Exhibit 10.1

A request for confidential treatment has been made with respect to portions of
the following document that are marked with [*CONFIDENTIAL*]. The redacted
portions have been filed separately with the SEC.

LICENSE, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT

This License, Development and Commercialization Agreement (this “Agreement”),
dated as of October 31, 2018 (the “Effective Date”), is made by and between MEI
Pharma, Inc., a Delaware corporation having an office at 3611 Valley Centre
Drive STE 500, San Diego, CA 92130 (“MEI”), and Kyowa Hakko Kirin Co., Ltd., a
Japanese corporation having an office at 1-9-2 Otemachi, Chiyoda-ku, Tokyo
100-0004, Japan (“KHK”). MEI and KHK are sometimes referred to herein
individually as a “Party” and collectively as the “Parties”.

RECITALS

WHEREAS, MEI has developed the Compound (as defined below);

WHEREAS, KHK is interested in further developing and commercializing the
Compound; and

WHEREAS, MEI wishes to grant a license to KHK under certain intellectual
property rights related to the Compound to Develop and Commercialize the
Compound and Product in the Territory (all as defined below), and KHK wishes to
take such license, in each case in accordance with the terms and conditions set
forth below; and

WHEREAS, the Parties entered into a Confidentiality Agreement on November 30,
2017 to facilitate the discussion and evaluation of a possible transaction
between the Parties.

NOW THEREFORE, in consideration of the foregoing premises and the mutual
promises, covenants and conditions contained in this Agreement, and for other
good and valuable consideration, receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows

ARTICLE 1

DEFINITIONS

Unless the context otherwise requires, the terms in this Agreement with initial
letters capitalized, shall have the meanings set forth below, or the meaning as
designated in the indicated places throughout this Agreement.

1.1    “AAA” has the meaning set forth in Section 14.9(b) (Dispute Resolution).

1.2    “Acquiring Party” has the meaning set forth in Section 2.7(b)
(Non-Compete).

1.3    “Affiliate” means with respect to any person, any other person directly
or indirectly controlling, controlled by, or under common control with such
person; provided, that, for purposes of this definition, “control” (including,
with correlative meanings, the terms “controlled by” and “under common control
with”), as used with respect to any person, means (i) the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies

 

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of such person, whether through the ownership of voting securities or by
contract or otherwise, or (ii) the ownership, directly or indirectly, of more
than fifty percent (50%) of the voting securities of such person. For purposes
of this Section 1.3 (Affiliate), “person” means an individual, corporation,
partnership, limited partnership, limited liability company, limited liability
partnership, syndicate, person (including a “person” as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, together
with the rules and regulations promulgated thereunder), trust, association,
entity or government or political subdivision, agency or instrumentality of a
government.

1.4    “Aggregate Annual Net Sales” has the meaning set forth in Section 8.4(a)
(Royalty Payments).

1.5    “Agreement” has the meaning set forth in the preamble to this Agreement.

1.6    “Alliance Managers” has the meaning set forth in Section 3.4 (Alliance
Managers).

1.7    [*CONFIDENTIAL*] means any protein derived from [*CONFIDENTIAL*] that
binds to or inhibits the human protein [*CONFIDENTIAL*].

1.8    “Anti-Corruption Laws” means the U.S. Foreign Corrupt Practices Act, as
amended, the UK Bribery Act 2010, and any similar anti-corruption-related
Applicable Laws or Applicable Laws related to the prevention of fraud,
racketeering, money laundering or terrorism.

1.9    “Applicable Laws” means any applicable United States federal, state or
local or foreign or multinational law, statute, standard, ordinance, code, rule,
regulation, resolution or promulgation, or any order, writ, judgment,
injunction, decree, stipulation, ruling, determination or award entered by or
with any Governmental Authority, or any license, franchise, permit or similar
right granted under any of the foregoing, or any similar provision having the
force or effect of law. For the avoidance of doubt, any specific references to
any Applicable Law or any portion thereof, shall be deemed to include all
then-current amendments thereto or any replacement or successor law, statute,
standard, ordinance, code, rule, regulation, resolution, order, writ, judgment,
injunction, decree, stipulation, ruling, or determination thereto, including all
applicable “good laboratory practices,” “good clinical practices,” “good
manufacturing practices,” and “good distribution practices” as such terms are
most broadly defined in the industry.

1.10    “Appointing Party” has the meaning set forth in Section 3.2(e)
(Appointment Not an Obligation).

1.11    “Audit” has the meaning set forth in Section 8.9 (Financial Records and
Audit).

1.12    “Business Day” means a day other than a Saturday, Sunday or a bank or
other public holiday in Japan or California.

 

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the following document that are marked with [*CONFIDENTIAL*]. The redacted
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1.13    “Calendar Quarter” means each respective period of three (3) consecutive
months ending on March 31, June 30, September 30, and December 31; provided,
that, the first Calendar Quarter hereunder will be deemed to commence on the
Effective Date and end on December 31, and the final Calendar Quarter will be
deemed to end on the date that this Agreement expires or is terminated.

1.14    “Calendar Year” means each respective period of twelve (12) consecutive
months ending on December 31; provided, that, the first Calendar Year hereunder
will be deemed to commence on the Effective Date and end on December 31, and the
final Calendar Year will be deemed to end on the date that this Agreement
expires or is terminated.

1.15    “CFR” means the U.S. Code of Federal Regulations.

1.16    “Change of Control” means (a) a merger or consolidation of MEI with a
Third Party that results in the voting securities of MEI outstanding immediately
prior thereto, or any securities into which such voting securities have been
converted or exchanged, ceasing to represent at least fifty percent (50%) of the
combined voting power of the surviving entity or the parent of the surviving
entity immediately after such merger or consolidation, (b) a transaction or
series of related transactions in which a Third Party, together with its
Affiliates, becomes the direct or indirect beneficial owner of fifty percent
(50%) or more of the combined voting power of the outstanding securities of MEI,
or (c) the sale or other transfer to a Third Party of all or substantially all
of MEI’s and its Affiliates’ assets.

1.17    “Claims” means all Third Party demands, claims, actions, proceedings and
liability (whether criminal or civil, in contract, tort or otherwise) for
losses, damages, legal costs and other expenses of any nature.

1.18    “Clinical Quality Agreement” has the meaning set forth in Section 6.4(a)
(Quality Agreements).

1.19    “Clinical Supply Agreement” has the meaning set forth in Section 6.1(b)
(Further Development Supply).

1.20    “Clinical Trial” means any clinical study of pharmaceutical product on
human subjects to assess the dosing, safety, tolerability, pharmacological
activity, pharmacokinetics, dose ranging or efficacy of such pharmaceutical
product, including any phase I trial, phase II trial, Pivotal Study, or phase IV
trial (as such trials, with the exception of Pivotal Study which is defined
herein, is defined by any applicable Regulatory Authority); provided, that,
post-marketing surveillance studies are not Clinical Trials.

1.21    “CMC” means chemistry, manufacturing, and controls.

1.22    “CMO” means a contract manufacturing organization.

 

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the following document that are marked with [*CONFIDENTIAL*]. The redacted
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1.23    “Combination Product” means any Product comprising the following, either
formulated together (i.e., a fixed dose combination) or packaged together and
sold for a single price: (a) a Compound and (b) at least one other active
pharmaceutical ingredient that is not Controlled by MEI.

1.24    “Commercialization” means to promote, market, distribute, sell (and
offer for sale or contract to sell), import, conduct post-marketing
surveillance, or otherwise commercially exploit or provide product support for a
Product and to conduct activities, other than Development, Packaging, or
Manufacturing, in preparation for conducting the foregoing activities, including
activities to produce commercialization support data and to secure and maintain
market access and reimbursement “Commercializing” and “Commercialization” shall
have correlative meanings. For the avoidance of doubt, Commercialization does
not include Development, Packaging, and Manufacturing.

1.25    “Commercialization Plan” has the meaning set forth in Section 7.2
(Commercialization Plan).

1.26    “Commercially Reasonable Efforts” means, with respect to the efforts and
resources to be expended by a Party with respect to the Compound and Product
hereunder, the level of efforts and resources consistent with the efforts and
resources a pharmaceutical company of similar size and situation in the exercise
of its reasonable business judgment typically devotes to its own product
candidates of similar market potential, at a similar stage in development or
product lifecycle, taking also into account the stage of development or product
lifecycle of other products in such Party’s portfolio candidates, issues of
safety and efficacy, product profile, the proprietary position of the Compound
and Product, cost of goods, the competitiveness of the marketplace, the
regulatory structure involved, the likelihood of regulatory approval, the
anticipated or actual profitability of the applicable product, and other
technical, legal, scientific and medical considerations; provided, that in any
event each Party shall use no less than those efforts it uses with respect to
its other high priority assets. Without limiting the foregoing, Commercially
Reasonable Efforts requires, with respect to such obligations, that the Party:
(a) promptly assign responsibility for such obligation to specific employee(s)
who are held accountable for progress and monitor such progress on an on-going
basis, (b) set objectives for carrying out such obligations, and (c) allocate
resources designed to advance progress with respect to such objectives.

1.27    “Commercial Quality Agreement” has the meaning set forth in
Section 6.4(b) (Quality Agreements).

1.28    “Commercial Supply Agreement” has the meaning set forth in Section 6.3
(Commercial Supply).

1.29    “Competitive Program” has the meaning set forth in Section 2.7(b)
(Non-Compete).

 

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the following document that are marked with [*CONFIDENTIAL*]. The redacted
portions have been filed separately with the SEC.

 

1.30    “Compound” means the small molecule referred to by MEI as ME-401 having
the structure set forth on Schedule 1.30 and [*CONFIDENTIAL*].

1.31    “Confidential Information” of a Party means all Know-How, unpublished
patent applications and other information and data of a financial, commercial,
business, operational, scientific, clinical, medical or technical nature of such
Party that is disclosed or made available by or on behalf of such Party or any
of its Affiliates to the other Party or any of its Affiliates, whether made
available orally, in writing or in electronic or other form, under this
Agreement. The terms of this Agreement are the Confidential Information of both
Parties.

1.32    “Control” and “Controlled by” means, with respect to any Know-How,
Invention, Patent, technology, copyright, trademark or other intellectual
property right, the possession by a Party or its Affiliates (whether by
ownership, license grant or other means) of the legal right to grant the right
to access or use, or to grant a license or a sublicense to, such Know-How,
Invention, Patent right, technology, copyright, trademark or other intellectual
property right as provided for herein without violating the proprietary rights
of any Third Party or any terms of any agreement or other arrangement between
such Party (or any of its Affiliates) and any Third Party.

1.33    “Cover”, “Covered” or “Covering” means, with respect to a Patent, that,
in the absence of a license granted to a Person under a Valid Claim included in
such Patent, the Manufacture, Packaging, use, practice, distribution or sale of
the subject matter of such Patent by such Person would infringe, or contribute
to or induce the infringement of, such Valid Claim, or with respect to a Patent
application, as if such Valid Claim was contained in an issued Patent.

1.34     “Develop” means to research, develop, analyze, test and conduct
preclinical trials, Clinical Trials, any preclinical/clinical/CMC commitments
following Regulatory Approval and all other regulatory trials, for the Compound
or a Product, including new Indications, new formulations and all other
activities, including regulatory activities, related to securing and maintaining
Regulatory Approval, for the Compound or a Product. For the avoidance of doubt,
Develop shall include activities such as conducting in vitro, in vivo or in
silico studies for the purpose of determining which Indication to pursue.
“Developing” and “Development” shall have correlative meanings.

1.35    “Development Plan” has the meaning set forth in Section 4.2 (Development
Plan).

1.36    “Disclosing Party” has the meaning set forth in Section 10.1(a) (Duty of
Confidence).

1.37    “Dollar” means U.S. dollars, and “$” shall be interpreted accordingly.

1.38    “Effective Date” has the meaning set forth in the preamble to this
Agreement.

1.39    “Excluded Claim” has the meaning set forth in Section 14.9(g) (Dispute
Resolution).

 

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the following document that are marked with [*CONFIDENTIAL*]. The redacted
portions have been filed separately with the SEC.

 

1.40    “Executive Officers” has the meaning set forth in Section 3.3 (JSC
Decision Making).

1.41    “Field” means all prophylactic, diagnostic and therapeutic uses for any
human disease.

1.42    “First Commercial Sale” means the first shipment of the Product by or on
behalf of KHK or its Affiliate or its Sublicensee to a Third Party in the
Territory for end use or consumption of the Product after Regulatory Approval of
the Product in the Territory or, if earlier, the invoicing of a Third Party for
such shipment. Sales or transfers of reasonable quantities of the Product for
Clinical Trial purposes, or for compassionate or similar use, shall not be
considered a First Commercial Sale.

1.43    “FL” has the meaning set forth in Section 4.3(a) (Development
Diligence).

1.44    “GAAP” means the then-current Generally Accepted Accounting Principles
or International Financial Reporting Standards (IFRS), whichever is adopted as
the standard financial accounting guideline in the United States for public
companies, as consistently applied.

1.45    “GDPR” has the meaning set forth in Section 5.9 (Personally-Identifiable
Data / GDPR Compliance).

1.46    “Generic Product” means any pharmaceutical product that is distributed
by a Third Party (that is not licensed or otherwise permitted by KHK or its
Affiliates or its Sublicensees) in the Territory (i) under a Regulatory Approval
approved by a Regulatory Authority in reliance, in whole or in part, on the
Regulatory Approval for the Product, including any product authorized for sale
(a) in the United States pursuant to Section 505(b)(2) or 505(j) of the FD&C Act
(21 U.S.C. 355(b)(2) and 355(j), respectively), (b) in the EU pursuant to
Article 10 of Directive 2001/83/EC as amended, or (c) in the Territory all
equivalents of such provisions in (a) and (b), and (ii) which product
(a) contains the same active pharmaceutical ingredient(s) as the Product, (b) is
approved based in significant part upon clinical data generated and used for
obtaining Regulatory Approval of the Product and (c) is approved for at least
one of the same Indication(s) as the Product in the Territory.

1.47    “Government Authority” means any United States federal, state or local,
or any foreign, government or political subdivision thereof, or any
multinational organization or authority, or any authority, agency or commission
entitled to exercise any administrative, executive, judicial, legislative,
police, regulatory or taxing authority or power, any court or tribunal (or any
department, bureau or division thereof), or any governmental arbitrator or
arbitral body. For clarity, any Regulatory Authority shall be a Governmental
Authority.

1.48    “IND” means an investigational new drug application, clinical trial
authorization or similar application or submission for approval to conduct human
clinical investigations filed

 

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with or submitted to a Regulatory Authority in conformance with the requirements
of such Regulatory Authority including the Clinical Trial Notification to the
MHLW.

1.49    “Indemnified Party” has the meaning set forth in Section 13.3
(Indemnification Procedure).

1.50    “Indemnifying Party” has the meaning set forth in Section 13.3
(Indemnification Procedure).

1.51    “Indication” means a separate and distinct disease, disorder, illness or
health condition for which [*CONFIDENTIAL*].

1.52    “Invention” means any improvement, addition, refinement, modification,
development, discovery or invention, whether or not patentable, that is
conceived, reduced to practice or otherwise developed by either Party, or by
both Parties, under this Agreement.

1.53    “Joint Inventions” has the meaning set forth in Section 9.1(b)
(Ownership of Inventions).

1.54    “Joint Patents” has the meaning set forth in Section 9.1(b) (Ownership
of Inventions).

1.55    “JPY” means the Japanese Yen (i.e., the currency in the Territory).

1.56    “JSC” has the meaning set forth in Section 3.1 (Joint Steering
Committee).

1.57    “KHK” has the meaning set forth in the preamble to this Agreement.

1.58    “KHK Data” has the meaning set forth in Section 9.1(a) (Data).

1.59    “KHK Indemnitees” has the meaning set forth in Section 13.1
(Indemnification by MEI).

1.60    “KHK Know-How” means any and all Know-How, whether or not patentable, to
the extent Controlled by, or on behalf of, KHK or its Affiliates following the
Effective Date or at any time thereafter during the Term (other than the MEI
Know-How) that is conceived or first made in the course of, or used in the
course of, KHK’s performance under this Agreement, and that is necessary and/or
reasonably useful for the Development, Manufacture, Packaging, Commercialization
or exploitation of the Compound or Product.

1.61    “KHK Patents” means any Patent that (i) claims a priority date
[*CONFIDENTIAL*] the Effective Date, (ii) is Controlled by KHK (or its
Affiliates) during the Term (other than the MEI Patents) and (iii) contains one
or more claims Covering the Compound and/or Product (including the Development,
Manufacturing, Packaging or Commercialization of

 

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the Compound and/or Product) or the KHK Know-How; provided, that “KHK Patents”
do not include any Joint Patent.

1.62    “KHK Sole Invention” has the meaning set forth in Section 9.1(d)(i)
(License to MEI).

1.63    “KHK Technology” means the KHK Know-How, the KHK Patents, KHK Sole
Inventions and KHK’s interest in the Joint Patents.

1.64    “KHK Trademarks” has the meaning set forth in Section 9.8(a)
(Trademarks).

1.65    “Know-How” means all secret and substantial technical, scientific,
regulatory and other information, results, knowledge, techniques, in whatever
form and whether or not confidential or patentable, Inventions, invention
disclosures, discoveries, plans, processes, practices, methods, knowledge, trade
secrets, know-how, instructions, skill, experience, ideas, concepts, data
(including biological, chemical, pharmacological, toxicological, pharmaceutical,
physical and analytical, safety, quality control, and preclinical and clinical
data), formulae, formulations, compositions, specifications, marketing, pricing,
distribution, cost, sales and Manufacturing data or descriptions. Know-How does
not include any Patent claiming any of the foregoing.

1.66    “Manufacture” or “Manufacturing” or “Manufactured” means, with respect
to the Compound and Product, the receipt, handling and storage of active
pharmaceutical ingredients, drug substance or drug product and other materials,
the manufacturing, processing, holding (including storage), quality assurance
and quality control testing (including release) of the Compound and Product
(other than quality assurance and quality control related to development of the
Manufacturing process, which activities shall be considered Development
activities) and shipping of the Compound and Product. For the avoidance of
doubt, Manufacturing does not include Development, Packaging, and
Commercializing.

1.67    “Manufacturing Option” has the meaning set forth in Section 6.5(a)
(Manufacturing Option).

1.68    “Marketing Authorization Application” or “MAA” means an application to
the appropriate Regulatory Authority for approval to market and sell the Product
(but excluding Pricing Approval) in any particular country or regulatory
jurisdiction.

1.69    “MEI” has the meaning set forth in the preamble to this Agreement.

1.70    “MEI Indemnitees” has the meaning set forth in Section 13.2
(Indemnification by KHK).

1.71    “MEI Know-How” means all Know-How that MEI Controls as of the Effective
Date or during the Term that is necessary for the Development, Packaging, and/or
Manufacture of

 

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the Compound or Product and/or Commercialization of any Product in the Field.
Notwithstanding the foregoing, “MEI Know-How” does not include any Know-How that
is owned or in-licensed by a Third Party described in the definition of “Change
of Control” or such Third Party’s Affiliates [*CONFIDENTIAL*].

1.72    “MEI Patents” means all Patents that MEI Controls as of the Effective
Date or during the Term that Cover the Development, Packaging, and/or
Manufacture of the Compound or Product and/or Commercialization of any Product
in the Field in the Territory. The MEI Patents existing as of the Effective Date
are listed on Schedule 1.72; provided, that “MEI Patents” do not include any
Joint Patent. Notwithstanding the foregoing, “MEI Patent” does not include any
Patent that is owned or in-licensed by a Third Party described in the definition
of “Change of Control” or such Third Party’s Affiliates [*CONFIDENTIAL*]

1.73    “MEI Technology” means the MEI Know-How, the MEI Patents, and MEI’s
interest in the Joint Patents.

1.74    “MEI Trademarks” has the meaning set forth in Section 9.8 (Trademarks).

