(LICENSE AGREEMENT)

Confidential treatment has been requested for portions of this document. Brackets indicate portions of text that have been omitted. A separate filing of such omitted text has been made with the Commission as part of the Company's application for confidential treatment.



LICENSE AGREEMENT





THIS LICENSE AGREEMENT (the "Agreement") is dated May 07, 1996 by and between CV THERAPEUTICS, INC., a California corporation, having its principal place of business at 3172 Porter Drive, Palo Alto, California ("CVT"), and BAYER AG, a German corporation having its principal place of business at D 51368 Leverkusen, Germany ("BAYER").



Each of BAYER and CVT are sometimes referred to herein as the "PARTY" or, collectively, as the "PARTIES".





WHEREAS, CVT has discovered [ ] ([ ] CTX), as the available representative), has performed certain research, and owns certain proprietary rights thereon.



WHEREAS, BAYER is a leader in the research, development, marketing, manufacture and distribution of therapeutic pharmaceutic products; and









WHEREAS, CVT and BAYER desire to establish a contractual relationship to grant an exclusive license to BAYER to research, develop, manufacture and market CTX, its derivatives and/or modulators of the principle.



NOW, THEREFORE, in consideration of the mutual covenants and promises contained in this Agreement, the PARTIES agree as follows:





Capitalized words used in this Agreement shall have the meanings ascribed in the following definitions, unless otherwise stated or defined in the Agreement.



1. DEFINITIONS



1.1 "AFFILIATE" means any entity controlled by, controlling, or under common control with a PARTY and shall include without limitation any company fifty percent (50%) or more of whose voting stock or participating profit interest is owned or controlled, directly or indirectly, by a PARTY, and any entity which owns or controls, directly or indirectly, fifty percent (50%) or more of the voting stock of a PARTY. Where the laws of jurisdiction in which such entity operates prohibits the ownership by a PARTY of 50%, an AFFILIATE shall mean an entity that is controlled by, controlling, or under common control with a PARTY at a maximum level of ownership allowed by such jurisdiction.



1.2 "BAYER PATENT" means all PATENTS that claim or cover COMPOUNDS or PRODUCTS, the manufacture, use, sale,offer for sale or import of COMPOUNDS, or methods or materials useful for discovering, identifying, or









assaying for COMPOUNDS, the manufacture, use, sale, offer for sale or import of PRODUCTS, where such PATENTS cover inventions made solely by employees or agents of BAYER or an AFFILIATE of BAYER.



1.3 "COMPOUND" means



(a) [ ] (CTX), and/or



(b) modulators [

] of CTX

and/or



(c) any composition of matter that is discovered, identified or synthesized by or on behalf of BAYER or an AFFILIATE regarding the FIELD and which is covered by valid claims of the CVT PATENT and/or identified only by using and applying the CVT KNOW HOW within the FIELD.





1.4 "CONFIDENTIAL INFORMATION" means each PARTY's confidential information, inventions, additional Know-How or data relating to COMPOUNDS, CTX, KNOW HOW, including but not limited to identifying, developing, manufacturing COMPOUNDS and/or PRODUCTS, BAYER's reporting and other business information and plans, whether in oral, written graphic or electronic form. CONFIDENTIAL INFORMATION disclosed orally shall be reduced to writing by the disclosing PARTY and delivered to the other PARTY within thirty (30) days after disclosure.









1.5 "CONTROL" means possession of the ability to grant a license or sublicense as provided for herein without violating the terms of any agreement, other arrangement with or any rights of any THIRD PARTY.



1.6 "CTX" means [

] covered by the FIELD and CVT PATENT.



1.7 "CVT KNOW HOW" means all KNOW HOW information, results, procedures including but not limited to the identification and development of COMPOUNDS and to the isolation and purification of CTX, [



] and corresponding information for the use and handling thereof and/or useful for the identification and development of COMPOUNDS that CVT owns or CONTROLS on the EFFECTIVE DATE and that will be owned and will be CONTROLLED by CVT. CVT KNOW HOW shall exclude CVT PATENTS.



1.8 "CVT PATENTS" means all PATENTS owned or CONTROLLED by CVT or an affiliate of CVT that claim or cover COMPOUNDS, the manufacture or use of COMPOUNDS and PRODUCTS and/or methods or materials useful for discovering, identifying, purifying, evaluating or assaying of COMPOUNDS, where such PATENTS cover inventions made by employees or agents of CVT or made by CVT's cooperation partners in the FIELD, as identified in Annex 2.



1.9 "EFFECTIVE DATE" means May 07, 1996.









1.10 "FIELD" means the use of the PRINCIPLE for any therapeutic and/or prophylactic and/or diagnostic use in human or animals.



