xi)                                to
resolve disputes between the Member Parties with respect to a Member Party’s
obligation, if any, pursuant to Section 5.10 to provide the other Member
Party with access to certain of such Member Party’s records, documentation and
data;

 

(xii)                             to
provide updates on the JCC’s activities and achievements to the JEC each
Calendar Quarter; and

 

24

 

(xiii)                          to
perform such other functions as the Member Parties may mutually agree in
writing from time to time.

 

2.5                                 Joint
Finance Committee.

 

(a)                                  Each
Member shall appoint two (2) members of a joint finance committee to support
the JEC, the JDC and the JCC (the “Joint Finance Committee” or “JFC”).  Gilead Sub shall appoint one (1) of the
members designated by Gilead Sub, to serve as chairperson of the JFC through
the first anniversary of the Effective Date. Thereafter a member designated by
BMS Sub and then a member designated by Gilead Sub shall serve alternately as
chairperson, on a rotating annual basis from each anniversary of the Effective
Date.  The initial JFC members and the
chairperson are identified in Annex A hereto.

 

(b)                                 Subject
to the oversight of the JEC, the JFC shall have the following powers and
duties:

 

(i)                                     to
work with the JEC and the other Operating Committees to assist in financial,
budgeting and planning matters as required, including assisting in the
preparation of budgets and annual and long-term plans;

 

(ii)                                  to
recommend, for approval by the JEC, procedures, formats and timelines
consistent with this Agreement for reporting financial data as well as
additional or alternative reporting procedures concerning financial aspects of
the JV;

 

(iii)                               to
prepare such reports on financial matters as are approved by the JEC for the
implementation of the financial aspects of the JV;

 

(iv)                              to
coordinate audits of financial data where appropriate and required or allowed
by this Agreement;

 

(v)                                 to
address issues of implementation relating to the financial mechanics and
calculations under this Agreement and the Operating Agreement;

 

(vi)                              to
recommend, for approval by the JEC, a means of reconciling, one to the other,
the internal reporting and accounting standards of each of the Member Parties
where necessary and methods of charging costs and expenses of each of the
Member Parties;

 

(vii)                           to
review the appropriate allocation of costs and expenses with respect to
Authorized Expenses;

 

(viii)                        to
calculate or cause to be calculated, as the case may be, those matters
expressly required to be calculated (or caused to be calculated) by the JFC
pursuant to this Agreement, including Sections 7.1(c) and 7.1(d), and pursuant
to the Operating Agreement, and to address issues of implementation relating to
the cash netting procedures set forth in Section 4.1(c) of the Operating
Agreement;

 

25

 

(ix)                                to
develop and recommend to the JEC for approval the initial Capital Contributions
(as defined in the Operating Agreement) of the Members and each Capital
Contribution planning schedule, and to recommend to the JEC certain requests
for additional Capital Contributions, in each case pursuant to Section 4.1
of the Operating Agreement;

 

(x)                                   to
provide updates on the JFC’s activities and achievements to the JEC each
Calendar Quarter; and

 

(xi)                                to
perform such other functions as the Member Parties may mutually agree in
writing from time to time.

 

2.6                                 Procedural
Rules of the Operating Committees.

 

(a)                                  Each
of BMS Sub and Gilead Sub shall designate representatives with appropriate
expertise to serve as members of each Operating Committee, and each
representative may serve on more than one (1) Operating Committee (and/or the
JEC) as appropriate in view of the individual’s expertise.  The Members shall endeavor to match their
respective representation on each Operating Committee, in terms of functional
areas and management level.

 

(b)                                 A
member of an Operating Committee may be removed or replaced at any time, with
or without cause, by the Member that appointed such committee member.  Such action shall be accomplished by written
notice to the other Member.  Each member
of an Operating Committee shall serve until a successor is named by the Member
that appointed such committee member (or until his or her earlier resignation
or removal).

 

(c)                                  The
JFC shall meet at least one (1) time per Calendar Quarter during the term of
this Agreement.  The JDC shall meet at
least one (1) time per Calendar Quarter
until the first anniversary of the Launch of the Combination Product, and thereafter
at least semiannually (or on such other schedule as may be determined by
the JDC).  The JCC shall meet at least one (1) time per Calendar Quarter until the
second anniversary of the Launch of the Combination Product, and thereafter
at least semiannually (or on such other schedule as may be determined by
the JCC).  Each Operating Committee shall
meet at times and places in the United States mutually agreed by BMS Sub and
Gilead Sub.  The respective Operating
Committees shall meet to discuss the overall progress of the Development
Activities in the Development Plan or Commercialization Activities in the
Commercialization Plan, or the financial aspects of the JV, as the case may be,
and any problems arising in the course of such activities; the status of the
Development Plan and Development Budget, the Commercialization Plan and
Commercialization Budget, or other financial aspects of the JV, as the case may
be; and any other matter that a member of such Operating Committee may
reasonably request.  Each Operating
Committee shall keep accurate and complete minutes of its meetings to record
all proposals, recommendations and actions taken.  All such minutes and other records of each
Operating Committee shall be available to each Member Party.

 

(d)                                 The
chairperson shall organize committee meetings, prepare the meeting agenda based
on items submitted by committee members, take or cause to be taken

 

26

 

accurate minutes of meetings, circulate draft minutes within seven (7)
days after the meeting for approval by the other Member’s committee members,
and circulate final minutes to the committee members promptly following such
approval.  Notice of, and the agenda for,
each meeting (and any accompanying materials) shall be circulated to the
members of the applicable Operating Committee sufficiently in advance so that
in the normal course such materials will be received at least five (5) Business Days in advance of such
meeting; provided, however, that under reasonable circumstances
such materials may be circulated within a lesser period of time in advance of
the meeting, so long as each Member agrees to the inclusion on such agenda of
any items proposed for consideration by the other Member. 
Any member of an Operating Committee may waive notice
of a meeting thereof, and shall be deemed to waive such notice (but not, if
applicable, his or her right to object to the inclusion of a particular agenda
item or items as set forth in the proviso to the previous sentence) if he or
she attends the meeting and does not object to the meeting because of a lack of
notice prior to its commencement.

 

(e)                                  At
least two (2) members appointed by Gilead Sub and two (2) members appointed by
BMS Sub must be in attendance at a meeting of an Operating Committee to
establish a quorum for the conduct of business. 
Committee members may attend meetings in person or, as long as each
attendee is able to hear the others, by telephone or by video conference equipment;
provided, however, that at least two (2) meetings per Calendar
Year of each Operating Committee shall be held in person until the Launch of
the Combination Product, and thereafter at least one (1) meeting per Calendar
Year of each Operating Committee shall be held in person.  Each Operating Committee
may also act by unanimous written consent of its members without a meeting.

 

(f)                                    At
each meeting of an Operating Committee, each Member’s designees on such
Operating Committee shall, collectively, have one (1) vote on all matters to be
acted upon (the “Member Vote”).  Each
Operating Committee shall take action by unanimous Member Vote.  If an Operating Committee is unable to reach
agreement on a matter properly presented to such Operating Committee for its
consideration, the matter shall be resolved by the procedure set forth in Section 2.8
(except as otherwise provided therein).

 

(g)                                 Each
Operating Committee may, as it deems appropriate, delegate its decision-making
authority for specific matters or types of matters (other than, as applicable in the case of the JDC and JCC, approval
of updates of the Development Plan, Commercialization Plan, Development Budget
or Commercialization Budget for which that Operating Committee is responsible,
or as provided in Section 3.4) to subcommittees or specific groups, each
with representatives from both Members, which shall make such decisions by
consensus.  If such subcommittees or
groups do not reach consensus on a matter, either Member may refer such matters
back to such Operating Committee for resolution.

 

(h)                                 Notwithstanding
the enumerated authority of the JEC in this Agreement and the Operating
Agreement and the express reservation to the decision-making authority of the
Member Parties of certain matters herein and therein:  in the event that the JEC, acting (i) by
unanimous affirmative Member Votes (as defined in the Operating Agreement)
pursuant to Section 6.5(d) of the Operating Agreement, or (ii) by
unanimous written consent pursuant to Section 6.5(c) of the Operating
Agreement, takes action on a matter relating to the Exploitation of the
Combination Product, but with respect to which matter authority and

 

27

 

responsibility have not been delegated to or vested in the JEC, the
Member Parties shall be deemed to waive any objection to the effect that the
JEC acted beyond the scope of its authority or responsibility, and the
resolution of such matter shall be binding on the Member Parties for purposes
of this Agreement and the Operating Agreement.

 

2.7                                 Alliance
Managers.

 

(a)                                  Gilead
and BMS shall each designate within their respective organizations an alliance
manager (an “Alliance Manager”) with responsibility for facilitating the
interaction and cooperation between Gilead and BMS with respect to the JV and
the Exploitation of the Combination Product in the Territory.  The initial Alliance Managers are identified
in Annex A hereto.  Each Member Party may
change its Alliance Manager from time to time upon written notice to the other
Member Party.

 

(b)                                 The
Alliance Managers shall attend all meetings of the JEC and each Operating
Committee (other than the JFC) and support the chairpersons of the JEC and each
Operating Committee in the discharge of their responsibilities.  The Alliance Managers shall be nonvoting
participants in such meetings, unless they are also appointed members of the
applicable committee(s).  Each Alliance
Manager shall endeavor to create and maintain a collaborative work environment
within and among the JEC and the Operating Committees.  In addition, each Alliance Manager: (i) shall
be the point of first referral in certain matters subject to dispute resolution
as provided in Section 2.8; (ii) shall coordinate the relevant functional
representatives of the Member Parties; (iii) shall provide a single point of
communication for seeking consensus both internally within the respective
Member Parties’ organizations and between the Member Parties; (iv) shall
identify and bring disputes to the attention of the JEC or an Operating
Committee as appropriate in a timely manner; (v) shall plan and coordinate
cooperative efforts and internal and external communications; and (vi) shall
take responsibility for ensuring that governance activities, such as the
conduct of required JEC and Operating Committee meetings and production of
meeting minutes, occur as set forth in this Agreement and in the Operating
Agreement and that relevant action items agreed upon at such meetings are
appropriately carried out or otherwise addressed.

 

(c)                                  Notices
given by a Member Party to the other Member Party with respect to Development
Activities, Combination Product or EFV, TDF or FTC bulk active pharmaceutical
ingredient Manufacturing and Commercialization Activities shall be made to the
other Member Party’s Alliance Manager and to such other Operating Committee or
JEC member of such other Member Party as is most directly involved in or
informed of the relevant activity, except
that if Gilead or BMS is selected as the Supplier pursuant to Section 4.2(a),
it shall not be required to provide such notice to the other Member Party’s
Alliance Manager with respect to its toll manufacturing activities.

 

2.8                                 Dispute
Resolution.

 

(a)                                  Disputes
may be referred to the JEC for resolution, as follows:  (i) if an Operating Committee is unable to
reach agreement on a matter properly presented to such Operating Committee for
its decision, the Operating Committee shall refer the matter to the Alliance
Managers for Gilead and BMS, and if the Alliance Managers are unable to resolve
the

 

28

 

dispute within [*] after such
referral, then the matter shall be referred to the JEC;  and (ii) either Member Party may refer to the
JEC any issue arising under this Agreement or the Operating Agreement and not
otherwise covered by clause (i).

 

(b)                                 If
the JEC is unable to resolve a dispute referred to it by the Alliance Managers
or by a Member Party pursuant to Section 2.8(a) within [*] after such referral, or in the event that the JEC is
unable to resolve a dispute arising within the JEC, then the dispute shall be
referred for resolution to the Chief Executive Officer of Gilead Parent and,
for BMS, the Chief Executive Officer of BMS Parent or any direct report
designated by the Chief Executive Officer of BMS Parent (who shall not be a
member of the JEC or any Operating Committee).

 

(c)                                  If the Chief Executive Officer of Gilead
Parent and Chief Executive Officer (or designee, as applicable) of BMS Parent
are unable to reach agreement on a disputed matter referred to them pursuant to
Section 2.8(b) within [*] after such
referral, then either Gilead or BMS may refer the disputed matter to binding
arbitration pursuant to Section 15.6 if and only if, and to the extent
that (A) the disputed matter relates to or arises out of the validity,
interpretation or construction of, or the compliance with or breach of, this
Agreement, the Operating Agreement, any Ancillary Agreement, or any other
agreement contemplated by this Agreement to which a Member Party (or its
Affiliates) and the JV and/or the other Member Party (or its Affiliates) are
parties; (B) the disputed matter came before the JEC pursuant to Section [*] or Section [*] (provided
that any dispute relating to the [*] may be
submitted to arbitration only with respect to the issue of whether specific [*] are [*], any
dispute relating to [*] pursuant to
[*] may be submitted to arbitration
only with respect to the issue of [*], any
dispute relating to [*] may be
submitted to arbitration only with respect to matters arising pursuant to [*], and any dispute relating to [*]
may be submitted to arbitration only with respect to matters arising pursuant
to [*]; or (C) there is a dispute as to
whether the [*] are satisfied with respect to
a matter.

 

(d)                                 For
the avoidance of doubt, the dispute resolution procedures set forth in Sections
2.8(a), 2.8(b) and 2.8(c) shall not apply to any deadlock within the JEC or any
Operating Committee resulting from a proposal by one Member’s committee members
to reverse or modify a decision of the JEC or such Operating Committee with
respect to a matter previously presented to it for decision and approved by
unanimous Member Vote or unanimous written consent of its members, unless all
of the following conditions are satisfied: 
(i) such proposal is [*] the
applicable JEC or Operating Committee decision; 
(ii) the deadlock involves [*]; and (iii)
the applicable JEC or Operating Committee decision, if not reversed or
modified, would [*] pursuant to this Agreement (it
being understood that if only certain aspects of the applicable JEC or
Operating Committee decision produce these results, only they shall be subject
to the dispute resolution procedures set forth in Sections 2.8(a), 2.8(b) and
2.8(c), and the balance of such decision shall remain in effect);  provided, however, that this Section 2.8(d)
shall not apply to the deliberations and decisions of the JCC pursuant to
Sections [*], and deliberations and decisions of
the JEC with respect to any disputes that arise within the JCC with respect
thereto;  and provided, further,
that the JCC’s and the JEC’s reconsideration of prior decisions with respect to
the matters covered by the preceding proviso shall be governed by [*], respectively, and in the event of any such reconsideration
(and any dispute resolution and arbitration in connection therewith), the prior
decision in force at the time of reconsideration shall remain in force and

 

29

 

continue to apply until such time, if any, as a modified position may
be agreed by the JCC or the JEC, or adopted by the arbitrator(s), as the case
may be.

 

(e)                                  Nothing
in this Section 2.8 shall affect the right of a Member Party to exercise
its rights under Section 14.4 with respect to a Material Default by the
other Member Party, concurrently with the exercise of its rights under this Section 2.8.  In the event that, at any time prior to
completion of the dispute resolution procedures set forth in this Section 2.8,
the Non-Breaching Member Party delivers a notice of Material Default to the
Breaching Member Party, the sixty (60) day cure period referred to in Section 14.4(a)
shall begin to run upon the receipt of such notice and shall run concurrently
with the procedures set forth in this Section 2.8.

 

2.9                                 Collaboration
Principles.  The Parties agree to
abide by the following principles (“Collaboration Principles”) in their conduct
of the Development Activities and the Commercialization Activities, and to
cause their representatives on the JEC and the Operating Committees to observe
these principles in connection with their committee-related activities:

 

(a)                                  Subject
to Sections 2.9(b) and (c), the purposes of the JV are (i) to develop,
manufacture, and commercialize the Combination Product for use within the
Territory, and (ii) to optimize the commercial potential of the Combination
Product within the Commercialization Plan, subject to the Commercialization
Budget.  For the avoidance of doubt,
nothing in this Agreement or in the Operating Agreement shall be deemed to
restrict or prohibit either Member Party or any of its Affiliates from (x)
commercializing its Single Agent Product(s) and/or Double Agent Product as
applicable, (y) subject to Sections 3.10 and 5.6, developing, manufacturing and
commercializing combination products (other than the Combination Product) for
the treatment of HIV infection or otherwise, including, without limitation, any
product containing such Party’s Single Agent Product(s) and/or Double Agent
Product or (z) conducting clinical studies involving one or more of EFV, FTC
and TDF, or any combination thereof (including the Combination Product).

 

(b)                                 Subject
to Section 5.7, each Party’s Promotion of the Combination Product in the
Territory shall be in accordance with the Approved Marketing Materials, the FDA-approved label and the package
insert for the Combination Product; provided, however, that
subject to the foregoing, each Party shall have a right to position the
Combination Product within its HIV product portfolio in its sole discretion.

 

(c)                                  Except
as expressly provided otherwise in this Agreement (or in the Operating
Agreement or any Ancillary Agreement) and notwithstanding the powers and
authority delegated to a Party, the JEC or an Operating Committee, neither
Party shall have any obligation (i) to conduct activities in support or
furtherance of the Exploitation of the Combination Product, unless mutually
agreed in writing by the Parties or expressly set forth in this Agreement, the
Commercialization Plan or Development Plan, or (ii) to make payments or incur
expenses or liabilities in support or furtherance of the Exploitation of the
Combination Product unless mutually agreed in writing by the Parties or
expressly set forth in the Commercialization Budget or the Development Budget.

 

2.10                           Commercialization
Budget/Plan Deadlocks.  In the event
of a Commercialization Budget Deadlock or a Commercialization Plan Deadlock (as
such terms are

 

30

 

defined below) with respect to
any portion of the period from the Effective Date through the end of the
Subsequent Launch Period, then in lieu of any other dispute resolution
procedures set forth in this Agreement or in the Operating Agreement, the
Parties agree that the dispute shall be conclusively resolved as follows:

 

(a)                                  If
a Commercialization Budget Deadlock relates to any Calendar Year (or part thereof) during the period from the Effective Date through the
end of the Initial Launch Period, the level of aggregate expenditure for
the Calendar Year (or part thereof) in dispute shall be fixed, upon notice
given by a Member Party to the other Member Party, at (i) in the case of
disputes on annual updates, the level for the Calendar Year in dispute provided
for in the initial version of the Commercialization Budget included in Annex C
hereto (as most recently updated, if applicable), or (ii) in the case of
disputes on interim updates, the level then in effect for the relevant part of
the current Calendar Year.

 

(b)                                 If a Commercialization Budget Deadlock
relates to any Calendar Year (or part thereof) during the Subsequent Launch
Period, (i) the level of aggregate expenditure for the Calendar Year (or part
thereof) in dispute shall be fixed, upon notice given by a Member Party to the
other Member Party,  at (A) in the case
of disputes on annual updates, [*] of the
level (as most recently updated) budgeted for the Calendar Year immediately
preceding the Calendar Year in dispute unless both Members, through their
respective representatives on the JEC have proposed levels of aggregate
expenditure both of which are lower than the aforesaid [*]
level, in which case the level of aggregate expenditure for the Calendar Year
in dispute shall instead be fixed at the [*] of the [*] by the Members through their respective
representatives on the JEC, or (B) in
the case of disputes on interim updates, the level then in effect for the
relevant part of the current Calendar Year, and (ii) if there is a
dispute regarding the level of aggregate expenditure provided for in a
subsequent annual update to the Commercialization Budget covered by the
foregoing clause (A), such level shall be fixed, upon notice given by a Member
Party to the other Member Party, at the amount [*]
which is the [*] of the [*]
by the Members through their respective representatives on the JEC.

 

(c)                                  If
a Commercialization Plan Deadlock
relates to any Calendar Year (or part thereof) during the Initial Launch
Period, the [*] for the Calendar Year (or part
thereof) in dispute shall be fixed, upon notice given by a Member Party to the
other Member Party, at (i) in the case of disputes on annual updates, the level
for the Calendar Year in dispute provided for in the initial version of the
Commercialization Plan included in Annex C hereto (as most recently updated, if
applicable), or (ii) in the case of disputes on interim updates, the level then
in effect for the relevant part of the current Calendar Year.

 

(d)                                 If
a Commercialization Plan Deadlock
relates to any Calendar Year (or part thereof) during the Subsequent Launch
Period, (i) the [*] for the Calendar Year (or part
thereof) in dispute shall be fixed, upon notice given by a Member Party to the
other Member Party, at (A) in the case of disputes on annual updates, [*] of the level (as most recently updated) in effect for
the Calendar Year immediately preceding the 
Calendar Year in dispute, unless both Members, through their respective
representatives on the JEC, have proposed [*] both of
which are lower than the aforesaid [*] level, in
which case the [*] for the Product Year in
dispute shall instead be fixed at the [*] of the [*] by the Members through their respective
representatives on the JEC, or (B) in
the case of disputes on interim updates, the level then in effect for the
relevant

 

31

 

part of the current Calendar Year, and (ii)
if there is a dispute regarding the [*] provided
for in a subsequent annual update to the Commercialization Plan covered by the
foregoing clause (A), such level shall be fixed, upon notice given by a Member
Party to the other Member Party, at the amount [*]
which is the [*] of the [*]
by the Members through their respective representatives on the JEC.

 

For Calendar Years (or any
part thereof) commencing after the Subsequent Launch Period, any aggregate
expenditures in a Commercialization Budget, and any [*]
in a Commercialization Plan, shall be decided by the mutual agreement in
writing of the Member Parties; failure to reach agreement thereon shall not be
subject to dispute resolution hereunder. 
As used in this Agreement, (x) a “Commercialization Budget Deadlock”
shall mean that the JEC is unable to reach agreement, by unanimous Member Vote
(as defined in the Operating Agreement) or unanimous written consent of the
members of the JEC, on the level of aggregate expenditure in any annual or (in
the case of clause (y) of Section 2.2(vi)) interim update to the
Commercialization Budget covering all or any portion of the period from the
Effective Date through the end of the Initial Launch Period or all or any
portion of the Subsequent Launch Period and (y) a “Commercialization Plan
Deadlock” shall mean that the JEC is unable to reach agreement, by unanimous
Member Vote or unanimous written consent of the members of the JEC, on the [*] to be conducted in any annual or (in the case of clause
(y) of Section 2.2(vi)) interim update to the Commercialization Plan
covering all or any portion of the Initial Launch Period or the Subsequent
Launch Period.

 

2.11                           Expenses.  Gilead and BMS shall each bear their own
expenses related to the management of the JV, including without limitation all
expenses relating to the meetings of the JEC and the Operating Committees, the
participation of the Members’ representatives in such meetings, communications
with the other Member in connection with such meetings or matters within the
authority of the committees, and travel to and from such meetings, and such
expenses shall not be deemed JV Expenses or Authorized Other Expenses.

 

SECTION 3.

DEVELOPMENT ACTIVITIES

 

3.1                                 General.  Under the oversight of the JDC, Gilead and
BMS shall each perform, or cause its Affiliates to perform, on behalf of and in
the name of the JV, the Development Activities designated for such Member Party
in the Development Plan, in each case in accordance with the timeline set forth
in the Development Plan.  For the
avoidance of doubt, Gilead, on its own behalf and in its own name, shall have
the sole right to [*] in its sole
discretion and without oversight by the JDC or the JEC, but shall [*] with respect to [*] such [*].

 

3.2                                 Clinical
Development.

 

(a)                                  Without
limitation of Section 3.1, Gilead, under the oversight of the JDC, shall
have primary responsibility for the development of the Combination Product and
the conduct of any clinical trials and bioequivalence studies required for
obtaining approval of an NDA for the Combination Product in the Territory in
the Field, in each case only as set forth in the Development Plan or otherwise
mutually agreed upon by the Member Parties.

 

32

 

(b)                                 In
the event that either Member Party desires (i) to conduct or sponsor, or cause
to be conducted or sponsored, jointly with the other Member Party, or in the
name of the JV, a clinical trial of the Combination Product (whether such
clinical trial would involve the Combination Product alone, or with one or more
other products) other than any clinical trial contemplated by the Development
Plan, including, without limitation, an expanded access program or Phase IIIb/IV
study, or (ii) to support jointly with the other Member Party (either on their
own behalf or in the name of the JV) any such clinical trial sponsored by an
investigator, such Member Party shall so notify the other Member Party.  The Member Parties shall then discuss the
particulars of the proposed clinical trial. 
In the event that the Member Parties, each in its sole discretion, agree
to conduct jointly or sponsor jointly such clinical trial (either on their own
behalf or in the name of the JV), the JDC representatives shall prepare and
agree upon a trial protocol and designate a Member Party to take the lead in
conducting or supervising such clinical trial and negotiating any necessary
clinical trial agreements, as the case may be, and the external, out-of-pocket
costs of the Member Parties, if any, without any markup, relating to such
clinical trial shall be treated as Authorized Development Expenses.  In the event that the Member Parties, each in
its sole discretion, agree to support jointly (either on their own behalf or in
the name of the JV) any investigator-sponsored clinical trial, the Member
Parties shall coordinate with the investigator seeking to conduct such clinical
trial and agree upon an appropriate grant of support (including, without limitation,
support in the form of funding or the contribution of drug product), and the
external, out-of-pocket costs of the Member Parties, if any, without any mark
up, with respect to such clinical trial shall be treated as Authorized
Development Expenses.  Each clinical
trial that the Member Parties shall determine to conduct, sponsor or support
jointly pursuant to the preceding two sentences shall be referred to as a “Co-Funded
Clinical Trial.”  The Clinical Data with
respect to any Co-Funded Clinical Trial shall be deemed to be Joint Know-How; provided,
however, that, in the case of any investigator-sponsored clinical trial,
the Clinical Data resulting from any such Co-Funded Clinical Trial shall be
deemed to be Joint Know-How only if and to the extent that the JV or either or
both Member Parties obtains any right, title and interest in and to such
Clinical Data.

 

For the avoidance of doubt, nothing contained in this Section 3.2
is intended, or shall be construed, to restrict or prohibit either Member Party
from conducting independently or together with one or more Third Parties, any
clinical trial of the Combination Product (whether such clinical trial would
involve the Combination Product alone, or with one or more other products).  Prior to a Member Party’s commencing any such
clinical trial sponsored by such Member Party, whether independently or
together with one or more Third Parties, the applicable Member Party shall
provide a brief summary of the protocols to the other Member Party’s
representatives on the JDC (it being understood that neither such
representatives nor the JDC shall have any approval rights with respect to such
study or protocols), provided that (A) each such summary shall constitute
Confidential Information of the disclosing Member Party to the extent that the
information provided in such summary satisfies the criteria set forth in Section 12.3,
(B) the receiving Member Party’s representatives shall not use such summary for
any purpose other than providing comments thereon to the disclosing Member
Party (which comments may be accepted or rejected by the disclosing Member
Party in its sole discretion), and (C) the receiving Member Party’s
representatives shall not disclose such summary to any Persons other than
employees of such Member Party who have an obligation (x) not to further
disclose such summary and (y) to use such summary solely in order to assist
such Member Party’s representatives in providing comments thereon.  For the avoidance of doubt, a Member

 

33

 

Party’s providing such summary with respect to any such clinical trial
pursuant to this Agreement shall not be construed to have the effect of causing
the activities with respect to such clinical trial to be deemed to be Project
Activities for purposes of this Agreement.

 

(c)                                  In
the event that the Member Parties determine 
to conduct additional Development Activities for an alternative
formulation or presentation of the Combination Product, and conduct or cause to
be conducted such additional activities, the external, out-of-pocket costs of
the Member Parties, if any, without any markup, with respect to such activities
shall be treated as Authorized Development Expenses.

 

3.3                                 Formulation
and CMC Data.  Without limitation of Section 3.1,
Gilead, under the oversight of the JDC, shall have primary responsibility for
formulation and Manufacturing Process development for, and preparation of the
CMC Data relating to, the Combination Product as contemplated by the
Development Plan.  Formulation
development shall include, without limitation, conducting the formulation
screening, optimization, scale-up and technology transfer for the Combination
Product in the Field.

 

3.4                                 Regulatory
Matters.

 

(a)                                  Without limitation of Section 3.1,
Gilead, under the oversight of the JDC and with the participation of BMS as
described in this Section 3.4, shall have primary responsibility for
preparing and filing all necessary Regulatory Documentation and for acting as
liaison on behalf of the JV for all communications with the Regulatory
Authorities in the Territory relating to the obtaining of approval of the
Combination Product in the Field under an NDA separate from the respective NDAs
for Sustiva, Viread, Emtriva and Truvada. 
Gilead shall prepare and file all Combination Product Regulatory
Documentation with Regulatory Authorities in the Territory in the name of the
JV.  All submissions of Combination
Product Regulatory Documentation consisting of any INDs, NDAs, sNDAs,
CMC Data, drug master files and PSURs (collectively, the “Key Regulatory
Submissions”) shall be approved in
advance by the JDC (which shall not delegate such approval to any subcommittees
or groups referred to in Section 2.6(g)). 
If permitted by Applicable Law, the label for the Combination Product
shall list the agents in the following order: 
[*].

 

(b)                                 Gilead shall notify BMS as early as
reasonably practicable in advance of all meetings (whether face to face or by
teleconference) and communications with representatives of the Regulatory
Authorities in the Territory concerning the Combination Product and in order to
provide BMS with an opportunity to be present at such meetings and to review
and comment on such communications; provided, however, that in no
event shall Gilead, after using reasonable efforts to provide BMS with an
opportunity to be present at any such meeting or to review and comment on such
communications, be required to postpone any such meeting to ensure that BMS
attends such meeting or to postpone any such communication in order to ensure
that BMS’ comments are received by Gilead in advance of its submission to
Regulatory Authorities, as the case may be. 
In order to enhance the efficiency of the Member Parties’ coordination
on regulatory matters concerning the Combination Product, and increase the
likelihood that BMS will have a meaningful opportunity to participate in such
activities, during the term of this Agreement, BMS will cause one of its
employees with the necessary regulatory expertise and decision-making authority
to be dedicated on a full-time basis to serving

 

34

 

as a conduit for BMS’ participation in such
activities.  Gilead shall promptly
forward to BMS in advance of any such meeting copies of all documents and other
relevant information relating to such meeting. 
Notwithstanding anything contained in this Agreement to the contrary,
(i) at any such meeting with, or any such communication to, the Regulatory
Authorities in the Territory concerning the Combination Product, at which BMS
and Gilead are present or in which both Member Parties participate, each Member
Party shall take the lead on matters relating to its respective Single Agent
Product(s) or Double Agent Product and (ii) at any such meeting with, or any
such communication to, such Regulatory Authorities concerning the Combination
Product, at which only one Member Party meets or in which communication only
one Member Party participates (without the other Member Party’s presence or
participation), such Member Party shall not engage in any substantive
discussions pertaining to the other Member Party’s Single Agent Product(s) or
Double Agent Product, as the case may be, including, without limitation, with
respect to API consisting of EFV, TDF or FTC, as the case may be, as it relates
to the Combination Product.

 

(c)                                  Each Member Party shall promptly forward to
the other Member Party any written communications received from representatives
of the Regulatory Authorities relating to the Combination Product.  BMS shall provide Gilead with full access to
and copies (including electronic copies if requested) of the BMS Regulatory
Documentation, including without limitation the NDA for Sustiva, as Gilead may
reasonably request in connection with (and solely for the purpose of) the
performance of its duties under this Section 3.4.