1.75    “MHLW” means the Japanese Ministry of Health, Labor and Welfare, or a
successor agency thereto.

1.76    “Net Sales” means, with respect to any Product, the gross amounts
invoiced for sales or other dispositions of such Product by or on behalf of KHK,
its Affiliates and Sublicensees to Third Parties, less the following deductions
to the extent included in the gross invoiced sales price for such Product or
otherwise paid or incurred by KHK or its Affiliates, as applicable, with respect
to the sale or other disposition of such Product, in each and every case solely
to the extent permitted to be taken as a deduction in accordance with GAAP:

(a) normal and customary trade and quantity discounts, allowances, and credits
actually allowed and properly taken with respect to sales of such Product;

(b) credits or allowances given or made for defects, rejection, recalls or
return of previously sold Products or for retroactive price reductions and
billing errors;

(c) discounts, rebates, reimbursements, and chargeback payments granted to
managed health care organizations or other health care institutions (including
hospitals), health care administrators, patient assistance or similar programs,
pharmacy benefit managers (or equivalents thereof), wholesalers and other
distributors, pharmacies and other retailers, group purchasing organizations or
other buying groups, health maintenance organizations, national,
state/provincial, local, and other governments, their agencies and purchasers
and reimbursers, any other providers of health insurance coverage, or to trade
customers;

(d) transportation costs and related insurance charges actually incurred; and

 

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(e) any Taxes levied on or with respect to such Product (excluding Taxes imposed
on or with respect to net income, however, denominated).

In the case of pharmacy incentive programs, hospital performance incentive
programs, chargebacks, disease management programs, similar programs or
discounts on portfolio product offerings, all rebates, discounts and other forms
of reimbursements shall be allocated among the relevant products on the basis on
which such rebates, discounts and other forms of reimbursements were actually
granted or, if such basis cannot be determined, in accordance with KHK’s, its
Affiliates’ or its Sublicensees’ existing allocation method; provided that any
such allocation to a Product shall be: (i) done in accordance with Applicable
Law, including any price reporting laws, rules and regulations and (ii) subject
to clause (i), in no event no greater than a pro rata allocation, such that the
portion of each of the foregoing rebates, discounts and other forms of
reimbursements shall not be included as deductions from invoiced sales hereunder
in any amount greater than the proportion of the number of units of such Product
sold by KHK, its Affiliates or its Sublicensees to Third Parties hereunder
compared to the number of units of all the products sold by KHK, such Affiliates
and such Sublicensees to Third Parties to which such foregoing rebate, discount
or other form of reimbursement, as applicable, are granted.

If a Product is sold or otherwise commercially disposed of for consideration
other than cash or in a transaction that is not at arm’s length between the
buyer and the seller, then the gross amount to be included in the calculation of
Net Sales shall be the amount that would have been invoiced had the transaction
been conducted at arm’s length and for cash. Such amount that would have been
invoiced shall be determined, wherever possible, by reference to the average
selling price of the relevant Product in arm’s length transactions in the
relevant jurisdiction in the relevant Calendar Quarter.

Such amounts shall be determined in accordance with GAAP, consistently applied.

All deductions shall only be allowable to the extent they are commercially
reasonable and shall be determined, on a jurisdiction-by-jurisdiction basis, as
incurred in the ordinary course of business in type and amount consistent with
KHK’s, its Affiliate’s, or a Sublicensee’s (as the payment is accrued by such
entity); provided, however, that, if the accrued amount with respect to such
deduction is determined in a subsequent Calendar Quarter to have been greater
than the actual amount of such deduction, the amount over-accrued shall be
included in Net Sales in such subsequent Calendar Quarter. For purposes of
determining Net Sales, a Product shall be deemed to be sold when billed or
invoiced and a sale shall not include transfers or dispositions of such Product
for pre-clinical or clinical purposes or provided in good faith as samples or
through patient assistance programs, in each case, without charge.

In the event that a Product is sold as part of a Combination Product, then Net
Sales for such product shall be determined by multiplying the net sales of the
Combination Product (as calculated in accordance with analogous criteria as set
forth above for the “Net Sales” definition) by the fraction, A / (A+B) where A
is the weighted average sale price of such Product when sold

 

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separately in finished form, and B is the weighted average sale price of the
other active compound or ingredient in the Combination Product sold separately
in finished form.

In the event that the weighted average sale price of a Product can be determined
but the weighted average sale price of the other active compound or ingredient
in the Combination Product cannot be determined, then Net Sales for such product
shall be calculated by multiplying the net sales of the Combination Product (as
calculated in accordance with analogous criteria as set forth above for the “Net
Sales” definition) by the fraction A / C where A is the weighted average sale
price of such Product when sold separately in finished form and C is the
weighted average sale price of the Combination Product.

In the event that the weighted average sale price of the other active compounds
or ingredients in the Combination Product can be determined but the weighted
average sale price of such Product cannot be determined, Net Sales for such
product shall be calculated by multiplying the net sales of the Combination
Product (as calculated in accordance with analogous criteria as set forth above
for the “Net Sales” definition) by the following formula: one (1) minus B / C
where B is the weighted average sale price of the other active compound or
ingredient in the Combination Product when sold separately in finished form and
C is the weighted average sale price of the Combination Product.

In the event that the weighted average sale price of both a Product and the
other active compound or ingredient in the Combination Product cannot be
determined in the Territory, then, the Parties shall negotiate in good faith a
reasonable adjustment to Net Sales in the Territory that takes into account all
factors reasonably relevant to the relative value of the Compound, on the one
hand, and all of the other active ingredient(s), collectively, on the other
hand.

Upon the sale or other disposal of a Product, such sale, disposal or use will be
deemed to constitute a sale with the consideration for the sale being the
consideration for the relevant transaction and constituting Net Sales hereunder,
or if the consideration is not a monetary amount, a sale will be deemed to have
occurred for a price assessed on the value of whatever consideration has been
provided in exchange for the sale. Disposal of a Product for or use of a Product
in Clinical Trials or as free samples will not give rise to any deemed sale
under this definition. Such amounts will be determined from the books and
records of KHK and its Sublicensees maintained in accordance with GAAP or
corresponding accounting standards in any other jurisdiction, consistently
applied throughout the organization.

In no event shall any particular amount of deduction identified above be
deducted more than once in calculating Net Sales (i.e., no “double counting” of
deductions).

1.77    “NHI” means the Japanese national health insurance system, or its
successor system.

1.78    “NHI Price” means the reimbursement price of the Product for purposes of
the NHI.

 

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1.79    “NHI Price Approval” means approval of the NHI Price by the MHLW.

1.80    “non-Appointing Party” has the meaning set forth in Section 3.2(e)
(Appointment Not an Obligation).

1.81    “Package” and “Packaging” has the meaning set forth in Section 6.2
(Packaging; Certain Other Manufacturing Activities).

1.82    “Party” and “Parties” have the meanings set forth in the preamble to
this Agreement.

1.83    “Patent” means any and all (a) issued patents, (b) pending patent
applications, including all provisional applications, substitutions,
continuations, continuations-in-part, divisionals and renewals, and all patents
granted thereon, (c) patents-of-addition, reissues, reexaminations and
extensions or restorations by existing or future extension or restoration
mechanisms, including patent term adjustments, Patent Term Extensions,
supplementary protection certificates or the equivalent thereof, (d) inventor’s
certificates, (e) other forms of government-issued rights substantially similar
to any of the foregoing, and (f) United States and foreign counterparts of any
of the foregoing.

1.84    “Patent Term Extension” means any term extensions, supplementary
protection certificates and equivalents thereof offering Patent protection
beyond the initial term with respect to any issued Patents.

1.85    “Person” means any individual, firm, corporation, partnership, limited
liability company, trust, business trust, joint venture, Governmental Authority,
association or other entity.

1.86    “Pharmacovigilance Agreement” has the meaning set forth in Section 5.8
(Pharmacovigilance).

1.87    “Pivotal Study” means a human clinical trial (a) on a sufficient number
of subjects that is designed to establish that the compound or product is safe
and efficacious for its intended use, and to determine warnings, precautions,
and adverse reactions that are associated with the compound or product in the
dosage range to be prescribed, and to support Regulatory Approval of the
compound or product for an Indication or label expansion of the compound or
product, (b) that would otherwise satisfy the requirements for a Phase 3 study
as defined in 21 CFR § 312.21(c) (or any amended or successor regulations) or
any equivalent regulations in the countries in the Territory, regardless of
where such clinical trial is conducted, or (c) that the data from which is
actually used for registration purposes.

1.88    “PMDA” means the Pharmaceuticals and Medical Devices Agency of Japan,
which is an extra-ministerial bureau of the MHLW and is responsible for, among
other things, the evaluation of new drugs, and offers face-to-face consultation
services, or a successor agency thereto.

 

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1.89    “Pricing Approval” means, with respect to any country where a
Governmental Authority authorizes reimbursement or access, or approves or
determines pricing, for pharmaceutical products, receipt of such reimbursement
or access authorization or pricing approval or determination (as the case may
be), including the NHI Price Approval.

1.90    “Product” means any pharmaceutical product, containing the Compound,
whether or not as the sole active ingredient, and in any dosage, form or
formulation ready for dispensing to or consumption by an end-user. For clarity,
(i) the Compound in drug substance form (as opposed to the drug dosage form)
shall constitute the Compound, but not the Product, and (ii) the term “Product”
shall not be construed to include any proprietary compounds of MEI or any of its
Affiliates other than the Compound.

1.91    “Product Agreements” has the meaning set forth in Section 11.3(g)
(Effect of Termination).

1.92    “Product Infringement” has the meaning set forth in Section 9.4(a)
(Notice).

1.93    “Promotional Materials” has the meaning set forth in Section 7.4
(Creation of Promotional Materials).

1.94    “Quality Agreements” has the meaning set forth in Section 6.4(b)
(Quality Agreements).

1.95    “Recall” has the meaning set forth in Section 5.7 (Remedial Actions).

1.96    “Recall Costs” has the meaning set forth in Section 5.7 (Remedial
Actions).

1.97    “Receiving Party” has the meaning set forth in Section 10.1(a) (Duty of
Confidence).

1.98    “Regulatory Approval” means, with respect to any pharmaceutical product
in any regulatory jurisdiction for a given Indication, approval from the
applicable Regulatory Authority permitting the distribution, use and sale of
such pharmaceutical product in such regulatory jurisdiction for such Indication
in accordance with Applicable Law.

1.99    “Regulatory Authority” means, in a particular country or regulatory
jurisdiction, any applicable Governmental Authority involved in granting
Regulatory Approval and/or Pricing Approval of a pharmaceutical product in such
country or regulatory jurisdiction.

1.100    “Regulatory Data” means any and all research data, pharmacology data,
preclinical data, clinical data and all other documentation submitted, or
required to be submitted, to Regulatory Authorities in association with
regulatory filings for the Product (including any applicable Drug Master Files,
CMC data, CDISC electronic data and relevant documents, or similar
documentation).

 

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1.101    “Regulatory Exclusivity” means, with respect to each Product in any
jurisdiction in the Territory, any period of data, market or other regulatory
exclusivity (other than Patent exclusivity) granted or afforded by Applicable
Law or by a Regulatory Authority in such jurisdiction that confers exclusive
marketing rights with respect to such Product in such jurisdiction or prevents
another Person from using or otherwise relying on any data supporting the
approval of the Marketing Authorization Application with respect to such Product
in such jurisdiction without the prior written consent of the Marketing
Authorization Application-holder, as applicable, including orphan drug
exclusivity, new chemical entity exclusivity, data exclusivity, or pediatric
exclusivity.

1.102    “Regulatory Materials” means regulatory applications, submissions,
notifications, communications, correspondence, discussion/meeting minutes,
registrations, Regulatory Approvals and/or other filings made or related to,
received from or otherwise conducted with a Regulatory Authority that are
necessary in order to Develop, Manufacture, Package, obtain marketing
authorization, market, sell or otherwise Commercialize the Product in a
particular country or regulatory jurisdiction. Regulatory Materials include
INDs, presentations, responses, and applications for other Regulatory Approvals.

1.103    “Remedial Action” has the meaning set forth in Section 5.7 (Remedial
Actions).

1.104    “Respective Territory” means, in the case of KHK, the Territory, and in
the case of MEI, all countries of the world outside the Territory.

1.105    “Royalty Term” has the meaning set forth in Section 8.4(b) (Royalty
Term).

1.106    “r/r” has the meaning set forth in Section 4.3(a) (Development
Diligence).

1.107     “Sole Inventions” has the meaning set forth in Section 9.1(b)
(Ownership of Inventions).

1.108    “Sublicense” means a license or sublicense to Develop, make, use,
import, promote, offer for sale or sell any Compound or Product.

1.109    “Sublicensee” means a Third Party or Affiliate to whom KHK has granted
a Sublicense in accordance with the terms of this Agreement.

1.110    “Supply Items” has the meaning set forth in Section 6.1 (Development
Supply).

1.111    “Tax” or “Taxes” means any (a) all federal, provincial, territorial,
state, municipal, local, foreign or other taxes, imposts, rates, levies,
assessments and other charges in the nature of a tax (and all interest and
penalties thereon and additions thereto imposed by any Government Authority),
including without limitation all income, excise, franchise, gains, capital, real
property, goods and services, transfer, value added, gross receipts, windfall
profits, severance, ad valorem, personal property, production, sales, use,
license, stamp, documentary stamp, mortgage recording,

 

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employment, payroll, social security, unemployment, disability, escheat,
estimated or withholding taxes, and all customs and import duties, together with
all interest, penalties and additions thereto imposed with respect to such
amounts, in each case whether disputed or not; (b) any liability for the payment
of any amounts of the type described in clause (a) as a result of being or
having been a member of an affiliated, consolidated, combined or unitary group;
and (c) any liability for the payment of any amounts as a result of being party
to any tax sharing agreement or arrangement or as a result of any express or
implied obligation to indemnify any other person with respect to the payment of
any amounts of the type described in clause (a) or (b).

1.112    “Term” has the meaning set forth in Section 11.1 (Term).

1.113    “Territory” means Japan.

1.114    “Third Party” means any Person other than a Party or an Affiliate of a
Party.

1.115    “Third Party Patent” has the meaning set forth in Section 9.5(b)(i)
(Third Party Intellectual Property Rights).

1.116    “Trademark Infringement” has the meaning set forth in Section 9.8(b)
(Trademarks).

1.117    “Transfer Plan” has the meaning set forth in Section 2.4(a) (Transfer
of Know-How and Materials).

1.118    “Transition Period” has the meaning set forth in Section 6.5(b)(i)
(Manufacturing Option).

1.119    “United States” or “U.S.” means the United States of America including
its territories and possessions.

1.120    “Valid Claim” means, with respect to the Territory, a claim of (a) an
issued and unexpired Patent in the Territory which has not been revoked, held
unenforceable, unpatentable or invalid by an administrative agency, court or
other governmental agency of a competent jurisdiction in a final and
non-appealable decision (or decision unappealed within the time allowed for
appeal), and which has not been admitted to be invalid or unenforceable through
reissue, disclaimer or otherwise or (b) a pending Patent application that is
being prosecuted in good faith and has not been pending for more than
[*CONFIDENTIAL*] from the first office action date with respect to such Patent
application (for clarity, a Patent application pending longer than such
[*CONFIDENTIAL*] period would become a Valid Claim after such period upon the
issuance of the relevant Patent).

1.121    “VAT” has the meaning set forth in Section 8.8(b) (VAT).

1.122    “Working Group” has the meaning set forth in Section 3.2(d) (Working
Group).

 

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ARTICLE 2

LICENSE

2.1    Licenses to KHK. Subject to the terms and conditions of this Agreement,
MEI hereby grants to KHK an exclusive, royalty-bearing license, with the right
to grant Sublicenses (through multiple tiers) in accordance with Section 2.2
(Sublicense Rights), under the MEI Technology to Develop, Package, have Packaged
and use Compound and Product, and Commercialize Product, in the Field in the
Territory.

2.2    Sublicense Rights.

(a)    Subject to the terms of this Section 2.2 (Sublicense Rights), KHK may
grant a Sublicense of the licenses granted in Section 2.1 (Licenses to KHK)
through to Affiliates of KHK without notice to or the prior consent of MEI. Upon
[*CONFIDENTIAL*], KHK may grant a Sublicense to any Third Party to Develop or
Commercialize a Product.

(b)    Each authorized Sublicense granted hereunder, if any, whether to an
Affiliate or Sublicensee, shall be in writing and shall incorporate terms and
conditions sufficient to enable KHK to comply with this Agreement. KHK shall
remain responsible for the performance by any of its Sublicensees and shall
cause its Sublicensees to comply with the provisions of this Agreement in
connection with such performance, including the non-compete, reporting, audit,
inspection and confidentiality provisions hereunder, and shall terminate all
relevant agreements with any such Sublicensee in the case of any uncured
material breach of such terms and conditions by such Sublicensee. For the
avoidance of doubt, KHK will remain directly responsible for all amounts owed to
MEI under this Agreement and KHK hereby expressly waives any requirement that
MEI exhaust any right, power or remedy, or proceed against a Sublicensee for any
obligation or performance hereunder prior to proceeding directly against KHK.

2.3    MEI’s Retained Rights. MEI retains the right under the MEI Technology to
(a) exercise its rights and perform its obligations under this Agreement; and
(b) research, Develop, make, have made, use, promote, distribute, sell, offer
for sale, have sold, import, export and otherwise Commercialize Compounds and
Products to the extent not inconsistent with the exclusive rights granted to KHK
under Section 2.1 (Licenses to KHK).

2.4    Transfer of Know-How and Materials.

(a)    The Parties shall agree to a plan for the transfer of certain MEI
Know-How (including the data therein) existing as of the Effective Date as
attached to this Agreement as Schedule 2.4 (the “Transfer Plan”). As soon as
practical and pursuant to the Transfer Plan, MEI shall disclose and make
available to KHK, and KHK shall receive, the MEI Know-How and materials listed
in the Transfer Plan, according to the timeline set forth in the Transfer Plan.
The Parties shall cooperate with each other in good faith to enable a smooth
transfer of such MEI Know-How to KHK. For clarity, this Section 2.4(a) (Transfer
of Know-How and Materials) does not apply to any transfer of
Manufacturing-related Know-How, which shall be required of MEI

 

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only as set forth in Section 6.5 (Manufacturing Option), other than
Manufacturing-related Know-How necessary for KHK to fulfill its obligations
under this Agreement as and to the extent set forth in the Transfer Plan.

(b)    Upon KHK’s reasonable request, MEI shall provide reasonable technical
assistance, including making appropriate employees available to KHK at
reasonable times, places and frequency, and upon reasonable prior notice, for
the purpose of assisting KHK to understand and use the MEI Know-How in
connection with KHK’s Development of Products; provided, that MEI shall have no
obligation under this Section 2.4 (Transfer of Know-How and Materials) to
provide assistance in excess of [*CONFIDENTIAL*] and any such assistance
provided by MEI in excess of such limit shall be paid for by KHK at a rate of
[*CONFIDENTIAL*] per hour.

(c)    If, during the Term, (i) MEI becomes aware of any Know-How or Patents MEI
Controls that are necessary for KHK to Develop, Package, and use Compound and
Product, and Commercialize Product, in the Territory, or Manufacture (following
the exercise, if ever, of KHK’s Manufacturing Option) Compound and Product for
the Development and Commercialization in the Territory, MEI shall promptly
notify KHK; and (ii) upon reasonable request by KHK, MEI shall disclose such MEI
Know-How or MEI Patents and make available such Know-How or Patents to KHK with
no additional cost and shall use Commercially Reasonable Efforts to provide
reasonable technical assistance, subject to Section 2.4(b) (Transfer of Know-How
and Materials), including making appropriate employees available at reasonably
agreed times and frequency, for the purpose of assisting KHK to understand and
use such Know-How in connection with KHK’s Product-related activities.