1.11 "KNOW HOW" means all intangible Know-How, inventions (whether or not patentable), data, preclinical results, information, and any physical, chemical or biological material or any replication of any part of such material.



1.12 "NET SALES" shall mean gross sales of PRODUCT sold by BAYER, its AFFILIATES and sublicensees to THIRD PARTIES (including any unaffiliated THIRD PARTY's distributors), less, to the extent included in gross sales, the total of



(a) ordinary and customary trade discounts actually allowed,



(b) credits, rebates, returns (including, but not limited to, wholesaler and retailer returns) actually allowed,



(c) excise taxes, other consumption taxes, customs duties and compulsory payments to governmental authorities paid, and



(d) amounts equivalent to 5 % of said gross sales as an allowance for expenses such as transportation, insurance and the like.





1.13 "PATENT" means



(a) valid and enforceable Letters Patent in any and all countries including without limitation any extension - Supplemental Protection Certificates









(SPC), registration, confirmation, reissue, continuation-in-part, division, or renewal thereof, and



(b) pending applications for any of the foregoing.





1.14 "PRINCIPLE" means the [ ] exemplified as the activities of CTX, and modulators [



].



1.15 "PRODUCT" means any pharmaceutical product identified and developed under this Agreement covered by the FIELD containing CTX or any other COMPOUND as active ingredient, representing the PRINCIPLE.



1.16 "PRODUCT DEVELOPMENT" means the performance of the non-clinical and clinical investigations necessary to and directly in support of obtaining REGULATORY APPROVAL for marketing a PRODUCT.



1.17 "REGULATORY APPROVAL" means any approvals (including price and reimbursement approvals), licenses, registrations or authorizations of any federal, state or local regulatory agency, department, bureau or other government entity, necessary for the manufacture, use, storage, import, transport or sale, of PRODUCTS in a country.



1.18 "SUBLICENSE REVENUES" means all revenues from THIRD PARTIES as consideration for the sale of PRODUCTS.



1.19 "TERRITORY" means the entire world.









1.20 "THIRD PARTY" means any entity other than CVT or BAYER and their respective AFFILIATES.



1.21 "THIRD PARTY ROYALTIES" means royalties payable to a THIRD PARTY in respect of the PRINCIPLE, COMPOUND and the manufacture or sale of PRODUCTS.



2. LICENSE GRANT



2.1 CVT hereby grants BAYER a license under CVT PATENTS and CVT KNOW HOW to identify, have identified and develop, have developed COMPOUNDS and to develop, have developed, make, have made use, have used, sell, have sold, offer, have offered for sale, import and have imported COMPOUNDS and/or PRODUCTS subject to the terms and conditions of this Agreement. Such license shall be exclusive, unlimited and worldwide. BAYER shall have the right to sublicense its rights hereunder to its AFFILIATES and to THIRD PARTIES.



2.2 EXCLUSIVITY.



2.2.1 RIGHTS IN USE



Subject to and conditioned upon the provisions of this Agreement, the rights, licenses and privileges granted pursuant to Article 2.1 shall be exclusive to









BAYER. Without limiting the generality of the foregoing, CVT covenants that during the term of this Agreement, neither CVT nor its AFFILIATES shall grant to any THIRD PARTY any right, license or privilege to identify, develop, make, have made COMPOUNDS and/or to develop, use or sell PRODUCTS, or to otherwise use or exploit CVT PATENTS and CVT KNOW HOW.



2.2.2 CONTROL



Regarding CVT PATENTS, CVT KNOW HOW and CTX, CVT herewith expressly confirms to own and CONTROL exclusively all rights, which will be exclusively licensed to BAYER. CVT further expressly confirms that CVT. owns and CONTROLS exclusively all rights, know how experiences, cell lines as defined under CVT KNOW HOW which was developed at CVT's cooperation partners including but not limited to the University of Kansas and the Washington University. CVT further confirms that- to the best of their knowledge - there are not any rights with any THIRD PARTY regarding the PRINCIPLE.









2.2.3 THIRD PARTY ROYALTIES



If under this Agreement BAYER becomes aware of technology and/or know how of a THIRD PARTY that at BAYER's discretion would be valuable or necessary to the discovery, development or commercialization of PRODUCTS, BAYER is free to acquire such rights at its sole discretion. In the event of an acquisition of any such THIRD PARTY right or know how which would result in payment of royalties or other license fee to a THIRD PARTY, the PARTIES will share such compensation to the offering THIRD PARTY:



Of any such license fee, CVT will pay [ ] out of the milestone payment foreseen in section 4.3.5., but only up to a maximum of [ ] of that milestone. The contribution of CVT to this license fee shall be deducted by BAYER from the milestone foreseen in section 4.3.5. In case of an obligation by BAYER to pay running royalties to such licensor, CVT will contribute [ ] out of CVT royalties received from BAYER under this Agreement, but limited to a maximum of [ ] of CVT's royalties received from BAYER.