 

(d)                                 Nothing in this Section 3.4 shall
prohibit or restrict either Member Party from communicating with the Regulatory
Authorities on matters relating to the Exploitation of any of its respective
Single Agent Product(s), Double Agent Product or other pharmaceutical
products.  Each Member Party shall
promptly notify the other Member Party of any label change for the first Member
Party’s respective Single Agent Product(s) or Double Agent Product that may result
in a label change for the Combination Product. 
If any communications from Regulatory Authorities regarding potential
label changes for the Combination Product are reasonably expected to lead to a
label change for a Member Party’s Single Agent Product or Double Agent Product,
then, notwithstanding anything in this Agreement to the contrary, the affected
Member Party shall take the lead in dealing with the Regulatory Authorities on
such matter.

 

3.5                                 Performance;
Subcontracting.  Gilead and BMS each
shall perform its respective Development Activities in material compliance with
GCP, GLP, and GMP, in each case to the extent applicable, and the requirements
of Applicable Law, and so long as there is a Development Plan in effect, shall
use Commercially Reasonable Efforts to perform its Development Activities under
the Development Plan efficiently and expeditiously, subject to the Development
Budget.  Either Member Party may
subcontract the performance of its respective Development Activities; provided,
however, that the subcontracting Member Party shall oversee the
performance by its subcontractors of the subcontracted Development Activities
in a manner that would be reasonably expected to result in their timely and
successful completion and shall remain responsible for the performance of such
Development Activities in accordance with this Agreement and the Development
Plan.

 

35

 

3.6                                 Records.

 

(a)                                  Maintenance of Records. 
Gilead and BMS each shall severally (in accordance with their respective
allocations of responsibilities with respect to Project Activities) maintain,
or cause to be maintained, all Combination Product Regulatory Documentation and
final supporting records and documentation therefor (but not draft records or
documentation therefor except as otherwise required by Applicable Law), in
sufficient detail and in material compliance with GCP, GLP, and GMP, in each
case to the extent applicable.  Such records shall be complete and
accurate and shall fully and properly reflect all work done and results
achieved in the performance of its respective Development Activities in a
manner appropriate for any regulatory purpose and, when applicable, for use in
connection with Patent filings, prosecution and maintenance.  Such documentation and records shall be
retained for at least (i) three (3) years or (ii) such longer period
as may be required by Applicable Law.

 

(b)                                 Access
to Records.  Each Member Party shall
have the right, during normal business hours and upon reasonable notice, to
inspect and copy any Combination Product Regulatory Documentation and final
supporting records and documentation therefor generated or maintained by the
other Member Party, for use by the
receiving Member Party solely in connection with the performance of its
Development Activities in a manner consistent with the Development
Plan.  Subject to the terms and
conditions of this Section 3.6(b), each Member Party shall also have the
right, during normal business hours and upon reasonable notice, to obtain from
the other Member Party access to or copies of scientific, regulatory and technical records, documentation and data
solely to the extent relating to the Combination Product or such other Member
Party’s Single Agent Product(s) and/or Double Agent Product, as the case may
be, and solely to the extent (i) necessary in order for the receiving Member
Party to perform its obligations with respect to Development Activities
in a manner consistent with the Development Plan, (ii) necessary for the receiving
Member Party to confirm compliance with and/or to comply with GLP, GCP and GMP (to the extent applicable),
and other Applicable Law, as it relates to Project Activities, and/or (iii)
necessary to enable the receiving Member Party to conduct reasonable diligence
on matters potentially giving rise to liability on the part of the JV and/or
such receiving Member Party, or to conduct a defense of itself and/or the JV
with respect to any such liability, if and to the extent that a fact,
circumstance or event has arisen that gives the receiving Member Party a
reasonable basis to believe that it or the JV has or may incur such liability,
in each case for use by the receiving Member Party for the purpose set forth in
clause (i), (ii) or  (iii) above, as the case
may be.  Clause (iii) of the immediately preceding
sentence shall not require any Party to provide such data, documentation or
records in the event that the Parties’ interests in such matter are or may be [*], in which case [*], shall apply.  Each such request shall be made in writing
and shall state the reason(s) therefor (each a “Development Record Request”).  The Member Party from which such records,
documentation or data are requested shall have the right to raise reasonable
objections in writing in response to such Development Record Request,
including, without limitation, based on such Member Party’s interests in
protecting from disclosure to the requesting Member Party trade secrets or
other competitive business information. 
Upon any such objection being asserted, the Member Parties shall
promptly confer in an attempt to address each Member Party’s concerns and reach
a resolution with respect to the matter, and in the event that the Member
Parties are unable to agree upon a mutually agreeable resolution, either Member
Party shall have the right to refer the matter to the JDC.  In the event that any such dispute is
ultimately [*] determine as a
threshold matter whether and to what extent one or more criteria set forth in
clauses (i), (ii) and/or (iii) above have been satisfied by the requesting
Member Party, and, if so, shall make a determination with

 

36

 

respect to whether and to what extent the
disclosure of such information shall be required by [*], and [*].  In making such determination, [*] to the facts and arguments set forth in
the Development Record Request and the other Member Party’s written response
thereto, and (y) shall have the right to require the receiving Member Party to
abide by terms and conditions for the handling, use and non-disclosure (either
within such Member Party’s organization and/or to Third Parties) of such
information as may be reasonable under the circumstances.  Except as provided in this Section 3.6,
a Member Party shall not have the right to obtain from the other Member Party
access to or copies of the other Member Party’s records, documentation and data
described above, unless otherwise expressly permitted pursuant to this
Agreement or the other Member Party gives its consent in its sole discretion.

 

3.7                                 Updates
to Development Plan and Development Budget. 
Gilead shall prepare and submit to each of the JDC and JFC (i) not less
than [*] prior to the start of each Calendar
Year, a proposed update to the Development Plan and the Development Budget for
such Calendar Year and (ii) not less than [*] prior to
the start of each Calendar Year, a preliminary update to such Development
Budget (which may address budget issues at a general level, may be incomplete
and is subject to change).  In addition,
either Member Party, directly or through its representatives on the JDC, may
propose updates to the Development Plan and the Development Budget to the JDC
from time to time as appropriate in light of changed circumstances.  Such changes and updates shall be subject to
approval by the JDC as set forth in Section 2.6(f), with annual updates to
be approved at least [*] prior to
the start of such Calendar Year.  If an
annual or interim update to the Development Plan or the Development Budget is
not approved by the JDC, then, subject to Sections 2.2(v) and 2.8 as
applicable, the Development Plan or Development Budget, as the case may be,
shall continue in effect as approved and most recently updated pursuant to this
Section 3.7.  Updated Development
Plans shall not cover items other than those included in the initial
Development Plan unless mutually agreed by the Member Parties.

 

3.8                                 Development
Expenses.  [*]
shall be [*] responsible for all costs that it
incurs (a) in its sole discretion, in connection with the [*]
or (b) in the performance of [*] Development
Activities as set out in the initial Development Plan.  The Parties agree that the JV shall bear all
JV Expenses incurred by Gilead or BMS in connection with the performance of its
respective Development Activities to the extent meeting all of the following
criteria (“Authorized Development Expenses”): 
(i) such Development Activities are conducted pursuant to the
Development Plan and are within an area of responsibility for the relevant
Member Party listed in the Development Budget as being chargeable to the JV;
(ii) the total expenses for that area of responsibility for that Member Party
for the relevant period to the extent that they do not exceed the corresponding
budgeted amount for that area in that period by more than [*]
unless approved by the JDC; (iii) the expenses are external, out-of-pocket
costs of Gilead or BMS, without any markup; and (iv) the expenses are not [*] costs of [*] referred to
in the [*].

 

3.9                                 Reports.  Gilead and BMS shall each present to the
other, at a meeting of the JDC at least once per Calendar Quarter until the
first anniversary of the Launch of the Combination Product, and, thereafter, at
a meeting of the JDC, at least semiannually, a report (oral and written, which
written report shall not be required to contain more detail than that typically
included in an executive summary) describing (i) the Development Activities it
has performed, or caused to be performed, since the preceding meeting at which
such a report was

 

37

 

presented (or, in the case of
the first meeting of the JDC, prior to such meeting) and on a Calendar Year-to
date basis, evaluating the work performed in relation to the goals and timeline
of the Development Plan, (ii) its Development Activities in process and the
future activities it expects to initiate during the then-current Calendar Year,
as compared to the Development Plan, and (iii) in the case of the written
report the Authorized Development Expenses incurred, and expected to be
incurred, by such Member Party for the then-current Calendar Year, as compared
to the Development Budget.  In addition,
Gilead and BMS shall report promptly to the JDC through their respective
committee members any material developments with respect to Development
Activities that they are responsible for performing under the Development
Plan.  Notwithstanding anything contained
in this Section 3.9 to the contrary, each Member Party’s reporting
obligations under this Section 3.9 shall automatically be deemed to
terminate with respect to any period in which there is not then in effect a
Development Plan and Development Budget.

 

3.10                           New
Products.  During the period from the
date of this Agreement through the [*] anniversary
of the Effective Date, the Member Parties agree to use commercially reasonable
efforts to evaluate and pursue an arrangement with each other for the
co-development and co-commercialization of [*] product
comprising [*]; provided, however,
that the Member Parties may terminate such efforts by mutual written agreement
if they determine that the proposed product is not commercially or technically
feasible, with such agreement to terminate not to be unreasonably withheld.  In furtherance of the foregoing,
notwithstanding anything in this Agreement to the contrary, during the period
from the Effective Date through the [*] anniversary
of the Effective Date (a) Gilead shall not (and shall cause its Affiliates not
to) [*] an [*]
with any [*] for [*]
within the Territory of any [*] that
contains [*] with [*]
that is (i) [*] to that Third Party and (ii) [*] in the Territory as of [*],
and (b) BMS shall not (and shall cause its Affiliates not to) [*] an [*] with any [*] for [*] within the
Territory of any [*] that contains [*] in combination with [*] that are
(i) proprietary to that Third Party and (ii) [*]
in the Territory as of [*].

 

3.11                           Publication.

 

(a)                                  Either
Member Party shall have the right to publish or present data and findings
resulting from Project Activities, including, without limitation, Co-Funded
Clinical Trials, subject to the right of objection or demand for modification
by the other Member Party in the interest of (i) protecting the Confidential
Information of such other Member Party, (ii) preserving the intellectual
property rights of such other Member Party or the JV, and/or (iii) assuring
that the publication or presentation presents such data and findings in a fair,
accurate and balanced manner in accordance with ethical, medical and/or scientific
standards.  During the term of this
Agreement, each Member Party shall provide to the other Member Party’s
representatives on the JDC for review copies of all academic, scientific and
medical publications and presentations specifically relating to the Combination
Product (or otherwise relating to the combined use of EFV, FTC and TDF) that
the Member Party proposes to submit for publication or presentation and that
result from Project Activities; provided, however, that
notwithstanding anything contained in this Section 3.11 to the contrary,
the terms and conditions of this Section 3.11 shall not apply to any
publications and presentations resulting directly or indirectly from Study
934.  Review of such publications and
presentations shall be conducted only for purposes of considering compliance
with the standards set forth in clauses (i), (ii) and (iii) above (the

 

38

 

“Publication Standards”) and shall consider whether any portion of any
such publication or presentation should be modified or deleted in order to
conform to the Publication Standards.  In
addition, in the case of any such publication or presentation resulting from a
Co-Funded Clinical Trial, the Member Party that proposes to submit such publication
or presentation shall have the right to do so only if the other Member Party
agrees that such publication or presentation, as may be modified, conforms to
the Publication Standards, which agreement shall not be unreasonably withheld
or delayed.  Such Member Party shall
consider in good faith any comments provided to it by such other Member Party
with respect to such publication or presentation, including, without
limitation, any comments of a scientific or medical nature.  In the case of any such publication or
presentation resulting from other Project Activities, the other Member Party
shall have a right to comment on such publication or presentation, provided
that the Member Party proposing such publication or presentation shall be under
no obligation to accept such comments (except to the extent necessary to
preserve the intellectual property rights of such other Member Party or the JV)
and shall be free to publish or present, as the case may be.  Written copies of each proposed publication
or presentation required to be provided for review shall be provided to the
other Member Party’s representatives on the JDC no later than [*] before submission for publication or presentation,
except that (A) in the case of an abstract, a copy of the abstract shall be
provided as soon as reasonably practicable in advance of the submission of such
abstract to a Third Party (which period may be less than [*]
and (B) if the deadline for submission of such publication or presentation is
less than [*] from the date of completion of that
publication or presentation, copies will be provided as soon as reasonably
practicable in advance of such submission deadline.  In the case of any proposed publication or
presentation of a Member Party that is required to be reviewed by the other
Member Party, in the event that the Member Parties fail to reach agreement, if
applicable, on such publication or presentation by the conclusion of the
applicable review period, and as a result there is a dispute between the Member
Parties with respect to such publication or presentation, such dispute may be
referred by either Member Party to the JDC. 
The Member Parties shall comply in any publications made pursuant to
this Section 3.11 with standard academic practice regarding authorship of
scientific publications and recognition of contribution of parties.  For the avoidance of doubt, nothing contained
in this Section 3.11 shall alter or affect a Member Party’s
confidentiality obligations pursuant to Section 12.

 

(b)                                 Subject
to compliance with Section 3.11(a), nothing in this Agreement shall
restrict either Member Party from providing information on Co-Funded Clinical
Trials conducted by the other Member Party to any Clinical Trials Registry or
Clinical Trials Results Database, in accordance with Applicable Law and
industry practice.  For purposes of this Section 3.11(b), (i) “Clinical
Trial Registry” means any listing of Clinical Trials which have been initiated,
whether maintained by the U.S. federal government (e.g., www.clinicaltrials.org) or an independent organization
(e.g., PhRMA) and (ii) “Clinical Trials Results Database” means any
database which provides access to Clinical Trial results to physicians,
patients and the general public, whether maintained by any government,
Regulatory Authority or independent organization (e.g., PhRMA).

 

3.12                           Certain
Inspections.  Each Member Party shall
involve the other Member Party, to the extent feasible, in its GCP, GLP and GMP
audit process for any facilities used in the performance of Development Activities
for the Combination Product (including the facilities of any subcontractors to
the extent permitted pursuant to the terms of the applicable subcontract or

 

39

 

otherwise permitted by the
applicable subcontractor) and shall consider in good faith any issues
concerning such compliance or any safety and efficacy issues with respect to
the Combination Product or the active pharmaceutical ingredient(s) of the other
Member Party’s Single Agent Product(s) or Double Agent Product, as applicable,
that are raised by the other Member Party on a reasonable basis as a result of
such audits.  Each Member Party shall
also have the right, during normal business hours and upon reasonable notice,
to inspect the other Member Party’s facilities (or the facilities of any
subcontractor to the extent permitted pursuant to the terms of the applicable
subcontract or otherwise permitted by the applicable subcontractor), used in
the performance of Development Activities for the Combination Product, if the
Member Party desiring such inspection has a reasonable basis on which to raise
in good faith any such compliance, safety or efficacy issues apart from the
aforementioned audit inspections.  Any audit
referred to in this Section 3.12 shall be subject to reasonable
restrictions on access to confidential information and trade secrets by the
inspecting Member Party to the extent such confidential information and trade
secrets are not expressly required to be disclosed by such Member Party to the
other Member Party pursuant to this Agreement.

 

3.13         Medical
Affairs and Medical Communications.

 

(a)                                  Gilead
and BMS shall determine independently how to utilize and deploy their
respective medical science liaisons for activities relating to the Combination
Product.  The JDC shall develop and
approve presentation materials for use by each Member Party’s medical science
liaisons when engaging in activities to support Promotion of the Combination
Product, and the medical science liaisons shall use only such approved
presentation materials in such activities. 
The JDC shall develop, and the Member Parties shall implement,
procedures to coordinate the training of each Member Party’s medical science
liaisons on any approved presentation materials.

 

(b)                                 The
JDC shall develop guidelines and procedures for determining and providing
appropriate responses to medical inquiries about the Combination Product,
including assigning responsibilities for medical communications.  The Parties shall develop a set of standard
response documents for the Member Parties to use in responding to medical
inquiries about the Combination Product, as follows:  (i) each Member Party shall develop standard
response documents relating to their respective Single Agent Product(s) and
Double Agent Product as incorporated in the Combination Product, and (ii)
Gilead shall develop draft standard response documents relating to the
Combination Product as a whole (substantially incorporating that developed by
each Member Party for its Single Agent Product(s) and/or Double Agent Product),
for review, comment and approval by the JDC.

 

SECTION 4.

MANUFACTURING AND SUPPLY

 

4.1                                 Clinical
Supply.  Gilead shall Manufacture or
have Manufactured through a subcontractor, on behalf of the JV, clinical
supplies of the Combination Product in such quantities as may be needed for the
clinical trials and studies required to obtain initial Approvals of an
NDA.  In connection with such
Manufacture, Gilead and BMS each shall donate to the JV quantities of FTC and
TDF, in the case of Gilead, and EFV, in the case of BMS.  Each Member

 

40

 

Party’s Cost of Goods of such
supply, as well as Gilead’s Cost of Goods for Manufacture of the clinical
supplies of the Combination Product, shall not be chargeable to the JV.

 

4.2           Commercial
Supply.

 

(a)                                  The initial Development Plan designates the
initial commercial Supplier of the Combination Product, which Supplier shall be
the source of Combination Product supply for purposes of the NDA filing and
Launch in the Territory.  Within [*] after the Effective Date, the JCC shall determine the
most cost-efficient manner in which to source the commercial supply of the
Combination Product, including, without limitation, one or more alternate suppliers.  Thereafter, during the term of this
Agreement, the JCC shall review annually the appropriate source(s) of
commercial supply of the Combination Product after Launch and agree upon
appropriate changes.  Each Member Party
may propose interim changes with respect thereto from time to time between such
reviews, which changes the JCC shall adopt if failure to do so would be likely
to have a material adverse effect on the Combination Product business.  If Gilead or BMS desires to be considered as
a possible Supplier of the Combination Product, it shall submit a confidential
written proposal to the JV for consideration by the JCC alongside written
proposals submitted by recognized, reliable and sufficiently capitalized Third
Parties and/or the supply terms pertaining to the initial Supplier.  Any proposal submitted by a possible Supplier
shall include an offer to perform any required tableting, blistering,
packaging, labeling, analytical testing and storage activities with respect to
commercial supplies of the Combination Product. 
The JCC shall select a Person to supply the JV with commercial supplies
of the Combination Product on the basis of price, quality, reliability, GMP
compliance, security of supply and other relevant commercial
considerations.  If a Third Party is
selected as a Supplier, the JCC shall designate a Member Party to manage the
relationship with that Supplier. Any supply contract between the JV and Gilead
or BMS as Supplier shall be negotiated on an arm’s-length basis and shall
contain such terms and conditions as are customary in the pharmaceutical
industry, modified as appropriate for the Combination Product.

 

(b)                                 The JCC, directly or through a designated
Member Party, and in coordination with the JDC, shall monitor Manufacturing
capacity of, and forecasts and orders for, the Combination Product submitted to
the relevant Supplier(s) to ensure that adequate commercial supplies of the
Combination Product will be available to meet the demand therefor as projected
by the JCC in commercial unit volume forecasts. 
The JCC shall prepare [*] rolling
unit volume forecasts at least [*] before the
commencement of each forecast period, and shall update such unit volume
forecasts on a [*] basis, or as the JCC deems
necessary and appropriate.

 

(c)                                  In
connection with the Manufacture by the Supplier of the commercial supply of the
Combination Product for the JV, Gilead and BMS each shall supply to the JV
quantities of FTC and TDF, in the case of Gilead, and EFV, in the case of BMS,
and in each case in the form of bulk active pharmaceutical ingredient, pursuant
to and in accordance with their respective Supply Agreements.  In consideration of such supply, the JV shall
pay to Gilead and BMS, respectively, the Gilead Transfer Price and the BMS
Transfer Price.  The JDC shall monitor
orders under the respective Supply Agreements to assure consistency in the
quantities of FTC, TDF and EFV ordered by the JV thereunder.

 

41

 

SECTION 5.

COMMERCIALIZATION ACTIVITIES

 

5.1                                 Co-Promotion
Obligations.

 

(a)                                  Gilead
and BMS each shall use Commercially Reasonable Efforts to perform in the
Territory the Commercialization Activities that such Member Party is required
to perform under the Commercialization Plan in accordance with the Commercialization
Budget as applicable to such activities, for so long as there is a
Commercialization Plan in effect.  Each Member Party shall be required, during
the Initial Launch Period and (to the extent there is a [*]
applicable thereto) the Subsequent Launch Period, to [*]
per Calendar Quarter, and take the other actions, applicable to it as specified
in the Commercialization Plan.  Subject
to Section 2.10, [*] shall apply
(i) during the Subsequent Launch Period unless approved by the JEC or JCC as applicable,
as part of a Commercialization Plan update pursuant to Section 5.11(c),
and (ii) after the Subsequent Launch Period unless approved by the Member
Parties.  Each Member Party shall be free
to engage in [*], and to engage in [*] when there is no longer a Commercialization Plan in
effect, in each case in its sole discretion.

 

(b)                                 Gilead and BMS shall select independently the
target prescribers to which each shall Promote the Combination Product.

 

(c)                                  In accordance with Section 2.9(b),
Gilead and BMS shall each cause its Field Force to use only the FDA-approved
product labels and inserts and, subject to Section 5.7, the Approved
Marketing Materials in Promoting the
Combination Product, and to make only such statements and claims regarding the
Combination Product as are consistent with Applicable Law and FDA-approved
product labels and inserts.  Gilead and
BMS shall not provide or give access to samples of the Combination Product to
health care practitioners or patients in connection with Promotion of the
Combination Product.

 

(d)                                 Gilead and BMS shall each Detail the
Combination Product and perform its other Promotional activities under this
Agreement in the Territory in strict adherence to regulatory and professional
requirements, and to all Applicable Law, including, to the extent applicable,
the Act; the FDA Guidance for Industry-Supported Scientific and Educational
Activities; the Pharmaceutical Research and Manufacturers of America Code on
Interactions with Healthcare Professionals; the Office of Inspector General
Compliance Program Guidance for Pharmaceutical Manufacturers; the American
Medical Association Guidelines on Gifts to Physicians from Industry; the
Pharmaceutical Marketing Research Group Guidelines on market research
activities; the Prescription Drug Marketing Act of 1987, as amended (“PDMA”);
and all federal, state and local “fraud and abuse,” consumer protection and
false claims statutes and regulations, including but not limited to the
Medicare and State Health Programs Anti-Fraud and Abuse Amendments of the
Social Security Act, the “Safe Harbor Regulations” found at 42 C.F.R. §1001.952
et seq.  As among the Parties, each Member Party shall
treat its sales representatives engaged in Detailing the Combination Product as
its (or its Affiliate’s) own employees for all purposes, including, without
limitation, federal, state and local tax and employment laws.

 

(e)                                  Within [*] after the
end of each Calendar Quarter (or part thereof) falling within (i) the Initial
Launch Period, (ii) (to the extent there is a [*]
applicable thereto) the

 

42

 

Subsequent Launch Period, or (iii) any period
commencing after the Subsequent Launch Period if mutually agreed by the Member
Parties pursuant to Section 2.10 (clauses (i), (ii) and (iii) being
referred to herein collectively as the “Product Detail Period”), Gilead and BMS
shall each furnish the other Parties with a written report, in the form set
forth in Annex H attached hereto, setting out the number of Details that it has
conducted during such Calendar Quarter (or part thereof) in the Territory.  The
number so reported shall be determined in accordance with applicable
self-reporting procedures for details customarily employed by such Member Party
in the Territory for other similarly detailed and similarly reported HIV
products to the target health care audience, consistently applied.

 

(f)                                    In each Calendar Year (or part thereof)
falling within the Product Detail Period, subject to the terms of this Section 5.1(f),
each Member Party shall [*] to conduct
(x) the [*] for each Calendar Quarter (or part
thereof) specified in the Commercialization Plan (the “[*]”)
and (y) the [*] for such Calendar Year (or
part thereof) specified in the Commercialization Plan (i.e.,
the [*]) (the “[*]”).  To the extent that the Product Detail Period
includes part but not all of a  Calendar
Quarter, then the [*] for such
Calendar Quarter shall be [*].  If, in any Calendar Quarter during the
applicable Calendar Year, the [*] of Details
conducted by a Member Party is [*] for such
Calendar Quarter (such [*] being a[  *]”), such
Member Party may [*] of Details it conducts [*], if any, during the [*], and in [*], in each case in order to [*]
some or all of the [*].  Subject to Section 5.1(g), if, in any
Calendar Year, the [*] of Details
conducted by a Member Party is [*] the [*] for such Calendar Year (such [*]
being a[*]), then notwithstanding anything in
this Agreement to the contrary, (i) the other Member Party shall [*] to such [*], and (ii)
any failure by a Member to comply with this Section 5.1(f) which results
in such [*] shall not be subject to the [*].

 

(g)                                 If, during any Calendar Quarter, a Member
Party expects that it will experience a [*] for the
succeeding Calendar Quarter (or part thereof), it shall inform the other Member
Party of the anticipated [*] by written
notice as promptly as practicable but no later than the due date of the report
referred to in Section 5.1(e).  The
other Member Party shall have the right to [*] in such
succeeding Calendar Quarter (or part thereof) by up to the anticipated [*] for such succeeding Calendar Quarter (or part
thereof)  by giving notice to the first
Member Party of its intent to do so within [*] of
receiving the notice.  For the avoidance
of doubt, if the other Member Party gives such notice and so [*], the first Member Party shall [*]
to the other Member Party an amount equal to the product of [*] multiplied by the [*] multiplied
by the [*]. 
In any such case, the [*] of the [*], if any, under [*] shall be [*].

 

5.2                                 Distribution
Obligations.

 

(a)                                  Gilead shall have the sole responsibility and
right to fill orders with respect to the Combination Product on behalf of the
JV.  If for any reason BMS receives sales
orders for the Combination Product, it shall promptly forward such order to
Gilead.  An order for the Combination
Product may be rejected by Gilead only if such rejection is commercially
reasonable under the circumstances.  The JCC shall determine how the JV shall
respond to requests from individual patients who have or may obtain
prescriptions for the Combination Product but may be unable to afford it, and
from health care providers on behalf of such patients, including, without
limitation, establishing appropriate procedures and response times that shall
apply in responding to such requests; provided, however, that the
JCC shall

 

43

 

structure the applicable program in a manner
that will make evident to such health care providers and patients the participation
of the JV (and, as appropriate, each of its Member Parties) in such program and
shall ensure that the procedures and response times are no less favorable to
patients than the most favorable of either Member Party’s patient assistance
programs for its Single Agent Product(s) and/or Double Agent Product as of the
Effective Date.  The JCC shall review the
arrangements for the patient assistance program annually and agree upon
appropriate changes.  Each Member Party
may propose interim changes with respect thereto from time to time between such
reviews, which changes the JCC shall adopt if failure to do so would be likely
to have a material adverse effect on the Combination Product business.

 

(b)                                 Without limitation of the foregoing, Gilead
shall perform all the functions of a distributor with respect to sales of the
Combination Product on behalf of the JV, including, without limitation,
inventory management and control, warehousing and distribution, invoicing,
collection of sales proceeds, preparation of sales records and reports,
customer relations and services, and handling of returns, in accordance with
customary practice in the biopharmaceutical industry, pursuant to a separate
Services Agreement to be entered into by the Parties within [*] of the Effective Date substantially on the terms
outlined in Annex P.

 

(c)                                  Gilead’s
relationships with wholesale distributors for the Combination Product shall be
governed by inventory management agreements to reduce inventory fluctuations to
the extent commercially feasible, and if such agreements do not also cover
Gilead’s other products in the Field, they shall be commercially reasonable and
[*]. 
For any [*] in respect of [*] relating thereto, Gilead shall ensure either that (i)
such [*] are [*]
for [*] on a [*]
as for [*], or (ii) if such [*] are not [*] on a [*] basis, such [*] are [*] among [*]. Gilead
shall use Commercially Reasonable Efforts to keep inventory levels of the
Combination Product at wholesale distributors at [*],
subject to fluctuations expected during the Launch period for the Combination
Product.

 

5.3                                 Pricing
of Combination Product.

 

(a)                                  Gilead shall have sole responsibility to act
as agent for selling the Combination Product on behalf of the JV at prices that
[*] with the [*]
(as defined below) made pursuant to the provisions of this Section 5.3 and
the [*] set forth on Annex Q (the “[*]”).

 

(b)                                 Gilead
and BMS shall each appoint two (2) members of a pricing committee for the JV
(the “Pricing Committee”).  One (1)
representative from each Member Party (the “[*]
Representative”) shall be an employee of that Member Party who is not at the
time of his or her appointment, or at any time during his or her service on the
Pricing Committee, otherwise involved, directly or indirectly, in the [*] of such Member Party’s (or any of its Affiliates’) [*] (provided, that for purposes of this Section 5.3,
duties solely with respect to accounts receivable analysis, bookkeeping and
accounting shall not, without more, be deemed involvement in [*]).  Such
representatives shall have skills reasonably appropriate to their
responsibilities and functions as members of the Pricing Committee. The other
representative from each Member Party (the “[*]
Representative”) shall be [*] for that
Member Party.  Furthermore, each Member
Party covenants that, for [*] immediately
after an individual’s service on the Pricing Committee (or for such shorter
period as he or she is employed by such Member Party or its Affiliate), he or
she will not be assigned to a function or position that

 

44

 

involves, directly or indirectly, the pricing of such Member Party’s
(or any of its Affiliates’) [*]
products.  Each Member Party shall have
the right to approve the other Member Party’s proposed [*]
Representative and [*]
Representative on the Pricing Committee (or any replacement therefor), which
approval shall not be unreasonably withheld. 
Subject to the preceding sentence, each Member Party shall have the
right to replace its [*]
Representative and/or [*]
Representative from time to time during the term of this Agreement, provided
that the composition of the Pricing Committee as so changed meets the
requirements set forth above in this Section 5.3(b).  For the avoidance of doubt, the Pricing
Committee is not an Operating Committee of the JV and, accordingly, references
in this Agreement, the Operating Agreement and, if applicable, any Ancillary
Agreement to an Operating Committee shall not apply to the Pricing Committee.  The Pricing Committee may determine in its
sole discretion to retain independent legal counsel, in which case the expenses
of such counsel shall be deemed to be Authorized Other Expenses.

 

(c)                                  Gilead
and BMS shall each be responsible for the performance of its representatives on
the Pricing Committee and their compliance with the terms of this Section 5.3
and the [*]. 
Any issue regarding the [*] of the
Pricing Committee shall be reviewed [*]  Gilead and BMS shall each bear their own
expenses related to the Pricing Committee, including without limitation all
expenses relating to the meetings of the Pricing Committee, the participation
of the Member Parties’ representatives in such meetings, communications with
the other Member Party in connection with such meetings or matters within the authority
of the Pricing Committee, and travel to and from such meetings, and such
expenses shall not be deemed JV Expenses or Authorized Other Expenses.

 

(d)                                 The
Pricing Committee shall be responsible, on an ongoing basis, for [*] Gilead, as agent of the JV [*],
(i) the [*] in accordance with this Section 5.3
and the [*] (the “[*]”)
and (ii) any [*] (“[*]”)
as [*] according to the [*] with respect to [*] (as defined
in the [*]) from the JV.  The Pricing Committee shall meet at least
quarterly (which meeting may be conducted by telephone or videoconference
equipment, so long as each attendee is able to hear the others), and as
otherwise required from time to time, to [*].  The [*] will serve
as [*], as applicable, in [*] Gilead, as agent of the JV, and [*].
 Gilead, as agent of the JV, shall have
no authority to [*], as the case may be, for [*].