(d)    The Parties acknowledge and agree that none of the technology transfer
assistance required by this Section 2.4 (Transfer of Know-How and Materials)
will require either Party to provide such assistance in person.

2.5    No Implied Licenses; Negative Covenant. Except as set forth herein,
neither Party shall acquire any license or other intellectual property interest,
by implication or otherwise, under any Know-How, Patents, trademarks or other
intellectual property rights owned or controlled by the other Party. KHK hereby
covenants not to practice, and not to permit or cause any of its Affiliate or
any Third Party to practice, any MEI Technology for any purpose other than as
expressly authorized in this Agreement, including exclusively Developing and
Commercializing Products in accordance with the Development Plan or
Commercialization Plan, as applicable.

2.6    Non-Diversion.

(a)    Each Party hereby covenants and agrees that it will not, and will ensure
that its Affiliates will not, and will ensure its Sublicensees (or licensees)
and subcontractors do not to, either directly or indirectly, promote, market,
solicit, distribute, import, sell or have sold Products in the other Party’s
Respective Territory, except in each case solely in the context of exercising
Manufacturing rights (and thus attendant import and the like rights) in the
other Party’s Respective

 

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Territory and to the extent that such Party has the express right to conduct
such Manufacturing and related activities.

(b)    If a Party or any of its Affiliates or Sublicensees (or licensees)
receives or becomes aware of the receipt by such Person of any orders for any
Product for use outside such Party’s Respective Territory, such Person shall
refer such orders to the other Party.

(c)    In furtherance of the foregoing, in the event that Party or any of its
Affiliates or Sublicensees (or licensees) violates the provisions of this
Section 2.6 (Non-Diversion) such Party shall pay, or cause to be paid, to the
other Party the full amount of any Net Sales of the Product outside of such
Party’s Respective Territory; provided, that, such payment shall not limit
either Party’s other remedies with respect thereto.

2.7    Non-Compete.

(a)    During the Term, both Parties and, with respect to KHK, for an additional
period of [*CONFIDENTIAL*] after the early termination of this Agreement
[*CONFIDENTIAL*] (but, for clarity, not the natural expiration of this
Agreement), shall not, and shall ensure that its Affiliates, its licensees and
Sublicensees do not, directly or indirectly, conduct, have conducted, exploit,
or fund any activity that involves the conduct of, any [*CONFIDENTIAL*] any
compound or product in or for (i) the Territory with respect to MEI, or
(ii) globally, including the Territory, with respect to KHK, that is intended
[*CONFIDENTIAL*] other than the Compound and Product in accordance with this
Agreement and any applicable supply agreement between the Parties. It is the
desire and intent of the Parties that the restrictive covenants contained in
this Section 2.7 (Non-Compete) be enforced to the fullest extent permissible
under Applicable Laws and public policies applied in each jurisdiction in which
enforcement is sought. KHK and MEI believe that the restrictive covenants in
this Section 2.7 (Non-Compete) are valid and enforceable. However, if any
restrictive covenant should for any reason become or be declared by a competent
court or competition authority to be invalid or unenforceable in any
jurisdiction, such restrictive covenant shall be deemed to have been amended to
the extent necessary in order that such provision be valid and enforceable, such
amendment shall apply only with respect to the operation of such provision of
this Section 2.7 (Non-Compete) in the particular jurisdiction in which such
declaration is made.

(b)    Notwithstanding Section 2.7(a) (Non-Compete), if during the relevant time
period under Section 2.7(a) (Non-Compete), a Party (such Party, the “Acquiring
Party”) or any of its Affiliates (as applicable) merges or consolidates with, or
otherwise acquires, or is acquired by, a Third Party wherein such Third Party is
engaged in activities that would otherwise constitute a breach of Section 2.7(a)
(Non-Compete) (a “Competitive Program”), unless the Parties agree otherwise in
writing, the Acquiring Party shall, within [*CONFIDENTIAL*] after the date of
the merger, consolidation or acquisition, notify the other Party in writing that
it intends to either (i) [*CONFIDENTIAL*] or (ii) [*CONFIDENTIAL*]. If the
Acquiring Party notifies the other Party that it:

 

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(i)    intends to [*CONFIDENTIAL*], then the Acquiring Party or its Affiliate
[*CONFIDENTIAL*] as quickly as possible (and in any event, subject to Applicable
Law, within [*CONFIDENTIAL*] of the date of such written notice); or

(ii)    intends [*CONFIDENTIAL*], then the Acquiring Party or its relevant
Affiliate shall use all reasonable efforts to effect [*CONFIDENTIAL*] as quickly
as possible (and in any event within [*CONFIDENTIAL*] of the date of such
written notice); provided, that, if the Acquiring Party or its relevant
Affiliate fails to complete [*CONFIDENTIAL*] within such [*CONFIDENTIAL*], but
can demonstrate to the other Party’s reasonable satisfaction that it used all
reasonable efforts to effect [*CONFIDENTIAL*] within such [*CONFIDENTIAL*]
period, then, unless otherwise required by Applicable Law, such [*CONFIDENTIAL*]
period shall be extended for such additional reasonable period thereafter as is
necessary to enable such Competitive Program [*CONFIDENTIAL*], not to exceed an
additional [*CONFIDENTIAL*] ; provided, further, however, that all times periods
under this Section 2.7(b) (Non-Compete) shall be extended for such period as is
necessary to obtain any governmental or Regulatory Approvals required to
complete [*CONFIDENTIAL*] for so long as the Acquiring Party or its relevant
Affiliate is using good faith efforts to obtain such approvals.

ARTICLE 3

GOVERNANCE

3.1    Joint Steering Committee. Within [*CONFIDENTIAL*] after the Effective
Date, the Parties shall establish a joint steering committee (the “JSC”),
composed of three (3) representatives of each Party (or such other equal number
of representative from each Party as the Parties may agree in writing from
time-to-time), to coordinate the Development of the Compound and Products and
Commercialization Products in the Field in the Territory. Each JSC
representative shall have appropriate knowledge and expertise and sufficient
seniority within the applicable Party to make decisions arising within the scope
of the JSC’s responsibilities. The JSC shall:

(a)    serve as a forum for discussing and supervising Development of the
Compound and Products in the Field in the Territory, including reviewing and
approving the Development Plans and amendments to the Development Plans, and
coordinating the conduct of the Development activities, including KHK’s
participation in global studies;

(b)    serve as a forum for discussing and supervising the Commercialization of
Products in the Field in the Territory, including by reviewing the
Commercialization strategy for the Territory, reviewing the Commercialization
Plans and amendments and updates to the Commercialization Plans, and
coordinating the conduct of the Commercialization activities; and

(c)    serve as a forum, if applicable, for discussing any Development of
Compound or Product in the Territory in combination with compound or product
other than [*CONFIDENTIAL*]. For the avoidance of doubt, if any such other
compound or product is

 

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Controlled by MEI and is not a Compound or Product, it is understood that KHK is
not being granted any license under MEI Patents to exploit such other compound
or product used in such combination.

The JSC shall have only such powers as are expressly assigned to it in this
Agreement, and such powers shall be subject to the terms and conditions of this
Agreement. For clarity, The JSC shall not have any right, power or authority:
(i) to determine any issue in a manner that would conflict with the express
terms and conditions of this Agreement; or (ii) to modify or amend the terms and
conditions of this Agreement.

3.2    JSC Membership and Meetings.

(a)    JSC Members. Each Party shall designate one of its JSC representatives to
act as co-chairpersons of the JSC. Each Party may replace its JSC
representatives (and its chairperson) on written notice to the other Party, but
each Party shall strive to maintain continuity. The JSC members shall jointly
prepare an agenda and shall direct the preparation of reasonably detailed
minutes for each JSC meeting, respectively, which shall be circulated within
[*CONFIDENTIAL*] of such meeting and thereafter approved by both Parties as soon
as possible; provided, that in the event of any disagreement it shall be noted
in the minutes and finalized with such notation(s).

(b)    JSC Meetings. The JSC will hold its first meeting as soon as practicable
but no later than [*CONFIDENTIAL*] of Effective Date. At this first meeting, the
JSC will address the initial transfer of MEI Know-How provided for in
Section 2.4 (Transfer of Know-How and Materials) and any other topics the
Parties deem appropriate. Thereafter, the JSC shall hold meetings at such times
as it elects to do so, but in no event shall such meetings be held less
frequently than [*CONFIDENTIAL*]. Meetings may be held in person, or by audio or
video teleconference; provided, that unless otherwise agreed by both Parties, at
least [*CONFIDENTIAL*] per year shall be held in person, and all in-person JSC
meetings shall be held at locations mutually agreed upon by the Parties. Each
Party shall be responsible for all of its own expenses of participating in JSC
meetings.

(c)    Non-Member Attendance. Each Party may from time to time invite a
reasonable number of participants, in addition to its representative, to attend
JSC meetings in a non-voting capacity; provided, that if either Party intends to
have any Third Party (including any consultant) attend such a meeting, such
Party shall provide at least [*CONFIDENTIAL*] prior written notice (to the
extent practicable, and otherwise as soon as possible) to the other Party and
obtain the other Party’s approval for such Third Party to attend such meeting,
which approval shall not be unreasonably withheld, conditioned or delayed. Such
Party shall ensure that such Third Party is bound by confidentiality and non-use
obligations consistent with the terms of this Agreement.

(d)    Working Group. In addition to the JSC, the Parties may establish under
the JSC one or more working groups to focus on discussions, information sharing
and day-to-day

 

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conduct of activities concerning Development, regulatory, supply of the Product
or any other areas of concern (the “Working Group”). Each Party may appoint its
own members of working group with expertise and responsibilities of the areas
relevant to the purpose of the Working Group and such member may be replaced
from time to time. For clarity, the decision to establish any Working Group
requires the mutual agreement of the Parties and is not a determination that is
under the jurisdiction of the JSC; provided, that, once established, Working
Groups will report to the JSC and any disagreements on a Working Group will be
referred to the JSC for resolution.

(e)    Appointment Not an Obligation. The appointment of members to the JSC is a
right of each Party and not an obligation and shall not be a “deliverable” as
defined in EITF Issue No. 00-21. Each Party shall be free to determine not to
appoint members to the JSC. If a Party (the “non-Appointing Party”) does not
appoint members to the JSC, it shall not be a breach of this Agreement, nor
shall any consideration be required to be returned, and the other Party (the
“Appointing Party”) shall have the votes and the decision-making power of the
non-Appointing Party unless and until such members are appointed by the
non-Appointing Party.

(f)    Discontinuation; Disbandment. Subject to Section 3.2(e) (Appointment Not
an Obligation), once established, the JSC shall continue to exist until the
first to occur of: (i) the Parties mutually agreeing to disband the JSC; and
(ii) MEI providing to KHK written notice of its intention to disband the JSC.
Upon the occurrence of either of the foregoing, (A) the JSC shall disband, have
no further responsibilities or authority under this Agreement and will be
considered dissolved by the Parties and (B) any requirement of a Party to
provide information or other materials to the JSC shall be deemed a requirement
to provide such information or other materials to the other Party and the
Parties shall retain their respective decision making authority in accordance
with Section 3.3 (JSC Decision Making) over matters that are subject to the
review or approval by the JSC hereunder, with any disputes to be resolved
pursuant to Section 14.9 (Dispute Resolution).

3.3    JSC Decision-Making. All decisions of the JSC shall be made by unanimous
vote, with each Party’s representatives collectively having one (1) vote. If
after reasonable discussion and good faith consideration of each Party’s view on
a particular matter before the JSC, the representatives of the Parties cannot
reach an agreement as to such matter within [*CONFIDENTIAL*] after such matter
was brought to the JSC for resolution, such disagreement shall be referred to
the Chief Executive Officer of MEI (or his or her designee) and the Chief
Executive Officer of KHK (or his or her designee) (collectively, the “Executive
Officers”) for resolution, who shall use good faith efforts to resolve such
matter within [*CONFIDENTIAL*] after it is referred to them. If the Executive
Officers are unable to reach consensus on any such matter during such period,
then the Chief Executive Officer of KHK shall have the right to make the final
decision except with respect to: [*CONFIDENTIAL*], and in each case of
subclauses [*CONFIDENTIAL*] through [*CONFIDENTIAL*], inclusive, the Chief
Executive Officer of MEI shall have the right to make the final decision.
Notwithstanding the foregoing, the Parties hereby agree that matters explicitly
reserved to the consent, approval or other decision-making authority of one or
both Parties, as expressly provided in this Agreement, are outside the

 

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jurisdiction and authority of the JSC and not subject to the decision-making
process set forth in this Section 3.3 (JSC Decision-Making).

3.4    Alliance Managers. As soon as practicable after the Effective Date, each
Party shall appoint a representative to act as its alliance manager under this
Agreement (the “Alliance Manager”). The Alliance Managers shall serve as a key
contact point between the Parties to facilitate the collaboration hereunder. A
Party may replace its Alliance Managers at any time by providing notice in
writing to the other Party.

ARTICLE 4

DEVELOPMENT

4.1    General. Subject to the terms and conditions of this Agreement, KHK shall
be responsible for the Development of the Compound and Products in the Field in
the Territory, including conduct of preclinical studies and Clinical Trials that
are required by Regulatory Authority in the Territory to support Regulatory
Approval of the Compound and Products in the Field in the Territory.

4.2    Development Plan. KHK shall conduct all Development of the Compound and
Products in the Field in the Territory in accordance with a comprehensive
development plan (as amended in accordance with this Agreement, the “Development
Plan”), including the timelines set forth therein, the initial version of which
is attached to this Agreement as Schedule 4.2. Following the Effective Date, KHK
shall deliver an updated Development Plan to include, among other things, the
Indications for which the Product is to be Developed, critical activities to be
undertaken, certain timelines, go/no go decision points and relevant decision
criteria, and feedback from the PMDA (which PMDA feedback will be reflected in a
promptly updated Development Plan that is provided by KHK to MEI), if
applicable. The Development Plan shall be focused on efficiently obtaining
Regulatory Approval for the Product in the Field in the Territory, while taking
into consideration actual and potential Development, Regulatory Approval or
commercial impacts on the Product outside of the Territory and/or the Field.
During the Term, KHK will review the Development Plan from time to time, not
less than [*CONFIDENTIAL*] and amend such Development Plan on an ongoing basis
as necessary. Any such amendment to the Development Plan will be reviewed,
discussed and approved by the JSC; provided, that, under no circumstances shall
KHK conduct any Development activities as part of a Development Plan that would
reasonably be expected to have a material adverse safety effect on the
Development or Commercialization of the Compound outside of the Territory. The
then-current Development Plan will at all times contain at least that level of
detail and cover at least the same matters (to the extent applicable) as the
prior iteration of the Development Plan.

4.3    Development Diligence.

(a)    KHK, directly and/or with or through Affiliates or Sublicensees, shall
use Commercially Reasonable Efforts to Develop, and to obtain Regulatory
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Compound and Product in the Field in the Territory in accordance with the
Development Plan for the Indications of [*CONFIDENTIAL*]. The Parties
acknowledge and agree that KHK’s failure to undertake any Development activities
for a period of [*CONFIDENTIAL*] shall be deemed to be a material breach of
KHK’s Development diligence obligations under this Section 4.3 (Development
Diligence) to the extent that there are no unexpected material delays in global
Clinical Trials conducted by MEI that affect KHK’s Development in the Territory.

(b)    MEI shall conduct (i) subject to and using Commercially Reasonable
Efforts, [*CONFIDENTIAL*]; provided, that the Parties acknowledge and agree that
MEI shall be excused from its obligations under this Section 4.3(b) (Development
Diligence) if: [*CONFIDENTIAL*].

4.4    Development Costs. KHK shall be solely responsible for the cost for the
Development of Compounds and Products in the Field in the Territory, including
all of the costs in connection with seeking Regulatory Approval of the Product
in the Territory except as otherwise set forth in Section 6.1 (Development
Supply) of this Agreement. In the case of KHK joining in the Territory
[*CONFIDENTIAL*] or its designees, KHK shall [*CONFIDENTIAL*]. In such case, MEI
shall invoice KHK from time-to-time in connection with costs and expenses
incurred in connection with the foregoing, and KHK shall pay such invoices
within [*CONFIDENTIAL*] of receipt of an invoice thereof.

4.5    Development Records. Each Party shall, and shall cause its Affiliates and
Sublicensees to, maintain, in good scientific manner, complete and accurate
books and records pertaining to Development of the Compound and Products
hereunder, in sufficient detail to verify compliance with its obligations under
this Agreement. Such books and records shall (a) be appropriate for patent and
regulatory purposes, (b) be in compliance with Applicable Law, (c) properly
reflect all work done and results achieved in the performance of Development
activities hereunder, (d) record only such activities and not include or be
commingled with records of activities outside the scope of this Agreement, and
(e) be retained by each Party for [*CONFIDENTIAL*] after the expiration or
termination of this Agreement or for such longer period as may be required by
Applicable Law, and during such period, neither Party shall dispose of any such
books and records without the prior written consent of the other Party. Both
Parties shall have the right, during normal business hours and upon reasonable
notice, to inspect and copy all such books and records maintained pursuant to
this Section 4.5 (Development Records), provided that requesting Party shall
bear all the costs for such inspection.

4.6    Development Reports. Without limiting Section 4.5 (Development Records),
at least [*CONFIDENTIAL*] prior to each meeting of the JSC and in any event not
less than [*CONFIDENTIAL*], during which KHK is conducting Development
activities hereunder, KHK shall provide the JSC with a detailed written report
of such Development activities it has performed, or caused to be performed,
since the preceding report, its Development activities in process, and the
future activities it expects to initiate during the following [*CONFIDENTIAL*]
period. Each such report shall contain sufficient detail to enable the JSC to
assess KHK’s compliance with its obligations set forth in Section 4.2
(Development Plan) and Section 4.3

 

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(Development Diligence), including: (a) KHK’s, or its Affiliates’ or
Sublicensees’ activities with respect to achieving Regulatory Approvals of
Products in the Territory; (b) results of Clinical Trials and other Development
activities not otherwise provided under subsection (a) above; and (c) the
Regulatory Approvals that KHK or any of its Affiliates reasonably expect to
make, seek or attempt to obtain in the Territory.

4.7    Provision of Development Data. During the Term, with no additional costs
to MEI, KHK shall, as soon as reasonably practicable following reasonable
request by MEI, provide MEI with copies of all data, as well as all other
information requested by MEI, generated by KHK in the conduct of any Clinical
Trials involving the Compound and Product (including all of KHK’s Regulatory
Data and KHK Data) that MEI determines would be necessary or useful to Develop
the Products outside of the Territory.

4.8    Compliance. KHK agrees that in performing its obligations and exercising
its rights under this Agreement: (a) it shall comply with all Applicable Laws;
and (b) without limiting Section 12.2(b) (Debarment), it will not employ or
engage any Person who has been debarred or disqualified by any Regulatory
Authority, or is the subject of debarment or disqualification proceedings by a
Regulatory Authority.

4.9    Subcontractor. Without limiting Section 2.2 (Sublicense Rights) to the
extent applicable, KHK shall have the right to engage subcontractors for the
performance of its obligations under the Agreement; provided, however, that KHK
shall remain responsible for and be guarantor of the performance by its
Affiliates and Third Party subcontractors and shall cause its Affiliates and
Third Party subcontractors to comply with the provisions of this Agreement in
connection with such performance, including obligations of confidentiality and
non-use of MEI’s Confidential Information and invention assignment consistent
with those contained herein. KHK shall remain responsible and liable for the
performance any such subcontractor(s) and KHK hereby expressly waives any
requirement that MEI exhaust any right, power or remedy, or proceed against an
Affiliate or a Third Party subcontractor, for any obligation or performance
hereunder prior to proceeding directly against KHK.