2.3 RIGHTS TO SUBLICENSE



(i) BAYER shall have the sole right to sublicense to THIRD PARTIES all or any portion of the rights to CVT PATENTS and CVT KNOW HOW and/or CTX granted to BAYER pursuant to this Agreement;











(ii) BAYER shall have the sole right to sublicense all or any portion of the rights to the CVT PATENTS, the CVT KNOW HOW and CTX, granted to BAYER pursuant to this Agreement to any or all of its AFFILIATES.



(iii) BAYER agrees that all sublicenses granted by BAYER hereunder shall expressly bind sublicensees to the terms of sections 3.2, 4.4, 5.4, 9, and all other relevant obligations of this Agreement. In the event BAYER grants sublicenses, BAYER shall pay all royalties to CVT through and under the sole responsibility of BAYER as if SUBLICENSE REVENUES were NET SALES of BAYER;



(iv) Any sublicenses granted by BAYER shall provide for the termination of the sublicenses upon termination of this Agreement.



(v) During the term of this Agreement, BAYER shall inform CVT on all sublicenses granted by BAYER hereunder.



2.4 SUBCONTRACTING



Notwithstanding anything herein provided for to the contrary, BAYER shall be allowed to (i) sub-contract in whole or in part COMPOUND and PRODUCT development to THIRD PARTIES, (ii) appoint sales agents and distributors to market PRODUCT, and (iii) sub-contract the manufacturing of COMPOUND and/or PRODUCT with THIRD PARTIES on BAYER's discretion or with BAYER's AFFILIATES. BAYER shall provide for the corresponding confidentiality and restriction-of-use obligations to apply to those subcontracting THIRD PARTIES according to Article









3. DISCLOSURE OF INFORMATION



3.1 As soon as possible after the EFFECTIVE DATE, CVT shall disclose or cause its AFFILIATES to disclose and/or deliver to BAYER all CVT PATENTS, COMPOUND, COMPOUND specifications, CTX, CTX specifications, CVT KNOW HOW, to enable and support BAYER to identify, develop COMPOUNDS and to manufacture, have manufactured, and commercialize PRODUCTS in the FIELD on the terms and subject to the conditions of this Agreement.



3.2 During the term of this AGREEMENT, BAYER shall inform CVT on the progress of the project under this Agreement, at 6 (six) months intervals (Summaries, only).



4. PAYMENTS



For the rights granted to BAYER according to Article 2, BAYER will compensate CVT by the following payments at the following events under the following conditions:



4.1 DOWN PAYMENT



BAYER shall transfer to CVT a downpayment of U.S. $0.25MM (two hundred and fifty thousand U.S. Dollars) due on the EFFECTIVE DATE.





4.2 DOWN PAYMENT









If and when the [ ] (CTX) producing cell line is successfully established at BAYER's labs, [



] and [ ] efficacy is confirmed by Bayer as being sufficient and qualified for [

] Bayer shall transfer to CVT [

].



4.3 Milestone Payments according to the progress of the first COMPOUND or PRODUCT to be developed, as follows:



4.3.1 As soon as [





] BAYER shall transfer to CVT [ ].



4.3.2 At the [



] BAYER shall transfer to CVT [ ].



4.3.3 At the [

Bayer shall furnish to CVT [ ].









4.3.4 At the [



] BAYER will furnish to CVT [ ].



4.3.5 At the [

BAYER shall furnish to CVT [ ].



It is understood that all payments identified in Article 4.3 will only become due [



].



4.4 ROYALTIES



4.4.1 On the NET SALES of each of BAYER's PRODUCTS [

] in the TERRITORY of up to [

]

-accrued during [ ] BAYER shall [ ] of [

] for the period according to Art. 10.1.



4.4.2 On the NET SALES of each of BAYER's PRODUCTS [

] in the TERRITORY of more than [

]

- accrued during [ ] BAYER shall [ ] of [ ] for the period according to Art. 10.1.









4.4.3 On the NET SALES of each of BAYER's PRODUCT [ ] or [ ] - accrued during [ ] BAYER shall [

] of [ ] of that identified in Art. 4.4.1 and 4.4.2, respectively, for the period according to Art. 10.1.



4.5 MARKET EXCLUSIVITY



On a country by country basis, BAYER will pay the royalty rates according to Art. 4.4 only and as long as the [

] Under all other circumstances, BAYER will [

] according to Art. 4.4.1 through 4.4.3.


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