 

(e)                                  Should
interpretation of the [*] become
necessary, the [*] Representatives on the Pricing
Committee shall discuss the matter with the [*]
Representatives and attempt to resolve the matter by consensus.  In the event that a consensus cannot be
reached, no [*] with respect to [*] and Gilead, as agent of the JV, shall not [*].

 

(f)                                    The
functional role of each representative on the Pricing Committee shall be
limited to:

 

(i)                                     coordinating
with Gilead, as agent of the JV, to ascertain [*];

 

(ii)                                  on
an as-needed basis, providing the Pricing Committee the [*],
as the case may be;

 

45

 

(iii)                               only
on an as-needed basis, and as specifically requested with respect to [*], providing the Pricing Committee such other specifically
limited [*] pertinent to [*],
as the [*] Representatives shall agree is
necessary and appropriate;

 

(iv)                              applying
the [*] to [*]
with respect to [*];  and

 

(v)                                 ensuring
that the [*] for the Combination Product, as [*], is [*], as the
case may be, for [*].

 

(g)                                 Either
Member Party (the “Requesting Member”) may, upon written notice to the other
Member Party, cause the Independent Accounting Expert (selected pursuant to Section 7.1(d))
to confirm the accuracy, with respect to any [*],
of (i) any [*] and/or (ii) any [*] the Pricing Committee, including, without limitation,
the [*], as the case may be.  In such case, each Member Party and the Pricing
Committee shall cooperate with the Independent Accounting Expert and (upon the
Independent Accounting Expert’s entry into an appropriate confidentiality
agreement) provide him or her with the data necessary to make the requisite
calculations.  Further, upon the written request
of either Member Party, the calculations of the Independent Accounting Expert
shall be audited by a second Third Party mutually agreed by the Member
Parties.  The Independent Accounting
Expert and the Third Party auditor, if any, shall notify the JEC of their
respective determinations, which notifications shall not contain any
information provided to such Independent Accounting Expert (and/or such Third
Party auditor) by either Member Party.  The calculations made by the
Independent Accounting Expert pursuant to this Section 5.3(g) shall be
binding upon the Pricing Committee and the Parties; provided, however,
that in the event that a Third Party auditor identifies a discrepancy in the
Independent Accounting Expert’s calculations, the Member Parties shall cause
the Independent Accounting Expert and such Third Party auditor to confer and
agree upon the final calculations and advise the Member Parties in writing of
same, whereupon such final agreed calculations shall be binding on the Parties.  The Requesting Member shall bear the fees and
costs of the Independent Accounting Expert in connection with  its confirmation of the accuracy of such
determination and/or information, unless the Independent Accounting Expert
finds a discrepancy equal to or greater than [*]
therein, in which case the JV (in the case of a discrepancy in a [*]) or the other Member Party (in the case of a discrepancy
in [*]), shall bear such fees and
costs.  Nothing in this Section 5.3(g)
shall be deemed to limit any remedy available to either Member Party in the
event of a breach of any of the provisions of this Section 5.3 or the [*] by the other Member Party.  Notwithstanding anything in this Agreement to
the contrary, such breach shall not be subject to the cure provisions set forth
in Section 14.4.

 

(h)                                 All
information provided to the Pricing Committee (“Pricing Information”) shall be
considered Confidential Information of the disclosing Member Party and shall be
used solely for the purpose of [*] and for no
other purpose. For the avoidance of doubt, the exceptions to confidentiality
set forth in Section 12.2 (other than in Sections 12.2(a) and (b)) shall
not apply to Pricing Information.  Except
as expressly permitted by the [*], Pricing
Information shall not be disclosed by the Pricing Committee representatives
except to counsel, the Independent Accounting Expert, or any Third Party
auditor selected pursuant to Section 5.3(g).  All Pricing Information shall be [*] maintained by the Pricing Committee, which [*] shall not be accessible by Persons other than the
members of the Pricing Committee. 
Without limiting the foregoing, each of BMS and Gilead shall:

 

46

 

(i)                                     cause
its representatives on the Pricing Committee not to disclose to any other
Person [*]; and

 

(ii)                                  not
reference or use, directly or indirectly, any information from the Pricing
Committee [*].

 

(i)                                     Prior
to the Launch of the Combination Product and thereafter annually, the JEC shall
review the [*] (as most recently modified pursuant
to this Section 5.3(i), if applicable) in light of the then-prevailing
market conditions and JV marketing and sales strategies.  If appropriate, the JEC shall recommend to
the Member Parties changes to the [*].  The JEC’s action or inaction under this Section 5.3(i)
shall not be subject to arbitration.  If
(and only if) Gilead and BMS mutually agree on any such changes proposed by the
JEC, then the [*] as so changed shall be deemed
to be the “[*]” hereunder.

 

(j)                                     Gilead
and BMS shall each retain sole discretion with respect to price-setting and
discounts for its respective Single Agent Products and Double Agent Product, if
any.  Notwithstanding the foregoing, each
Member Party covenants that it shall [*] and shall
not directly or indirectly [*] of [*] solely or primarily for the purpose of [*].

 

5.4                                 National
Accounts.  Gilead shall have sole
responsibility to act as agent for conducting all pricing activities on behalf
of the JV relating to governmental organizations, AIDS Drug Assistance
Programs, correctional facilities and systems, managed care organizations and
all other national accounts in all payor segments in the Territory, including
without limitation contract strategy and contract creation.  Such activities shall be further defined in
the Commercialization Plan and shall comply with Section 5.3 and the [*].  Except with
respect to pricing activities, BMS shall share in the Commercialization
Activities in correctional facilities and systems and other national accounts.

 

5.5                                 Performance;
Subcontracting.  Gilead and BMS each
shall comply, and shall cause its Affiliates to comply, with all Applicable
Laws, regulations and Approvals in conducting their respective
Commercialization Activities.  Either
Member Party may subcontract the performance of Commercialization Activities
allocated to it under the Commercialization Plan; provided, however,
that the subcontracting Member Party shall oversee the performance by its
subcontractors of such subcontracted Commercialization Activities in a manner
that would be reasonably expected to result in their timely and successful
completion and shall remain responsible for the performance of such
Commercialization Activities in accordance with this Agreement and the
Commercialization Plan; and, provided, further, that neither
Gilead nor BMS may engage any subcontractor, including, without limitation, any
contract sales organization, to perform any Details of the Combination Product.

 

5.6                                 Conflict
Avoidance.  Gilead and BMS each
agrees to ensure that, during the Initial Launch Period, none of its Field
Force employees who engages in the Marketing of the Combination Product shall
also market any [*] which [*],
any [*] that is [*]
in the Territory as of [*], or any [*] that is [*] in the
Territory as of [*].

 

47

 

5.7                                 Marketing
Materials.

 

(a)                                  The
JCC shall develop and approve an initial set of advertising and promotional
materials for the Combination Product. 
If the JCC cannot reach agreement with respect to such materials, the
JEC shall attempt to resolve any disputed issues relating to the
materials.  In the event that the JCC or,
following a dispute within the JCC,  the
JEC shall reach agreement with respect to such materials (as modified from time
to time pursuant to this Section 5.7, the “Approved Marketing Materials”),
then subject to subparagraph (b) below, each Member Party shall use the
Approved Marketing Materials (and only the Approved Marketing Materials,
together with the FDA-approved product label and the package insert) in
Promoting the Combination Product in the Territory for at least the first
twelve months following the Launch.  If
each of the JCC and the JEC is unable to reach agreement on such materials,
then the Member Parties shall Promote the Combination Product in the Territory
using only the FDA-approved product label and the package insert for the
Combination Product.

 

(b)                                 Each
Member Party may propose interim updates to the Approved Marketing Materials
from time to time, independent of the annual reviews conducted pursuant to Section 5.7(c).  The JCC shall be required to consider, and
shall adopt, such updates only if they satisfy the following conditions:  (i) the update is based on relevant new
scientific, medical or clinical data, relevant new regulatory or legal
developments, or changes to the FDA-approved label or package insert for the
Combination Product;  and (ii) in the
absence of such update, the use of the Approved Marketing Materials would not
comply with Applicable Law ( any update satisfying such conditions, a “Required
Update”).

 

(c)                                  Approximately
[*] after the Launch, the JCC shall
review and, if appropriate, update the Approved Marketing Materials, if
any.  Such updates shall include, at a
minimum, any Required Updates.  If the
JCC cannot reach agreement on a Required Update proposed by a Member Party,
then the matter shall be subject to dispute resolution under Section 2.8.  In the event that neither the JCC nor the JEC
is able to reach agreement on a proposed Required Update, and after [*] relating to Required Updates, each Member Party may
elect upon written notice to the other Member Party to Promote the Combination
Product in the Territory using either (i) only the FDA-approved product label
and the package insert or (ii) the Approved Marketing Materials as modified to
reflect any Required Updates [*].

 

(d)                                 In
connection with the review conducted pursuant to Section 5.7(c), the JCC
may make other appropriate changes arising from business or other
considerations (each, an “Optional Update”) as proposed by a Member Party.  In the event that the JCC cannot reach
agreement on any proposed Optional Update, then the dispute shall be subject to
dispute resolution under Section 2.8; 
provided, however, that [*]
to [*]. 
In the event that neither the JCC nor the JEC is able to reach agreement
on a proposed Optional Update, each Member Party may elect upon written notice
to the other Member Party to Promote the Combination Product in the Territory
using either (i) only the FDA-approved product label and the package insert or
(ii) the Approved Marketing Materials without such Optional Update.

 

(e)                                  After
the review conducted pursuant to Section 5.7(c), the JCC shall review the
most recent Revised Marketing Materials on an annual basis, and shall make
Required Updates and  consider any
Optional Updates proposed by a Member Party. 
Any disputes within the JCC relating to such updates shall be resolved
using the procedures set forth in Sections 5.7(c) and 5.7(d).

 

48

(f)            The
JV shall own all rights, title and interest in and to such Approved Marketing
Materials.  Notwithstanding
anything in this Agreement to the contrary, neither Member Party shall use in
the Promotion of the Combination Product in the Territory materials other than
the FDA-approved product label and inserts and the Approved Marketing
Materials.  The JCC shall select for the
Marketing of the Combination Product an advertising agency or agencies, and the
JV shall retain such agency or agencies on commercially reasonable terms.  The JCC shall also develop, implement and
oversee an orderly, systematic process, involving representatives from the
legal, medical and regulatory functions of the respective Member Parties, for
the review and approval of all such advertising and promotional materials.  In any interactions with FDA, the allocation
of the Member Parties’ rights and responsibilities shall be as set forth in
Section 3.4.

 

5.8           Development
and Use of Trademarks.  The
JCC shall select all Combination Product Trademarks, which shall be owned by
the JV.  Subject to Applicable Law, the
JV shall include a Trademark and the name of each of Gilead Parent and BMS
Parent on the labeling, packaging and advertising materials for the Combination
Product in the Territory.  The JV shall comply with all notice and
marking requirements of applicable intellectual property law for the protection
and enforcement of the Trademarks of the JV, Gilead and BMS, unless such notice
and marking requirements are not commercially reasonable under the
circumstances.

 

5.9           Insurance.  The Member Parties agree that the JV will [*].  Further, neither
Member Party shall have any obligation to [*].  In the event that either Member Party elects
to [*] arising out of the Exploitation of
the Combination Product, the Member Party [*] shall have
the sole right to [*].  For the avoidance of doubt, nothing contained
in this Section 5.9 is intended, or shall be construed, to limit a Member Party’s
(or the JV’s) indemnity obligations pursuant to Section 13.

 

5.10         Records.

 

(a)           Maintenance of Records.  Gilead and BMS each shall severally (in
accordance with their respective allocations of responsibility with respect to
Project Activities) maintain and retain, or cause to be maintained and
retained, final records (but not draft records or documents except as otherwise
required by Applicable Law) of its respective Commercialization Activities
covered in the Commercialization Plan for at least (i) three (3) years or (ii) such longer period
as may be required by Applicable Law.

 

(b)           Access to Records.  Subject to this Section 5.10(b), each Member
Party shall have the right, with respect to records maintained by the other
Member Party of such other Member Party’s Commercialization Activities covered
in the Commercialization Plan, during normal business hours and upon reasonable
notice, to inspect and copy any such records solely to the extent relating to the Combination Product and solely to
the extent (i) necessary in order for the receiving Member Party to perform its
obligations with respect to Commercialization Activities in a manner
consistent with the Commercialization Plan, (ii) necessary for the receiving
Member Party to confirm compliance with and/or to comply with GLP, GCP and GMP (to the extent applicable),
and other Applicable Law, as it relates to Project Activities, and/or (iii)
necessary to enable the receiving Member Party to conduct reasonable diligence
on matters potentially giving rise to liability on the part of the JV and/or
such receiving 

 

49

 

Member
Party, or to conduct a defense of itself and/or the JV with respect to any such
liability, if and to the extent that a fact, circumstance or event has arisen
that gives the receiving Member Party a reasonable basis to believe that it or
the JV has or may incur such liability, in each case for use by the receiving
Member Party for the purpose set forth in clause (i), (ii) or  (iii) above, as the case may be.  Clause
(iii) of the immediately preceding sentence shall not require any Party to
provide such data, documentation or records in the event that the Parties’
interests in such matter are or may be [*],
in which case [*] shall apply.  Each such request shall be made in writing
and shall state the reason(s) therefore (each a “Commercial Record Request”).  The Member Party from which such records,
documentation or data are requested shall have the right to raise reasonable
objections in writing in response to such Commercial Record Request, including,
without limitation, based on such Member Party’s interests in protecting from
disclosure to the requesting Member Party trade secrets or other competitive
business information.  Upon any such
objection being asserted, the Member Parties shall promptly confer in an
attempt to address each Member Party’s concerns and reach a resolution with
respect to the matter, and in the event that the Member Parties are unable to
agree upon a mutually agreeable resolution, either Member Party shall have the
right to refer the matter to the JCC.  In
the event that any such dispute is ultimately [*]
determine as a threshold matter whether and to what extent one or more criteria
set forth in clauses (i), (ii) and/or (iii) above have been satisfied by the
requesting Member Party, and, if so, shall make a determination with respect to
whether and to what extent the disclosure of such information shall be
required, by [*], and [*]. 
In making such determination, [*]
to the facts and arguments set forth in the Commercial Record Request and the
other Member Party’s written response thereto, and (y) have the right to
require the receiving Member Party to abide by terms and conditions for the
handling, use and non-disclosure (either within such Member Party’s
organization and/or to Third Parties) of such information as may be reasonable
under the circumstances. Except
as provided in this Section 5.10, a Member Party shall not have the right to
obtain from the other Member Party access to or copies of the other Member
Party’s records, documentation and data described above, unless otherwise
expressly permitted pursuant to this Agreement or the other Member Party gives
its consent in its sole discretion.  Notwithstanding the foregoing, neither
Member Party shall have any obligation to (and, with respect to pricing and
discounting matters as set forth in Section 5.3, neither Member Party shall)
provide to the other Member Party any such information to the extent it relates
to price setting and discounting, or inventory management agreements, or which
such first Member Party is restricted from disclosing pursuant to Applicable
Law or confidentiality or other contractual arrangements with Third Parties.

 

5.11         Commercialization
Plan and Budget.

 

(a)           The Commercialization Plan shall cover only activities for
commercialization of the Combination Product in the Territory that shall be
conducted by a single Member Party or that must be coordinated between the
Member Parties, which activities shall conform to the Collaboration Principles
and the provisions of this Section 5.

 

(b)           The initial Commercialization Plan attached hereto as Annex C covers
the period from the Effective Date through the Initial Launch Period.  Each Commercialization Plan and update shall
contain a budget for each Member Party’s out-of-pocket expenses for such Member
Party’s activities set forth therein (each, a “Commercialization Budget”).  The initial Commercialization Plan covers (i)
the [*] by each Member Party in the

 

50

 

Territory
[*] for the Initial Launch Period, (ii)
[*] for the Combination Product for the
Initial Launch Period, and (iii) certain other Marketing and other
commercialization activities for the Combination Product that are required to
be conducted by a single Member Party or that must be coordinated between the
Member Parties; provided, however, that within [*]
after the Effective Date, the Member Parties shall (x) supplement the initial
Commercialization Plan in order to assign to the Member Parties their respective
responsibilities for executing activities referred to in clause (iii) above and
(y) revise the initial Commercialization Plan and Commercialization Budget so
that the amounts set forth in Annex C with respect to the period from the
Effective Date to the commencement of the Initial Launch Period are reported on
a Calendar Year/Calendar Quarter basis reflecting the timing of such amounts as
contemplated by Annex C.  Updates of the
Commercialization Plan shall not cover or include any activities not covered by
the initial Commercialization Plan unless mutually agreed by the Member
Parties.

 

(c)           Not less than [*] prior to
the proposed date of filing for Approval of an NDA for the Combination Product
in the Territory, the Member Parties shall revise the then-current
Commercialization Plan and Commercialization Budget so that the amounts set
forth therein with respect to the Initial Launch Period are reported on a
Calendar Year/Calendar Quarter basis reflecting the timing of such amounts as
contemplated by the then-current Commercialization Plan and Commercialization
Budget.  The responsible Member
Party (as determined below) shall prepare and submit to each of the JCC and JFC
(i) not less than [*] prior to
the start of each Calendar Year, a proposed update to the Commercialization
Plan and the Commercialization Budget for such Calendar Year and (ii) not less
than [*] prior to the start of each Calendar
Year, a preliminary update to such Commercialization Budget (which may address
budget issues at a general level, may be incomplete and is subject to change).  Following review, discussion and revision of
such proposed update, the JCC shall vote upon such update at least [*] prior to the start of the applicable Calendar Year.  BMS shall prepare the first such annual
update; thereafter, such responsibility shall rotate between BMS and Gilead on
a year-to-year basis, on the same annual schedule as for the first update,
through the Calendar Year in which the Subsequent Launch Period ends (or for
such longer period as may be agreed by the Member Parties).  In addition, either Member Party, directly or
through its representatives on the JCC, may propose interim updates to the
Commercialization Plan and the Commercialization Budget to the JCC from time to
time as appropriate in light of changed circumstances.  Such annual and interim updates for periods
commencing with Calendar Years through the one containing the end of the
Subsequent Launch Period shall be approved by the JCC as set forth in Section
2.4(b)(ii).  Subject to Sections 2.2(vi)
and 2.10, if a proposed update to the Commercialization Plan or
Commercialization Budget is not approved by the JEC or JCC as applicable, then
the Commercialization Plan or Commercialization Budget, as the case may be,
shall continue in effect as approved and most recently updated pursuant to this
Section 5.11(c).

 

5.12         Commercialization
Expenses.  The Parties agree
that the JV shall bear all JV Expenses incurred by each of Gilead and BMS in
connection with the performance of its respective Commercialization Activities
to the extent that they meet all of the following criteria (“Authorized
Commercialization Expenses”):  (a) such
Commercialization Activities are covered in and consistent with the
Commercialization Plan and are within an area of responsibility for the
relevant Member Party listed in the Commercialization Budget as being
chargeable to the JV; (b) the total expenses for that Member Party’s designated
activities under the Commercialization Plan for the relevant period to the
extent that they do not exceed the aggregate amount set forth

 

51

 

in the Commercialization Budget for such activities in that period by
more than [*]; (c) the expenses are external,
out-of-pocket costs of Gilead or BMS, without any markup, and not internal
costs, including, without limitation, internal costs incurred in [*]; and (d) the relevant Commercialization Activities are
for the Marketing of the Combination Product only and not for the Marketing of
any other proprietary products of Gilead or BMS.  Notwithstanding the limitation contained in
clause (d) above, in the event that either Member Party reasonably believes
that there are cost or other efficiencies that the JV can reasonably be
expected to achieve through one or both Member Parties’ conducting
Commercialization Activities with respect to the Combination Product as part
of, or in coordination with, activities being conducted by one or both Member
Parties with respect to its or their Single Agent Product(s) and/or Double
Agent Product, such Member Party(ies) may propose, by and through its JCC
member(s), that such activities be coordinated and an appropriate and
reasonable allocation of the related costs be made between the Combination
Product, on the one hand, and such other product or products, on the other
hand, and that the amount allocated to the Combination Product be treated as
Authorized Commercialization Expenses (each such proposal, a “Cost Allocation
Proposal”).  If, and only to the extent
that, such Cost Allocation Proposal is reviewed by the JFC and JCC pursuant to
Sections 2.5(b)(vii) and 2.4(b)(viii), respectively, and approved by the JEC
pursuant to Section 2.2(ix) (with any modifications made by the JEC), the
amount approved by the JEC for allocation to the Combination Product (any such
approved costs, “Allocated Costs”) shall constitute Authorized
Commercialization Expenses.

 

5.13         Reports.  Gilead and BMS shall each present to the
other, at a meeting of the JCC at least once per Calendar Quarter until the
second anniversary of the Launch of the Combination Product, and, thereafter,
at a meeting of the JCC, at least semiannually, a report (oral and written,
which written report shall not be required to contain more detail than that typically
included in an executive summary) describing (i) the Commercialization
Activities it has performed, or caused to be performed, since the preceding
meeting at which such a report was presented (or, in the case of the first
meeting of the JCC, prior to such meeting) and on a Calendar Year-to date
basis, evaluating the work performed in relation to the goals and timeline of
the Commercialization Plan, (ii) its Commercialization Activities in process
and the future activities it expects to initiate during the then-current
Calendar Year, as compared to the Commercialization Plan, and (iii) in the case
of the written report the Authorized Commercialization Expenses incurred, and
expected to be incurred, by such Member Party for the then-current Calendar Year,
as compared to the Commercialization Budget (if applicable).  In addition, Gilead and BMS shall report
promptly to the JCC through their respective committee members any material
developments with respect to Commercialization Activities that they are responsible
for performing under the Commercialization Plan.  Notwithstanding anything contained in this
Section 5.13 to the contrary, each Member Party’s reporting obligations under
this Section 5.13 shall automatically be deemed to terminate with respect to
any period in which there is not then in effect a Commercialization Plan and/or
a Commercialization Budget.

 

52

 

SECTION 6.

LICENSE GRANTS

 

6.1           Technology
Licenses by Member Parties to the JV.

 

(a)           Subject to the terms and conditions of this
Agreement, Gilead hereby grants to the JV a sole, royalty-free license (which
license shall be exclusive as to BMS, its Affiliates and all Third Parties but
not as to Gilead and its Affiliates), with the right to grant sublicenses
solely as set forth in Sections 6.2(a) and (c) or pursuant to Section 6.4,
under the Gilead Technology only to Exploit the Combination Product (but not to
make or have made the active pharmaceutical ingredients thereof or otherwise to
Exploit the active pharmaceutical ingredients thereof individually or in
combination other than in the Combination Product) worldwide.

 

(b)           Subject to the terms and conditions of this
Agreement, BMS hereby grants to the JV a sole, royalty-free license (which
license shall be exclusive as to Gilead, its Affiliates and all Third Parties
but not as to BMS and its Affiliates), with the right to grant sublicenses
solely as set forth in Sections 6.2(a) and (c) or pursuant to Section 6.4,
under the BMS Technology only to Exploit the Combination Product (but not to
make or have made the active pharmaceutical ingredients thereof or otherwise to
Exploit the active pharmaceutical ingredients thereof individually or in
combination other than in the Combination Product) in the Applicable EFV
Territory.

 

6.2           Licenses
and Sublicenses by the JV to Member Parties.  Subject to the terms and conditions of this
Agreement, the JV hereby grants the following licenses and sublicenses:

 

(a)           to Gilead,
(1) a non-exclusive, royalty-free sublicense, without the right to grant
further sublicenses under the license granted to the JV in Section 6.1(b), (2)
a non-exclusive, royalty-free license, without the right to grant sublicenses,
under the Joint Technology and Joint Inventions, and any and all rights, title
and interest that the JV may have in and to any Gilead Core Improvement  and
Patents claiming such Improvement and (3) additionally, a perpetual, royalty-free, fully
paid-up, irrevocable, exclusive (even as to the JV) license, with the right to
grant sublicenses through multiple tiers, under any and all rights, title, and
interest that the JV may have in and to any Gilead Core Improvement and Patents
claiming such Improvement, in the case of clauses (1) and (2) only (i)
to Exploit the Combination Product (but not to Exploit the EFV active
pharmaceutical ingredient therein individually or in combination other than in
the Combination Product) in the Territory; (ii) to conduct anywhere in the
world Development Activities in support of Approvals for the Combination
Product in the Territory; and (iii) to make and have made, and import into the
Territory, Combination Product (but not to make or have made the EFV active
pharmaceutical ingredient therein) for Exploitation in the Territory, in each
case ((i), (ii) and (iii)) pursuant to and in accordance with this Agreement,
including, without limitation, performance of Gilead’s obligations under the
Development Plan and the Commercialization Plan, and, in the case of clause (3)
only, to Exploit such Improvement worldwide
only with respect to products containing TDF or FTC as an active pharmaceutical
ingredient, whether alone or in combination with one or more other active
pharmaceutical ingredients (excluding EFV and other proprietary BMS active
pharmaceutical ingredients);

 

(b)           to BMS, (1) a
non-exclusive, royalty-free sublicense, without the right to grant further
sublicenses under the license granted to the JV in Section 6.1(a), (2) a
non-exclusive, royalty-free license, without the right to grant sublicenses,
under the Joint Technology and Joint Inventions, and any and all rights, title, and interest
that the JV may have in and to any

 

53

 

BMS Core Improvement
and Patents claiming such Improvement and (3) additionally, a perpetual, royalty-free, fully
paid-up, irrevocable, exclusive (even as to the JV) license, with the right to
grant sublicenses through multiple tiers, under any and all rights, title, and
interest that the JV may have in and to any BMS Core Improvement and Patents
claiming such Improvement, in the case of clauses (1) and (2) only (i)
to Exploit the Combination Product (but not to Exploit the TDF or FTC active
pharmaceutical ingredients therein individually or in combination other than in
the Combination Product) in the Territory; (ii) to conduct anywhere in the
world Development Activities in support of Approvals for the Combination
Product in the Territory; and (iii) to make and have made, and import into the
Territory, Combination Product (but not to make or have made the TDF or FTC
active pharmaceutical ingredients therein) for Exploitation in the Territory,
in each case ((i), (ii) and (iii)) pursuant to and in accordance with this
Agreement, including, without limitation, performance of BMS’ obligations under
the Development Plan and the Commercialization Plan, and, in the case of clause
(3) only, to Exploit such
Improvement in the EFV License Agreement Territory only with respect to
products containing EFV as an active pharmaceutical ingredient, whether alone
or in combination with one or more other active pharmaceutical ingredients
(excluding TDF, FTC and other proprietary Gilead pharmaceutical ingredients);

 

(c)           to each of
Gilead and BMS, a perpetual, non-exclusive, royalty-free license, with the
right to grant sublicenses through multiple tiers, under the Joint Technology
and Joint Inventions (including, without limitation, Joint Know-How consisting
of Clinical Data and other Relevant Experience Information, CMC Data and
Finished Product Manufacturing Data), only to Exploit on a worldwide basis (in
the case of Gilead) or in the EFV License Agreement Territory (in the case of
BMS), (i) such Member Party’s Single Agent Product(s) and Double Agent Product,
as the case may be, and (ii) other pharmaceutical compounds and products (other
than the Combination Product), in each case ((i) and (ii)) whether alone or in
combination with other agents; and

 

(d)           to Gilead, an
exclusive, royalty-free, with the right to grant sublicenses through multiple tiers,
under the license granted to the JV in Sections 6.1(a) and (b) and under the
Joint Technology and Joint Inventions (including, without limitation, Joint
Know-How consisting of Clinical Data and other Relevant Experience Information,
CMC Data and Finished Product Manufacturing Data) and any and all rights, title and interest that the JV may have in and
to any Gilead Core Improvement and Patents claiming such Improvement, (1)
to Exploit the Combination Product (but not to Exploit the active pharmaceutical
ingredients thereof individually or in combination other than in the
Combination Product) worldwide (except in the Territory, Canada and Europe),
(2) to conduct anywhere in the world development activities in support of
Approvals for the Combination Product worldwide (other than Approvals in the
Territory, Canada and Europe), and (3) to make and have made anywhere in the
world, and import anywhere in the world, Combination Product (but not to make
or have made the active pharmaceutical ingredients thereof individually or in
combination other than in the Combination Product) for Exploitation worldwide
(other than Exploitation in the Territory, Canada and Europe), with such
license to continue in effect so long as, and only so long as, Gilead is not in
material breach of the conditions set forth in the following clauses (i)
through (v) of this Section 6.2(d), subject to the last sentence of this
Section 6.2(d):

 

54

 

(i)            Gilead
shall use all commercially reasonable efforts to obtain for BMS appropriate and
legally permissible public recognition for BMS’ role in enabling access to the
Combination Product in the Developing World, which may include any or all of
the following, in order of preference: (A) inclusion of BMS as a licensor and,
if applicable, manufacturer, on the packaging and label of Combination Product
sold or provided for use in the Developing World, (B) acknowledgement of BMS as
a licensor and, if applicable, manufacturer or supplier of EFV, in press
releases and other public announcements relating to provision of Combination
Product for the Developing World, and (C) acknowledgement of BMS as a licensor
and, if applicable, manufacturer or supplier of EFV, in any websites maintained
by or through the cooperation of Gilead specifically to promote or enable
provision of Combination Product for the Developing World; provided,
however, that the Parties acknowledge that Gilead cannot ensure that any
required Third Party or Regulatory Authority consents or approvals for such
recognition can be obtained.

 

(ii)           Except
as provided in Section 6.9(a), Gilead shall not cause the sale by the JV of the
Combination Product for use or sale outside the Territory.

 

(iii)          Without
BMS’ prior written consent, not to be unreasonably withheld or delayed, Gilead
shall not grant sublicenses under the license granted to it in this Section
6.2(d) to, or utilize for Manufacture of Combination Product, any Person other
than one who has contracted for Manufacture and supply of tableted Combination
Product with BMS, one of its Affiliates, or a joint venture or similar entity
in which BMS has an ownership interest, or any Person acting on behalf of any
of the foregoing.

 

(iv)          In
the event that Gilead Exploits the Combination Product outside the Territory,
Canada and Europe pursuant to the license granted to it in this Section 6.2(d),
BMS agrees to perform any administrative or ministerial acts that may be
reasonably necessary or useful in order to enable Gilead to satisfy its
obligations under clauses (i) through (iii) above or to enable Gilead to
exercise its rights under the license granted to it in this Section
6.2(d).  Gilead agrees that, other than
with BMS’ consent, BMS shall have no additional obligations, including, without
limitation, any obligation to incur additional expenses or obligations, as a
result of such Exploitation, other than the following:  BMS’ obligations provided for in this Section
6.2(d); BMS’ obligations pursuant to Section 6.9(a), the last sentence of
Section 6.9(b) and the last sentence of Section 6.11;  and BMS’ obligations pursuant to Applicable
Law and any separate agreements between the Member Parties (including, without
limitation, if applicable, the BMS Supply Agreement).

 

(v)           Gilead
shall cause its sublicensees, if any, under this Section 6.2(d) to comply with
the obligations of Gilead under clauses (i) through (iv) above, and any failure
on the part of any such sublicensee to comply in any material respect with any
such obligation of Gilead shall be deemed to be a failure on the part of Gilead
to comply in such respect with such obligation.