ARTICLE 5

REGULATORY

5.1    Regulatory Responsibilities. KHK shall be responsible for all regulatory
activities necessary to obtain and maintain Regulatory Approval of Products in
the Field in the Territory. KHK shall keep MEI informed of regulatory
developments related to the Compound and Products in the Field in the Territory
both via the JSC and KHK’s reports pursuant to Section 4.6. (Development
Reports).

5.2    Regulatory Materials. KHK shall prepare and submit all Regulatory
Materials for Products in the Field in the Territory and shall own all
Regulatory Materials and Regulatory Approvals for Products in the Field in the
Territory. KHK shall timely notify MEI of all material submissions, filings with
any Regulatory Authority and all material notices, correspondences,

 

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communications, or other filings received from any Regulatory Authority that are
related to any Product in the Territory. Moreover, with respect to submission of
(i) Marketing Authorization Application in the Territory, KHK will provide MEI
with drafts of such filing and a reasonable English summary of such filing
(which summary will include key information) not less than [*CONFIDENTIAL*]
prior to submission so that MEI may review and comment, and (ii) other
Regulatory Materials to the any Regulatory Authority in the Territory, KHK will
provide MEI with drafts of such submissions and reasonable English summaries of
such submissions (which summaries will include key information) not less than
[*CONFIDENTIAL*] prior to document finalization so that MEI may review and
comment on them; provided, that any failure by MEI to provide comments within
the applicable review period shall not delay KHK’s submission date. KHK shall
consider all comments of MEI in good faith, taking into account the best
interests of the Development and/or Commercialization of the Product. For
clarity, such English summaries to be provided prior to document submission or
finalization, as applicable, shall include [*CONFIDENTIAL*]. KHK shall also
provide to MEI copies of the final submitted version of each Regulatory Material
and each granted Regulatory Approval in the Territory and an English translation
of such Regulatory Approval. In addition, upon reasonable request by MEI, KHK
shall also provide MEI with any Regulatory Material(s) not previously provided
under this Section 5.2 (Regulatory Materials). Upon request by KHK, MEI shall,
subject to the reasonable availability of MEI’s relevant personnel, assist KHK
in seeking and obtaining Regulatory Approvals with respect to Product in the
Territory, including: [*CONFIDENTIAL*] provided, that MEI shall have no
obligation under this Section 5.2 (Regulatory Materials) (or under any other
provision of this Agreement) to assist KHK with respect to regulatory matters in
excess of [*CONFIDENTIAL*] and any such assistance provided by MEI in excess of
such limit shall be paid for by KHK at a rate of [*CONFIDENTIAL*] per hour.

5.3    Regulatory Inspections. If a Regulatory Authority in the Territory
desires to conduct an inspection or audit of MEI’s facilities or facilities
under contract with MEI with regard to Manufacturing of the Compound or Product,
MEI shall cooperate with such Regulatory Authority during such inspection or
audit and shall [*CONFIDENTIAL*]. As reasonably requested by KHK in a timely
manner MEI shall allow representative(s), details of which shall be discussed
under the Quality Agreements, from KHK to attend any inspection or audit
required by Regulatory Authority (as and to the extent permitted by such
Regulatory Authority and any applicable CMOs) as a silent observer. KHK shall
reimburse MEI for any costs MEI incurs under this Section 5.3 (Regulatory
Inspections) promptly following receipt of an invoice for any such costs.
Notwithstanding anything to the contrary herein, and without limiting
Section 13.5 (Special Indirect and Other Losses), MEI’s liability toward KHK
caused by such a CMO’s failure to perform its obligation under this Section 5.3
(Regulatory Inspections) [*CONFIDENTIAL*] shall be limited to [*CONFIDENTIAL*].
For the avoidance of any doubt, this limitation of liability in the previous
sentence shall not affect MEI’s liability toward KHK under any other Sections of
this Agreement.

5.4    Regulatory Inspections for Improper Activities. If any Regulatory
Authority (a) contacts KHK or any of its Affiliates or any Sublicensee with
respect to the alleged improper

 

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Development, Packaging, Manufacture or Commercialization of any Product,
(b) conducts, or gives notice of its intent to conduct, an inspection at KHK’s
or its Affiliate’s or a Sublicensee’s (including the facilities of any
subcontractor(s) of any of the foregoing) facilities used in the Development of
Products, or (c) takes, or gives notice of its intent to take, any other
regulatory action with respect to any activity of KHK or its Affiliates or a
Sublicensee that could reasonably be expected to adversely affect any
Development, Packaging, Manufacture or Commercialization activities with respect
to the Product in or outside of the Territory, then KHK will (i) promptly notify
MEI of such contact, inspection or notice and (ii) provide copies of all reports
and correspondence received from or provided to any such Regulatory Authority in
connection with any of the matters identified in the foregoing clauses (a), (b)
or (c). In addition, MEI shall have the right to attend any such meetings or
inspections to the extent not prohibited by such Regulatory Authority.

5.5    Sharing of Regulatory Data and Filings; Pricing Approval Documentation.

(a)    MEI; MEI Licensees. MEI shall make available (1) MEI’s, its Affiliates’
or its licensee’s material Regulatory Data and material Regulatory Materials to
KHK, in each case, solely to the extent specific to the Clinical Trials
described in subclauses (ii) and (iii) of Section 4.3(b) (Development
Diligence), and (2) [*CONFIDENTIAL*], which will be used for a MAA submission
for Product in the United States, to KHK, its Affiliates, and Sublicensees, for
no additional consideration, for use solely in the Development and
Commercialization of the Compound and the Products in the Field in the Territory
by KHK, its Affiliates or Sublicensees, which was not previously provided to KHK
under Section 2.4(a) (Transfer of Know-How and Materials) and solely for use in
exercising the rights licensed to KHK hereunder.    MEI shall ensure that all
licensees of MEI shall be required to provide such material Regulatory Data and
material Regulatory Materials to MEI for use by KHK. Without prejudice to the
foregoing, MEI shall use Commercially Reasonable Efforts to make available other
material Regulatory Data and material Regulatory Materials (i.e., other than
such related to the Clinical Trials referenced above) of MEI or its Affiliates
or its licensees to KHK, its Affiliates, and Sublicensees (by way of MEI and not
directly to any such entities), for no additional consideration, for use solely
in the Development, Packaging and Commercialization of the Products in the Field
in the Territory.

(b)    KHK.

(i)    KHK shall make available KHK’s, its Affiliates’, and its Sublicensees’
material Regulatory Data and material Regulatory Materials to MEI, its
Affiliates, and licensees, for no additional consideration, for use solely in
the Development and Commercialization of the Compound and the Products outside
the Territory and Manufacturing of the Compound and the Products. MEI shall not
provide any Regulatory Data or Regulatory Materials of KHK, its Affiliates, or
Sublicensees to any of MEI’s licensees who do not agree pursuant to
Section 5.5(a) (MEI; MEI Licensees) to permit its Regulatory Data and Regulatory
Materials related to the Clinical Trials described in subclauses (i) and (ii) of
Section 4.3(b) (Development Diligence) to be shared with KHK, its Affiliates,
and its Sublicensees.

 

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(ii)    Upon MEI’s reasonable request, from time-to-time, KHK shall provide to
MEI KHK’s, its Affiliates’, and its Sublicensees’ materials, including
correspondence and submissions, related to negotiating for, obtaining, and
maintaining Pricing Approval and shall discuss the same with MEI upon MEI’s
request.

(c)    Maintenance. Each Party shall provide its Regulatory Data and Regulatory
Materials, and each Party shall receive and maintain the other Party’s
Regulatory Data and Regulatory Materials, in conformity with all Applicable Laws
(including data privacy laws) and in a good scientific manner appropriate for
patent and regulatory purposes. The Parties acknowledge and agree that it may be
necessary to amend and supplement this Agreement, or to enter into one or more
separate agreements, in order to facilitate compliance with applicable data
privacy laws.

5.6    Rights of Reference. MEI hereby grants KHK the right to use and reference
all Regulatory Materials (including data contained therein) and Regulatory
Approvals for the Compound and Products outside the Territory submitted by or on
behalf of MEI, its Affiliates or licensees (to the extent that MEI has the right
to grant such cross reference rights on behalf of its licensee(s)), which right
may be used by KHK only in the Field in the Territory [*CONFIDENTIAL*] to KHK.
MEI shall use Commercially Reasonable Efforts to cause all relevant licensees of
MEI to grant such cross reference rights, with right to sublicense to KHK,
provided that if MEI, its Affiliates or its licensees does not grant such cross
reference rights to KHK to either or both of the Clinical Trials described in
subclauses (ii) and/or (iii) of Section 4.3(b) (Development Diligence), then KHK
[*CONFIDENTIAL*] that is the subject of such Clinical Trial(s) for which such
cross reference rights are not granted (and, accordingly, [*CONFIDENTIAL*] which
relate to such Clinical Trial(s)). KHK hereby grants MEI the right to use and
reference all Regulatory Materials (including data contained therein) and
Regulatory Approvals for the Compound and Products in the Territory submitted by
or on behalf of KHK, its Affiliates or Sublicensees, which right may be used by
MEI only outside the Territory [*CONFIDENTIAL*] to MEI. KHK shall cause all
relevant Sublicensees of KHK to grant such cross reference rights, with right to
sublicense to MEI. Each Party shall execute any documentation that is reasonably
requested by the other Party to facilitate the exercise of such rights of
reference. MEI shall not provide any cross-reference rights of KHK, its
Affiliates, or Sublicensees to any of MEI’s licensees who do not agree to permit
its Regulatory Materials to be cross-referenced by KHK, its Affiliates, and its
Sublicensees.

5.7    Remedial Actions. Each Party will notify the other Party immediately, and
promptly confirm such notice in writing, if it obtains information indicating
that a Product may be subject to any recall, withdrawal, corrective action or
other regulatory action with respect to the Product taken by virtue of
Applicable Laws (a “Remedial Action”). The Parties will assist each other in
gathering and evaluating such information as is necessary to determine the
necessity of conducting a Remedial Action. KHK shall have the sole discretion
with respect to any matters relating to any Remedial Action with respect to any
Product in the Field in the Territory, including the decision to commence such
Remedial Action and the control over the conduct of such Remedial Action,
provided that KHK shall notify MEI prior to making any public disclosure of

 

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Remedial Action and shall keep MEI regularly informed regarding any such
Remedial Action. KHK shall be solely responsible for the cost and expense of any
such Remedial Action in the Field in the Territory. MEI shall have the sole
discretion with respect to any matters relating to any Remedial Action with
respect to any Product outside the Territory, including the decision to commence
such Remedial Action and the control over the conduct of such Remedial Action,
provided that MEI shall notify KHK prior to making any public disclosure of
Remedial Action and shall keep KHK regularly informed regarding any such
Remedial Action. MEI shall be solely responsible for the cost and expense of any
such Remedial Action outside the Territory. Notwithstanding anything to the
contrary in this Section 5.7 (Remedial Actions), the Parties acknowledge and
agree that supply and/or quality agreements between the Parties may vary and/or
augment the rights and responsibilities of the Parties with respect to Remedial
Actions. Without prejudice to other rights and remedies set forth in this
Agreement, or any other agreement executed pursuant to this Agreement, including
the Clinical Supply Agreement, the Commercial Supply Agreement, the
Pharmacovigilance Agreement and the Quality Agreements, all internal and
external costs (excluding any costs or damages arising from a Claims by a Third
Party to which a Party is entitled to indemnification under Article 13
(Indemnification; Liability)) incurred by the Parties in connection with
implementing a recall or withdrawal (a “Recall”) with respect to the Product in
the Field in the Territory (“Recall Costs”) shall be allocated between MEI and
KHK as follows: .

(a)    [*CONFIDENTIAL*]

(b)    [*CONFIDENTIAL*]

(c)    [*CONFIDENTIAL*]

5.8    Pharmacovigilance. As soon as practicable, but in any case within
[*CONFIDENTIAL*] from the Effective Date, the Parties shall define and finalize
the actions that the Parties shall employ with respect to the Compound and
Products to protect patients and promote their well-being in a written
pharmacovigilance agreement (the “Pharmacovigilance Agreement”), with MEI (or
its designee) as the global safety database holder. Absent the execution of a
Pharmacovigilance Agreement, KHK shall not ship Product to any clinical study
site in the Territory. These responsibilities shall include mutually acceptable
guidelines and procedures for the receipt, investigation, recordation,
communication, and exchange (as between the Parties) of adverse event reports
and any other information concerning the safety of the Compound and Products and
shall ensure that adverse event associated with the Products and other safety
information is exchanged according to a schedule that will permit each Party
(and its designees or, solely with respect to MEI, its other licensees) to
comply with Applicable Laws and regulatory requirements in their Respective
Territories. Such guidelines and procedures shall be in accordance with, and
enable the Parties to fulfill, local and national regulatory reporting
obligations under applicable laws and regulations.

5.9    Personally-Identifiable Data / GDPR Compliance. All Confidential
Information containing personally-identifiable data or personal data (as defined
in the General Data Protection

 

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Regulation (EU) 2016/679 (“GDPR”)) shall be processed by KHK and its Affiliates,
sublicensees, and subcontractors in accordance with all data protection and
privacy laws, rules and regulations applicable to such data, and in accordance
with the GDPR Joint Controller and Onward Transfer Agreement attached in
Schedule 5.9 (“GDPR Agreement”), and contemporaneously executed with the
execution of this Agreement, and other agreements that are reasonably required
to achieve or to ensure full GDPR compliance and/or compliance of either Party
with national laws and regulations for such personally-identifiable data or
personal data.

ARTICLE 6

MANUFACTURING

6.1    Development Supply. MEI shall [*CONFIDENTIAL*] the Product, Compound,
placebo and other related materials (including empty capsules, empty bottles and
caps for the bottles, reference standards and impurities) (collectively, “Supply
Items”) to KHK for use in the Development of the Product in the Territory,
without further consideration by KHK to MEI, other than that set forth in
Article 8 (Financial Provisions) below. The Supply Items shall be made available
to KHK FCA (as defined in INCOTERMS 2010) at the warehouse locations specified
in Schedule 6.1. For clarity, KHK shall bear all costs related to shipping,
Taxes, and acceptance testing associated with such supply. Subject to the
specific costs that KHK is responsible for in accordance with this Section 6.1
(Development Supply), Supply Items supplied for Development purposes and used in
accordance with the Development Plan will be provided [*CONFIDENTIAL*].

(a)    Initial Supply. MEI shall [*CONFIDENTIAL*] the Supply Items to KHK up to
the amounts and in the forms set forth on Schedule 6.1 and on the timing set
forth in such schedule. MEI shall make available to KHK the Supply Items up to
the amounts and in the forms specified on Schedule 6.1 with appropriate
documentation (i.e., appropriate certificates of analysis and/or compliance, as
applicable).

(b)    Further Development Supply. Within [*CONFIDENTIAL*] of the Effective
Date, the Parties shall enter into a supply agreement which shall include
customary provisions to address the forecasting, order, delivery, and other
customary provisions applicable to the supply of the Supply Items for
Development purpose after the supply set forth in Section 6.1(a) (Initial
Supply) (the “Clinical Supply Agreement”). MEI shall [*CONFIDENTIAL*] the Supply
Items to KHK with the amounts and in the forms, and on the timing set forth in
Clinical Supply Agreement, which KHK agrees to accept in accordance with the
Clinical Quality Agreement. MEI shall make available to KHK the Supply Items
with appropriate documentation (i.e., appropriate certificates of analysis
and/or compliance, as applicable in accordance with the Clinical Quality
Agreement) following receipt of a written request therefor from KHK that
specifies the quantities and forms desired. Following discussions with the PMDA
and/or a change to the Development Plan that is approved in writing by MEI, KHK
may request changes to the amounts, forms and timing of the supply of the Supply
Items set forth in this Section 6.1(b) (Further Development Supply) which the
Parties shall discuss in good faith under the governance of Clinical Supply
Agreement, provided that MEI shall use Commercially Reasonable Efforts to

 

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comply with such requests by KHK. Notwithstanding forgoing, in case, after
completion of KHK’s first [*CONFIDENTIAL*] in the Territory, there is an
amendment to the Development Plan for the Product to be Developed in the
Territory with [*CONFIDENTIAL*], onward supply of [*CONFIDENTIAL*] for
Development purposes will be provided to KHK [*CONFIDENTIAL*] and further
manufacturing and supply, including commercial supply and which Party will be
responsible for supplying such, shall be discussed in good faith between the
Parties.

6.2    Packaging; Certain Other Manufacturing Activities. Subject to the
remainder of this Section 6.2 (Packaging; Certain Other Manufacturing
Activities), MEI shall supply the Product to KHK in its bulk capsule form unless
otherwise defined and/or agreed by the Parties. KHK or its designated Third
Party shall be responsible (at its sole cost and expense) for all final Product
labeling and packaging (whether in commercial or clinical packaging
presentation), including packaging the capsules to its primary package,
secondary packaging, insertion of materials such as patient inserts, providing
patient medication guides, professional inserts and any other written, printed
or graphic materials accompanying the Product and considered to be part of the
finished Product packaging and labeling, and handling storage, quality control,
quality assurance, testing and release of Product (collectively, “Package” or
“Packaging”). For clarity, KHK’s Packaging responsibilities apply to the Product
supplied by MEI under Section 6.1 (Development Supply) and Section 6.3
(Commercial Supply). KHK or its designated Third Party shall ensure that all
such Packaging complies with Applicable Laws and the Regulatory Approvals for
the Product. To the extent that a Third Party is involved in Packaging or other
activities described in this Section 6.2 (Packaging; Certain Other Manufacturing
Activities), KHK shall be wholly responsible for, and bear one hundred percent
(100%) of the costs related to, qualifying such Third Party to perform such
activities. Notwithstanding the foregoing, MEI shall be responsible for the
physical performance of Packaging for global Clinical Trials, including the
portion of any such Clinical Trials in the Territory; provided, that KHK shall
be responsible for the costs associated with such Packaging for Product to be
used in the Territory in accordance with Section 4.4 (Development Costs).

6.3    Commercial Supply. MEI shall Manufacture, or arrange for a Third Party to
Manufacture, and [*CONFIDENTIAL*] all of KHK’s requirements of the Product for
commercial sale in the Field in the Territory in accordance with a commercial
supply agreement, which shall include customary provisions to address the
forecasting, order, delivery and other customary provisions applicable to the
commercial supply of pharmaceuticals from a licensor to a licensee (“Commercial
Supply Agreement”). MEI shall [*CONFIDENTIAL*] the Product to KHK in accordance
with the conditions set forth in Commercial Supply Agreement, which KHK agrees
to accept in accordance with the Commercial Quality Agreement. MEI shall make
available to KHK the Product with appropriate documentation (i.e., appropriate
certificates of analysis and/or compliance, as applicable in accordance with the
Commercial Quality Agreement) following receipt of a written request therefor
from KHK that specifies the quantities and forms desired. The Commercial Supply
Agreement shall be negotiated by the Parties in good faith after

 

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the Effective Date; provided, that the Parties acknowledge and agree that the
supply price for Product intended for Commercial purposes will be
[*CONFIDENTIAL*].

6.4    Quality Agreements.

(a)    At the same time that the Parties enter into the Clinical Supply
Agreement, the Parties shall enter into a quality agreement which shall include
customary provisions to address the quality of the Product and related
regulatory issues, Parties’ audit rights relating thereto, product
specifications and other customary provisions applicable to the clinical supply
of the pharmaceuticals (the “Clinical Quality Agreement”).

(b)    At the same time that the Parties enter into the Commercial Supply
Agreement, the Parties shall enter into a quality agreement which shall include
customary provisions to address the quality of the Product and related
regulatory issues, Parties’ audit rights relating thereto, product
specifications and other customary provisions applicable to the commercial
supply of pharmaceuticals (the “Commercial Quality Agreement”). MEI shall use
Commercial Reasonable Effort, but shall not be obligated to incur any costs, to
cause MEI CMOs to be a party to the Commercial Quality Agreement if required by
Applicable Law. Clinical Quality Agreement and the Commercial Quality Agreement
are collectively “Quality Agreements”.