 

If Gilead is in
material breach of any of clauses (i) through (v) above, Gilead’s license under
this Section 6.2(d) shall not terminate unless and until BMS has given notice
to Gilead of such breach and such breach remains uncured for sixty (60) days
after Gilead’s receipt of such notice or, if longer, such period as would
reasonably be required to cure such breach provided that

 

55

 

Gilead is using
commercially reasonable efforts to effect such cure.  For clarity, a material breach of clauses (i)
through (v) above shall not give rise to any rights of cure or of termination
of this Agreement pursuant to Section 14.4 of this Agreement.  The Parties acknowledge and agree that the
remedy of specific performance set forth in Section 14.4(d) shall be available
with respect to any material breach by Gilead of its obligations under this
Section 6.2(d) or any material breach by BMS of its obligations under Section
6.2(d)(iv), Section 6.9 or Section 6.11.

 

6.3           Licenses and Rights of Reference Between
Member Parties.

 

(a)           Subject to the terms and conditions of this Agreement, Gilead hereby
grants to BMS (1) a (A) non-exclusive Right of Reference in the EFV License
Agreement Territory with respect to such Gilead Know-How as consists of
Clinical Data and other Relevant Experience Information, and  (B) non-exclusive, royalty-free, fully
paid-up, irrevocable license, with the right to grant sublicenses through
multiple tiers, to use such Gilead Know-How in the EFV License Agreement
Territory, in each case ((A) and (B)) solely to the extent reasonably necessary to enable
BMS to Exploit its Single Agent Product, whether alone or in combination with
other agents (other than Gilead’s Single Agent Product(s) or Double Agent
Product), in the EFV License Agreement Territory in a manner consistent with
the labeling and Approved Marketing Materials for the Combination Product, and
(2) a perpetual, royalty-free, fully paid-up, irrevocable, exclusive (even as
to Gilead and its Affiliates) license, with the right to grant sublicenses
through multiple tiers, under any and all rights, title, and interest that
Gilead and its Affiliates may have in and to any BMS Core Improvement and
Patents claiming such Improvement, to Exploit such Improvement in the EFV
License Agreement Territory only with respect to products containing EFV as an
active pharmaceutical ingredient, whether alone or in combination with one or
more other active pharmaceutical ingredients (excluding TDF, FTC and other
proprietary Gilead pharmaceutical ingredients). 
For clarity, Gilead shall not be required to transfer any Gilead
Know-How to BMS pursuant to Section 6.3(a)(1).

 

(b)           Subject to the terms and conditions of this Agreement, BMS hereby
grants to Gilead (1) a (A) worldwide, non-exclusive Right of Reference with
respect to such BMS Know-How as consists of Clinical Data and other Relevant
Experience Information, and (B) worldwide, non-exclusive, royalty-free, fully
paid-up, irrevocable license, with the right to grant sublicenses through
multiple tiers, to use such BMS Know-How, in each case ((A) and (B)) solely to
the extent reasonably necessary to enable Gilead to Exploit its Single Agent
Products or Double Agent Product as applicable, whether alone or in combination
with other agents (other than BMS’ Single Agent Product), in a manner
consistent with the labeling and Approved Marketing Materials for the
Combination Product, and (2) a perpetual, worldwide, royalty-free, fully
paid-up, irrevocable, exclusive (even as to BMS and its Affiliates) license,
with the right to grant sublicenses through multiple tiers, under any and all
rights, title, and interest that BMS and its Affiliates may have in and to any
Gilead Core Improvement and Patents claiming such Improvement, to Exploit such
Improvement only with respect to products containing TDF or FTC as an active
pharmaceutical ingredient, whether alone or in combination with one or more
other active pharmaceutical ingredients (excluding EFV and other proprietary
BMS active pharmaceutical ingredients). 
For clarity, BMS shall not be required to transfer any BMS Know-How to
Gilead pursuant to Section 6.3(b)(1).

 

56

 

6.4           Rights
of Reference to and from the JV and Related Matters.

 

(a)           Subject to the terms and conditions of this Agreement, Gilead and BMS
each hereby grants to the JV a non-exclusive Right of Reference in the
Territory with regard to the Gilead Regulatory Documentation and the BMS
Regulatory Documentation, respectively, for the purpose of the JV’s securing,
maintaining and updating Approvals and agrees to provide a signed statement to
that effect in accordance with 21 C.F.R. § 314.50(g)(3).

 

(b)           Subject to the terms and conditions
of this Agreement, the JV hereby grants to BMS a non-exclusive Right of
Reference in the Territory with regard to the Combination Product Regulatory
Documentation, for the purpose of BMS’ securing, maintaining and updating NDAs
for Sustiva and any other of its products containing EFV, other than the
Combination Product, and
agrees to provide a signed statement to that effect in accordance with 21
C.F.R. § 314.50(g)(3).

 

(c)           Subject to the terms and conditions
of this Agreement, the JV hereby grants to Gilead a non-exclusive Right of
Reference in the Territory with regard to the Combination Product Regulatory
Documentation, for the purpose of Gilead’s securing, maintaining and updating
NDAs for Viread, Emtriva, Truvada, and any other of its products containing
either or both of TDF and FTC, other than the Combination Product, and agrees to provide a signed statement to
that effect in accordance with 21 C.F.R. § 314.50(g)(3).

 

(d)           For so long as the license
granted to Gilead in Section 6.2(d) remains in effect, (i) the JV shall (and the
Members agree to cause the JV to) cooperate with Gilead to make the Combination
Product Regulatory Documentation available to Gilead (including potentially
through filing of an sNDA to the NDA as needed to change the Combination
Product label or, if applicable, qualify a different presentation of the
Combination Product for export, or granting a Right of Reference thereto) for
use in securing approvals from the FDA for export of the Combination Product
and for securing approvals from other Regulatory Authorities for use and sale
outside of the Territory, Canada and Europe, (ii) BMS and the JV hereby grant
to Gilead  Rights of Reference, if any,
in any country worldwide outside the Territory, Canada and Europe solely for
purposes of filing for Approvals of the Combination Product in any such
country, which Rights of Reference shall continue for so long as the license
granted to Gilead in Section 6.2(d) 
remains in effect, and agree to perform any administrative or
ministerial acts that may be reasonably necessary or useful in order to enable
Gilead to avail itself of such Rights of Reference, and (iii) BMS and the JV
shall permit Gilead or its designee to provide a copy of any or all of the Combination
Product Regulatory Documentation or any data or information therein to
Regulatory Authorities outside the Territory, Canada and Europe, shall permit
Gilead to obtain and provide Certificates of Pharmaceutical Product for the
Combination Product (as approved by the FDA or other Regulatory Authorities)
for submissions to Regulatory Authorities outside of the Territory, Canada and
Europe, and shall provide any documentation or consents necessary to effectuate
such Rights of Reference or permit Gilead to take all the foregoing actions in
this clause (ii) for the Combination Product Regulatory Documentation and such
Combination Product Certificates of Pharmaceutical Product.  For clarity, BMS’ grants of rights under
clauses (ii) and (iii) above shall not be construed as BMS’ granting any right
to Gilead under any or all BMS Technology anywhere outside the Applicable EFV
Territory.

 

6.5           Other Sublicenses.  In supply agreements with the Suppliers
selected pursuant to Section 4.2, the JV shall have the right to grant such
Suppliers a non-exclusive,

 

57

 

royalty-free, worldwide sublicense, without right to sublicense, under
the Joint Technology and the licenses granted to the JV in Sections 6.1(a) and
6.1(b), for the sole purpose of Manufacturing the Combination Product (but not
the active pharmaceutical ingredients thereof), for supply to the JV.

 

6.6           Trademark
Licenses by Member Parties to the JV.

 

(a)           Subject to the terms and conditions
of this Agreement, Gilead hereby grants to the JV a non-exclusive,
royalty-free, fully paid-up, license, with right to sublicense through multiple
tiers, to use in the Territory (i) the Trademarks listed on Annex F hereto (the
“Gilead Licensed Trademarks”) for the sole purposes of Exploitation of the
Combination Product (but not to Exploit the active pharmaceutical ingredients
thereof individually or in combination other than in the Combination Product)
in the Territory and (ii) Gilead Parent’s name and company logo/identifiers,
for use in the name of the JV, and/or on product labeling, product packaging,
and promotional materials for the Combination Product pursuant to Section 5.8.

 

(b)           Subject to the terms and conditions
of this Agreement, BMS hereby grants to the JV a non-exclusive, royalty-free,
fully paid-up, license, without right to sublicense, to use in the Territory
(i) the Trademarks listed on Annex G hereto (the “BMS Licensed Trademarks”) for
the sole purposes of  Exploitation of the
Combination Product (but not to Exploit the active pharmaceutical ingredients
thereof individually or in combination other than in the Combination Product)
in the Territory and (ii) BMS Parent’s name and company logo/identifiers, for
use in the name of the JV, and/or on product labeling, product packaging, and
promotional materials for the Combination Product pursuant to Section 5.8.

 

(c)           Each of the Member Parties
shall be responsible for determining and thereafter monitoring what steps, if
any, it needs to take in order to satisfy itself that the JV’s use of its
Trademarks (i.e. the Gilead Licensed Trademarks or the BMS Licensed Trademarks,
as the case may be), meets the commercially reasonable high quality standards,
specifications, and instructions submitted or approved by Gilead or BMS, respectively,
in connection with this Agreement.

 

(d)           Gilead and the JV hereby recognize BMS’ right, title, and
interest in and to the BMS Licensed Trademarks. 
Gilead and the JV further recognize that this Agreement, or use of the
BMS Licensed Trademarks in connection with this Agreement, in no way confers to
Gilead or the JV any right, title, and interest in and to the BMS Licensed
Trademarks or any other trademarks or intellectual property rights owned by
BMS, except as may otherwise be expressly provided in this Agreement.  BMS and the JV hereby recognize Gilead’s
right, title, and interest in and to the Gilead Licensed Trademarks.  BMS and the JV further recognize that this
Agreement, or use of the Gilead Licensed Trademarks in connection with this
Agreement, in no way confers to BMS or the JV any right, title, and interest in
and to the Gilead Licensed Trademarks or any other trademarks or intellectual
property rights owned by Gilead, except as may otherwise be expressly provided
in this Agreement.

 

(e)           The JV acknowledges that (i) the goodwill generated by the JV’s use of
the Gilead Licensed Trademarks will inure solely to the benefit of Gilead; and
(ii) the

 

58

 

goodwill
generated by the JV’s use of the BMS Licensed Trademarks will inure solely to
the benefit of BMS.

 

6.7           Trademark
License by the JV to Gilead.

 

(a)           Subject to the terms and conditions
of this Agreement, the
JV
hereby grants to Gilead a
non-exclusive, royalty-free, fully paid-up license, in all countries and
territories of the world excluding the Territory, Canada and Europe, with the
right to sublicense through multiple tiers, to use Combination
Product Trademarks for the sole purpose of Exploitation of the Combination
Product (but not to Exploit the active pharmaceutical ingredients thereof
individually or in combination other than in the Combination Product) in such
countries and territories; provided, however, that this license
shall remain in effect only so long as Gilead’s license pursuant to Section
6.2(d) remains in effect.

 

(b)           BMS and Gilead hereby recognize the JV’s right, title, and interest in
and to the Combination Product Trademarks.  BMS and Gilead further
recognize that this Agreement, or use of the Combination Product Trademarks in
connection with this Agreement, in no way confers on BMS or Gilead any right,
title, and interest in and to the Combination Product Trademarks on any other
trademarks or intellectual property rights owned by the JV, except as may
otherwise be expressly provided in this Agreement.

 

(c)           BMS and Gilead acknowledge that the goodwill generated by their use of
the Combination Product Trademarks will inure solely to the benefit of the JV.

 

6.8           Retained
Rights.  All license rights
not specifically granted in this Section 6 are expressly reserved by each
licensing Party.  Any license granted in
this Section 6 which is not sublicensable may be transferred or assigned by the
licensee Party only in connection with a permitted assignment of this Agreement
by such Party under Section 15.4.

 

6.9           Combination
Product Sales for Outside the Territory, Canada and Europe.

 

(a)           If so requested by Gilead, either or both of BMS
and the JV (acting for these purposes through BMS representatives), as
applicable, shall negotiate in good faith a commercially reasonable arrangement
(taking into account relevant economic and market conditions in the relevant
territories, e.g. should BMS become the supplier, a transfer price [*] of the Combination Product in territories where it would
be supplied) to enable the supply of EFV active pharmaceutical ingredient for
Manufacture of Combination Product (in the case of BMS, either Manufacturing or
enabling a Third party to Manufacture such EFV active pharmaceutical
ingredient) or of Combination Product (in the case of the JV), in each case
sufficient to allow Gilead, its designee or the JV (as permitted under Section
6.9(b)), to sell or provide Combination Product for use both in the Developing
World and in other territories outside the Territory, Canada and Europe, to
meet the anticipated demand therefor in such countries.

 

(b)           If requested by Gilead, and as permitted by
applicable laws, rules and regulations, and consented to by BMS (such consent
not to be unreasonably withheld or delayed), the Parties shall cooperate to
enable and cause the JV to make the Combination Product available for export
to, and use and sale in, the Developing World, including, without limitation,
any sales within the Territory of Combination Product only for export, use or
sale in

 

59

 

the Developing
World.  As part of these efforts, the
Parties shall negotiate in good faith appropriate amendments to this Agreement
and the Operating Agreement consistent with clauses (i) through (v) of Section
6.2(d) and Section 6.9(c).

 

(c)           Other
than payments in respect of any supply of EFV (if applicable) or Combination
Product by BMS or the JV pursuant to Section 6.8(a), BMS and the JV shall not
be entitled to any additional financial compensation, whether in the form of
license fees, milestone payments, royalties or otherwise, either by reason of
sales by the JV or other Persons authorized by Gilead, of Combination Product
for use outside the Territory, Canada and Europe or by reason of the JV’s grant
of the license in Section 6.2(d).

 

6.10         Combination
Product Sales for Europe.  The
Parties acknowledge and agree that the Combination Product shall be sold or
otherwise commercially distributed in Europe only [*]
to (and only if the [*] upon) one
(1) or more [*] (and, if applicable, the [*]) covering [*], unless
such sale or distribution is commenced only after a [*]
in [*].

 

6.11         EFV
License Agreement. 
Notwithstanding anything in this Agreement to the contrary, Gilead
agrees to exercise the rights granted to it in Sections 6.2(d), 6.4(d) and
6.9(a) in the territories outside the EFV License Agreement Territory, only
after reaching an agreement with the EFV Licensor if and as necessary for
Gilead to avoid infringing or misappropriating the intellectual property rights
of the EFV Licensor in such territories. 
If requested by Gilead, BMS shall cooperate with Gilead in its efforts
to reach such an agreement.

 

6.12         JV
Obligations as Sublicensee. 
The JV shall comply with all provisions applicable to sublicensees set
forth in the EFV License Agreement (in the form provided by BMS to Gilead
pursuant to Section 13.2(c)) and in the license agreements delivered by Gilead
to BMS pursuant to the third sentence of Section 13.3(c) (in the form so
delivered), respectively, including without limitation any such provisions with
respect to reporting of information, record keeping and access to records for
audit by the upstream licensor (but excluding any payment obligations or other
matters for which a Member Party is responsible under Section 7.2).  Such obligations as of the Effective Date are
more specifically identified in Annex O. 
With respect to [*] with [*] referred to in Annex O (the [*]),
[*] shall use commercially reasonable
efforts to [*] after the Effective Date, the [*] to [*] grant of a sublicense
to the JV under this Agreement as required by [*]
(which [*] shall be in form and substance
reasonably acceptable to [*]).

 

60

 

SECTION 7.

PAYMENTS AND THIRD PARTY ROYALTIES

 

7.1           Payments to Member
Parties.

 

(a)           In
consideration of the supply by Gilead and BMS to the JV of quantities of their
respective active pharmaceutical ingredients for manufacture of non-clinical
supply of the Combination Product pursuant to Section 4.2(c) and their
respective Supply Agreements (and in consideration of the provision of certain
services hereunder), and subject to adjustment pursuant to Section 7.1(d), the
JV shall pay to Gilead the “Gilead Transfer Price” and to BMS Sub the “BMS
Transfer Price” in accordance with this Section 7.  For a given Calendar Year, pursuant to this
Section 7.1, the JFC shall calculate (i) interim Gilead Transfer Prices per kilogram
of TDF or FTC bulk active pharmaceutical ingredient respectively, i.e. the applicable Transfer Price in accordance with Annex
K hereto per kilogram of bulk active pharmaceutical ingredient (each an “Interim
Gilead Unit Transfer Price”) and (ii) an interim BMS Transfer Price per kilogram
of EFV active pharmaceutical ingredient, i.e. the
applicable Transfer Price in accordance with Annex K hereto per kilogram of EFV
active pharmaceutical ingredient (the “Interim BMS Unit Transfer Price”), in
each case based upon the respective Working Percentages calculated pursuant to
Section 7.1(c)(i), the Estimated Net Selling Price of the Combination Product
determined by the JFC with respect to such Calendar Year pursuant to Section
7.1(c)(ii), and the relevant Target Yield for the active pharmaceutical
ingredient calculated pursuant to Annex K hereto.  The JFC shall then inform Gilead and BMS of
their respective Interim Unit Transfer Prices pursuant to Section
7.1(c)(iii).  Subject to the last
sentence of Section 7.3(c), each of Gilead and BMS Sub shall use its
then-current Interim Unit Transfer Price(s) in preparing an invoice for each
shipment of bulk active pharmaceutical ingredients it makes pursuant to Section
4.2(c) and its Supply Agreement.

 

(b)           The
Actual Gilead Percentage and the Actual BMS Percentage for a particular
Calendar Year shall be equal to one hundred percent (100%) multiplied by a
fraction, the denominator of which is the sum of the Net Selling Prices of
Truvada and Sustiva in the Territory during the relevant Calendar Year, and the
numerator of which is:

 

(i)            for
the Actual Gilead Percentage, the Net Selling Price of Truvada in the Territory
during the relevant Calendar Year; and

 

(ii)           for
the Actual BMS Percentage, the Net Selling Price of Sustiva in the Territory
during the relevant Calendar Year;

 

provided, however, that, without
limitation of the obligations of the Member Parties under Section 5.3(j), for
purposes of calculating the numerator and denominator of such fraction for both
the Actual Gilead Percentage and the Actual BMS Percentage, any [*] in the Net Selling Price of Sustiva or Truvada for the
relevant Calendar Year that [*] the [*] for the Calendar Year [*]
shall be [*] and any such [*]
shall not be [*].  In the event of a termination of
this Agreement, the effective date of which falls on a date other than December
31 of a Calendar Year, the determination of the Actual Percentages shall be
based on the period from January 1 of such Calendar Year through the effective
date of termination, instead of the entire Calendar Year; and the provisions of
this Agreement shall apply, mutatis  mutandis, to such period.

 

61

 

(c)           The
JFC shall determine the Member Parties’ Interim Unit Transfer Prices for each
Calendar Year using the Member Parties’ respective Working Percentages, the
Estimated Net Selling Price and the Target Yield, as follows:

 

(i)            On or before [*], BMS and Gilead shall agree in writing on the
Working BMS Percentage and the Working Gilead Percentage for Calendar Year 2005
(which shall be equal to their respective Actual Percentages for Calendar Year
2004 using the relevant data for Calendar Year 2004 inclusive).  For each subsequent Calendar Year, the
respective Working Percentages shall equal the Actual BMS Percentage and the
Actual Gilead Percentage, respectively, for the immediately preceding Calendar
Year; provided, however, that, with respect to any Calendar Year, pending
determination of the Actual Percentages for the immediately preceding Calendar
Year, the Working Percentages for such immediately preceding Calendar Year
shall remain in effect until such time as the Actual Percentages for such
immediately preceding Calendar Year have been determined. On or before [*], BMS and Gilead shall agree in writing on the Target
Yields for each of EFV, TDF and FTC for the Calendar Year 2005.  For each subsequent Calendar Year, the
relevant Target Yields for EFV, TDF and FTC shall be calculated pursuant to
Section 7.1(d)(ii) and Annex K.

 

(ii)           No later than [*] of each
subsequent Calendar Year, the JFC shall determine the estimated Net Selling
Price for the Combination Product for such Calendar Year using only historical
data (such amount for each Calendar Year, the “Estimated Net Selling Price”).

 

(iii)          Using the Member Parties’
respective Working Percentages, the Estimated Net Selling Price and the Target
Yield for such Calendar Year, the JFC shall calculate each Member Party’s
Interim Unit Transfer Price(s) in accordance with Annex K and shall so notify
the Member Parties in writing no later than [*]
days after the first day of the applicable Calendar Year.  From and after the date on which a Member
Party receives a notice from the JFC with respect to such Member Party’s
respective Interim Unit Transfer Price(s) with respect to such Calendar Year,
such amounts shall then be used by the Member Parties in invoicing the JV for
the Transfer Price for shipments of bulk active pharmaceutical ingredients
pursuant to Section 4.2(c) and the applicable Supply Agreement in such Calendar
Year.  Notwithstanding the foregoing, on a Calendar Quarter basis,  the JFC shall recalculate the
respective Interim Unit Transfer Prices (each, a “Recalculated Transfer Price”)
in accordance with Annex K within [*] after the
end of [*].  Such recalculation shall be
made using the Working Percentages, Target Yield and updated Net Selling Prices
as determined in Annex I for such [*].  In
the event that a particular Interim Unit Transfer Price is less than the
Recalculated Transfer Price, the JV shall deliver a reconciliation statement to
the applicable Member Party setting forth the difference in price multiplied by
the quantity of active pharmaceutical ingredient the Member Party invoiced to
the JV during such [*].  In
the event a particular Interim Unit Transfer Price is greater than the
Recalculated Transfer Price, the JV shall deliver a reconciliation statement to
the applicable Member Party setting forth the difference in price multiplied by
the quantity of active pharmaceutical ingredient the Member Party invoiced to
the JV during such [*].  In each
case, the relevant adjustment shall be addressed as part of the cash netting
mechanism provided for in Section 4.1 of the Operating Agreement and shall be
settled

 

62

 

on
the first Cash Netting Day following such recalculation.  The Interim Unit Transfer Prices shall not be
changed as a result of the recalculation mentioned above.

 

(iv)          Following [*], the JV
shall cause the Independent Accounting Expert to calculate (solely for planning,
accounting and bookkeeping purposes of the Member Parties) the Actual
Percentages for such [*] based on
data as of [*], to be completed no later than
[*] after [*].  The Respective Percentages shall not be
changed as a result of the recalculation mentioned above.

 

(d)           Following
the end of each Calendar Year, the JFC shall cause an independent Third Party
accounting firm or consultant mutually agreed by the Member Parties (such
agreed Third Party, the “Independent Accounting Expert”) to calculate the
Actual Percentages for such Calendar Year and recalculate the Transfer Prices
(using the Product Yields determined pursuant to Section 7.1(d)(ii) and actual
Net Selling Price for the Combination Product determined pursuant to Section
7.1(d)(iii)) with respect to shipments of bulk active pharmaceutical ingredient
made by the Member Parties in such Calendar Year pursuant to Section 4.2(c) and
their respective Supply Agreements, as follows.

 

(i)            Within
[*] following the end of each Calendar
Year, each Member Party shall provide to the Independent Accounting Expert the
data necessary in order to make the calculations required pursuant to this
Section 7.1(d), which data is described in Annex N.

 

(ii)           Within
[*] following the end of each Calendar
Year, the JFC shall (A) calculate the Product EFV Yield, Product FTC Yield, and
Product TDF Yield, in each case based on Actual Yield, for the supply of
Combination Product and (B) provide to the Independent Accounting Expert
written confirmation of such calculations. 
Within [*] following the first full-scale
commercial manufacturing run, the JFC shall determine a blended average of each
of Product EFV Yield, Product FTC Yield and TDF Product Yield on a per weight
and per unit basis and inform the Independent Accounting Expert thereof.

 

(iii)          Within
[*] following the end of each Calendar
Year, the JV shall cause the Independent Accounting Expert to (A) calculate the
actual Net Selling Prices of the Combination Product, Truvada and Sustiva for
that Calendar Year, (B) calculate the Actual Gilead Percentage and the Actual
BMS Percentage pursuant to Section 7.1(b) using the actual Net Selling Prices
of the Combination Product, Truvada and Sustiva for that Calendar Year and (C)
recalculate the Gilead Transfer Price and the BMS Transfer Prices for the bulk
active pharmaceutical ingredient shipments during that Calendar Year pursuant
to Section 7.1(a) in accordance with Annex K.

 

(iv)          Within
[*] following the end of each Calendar
Year, on the basis of such the recalculated Transfer Prices (as notified to the
JV by the Independent Accounting Expert), the JFC shall recalculate the amounts
owed by the JV to the Member Parties with respect to shipments received by the
JV in such Calendar Year pursuant to Section 4.2(c) and their respective Supply
Agreements and provide to the Member Parties notice of the recalculated amounts
(and the adjustments that will be required pursuant to this Section
7.1(d)(iv)).  If the aggregate amount
invoiced by a Member Party for Transfer Prices is greater

 

63

 

than or less than  the aggregate amount owed to such Member
Party by the JV for such Transfer Prices, as recalculated pursuant to this
Section 7.1(d), then the relevant adjustment shall be addressed as part of the
cash netting mechanism provided for in Section 4.1 of the Operating Agreement
and shall be settled on the first Cash Netting Day following such
recalculation.

 

(e)           The Independent Accounting
Expert shall be bound by commercially reasonable written confidentiality and
non-use obligations to the Member Parties. 
Such Independent Accounting Expert shall, upon the written request of
either Member Party (the “Initiating Member”), audit the other Member Party to
confirm the accuracy of the data provided to such Independent Accounting Expert
by such other Member Party.  Further,
upon the written request of either Member Party, the calculations of the
Independent Accounting Expert shall be audited by a second Third Party mutually
agreed by the Member Parties.  The
Independent Accounting Expert and the Third Party auditor, if any, shall notify
the Member Parties of their respective determinations;  provided, however, that neither
the Independent Accounting Expert nor any Third Party selected to audit the
Independent Accounting Expert shall share with either Member Party any
information provided to such Independent Accounting Expert (and/or such Third
Party) by the other Member Party.  The
calculations made by the Independent Accounting Expert pursuant to this Section
7.1(e) shall be binding on the Parties; provided, however, that
in the event that a Third Party auditor identifies a discrepancy in the
Independent Accounting Expert’s calculations, the Member Parties shall cause
the Independent Accounting Expert and such Third Party to confer and agree upon
the final calculations and advise the Member Parties in writing of same,
whereupon such final agreed calculations shall be binding on the Parties.  The Initiating Member shall bear the fees and
costs of the Independent Accounting Expert in connection with its confirmation
of the accuracy of such data, unless the Independent Accounting Expert finds a
discrepancy equal to or greater than [*] therein, in
which case the other Member Party shall bear such fees and costs.

 

7.2           Royalty
Payments to Third Parties.  If
a Third Party’s Patent is or would be infringed or a Third Party’s trade
secrets are or would be misappropriated solely as a direct result of the
incorporation of TDF, FTC or both TDF and FTC in the Combination Product, then
Gilead shall be solely responsible for any Losses or royalty, license fee or
other payment obligation to such Third Party (which shall not qualify as a JV
Expense or Authorized Expense) in connection with such infringement or
misappropriation, including, without limitation, its obligations pursuant to
Section 11.4.  If a Third Party’s Patent
is or would be infringed or a Third Party’s trade secrets are or would be
misappropriated solely as a direct result of the incorporation of EFV in the
Combination Product, then BMS shall be solely responsible for any Losses or
royalty, license fee or other payment obligation to such Third Party (which
shall not qualify as a JV Expense or Authorized Expense) in connection with
such infringement or misappropriation, including, without limitation, its
obligations pursuant to Section 11.4. 
All other royalty, license fee or other payments by Gilead or BMS to
Third Parties in connection with licenses under Third Party Patents or Third
Party trade secrets which are reasonably necessary for the performance of the
Member Parties’ obligations under this Agreement shall qualify as Authorized
Commercialization Expenses.

 

64

 

7.3           Authorized
Expenses; Mode and Timing of Payment.

 

(a)           The JV shall bear all Authorized Expenses incurred
by Gilead and BMS.  Each Member Party
shall calculate and invoice the JV for its respective Authorized Expenses
incurred in each Calendar Quarter in sufficient time to ensure that the
applicable invoice is received by the JV no later than the last day of the next
Calendar Quarter (the “Final Invoice Date”). 
The JV shall not have any obligation to make payments to Gilead or BMS
on account of any such expenses incurred in a given Calendar Quarter for which
an invoice is not received by the Final Invoice Date.

 

(b)           All payments by the JV to the
Member Parties pursuant to Sections 7.3(a) and 14.6(b)(ii) and other payments
to be made to Member Parties under this Agreement shall be made by wire
transfer or electronic funds transfer of United States Dollars in the requisite
amount to such bank account as each Member Party may designate from time to
time by notice to the payor.

 

(c)           Each Member Party shall calculate and invoice the
JV at the time of shipment, for the Transfer Price for each shipment of bulk
active pharmaceutical ingredient 
pursuant to Section 4.2(c) and the applicable Supply Agreement using the
applicable Interim Unit Transfer Price.  The JV shall pay to a Member Party
any amounts owed to such Member Party (or, in the case of BMS, to BMS Sub)
pursuant to Section 7.1(a) on the applicable Cash Netting Day as provided in
Section 4.1 of the Operating Agreement. 
In the case of any shipment of bulk active pharmaceutical
ingredient  pursuant to the applicable
Supply Agreement during the first Calendar Quarter of a given Calendar Year
prior to the JFC giving notice of the applicable Interim Unit Transfer Price,
the Member Party providing such shipment shall use the Interim Unit Transfer
Price for the immediately preceding Calendar Year for purposes of invoicing
such shipment, provided that upon the JFC’s determination of the new Interim
Unit Transfer Price for the Calendar Year in which such shipment occurs
pursuant to Section 7.1(d) and Annex K, the JV shall recalculate such invoices
using such new Interim Transfer Price for such Calendar Year and at the time of
payment shall issue to the applicable Member Party a reconciliation statement,
with respect to such invoice to reconcile any differences between the original
Transfer Price for such shipment and the Transfer Price for such shipment as
calculated using such new Interim Unit Transfer Price.

 

(d)           Interest shall accrue on delinquent payments from the date
such payments are due at the lesser of (i) the prime rate of interest, as
published in The Wall Street Journal (Eastern United States Edition), plus [*]  basis
points and (ii) the maximum rate of interest permissible under Applicable Law,
taking into consideration any amounts deemed additional interest.

 

7.4           Taxes.  The JV shall be responsible for all sales,
use, excise, value added and similar taxes and charges imposed with respect to
acquisition of product from a Member Party and/or payments by the JV to a
Member Party pursuant to this Section 7, provided that each Member Party shall
be responsible for any taxes (including any such taxes imposed by way of
withholding) in the nature of income or franchise taxes or based on or measured
by gross or net income imposed with respect to its income.  The JV shall pay any and all withholding
taxes or similar charges imposed by any governmental unit that are required to
be withheld from any 

 

65

 

amounts due to a Member Party from the JV pursuant to this Section 7 to
the proper taxing authority, and proof of payment of such taxes or charges
shall be secured and sent to such Member Party as evidence of such
payment.  All amounts paid by the JV
pursuant to the immediately preceding sentence with respect to taxes for which
a Member Party is responsible pursuant to the first sentence of this Section
7.4 shall be paid for the account of such Member Party and deducted from the
amounts due from the JV to such Member Party pursuant to this Section 7.

 

SECTION 8.

FINANCIAL RECORDS

 

8.1           Financial
Records.  Gilead shall
keep complete and accurate books and records on behalf of the JV pertaining to
sales of the Combination Product, including, without limitation, books and
records of the Net Sales of the Combination Product, in the detail required for
the calculation on behalf of the JV of amounts payable by the JV under Section
7.1(a) and to identify the purchase order details for each customer to which it
sells the Combination Product, or pertaining to Authorized Commercialization
Expenses, Authorized Development Expenses or Authorized Other Expenses.  Gilead shall retain such books and records
for at least the latest of (a) three (3) years after the Calendar Quarter in
which the relevant sale was made or the relevant expense was reimbursed pursuant
to Section 7.3, (b) the expiration of the applicable statute of limitations for
tax purposes (or any extension thereof) or (c) such longer period as may be
required by Applicable Law.  Gilead and
BMS shall each keep all records of Authorized Commercialization Expenses,
Authorized Development Expenses and Authorized Other Expenses that it incurs
for at least the latest of (i) three (3) years
after the Calendar Quarter in which it invoiced them to the JV, (ii) the
expiration of the applicable statute of limitations for tax purposes (or any
expiration thereof) or (iii) such longer period as may be required by
Applicable Law.  Gilead and BMS shall
each keep documentation supporting [*] for at
least (x) three (3) years after the Calendar Quarter in which such [*] occurred or (y) such longer period as may be required by
Applicable Law.

 

8.2           Audit of Records.  At the request of BMS or Gilead, as the case
may be, the other Member Party shall permit an independent certified public
accountant reasonably acceptable to the other Member Party, at reasonable times
and upon reasonable notice, to examine the books and records maintained by the
other Member Party (and, if applicable, the books and records maintained by
Gilead on behalf of the JV) pursuant to Section 8.1 to verify any or all of the
following: (a) the accuracy of the amounts invoiced by the other Member Party
to the JV pursuant to Section 7.1 and (b) the Authorized Commercialization
Expenses, Authorized Development Expenses and Authorized Other Expenses charged
by the other Member to the JV, in each case only as to any period ending not
more than three (3) years prior to the date of such request.  Such Third Party accountant shall be bound by
written commercially reasonable confidentiality and non-use obligations to the
Member Parties.  Each Member Party shall
receive a copy of the Third Party accountant’s report of any such audit, which
shall disclose only whether such amounts as invoiced or charged are correct or
incorrect, and the amounts of any underpayments or overpayments; such report
shall be Confidential Information of both Member Parties.  Any discrepancy shall be rectified by a
reconciliation payment made by the underpaying Party or the overpaid Party, as
the case may be, within thirty (30) days after receipt of notice thereof.  If such audit establishes that either the
non-requesting Member Party or the JV

 

66

 

made an error in invoicing or payment to the detriment of the
requesting Member Party, in amount equal to or greater than [*] of the
relevant amounts for the period under audit, then the out-of-pocket costs of
such audit shall qualify as an Authorized Other Expense.  In all other cases, the costs of such audit
shall be borne solely by the requesting Member Party and shall not qualify as a
JV Expense or an Authorized Expense.  BMS
and Gilead may each make audit requests under this Section 8.2 on its own
behalf or on behalf of the JV.

 

8.3           Certain Reports.  So that BMS may satisfy its internal
reporting needs, Gilead shall provide to BMS, at the applicable times set forth
in Annex M, the financial data described in that Annex.

 

SECTION 9.

ADVERSE EVENT AND OTHER INFORMATION EXCHANGE

 

9.1           Pharmacovigilance.  Subject to the terms of this Agreement, BMS
and Gilead (under the guidance of their respective Pharmacovigilance
Departments, or equivalent thereof) shall define and finalize mutually
acceptable guidelines and procedures to be followed by the Member Parties with
respect to the receipt, investigation, recordation, communication, and exchange
(as between the Member Parties) of adverse event reports, pregnancy reports,
and any other information, concerning the safety of the Combination Product or
EFV, TDF or FTC, as appropriate.  Such
guidelines and procedures shall be included in an agreement (hereafter referred
to as the Safety Data Exchange Agreement (“SDEA”)), to be entered into by the
Member Parties prior to the earlier to occur of 
(i) the [*] anniversary of the Effective
Date and (ii) the first dosing of the Combination Product in patients, and
shall be in accordance with, and enable the Parties and their Affiliates to
fulfill, local and international regulatory reporting obligations to government
authorities.  Furthermore, such agreed
procedures shall be consistent with relevant International Council for
Harmonization guidelines, except where said guidelines may conflict with
existing local regulatory safety reporting requirements, in which case local
reporting requirements shall prevail. 
Without limitation of the foregoing, the SDEA shall include provisions
stating that:  (i) Gilead shall be
primarily responsible for complying with Applicable Laws in collecting and
reporting to Regulatory Authorities any information about adverse events
associated with the use of the Combination Product; (ii) Gilead shall maintain
the global safety database for the Combination Product; and (iii) BMS shall
have the right to review and approve PSURs prepared by Gilead, such approval
not to be unreasonably withheld.

 

9.2           Material
Communications. 
In addition to the notifications required by Section 3.9 and the SDEA,
each Member Party shall promptly provide notice to the other Member Party of
any material communications with any governmental agency concerning the safety
of the Combination Product, including, without limitation, adverse drug
reaction reports.  Copies of all such
material communications shall be attached to the applicable notice.

 

67

 

SECTION 10.

PRODUCT RECALL

 

10.1         Notification
and Recall.

 

(a)           In the event that any governmental agency or authority
issues or requests a recall or market withdrawal or takes similar action in
connection with the Combination Product, or in the event that either Member
Party determines that a recall or market withdrawal of the Combination Product
may be necessary or advisable, such Member Party shall advise the other Member
Party thereof by telephone, within [*].  Each Member Party shall also notify the other
promptly in the event of (i) the issuance of an FDA field alert or similar
alert by such Member Party (in which case the Member Party issuing such field
alert shall notify the other Member Party at the same time as  the applicable governmental agency or
authority), and (ii) any communication from any governmental agency or
authority regarding a potential recall or market withdrawal of the Combination
Product or any of such Member Party’s respective Single Agent Product or Double
Agent Product.

 

(b)           Within [*] of receipt
of notice given pursuant to the first sentence of Section 10.1(a), the Member
Parties’ shall cause their respective representatives from the business, medical, regulatory,
quality assurance and legal functions (and any others deemed necessary by a
Member Party) to convene an
initial meeting to consider whether or not the JV should conduct a recall
(except in the case of a government-mandated recall or market withdrawal), and
such representatives shall thereafter make a recommendation to the Member
Parties with respect to such determination, and, if there is a recommendation
to recall the Combination Product, with respect to the timing of the recall;
the breadth, extent and level of customer to which the recall shall reach; the
strategies and notifications to be used; and other related issues.  Neither Member Party shall unreasonably
object to a recall requested by the other Member Party; and neither Member
Party shall have any right to object to a recall requested by the other Member
Party (i) for failure of the Combination Product to meet the specifications
therefor, (ii) if there is a reasonable basis to conclude that material harm to
patients may occur, or (iii) for the Manufacture of the Combination Product in
a manner that does not comply with the Act. 
Notwithstanding the foregoing, if a recall or market withdrawal is
mandated by a governmental agency or authority, or a recall is proposed by a
Member Party, on account of such Member Party’s Single Agent Product or Double
Agent Product, then such Member Party may cause the JV (and, accordingly,
Gilead shall take such action on behalf of the JV) to effectuate such recall on
such reasonable terms as such Member Party determines, without the meeting
described in the first sentence of this Section 10.1(b) and without any
liability to the other Member Party or the JV (except for expenses described in
Section 10.2 and indemnity amounts payable by a Party pursuant to Section
13.7).

 

(c)           The Member Parties may, for commercial reasons
or otherwise, mutually determine to withdraw the Combination Product from the
market.  If the reason for market
withdrawal relates to efficacy or safety, such withdrawal shall be treated as
one mandated by a government agency or authority and be dealt with as provided
in Section 10.1(b).  In all other cases,
the JV shall, upon receiving FDA approval, cease selling the Combination
Product; and the Member Parties shall mutually determine whether, and if so
how, to recall any Combination Product already on the market.

 

68

 

(d)           Nothing set forth in this Section 10.1 shall be
construed as restricting the right of either Member Party to make a timely
report of such matter to any government agency or take other action that it
deems appropriate or required by Applicable Law.

 

10.2         Recall
Expenses.  The Member Parties
shall bear the expenses of any recall of the Combination Product in proportion
to their Respective Percentages, and their respective external, out-of-pocket costs
of such recall (without any markup) shall qualify as an Authorized Other
Expense; provided, however, that each Member Party shall bear the
expenses of a recall incurred in a reasonable manner to the extent that such
recall is (a) caused by such Member Party’s breach of its obligations under
this Agreement or its Supply Agreement (or, if it is the Supplier, its supply
contract referred to in Section 4.2) or its gross negligence or willful
misconduct, or (b) otherwise occasioned solely by such Member Party’s Single
Agent Product and/or Double Agent Product, as the case may be.  Such expenses of recall shall include,
without limitation, the expenses of notification and destruction or return of
the recalled Combination Product and the refund to consumers of amounts paid
for the recalled Combination Product.

 

SECTION 11.

INTELLECTUAL PROPERTY RIGHTS

 

11.1         Ownership
of Intellectual Property.

 

(a)           Gilead Intellectual
Property.  Except as otherwise
expressly provided in Sections 6.1(a), 6.3(a), 6.4(a) and 14.6, as among the
Parties, Gilead shall own all right, title, and interest in and to the Gilead
Patents, the Gilead Know-How, the Gilead Inventions, and the Gilead Regulatory
Documentation.  Gilead shall disclose,
and shall cause its Affiliates to disclose, to BMS any BMS Core Improvement
promptly after it is conceived, discovered, developed, or otherwise made.

 

(b)           BMS Intellectual Property.  Except as otherwise expressly provided in
Sections 6.1(b), 6.3(b), 6.4(a), 6.4(d) and 14.6, as among the Parties, BMS
shall own all right, title, and interest in and to the BMS Patents, the BMS
Know-How, the BMS Inventions and the BMS Regulatory Documentation.  BMS shall disclose, and shall cause its
Affiliates to disclose, to Gilead any Gilead Core Improvement promptly after it
is conceived, discovered, developed, or otherwise made.

 

(c)           JV Intellectual Property.  Except as otherwise expressly provided in
Sections 6.2, 6.4(b), 6.4(c), 6.4(d) and 14.6, as among the Parties, the JV
shall own all right, title and interest in and to the Joint Patents, Joint
Know-How, Joint Inventions and Combination Product Regulatory
Documentation.  Except as otherwise
expressly permitted by this Agreement, no Party, including, without limitation,
the JV, shall license, assign, sell, convey or otherwise Exploit its rights in
any Joint Patents, Joint Know-How, Joint Inventions or Combination Product
Regulatory Documentation for any purpose. 
Each Member Party shall disclose to the other Member Party promptly in
writing any and all Joint Inventions that are conceived, discovered, developed
or otherwise made by or on behalf of such Member Party, and each of the Member
Parties hereby assigns, and agrees to cause its employees and agents to assign
to the JV, without payment of additional consideration, all of such Member
Party’s rights, title and interest in and to such Joint Inventions.

 

69

 

11.2         Prosecution
of Patents.

 

(a)           Gilead
Patents.  Gilead shall have the sole
right, at its sole cost and expense, to prepare, file, prosecute and maintain
the Gilead Patents in the Territory. 
Gilead shall have sole discretion to determine which Gilead Patents, if
any, shall be listed in the “Orange Book” with respect to the Combination
Product.

 

(b)           BMS
Patents.  BMS shall have the sole
right, at its sole cost and expense, to prepare, file, prosecute and maintain
the BMS Patents in the Territory.  BMS
shall have the sole discretion to determine which BMS Patents, if any, shall be
listed in the “Orange Book” with respect to the Combination Product.

 

(c)           Joint
Patents.

 

(i)            A
patent application for a Joint Patent claiming any Joint Invention shall be
filed only with the mutual written agreement of the Member Parties, and solely
in accordance with this Section 11.2(c). 
In the event that either Member Party desires to have filed a patent
application for a Joint Patent claiming a Joint Invention, such Member Party
shall propose such filing to the other Member Party, and representatives
designated by each Member Party shall discuss and consider the matter.  In the event that the Member Parties fail to
reach written agreement that such patent application should be filed, neither
Member Party, whether on behalf of itself, the JV or any Third Party, may file
or cause to be filed such patent application.

 

(ii)           In
the event that the Member Parties mutually agree in writing pursuant to Section
11.2(c)(i) that a patent application for a Joint Patent claiming a Joint
Invention should be filed, Gilead shall have the sole right and obligation to
prepare, file, prosecute and maintain the Joint Patents in the name of the JV
in such countries as the Member Parties shall determine, and the external,
out-of-pocket costs, without any markup, with respect thereto shall be treated
as Authorized Other Expenses.  BMS shall
cooperate fully in Gilead’s preparation, filing, prosecution, and maintenance
of the Joint Patents (and in any other proceedings before a patent official or
office with respect thereto).  Such
cooperation shall include, without limitation, (A) promptly executing all papers
and instruments or requiring employees to execute such papers and instruments
as reasonable and appropriate so as to enable Gilead to prepare, file,
prosecute, and maintain the Joint Patents in any country; and (B) promptly
informing Gilead of matters that may affect the preparation, filing,
prosecution, or maintenance of any such Joint Patent, including, without
limitation, providing a copy of any official correspondence received by BMS
from a patent office in any country with respect to Joint Patents.  Gilead shall keep BMS advised of the status
of Joint Patent filings and upon request of BMS shall provide copies of any
official correspondence or other documentation with respect to official actions
and submissions relating to the prosecution or maintenance of such Joint
Patents.

 

(iii)          The
Member Parties shall have the sole discretion to determine (by mutual
agreement) which Joint Patents, if any, shall be listed in the “Orange Book”
with respect to the Combination Product.

 

70

 

11.3         Enforcement
of Patents.

 

(a)           Gilead Patents.  As among the Parties, Gilead shall have the
sole right and option, at its sole cost and expense, to respond to any
Infringement (as defined below) with respect to any Gilead Patent by
appropriate steps, including, without limitation, by filing an infringement
suit or taking other similar action. Gilead shall also have the sole right and
option not to take action to respond to any such Infringement (and in such
event no other Party shall have the right to take any action to respond to any
Infringement with respect to such Gilead Patent).  At Gilead’s request, each of BMS and the JV
shall, at such Party’s own expense, provide reasonable assistance to Gilead in
connection with any such action to respond to Infringement, including, without
limitation, providing access to relevant documents and other evidence, making
its employees available at reasonable business hours, and joining (and having
the JV join) the action to the extent necessary to allow Gilead to maintain the
action.  For purposes of this Section
11.3, (i) “Infringement” shall mean infringement or potential infringement of
one (1) or more Gilead Patents and/or one (1) or more BMS Patents, as the case
may be, by the actions of a Third Party in connection with a product (an “Infringing
Combination Product”) containing, among its active pharmaceutical ingredients,
all of TDF, FTC and EFV and (ii) “other similar action” shall include, without
limitation, responses to paragraph (iv) certification under the Drug Price
Competition and Patent Restoration Act (also known as the Hatch-Waxman Act)
resulting from an attempt to market a Generic Version Combination Product (a “Paragraph
(iv) Certification”).  For the avoidance
of doubt, the Parties acknowledge and agree that infringement of a Gilead
Patent or a BMS Patent, as the case may be, other than by an Infringing
Combination Product, is outside the scope of this Agreement and shall not
create any rights or impose any obligations on the Parties hereunder, including
any right or obligation to take actions to respond to such infringement.

 

(b)           BMS Patents. 
As among the Parties, BMS shall have the sole right and option, at its
sole cost and expense, to respond to any Infringement with respect to any BMS
Patent by appropriate steps, including, without limitation, filing an
infringement suit or taking other similar action.  BMS shall also have the sole right and option
not to take action to respond to any such Infringement  (and in such event no other Party shall have
the right to take any action to respond to any Infringement with respect to a
BMS Patent).  At the request of BMS, each
of Gilead and the JV shall, at such Party’s own expense, provide reasonable
assistance to BMS or the EFV Licensor as applicable, in connection with any
such action to respond to Infringement including, without limitation, providing
access to relevant documents and other evidence, making its employees available
at reasonable business hours, and joining (and having the JV join) the action
to the extent necessary to allow BMS or the EFV Licensor to maintain the
action.

 

(c)           Joint Patents.  If either Member Party determines that any
Joint Patent is being infringed by a Third Party’s activities, it shall notify
the other Member Party in writing and provide it with any evidence of such
infringement that is reasonably available. 
Gilead, on behalf of, and in the name of, the JV, shall have the first
right and option to respond to any infringement with respect to any Joint
Patent by appropriate steps, including without limitation, filing an
infringement suit or taking other similar action, and shall notify BMS of, and consult
with BMS from time to time regarding, any such suit or other action.  If Gilead elects at its sole discretion not
to take action to respond to any such infringement, then BMS, on behalf of, and
in the name of, the JV, shall have the right and option to respond to such
infringement by

 

71

 

appropriate steps,
including without limitation, filing an infringement suit or taking other
similar action, and
shall notify Gilead of, and consult with Gilead from time to time regarding,
any such suit or other action. 
Without limiting the foregoing, in the event that Gilead (for itself or
on behalf of the JV) receives a Paragraph (iv) Certification with respect to
the Combination Product, Gilead shall notify BMS within [*]
after its receipt of such Paragraph (iv) Certification whether or not Gilead
has made the election described in the preceding sentence and, if Gilead elects
not to take action to respond to any such infringement, or fails to notify BMS
within such [*] period, then BMS shall have
the rights described in the immediately preceding sentence.  The Member Party not taking action to respond
to the infringement shall provide reasonable assistance to the Member Party
taking such action, including without limitation providing access to relevant
documents and other evidence, making its employees available at reasonable
business hours, and joining the action to the extent necessary to allow the
Member Party taking such action to maintain the action.  Any amounts recovered by a Member Party
pursuant to this Section 11.3(c), whether by settlement or judgment, shall be
deemed to be recovered on behalf of (and shall be paid over to) the JV; and the
reasonable out-of-pocket costs, including reasonable attorneys’ fees, without
any markup, incurred by the Member Parties in making such recovery shall be
treated as Authorized Other Expenses.

 

(d)           Paragraph (iv) Certifications.  Each Member Party shall notify the other
Member Party in writing within [*] of
receiving any Paragraph (iv) Certification with respect to the Combination
Product, (in the case of BMS) Sustiva, or (in the case of Gilead) Viread,
Emtriva or Truvada, as applicable.

 

11.4         Infringement
of Third Party Rights.  If a
Third Party initiates a Proceeding against the JV or a Member Party alleging
that the conduct of the Project Activities infringes or will infringe such
Third Party’s Patent or misappropriates or will misappropriate such Third Party’s
trade secrets, (a) if such Proceeding arises as a direct result of TDF, FTC or
both TDF and FTC being incorporated in the Combination Product, in each case
without reference to EFV, then Gilead shall defend and hold the JV and BMS
harmless from and against such Proceeding and any Losses resulting from such
Proceeding, and shall have the sole right and obligation to defend such
Proceeding or to settle it (e.g.,
by obtaining a license from such Third Party) at Gilead’s sole cost (which
shall not be deemed a JV Expense or Authorized Expense), and BMS shall
reasonably cooperate at Gilead’s request and expense in such defense and/or
settlement; (b) if such claim arises as a direct result of EFV being
incorporated in the Combination Product, in each case without reference to TDF
or FTC, then BMS shall defend and hold the JV and Gilead harmless from and
against such Proceeding and any Losses resulting from such Proceeding, and shall
have the sole right and obligation to defend such Proceeding or to settle it (e.g., by obtaining a license from such
Third Party) at BMS’ sole cost (which shall not be deemed a JV Expense or
Authorized Expense), and Gilead shall reasonably cooperate at BMS’ request and
expense in such defense and/or settlement; 
and (c) in the event that neither clause (a) nor (b) applies, then the
JEC shall determine whether to defend against such claim or to obtain a license
from such Third Party, and if so, on what terms and conditions (which
out-of-pocket costs, without any markup, shall be deemed Authorized Other
Expenses), and which Member Party shall take such actions on behalf of the JV.  The procedures set forth in Section 13.8
shall apply to indemnification of Member Parties under this Section 11.4.

 

72

 

11.5         Trademarks.

 

(a)           Gilead Licensed Trademarks. 
Gilead shall have the sole right, at its sole cost and expense, to
search, clear, file, register, prosecute, maintain and enforce the Gilead
Licensed Trademarks in the Territory. 
Gilead shall have the sole right and option, at its sole cost and
expense, to respond to any infringement with respect to any Gilead Licensed
Trademark by appropriate steps, including, without limitation, by filing an
infringement suit or taking other similar action.  Gilead shall also have the sole right
and option not to prosecute, maintain or enforce Gilead Licensed Trademarks or
take action to respond to any such infringement.

 

(b)           BMS Licensed Trademarks. 
BMS shall have the sole right, at its sole cost and expense, to search,
clear, file, register, prosecute, maintain and enforce the BMS Licensed
Trademarks in the Territory.  BMS shall
have the sole right and option, at its sole cost and expense, to respond to any
infringement with respect to any BMS Licensed Trademark by appropriate steps,
including, without limitation, by filing an infringement suit or taking other
similar action.  BMS shall also
have the sole right and option not to prosecute, maintain or enforce BMS
Licensed Trademarks or take action to respond to any such infringement.

 

(c)           Combination Product Trademarks.  Except as otherwise expressly
provided in Section 6.7, the Parties agree that, as among themselves, the JV
shall own all right, title and interest in and to the Combination Product
Trademarks.  Gilead shall be solely
responsible for searching, clearing, filing, registering, prosecuting and
maintaining the Combination Product Trademarks in the Territory in the name of
the JV, the external out-of-pocket costs (without any markup) of which shall be
treated as Authorized Other Expenses.  If
either Member Party has a reasonable basis to believe that a Third Party is or
may be engaging in commercially significant infringement of any Combination
Product Trademark, such Member Party shall notify the other Member Party in
writing and provide it with any evidence of such infringement that is
reasonably available.  Gilead shall have
the first right and option to respond to any infringement or potential
infringement with respect to any Combination Product Trademark by appropriate
steps, including, without limitation, filing an infringement suit or taking
other similar action, and shall notify BMS of, and consult with BMS from time
to time regarding, any such suit or other action.  If Gilead elects at its sole discretion not
to take action to respond to any such infringement or potential infringement
within thirty (30) days of Gilead’s becoming aware of such infringement or
potential infringement, then BMS shall have the right and option to respond to
such infringement or potential infringement by appropriate steps, including,
without limitation, filing an infringement suit or taking other similar action,
and shall notify Gilead of, and consult with Gilead from time to time
regarding, any such suit or other action. 
The Member Party not taking action to respond to the infringement or
potential infringement shall provide reasonable assistance to the Member Party
taking such action, including, without limitation, providing access to relevant
documents and other evidence, making its employees available at reasonable
business hours, and joining the action to the extent necessary to allow the
Member Party taking such action to maintain the action.  Any amounts recovered by a Member
Party pursuant to this Section 11.5(c), whether by settlement or judgment,
shall be deemed to be recovered on behalf of (and shall be paid over to) the
JV; and the reasonable out-of-pocket costs, including reasonable attorneys’
fees, without any markup,

 

73

 

incurred by the Member
Parties in making such recovery shall be treated as Authorized Other Expenses.

 

SECTION 12.

CONFIDENTIALITY

 

12.1         Treatment
of Confidential Information. 
Except as provided in this Section 12, during the term of this Agreement
and for five (5) years after this Agreement’s expiration or termination, each
Party (the “Receiving Party”) (a) shall hold in strict confidence and shall not
publish or otherwise disclose, directly or indirectly, to any Third Party any
Confidential Information of another Party or its Affiliates (collectively, the “Disclosing
Party”), (b) except as permitted pursuant to Section 12.7, shall not directly
or indirectly use Confidential Information of a Disclosing Party for any
purpose other than performance of its obligations or exercise of its rights
under this Agreement, or as otherwise permitted under this Agreement, the
Operating Agreement or any Ancillary Agreement, and (c) shall use the same
level of effort to maintain the confidentiality of Confidential Information of
a Disclosing Party as it uses for its own confidential or proprietary
information, but in any event at least commercially reasonable efforts.

 

12.2         Permitted
Disclosure.  Each Party may
disclose Confidential Information of a Disclosing Party to the extent that such
disclosure is:

 

(a)           Made only as required to specific persons or entities
under applicable laws, rules, regulations or orders of a court of competent
jurisdiction or other supra-national, federal, national, regional, state,
provincial or local governmental or regulatory body of competent jurisdiction; provided,
however, that the Receiving Party shall first have given notice to the
Disclosing Party and given the Disclosing Party a reasonable opportunity to
seek any available limitations on, exemptions from or protections available
under such disclosure requirement and reasonably cooperate in any such efforts
by the Disclosing Party; and provided  further that if an
exemption from such disclosure requirement is not obtained, the Confidential
Information disclosed in response to such requirement shall be limited to that
information which is legally required to be disclosed;

 

(b)           Otherwise required by law, in the opinion of legal counsel
to the Receiving Party as expressed in an opinion letter in form and substance
reasonably satisfactory to the Disclosing Party, which shall be provided to the
Disclosing Party at least two (2) Business Days prior to the Receiving Party’s
disclosure of the Confidential Information pursuant to this Section 12.2(b);

 

(c)           Made as required by the applicable laws and regulations
(including, without limitation, Regulation FD) relating to securities or rules
of the National Association of Securities Dealers, the New York Stock Exchange,
or any other applicable association governing the stock exchange on which a
Member Party’s stock is listed, including without limitation filing of reports
on Forms 10-K, 10-Q and 8-K with the U.S. Securities and Exchange Commission,
in which case (i) the procedures set forth in Section 12.2(d) shall apply if
Section 12.2(d) is also applicable to such filing and (ii) the procedures set
forth in the proviso to Section 12.5(b) shall apply;

 

74

 

(d)           Made in the form of a filing of a copy of this Agreement
by Gilead or BMS (as the case may be) with the U.S. Securities and Exchange
Commission to comply with Applicable Law, provided that such Member Party (i) requests
confidential treatment of at least the commercial terms and material terms
hereof to the extent such confidential treatment is reasonably available to
such Member Party, and (ii) solicits the other Member Party’s comments on such
request for confidential treatment, in which case the filing Member Party shall
use commercially reasonable efforts to take into account the other Member Party’s
reasonable comments on such request;

 

(e)           Subject to Section 3.4, made by the Receiving Party to the
Regulatory Authorities as required in connection with any filing, application
or request for any regulatory approvals or otherwise to comply with the
requirements of Applicable Law; provided, however, that
reasonable measures shall be taken to assure confidential treatment of such
information;

 

(f)            Made by the Receiving Party as necessary to file or
prosecute patent applications, prosecute or defend litigation or otherwise
establish rights or enforce obligations under this Agreement;

 

(g)           Made by the Receiving Party to its employees, Affiliates,
independent contractors, legal counsel, consultants, auditors and advisors who
are bound by confidentiality and non-use obligations no less protective than
those in this Section 12 and who reasonably require such Confidential Information
for the performance of such Member Party’s obligations or enforcement of such
Member Party’s rights under this Agreement (including, without limitation, the
matters described in Sections 12.2(a) through (j)); provided, however,
that the Receiving Party shall remain responsible for any failure by any such
Person to treat such Confidential Information as required by this Section 12;

 

(h)           Made by the Receiving Party to its licensors of its
respective Technology pursuant to contractual obligations to such licensors
existing as of the Effective Date and under
obligations of confidentiality and non-use no less protective than those in
this Section 12; provided, however, that the Receiving Party
shall remain responsible for any failure by any such Person to treat such
Confidential Information as required by this Section 12;

 

(i)            Made by the Receiving Party as necessary for the filing
of its tax returns or pursuant to any audit thereof; or

 

(j)            As otherwise permitted pursuant to Section 12.5 and
Section 12.7.

 

12.3         Confidential
Information.

 

(a)           Defined.  “Confidential
Information” of a Party shall mean the terms of this Agreement and all
Information and Inventions provided by or on behalf of such Party to another
Party (or, in the case of Section 5.3, to the Pricing Committee) either in
connection with the discussions and negotiations pertaining to this Agreement
(including under the Mutual Confidential Disclosure Agreement entered into by
and between Bristol-Myers Squibb Company and Gilead Sciences, Inc. as of
December 12, 2003) or in the course of performing this Agreement or the MTTA,
including, without limitation: the material terms of 

 

75

this
Agreement; data; knowledge; practices; processes; ideas; research plans;
engineering designs and drawings; research data; manufacturing processes and
techniques; scientific, manufacturing, marketing and business plans; and
financial and personnel matters relating to the Disclosing Party or to its
present or future products, sales, suppliers, customers, employees, investors
or business.  For the avoidance of doubt,
Confidential Information shall include any and all information provided by one
Party to another Party relating to the Combination Product or the
first-mentioned Party’s Single Agent Product(s) or Double Agent Product, as
applicable; provided, however, that information provided by one
Party to another Party relating to Improvements to the Core Technology of such
other Party shall be deemed Confidential Information of such other Party.

 

(b)           Exclusions.  Notwithstanding the foregoing,
Information and Inventions of a Disclosing Party shall not be deemed
Confidential Information with respect to a Receiving Party for purposes of this
Agreement if it:

 

(i)                                     was already known to the Receiving Party or
its Affiliates, other than under an obligation of confidentiality or non-use,
at the time of disclosure to such Receiving Party;

 

(ii)                                  was generally available or known, or was
otherwise part of the public domain, at the time of its disclosure to such
Receiving Party;

 

(iii)                               became generally available or known, or
otherwise became part of the public domain, after its disclosure to such
Receiving Party through no fault of the Receiving Party or its Affiliates;

 

(iv)                              was disclosed to such Receiving Party or its
Affiliates, other than under an obligation of confidentiality or non-use, by a
Third Party who had no obligation to the Disclosing Party not to disclose such
Information and Inventions to others; or

 

(v)                                 was independently discovered or developed by
such Receiving Party or its Affiliates, as evidenced by their written records,
without the use of Confidential Information belonging to the Disclosing Party.

 

Specific aspects or details of Confidential
Information shall not be deemed to be within the public domain or in the
possession of a Party merely because the Confidential Information is embraced
by more general information in the public domain or in the possession of such
Party.  Further, any combination of
Confidential Information shall not be considered in the public domain or in the
possession of a Party merely because individual elements of such Confidential
Information are in the public domain or in the possession of such Party unless
the combination and its principles are in the public domain or in the
possession of such Party.

 

12.4         Use
of Name.  Subject to Sections
5.8, 6.7 and 12.5, no Member Party shall mention or otherwise use the name,
insignia, symbol, trademark, trade name or logotype of another Party (or any
abbreviation or adaptation thereof) in any publication, press release,
promotional material or other form of publicity without the prior written
approval of such other Member Party in each instance.  For purposes of this Section 12.4, Approved
Marketing Materials shall be deemed to have been approved by all of the Member
Parties.  The restrictions

 

76

 

imposed by this Section shall not prohibit any Member Party from making
any disclosure identifying another Party that is required by Applicable Law.