6.5    Manufacturing Option.

(a)    MEI hereby grants KHK an option under MEI Technology to Manufacture and
to have Manufactured the Compound and/or the Product in the Territory or outside
of the Territory exclusively for Development and Commercialization in the
Territory, which can be exercised by written notice from KHK to MEI (i) in the
event that MEI experiences a “supply failure” with respect to supplying the
Compound or Product to KHK under the Commercial Supply Agreement as “supply
failure” is defined in the Commercial Supply Agreement and/or Commercial Quality
Agreement; (ii) if MEI’s cost of Manufacturing under the Commercial Supply
Agreement increases by more than [*CONFIDENTIAL*] from one Calendar Year to the
next for reasons other than raw material costs; or (iii) for a period of
[*CONFIDENTIAL*] starting [*CONFIDENTIAL*] prior to the anticipated expiration
of the Term (the “Manufacturing Option”); provided, that, the Manufacturing
Option shall expire [*CONFIDENTIAL*] prior to the anticipated expiration of the
Agreement.

(b)    If the Manufacturing Option is exercised, then:

(i)    for a transition period of not less than [*CONFIDENTIAL*] (but only
longer if the Parties mutually agree) MEI shall continue to supply the Compound
and/or the Product to KHK for Development and Commercialization (in accordance
with, as applicable, this Agreement or one or more separate supply agreement(s)
between the Parties) (the “Transition Period”). MEI shall have no obligation to
supply KHK with the Compound and/or Product after the Transition Period.

 

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(ii)    during Transition Period, MEI shall make available and transfer to KHK,
copies of existing embodiments of the MEI Know-How in MEI’s possession that are
necessary or reasonably useful in, and as of such date are being used by MEI to,
Manufacture of the Compound and Products solely for KHK to Manufacturer or have
Manufactured (to the extent permitted by this Agreement) the Compound and
Products in accordance with the terms and conditions of this Agreement with no
additional consideration during Transition Period. Subject to the proviso in the
foregoing sentence, MEI shall use Commercially Reasonable Efforts to provide KHK
with reasonable assistance to facilitate the practice of such Manufacturing
rights by KHK, its Affiliate or its Sublicensee. In the event that KHK elects to
have one or more of MEI’s existing contract manufacturers to Manufacture the
Product and/or Compound for the Territory, MEI shall reasonably cooperate to
allow KHK to enter into a direct contract manufacturing agreement with such
contract manufacturers. Any Product Manufactured by KHK pursuant to the
foregoing rights shall be exclusively sold in the Territory. Any regulatory
activities that are necessary for KHK to engage the foregoing Manufacture of the
Product or the Compound shall be conducted by the Parties in accordance with
Section 4.3 (Development Diligence).

ARTICLE 7

COMMERCIALIZATION

7.1    General. Subject to the terms and conditions of this Agreement, KHK shall
be responsible for all aspects of the Commercialization of the Products in the
Field in the Territory, including, solely with respect to the Products in the
Field in the Territory: (a) developing and executing a commercial launch and
pre-launch plan, (b) negotiating with applicable Government Authorities in the
Territory regarding the price and reimbursement status of the Products and
obtaining and maintaining the NHI Price Approvals; (c) marketing, medical
affairs, and promotion; (d) booking sales and distribution and performance of
related services; (e) handling all aspects of order processing, invoicing and
collection, inventory and receivables; (f) providing customer support, including
handling medical queries, and performing other related functions; and
(g) conforming its practices and procedures to Applicable Law relating to the
marketing, detailing and promotion of Products in the Field in the Territory. As
between the Parties, KHK shall be solely responsible for the costs and expenses
of Commercialization of the Products in the Field in the Territory.

7.2    Commercialization Plan. KHK shall conduct all Commercialization of
Products in the Field in the Territory in accordance with a comprehensive
commercialization plan that is consistent with this Agreement (as amended in
accordance with this Agreement, the “Commercialization Plan”), the initial
version of which KHK will prepare and provide to the JSC for review no later
than [*CONFIDENTIAL*] after initial submission of Marketing Authorization
Application of Product in the Field in the Territory, and such plan will include
a pricing strategy for the Product. From time to time, but at least once every
[*CONFIDENTIAL*], KHK will update the Commercialization Plan and submit such
updated plan to the JSC for review and discussion. Notwithstanding anything to
the contrary herein, if the terms of the Commercialization Plan contradict, or
create actual or potential inconsistencies with, the terms of

 

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this Agreement, then the terms of this Agreement shall govern and KHK shall
perform relevant activities in accordance with this Agreement and not the
Commercialization Plan.

7.3    Commercial Diligence. KHK, directly and/or with or through Affiliates or
Sublicensees, shall use Commercially Reasonable Efforts to Commercialize, and
optimize the commercial potential for, the Products that received Regulatory
Approval in the Field in the Territory. Without limiting the foregoing, in
connection with the Commercialization of Products in the Field in the Territory:

(a) KHK shall promote Products in a professional, diligent and honest manner in
accordance with Applicable Law and industry standards;

(b) KHK shall not (A) sell any Product as part of a bundle with any other
products, (B) utilize deceptive, misleading or unethical business practices or
(C) take any action or inaction that would reasonably be likely to prejudice the
value of any Product;

(c) KHK shall seek a daily NHI Price equal to or greater than [*CONFIDENTIAL*];
and

(d) KHK shall undertake a First Commercial Sale within [*CONFIDENTIAL*] of the
NHI Price listing for a Product in the Territory.

7.4    Creation of Promotional Materials. KHK will create and develop materials
for marketing, advertising and promoting of the Products in the Field in the
Territory (“Promotional Materials”) in accordance with the Regulatory Approvals
and Applicable Laws and at KHK’s sole cost and expense. To the extent KHK
includes any MEI corporate trademarks in the Promotional Materials for the
Territory, KHK shall comply with MEI’s then current guidelines for trademark
usage. KHK will review all Promotional Materials and programs in connection with
the Commercialization of Products prior to use thereof to ensure that all are in
accordance with the Commercialization Plan, the Regulatory Approvals and
Applicable Laws. KHK shall provide MEI with copies of final versions of material
Promotional Materials which are prepared in connection with the First Commercial
Sale of the Product and that KHK is intending to use in connection with
Commercialization the Products and any change to the key message(s) contained in
such Promotional Materials.

7.5    Commercialization Reports. [*CONFIDENTIAL*], commencing upon KHK’s, any
of its Affiliates’ or any Sublicensee’s first filing for Marketing Authorization
Application of a Product in the Territory and thereafter, KHK shall provide to
the JSC with detailed written reports of such Commercialization activities it,
any of its Affiliates or any Sublicensee has performed, or caused to be
performed, since the preceding report and the future activities it expects to
initiate during the following [*CONFIDENTIAL*] period. Each such report shall
contain sufficient detail to enable the JSC to assess KHK’s compliance with its
obligations set forth in Sections 7.2 (Commercialization Plan) and 7.3
(Commercial Diligence), including, in each case, Net Sales for such Product in
the Territory.

 

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7.6    Compliance with Applicable Law. KHK shall, and shall ensure that its
Affiliates and Sublicensees shall, in all material respects conform their
practices and procedures relating to the Commercialization of the Products and
educating the medical community in the Territory with respect to the Products to
any applicable industry association regulations, policies and guidelines, as the
same may be amended from time to time, and Applicable Law.

7.7    Training. KHK shall be solely responsible for training, and all costs
associated with such training, its employees and representatives engaged in
activities under this Agreement. Such training shall be in accordance with
Applicable Laws, including with respect to timely reporting of any adverse
events with respect to the Products.

ARTICLE 8

FINANCIAL PROVISIONS

8.1    Upfront Payment. (i) Within thirty (30) days after the Effective Date or
(ii) thirty (30) days following KHK’s receipt from MEI of the tax forms provided
to MEI under Section 8.8(d) (Tax Cooperation), whichever comes later, KHK shall
pay to MEI a one-time, non-refundable and non-creditable upfront payment of ten
million Dollars ($10,000,000).

8.2    Development and Regulatory Milestone Payments. Within [*CONFIDENTIAL*]
after the first achievement of each milestone event below by or on behalf of KHK
or any of its Affiliates or Sublicensees, KHK shall notify MEI of the
achievement of such milestone event and pay to MEI the applicable
non-refundable, non-creditable milestone payment corresponding to such milestone
event as shown below.

 

Development or Regulatory Milestone Events

  

Milestone Payments (in
U.S. Dollars)

[*CONFIDENTIAL*]

  

[*CONFIDENTIAL*]

[*CONFIDENTIAL*]

  

[*CONFIDENTIAL*]

[*CONFIDENTIAL*]

  

[*CONFIDENTIAL*]

[*CONFIDENTIAL*]

  

[*CONFIDENTIAL*]

[*CONFIDENTIAL*]

  

[*CONFIDENTIAL*]

[*CONFIDENTIAL*].

 

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[*CONFIDENTIAL*].

[*CONFIDENTIAL*].

[*CONFIDENTIAL*].

.

8.3    Commercial Milestones.

(a)    Within [*CONFIDENTIAL*] after the annual Net Sales for a Calendar Year
reach any threshold indicated in the milestone events listed below, KHK shall
notify MEI of the achievement of such milestone event and pay to MEI the
corresponding non-refundable, non-creditable milestone payment set forth below.

 

Annual Net Sales Milestone Events

  

Milestone Payments

[*CONFIDENTIAL*]

  

[*CONFIDENTIAL*]

[*CONFIDENTIAL*]

  

[*CONFIDENTIAL*]

[*CONFIDENTIAL*]

  

[*CONFIDENTIAL*]

(b)    For purposes of determining whether a Net Sales milestone event has been
achieved, Net Sales of all Products in the Territory shall be aggregated. For
clarity, the annual Net Sales milestone payments set forth in this Section 8.3
(Commercial Milestones) shall be payable only once for all Products, upon the
first achievement of the applicable milestone event.

(c)    If a Milestone Event in Section 8.3 (Commercial Milestones) is achieved
and payment with respect to any previous milestone event has not been made, then
such previous milestone event shall be deemed achieved, MEI shall invoice KHK
for such unpaid previous milestone event(s) and KHK shall pay MEI such unpaid
previous milestone payment(s) within thirty (30) days of receipt of such
invoice.

8.4    Royalty Payments.

(a)    KHK shall pay to MEI non-refundable, non-creditable royalties on
aggregate annual Net Sales of all Products in the Territory in each Calendar
Year (“Aggregate Annual Net Sales”) at the applicable rate(s) set forth below,
with such royalties to be calculated

 

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by multiplying the applicable incremental amount of Aggregate Annual Net Sales
in such Calendar Year by the corresponding royalty rate set forth in the table
below:

 

Aggregate Annual [*CONFIDENTIAL*] Net Sales of the Products

  

Royalty Rates

[*CONFIDENTIAL*]

  

[*CONFIDENTIAL*]

[*CONFIDENTIAL*]

  

[*CONFIDENTIAL*]

[*CONFIDENTIAL*]

  

[*CONFIDENTIAL*]

(b)    Royalty Term. Royalties under this Section 8.4 (Royalty Payments) shall
be payable on a Product-by-Product basis from the First Commercial Sale of such
Product in the Territory until the latest of: (i) expiration of the
last-to-expire Valid Claim of the MEI Patents that Covers the composition of
matter, pharmaceutical composition, Manufacture, use or sale of such Product (or
the Compound contained therein) in the Territory; (ii) expiration of Regulatory
Exclusivity for such Product in the Territory; or (iii) [*CONFIDENTIAL*] after
the First Commercial Sale of the Product in the Territory (the “Royalty Term”
for such Product).

(c)    Royalty Reports and Payment. KHK shall calculate all Royalty Payments
payable to MEI pursuant to this Section 8.4 (Royalty Payments) with respect to
Net Sales at the end of each Calendar Quarter, which amounts shall be converted
to Dollars at such time in accordance with Section 8.6 (Currency Conversion).
KHK shall pay to MEI the royalty payment due for Net Sales during a given
Calendar Quarter within [*CONFIDENTIAL*] after the end of such Calendar Quarter.
Each royalty payment due shall be accompanied by (i) a statement of the amount
of gross sales of each Product during the applicable Calendar Quarter (including
such amounts expressed in local currency and as converted to Dollars), (ii) an
itemized calculation of Net Sales showing deductions from gross sales provided
for in the definition of “Net Sales” during such Calendar Quarter, and (iii) a
statement of the prices and the number of units of Products sold. KHK shall be
responsible for the proper accounting of Net Sales by or on behalf of its
Affiliates and Sublicensees.

(d)    Blended Royalty. KHK acknowledges that (i) the MEI Know-How and the
information included in MEI’s Regulatory Materials licensed to KHK are
proprietary and valuable and that without the MEI Know-How and such information,
KHK would not be able to obtain and maintain Regulatory Approvals with respect
to the Products, (ii) such Regulatory Approvals will allow KHK to obtain and
maintain Regulatory Exclusivity with respect to the Products in the Field in the
Territory, (iii) access to the MEI Know-How and the rights with respect to the
MEI’s Regulatory Materials will have provided KHK with a competitive advantage
in the marketplace beyond the exclusivity afforded by the MEI Patents and
Regulatory Exclusivity and (iv) the upfront payment and royalties set forth in
Sections 8.1 (Upfront Payment) and 8.4 (Royalty Payments), respectively, are, in
part, intended to compensate MEI for such exclusivity and such competitive
advantage. The Parties agree that the royalty rate set forth in Section 8.4(a)
(Royalty

 

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Payments) reflects an efficient and reasonable blended allocation of the value
provided by MEI to KHK.

8.5    Royalty Adjustments. Except as otherwise set forth in this Agreement,
royalties due hereunder are subject to adjustment as set forth below (such
adjustments to be prorated for the Calendar Quarter in which the adjustment
becomes applicable), provided, however, that the royalties payable under
Section 8.4(a) (Royalty Payments) shall not be reduced by more than
[*CONFIDENTIAL*] of the amounts set forth in Section 8.4(a) (Royalty Payments)
by any or all reasons of the adjustments set forth below.

(a)    Royalty Adjustment for Third Party License Payments. If a license to any
Third Party Patent is entered under Section 9.5 (Third Party Intellectual
Property Rights), then the amount of royalties payable under Section 8.4(a)
(Royalty Payments) with respect to the Territory shall be adjusted in accordance
with Section 9.5 (Third Party Intellectual Property Rights).

(b)    Royalty Adjustment for Generic Competition. If a Generic Product receives
Regulatory Approval and is sold in the Territory, then for so long as such
Generic Product is being sold in the Territory the royalties payable to MEI on
the sales of such Product shall be reduced by [*CONFIDENTIAL*].

(c)    Royalty Adjustment for Pricing. If the Royalty Term is continuing with
respect to a given Product on or after the date that is [*CONFIDENTIAL*] after
the date that the NHI Price is first listed for such Product in the Territory,
then the royalties payable to MEI on the sales of such Product shall be reduced
by [*CONFIDENTIAL*].

8.6    Currency Conversion. All payments hereunder shall be made in United
States Dollars. For the purpose of calculating any sums due under, or otherwise
reimbursable pursuant to, this Agreement (including the calculation of Net Sales
expressed in currencies other than Dollars), any amount expressed in a foreign
currency shall be converted into Dollars in a manner consistent with KHK’s
normal practices used to prepare its audited financial statements for external
reporting purposes, in accordance with GAAP, consistently applied, or by using
the Wall Street Journal or Reuters, at KHK’s discretion.

8.7    Late Payments. Any amount required to be paid by KHK hereunder which is
not paid on the date due shall accrue interest from the date due at the rate of
the one-month London Interbank Offered Rate as quoted in the Wall Street Journal
(or if it no longer exists, similarly authoritative source) plus
[*CONFIDENTIAL*] basis points; provided, however, that in no event shall such
rate exceed the maximum legal annual interest rate. The payment of such interest
shall not limit MEI from exercising any other rights it may have as a
consequence of the lateness of any payment. Such interest shall be computed on
the basis of a year of three hundred sixty (360) days for the actual number of
days payment is delinquent.

 

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8.8    Taxes and Withholding.

(a)    Taxes on Income. Notwithstanding anything else set forth in this
Section 8.8 (Taxes and Withholding), each Party shall solely bear and pay all
Taxes imposed on such Party’s net income (however denominated) franchise Taxes,
and branch profits Taxes, in each case, imposed as a result of such Party being
organized under the laws of, or having an permanent establishment or office
located in, the jurisdiction imposing such Tax (or any political subdivision
thereof).

(b)    VAT. The Parties agree to cooperate with one another and use reasonable
efforts to ensure that any value added tax or similar payment (“VAT”) in respect
of any payments made by KHK to MEI under this Agreement does not represent an
unnecessary cost in respect of payments made under this Agreement; provided,
that the Parties further agree that as of the Effective Date it is not
anticipated that VAT will apply in connection with payments under this
Agreement. For purposes of clarity, all sums payable under this Agreement shall
be exclusive of VAT. In the event that any VAT is owing in any jurisdiction in
respect of any such payment, KHK shall pay such VAT, and (i) if such VAT is
owing as a result of any action by KHK, including any assignment or sublicense
(including assignment to, or payment hereunder by, a KHK-related entity or
Affiliate), or any failure on the part of KHK or its Affiliates to comply with
applicable tax laws or filing or record retention requirements, that has the
effect of modifying the tax treatment of the Parties hereto, then the payment in
respect of which such VAT is owing shall be made without deduction for or on
account of such VAT to ensure that MEI receives a sum equal to the sum which it
would have received had such VAT not been due or (ii) otherwise, such payment
shall be made after deduction of such VAT. In the event that any deducted VAT is
later recovered by KHK, KHK shall promptly reimburse MEI for the deducted
amount. For the sake of clarity, any increase in payments to MEI under this
Section (b) (VAT) shall reflect only the incremental increase in VAT directly
resulting from clause (i) above. In the event that any VAT is owing in any
jurisdiction in respect of any such payment, MEI will provide to KHK tax
invoices showing the correct amount of VAT in respect of such payments
hereunder.

(c)    Withholding Tax Matters. If KHK is required to make a payment to MEI
subject to a deduction of tax or withholding tax, the sum payable by KHK (in
respect of which such deduction or withholding is required to be made) shall be
made to MEI after deduction of the amount required to be so deducted or
withheld, which deducted or withheld amount shall be remitted to the appropriate
Governmental Authority in accordance with Applicable Laws. Any such withholding
taxes required under Applicable Laws to be paid or withheld shall be an expense
of, and borne solely by MEI.

(d)    Tax Cooperation. To the extent KHK is required to deduct and withhold
taxes on any payments to MEI, KHK shall pay the amounts of such taxes to the
proper Governmental Authority in a timely manner and promptly transmit to MEI an
official tax certificate or other evidence of such withholding reasonably
sufficient to enable MEI to claim such payments of taxes. MEI shall provide to
KHK any tax forms that may be reasonably necessary in order for KHK not to
withhold tax or to withhold tax at a reduced rate under an applicable bilateral

 

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income tax treaty. MEI shall use reasonable efforts to provide any such tax
forms to KHK at least thirty (30) days prior to the due date for any payments
for which the MEI desires that KHK apply a reduced withholding rate. Each Party
shall provide the other with reasonable assistance to enable the recovery or
reduction, as permitted by Applicable Laws, of withholding taxes, VAT, or
similar obligations resulting from payments made under this Agreement, such
recovery to be for the benefit of the Party bearing such withholding tax or VAT.