 

12.5         Publicity;
Terms of Agreement.

 

(a)                                  The Parties shall make a joint public
announcement of the execution and delivery of this Agreement substantially in
the form of the joint press release attached as Annex L hereto upon or after
execution of this Agreement.

 

(b)                                 After public disclosure of the joint press
release pursuant to Section 12.5(a), if either Member Party desires to make a
public announcement (such as a press release) concerning the material terms of
this Agreement, such Member Party shall give reasonable prior advance notice of
the proposed text of such announcement to the other Member Party for its prior
review and approval (except as otherwise provided in this Section 12.5(b)),
such approval not to be unreasonably withheld. 
A Member Party commenting on such a proposed announcement shall provide
its comments, if any, as soon as reasonably practicable but in any event within
three (3) Business Days after receiving the proposed announcement for
review.  Either Member Party shall have
the right to make a press release announcing the receipt of Approvals, subject
only to the review procedure set forth in the preceding sentence.  Neither Member Party shall be required to
seek the permission of the other Member Party to repeat any information as to
the terms of this Agreement that have already been publicly disclosed by such
Member Party in accordance with Section 12.2 or this Section 12.5.  In
the event of a legally required press release or other public announcement or
disclosure, the Member Party in question shall provide the other Member Party
with a copy of the proposed text with as much notice as practicable (which
shall be no less than three (3) Business Days prior to the proposed
disclosure), the other Member Party shall respond with its comments as promptly
as practicable (but no less than one (1) Business Day prior to the proposed
disclosure), and the Member Party in question shall take into due consideration
any and all reasonable comments that such other Member Party may provide in a
timely manner; provided, however, that if a Member Party
determines that it must make a legally required disclosure under Regulation FD,
then it shall have the right to make such disclosure at such time as is
necessary to comply with Regulation FD and shall provide the other Member Party
with as much notice and opportunity for review and comment as is practicable in
the circumstances.

 

12.6         Notification.
 The Receiving Party shall notify the
Disclosing Party immediately, and cooperate with the Disclosing Party as the
Disclosing Party may reasonably request, upon the Receiving Party’s discovery
of any loss or compromise of the Disclosing Party’s Confidential Information.

 

12.7         Permitted
Uses.  Notwithstanding any
provision of this Agreement to the contrary, regardless of which Member Party
is the Disclosing Party, to the extent that any Confidential Information
relates specifically to the Combination Product, including any such
Confidential Information consisting of Combination Product Regulatory
Documentation, each Member Party shall have the right to use such Confidential
Information in connection with any Exploitation of the Combination Product to
the extent permitted by the terms and conditions of this Agreement, including,
without limitation (a) any use in accordance with the license grants made by
the JV to the Member Parties in Section 6.2, or with the Rights of Reference
granted by

 

77

 

the JV to the Member Parties in Sections 6.4(b), 6.4(c) and 6.4(d), as
the case may be, or (b) in connection with the preparation and/or submission to
Regulatory Authorities as required in connection with any filing or application,
or request for regulatory approval for the Combination Product anywhere in the
world.

 

12.8         Remedies.  Each Party agrees that the unauthorized use
or disclosure of any material Confidential Information by the Receiving Party
in violation of this Agreement may cause severe and irreparable damage to the
Disclosing Party, for which money damages represent an insufficient remedy.  In the event of any violation of this Section
12, notwithstanding anything in this Agreement to the contrary, the Disclosing
Party shall be authorized and entitled to seek from any court of competent
jurisdiction injunctive relief, whether preliminary or permanent, with respect
to such violation as well as any other relief permitted by Applicable Law, and
may obtain that relief without making a showing of insufficiency of money
damages or irreparable harm.  The
Receiving Party agrees to waive any requirement that the Disclosing Party post
bond as a condition for obtaining any such relief.

 

SECTION 13.

WARRANTIES; INDEMNITIES

 

13.1         Representations, Warranties and Covenants.  Each Member Party hereby represents, warrants
and covenants to the other Member Party as of the Effective Date as follows:

 

(a)                                  Such
Member Party as applicable (i) has the power and authority and the legal right
to enter into this Agreement, the Operating Agreement and any Ancillary
Agreements to which it is a party and to perform its obligations hereunder and
thereunder, and (ii) has taken all necessary action on its part required to
authorize the execution and delivery of this Agreement, the Operating Agreement
and any Ancillary Agreements to which it is a party.  Each of this Agreement and the Operating
Agreement has been (and in the case of any Ancillary Agreements to which such
Member Party is a party, when executed and delivered, will have been) duly
executed and delivered on behalf of such Member Party and constitutes (and in
the case of any Ancillary Agreements to which such Member Party is a party,
when duly executed and delivered, shall constitute) a legal, valid and binding
obligation of such Member Party and is (and in the case of any Ancillary
Agreements to which such Member Party is a party, when duly executed and
delivered, shall be) enforceable against it in accordance with its terms
subject to the effects of bankruptcy, insolvency or other laws of general
application affecting the enforcement of creditor rights and judicial
principles affecting the availability of specific performance and general
principles of equity, whether enforceability is considered a proceeding at law
or equity.

 

(b)                                 Such
Member Party is not aware of any pending or threatened litigation (and has not
received any communication) that alleges that such Member Party’s activities
related to this Agreement have violated, or that by conducting the activities
as contemplated in this Agreement such Party would violate, any of the
intellectual property rights of any other Person (after giving effect to the
license grants in this Agreement).  On
the Effective Date, such Member Party has delivered to the other Member Party a
list setting forth, to the extent of such Member Party’s knowledge any and all (i) products liability
litigation, (ii) intellectual property litigation that is reasonably likely to
have a material adverse effect on such

 

78

 

Member Party’s Single Agent Product(s) or Double Agent Product or the
Combination Product, as applicable, or the rights or licenses granted by such
Member Party to the other Member Party or the JV hereunder with respect to any
such product, and (iii) litigation or investigation(s) initiated by, and
warning letters received from, Regulatory Authorities, including Form 483
letters, in each case with respect to Manufacturing; and in each case ((i), (ii)
and (iii)):  (A) which relates to such
Member Party’s Single Agent Product(s) or Double Agent Product, and (B) which
litigation or investigation is currently pending or was pending, or which
warning letter was received, at any time on or after [*].

 

(c)                                  All necessary consents, approvals and
authorizations of all regulatory and governmental authorities and other Persons
required to be obtained by such Member Party in connection with the execution
and delivery of this Agreement and the performance of its obligations under
this Agreement have been obtained.

 

(d)                                 With respect to such Member Party as
applicable, the execution and delivery of this Agreement, the Operating
Agreement and any Ancillary Agreements to which it is a party and the
performance of such Member Party’s obligations hereunder and thereunder (i) do
not conflict with or violate in any material way any requirement of Applicable
Law, (ii) do not conflict with or violate any provision of the articles of
incorporation, bylaws, limited partnership agreement or any similar instrument
of such Member Party, as applicable and (ii) do not conflict with, violate, or
breach or constitute a default or require any consent under, any contractual
obligation or court or administrative order by which such Member Party is
bound.

 

13.2         Additional
Representations, Warranties and Covenants of BMS.  BMS represents, warrants and covenants to
Gilead that:

 

(a)                                  Each of BMS Parent and BMS Sub (i) is a
corporation or limited liability company, as the case may be, duly organized
and in good standing under the laws of the State of Delaware, and (ii) has full
power and authority and the legal right to own and operate its property and
assets and to carry on its business as it is now being conducted and as it is
contemplated to be conducted by this Agreement.

 

(b)                                 Neither BMS nor any of its Affiliates has
been debarred or is subject to debarment and neither BMS nor any of its
Affiliates shall use in any capacity, in connection with the services to be
performed under this Agreement, any Person who has been debarred pursuant to
Section 306 of the Act, or who is the subject of a conviction described in such
section.  BMS agrees to inform Gilead in
writing immediately if it or any Person who is performing services under this
Agreement is debarred or is the subject of a conviction described in Section
306, or if any action, suit, claim, investigation or legal or administrative
proceeding is pending or, to the knowledge of BMS, is threatened, relating to
the debarment or conviction of BMS or any Person performing services under this
Agreement.

 

(c)                                  BMS has the right to grant the license under
the BMS Patents that is set forth in Section 6.1(b), and has not, prior to the
Effective Date, made a grant to any Third Party of any right or license in
respect of the BMS Patents that would conflict with any grant of rights or
licenses to Gilead or the JV hereunder. 
The BMS Patents are not subject to any 

 

79

 

encumbrance
or lien by any Third Party (except for any such encumbrances or liens as would
not, in the aggregate, have a material adverse effect on the license rights
granted to the JV and Gilead under this Agreement).  Prior to the Effective Date, BMS has delivered
to Gilead a copy (with financial terms redacted) of any license or similar
grant of rights between BMS, on the one hand, and a Third Party, on the other
hand, (i) pursuant to which BMS obtained from such Third Party a license or
other rights with respect to any of the BMS Patents, or (ii) pursuant to which
BMS grants to any such Third Party a license or other rights with respect to
any of the BMS Patents for Exploitation in the Territory.  BMS covenants and agrees that, except for
agreements referred to in the preceding sentence (including extensions,
amendments and renewals thereof), it shall not, from and after the Effective
Date and throughout the term of this Agreement, grant to any Third Party any
right or license in respect of the BMS Patents that would conflict with any
grant to Gilead or the JV hereunder.

 

(d)                                 There are no judgments or settlements against
or amounts with respect thereto owed by BMS relating to the BMS Patents.  To the knowledge of BMS, it has not received
written notice of any Proceeding in which it is alleged that (i) the BMS
Patents are invalid or unenforceable or (ii) the Exploitation of EFV, whether
alone or in combination with either or both of TDF and FTC, infringes any Third
Party Patent.

 

(e)                                  To the knowledge of BMS, the information
contained in BMS’ Single Agent Product label and in the NDA for BMS’ Single
Agent Product represents, in all material respects, a complete and accurate
reflection of the safety and efficacy profile of BMS’ Single Agent Product as
of the Effective Date.  BMS shall use
commercially reasonable efforts to maintain its Single Agent Product label and
the BMS Regulatory Documentation through updates as needed to ensure that such
information continues to represent a complete and accurate reflection in all
material respects of the safety and efficacy profile of its Single Agent
Product.  It is understood and agreed
that BMS makes the representation and covenant to Gilead set forth in this
Section 13.2(e) solely for purposes of the Member Parties’ collaboration
pursuant to this Agreement, and for no other purpose.

 

(f)                                    Quantities
of EFV provided by BMS pursuant to Section 4.1 will (i) be Manufactured using
reasonable care; (ii) conform to the applicable EFV Bulk Specifications (as
defined in the BMS Supply Agreement) and with the applicable certificate of
analysis at the time of delivery; (iii) be conveyed by BMS with good title and
free from any lawful security interest, lien or encumbrance; and BMS (or any
Affiliates or Third Party suppliers as applicable) will have obtained all
approvals required by all applicable Regulatory Authorities to Manufacture EFV
for use in Sustiva.

 

13.3         Additional
Representations, Warranties and Covenants of Gilead.  Gilead represents, warrants and covenants to
BMS that:

 

(a)                                  Each of Gilead Parent and Gilead Sub is a
corporation or limited liability company, as the case may be, duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and has full power and authority and the legal right to own and operate its
property and assets and to carry on its business as it is now being conducted
and as is contemplated to be conducted by this Agreement.

 

80

 

(b)                                 Neither Gilead nor any of its Affiliates has
been debarred or is subject to debarment and neither Gilead nor any of its
Affiliates shall use in any capacity, in connection with the services to be
performed under this Agreement, any Person who has been debarred pursuant to
Section 306 of the Act, or who is the subject of a conviction described in such
section.  Gilead agrees to inform BMS in
writing immediately if it or any Person who is performing services under this
Agreement is debarred or is the subject of a conviction described in Section
306, or if any action, suit, claim, investigation or legal or administrative
proceeding is pending or, to the knowledge of Gilead, is threatened, relating
to the debarment or conviction of Gilead or any Person performing services
under this Agreement.

 

(c)                                  Gilead has the right to grant the license under
the Gilead Patents that is set forth in Section 6.1(a), and has not, prior to
the Effective Date, made a grant to any Third Party of any right or license in
respect of the Gilead Patents that would conflict with any grant of rights or
licenses to BMS or the JV hereunder.  The
Gilead Patents are not subject to any encumbrance or lien by any Third Party
(except for any such encumbrances or liens as would not, in the aggregate, have
a material adverse effect on the license rights granted to the JV and BMS under
this Agreement).  Prior to the Effective
Date, Gilead has delivered to BMS a copy (with financial terms redacted) of any
license or similar grant of rights between Gilead, on the one hand, and a Third
Party, on the other hand, (i) pursuant to which Gilead obtained from such Third
Party a license or other rights with respect to any of the Gilead Patents, or
(ii) pursuant to which Gilead grants to any such Third Party a license or other
rights with respect to any of the Gilead Patents for Exploitation in the
Territory.  Gilead covenants and agrees
that, except for agreements referred to in the preceding sentence (including
extensions, amendments and renewals thereof), it shall not, from and after the
Effective Date and throughout the term of this Agreement, grant to any Third
Party any right or license in respect of the Gilead Patents that would conflict
with any grant to Gilead or the JV hereunder.

 

(d)                                 There are no judgments or settlements against
or amounts with respect thereto owed by Gilead relating to the Gilead
Patents.  To the knowledge of Gilead, it
has not received written notice of any Proceeding in which it is alleged that
(i) the Gilead Patents are invalid or unenforceable or (ii) the Exploitation of
either TDF or FTC, whether alone or together and whether or not in combination
with EFV, infringes any Third Party Patent.

 

(e)                                  To the knowledge of Gilead, the information
contained in the labels of Gilead’s Single Agent Products and Double Agent
Product and in the NDAs for Gilead’s Single Agent Products and Double Agent
Product represents, in all material respects, a complete and accurate
reflection of the safety and efficacy profile of Gilead’s Single Agent Products
and Double Agent Product as of the Effective Date.  Gilead shall use commercially reasonable
efforts to maintain its Single and Double Agent Product labels and the Gilead
Regulatory Documentation through updates as needed to ensure that such
information continues to represent a complete and accurate reflection in all
material respects of the safety and efficacy profile of its Single and Double
Agent Products.  It is understood and
agreed that Gilead makes the representation and covenant to BMS set forth in
this Section 13.3(e) solely for purposes of the Member Parties’ collaboration
pursuant to this Agreement, and for no other purpose.

 

(f)                                    Quantities
of FTC and TDF provided by Gilead pursuant to Section 4.1 will (i) be
Manufactured using reasonable care; (ii) conform to the applicable

 

81

 

Product Specifications
(as defined in the Gilead Supply Agreement) and with the applicable certificate
of analysis at the time of delivery; (iii) be conveyed by Gilead with good
title and free from any lawful security interest, lien or encumbrance; and Gilead
(or any Affiliates or Third Party suppliers as applicable) will have obtained
all approvals required by all applicable Regulatory Authorities to Manufacture
FTC and TDF for use in Viread, Emtriva and Truvada as applicable.

 

13.4                           Disclaimer.  EXCEPT AS SET FORTH IN SECTIONS 13.1, 13.2
AND 13.3, EACH PARTY HEREBY DISCLAIMS ANY AND ALL WARRANTIES, WHETHER WRITTEN
OR ORAL, OR EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION WITH RESPECT TO
THE SINGLE AGENT PRODUCTS, THE DOUBLE AGENT PRODUCT, THE COMBINATION PRODUCT OR
ANY ACTIVE PHARMACEUTICAL INGREDIENTS FOR THE COMBINATION PRODUCT SUPPLIED
UNDER THIS AGREEMENT, OR ANY TECHNOLOGY LICENSED UNDER THIS AGREEMENT,
INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF QUALITY, PERFORMANCE,
MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE.  FOR THE AVOIDANCE OF DOUBT, NOTHING CONTAINED
IN THIS SECTION 13.4 SHALL OPERATE TO LIMIT OR INVALIDATE ANY WARRANTY
CONTAINED IN ANY ANCILLARY AGREEMENT.

 

13.5                           Indemnification
by the JV.  The JV shall
indemnify each of the Member Parties and their Affiliates and their respective
officers, directors and employees from and against (a) (i) all Proceedings in
which such Member Party (or its Affiliate) is involved or threatened to be
involved and which arises out of the Exploitation of the Combination Product or
either Member Party’s (or its Affiliate’s) performance of its obligations under
and in compliance with this Agreement, the Operating Agreement, the SDEA or the
MTTA  and (ii) all Losses incurred by the
indemnitee resulting from such Proceedings, and (b) without limitation of the
foregoing clause (a), (i) all Proceedings in which such Member Party (or its
Affiliate) is involved or threatened to be involved and which arises out of (A)
the content of any Approved Marketing Materials, to the extent that such
Approved Marketing Materials are used by both Member Parties, (B) the
performance of such Member Party’s duties under Section 3.3 (with respect to
formulation and Manufacturing process development related activities), 5.2, 5.3,
5.4, 7.1 or 8.1 of this Agreement, (C) the performance by the Tax Matters
Member of its duties under the Operating Agreement, or (D) the JV’s use of the
Combination Product Trademarks, the Gilead Licensed Trademarks, and/or the BMS
Licensed Trademarks, and (ii) all Losses incurred by the indemnitee resulting
from such Proceedings, except in each case ((a) and (b)) to the extent that
such Proceedings arise out of or such Losses were caused by the indemnitee
Member Party’s (or its Affiliate’s or subcontractor’s) gross negligence,
willful misconduct, failure to comply with or perform one or more of its
covenants in this Agreement, the Operating Agreement, the SDEA or the MTTA, or
breach or inaccuracy of one or more of its representations and warranties in this
Agreement, the Operating Agreement or (if applicable) the SDEA, and except in
each case ((a) and (b)) to the extent that the other Member Party has an
obligation of indemnity for such Losses and Proceedings pursuant to Section
13.6, 13.7 or Section 11.4, as the case may be. 
The indemnification provided in this Section 13.5 shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any applicable, statutes, agreement, vote of the JEC or otherwise.  Except as otherwise expressly provided in
this Agreement, including without

 

82

 

limitation this Section 13.5 or Section 13.6 or 13.7, all Losses
incurred by the JV shall be borne by the Member Parties in accordance with the
terms of the Operating Agreement.

 

13.6         Indemnification
by the Member Parties in General. 
Each Member Party (the “Indemnifying Member Party”) shall indemnify the
JV and the other Member Party and its Affiliates and their respective officers,
directors and employees from and against (a) all Proceedings in which the JV or
such other Member Party (or its Affiliate) is involved or threatened to be
involved and which arises out of (i) the Indemnifying Member Party’s (or its
Affiliate’s or subcontractor’s) gross negligence, willful misconduct, failure
to comply with or perform one or more of its covenants in this Agreement, the
Operating Agreement, the SDEA or the MTTA, or breach or inaccuracy of one or
more of its representations and warranties in this Agreement, the Operating
Agreement or (if applicable) the SDEA, or (ii) the content of any Approved
Marketing Materials used by the Indemnifying Member Party in accordance with
Section 5.7, following its receipt of notification from the other Member Party in
accordance with Section 5.7 that the other Member Party has elected not to use
such Approved Marketing Materials in the Promotion of the Combination Product
in the Territory (and provided that the other Member Party does not use such
Approved Marketing Materials in the Promotion of the Combination Product in the
Territory), and (b) all Losses incurred by the indemnitee resulting from such
Proceedings, except to the extent that such Proceedings arise out of or such
Losses were caused by the other Member Party’s (or its Affiliate’s or
subcontractor’s) gross negligence, willful misconduct, failure to comply with
or perform one or more of its covenants in this Agreement, the Operating
Agreement, the SDEA or the MTTA, or breach or inaccuracy of one or more of its
representations and warranties in this Agreement, the Operating Agreement or
(if applicable) the SDEA, and except to the extent a Member Party or the JV has
an obligation of indemnity for Losses and Proceedings pursuant to Section 13.7
or Section 11.4 or Section 13.5, as the case may be.  The indemnification provided in this Section
13.6 shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under any applicable statutes, agreement, vote of
the JEC or otherwise.

 

13.7         Indemnification for Certain Product
Liability Related Matters.

 

(a)                        Gilead shall indemnify the JV and
each BMS Indemnified Party from and against (i) all Proceedings in which the JV
or such BMS Indemnified Party is involved or threatened to be involved
and which arise from personal injury or death caused by the Combination Product
due to design defects, manufacturing defects or the inherent characteristics
thereof, where the [*] that such
defect(s) or characteristics are the direct result of the incorporation in the
Combination Product of TDF, FTC or both TDF and FTC, in each case without
reference to the incorporation in the Combination Product of EFV (other than
any Selected Product Liability Claims), irrespective of whether such defect(s) or characteristics (or any
associated defects or characteristics of TDF and/or FTC) are [*], and (ii) all Losses incurred by the JV or such BMS
Indemnified Party, as the case may be, resulting from such Proceedings, except
to the extent that such Proceedings arise out of or such Losses were caused by
BMS’ (or its Affiliate’s or subcontractor’s) gross negligence, willful
misconduct, failure to comply with or perform one or more of its
covenants in this Agreement, the Operating Agreement, the SDEA or the MTTA, or
breach or inaccuracy of one or more of its representations and warranties in
this Agreement, the Operating Agreement or (if applicable) the SDEA.

 

83

 

(b)                                 BMS shall
indemnify the JV and each Gilead Indemnified Party from and against (i) all
Proceedings in which the JV or such Gilead Indemnified Party is involved or threatened to be involved and
which arise from personal injury or death caused by the Combination Product due
to design defects, manufacturing defects or the inherent characteristics
thereof, where the [*] that such
defect(s) or characteristics are the direct result of the incorporation in the
Combination Product of EFV, in each case without reference to the incorporation
in the Combination Product of either or both of TDF and FTC (other than any
Selected Product Liability Claims), irrespective of whether such defect(s) or
characteristics (or any associated defects or characteristics of EFV) are [*], and (ii) all Losses incurred by the JV or such Gilead
Indemnified Party, as the case may be, resulting from such Proceedings, except
to the extent that such Proceedings arise out of or such Losses were caused by
Gilead’s (or its Affiliate’s or subcontractor’s) gross negligence, willful
misconduct, failure to comply with or perform one or more of its
covenants in this Agreement, the Operating Agreement, the SDEA or the MTTA, or
breach or inaccuracy of one or more of its representations and warranties in
this Agreement, the Operating Agreement or (if applicable) the SDEA.

 

(c)                                  The JV shall indemnify each of the
Gilead Indemnified Parties and BMS Indemnified Parties from and against (i) all
Proceedings in which any such Gilead Indemnified Party or BMS Indemnified
Party, as the case may be, is
involved or threatened to be involved and which arise from personal injury or
death caused by the Combination Product due to design defects, manufacturing
defects or the inherent characteristics thereof, (A) where the [*]
that such defect(s) or characteristics are the direct result of both (1) EFV
and (2) either or both of TDF and/or FTC being incorporated into the
Combination Product, (B) where it ultimately cannot be or is not determined
whether such defect(s) or characteristics are the direct result of EFV, on the
one hand, and either or both of TDF and FTC, on the other hand, being
incorporated into the Combination Product, or (C) where such defect(s) or
characteristics are the direct result of an aspect of the Combination Product
other than any of its active ingredients (each such claim ((A), (B) or (C)) a “Selected
Product Liability Claim”); and (ii) all Losses incurred by the Gilead
Indemnified Party or BMS Indemnified Party, as the case may be, resulting from
such Proceedings; in each case except to the extent that such Proceedings arise
out of or such Losses were caused by a Member Party’s (or its Affiliate’s or
subcontractor’s) gross negligence, willful misconduct, failure to comply
with or perform one or more of its covenants in this Agreement, the Operating
Agreement, the SDEA or the MTTA, or breach or 
inaccuracy of one or more of its representations and warranties in this
Agreement, the Operating Agreement or (if applicable) the SDEA, and except to the extent a Member Party has
an obligation of indemnity for such Losses and Proceedings pursuant to Section
11.4.

 

(d)                                 For purposes of Sections 13.7(b) and
13.7(c) only, [*] shall be deemed to be an
Affiliate of Gilead;  provided, however,
that BMS shall have no greater scope of liability to [*]
pursuant to this Section 13.7(d) than the lesser of (i) the scope of liability
of BMS to Gilead pursuant to Section 13.7(b) and (ii) the scope of liability of
Gilead to [*] pursuant to [*]
of the [*] as of the Effective Date.

 

13.8         Indemnification
Procedure.

 

(a)                                  Each Indemnified Party agrees to give the
Indemnifying Party prompt written notice of any Losses or the discovery of a
fact (including any Proceeding) upon

 

84

 

which
such Indemnified Party intends to base a request for indemnification under
Section 11.4, 13.5, 13.6 or 13.7, as the case may be (it being understood and
agreed, however, that the failure to give notice as provided in this Section
13.8(a) shall not relieve the Indemnifying Party of any such indemnification
obligations except and only to the extent that the Indemnifying Party is
actually materially prejudiced as a result of such failure to give notice).

 

(b)                                 Each Party shall furnish promptly to the
other Parties, copies of all papers and official documents received in respect
of any Proceedings.  The Indemnified
Party shall reasonably cooperate as requested by and at the expense of the
Indemnifying Party in the defense of any Proceedings.

 

(c)                                  With respect to any Losses relating solely to
the payment of money damages and which shall not result in the Indemnified
Party’s becoming subject to injunctive or other relief or otherwise adversely
affecting the Indemnified Party in any manner, and as to which the Indemnifying
Party shall have acknowledged in writing the obligation to indemnify the
Indemnified Party under this Agreement, the Indemnifying Party shall have the
sole right to defend, settle or otherwise dispose of such Proceeding, on such
terms as the Indemnifying Party shall deem appropriate.

 

(d)                                 With respect to all Losses other than those
addressed in Section 13.8(c), and as to which the Indemnifying Party shall have
acknowledged in writing the obligation to indemnify the Indemnified Party under
this Agreement,  the Indemnifying Party
shall have the sole right to control the defense of the relevant Proceeding,
provided that the Indemnifying Party shall obtain the written consent of the
Indemnified Party, which shall not be unreasonably withheld, prior to ceasing
to defend, settling or otherwise disposing of any Proceeding if as a result
thereof (i) the Indemnified Party would become responsible for the payment of
any money damages or other costs (with respect to which the Indemnifying Party
has contested or challenged or may contest or challenge its obligation to
indemnify), (ii) the Indemnified Party would become subject to injunctive or
other equitable relief or any remedy other than the payment of money by the
Indemnifying Party or (iii) the Indemnified Party would otherwise be adversely
affected.

 

(e)                                  Furthermore, with respect to each of Section
13.8(c) and 13.8(d), the Indemnifying Party shall be entitled to control the
proceeding only if it so notifies the Indemnified Party within thirty (30) days
after delivery of the notice by the Indemnified Party under Section 13.8(a).

 

(f)                                    The Indemnifying Party shall not be liable
for any Losses resulting from any settlement or other disposition of a
Proceeding by the Indemnified Party which is reached without the written
consent of the Indemnifying Party.

 

(g)                                 The allocation among the Member Parties and
the JV of any liability for a Loss or Proceeding, if not otherwise determined
in a court of law, shall be considered by the JEC and, if the JEC does not
reach agreement on such allocation, by unanimous Member Vote or unanimous
written consent of its members, either Member Party shall have the right to
refer the dispute to arbitration pursuant to Section 15.6.  The dispute

 

85

 

resolution
procedures in Section 2.8 shall not apply to any disputes arising under this
Section 13.8(g).

 

(h)                                 The out-of-pocket expenses reasonably
incurred by any Indemnified Party in connection with any Proceeding shall be
reimbursed on a Calendar Quarter basis by the Indemnifying Party, without
prejudice to the Indemnifying Party’s right to contest the Indemnified Party’s
right to indemnification and subject to refund in the event the Indemnifying
Party is ultimately held not to be obligated to indemnify the Indemnified
Party.

 

13.9         Limitation
on Damages.  Except for breaches
of Section 12, the Parties shall not be liable to each other for special,
indirect, incidental or consequential damages (including, without limitation,
for lost profits), whether in contract, warranty, negligence, tort, strict
liability or otherwise, arising out of any breach or failure to perform any provision(s)
of this Agreement; provided, however, that the parties shall be
liable to each other for [*]; and provided,
further, that the parties shall be liable to each other for [*] and [*], provided that
such breaches are intentional or arise out of acts or omissions constituting
gross negligence.  Nothing in this
Section 13.9 is intended to or shall operate to limit a party’s obligations of
indemnity with respect to losses awarded to third parties in a proceeding under
Sections 11.4, 13.5, 13.6 and 13.7.

 

13.10       Ancillary
Agreements.  Any reference in
this Agreement to an Ancillary Agreement (other than the SDEA) or any
obligation under any such Ancillary Agreement, shall not be construed to
include within the scope of  the
indemnification obligations of the Parties under this Agreement any liability
arising out of any such Ancillary Agreement or any obligation under any such
Ancillary Agreement.

 

13.11       Employees.  The Parties agree that, as among the Parties,
all actions taken or omitted to be taken by any employee of a Member Party (or
any of its Affiliates) in his or her capacity as a member of the JEC, any
Operating Committee or the Pricing Committee, and all other actions taken or
omitted to be taken by any employee of a Member Party (or any of its
Affiliates) with respect to the Project Activities, shall be attributed only to
such Member Party.  Accordingly, any
claims by the other Member Party or the JV arising out of such actions or
inactions shall be asserted directly against the Member Party who is (or whose
Affiliate is) such individual’s employer, and such other Member Party, or the
JV, as the case may be, hereby waives any such claims against such individual.

 

SECTION 14.

TERM AND TERMINATION

 

14.1         Term.  The term of this Agreement shall commence as
of the Effective Date and shall continue until terminated by mutual agreement
of the Parties or otherwise in accordance with this Section 14.

 

14.2         Certain
Litigation. This Agreement shall terminate upon notice given by
either Member Party to the other Member Party in the event that any U.S.
governmental authority seeks or obtains a temporary restraining order or
preliminary injunction to enjoin the

 

86

 

transactions contemplated by this Agreement or institutes litigation
seeking other relief in respect of such transactions under any Applicable Law
in the Territory.

 

14.3         Termination
for NDA Filing Delay.  Either
Member Party may terminate this Agreement by notice to the other Member Party
if either (a) no NDA for the Combination Product in the Field is filed by
December 31, 2006, or (b) no NDA for the Combination Product in the Field is
approved by December 31, 2007.

 

14.4         Material Default.

 

(a)                                  If
a Member Party (the “Breaching Member Party”) fails to comply with or perform,
in any material respect, any of its material obligations contained in this
Agreement or the Operating Agreement, or any act
or omission by such Member Party causes a failure by the JV to comply with or
perform, in any material respect, any of its material obligations contained in
this Agreement or the Operating Agreement (any such default, a “Material
Default”), then the other Member Party (the “Non-Breaching Member Party”) shall
have the right to give to the Breaching Member Party notice specifying the
nature of the Material Default.  The
Breaching Member Party shall have a period of sixty (60) days after receipt of
such notice to fully cure the Material Default in a manner reasonably
acceptable to the Non-Breaching Member Party, and, if it does not do so within
such period, the Member Parties shall discuss in good faith appropriate
adjustments to or cancellation of the Member Parties’ respective obligations
under this Agreement to permit the continuation of this Agreement and the JV on
a mutually agreeable basis.  For the
avoidance of doubt, the Non-Breaching Member Party may, in its sole discretion,
deliver a notice of Material Default to the Breaching Member Party prior to
completion of the dispute resolution procedures set forth in Section 2.8, in
which case the sixty (60) day cure period referred to in the preceding sentence
shall begin to run upon receipt of such notice and shall run concurrently with
such procedures.