8.9    Financial Records and Audit. KHK shall keep full, true and accurate
records and books of account containing all particulars that may be necessary
for the purpose of confirming the accuracy of, and calculating, as applicable,
all royalty payments and other amounts due to MEI hereunder (including records
of Net Sales), during the Term and for [*CONFIDENTIAL*] thereafter or such
longer period as required by Applicable Laws. MEI shall have a right to request
[*CONFIDENTIAL*] audit of KHK [*CONFIDENTIAL*] throughout the Term in order to
confirm the accuracy of the foregoing (an “Audit”); provided, that, such
[*CONFIDENTIAL*] limitation shall not apply in the event of any subsequent “for
cause” audit. Upon the written request by MEI to Audit KHK, MEI shall have the
right to engage an independent, internationally recognized accounting firm
reasonably acceptable to KHK and which will be subject to appropriate written
obligations of confidentiality, to perform a review as is reasonably necessary
to enable such accounting firm to calculate or otherwise confirm the accuracy of
any of the foregoing for the Calendar Year(s) requested by MEI. KHK, shall make
personnel reasonably available during regular business hours to answer queries
on all such books and records required for the purpose of the Audit. The
accountants shall deliver a copy of their findings to each of the Parties within
[*CONFIDENTIAL*] of the completion of the review, and, in the absence of fraud
or manifest error, the findings of such accountant shall be final and binding on
each of the Parties. Any underpayments by KHK shall be paid to MEI within
[*CONFIDENTIAL*] of notification of the results of such Audit. Any overpayments
made by KHK shall be refunded by MEI within [*CONFIDENTIAL*] of notification of
the results of such Audit. The cost of the accountants shall be the
responsibility of MEI unless the accountants’ calculation shows that the actual
royalties payable, Net Sales and/or any other applicable amount Audited
hereunder (in the aggregate with respect to the entire period audited) to be
different, by more than [*CONFIDENTIAL*], than the amounts as paid and reported
by KHK for the period subject to the Audit, in which case KHK shall bear the
costs of the accountants. Any information obtained during such audit shall be
treated as Confidential Information. In the event that MEI has a good faith
basis, which shall be shared with KHK, for believing that a Sublicensee of KHK
is not accurately reporting Net Sales (and thus that KHK is not making
appropriate royalty payments hereunder), then at MEI’s request, KHK shall
enforce its audit rights with respect to any such Sublicensee and KHK shall
report back to MEI regarding the outcome of any such audit.

8.10    Financial Adjustments. In case it appears likely that the
[*CONFIDENTIAL*], the Parties shall discuss and negotiate in good faith
regarding potential adjustments to the [*CONFIDENTIAL*]; provided, that, in no
event shall any such newly negotiated financial terms be less favorable to MEI
in their totality and in no event shall either Party be obligated to agree to
any such adjustments.

 

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ARTICLE 9

INTELLECTUAL PROPERTY RIGHTS

9.1    Ownership.

(a)    Data. All data generated in connection with any Development, regulatory,
Manufacturing or Commercialization activities with respect to any Compound or
Product conducted by or on behalf of KHK or its Affiliates or Sublicensees
without the involvement of MEI (the “KHK Data”) shall be the sole and exclusive
property of KHK or of its Affiliates or Sublicensees, as applicable.

(b)    Ownership of Inventions. Ownership of all Inventions shall be based on
inventorship, as determined in accordance with the rules of inventorship under
United States patent laws. Each Party shall solely own any Inventions made
solely by its or its Affiliates’ employees, agents or independent contractors
(“Sole Inventions”). The Parties shall jointly own any Inventions that are made
jointly by employees, agents or independent contractors of one Party or its
Affiliates together with employees, agents or independent contractors of the
other Party or its Affiliates (“Joint Inventions”). All Patents claiming Joint
Inventions shall be referred to herein as “Joint Patents”. Except to the extent
either Party is restricted by the licenses granted to the other Party under this
Agreement, each Party shall be entitled to practice, license, assign and
otherwise exploit the Joint Inventions and Joint Patents without the duty of
accounting or seeking consent from the other Party, and each Party hereby waives
any right it may have under the laws of any country to require any such
accounting or consent.

(c)    Disclosure of Inventions. Each Party shall promptly disclose to the other
Party all Sole Inventions of such Party and all Joint Inventions, including any
invention disclosures or other similar documents submitted to such Party by its
employees, agents or independent contractors describing such Inventions, and
shall promptly respond to reasonable requests from the other Party for
additional information relating to such Inventions.

(d)    License to MEI.

(i)    If, during the Term, KHK, its Affiliate or its sublicensee identifies any
(A) KHK Technology, or (B) through development, any improvement that is
conceived in the course of KHK’s or its Affiliate’s or its sublicensee’s
performance under this Agreement that are necessary or reasonably useful for MEI
to Develop, Package, Manufacture, use or Commercialize the Compound or Product
(“KHK Sole Invention”), KHK shall promptly notify MEI and KHK shall disclose and
make available such KHK Technology including any KHK Sole Inventions, to MEI and
KHK hereby grants to MEI a perpetual, [*CONFIDENTIAL*], royalty-free,
fully-paid, license, with the right to grant sublicenses through multiple tiers,
under, in and to the KHK Technology, including any KHK Sole Inventions, to
Develop, make, have made, use, import, offer for sale, sell and otherwise
Commercialize the Compound and Products. In addition, KHK hereby grants to MEI
[*CONFIDENTIAL*].

 

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(ii)    KHK shall make the KHK Technology available to MEI at no additional cost
and shall use Commercially Reasonable Efforts to provide reasonable technical
assistance, including making appropriate employees available at reasonably
agreed times and frequency, for the purpose of assisting MEI to understand and
use such Know-How in connection with MEI’s Product-related activities; provided,
that KHK shall have no obligation under this Section 9.1(d)(ii) (License to MEI)
to provide such assistance in excess of [*CONFIDENTIAL*] and any such assistance
provided by KHK in excess of such limit shall be paid for by MEI at a rate of
[*CONFIDENTIAL*].

9.2    Patent Prosecution and Maintenance.

(a)    MEI Patents and Joint Patents in the Territory.

(i)    MEI shall have the first right, but not the obligation, to control the
preparation, filing, prosecution (including any interferences, reissue
proceedings and reexaminations) and maintenance of all MEI Patents and Joint
Patents in the Territory, at its sole cost and expense and by counsel of its own
choice. MEI shall consult with KHK and keep KHK reasonably informed of the
status of such Patents and shall promptly provide KHK with all material
correspondence received from any patent authority in connection therewith. In
addition, MEI shall promptly provide KHK with drafts of all proposed material
filings and correspondence to any patent authority with respect to such Joint
Patents for KHK’s review and comment prior to the submission of such proposed
filings and correspondence. MEI shall confer with KHK and consider in good faith
KHK’s comments prior to submitting such filings and correspondence, provided
that KHK provides such comments within [*CONFIDENTIAL*] of receiving the draft
filings and correspondence from MEI.

(ii)    In the event that MEI desires to abandon or cease prosecution or
maintenance of any MEI Patent or any Joint Patent in the Territory, MEI shall
provide reasonable prior written notice to KHK of such intention to abandon
(which notice shall be given no later than [*CONFIDENTIAL*] prior to the next
deadline for any action that must be taken with respect to any such Patent in
the relevant patent office). In such case, upon KHK’s written election, KHK
shall have the right to assume prosecution and maintenance of such Patent at
KHK’s expense; provided that KHK shall not be obligated to pay royalties for
such Patent under Section 8.4 (Royalty Payments) from and after the date that
KHK assumes responsibility for such Patent, including responsibility for all
costs incurred in connection therewith. If KHK does not provide such election
during such [*CONFIDENTIAL*] period, MEI may, in its sole discretion, continue
prosecution and maintenance of such Patent or discontinue prosecution and
maintenance of such Patent.

(b)    Joint Patents outside the Territory.

(i)    MEI shall have the first right, but not the obligation, to control the
preparation, filing, prosecution (including any interferences, reissue
proceedings and

 

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reexaminations) and maintenance of all Joint Patents outside the Territory, at
its sole cost and expense and by counsel of its own choice.

(c)    KHK Patents. KHK shall have the first right, but not the obligation, to
control the preparation, filing, prosecution (including any interferences,
reissue proceedings and reexaminations) and maintenance of all KHK Patents, at
its sole cost and expense and by counsel of its own choice. In the event that
KHK desires to abandon or cease prosecution or maintenance of any KHK Patent,
KHK shall provide reasonable prior written notice to MEI of such intention to
abandon (which notice shall, to the extent possible, be given no later than
[*CONFIDENTIAL*] prior to the next deadline for any action that must be taken
with respect to any such Patent in the relevant patent office). In such case,
upon MEI’s written election provided no later than [*CONFIDENTIAL*] after such
notice from KHK, MEI shall have the right to assume prosecution and maintenance
of such KHK Patent at MEI’s expense. If MEI does not provide such election
within [*CONFIDENTIAL*] after such notice from KHK, KHK may, in its sole
discretion, continue prosecution and maintenance of such KHK Patent or
discontinue prosecution and maintenance of such KHK Patent.

9.3    Cooperation of the Parties. Each Party agrees to reasonably cooperate in
the preparation, filing, prosecution and maintenance of Patents under
Section 9.2 (Patent Prosecution and Maintenance), at its own cost, and such
cooperation includes: (a) executing all papers and instruments, or requiring its
employees or contractors, to execute such papers and instruments, so as to
enable the other Party to apply for and to prosecute patent applications in any
country as permitted by Section 9.2 (Patent Prosecution and Maintenance); and
(b) promptly informing the other Party of any matters coming to such Party’s
attention that may affect the preparation, filing, prosecution or maintenance of
any such patent applications.

9.4    Infringement by Third Parties.

(a)    Notice. In the event that either MEI or KHK becomes aware of any
infringement or threatened infringement by a Third Party of any MEI Patent, KHK
Patent or Joint Patent in the Territory, or the submission to a Party or a
Regulatory Authority in the Territory of an application for a product
referencing a Product, or any declaratory judgment or equivalent action
challenging any MEI Patent, KHK Patent or Joint Patent in the Territory in
connection with any such infringement (each, a “Product Infringement”), it will
promptly notify the other Party in writing to that effect. Any such notice shall
include evidence to support an allegation of infringement or threatened
infringement, or declaratory judgment or equivalent action, by such Third Party.

(b)    Enforcement of MEI Patents, KHK Patents and Joint Patents.

(i)    MEI shall have the first right, as between KHK and MEI, but not the
obligation, to bring an appropriate suit or take other action against any Person
engaged in, or to defend against, a Product Infringement in the Field of any MEI
Patent or Joint Patent, at its own expense and by counsel of its own choice. KHK
shall have the right, at its own expense, to be

 

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represented in any such action by counsel of its own choice, and KHK and its
counsel will reasonably cooperate with MEI and its counsel in strategizing,
preparing and prosecuting any such action or proceeding in the Territory. If MEI
fails to bring an action or proceeding with respect to such Product Infringement
of any MEI Patent or Joint Patent in the Territory within (A) [*CONFIDENTIAL*]
following the notice of alleged infringement or declaratory judgment or
(B) [*CONFIDENTIAL*] before the time limit, if any, set forth in the appropriate
laws and regulations for the filing of such actions, whichever comes first, KHK
shall have the right, but not the obligation, to bring and control any such
action at its own expense and by counsel of its own choice, and MEI shall have
the right, at its own expense, to be represented in any such action by counsel
of its own choice and MEI and its counsel will reasonably cooperate with KHK and
its counsel in strategizing, preparing and prosecuting any such action or
proceeding.

(ii)    KHK shall have the first right, as between KHK and MEI, but not the
obligation, to bring an appropriate suit or take other action against any Person
engaged in, or to defend against, a Product Infringement in the Field of any KHK
Patent, at its own expense and by counsel of its own choice. MEI shall have the
right, at its own expense, to be represented in any such action by counsel of
its own choice, and MEI and its counsel will reasonably cooperate with KHK and
its counsel in strategizing, preparing and prosecuting any such action or
proceeding. If KHK fails to bring an action or proceeding with respect to such
Product Infringement of any KHK Patent in the Territory within
(A) [*CONFIDENTIAL*] following the notice of alleged infringement or declaratory
judgment or (B) [*CONFIDENTIAL*] before the time limit, if any, set forth in the
appropriate laws and regulations for the filing of such actions, whichever comes
first, MEI shall have the right, but not the obligation, to bring and control
any such action at its own expense and by counsel of its own choice, and KHK
shall have the right, at its own expense, to be represented in any such action
by counsel of its own choice and KHK and its counsel will reasonably cooperate
with MEI and its counsel in strategizing, preparing and prosecuting any such
action or proceeding.

(iii)    Except as otherwise agreed by the Parties as part of a cost-sharing
arrangement, any recovery or damages realized as a result of such action or
proceeding with respect to Product Infringement of any MEI Patent, KHK Patent or
Joint Patent shall be used first to reimburse the Parties’ documented
out-of-pocket (i.e., paid to Third Parties) legal expenses relating to the
action or proceeding, and any remaining damages relating to Product Infringement
of a MEI Patent or Joint Patent in the Territory (including lost sales or lost
profits) shall belong: [*CONFIDENTIAL*].

(c)    Cooperation. In the event a Party brings an action in accordance with
this Section 9.4 (Infringement by Third Parties), the other Party shall
reasonably cooperate, including, if required to bring such action, being named
as a party to such action; provided, that if a Party is required by Applicable
Laws to be named as a party, then the other Party shall bear such Party’s costs
in connection with being so named.

 

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(d)    Other Infringement. MEI shall have the sole right, but not the
obligation, to bring and control, at its own cost and expense, any legal action
in connection with any infringement of any MEI Patent or Joint Patent outside
the Territory.

9.5    Third Party Intellectual Property Rights.

(a)    Each Party shall promptly notify the other in writing of any allegation
by a Third Party that the Packaging, Commercialization, Manufacture,
Development, or use of the Compound or Product in the Territory infringes or may
infringe the intellectual property rights of a Third Party. If a Third Party
asserts that any of its Patents or other rights are infringed by the
Manufacture, Commercialization or Development by KHK or its Affiliates of any
Product in the Territory, KHK shall have the right but not the obligation to
defend against any such assertions at its sole cost and expense. In the event
that KHK elects not to defend against such Third Party claims within
[*CONFIDENTIAL*] of learning of same, MEI shall have the right, but not the
obligation, to defend against such an action. In any event, the other Party
shall reasonably cooperate and shall provide full access to documents,
information and witnesses as reasonably requested by the Party defending such
action. The Party defending the action will reimburse all Third Party costs
incurred in connection with such requested cooperation. Notwithstanding the
foregoing, the Parties’ rights and obligations under this Section 9.5 (Third
Party Intellectual Property Rights), including payment obligations, will be
subject to the terms of Article 13 (Indemnification; Liability).

(b)    Notwithstanding Section 9.5(a) (Third Party Intellectual Property
Rights), if:

(i)    the (A) Development, use, or Commercialization of the dosage form, as of
the Effective Date, of the Product in the Territory as a [*CONFIDENTIAL*], or
(B) manufacture of the Compound or the dosage form, as of the Effective Date, of
the Product in the Territory and in the United States for Development or
Commercialization in the Territory infringes an issued Valid Claim (as defined
in Section 1.120(a) (Valid Claim) but not 1.120(b) (Valid Claim) above) of a
Third Party’s Patent (“Third Party Patent”), then MEI shall use Commercially
Reasonable Efforts to obtain a license to such Third Party Patent(s) and MEI
shall be responsible for [*CONFIDENTIAL*] of any payments due in connection with
sales or activities in the Territory (including any upfront or general
payments). If MEI does not obtain such license, then KHK shall have a right, but
not an obligation, to obtain a license to such Third Party Patent(s), provided
that KHK’s royalty payment for such license shall be [*CONFIDENTIAL*].

(ii)    the use of the Product in the Territory in [*CONFIDENTIAL*], infringes
an issued Valid Claim (as defined in Section 1.120(a) (Valid Claim) but not
1.120(b) (Valid Claim) above) of a Third Party’s Patent in the Territory (also,
a “Third Party Patent”), then MEI would have the first right to negotiate a
license to any such Third Party Patent(s), details of which shall be notified to
KHK in writing prior to undertaking any such action. MEI shall keep KHK informed
of the progress of such action. If MEI does not desire to obtain such license
directly, then KHK shall have a right, but not an obligation, to obtain such
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approach (MEI or KHK obtaining such a license): (A) no license to a Third Party
Patent may be entered under this Section 9.5(b)(ii) (Third Party Intellectual
Property Rights) without the other Party’s prior consent, which consent shall
not be unreasonably withheld, conditioned or delayed, and (B) KHK will be
responsible for [*CONFIDENTIAL*] of any payments due in connection with sales or
activities in the Territory (including a reasonable allocation of any upfront or
general payments to the Territory in the case of a broader license taken by
MEI). For clarity, if KHK obtains such a license, KHK shall have the right to
receive from MEI [*CONFIDENTIAL*] of any upfront or general payments and to
reduce its quarterly royalty payments to MEI by [*CONFIDENTIAL*] of any royalty
payments to such a Third Party, subject to KHK’s royalty payments to MEI not
being reduced to less than [*CONFIDENTIAL*] of the amounts that would have
otherwise been due to MEI for such Calendar Quarter. In case MEI obtains such
license from Third Party, KHK shall reimburse [*CONFIDENTIAL*] of the reasonable
allocation of any upfront or general payments and [*CONFIDENTIAL*] of any
royalty payment to such Third Party, subject to KHK’s royalty payment not
exceeding [*CONFIDENTIAL*] of the amounts that would have otherwise been due to
MEI for such Calendar Quarter. In the event that MEI negotiates the license to
any such Third Party Patent, payments associated with the Territory shall be
appropriate and proportional to other amounts due under any such agreement. In
either approach, if such license is not secured with terms acceptable to both
Parties, neither Party is obligated to [*CONFIDENTIAL*].

(iii)    Each Party expressly agrees and acknowledges that (A) the rights
granted to such Party under this Agreement, as and to the extent applicable,
shall in all cases be subject to the terms and conditions of any applicable
license agreement related to any Third Party Patent, and (B) it shall comply
with the terms and conditions of any such agreements (and shall take no action
or omit to take any action, that may cause a breach of either of any such
agreements). In furtherance of the foregoing, a copy of any such agreements
shall be provided by the executing Party to the other Party.

(iv)    The Parties acknowledge and agree that a defense action commenced under
Section 9.5(a) (Third Party Intellectual Property Rights) may lead to MEI
negotiating an agreement under this Section 9.5(b) (Third Party Intellectual
Property Rights).

9.6    Consent for Settlement. Neither Party shall unilaterally enter into any
settlement or compromise of any action or proceeding under this Article 9
(Intellectual Property Rights) that would in any manner alter, diminish, or be
in derogation of the other Party’s rights under this Agreement or, in the case
of MEI, with respect to the Product outside the Territory, without the prior
written consent of such other Party, which shall not be unreasonably withheld.
Notwithstanding the above, KHK shall not enter into any settlement of any such
claim without the prior written consent of MEI if such settlement would require
MEI to be subject to an injunction or to make any monetary payment to KHK or any
Third Party, or admit any wrongful conduct by MEI or its Affiliates, or would
limit or restrict the claims of or admit any invalidity and/or unenforceability
of any of the Patents Controlled by MEI.

 

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9.7    Patent Extensions. The Parties shall jointly agree regarding, and each
shall reasonably cooperate with the other in obtaining, patent term restoration,
supplemental protection certificates or their equivalents, and Patent Term
Extensions with respect to the Products in the Territory where applicable. The
Party responsible for controlling the preparation, filing, prosecution
(including any interferences, reissue proceedings and reexaminations) and
maintenance of Patents under Section 9.2 (Patent Prosecution and Maintenance)
shall file applications for such extensions at its own cost and the other Party
shall provide such responsible Party any necessary documents and information for
filing and prosecuting the Patent Term Extension application at such other
Party’s own cost.