 

(b)                                 If
the Breaching Member Party does not cure a Material Default pursuant to Section
14.4(a) and the Member Parties’ discussions pursuant to the last sentence of
Section 14.4(a) do not lead to a mutually agreeable restructuring of this
Agreement, then if the Non-Breaching Member Party and the Breaching Member
Party mutually agree that it is both desirable and practicable to withdraw the
Combination Product from the market in the Territory, the Non-Breaching Member
Party shall have the right to terminate this Agreement upon notice to the
Breaching Member Party given within thirty (30) days of the cessation of the
Member Parties’ discussions pursuant to the last sentence of Section
14.4(a).  Any such termination shall be
effective upon such withdrawal, and the Member Parties shall cooperate with
each other and cause the JV to effect such withdrawal as promptly as
practicable under Applicable Law.

 

(c)                                  Whether
or not there is a termination of this Agreement pursuant to Section 14.4(b),
the Non-Breaching Member Party shall have the right to seek damages on account
of the Material Default in an arbitration pursuant to Section 15.6.  The express remedies of the Non-Breaching Member
Party pursuant to this Section 14.4 shall be in addition to any other remedies
in favor of the Non-Breaching Member Party (or, if applicable, the JV) provided
for in this Agreement or the Operating Agreement, as applicable, or under the
BMS Guarantee Agreement or Gilead Guarantee Agreement, as applicable.

 

87

 

(d)                                 The
Parties acknowledge that each Member Party has entered into this Agreement and
the Operating Agreement in reliance on the other Member Party’s continued
compliance with, and performance of, its obligations under this Agreement and
the Operating Agreement.  Accordingly, each
Member Party agrees that any Material Default may cause severe and irreparable
damage to the Non-Breaching Member Party or the JV as applicable, for which
money damages would represent an insufficient remedy.  In the event of any such Material Default, notwithstanding
anything in this Agreement to the contrary, the Non-Breaching Member Party
shall be authorized and entitled to seek from any arbitrator under Section 15.6
the remedy of specific performance with respect to any such Material Default,
as well as any other relief permitted by Applicable Law and may obtain that
relief without making a showing of the insufficiency of money damages.  The Breaching Member Party agrees to waive any
requirement that the Non-Breaching Member Party post bond as a condition for
obtaining any such relief.

 

14.5         Termination
Upon Generic Launch.  Either
Member Party (the “Continuing Member Party”) may terminate this Agreement by
notice to the other Member Party (the “Terminated Member Party”) in the event
that there is the Launch in the Territory of at least one (1) Generic Version
of all of the Single Agent Products (or the Double Agent Product) of the
Terminated Member Party (a “Generic Version Launch”) and the Continuing Member
Party delivers notice of termination within thirty (30) days after the Generic
Version Launch.  Such termination shall
be effective on the last day of the Calendar Quarter in which such notice is
given.

 

14.6         Consequences
of Termination.

 

(a)                                  Termination
Pursuant to Sections 14.2, 14.3 or 14.4(b). 
If a Member Party terminates this Agreement pursuant to Section 14.2,
14.3 or 14.4(b), (i) the license and sublicense grants and Rights of Reference
in Section 6 from the Member Parties to the JV shall terminate, (ii) the Rights
of Reference and license grants in Section 6.3(a)(1) and 6.3(b)(1) shall
survive solely to the extent necessary in order for the licensee Member Party
to support the labeling of its Single Agent Product(s) and/or Double Agent
Product, as applicable, as approved as of the effective date of such
termination, (iii) the license grants in Section 6.3(a)(2) and 6.3(b)(2) shall
survive, (iv) the license grants and Rights of Reference in Section 6 from the
JV to the Member Parties shall survive until the first date on which the JV has
been dissolved and any and all intangible Property (as defined in the Operating
Agreement) has been distributed in kind to the Member Parties pursuant to
Section 10.2(c) of the Operating Agreement, (v) unless Gilead is the Breaching
Member Party, the licenses and other rights granted to Gilead in Sections
6.2(d) and 6.4(d) with respect to the Combination Product outside the
Territory, Canada and Europe shall survive (in which event such licenses and
other rights shall be deemed to be granted by BMS directly to Gilead), (vi) the JV shall be dissolved in accordance
with the Operating Agreement and, in connection with such dissolution, each
Combination Product Trademark shall be sold to a Member in a bidding process,
(vii) the Operating Agreement and the Ancillary Agreements shall terminate
(except as expressly provided in any such agreement) and (viii) each Member
Party shall promptly (and in any event within thirty (30) days thereafter) make
arrangements for the return or disposal, at the other Member Party’s option, of
any Confidential Information, in tangible or intangible form (except for (x)
one (1) copy which may be retained solely for archival purposes and (y)
Confidential Information relating to any surviving licenses and other rights
described above).

 

88

 

(b)           Termination Pursuant to Section 14.5.  Upon
termination of this Agreement pursuant to Section 14.5, the JV shall not be
dissolved and the following terms and conditions shall apply:

 

(i)                                     (A) The license grants and Rights of
Reference in Section 6 from the Terminated Member Party to the JV shall survive
(except for the trademark license grants in Section 6.6, which shall survive
only to the extent necessary to enable the Continuing Member Party to identify
the Terminated Member Party on the label of the Combination Product and/or in
the Combination Product Regulatory Documentation, as required by Applicable
Law); (B) if Gilead is the Terminated Member Party, the license grant in
Section 6.7 from the JV to Gilead shall terminate; (C) the license and sublicense
grants in Section 6.2 from the JV to the Terminated Member Party shall
terminate (other than Section 6.2(a)(3) or 6.2(b)(3), as applicable), and 6.2(c)
and, if Gilead is the Terminated Member Party, other than the sublicense grant
in Section 6.2(d) which shall be addressed as set forth in clause (F) below);
(D) the license grants and Rights of Reference from a Member Party to the other
Member Party in Section 6.3 shall survive; (E) the Rights of Reference from the
JV to the Terminated Member Party in Section 6.4(b) or 6.4(c) shall survive;
and (F) if Gilead is the Terminated Member Party, the sublicenses and
Rights of Reference granted to Gilead in Sections 6.2(d) and 6.4(d) with
respect to the Combination Product outside the Territory, Canada and Europe
shall survive.

 

(ii)                                  The
Continuing Member Party shall pay or cause the JV to pay to the Terminated
Party, in the manner set forth in Sections 7.3(b) and (d) and subject mutatis mutandis to Section 7.4, with
respect to the period from the effective date of such termination through the [*] thereof, an amount determined pursuant to the following
formula (with Net Sales and Net Selling Prices in each case being determined
for the applicable yearly period):

 

Net Sales of the Combination Product * ([[Net Selling
Price of the Combination Product] – [Net Selling Price of the Continuing Member
Party’s Single Agent Product or Double Agent Product]]/[Net Selling Price of
the Combination Product]), multiplied by the following percentages for the
following twelve (12)-month periods commencing with the effective date of
termination:

 

[*]

 

The JV or other paying
Member Party shall pay any amounts owed to a Member Party pursuant to this
Section 14.6(b)(ii) within sixty (60) days of the end of the Calendar Quarter
in which the relevant Net Sales were invoiced. Each such payment shall be
accompanied by a written report, providing a detailed breakdown of the
calculation of amounts paid for the relevant period.

 

(iii)                               The Terminated Member Party, at its own
election (of which it shall promptly notify the Continuing Member Party in
writing), shall (pursuant to a license and/or supply agreement containing the
following terms and any other terms upon which the Member Parties mutually
agree) either (A) enable the Continuing Member Party to Manufacture quantities
of EFV or TDF and FTC, as the case may be, in bulk active pharmaceutical
ingredient form for use in the Manufacture of the Combination Product for use
in

 

89

 

the
Territory, in which event the Terminated Member Party shall (1) automatically
be deemed to grant a royalty-free, non-exclusive license to the Continuing
Member Party (or its Third Party designee, which shall be reasonably acceptable
to the Terminated Member Party) under the Terminated Member Party’s Patents
covering such Manufacture and Information and Inventions used in such
Manufacture by or on behalf of the Terminated Member Party, to Manufacture such
ingredient(s) for the sole purpose of using such ingredient(s) in the
Manufacture of the Combination Product for the Territory, and (2) provide
reasonable technical assistance to such Continuing Member Party or Third Party
designee (which choice of recipient shall be subject to the prior approval of
the Terminated Member Party, such approval not to be unreasonably withheld or
delayed), at the Continuing Member Party’s expense on the Terminated Member
Party’s then-current standard terms and conditions; or (B) continue to supply
to the JV (or its designee) on a non-exclusive basis such quantities of EFV or
TDF and FTC, as the case may be, in bulk active pharmaceutical ingredient form,
as such Continuing Member Party may request for Manufacture of the Combination
Product for the Territory, at a transfer price of such supply equal to [*] of the Cost of Goods. 
Notwithstanding the foregoing, thereafter, the Terminated Member Party may
elect pursuant to clause (B) above to continue to supply the applicable bulk
active pharmaceutical ingredient, or determine to cease to Manufacture such
ingredient(s) or that it otherwise desires to terminate the aforementioned
supply arrangement with the Continuing Member Party, at a time when the
Continuing Member Party is still Manufacturing or having Manufactured the
Combination Product.  In the event that
the Terminated Member Party elects to cease the Manufacture of such
ingredient(s) or otherwise desires to terminate such supply arrangement, the
Terminated Member Party shall (x) give the Continuing Member Party at least [*] written notice prior to ceasing such Manufacture or
otherwise terminating such agreement, (y) grant to the Continuing Member Party
the license described in clause (A)(1) above, and (z) provide to the Continuing
Member Party the technical assistance described in clause (A)(2) above.  In the event that the Terminated Member Party
and the JV or the Continuing Member Party enter into a supply arrangement for
bulk active pharmaceutical ingredient(s) pursuant to the first sentence of this
Section 14.6(b)(iii), and thereafter the JV or such Continuing Member Party, as
the case may be, desires to terminate such supply arrangement (without
receiving from the Terminated Member Party the license described in clause
(A)(1) above or the technical assistance described in clause (A)(2) above), the
JV or such Continuing Member Party, as the case may be, shall provide [*] written notice thereof to the Terminated Member Party.  The JV and the Continuing Member Party shall
be responsible for all Third Party royalties payable by the Terminated Member
Party in respect of any supply provided by the Terminated Member Party pursuant
to this Section 14.6(b)(iii).

 

(iv)                              The name of the JV shall be changed to remove
the name of the Terminated Member Party, and the Continuing Member Party shall
not, and shall cause the JV not to, include the Trademark or name of the
Terminated Member Party on the labeling, packaging and advertising materials of
the Combination Product, or otherwise in connection with the JV’s business with
respect to the Combination Product.

 

(v)                                 The Terminated Member Party shall promptly
(and in any event within thirty (30) days thereafter) make arrangements for the
return or disposal, at the Continuing Member Party’s option, of any
Confidential Information, in tangible or intangible form (except for (x) one
(1) copy which may be retained solely for archival purposes and (y)

 

90

 

Confidential
Information relating to any surviving licenses and other rights pursuant to
Section 14.6(b)(i)).

 

(vi)                              Except as otherwise expressly provided in the
Operating Agreement and/or any Ancillary Agreement, the Operating Agreement and
the Ancillary Agreements shall terminate.

 

(vii)                           The JV shall immediately discontinue use of
the Terminated Member Party’s Trademarks, and the license granted by the
Terminated Member Party to the JV to use the Terminated Member Party’s
Trademarks shall immediately revert to the Terminated Member Party.

 

(viii)                        For the avoidance of doubt, the pricing and
other provisions contained in Section 5.3 and the [*]
shall terminate.

 

14.7         Rights in Bankruptcy.  All rights and licenses granted under or
pursuant to this Agreement by the JV, BMS or Gilead are, and shall otherwise be
deemed to be, for purposes of Section 365(n) of the United States Bankruptcy
Code, licenses of right to “intellectual property” as defined under Section 101
of the United States Bankruptcy Code. 
The Parties agree that the JV, BMS and Gilead, as licensees of such
rights under this Agreement, shall retain and may fully exercise all of its
rights and elections under the United States Bankruptcy Code.  The Parties further agree that, in the event
of the commencement of a bankruptcy proceeding by or against the JV or either
Member Party under the United States Bankruptcy Code, the non-subject Parties
shall be entitled to a complete duplicate of (or complete access to, as the
non-subject Party deems appropriate) any such intellectual property and all
embodiments of such intellectual property, which, if not already in their
possession, shall be promptly delivered to them (a) upon any such commencement
of a bankruptcy proceeding upon a non-subject Party’s written request therefor,
unless the Party subject to such proceeding elects to continue to perform all
of its obligations under this Agreement or (b) if not delivered under clause
(a) above, following the rejection of this Agreement by or on behalf of the
Party subject to such proceeding upon written request therefor by a non-subject
Party.  The provisions of this Section 14.7 are
without prejudice to any rights the non-subject Parties may have arising under
the U.S. Bankruptcy Code or other Applicable Law.

 

14.8         Accrued
Rights; Surviving Obligations.

 

(a)                                  Termination or expiration of this Agreement
shall be without prejudice to any rights that shall have accrued to the benefit
of a Party prior to such termination or expiration.  Such termination or expiration shall not
relieve a Party from obligations that are expressly indicated to survive the
termination or expiration of this Agreement.

 

(b)                                 Without
limiting anything contained in this Section 14, Sections 1, 3.6, 3.11 (which
provision shall be implemented by the Member Parties), 5.10, 6 (as modified by 14.6
or 14.7), 7 (for payments pursuant to Section 14.6(b)(ii)), 8, 9, 11.1, 11.2,
11.3, 11.4, 12, 13.2(e) (as to the second sentence thereof) 13.3(e), (as to the
second sentence thereof), 13.4, 13.5, 13.6, 13.7, 13.8, 13.9, 13.10, 13.11,14.4(d)
(as it applies to other surviving provisions), 14.6, 14.7 (for surviving rights
and licenses), 14.8 and 15 shall survive the termination or

 

91

 

expiration of this
Agreement for any reason.

 

SECTION 15.

GENERAL PROVISIONS

 

15.1         Force Majeure.  No Party shall be held liable or responsible
to the other Parties or be deemed to have defaulted under or breached this
Agreement for failure or delay in fulfilling or performing any term of this
Agreement, except for the payment of any amounts under this Agreement, when
such failure or delay is caused by or results from causes beyond the reasonable
control of the non-performing Party, including, without limitation, fires,
floods, embargoes, shortages, epidemics, quarantines, war, acts of war (whether
war be declared or not), terrorism, insurrections, riots, civil commotion, acts
of God or acts, omissions or delays in acting by any governmental
authority.  The non-performing Party
shall notify the other Parties of such force majeure within five (5) days after
such occurrence by giving written notice to the other Parties stating the
nature of the event, its anticipated duration, and any action being taken to
avoid or minimize its effect.  The
suspension of performance shall be of no greater scope and no longer duration
than is necessary and the non-performing Party shall use, throughout the period
of suspension of performance, commercially reasonable efforts to remedy its
inability to perform; provided, however, that in the event the
suspension of performance continues for ninety (90) days after the date such
force majeure commences, the Parties shall meet to discuss in good faith how
to proceed in order to accomplish the Collaboration Principles.  For purposes of this Agreement a force
majeure shall not include a failure to commit sufficient resources, financial
or otherwise, to the Project Activities or general market or economic
conditions.

 

15.2         Notice.  All notices, requests, reports, statements
and other communications to any Party (other than as specified in Section
2.7(c)) shall be in writing, shall refer specifically to this Agreement and
shall be delivered personally, sent by nationally-recognized overnight courier
or sent by registered or certified mail, postage prepaid, return receipt
requested, to the following respective addresses (or to such other address as
may be specified by notice from time to time by the relevant Party):

 

if
to Gilead, to:

 

Gilead Sciences, Inc.

333 Lakeside Drive

Foster City, CA 94404

Attn:  EVP and
CFO

 

with
copies to:

 

Gilead Sciences, Inc.

333 Lakeside Drive

Foster City, CA 94404

Attn:  VP and
General Counsel

 

and:

 

92

 

Covington & Burling

One Front Street

San Francisco, CA 94111

Attn:  James
C. Snipes, Esq.

 

if
to BMS, to:

 

Bristol-Myers Squibb Worldwide Medicines Group

Route 206 and Province Line Road

Princeton, NJ 08540

Attn:  Vice
President and Senior Counsel, Corporate and Business

Development

 

with
a copy to:

 

Hughes Hubbard & Reed LLP

One Battery Park Plaza

New York, NY 10004

Attn:  Ellen
S. Friedenberg, Esq.

 

Any such communication shall be deemed to have been
given (i) when delivered, if personally delivered during the recipient’s normal
business hours, (ii) on the Business Day after dispatch, if sent by
nationally-recognized overnight courier and proof of delivery is obtained, and
(iii) on the third (3rd) Business Day following the date of mailing, if sent by
mail.  It is understood and agreed that
this Section 15.2 is not intended to govern the day-to-day business
communications necessary between the Parties in performing their duties, in due
course, under the terms of this Agreement. 
Whenever this Agreement requires or permits the giving of notice by a
Member Party, such notice may be given by BMS Parent on behalf of itself and
BMS Sub, and by Gilead Parent on behalf of itself and Gilead Sub.

 

15.3         Further
Assurances.  Each Party shall
duly execute and deliver, or cause to be duly executed and delivered, such
further instruments and do and cause to be done such further ministerial,
administrative or similar acts and things, including, without limitation, the
filing of such assignments, agreements, documents and instruments, as may be
necessary or as another Party may reasonably request in connection with this
Agreement or to carry out more effectively the provisions and purposes hereof,
or to better assure and confirm unto such other Party its rights and remedies
under this Agreement.

 

15.4         Successors and Assigns.

 

(a)                                  The
terms and provisions hereof shall inure to the benefit of, and be binding upon,
the Parties and their respective successors and permitted assigns.  Except as expressly permitted pursuant to
Sections 3.5, 4.1, 4.2 and 5.5, no Member Party may, without the prior written
consent of the other Member Party, assign or otherwise transfer any of its
rights and interests or subcontract or otherwise delegate any of its
obligations under this Agreement; provided, however, that (i) either Member Party, without such consent,
may assign its rights and delegate its duties under this Agreement to an
Affiliate which is a directly or indirectly wholly-owned subsidiary of Gilead
Parent or BMS Parent, as the case may be; provided, however, that

 

93

 

the assigning Member
Party shall remain primarily (and not secondarily or derivatively) liable for
the full and timely performance by such Affiliate of all its obligations under
this Agreement; and provided, further, that, except as set forth
in clause (ii) below, such assignment or delegation shall terminate
automatically at such time, if any, as such Affiliate ceases to be
wholly-owned, directly or indirectly, by Gilead Parent or BMS Parent, as the
case may be, and (ii) either Member Party, without such consent, may assign its
rights and delegate its duties under this Agreement, whether by contract or
operation of law, to a Third Party Acquirer in the event of a Change of Control
of such Member Party.  Any permitted successor
or assignee of rights and/or obligations hereunder (a “Permitted Assignee”) shall,
in a writing delivered to the other Parties at the time of such assignment,
expressly assume performance of such rights and/or obligations.  The JV may not assign this Agreement without
the prior written consent of the Member Parties.  Any purported assignment, transfer,
subcontract or delegation by either Member Party or the JV in violation of the
terms of this Section 15.4 shall be null and void and of no legal effect.

 

(b)                                 In
the event of any Change of Control of a Member Party (the “Transferring Member
Party”), the Transferring Member Party shall give the other Member Party
written notice thereof within ten (10) days, identifying such Third Party
Acquirer.  If at the time of such Change
of Control such Third Party Acquirer is marketing in the Territory a Competing
Product that was commercially available as of the Effective Date, then upon
written notice from the other Member Party at its election to the Transferring
Member Party within thirty (30) days of such other Member Party’s receiving
written notice of such Change of Control, such Third Party Acquirer shall have [*] to [*].  If such Third Party Acquirer fails to [*]:  (i) the
performance obligations (other than payment obligations) of the Member Parties
under this Agreement shall terminate, except to the extent of those minimum
obligations reasonably required (A) for the JV to obtain and maintain Approval
for the Combination Product in the Territory, (B) for Gilead, to act as agent for selling the Combination
Product on behalf of the JV, to perform its obligations with respect to
pricing and discounting of the Combination Product pursuant to Section 5.3 and
the [*], and (C) for each Member Party to
supply to the JV bulk active pharmaceutical ingredient pursuant to Section 4
and the applicable Supply Agreement, (ii) the Commercialization Plan and Budget
(including any minimum Commercialization expenditures and/or [*]) shall terminate, and (iii) each Member Party shall have
the right to Promote, Market and otherwise commercialize the Combination
Product in the Territory without coordination with the other Member Party under
this Agreement (including, without any obligation to reach agreement on the
form of Approved Marketing Materials).

 

15.5         Governing
Law.  This Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware,
without reference to the rules of conflict of laws thereof.

 

15.6         Arbitration.

 

(a)                                  Disputes between the Member Parties, or
between a Member Party and the JV, relating to or arising out of the validity,
interpretation or construction of, or the compliance with or breach of, this
Agreement, the Operating Agreement, any Ancillary Agreement or any other
agreement contemplated by this Agreement to which such Member Party (or its
Affiliates) and the JV and/or the other Member Party (or its Affiliates) are
parties shall (except as otherwise expressly provided in this Agreement, the
Operating Agreement, any

 

94

 

Ancillary
Agreement or any such other agreement) be
referred initially to the JEC as provided in Section 2.8 and, if not resolved as
so provided in Section 2.8, thereafter (subject to the limitations in Section
2.8) resolved exclusively through binding arbitration in accordance with the
CPR Institute for Dispute Resolution Rules for Non-Administered Arbitration, to
be held in Washington, D.C.  In any
proceeding between a Member Party and the JV, the other Member Party shall act
on behalf of and in the name of the JV, and any external, out-of-pocket costs
(without markup) so incurred by such other Member Party shall be deemed to be
JV Expenses and Authorized Expenses.  In
any proceeding under this Section 15.6, there shall be one arbitrator, except
that at the election of either Member Party in writing within ten (10) Business
Days of receiving notice of such referral to arbitration, there shall be a
panel of three (3) arbitrators.  The Member Parties shall appoint such
arbitrator(s) by mutual agreement or, if the Member Parties cannot agree on the
appointment of such arbitrator(s) within thirty (30) days after receipt of a
demand for arbitration, the Member Parties shall have the relevant number of
arbitrators with the required qualifications appointed by the CPR Institute for
Dispute Resolution, provided that if either Member Party has elected to have a
panel of three arbitrators, each Member Party shall have the right to appoint
one arbitrator with the required qualifications, and the third arbitrator shall
be appointed by the CPR Institute for Dispute Resolution.  Each arbitrator shall either have at least
ten (10) years of significant management level experience in the
biopharmaceutical industry including responsibility for legal matters or have
at least ten (10) years of substantial experience as an attorney representing
or working with biopharmaceutical clients as either in-house or outside counsel
in commercial litigation or transactional matters, shall not be directly or
indirectly affiliated with either Member Party or with either Member Party’s
Affiliates, and shall not have any direct or indirect interest of any kind in
the resolution of the relevant issue. 
This Section 15.6 shall also apply to any dispute properly referred to
arbitration in accordance with Section 2.8 or Section 13.8(g) hereof or Section
6.5(d) of the Operating Agreement (with respect to the JEC).

 

(b)                                 Any fees and expenses payable with respect to
an arbitration under this Section 15.6, together with the reasonable legal fees
of the prevailing Party, shall be borne by the non-prevailing Party, as
determined by the arbitrator(s).  All
arbitration rulings and awards shall be final and binding on the Parties.

 

(c)                                  Any dispute referred to binding arbitration
pursuant to this Section 15.6 shall be scheduled for discovery, briefing and
arguments by the arbitrator(s) so that the decision can be rendered within [*] (or as soon thereafter as
practicable) after such referral.  Each
of the Member Parties shall submit to the arbitrator(s) a comprehensive
proposal for resolution of the dispute (including, if the arbitration involves
an allegation of breach by a Member Party of any of its obligations under this
Agreement, the Operating Agreement, any Ancillary Agreement or any other
agreement contemplated by this Agreement to which such Member Party (or its
Affiliates) and the JV and/or the other Member Party (or its Affiliates) are
parties, a proposal for damages), and the arbitrator(s) shall decide in favor
of one of the two (2) proposals, without making any modifications thereto.  The decision of the arbitrator(s) shall be
based on which of the proposals complies most nearly with this Agreement, any
relevant Development Plan(s) or Commercialization Plan(s), and any relevant
principles reflected in such plans, including, without limitation, the
Collaboration Principles.

 

95

 

(d)                                 Nothing in this Agreement, including, without
limitation this Section 15.6, shall preclude either Member Party from seeking
interim or provisional relief, including a temporary restraining order,
preliminary injunction or other interim equitable relief concerning a dispute
with the other Member Party, either prior to or during the dispute resolution
procedures set forth in this Section 15.6, if necessary to protect the
interests of such Member Party.  This
Section 15.6(d) shall be specifically enforceable.

 

15.7         Waiver.  A Party’s failure to enforce, at any time or
for any period of time, any provision of this Agreement, or to exercise any
right or remedy, does not constitute a waiver of such provision, right or
remedy, or prevent such Party thereafter from enforcing any or all provisions
and exercising any or all other rights and remedies.  The exercise of any right or remedy does not
constitute an election or prevent the exercise of any or all rights or
remedies, all rights and remedies being cumulative.

 

15.8         Severability.  If any provision of this Agreement, other
than the obligation of the JV to make payments pursuant to Section 7.1(a),
should be held invalid, illegal or unenforceable in any respect, then, to the
fullest extent permitted by Applicable Law, (a) all other provisions
hereof shall remain in full force and effect and shall be liberally construed
in order to carry out the intent of the Parties as nearly as may be possible,
and (b) the Parties agree to use their best efforts to negotiate a provision,
in replacement of the provision held invalid, illegal or unenforceable, that is
consistent with Applicable Law and accomplishes, as nearly as possible, the
original intention of the Parties with respect thereto.  To the fullest extent permitted by Applicable
Law, each Party hereby waives any provision of law that would render any
provision hereof prohibited or unenforceable in any respect.

 

15.9         Counterparts.  This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, and all of
which, taken together, shall constitute one and the same instrument.

 

15.10       Construction.  Except where the context otherwise requires,
wherever used the singular shall include the plural, the plural the singular,
the use of any gender shall be applicable to all genders.  The words “hereof” and “hereunder”, and words
of similar import, shall be construed to refer to this Agreement (including the
Annexes hereto) as an entirety and not to any particular provision.  The captions of this Agreement are for
convenience of reference only and in no way define, describe, extend or limit
the scope or intent of this Agreement or the intent of any provision contained
in this Agreement.  Any reference in this
Agreement to a matter or action being subject to the “mutual agreement” or “mutual
consultation” of the Member Parties, or words of similar import, shall not be construed
as an agreement that the Member Parties shall agree to such matter or
action.  The language of this Agreement
shall be deemed to be the language mutually chosen by the Parties and no rule
of strict construction shall be applied against any Party.

 

15.11       Status
of the Parties.  Except as set
forth expressly in this Agreement or in the Operating Agreement, no Party shall
have the right to enter into any agreements or take action on behalf of any
other Party, nor shall it represent to any Person that it has any such right or
authority.  Except for the status of BMS
Sub and Gilead Sub as members of the JV, nothing in this Agreement shall be
construed as establishing a partnership or joint venture relationship

 

96

 

between the Parties.  Each Member
Party shall be made a third party beneficiary of all Ancillary Agreements to
which the other Member Party is a party, for the purpose of enforcing the JV’s
rights thereunder.

 

15.12       Standstill.  During the period commencing on the Effective
Date and continuing until the fifth anniversary of the Effective Date, BMS
shall not, and shall cause the Affiliates of BMS not to:

 

(a)                                  acquire, or offer or agree to acquire,
directly or indirectly, beneficial ownership of any equity securities of
Gilead, or any rights or options to acquire such beneficial ownership, or
otherwise act in concert with respect to any such securities, rights or options
with any Person;

 

(b)                                 make, or participate in, directly or
indirectly, any “solicitation” of “proxies” to vote (as such terms are used in
the Regulation 14A promulgated under the United States Securities Exchange Act
of 1934, as amended (the “Exchange Act”)), become a “participant” in any “election
contest” (as such terms are defined in Rule 14a-11 promulgated under the
Exchange Act) or initiate, propose or otherwise solicit stockholders of Gilead
for the approval of any stockholder proposals;

 

(c)                                  form, join, participate in, or encourage the
formation of, a group (within the meaning of Section 13(d)(3) of the Exchange
Act) with respect to any voting securities of Gilead;

 

(d)                                 deposit any securities of Gilead into a
voting trust, or subject any securities of Gilead to any agreement or
arrangement with respect to the voting of such securities;

 

(e)                                  make any public announcement with respect to,
or submit a proposal for, or offer (with or without conditions) of any
extraordinary transaction involving Gilead or any of its securities or assets;

 

(f)                                    seek, or encourage or support any effort, to
influence or control the management, Board of Directors, business, or policies
of Gilead (it being understood and agreed that this Section 15.12(f) shall not
apply to the exercise by BMS of any of its rights and obligations under this
Agreement, the Operating Agreement and the Ancillary Agreements as applicable);

 

(g)                                 encourage or assist any other Person to
undertake any of the foregoing actions; or

 

(h)                                 take
any action that could reasonably be expected to require Gilead to make a public announcement regarding the possibility
of any of the events described in clauses (a) through (g) of this Section
15.12;

 

provided,
however, that nothing in Sections 15.12(a), (e) or (g) shall be deemed
to prohibit BMS from acquiring (i) by merger or stock purchase of more than
fifty percent (50%) of the voting securities thereof, a Third Party that has
beneficial ownership of equity securities of Gilead (or

 

97

 

rights or options to
acquire such beneficial ownership) or (ii) beneficial ownership of up to five
percent (5%) of any class of equity securities of Gilead (or rights or options
to acquire such beneficial ownership) by or through (1) an employee benefit
plan of BMS or any of its Affiliates, (2) a diversified mutual or pension fund
managed by an independent investment adviser or pension plan established for
the benefit of the employees of BMS or its Affiliates, or (3) any stock
portfolios not controlled by BMS or any of its Affiliates that invest in Gilead
or any of its Affiliates among other companies; provided that BMS or any of its
Affiliates does not, directly or indirectly, request the trustee or
administrator or investment adviser of such fund, plan or portfolio to acquire
Gilead equity securities;  and provided,
further, that this Section 15.12 shall be of no further effect and shall
not bind BMS in any manner from and after such time, if any, as Gilead shall
make a public announcement that it has entered into a letter of intent or
definitive agreement with a Third Party Acquirer providing for a Change of
Control of Gilead.