9.8    Trademarks.

(a)    KHK shall have the right to Develop, Package and Commercialize the
Products in the Field in the Territory under trademarks of its choice that it
registers (“KHK Trademarks”); provided, that KHK may not include in any such
trademarks any corporate names or any reference to any products of MEI or any of
its Affiliates or licensees without the prior written consent of MEI. In
addition, KHK shall have an option to select trademark(s) registered or created
by MEI (“MEI Trademarks”) for use with the Product and MEI shall grant KHK an
exclusive (even as to MEI), royalty-free, fully-paid, license, with the right to
grant sublicenses through multiple tiers, to use such trademarks in connection
with Developing, Packaging or Commercializing Products in the Territory during
the Term. In connection with the foregoing, upon KHK’s reasonable request from
time-to-time, MEI shall provide KHK a list of MEI Trademarks (and not including
the “MEI” corporate mark or other marks that are not exclusively used in
connection with Products) including registration number, class and
product/service. If KHK decides to be licensed MEI Trademarks to Develop,
Package and Commercialize the Product in the Field in the Territory, KHK shall
provide a notice to MEI it wishes to be licensed such MEI Trademarks. MEI shall
use Commercially Reasonable Efforts to have MEI Trademarks and its local
transliterations (KATAKANA character trademark) registered, filed, maintained
and renewed in the Territory at MEI’s cost upon KHK’s request, and shall keep
KHK reasonably informed of the completion of such registration process and
provide KHK with updated list of registration numbers for such MEI Trademarks in
the Territory. KHK acknowledges and agrees that it has no rights to the KHK
Trademarks outside of the Territory and that, as between the Parties, MEI is
free to use the KHK Trademarks outside of the Territory. In addition, MEI will
have the right to use the KHK Trademark in the Territory to the extent necessary
to perform its obligations under this Agreement.

(b)    In the event that either MEI or KHK becomes aware of any infringement or
threatened infringement by a Third Party of any MEI Trademark or KHK Trademark
in the Territory (“Trademark Infringement”), it will promptly notify the other
Party in writing to that effect. Any such notice shall include evidence to
support an allegation of infringement or threatened infringement, or declaratory
judgment or equivalent action, by such Third Party.

(i)    MEI shall have the right, as between KHK and MEI, but not the obligation,
to bring an appropriate suit or take other action against any Person engaged in,
or to

 

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defend against, a Trademark Infringement in the Field of any MEI Trademarks, at
its own expense and by counsel of its own choice. KHK shall have the right, at
its own expense, to be represented in any such action by counsel of its own
choice, and KHK and its counsel will reasonably cooperate with MEI and its
counsel in strategizing, preparing and prosecuting any such action or
proceeding. If MEI fails to bring an action or proceeding with respect to such
Trademark Infringement of any MEI Trademark in the Territory, each party shall
discuss possible action against the Trademark Infringement.

(ii)    KHK shall have the right, as between KHK and MEI, but not the
obligation, to bring an appropriate suit or take other action against any Person
engaged in, or to defend against, a Trademark Infringement in the Field of any
KHK Trademarks, at its own expense and by counsel of its own choice.

ARTICLE 10

CONFIDENTIALITY; PUBLICATION

10.1    Duty of Confidence. Subject to the other provisions of this Article 10
(Confidentiality; Publication):

(a)    all Confidential Information disclosed by or on behalf of a Party (the
“Disclosing Party”) or its Affiliates under this Agreement will be maintained in
confidence and otherwise safeguarded by the recipient Party (the “Receiving
Party”) and its Affiliates using at least the same standard of care as the
Receiving Party uses to protect its own proprietary or Confidential Information
(but in no event less than reasonable care for the industry); and

(b)    the Receiving Party may only use any such Confidential Information for
the purposes of performing its obligations or exercising its rights under this
Agreement, including, for clarity, inclusion in Regulatory Materials in each
Party’s Respective Territory.

10.2    Exceptions. The foregoing obligations as to particular Confidential
Information of a Disclosing Party shall not apply to the extent that the
Receiving Party can demonstrate by competent written evidence that such
Confidential Information:

(a)    is known by the Receiving Party at the time of its receipt, and not
through a prior disclosure by the Disclosing Party, as shown by contemporaneous
written documents of the Receiving Party;

(b)    is in the public domain by use and/or publication before its receipt from
the Disclosing Party, or thereafter enters the public domain through no fault
of, or breach of this Agreement by, the Receiving Party or any individuals to
whom the Receiving Party disclosed such Confidential Information as permitted by
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(c)    is subsequently disclosed to the Receiving Party on a non-confidential
basis by a Third Party who may lawfully do so and is not under an obligation of
confidentiality to the Disclosing Party; or

(d)    is developed by the Receiving Party independently and without use of or
access to any Confidential Information disclosed to it by or on behalf of the
Disclosing Party, as shown by contemporaneous written documents of the Receiving
Party.

10.3    Authorized Disclosures. Notwithstanding the obligations set forth in
Section 10.1 (Duty of Confidence), the Receiving Party may disclose Confidential
Information of the Disclosing Party and the terms of this Agreement to the
extent such disclosure is reasonably necessary in the following instances:

(a)    enforcing the Receiving Party’s rights under this Agreement or performing
the Receiving Party’s obligations under this Agreement;

(b)    prosecuting or defending litigation as permitted by this Agreement;

(c)    preparing and submitting Regulatory Materials;

(d)    to the Receiving Party’s employees, directors, officers, Affiliates,
actual or potential Sublicensees (in the case of KHK), actual or potential
(sub)licensees (in the case of MEI), commercial partners, independent
contractors, consultants, advisors, agents, attorneys, independent accountants
or financial advisors who, in each case, have a need to know such Confidential
Information in order for the Receiving Party to exercise its rights or fulfill
its obligations under this Agreement, provided, in each case, that any such
Person agrees to be bound by terms of confidentiality and non-use (or, in the
case of the Receiving Party’s attorneys and independent accountants, such Person
is obligated by applicable professional or ethical obligations) at least as
restrictive as those set forth in this Article 10 (Confidentiality;
Publication);

(e)    to actual or potential investors, investment bankers, lenders, other
financing sources or acquirors (and attorneys and independent accountants
thereof) in connection with potential investment, acquisition, collaboration,
merger, public offering, due diligence or similar investigations by such Third
Parties or in confidential financing documents, provided, in each case, that any
such Third Party agrees to be bound by written terms of confidentiality and
non-use (or, in the case of the Receiving Party’s attorneys and independent
accountants, such Third Party is obligated by applicable professional or ethical
obligations) that are no less stringent than those contained in this Agreement
(except to the extent that a shorter confidentiality period is customary in the
industry); and

(f)    such disclosure is required by court order, judicial or administrative
process or Applicable Law, provided that in such event the Receiving Party shall
promptly inform the Disclosing Party of such required disclosure and provide the
Disclosing Party an opportunity to challenge or limit the disclosure
obligations. Confidential Information that is disclosed as required

 

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by court order, judicial or administrative process or Applicable Law shall
remain otherwise subject to the confidentiality and non-use provisions of this
Article 10 (Confidentiality; Publication), and the Receiving Party shall take
all steps reasonably necessary, including seeking of confidential treatment or a
protective order, to ensure the continued confidential treatment of such
Confidential Information.

Each Party shall be responsible for any breach of this Agreement by any Person
to which Confidential Information of the other Party has been disclosed by or on
behalf of such Party under this Agreement.

10.4    Publication. Prior to any publication or public disclosure of KHK Data
related to the Compound or any Product, including any peer reviewed manuscripts
disclosing the results of studies carried out under this Agreement, KHK shall
provide MEI with the opportunity to review and comment on such proposed
publication at least [*CONFIDENTIAL*] prior to its intended submission for
publication or public disclosure. MEI shall review any proposed publication and
shall respond in writing to KHK within [*CONFIDENTIAL*] after receipt of the
proposed disclosure with comments, if any. KHK shall: (i) consider in good faith
any comments thereto provided by MEI; (ii) remove any Confidential Information
of MEI identified by MEI as part of its review; and (iii) delay such publication
or public disclosure for an additional [*CONFIDENTIAL*] (at MEI’s request and
dated from the date of such request) to enable filing of Patents. For clarity,
KHK has no right to publish anything related to the Compound or Product except
for KHK Data. Prior to any peer-reviewed publication related to the Compound or
any Product by MEI, including any peer reviewed manuscripts disclosing the
results of studies carried out by MEI, MEI shall provide KHK at least
[*CONFIDENTIAL*] with the opportunity to review and comment on such proposed
publication and MEI shall consider in good faith any comments thereto provided
by KHK.

10.5    Privileged Communications. In furtherance of this Agreement, it is
expected that the Parties may, from time to time, disclose to one another
privileged communications with counsel, including opinions, memoranda, letters
and other written, electronic and verbal communications. Such disclosures are
made with the understanding that they shall remain confidential in accordance
with this Article 10 (Confidentiality and Publications), that they will not be
deemed to waive any applicable attorney-client or attorney work product or other
privilege and that they are made in connection with the shared community of
legal interests existing between MEI and KHK, including the community of legal
interests in avoiding infringement of any valid, enforceable patents of Third
Parties and maintaining the validity of the MEI Patents, KHK Patents and Joint
Patents. In the event of any litigation (or potential litigation) with a Third
Party related to this Agreement or the subject matter hereof, the Parties shall,
upon either Party’s request, enter into a reasonable and customary joint defense
or common interest agreement. In any event, each Party shall consult in a timely
manner with the other Party before engaging in any conduct (e.g., producing
information or documents) in connection with litigation or other proceedings
that could conceivably implicate privileges maintained by the other Party.
Notwithstanding anything contained in this Section 10.5 (Privileged
Communications), nothing in this Agreement shall prejudice a Party’s ability to
take discovery of the other Party in disputes between them relating to

 

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the Agreement and no information otherwise admissible or discoverable by a Party
shall become inadmissible or immune from discovery solely by this Section 10.5
(Privileged Communications).

10.6    Publicity/Use of Names. Subject to the remainder of this Section 10.6
(Publicity/Use of Names), no disclosure of the existence, or the terms, of this
Agreement may be made by either Party or its Affiliates, and neither Party shall
use the name, corporate trademark, trade name or logo of the other Party, its
Affiliates or their respective employee(s) in any publicity, promotion, news
release or disclosure relating to this Agreement or its subject matter, without
the prior express written permission of the other Party, except as may be
required by law. Notwithstanding the above, (a) each Party and its Affiliates
may disclose on its website and in its promotional materials that the other
Party is a development partner of such Party for the Products and may use the
other Party’s name and logo in conjunction with such disclosure and (b) KHK
shall ensure that MEI is appropriately identified as the licensor of the Product
in the Territory as and to the extent appropriate for the industry.

(a)    In the event KHK proposes to file with the U.S. Securities and Exchange
Commission or the securities regulators of any state or other jurisdiction under
the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, or any other applicable securities law a registration statement or any
other disclosure document which describes or refers to this Agreement, including
filing a copy of this Agreement itself, KHK shall notify MEI of such intention
and shall provide MEI with a copy of relevant portions of the proposed filing
not less than [*CONFIDENTIAL*] prior to such filing (unless exigent
circumstances do not permit such review period and then KHK will provide
relevant portions of the proposed filing as reasonably in advance as is
possible), and shall use Commercially Reasonable Efforts to obtain confidential
treatment of any information concerning MEI that MEI requests be kept
confidential, consistent with KHK’s disclosure obligations under applicable
securities laws. MEI may, at its discretion, file with the U.S. Securities and
Exchange Commission or the securities regulators of any state or other
jurisdiction under the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, or any other applicable securities law a
registration statement or any other disclosure document which describes or
refers to this Agreement, including filing a copy of this Agreement itself. MEI
shall provide KHK with a copy of relevant portions of the proposed filing not
less than [*CONFIDENTIAL*] prior to such filing (unless exigent circumstances do
not permit such review period and then MEI will provide relevant portions of the
proposed filing as reasonably in advance as is possible, and shall use
Commercially Reasonable Efforts to obtain confidential treatment of any
information concerning KHK that KHK reasonably requests be kept confidential,
consistent with MEI’s disclosure obligations under applicable securities laws.
For clarity, in no event shall MEI be obligated to delay or withhold such a
filing in order to comply with the foregoing sentence if such compliance would
result in MEI being in violation of any Applicable Law.

(b)    The Parties agree to issue the joint press release attached here as
Schedule 10.6 contemporaneously with the execution of this Agreement. If either
Party desires to issue a subsequent press release or make a public announcement
concerning the material terms of this Agreement or the Development or
Commercialization of the Product under this Agreement, such

 

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as the achievement of Regulatory Approvals of the Product, such Party shall
provide the other Party with the proposed text of such announcement for prior
review and, except to the extent such press release or public announcement is
permitted by subsection (a) or (b) above, approval by such other Party.

(c)    The Parties agree that after a public disclosure has been made or a press
release or other public announcement has been issued in compliance with
subsection (a), (b) or (c) hereof, each Party may make subsequent public
disclosures or issue press releases or other public announcements disclosing the
same content without having to obtain the other Party’s prior consent and
approval.

ARTICLE 11

TERM AND TERMINATION

11.1    Term. Unless earlier terminated as permitted by this Agreement, the term
of this Agreement will commence upon the Effective Date and continue in full
force and effect, on a Product-by-Product basis, until the expiration of the
Royalty Term for such Product (the “Term”). If this Agreement naturally expires
(as opposed to ending earlier due to an affirmative exercise of a Party’s
termination right), then KHK shall have [*CONFIDENTIAL*], fully paid-up,
royalty-free and perpetual license to Develop, Package, Manufacture and
Commercialize the Product in the Territory; provided, that, in the event that
KHK uses or has its Sublicensee(s) or designee use any trademark of the Product
Controlled by MEI after the Term to Commercialize and Manufacture (if KHK’s
option is exercised) the Product in the Territory (other than in connection with
a Generic Product, which use with a Generic Product is prohibited), KHK shall
pay to MEI [*CONFIDENTIAL*] of Net Sales in the Territory as a trademark
royalty, and MEI shall be responsible for maintenance of such trademark, in all
cases subject to the terms and conditions of a trademark use agreement to be
negotiated in good faith by the Parties upon one Party’s request to the other
therefor (pending execution of such a trademark use agreement, Sections 8.4
(Royalty Payments)-8.9 (Financial Records and Audit) (inclusive) shall apply
mutatis mutandis with respect to the payments due).

11.2    Termination.

(a)    Termination by KHK for Convenience. At any time, KHK may terminate this
Agreement, at its sole discretion and for any reason or no reason, by providing
written notice of termination to MEI, which notice includes an effective date of
termination at least one hundred eighty (180) days after the date of the notice
if the notice is given.

(b)    Termination for Cause. If either Party believes that the other is in
material breach of this Agreement, then the non-breaching Party may deliver
notice of such breach to the other Party. The allegedly breaching Party shall
have [*CONFIDENTIAL*] ([*CONFIDENTIAL*] in the case of a payment-related breach)
to cure such breach from the receipt of the notice. If the allegedly breaching
Party fails to cure that breach within the applicable

 

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period set forth above, then the Party originally delivering the notice of
breach may terminate this Agreement on written notice of termination. Any right
to terminate this Agreement under this Section 11.2(b) (Termination for Cause)
shall be stayed for up to a period of [*CONFIDENTIAL*] and the applicable cure
period tolled in the event that, during such cure period, the Party alleged to
have been in material breach shall have initiated dispute resolution in
accordance with Section 14.9 (Dispute Resolution) with respect to the alleged
breach, which stay and tolling shall continue until such dispute has been
resolved in accordance with Section 14.9 (Dispute Resolution) but in any event
no longer than [*CONFIDENTIAL*] from the date that the Party alleged to have
been in material breach initiates dispute resolution proceeding under
Section 14.9 (Dispute Resolution). If a Party is determined to be in material
breach of this Agreement, the other Party may terminate this Agreement if the
breaching Party fails to cure the breach within [*CONFIDENTIAL*]
([*CONFIDENTIAL*] in the case of a payment-related breach) after the conclusion
of the dispute resolution procedure (and such termination shall then be
effective upon written notification from the notifying Party to the breaching
Party).

(c)    Termination for Patent Challenge. Except to the extent the following is
unenforceable under the laws of a particular jurisdiction, MEI may terminate
this Agreement immediately upon written notice to KHK if KHK or its Affiliates
or Sublicensees, individually or in association with any other Person, commences
a legal action challenging the validity or enforceability of any MEI Patent.

(d)    Termination for Bankruptcy. This Agreement may be terminated at any time
during the Term by either Party upon the other Party’s filing or institution of
bankruptcy, reorganization, liquidation or receivership proceedings, or upon an
assignment of a substantial portion of the assets for the benefit of creditors
by the other Party; provided, however, that in the case of any involuntary
bankruptcy proceeding such right to terminate shall only become effective if the
Party consents to the involuntary bankruptcy or such proceeding is not dismissed
within [*CONFIDENTIAL*] after the filing thereof.

(e)    Automatic Termination for Nonpayment. If KHK fails to pay MEI the upfront
payment set forth in Section 8.1 (Upfront Payment), this Agreement will
automatically and immediately terminate.

(f)    Termination for Force Majeure. Each Party shall have the right to
terminate this Agreement upon written notice to the other Party if an event of
force majeure (in accordance with Section 14.6 (Force Majeure)) prevents,
prohibits, or otherwise inhibits such other Party from performing its
obligations hereunder for a period of six (6) months.

(g)    Termination Related to GDPR Agreement. Consistent with Section 7(f) of
the GDPR Agreement, if KHK’s ability to meet the obligations and assurances as
set out under the GDPR Agreement cannot be restored by reasonable and
appropriate means following KHK’s notice provided under Section 7(f) of the GDPR
Agreement, then MEI shall have the right to terminate this Agreement upon
written notice to KHK.

 

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11.3    Effect of Termination. Upon termination of this Agreement by KHK
pursuant to Section 11.2(a) (Termination by KHK for Convenience) or 11.2(f)
(Termination for Force Majeure), or termination of this Agreement by MEI
pursuant to Section 11.2(b) (Termination for Cause), 11.2(c) (Termination for
Patent Challenge), 11.2(d) (Termination for Bankruptcy), 11.2(e) (Automatic
Termination for Nonpayment), 11.2(f) (Termination for Force Majeure), or 11.2(g)
(Termination Related to GDPR Agreement), the following consequences shall apply
and shall be effective as of the effective date of such termination:

(a)    KHK’s license under Section 2.1 (Licenses to KHK) shall terminate;

(b)    KHK hereby grants to MEI, [*CONFIDENTIAL*], royalty free, fully paid,
worldwide, perpetual and irrevocable license, with the right to grant
sublicenses through multiple tiers, under the KHK Data and KHK Technology, to
research, develop, make, have made, use, distribute, sell, offer for sale, have
sold, import, export and otherwise commercialize the Compound and Products;

(c)    KHK shall return to MEI or destroy, at MEI’s election, all Confidential
Information of MEI, including all copies thereof and all materials, substances
and compositions delivered or provided by MEI to KHK, provided that KHK shall
have the right to retain [*CONFIDENTIAL*] copy thereof, which may be retained by
KHK solely for legal archiving purposes;

(d)    KHK shall, where permitted under Applicable Law, as promptly as
reasonably practical, assign to MEI all Regulatory Materials and Regulatory
Approvals for any Compound and Product and provide MEI with all correspondence
with Regulatory Authorities related to such Regulatory Materials and Regulatory
Approval;

(e)    KHK shall disclose to MEI all KHK Know-How and all Joint Inventions to
the extent not already known to MEI, which may be necessary or reasonably useful
for MEI to continue to Develop, Package, Manufacture and Commercialize Compounds
and Products in the Field. In addition, KHK shall, at MEI’s request, provide
reasonable technical assistance and transfer all KHK Know-How and Joint
Inventions necessary to Package or Manufacture Compounds and Products to MEI or
its designee;

(f)    KHK shall, to the extent that MEI does not provide written notice that it
does not want to receive the benefit thereof in part or in whole, transfer
sponsorship and Control to MEI of all Clinical Trials of the Product being
conducted as of the effective date of termination (provided, that, if MEI does
not desire to take over control of any given ongoing Clinical Trial(s), then KHK
shall be responsible for winding-down such trials as soon as possible in
accordance with Applicable Law and industry standards.