 

15.13                     Nonsolicitation of Employees.  During the period commencing on the Effective Date and continuing through
the term of this Agreement, each Member Party agrees that neither it nor any of
its Affiliates that participates in or is responsible for the Development or
Commercialization of the Combination Product pursuant to this Agreement shall
recruit, solicit or induce any employee of the other Member Party’s
HIV/Virology Sales Force (including managers) to terminate his or her
employment with such other Member Party and become employed by or consult for
such other Member Party, whether or not such employee is a full-time employee
of such other Member Party, and whether or not such employment is pursuant to a
written agreement or is at-will.  For
purposes of the foregoing, “recruit,” “solicit” or “induce” shall not be deemed
to mean (x) general solicitations by Third Party placement specialists or firms
(e.g., headhunters) or (y) other general solicitations of employment (including
responses to general advertisements), in each case ((x) and (y)) not
specifically targeted at employees of a Party or any of its Affiliates.

 

15.14                     Entire
Agreement.  This Agreement
(including the Annexes hereto), together with the Operating Agreement, the
Ancillary Agreements and the other agreements contemplated by this Agreement
(including without limitation the Safety Data Exchange Protocol), constitutes,
on and as of the Effective Date, the entire agreement of the Parties with
respect to the subject matter hereof, and all prior or contemporaneous
understandings or agreements, whether written or oral, between the Parties with
respect to such subject matter (including the Mutual Technology Transfer
Agreement entered into by Bristol-Myers Squibb Company and Gilead Sciences,
Inc. as of February 5, 2004 (the “MTTA”) and the Mutual Confidential Disclosure
Agreement entered into by and between Bristol-Myers Squibb Company and Gilead
Sciences, Inc. as of December 12, 2003, as amended) are hereby superseded in
their entireties;  provided, however,
that any rights and obligations of the Parties under the MTTA and such Mutual
Confidential Disclosure Agreement that have accrued as of the Effective Date
shall survive.  This Agreement shall not
be amended in any respect whatsoever except by a further agreement, in writing,
fully executed by each of the Parties (or prior to the Effective Date, by
Gilead and BMS).

 

15.15                     Consent to
Jurisdiction.  Each Party, for the purpose of enforcing
an award under Section 15.6 or for seeking injunctive or other equitable relief
as permitted by Section 12.8, 14.4(d) or 15.6(d), (a) irrevocably submits to
the non-exclusive jurisdiction of the United States District Court for the
District of Columbia (the “Court”), for purposes of any action, suit

 

98

 

or other proceeding arising out
of this Agreement, the Operating Agreement and any Ancillary Agreement, and (b)
agrees not to raise any objection at any time to the laying or maintaining of
the venue of any such action, suit or proceeding in any of such Court,
irrevocably waives any claim that such action, suit or other proceeding has
been brought in an inconvenient forum and further irrevocably waives the right
to object, with respect to such action, suit or other proceeding, that such
Court does not have any jurisdiction over such Party.  Each Party further agrees that service or any
process, summons, notice or document by U.S. registered mail to such Party’s notice
address provided for in this Agreement shall be effective service of process
for any action, suit or proceeding in the Court with respect to any matters to which it has submitted to
jurisdiction in this Section 15.15.

 

15.16                     Third
Parties.  Except as set forth
in Sections 13.5, 13.6, and 13.7 as to those Third Parties expressly referred
to therein, the agreements, covenants and representations contained herein are
for the benefit of the Parties only and are not for the benefit of any Third
Parties.

 

 

[Signatures to follow
on page 104]

 

99

 

[Page
intentionally left blank]

 

100

 

[Page
intentionally left blank]

 

101

 

IN WITNESS WHEREOF, the
Parties have caused this Collaboration Agreement to be duly executed and
delivered as of the date first above written.

 

 

	
  GILEAD
  SCIENCES, INC.

  	
   

  	
  BRISTOL-MYERS
  SQUIBB COMPANY

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  John C. Martin

  	
   

  	
   

  	
  By:

  	
  /s/
  Tamar Howson

  	
   

  	
   

  
	
   

  	
  John
  C. Martin, Ph.D.

  	
   

  	
   

  	
  Tamar
  Howson

  	
   

  
	
   

  	
  President
  and Chief Executive

  Officer

  	
   

  	
   

  	
  Senior
  Vice President,

  Corporate and Business
  Development

  	
   

  
								

 

	
  GILEAD
  HOLDINGS, LLC

  	
   

  	
  E.R. SQUIBB & SONS, L.L.C.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  John F. Milligan

  	
   

  	
   

  	
  By:

  	
  /s/
  Charles Linzner

  	
   

  	
   

  
	
   

  	
  John
  F. Milligan, Ph.D.

  	
   

  	
   

  	
  Charles
  Linzner

  	
   

  
	
   

  	
  President

  	
   

  	
   

  	
  Assistant
  Secretary

  	
   

  
								

 

 

BRISTOL-MYERS
SQUIBB & GILEAD SCIENCES, LLC

 

 

	
  By
  Gilead Holdings, LLC, its Member

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  John F. Milligan

  	
   

  	
   

  
	
   

  	
  John
  F. Milligan, Ph.D.

  	
   

  
	
   

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By
  E.R. Squibb & Sons, L.L.C., its Member

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Charles Linzner

  	
   

  	
   

  
	
   

  	
  Charles
  Linzner

  	
   

  
	
   

  	
  Assistant
  Secretary

  	
   

  

 

i

 

ANNEXES TO COLLABORATION AGREEMENT

 

	
  Annex A - Initial
  Committee Members and Alliance Managers

  	
   

  
	
   

  	
   

  
	
  Annex B - Development
  Plan and Development Budget as of Effective Date

  	
   

  
	
   

  	
   

  
	
  Annex C –
  Commercialization Plan and Commercialization Budget as of Effective Date

  	
   

  
	
   

  	
   

  
	
  Annex D - BMS Patents

  	
   

  
	
   

  	
   

  
	
  Annex E - Gilead Patents

  	
   

  
	
   

  	
   

  
	
  Annex F – Gilead Licensed
  Trademarks

  	
   

  
	
   

  	
   

  
	
  Annex G – BMS Licensed
  Trademarks

  	
   

  
	
   

  	
   

  
	
  Annex H – Quarterly
  Detail Report

  	
   

  
	
   

  	
   

  
	
  Annex I - Manner of
  Calculation of Net Selling Price

  	
   

  
	
   

  	
   

  
	
  Annex J - Calculation of
  Cost of Goods

  	
   

  
	
   

  	
   

  
	
  Annex K - Calculation of
  Transfer Price

  	
   

  
	
   

  	
   

  
	
  Annex L – Joint Press
  Release

  	
   

  
	
   

  	
   

  
	
  Annex M — Certain
  Financial Data

  	
   

  
	
   

  	
   

  
	
  Annex N – Data to be
  Provided to Independent Accounting Expert Pursuant to Section 7.1

  	
   

  
	
   

  	
   

  
	
  Annex O – JV Obligations
  as Sublicensee

  	
   

  
	
   

  	
   

  
	
  Annex P – Key Terms of
  Services Agreement

  	
   

  
	
   

  	
   

  
	
  Annex Q – Pricing [*]

  	
   

  
	
   

  	
   

  
	
  Annex R – List of
  Countries Comprising the Developing World

  	
   

  

 

i

 

Annex A - Initial Committee Members and Alliance Managers

 

	
  GILEAD SUB

  	
   

  	
  BMS
  SUB

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Joint Executive
  Committee (JEC)

  	
   

  	
   

  	
  Joint Executive
  Committee (JEC)

  	
   

  
	
  [*]

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Joint Development
  Committee (JDC)

  	
   

  	
   

  	
  Joint Development
  Committee (JDC)

  	
   

  
	
  [*]

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Joint Commercialization
  Committee (JCC)

  	
   

  	
   

  	
  Joint Commercialization
  Committee (JCC)

  	
   

  
	
  [*]

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Joint Finance Committee
  (JFC)

  	
   

  	
   

  	
  Joint Finance Committee
  (JFC)

  	
   

  
	
  [*]

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Alliance Manager

  	
   

  	
   

  	
  Alliance Manager

  	
   

  
	
  [*]

  	
   

  	
   

  	
   

  	
   

  

 

* denotes initial
chairperson

 

A-1

 

Annex B - Development Plan and Development Budget as of Effective Date

 

[*]

 

B-1

 

Annex C – Commercialization Plan and Commercialization Budget as of Effective
Date

 

[*]

 

C-1

 

Annex D - BMS Patents

 

•                  Patents
exclusively licensed by BMS from Merck

 

[*]

 

D-1

 

Annex E - Gilead Patents

 

[*]

 

E-1

 

Annex F – Gilead Licensed Trademarks

 

	
  Country

  	
   

  	
  Mark

  	
   

  	
  App. / Reg. No.

  	
   

  	
  Filing / Reg. Date

  	
   

  	
  Class

  	
   

  
	
  USA

  	
   

  	
  TRUVADA

  	
   

  	
  Application No.

  78/239,720

  	
   

  	
  Filed 4/18/03

  	
   

  	
  5

  	
   

  
	
  USA

  	
   

  	
  VIREAD

  	
   

  	
  2,586,295

  	
   

  	
  06/25/2002

  	
   

  	
  5

  	
   

  
	
  USA

  	
   

  	
  EMTRIVA

  	
   

  	
  2,852,092

  	
   

  	
  06/08/2004

  	
   

  	
  5

  	
   

  

 

F-1

 

Annex G – BMS Licensed Trademarks

 

	
  Country

  	
   

  	
  Mark

  	
   

  	
  App. / Reg. No.

  	
   

  	
  Filing / Reg. Date

  	
   

  	
  Class

  	
   

  
	
  U.S.

  	
   

  	
  SUSTIVA

  	
   

  	
  2,496,476

  	
   

  	
  10/9/2001

  	
   

  	
  5

  	
   

  
	
  Puerto Rico

  	
   

  	
  SUSTIVA

  	
   

  	
  39883

  	
   

  	
  2/28/97

  	
   

  	
  5

  	
   

  

 

G-1

 

Annex H – Quarterly Detail Report

 

For illustrative purposes only

 

	
   

  	
   

  	
  Period Ending: 06/30/2006

  
	
   

  	
   

  	
   

  
	
   

  	
  Detail Activity Report

  	
  Run Date: 07/15/2006

  

 

Product:  FDC “Brand X”

 

[*]

 

H-1

 

Annex I - Manner of Calculation of Net Selling Price

 

The Net Selling Price for
a product for a relevant period for a country shall be expressed in dollars per
daily dose for such product and shall be equal to the quotient of (i) the
aggregate Net Sales for such country of such product for such period that are
recognized as revenue (under United States generally accepted accounting
principles in effect from time to time, as consistently applied), divided by
(ii) the number of daily doses of such product in units for which revenue may
be recognized (under United States generally accepted accounting principles in
effect from time to time, as consistently applied) for such period that may be
sold or used [*] in such country plus the
number of daily doses of such product in [*] for such
country shipped during such period, provided, however, that consistent with the
definition of Net Sales, [*].  The Parties’ intent is that the practices of
BMS and Gilead in calculation of Net Sales shall be harmonized in the process
of calculating Net Selling Price, such that (a) any deductions, payments,
rebates or other compensations made or given by BMS or Gilead in connection
with or in respect of sales of such products shall be treated as a deduction
from gross amount invoiced in the calculation of Net Sales, and (b) if both BMS
and Gilead make payments or provide other compensation for a similar purpose
with respect to a product but only one of them treats that item for accounting
purposes as a deduction from revenues, then for purposes of calculation of Net
Selling Price under this Annex I that item shall be a deduction from gross
amount invoiced in the calculation of Net Sales for both parties.

 

Example:

[*]

 

I-1

 

Annex J - Calculation of Cost of Goods

 

“Cost of Goods” means
with respect to manufacture or acquisition of a product, an amount equal to [*].  The calculation
of Cost of Goods for specific products will be mutually agreed in writing by
the Members and updated for each Calendar Year.

 

J-1

 

Annex K - Calculation of Transfer Price

 

[*]

 

K-1

 

[*]

 

K-2

 

[*]

 

K-3

 

[*]

 

K-4

 

Annex L – Joint Press Release

 

	
  Bristol-Myers Squibb Contacts

  	
   

  	
  Gilead Sciences Contacts

  
	
  David
  Rosen, Media

  	
   

  	
  Amy
  Flood, Media

  
	
  (609)
  252-5675

  	
   

  	
  (650)
  522-5643

  
	
   

  	
   

  	
   

  
	
  John Elicker, Investors

  	
   

  	
  Susan Hubbard, Investors

  
	
  (212) 546-3775

  	
   

  	
  (650) 522-5715

  

 

BRISTOL-MYERS SQUIBB AND GILEAD
SCIENCES ESTABLISH

JOINT VENTURE TO DEVELOP AND COMMERCIALIZE

FIXED-DOSE COMBINATION OF THREE HIV MEDICINES

 

First Collaboration to Develop a
Once-Daily Antiretroviral Fixed-Dose Regimen

 

New York, NY and Foster City, CA, DATE, 2004 – Bristol-Myers Squibb Company (NYSE: BMY)
and Gilead Sciences, Inc. (Nasdaq: GILD) today announced details of a joint
venture to develop and commercialize the fixed-dose combination of
Bristol-Myers Squibb’s SustivaÒ (efavirenz) and Gilead’s TruvadaTM
(emtricitabine and tenofovir disoproxil fumarate) in the United States.  If approved, the new product would be the
first complete Highly Active Antiretroviral Therapy (HAART) treatment regimen
for HIV available in a fixed-dose combination taken once daily.  Fixed-dose combinations contain multiple
medicines formulated together and may help simplify HIV therapy for patients
and providers. The joint venture established by the two companies is the first
of its kind in the field of HIV therapy.

 

The work necessary to
co-formulate Sustiva and Truvada into a once-daily combination product has been
ongoing throughout most of 2004 and will continue into 2005.  Through the joint venture – Bristol-Myers Squibb & Gilead Sciences,
LLC – the companies will work in partnership to complete development and
U.S. regulatory filings for this fixed-dose regimen.  Subject to receiving marketing approval of
the fixed-dose regimen, the companies would share responsibility for
commercializing the product in the United States.  Both companies
will provide funding and field-based sales representatives in support of
promotional efforts for the combination product.  Bristol-Myers Squibb and Gilead will receive
revenues from future net sales at percentages relative to the contribution represented
by their individual products that comprise the fixed-dose combination.

 

Guidelines
issued by the U.S. Department of Health and Human Services (DHHS) list the
combination of emtricitabine, tenofovir disoproxil fumarate and efavirenz as
one of the preferred non-nucleoside reverse transcriptase inhibitor
(NNRTI)-based treatments for use in appropriate patients that have never taken
anti-HIV medicines before. It is important that patients be aware that
individual HIV medications must be taken as part of combination regimens, and
that they do not cure HIV infection or prevent passing HIV to others.

 

“Gilead and Bristol-Myers
Squibb share a steadfast commitment to addressing the needs of people living
with HIV/AIDS around the world, and today’s announcement signals significant
progress toward our

 

L-1

 

common goal,” commented John
C. Martin, PhD, president and chief executive officer, Gilead Sciences.  “This
landmark partnership reflects the dedication Gilead and Bristol-Myers Squibb
bring to delivering simplified therapy to physicians and patients.  We look forward to working with the
Bristol-Myers Squibb team to ensure this novel therapeutic advancement reaches
physicians and people living with HIV/AIDS as rapidly as possible.”

 

“For more than a decade, Bristol-Myers Squibb has been a leader in the field of HIV with significant investments in innovative scientific research and an unwavering commitment to finding new and better treatment options to help improve the lives of people with HIV,” said Peter R. Dolan, chairman and chief executive officer, Bristol-Myers Squibb Company.  “We are pleased to be leveraging our leadership in HIV through this collaboration with Gilead to help advance the management of the disease through the development of potentially more convenient treatment options.”
 

Earlier in 2004, U.S.
Secretary of Health and Human Services Tommy Thompson addressed the need for
new products to help advance and simplify treatment for people with HIV/AIDS,
encouraging members of industry to work together to create fixed-dose
combinations that would help achieve these goals.  Additionally, earlier this year the U.S. Food
and Drug Administration issued new guidelines to expedite the approval of new
combination products for HIV.

 

“The availability of
simplified treatment regimens for HIV/AIDS is important to our ability to make
progress in the fight against the disease,” Secretary Thompson said. “I am
pleased to see the collaboration and efforts of Bristol-Myers Squibb and
Gilead. This partnership to create a fixed-dose combination of three HIV
medications represents an important advance in our collective effort to deliver
simplified therapy for people living with HIV.”

 

Important
Safety Information About Sustiva

Sustiva is a prescription
medicine used in combination with other medicines to treat people who are
infected with the human immunodeficiency virus type 1 (HIV-1).  Sustiva does not cure HIV or help prevent
passing HIV to others.

 

Sustiva should not be taken
with Hismanal® (astemizole), Propulsid® (cisapride),
Versed® (midazolam), Halcion® (triazolam), ergot
medicines (for example, Wigraine® and Cafergot®), or
Vfend® (voriconazole).  This
list of medicines is not complete. 
Patients should discuss all prescription and non-prescription medicines,
vitamin and herbal supplements, or other health preparations (particularly St.
John’s wort) they are taking or plan to take with their healthcare
provider.  Patients taking Sustiva should
tell their doctor right away if they have any side effects or conditions
including: severe depression, strange thoughts, or angry behavior, which have
been reported in a small number of patients. A few reports of suicide have been
made, but it is not known if Sustiva was the cause.  Patients should tell their doctor if they
have a history of mental illness or are using drugs or alcohol. Dizziness,
trouble sleeping, drowsiness, trouble concentrating, and/or unusual dreams are
common.  These feelings tend to go away
after taking Sustiva for a few weeks.

 

Women
should not become pregnant or breastfeed while taking Sustiva.  Rash
is a common side effect that usually goes away without any change in
treatment.  Rash may be a serious problem
in some children.  If a child develops a
rash, their doctor should be contacted right away.  Patients should tell their doctor if they
have liver disease, have ever had seizures, or are taking medicine for seizures
as tests to check the liver or drug levels in the blood may be needed.  Changes in body fat have been seen in some
patients taking HIV medicines, however, the cause and long-term effects of
these changes are not known at this time. Other common side effects include:
tiredness, upset stomach, vomiting and diarrhea.  Taking Sustiva with food increases the amount
of medicine in the body, which may increase the frequency of side

 

L-2

 

effects.  Sustiva should be taken on an empty stomach,
preferably at bedtime, which may make some side effects less bothersome.  United States Full Prescribing Information is
available at www.sustiva.com.

 

About
Truvada

Truvada
combines Emtriva® (emtricitabine) and Viread® (tenofovir
disoproxil fumarate) in one tablet taken once a day in combination with other
antiretroviral agents.  In the United
States, Truvada is indicated in combination with other antiretroviral agents
(such as non-nucleoside reverse transcriptase inhibitors or protease
inhibitors) for the treatment of HIV-1 infection in adults.  Safety and efficacy studies using Truvada
tablets or using Emtriva and Viread in combination are ongoing.

 

Both
components of Truvada have been studied individually, as part of multi-drug
regimens and have been found to be safe and effective.  Since Emtriva and lamivudine (3TC) are
comparable in their structure, resistance profiles, and efficacy and safety as
part of multi-drug regimens, existing data from the use of lamivudine and
Viread in combination have been extrapolated to support use of Truvada tablets
for the treatment of HIV-1 infection in adults. 
Therefore, in treatment-naïve patients, Truvada should be considered as
an alternative to the combination of Viread and lamivudine for those patients
who might benefit from a once-daily regimen. 
In treatment-experienced patients, the use of Truvada should be guided
by laboratory testing and treatment history.

 

There
are no study results demonstrating the effect of Truvada on clinical
progression of HIV-1, and it is not recommended that Truvada be used as a
component of a triple nucleoside regimen.

 

Truvada
should not be used with Emtriva or Viread, or other drugs containing
lamivudine, including Combivir®, Epivir®, Epivir-HBV®,
EpzicomTM or Trizivir®. 
Two-hundred eighty-three patients have received combination therapy with
Emtriva and Viread with either a non-nucleoside reverse transcriptase inhibitor
or protease inhibitor for 24 to 48 weeks in ongoing clinical studies.  Based on these limited data, no new patterns
of adverse events were identified and there was no increased frequency of
established toxicities.  For additional
safety information about Emtriva or Viread in combination with other
antiretroviral agents, please see “About Emtriva” and “About Viread,” below.

 

Lactic
acidosis and severe hepatomegaly with steatosis, including fatal cases, have
been reported with the use of nucleoside analogues alone or in combination with
other antiretrovirals. Viread, Emtriva and Truvada are not indicated for the
treatment of chronic hepatitis B virus (HBV) infection and the safety and
efficacy of these drugs has not been established in patients co-infected with
HBV and HIV.  Severe acute exacerbations
of hepatitis B have been reported in patients who have discontinued Viread or
Emtriva. Hepatic function should be monitored closely with both clinical and
laboratory follow-up for at least several months in patients who discontinue
Viread, Emtriva or Truvada and are co-infected with HIV and HBV.  If appropriate, initiation of anti-hepatitis
B therapy may be warranted.

 

Changes
in body fat have been observed in patients taking Viread, Emtriva, Truvada and
other anti-HIV medicines.  The cause and
long term health effect of these conditions are unknown.

 

About
Viread

In
the United States, Viread is indicated in combination with other antiretroviral
agents for the treatment of HIV-1 infection. 
This indication is based on analyses of plasma HIV-1 RNA levels and CD4
cell counts in controlled studies of Viread in treatment-naïve adults and in
treatment-experienced adults.  There are
no study results demonstrating the effect of Viread on clinical progression of
HIV-1.  The use of Viread should be
considered for treating adult patients with HIV-1 strains that are expected to
be susceptible to tenofovir as assessed by laboratory testing or treatment
history.

 

L-3

 

Drug
interactions have been observed when didanosine, atazanavir or
lopinavir/ritonavir is co-administered with Viread and dose adjustments may be
necessary.  Data are not available to
recommend a dose adjustment of didanosine for patients weighing less than 60
kg.  Patients on atazanavir or
lopinavir/ritonavir plus Viread should be monitored for Viread-associated
adverse events which may require discontinuation.  When co-administered with Viread, it is
recommended that atazanavir 300 mg be given with ritonavir 100 mg.  Atazanavir without ritonavir should not be
co-administered with Viread.

 

Renal
impairment, including serious cases, has been reported.  Renal impairment occurred most often in
patients with underlying systemic or renal disease or in patients taking
concomitant nephrotoxic agents, though some cases have appeared in patients
without identified risk factors. 
Decreases in bone mineral density (BMD) at the lumbar spine and hip have
been seen with the use of Viread.  The
clinical significance of changes in BMD and biochemical markers is unknown and
follow-up is continuing to assess long-term impact.  The most common adverse events and those
occurring in more than 5 percent of patients receiving Viread with other
antiretroviral agents in clinical trials include asthenia, pain, abdominal
pain, headache, nausea, diarrhea, vomiting, rash (rash, pruritis, maculopapular
rash, urticaria, vesiculobullous rash and pustular rash), flatulence, dizziness
and depression.  Less than 1 percent of
patients discontinued participation because of gastrointestinal events.

 

About
Emtriva

In
the United States, Emtriva is indicated, in combination with other
antiretroviral agents, for the treatment of HIV-1 infection in adults.  This indication is based on analyses of
plasma HIV-1 RNA levels and CD4 cell counts from controlled studies of 48 weeks
duration in antiretroviral-naïve patients and antiretroviral-treatment-experienced
patients who were virologically suppressed on an HIV treatment regimen.  In antiretroviral-treatment-experienced
patients, the use of Emtriva may be considered for adults with HIV strains that
are expected to be susceptible to Emtriva as assessed by genotypic or
phenotypic testing.

 

Adverse
events that occurred in more than 5 percent of patients receiving Emtriva with
other antiretroviral agents in clinical trials include abdominal pain, asthenia
(weakness), headache, diarrhea, nausea, vomiting, dizziness and rash (rash,
pruritis, maculopapular rash, urticaria, vesiculobullous rash, pustular rash
and allergic reaction).  Approximately 1
percent of patients discontinued participation because of these events.  All adverse events were reported with similar
frequency in Emtriva and control treatment groups with the exception of skin
discoloration which was reported with higher frequency in the Emtriva treated
group.  Skin discoloration, manifested by
hyperpigmentation on the palms and/or soles, was generally mild and
asymptomatic.  The mechanism and clinical
significance are unknown.

 

About Bristol-Myers Squibb 

Bristol-Myers
Squibb is a global pharmaceutical and related healthcare products company whose
mission is to extend and enhance human life. 
For more than a decade, Bristol-Myers Squibb Company has been a global
leader in the science of infectious diseases and has invested consistently in
innovative research leading to the development of important treatments for
people with HIV/AIDS.  Visit Bristol-Myers
Squibb on the World Wide Web at www.bms.com.

 

About Gilead Sciences

Gilead
Sciences is a biopharmaceutical company that discovers, develops and
commercializes therapeutics to advance the care of patients suffering from
life-threatening diseases worldwide.  The
company has seven marketed products and focuses its research and clinical
programs on anti-infectives. 
Headquartered in Foster City, CA, Gilead has operations in North
America, Europe and Australia.  Visit Gilead
on the World Wide Web at www.gilead.com.

 

L-4

 

Forward-Looking Statements

 

Bristol-Myers Squibb Forward-Looking Statement

This
press release contains “forward-looking statements” as that term is defined in
the Private Securities Litigation Reform Act of 1995 regarding product development.  Such forward-looking statements are based on
current expectations and involve inherent risks and uncertainties, including
factors that could delay, divert or change any of them, and could cause actual
outcomes and results to differ materially from current expectations.  Among other risks, there can be no guarantee
that the combination product will be submitted for regulatory approval, will
receive regulatory approval, or, if approved, will be commercially successful.  No forward-looking statement can be
guaranteed. Forward-looking statements in this press release should be
evaluated together with the many uncertainties that affect Bristol-Myers Squibb’s
business, particularly those identified in the cautionary factors discussion in
Bristol-Myers Squibb’s Annual Report on Form 10-K/A for the year ended December 31,
2003 and in our Quarterly Reports on Form 10-Q. 
Bristol-Myers Squibb undertakes no obligation to publicly update any
forward-looking statement, whether as a result of new information, future
events or otherwise.

 

Gilead Forward-Looking Statement

This
press release contains “forward-looking statements” as that term is defined in
the Private Securities Litigation Reform Act of 1995.  The forward-looking statements include
statements regarding approval and licensure of the combination product.  These statements involve risks and
uncertainties, which may cause results to differ materially from those set
forth in the statements, including the risks related to the ability of the
companies to successfully complete ongoing studies to support approval of the
combination product and the willingness of regulatory authorities to grant
regulatory approval for the combination product based on data from those
studies. No forward-looking statement can be guaranteed, and actual results may
differ materially from those projected. 
Gilead undertakes no obligation to publicly update any forward-looking
statement, whether as a result of new information, future events or otherwise.  Forward-looking statements in this press
release should be evaluated together with the many uncertainties that affect
Gilead’s business, particularly those mentioned in the cautionary statements in
the company’s Form 10-K for the year ended December 31, 2003, and in
periodic reports on Form 10-Q and Form 8-K.

 

L-5

 

Annex M
— Certain Financial Data

•                  Annual Budget Reports:  [*]

 

•                  Quarterly Projection Reports: (No
later that [*]

 

•                  Weekly Sales Reports by [*].

 

•                  Actual Reports: (all times based on [*]

 

M-1

 

Annex N
– Data to be Provided to Independent Accounting Expert Pursuant to Section 7.1

 

To be provided by BMS on an annual basis:

 

[*]

 

To be provided by Gilead on an annual basis:

 

[*]

 

To be provided by the JV
(or its designee) on an annual basis:

 

[*]

 

N-1

 

Annex O
– JV Obligations as Sublicensee

 

[*]

 

O-1

 

Annex P
– Key Terms of Services Agreement

 

This term sheet focuses on certain
key aspects of the Services Agreement. 
It does not discuss all the terms and conditions that would be included
in the definitive Services Agreement to be entered into by the JV and Gilead
Parent pursuant to Section 5.2 of the Collaboration Agreement.

 

1.  Agreement:   Distribution
Services Agreement (“Services Agreement”) between the JV and Gilead Parent,
pursuant to which Gilead Parent will provide certain distribution services for
the Combination Product in the Territory on behalf of the JV.

 

2.  Distribution Services:  Distribution services to be
provided by Gilead Parent on behalf of the JV will include, without limitation,

 

•                  Inventory
management and control:

[*]

 

•                  Warehousing
and storage:

[*]

 

•                  Orders:

[*]

 

•                  Invoicing;
collection of sales proceeds:

[*]

 

•                  Customer
relations and services; returns:

[*]

 

The JCC will oversee Gilead Parent’s activities under
the Services Agreement.

 

Gilead Parent will provide the distribution services
in accordance with customary practice in the biopharmaceutical industry, as
well as with GSP, GMP and applicable law.

 

3.  Compensation:

 

[*]

 

4.  Term:

 

The Services Agreement
will continue for the term of the Collaboration Agreement, unless earlier
terminated in accordance with Article 14 of the Collaboration Agreement.

 

P-1

 

5.  Miscellaneous:

 

The Services Agreement
will contain additional provisions relating to matters such as [*] and such other provisions, consistent with the
provisions of the Collaboration Agreement, upon which BMS and Gilead Parent
mutually agree.

 

P-2

 

Annex Q
– Pricing [*]

 

[*]

 

Q-1

 

Annex R
– List of Countries Comprising the Developing World

 

African Countries:

 

Algeria

Angola

Benin

Botswana

Burkina Faso

Burundi

Cameroon

Cape Verde

Central African Republic

Chad

Comoros

Côte d’Ivoire

Democratic Republic of
Congo

Djibouti

Egypt

Equatorial Guinea

Eritrea

Ethiopia

Gabon

Gambia

Ghana

Guinea

Guinea-Bissau

Kenya

Lesotho

Liberia

Libya

Madagascar

Malawi

Mali

Mauritania

Mauritius

Morocco

Mozambique

Namibia

Niger

Nigeria

Republic of Congo

Rwanda

São Tomé and Príncipe

Senegal

Seychelles

Sierra Leone

Somalia

South Africa

Sudan

Swaziland

Tanzania

Togo

Tunisia

Uganda

Zambia

Zimbabwe

 

Non-African
Countries on the United Nations List of Least Developed Countries:

 

Afghanistan

Antigua and Barbuda

Bahamas

Bangladesh

Barbados

Belize

Bhutan

Bolivia

Cambodia

Cuba

Dominica

Dominican Republic

El Salvador

Fiji

Grenada

Guatemala

Guyana

Haiti

Honduras

Indonesia

Iran, Islamic Rep. of

Iraq

Jamaica

Jordan

Kiribati

Laos

Lebanon

Maldives

Mongolia

Myanmar

Naura

Nepal

Nicaragua

Oman

Pakistan

Papua New Guinea

Philippines

Saint Kitts and Nevis

Saint Lucia

Samoa

Saudia Arabia

Solomon Islands

Sri Lanka

St. Vincent and the
Grenadines

Suriname

Syrian Arab Republic

Timor-Leste

Trinidad and Tobago

Tonga

Tuvalu

Vanuatu

Vietnam

Yemen 

 

R-1

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