(g)    KHK shall, and shall cause its Affiliates and its and their Sublicensees
to, as promptly as reasonably practicable, provide a copy to MEI of all
agreements related to the Development, Packaging, Manufacture, use or
Commercialization of the Compound or Product

 

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(“Product Agreements”), including all Sublicenses, and, to the extent requested
by MEI in writing, assign to MEI any Product Agreement, unless, with respect to
any such Product Agreement, such Product Agreement expressly prohibits such
assignment, in which case KHK (or such Affiliate or Sublicensee, as applicable)
shall co-operate with MEI and use Commercially Reasonable Efforts to secure the
consent of the applicable Third Party to such assignment, at KHK’s expense, and
if any such consent cannot be obtained with respect to a Product Agreement, KHK
shall, and shall cause its Affiliates and its and their Sublicensees to
cooperate, to the extent requested by MEI in writing, facilitate discussions
between MEI and such Third Parties to assist MEI in entering into a direct
agreement with such Third Parties;

(h)    KHK shall transfer to MEI all units of Compound and Product in its
possession at no cost; and

(i)    KHK shall, if applicable, and hereby does, effective on such termination,
assign to MEI all of KHK’s and its Affiliates’ right, title and interest in and
to the KHK Trademarks used by KHK and its Affiliates in the Territory in
connection with its Development, Packaging, or Commercialization of Products
(excluding any such trademarks that include, in whole or part, any corporate
name or logo of KHK or its Affiliates), including all goodwill therein, and KHK
shall promptly take such actions and execute such instruments, assignments and
documents as may be necessary to effect, evidence, register and record such
assignment.

11.4    Effect of Termination for Cause by KHK. If KHK is entitled to terminate
this Agreement under Section 11.2(b) (Termination for Cause) as a result of an
uncured material breach by MEI, KHK may elect to terminate or continue this
Agreement. If KHK elects to terminate this Agreement under Sections 11.2(b)
(Termination for Cause), or 11.2(d) (Termination for Bankruptcy), the following
consequences shall apply and shall be effective as of the effective date of such
termination. MEI shall compensate KHK any costs and expenses incurred by KHK, or
its Affiliates in connection with performing any of the activities contemplated
under Section 11.4 (Effect of Termination for Cause by KHK). If KHK elects to
continue this Agreement, the rights and licenses granted by MEI to KHK under
this Agreement shall continue, subject to KHK’s related obligation hereunder:

(a)    KHK’s license under Section 2.1 (Licenses to KHK) shall terminate;

(b)    the Receiving Party shall return to the Disclosing Party or destroy, at
the Disclosing Party’s election, all Confidential Information of the Disclosing
Party, including all copies thereof and all materials, substances and
compositions delivered or provided by the Disclosing Party to the Receiving
Party, provided that the Receiving Party shall have the right to retain one
(1) copy thereof, which may be retained by the Receiving Party solely for legal
archiving purposes;

(c)    KHK shall, at KHK’s election, withdraw Regulatory Approvals for any
Compound and Product in the Territory or, with MEI’s prior written consent,
assign to MEI all Regulatory Materials and Regulatory Approvals for any Compound
and Product and provide MEI

 

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with copies of all correspondence with Regulatory Authorities relating to such
Regulatory Materials and Regulatory Approval; and

(d)    KHK shall transfer to MEI and MEI shall purchase all units of Compound
and Product which are intended for sale in the Territory at a price equal to
KHK’s or its Affiliate’s fully burdened costs for such inventory with shipment
costs reimbursed by MEI.

11.5    Survival. Expiration or termination of this Agreement shall not relieve
the Parties of any obligation accruing prior to such expiration or termination,
nor shall expiration or any termination of this Agreement preclude either Party
from pursuing all rights and remedies it may have under this Agreement, at law
or in equity, with respect to breach of this Agreement. In addition, the
provisions of Articles 1 (Definitions) (to the extent necessary to give effect
to other surviving provisions), 8 (Financial Provisions) (but not Section 8.10
(Financial Adjustments) and only with respect to amounts due or accruing on or
prior to expiration or termination), 10 (Confidentiality; Publication) (but not
Sections 10.4 (Publication) or 10.5 (Privileged Communications)), 13
(Indemnification; Liability) (but not Section 13.6 (Insurance)), and 14 (General
Provisions), and Sections 2.5 (No Implied Licenses; Negative Covenant), 2.7
(Non-Compete) (to the extent applicable), 4.4 (Development Costs) (with respect
to amounts incurred or otherwise due or accruing on or prior to expiration or
termination), 5.4 (Regulatory Inspections for Improper Activities), 9.1(d)(i)
(License to MEI), 11.3 (Effect of Termination) or 11.4 (Effect of Termination
for Cause by KHK) as applicable, this 11.5 (Survival), and 11.6 (Termination Not
Sole Remedy), hereof shall survive the expiration or termination of this
Agreement. Notwithstanding the foregoing, with respect to the survival of
[*CONFIDENTIAL*] solely in the event that this Agreement is terminated by KHK
pursuant to Section 11.2(b) (Termination for Cause) or 11.2(d) (Termination for
Bankruptcy), the Parties shall promptly negotiate in good faith
[*CONFIDENTIAL*]; provided, that, (i) if the Parties are unable to agree on
[*CONFIDENTIAL*] within [*CONFIDENTIAL*] of beginning discussions with respect
thereto, then either Party may refer such matter for arbitration in accordance
with Section 14.9 (Dispute Resolution), and (ii) at any time MEI shall have the
right to terminate [*CONFIDENTIAL*] upon written notice to KHK and to forego
paying [*CONFIDENTIAL*].

11.6    Termination Not Sole Remedy. Termination is not the sole remedy under
this Agreement and, whether or not termination is effected and notwithstanding
anything contained in this Agreement to the contrary, all other remedies will
remain available except as agreed to otherwise herein.

ARTICLE 12

REPRESENTATIONS AND WARRANTIES

12.1    Representations and Warranties of Each Party. Each Party represents and
warrants to the other Party as of the Effective Date that:

 

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(a)    it has the full right, power and authority to enter into this Agreement,
to perform its obligations hereunder, and no approval from any governmental
authority is required of such Party; and

(b)    this Agreement has been duly executed by it and is legally binding upon
it, enforceable in accordance with its terms, and does not and will not conflict
with any agreement, instrument or understanding, oral or written, to which it is
or becomes a party or by which it is or may become be bound, nor violate any
material law or regulation of any court, governmental body or administrative or
other agency having jurisdiction over it.

12.2    Mutual Covenants.

(a)    Employees, Consultants and Contractors. Each Party covenants that it has
obtained or will obtain written agreements from each of its employees,
consultants and contractors who perform Development activities pursuant to this
Agreement, which agreements will obligate such persons to obligations of
confidentiality and non-use and to assign Inventions in a manner consistent with
the provisions of this Agreement.

(b)    Debarment. Each Party represents, warrants and covenants to the other
Party that it is not debarred or disqualified under the U.S. Federal Food, Drug
and Cosmetic Act, as may be amended, or comparable laws in any country or
jurisdiction other than the U.S., and it does not, and will not during the Term,
employ or use the services of any person who is debarred or disqualified, in
connection with activities relating to the Compound or Product. In the event
that either Party becomes aware of the debarment or disqualification or
threatened debarment or disqualification of any person providing services to
such Party, including the Party itself or its Affiliates, that directly or
indirectly relate to activities contemplated by this Agreement, such Party shall
immediately notify the other Party in writing and such Party shall cease
employing, contracting with, or retaining any such person to perform any such
services.

(c)    Compliance. Each Party covenants as follows:

(i)    In the performance of its obligations under this Agreement, such Party
shall comply and shall cause its and its Affiliates’ employees and contractors
to comply with all Applicable Laws, including all export control,
anti-corruption and anti-bribery laws and regulations, and shall not cause such
other Party’s Indemnitees to be in violation of any Applicable Laws or otherwise
cause any reputational harm to such other Party.

(ii)    Such Party and its and its Affiliates’ employees and contractors shall
not, in connection with the performance of their respective obligations under
this Agreement, directly or indirectly through Third Parties, pay, promise or
offer to pay, or authorize the payment of, any money or give any promise or
offer to give, or authorize the giving of anything of value to any Government
Authority or representative thereof or other person for purpose of obtaining or
retaining business for or with, or directing business to, any person, including
either Party (and each Party represents and warrants that as of the Effective
Date, such Party, and to its knowledge, its

 

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and its Affiliates’ employees and contractors, have not directly or indirectly
promised, offered or provided any corrupt payment, gratuity, emolument, bribe,
kickback, illicit gift or hospitality or other illegal or unethical benefit to a
Government Authority or representative thereof or any other person in connection
with the performance of such Party’s obligations under this Agreement, and each
Party covenants that it and its Affiliates’ employees and contractors shall not,
directly or indirectly, engage in any of the foregoing).

(iii)    Such Party and its and its Affiliates’ employees and contractors shall
have complied and will comply with all Anti-Corruption Laws and industry codes
dealing with government procurement, conflicts of interest, corruption or
bribery.

Each Party shall have the right to suspend or terminate this Agreement, upon
written notice to the other Party, in its entirety where there is a credible
finding, after a reasonable investigation, that the other Party, in connection
with performance of such other Party’s obligations under this Agreement, has
violated any Anti-Corruption Laws.

12.3    Representations and Warranties by MEI. MEI represents and warrants to
KHK as of the Effective Date that:

(a)    it has not previously assigned, transferred, conveyed or otherwise
encumbered its right, title and interest in MEI Technology in a manner that is
inconsistent with the exclusive license granted to KHK under Section 2.1
(Licenses to KHK);

(b)    MEI has not received any notice from a Third Party that the Development
of any Compound or Product conducted by MEI prior to the Effective Date has
infringed any Patents of any Third Party or misappropriated any other
intellectual property of any Third Party and is not aware of any imminent or
likely threat from a Third Party of such infringement or misappropriation;

(c)    MEI has no knowledge as of the Effective Date of any Third Party that is
infringing or misappropriating any of the MEI Technology in the Territory;

(d)    no claim or action has been brought or, to MEI’s knowledge, threatened in
writing by any Third Party alleging that the MEI Patents are invalid or
unenforceable, and no MEI Patent is the subject of any interference, opposition,
cancellation or other protest proceeding; and

(e)    the patents and patent applications listed on Schedule 1.72 constitute
all existing MEI Patents as of the Effective Date.

12.4    Representations and Warranties by KHK. KHK represents and warrants to
MEI as of the Effective Date that:

 

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(a)    KHK has received satisfactory responses from MEI to each specific written
request for information, in connection with the execution of this Agreement,
made by KHK prior to the Effective Date;

(b)    KHK’s (and its Affiliates, Sublicensees and subcontractors) compensation
programs for their respective sales representatives in connection with the
Commercialization of Products do not, and will not, provide financial incentives
for the promotion, sales, and marketing of Products in violation of any
Applicable Laws or any professional requirements;

(c)    All Products Commercialized or (to the extent KHK’s Manufacturing Option
is exercised) Manufactured by, or under authority of, KHK shall be:

(i) packaged, labeled, handled, stored and shipped in accordance with, and shall
conform to, applicable specifications; and

(ii) packaged, labeled, handled, stored and shipped in compliance with all
Applicable Laws.

12.5    Disclaimer. KHK understands that the Compound and Product are the
subject of ongoing clinical research and development and that MEI cannot ensure
the safety or usefulness of the Compound or Product or that the Product will
receive Regulatory Approvals.

12.6    No Other Warranties. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT,
NEITHER PARTY MAKES, AND EACH PARTY EXPRESSLY DISCLAIMS, ANY AND ALL WARRANTIES
OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF DESIGN,
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, VALIDITY OF PATENTS,
NON-INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES, OR
ARISING FROM A COURSE OF DEALING, USAGE OR TRADE PRACTICES.

ARTICLE 13

INDEMNIFICATION; LIABILITY

13.1    Indemnification by MEI. MEI shall indemnify and hold KHK, its Affiliates
and Sublicensees, and their respective officers, directors, agents and employees
(“KHK Indemnitees”) harmless from and against any Claims against them to the
extent arising or resulting from:

(a)    the use, Development, Packaging, Manufacture, Commercialization,
handling, storage or other disposition by or on behalf of MEI (other than by any
KHK Indemnitees) or any of its Affiliates or Third Party licensees (excluding
Sublicensees) of any Compound or Product outside the Territory, including any
product liability claim outside the Territory;

 

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(b)    any product liability claim in the Territory resulting from a defect in
the manufacturing of Compound or Product supplied by or on behalf of MEI for the
Territory;

(c)    the gross negligence or willful misconduct of any of the MEI Indemnitees;
and

(d)    any material breach by MEI of this Agreement.

except in each case, to the extent such Claims result from the material breach
by KHK of any covenant, representation, warranty or other agreement made by KHK
in this Agreement or the negligence or willful misconduct of any KHK Indemnitee.
Notwithstanding the above, MEI will have no obligation to defend or indemnify
KHK or its Affiliates for any claim brought by a shareholder or a class of
shareholders of KHK or its Affiliates including, securities fraud claims,
shareholder direct claims, and shareholder derivative claims, except to the
extent resulting from the gross negligence or willful misconduct on the part of
MEI or any Affiliate.

13.2    Indemnification by KHK. KHK shall indemnify and hold MEI, its Affiliates
and (sub)licensees, and their respective officers, directors, agents and
employees (“MEI Indemnitees”) harmless from and against any Claims against them
to the extent arising or resulting from:

(a)    the use, Development, Packaging, Manufacture (only if KHK’s Manufacturing
Option has been exercised), Commercialization, handling, storage or other
disposition by or on behalf of KHK or any of its Affiliates or Sublicensees of
any Compound or Product in the Field in or for the Territory, including any
product liability claim in the Territory that is not subject to MEI’s
indemnification obligations under Section 13.1(b) (Indemnification by MEI); or

(b)    the gross negligence or willful misconduct of any of the KHK Indemnitees;
or

(c)    the material breach by KHK of this Agreement;

except in each case, to the extent such Claims result from the material breach
by MEI of any covenant, representation, warranty or other agreement made by MEI
in this Agreement or the negligence or willful misconduct of any MEI Indemnitee.
Notwithstanding the above, KHK will have no obligation to defend or indemnify
MEI or its Affiliates for any claim brought by a shareholder or a class of
shareholders of MEI or its Affiliates including, but not limited to, securities
fraud claims, shareholder direct claims, and shareholder derivative claims,
except to the extent resulting from the gross negligence or willful misconduct
on the part of KHK or any Affiliate.

13.3    Indemnification Procedure. If either Party is seeking indemnification
under Sections 13.1 (Indemnification by MEI) or 13.2 (Indemnification by KHK)
(the “Indemnified

 

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Party”), it shall inform the other Party (the “Indemnifying Party”) of the claim
giving rise to the obligation to indemnify pursuant to such section as soon as
reasonably practicable after receiving notice of the claim. The Indemnifying
Party shall have the right to assume the defense of any such claim for which it
is obligated to indemnify the Indemnified Party. The Indemnified Party shall
cooperate with the Indemnifying Party and the Indemnifying Party’s insurer as
the Indemnifying Party may reasonably request, and at the Indemnifying Party’s
cost and expense. The Indemnified Party shall have the right to participate, at
its own expense and with counsel of its choice, in the defense of any claim or
suit that has been assumed by the Indemnifying Party. Neither Party shall have
the obligation to indemnify the other Party in connection with any settlement
made without such Party’s written consent, which consent shall not be
unreasonably withheld or delayed. If the Parties cannot agree as to the
application of Section 13.1 (Indemnification by MEI) or 13.2 (Indemnification by
KHK) as to any claim, pending resolution of the dispute pursuant to Section 14.9
(Dispute Resolution), the Parties may conduct separate defenses of such claims,
with each Party retaining the right to claim indemnification from the other
Party in accordance with Section 13.1 (Indemnification by MEI) or 13.2
(Indemnification by KHK) upon resolution of the underlying claim.

13.4    Mitigation of Loss. Each Indemnified Party will take and will procure
that its Affiliates take reasonable steps and actions to mitigate any Claims (or
potential losses or damages) under this Article 13 (Indemnification; Liability).
Nothing in this Agreement shall or shall be deemed to relieve any Party of any
common law or other duty to mitigate any losses incurred by it.

13.5    Special, Indirect and Other Losses. EXCEPT IN THE EVENT OF A PARTY’S
BREACH OF Article 10 (CONFIDENTIALITY; PUBLICATION) OR A PARTY’S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT, NEITHER PARTY SHALL BE ENTITLED TO RECOVER
FROM THE OTHER PARTY ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES
IN CONNECTION WITH THIS AGREEMENT OR ANY LICENSE GRANTED HEREUNDER; provided,
however, that this Section 13.5 (Special, Indirect and Other Losses) shall not
be construed to limit [*CONFIDENTIAL*].

13.6    Insurance. Each Party, at its own expense, shall maintain product
liability and other appropriate insurance in an amount consistent with sound
business practice and reasonable in light of its obligations under this
Agreement during the Term. Each Party shall provide a certificate of insurance
(or evidence of self-insurance) evidencing such coverage to the other Party upon
request.

ARTICLE 14

GENERAL PROVISIONS

14.1    Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without reference to any rules
of conflict of laws with the exception of sections 5-1401 and 5-1402 of New York
General Obligations Law;

 

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the following document that are marked with [*CONFIDENTIAL*]. The redacted
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provided, that, the GDPR Agreement shall be governed by and construed in
accordance with the laws identified therein.

14.2    Assignment. Except as expressly provided hereunder, neither this
Agreement nor any rights or obligations hereunder may be assigned or otherwise
transferred by either Party without the prior written consent of the other Party
(which consent shall not be unreasonably withheld); provided, however, that
either Party may assign or otherwise transfer this Agreement and its rights and
obligations hereunder without the other Party’s consent: (a) in connection with
the transfer or sale of all or substantially all of the business or assets of
such Party to which this Agreement relates to a Third Party, whether by merger,
consolidation, divesture, restructure, sale of stock, sale of assets or
otherwise; provided that in the event of any such transaction (whether this
Agreement is actually assigned or is assumed by the acquiring party by operation
of law (e.g., in the context of a reverse triangular merger)), intellectual
property rights of the acquiring party to such transaction (if other than one of
the Parties to this Agreement) and its affiliates existing prior to the
transaction shall not be included in the technology licensed hereunder; or
(b) to an Affiliate, provided that the assigning Party shall remain liable and
responsible to the non-assigning Party hereto for the performance and observance
of all such duties and obligations by such assignee. The rights and obligations
of the Parties under this Agreement shall be binding upon and inure to the
benefit of the successors and permitted assigns of the Parties, and the name of
a Party appearing herein will be deemed to include the name of such Party’s
successors and permitted assigns to the extent necessary to carry out the intent
of this section. Any assignment not in accordance with this Section 14.2
(Assignment) shall be null and void.

14.3    Entire Agreement; Modification. This Agreement is both a final
expression of the Parties’ agreement and a complete and exclusive statement with
respect to all of its terms. This Agreement supersedes all prior and
contemporaneous agreements and communications, whether oral, written or
otherwise, concerning any and all matters contained herein. This Agreement may
only be modified or supplemented in a writing expressly stated for such purpose
and signed by the Parties to this Agreement.

14.4    Relationship Between the Parties. The Parties’ relationship with one
another, as established by this Agreement, is solely that of independent
contractors. This Agreement does not create any partnership, joint venture or
similar business relationship between the Parties. Neither Party is a legal
representative of the other Party. Neither Party can assume or create any
obligation, representation, warranty or guarantee, express or implied, on behalf
of the other Party for any purpose whatsoever.

14.5    Non-Waiver. The failure of a Party to insist upon strict performance of
any provision of this Agreement or to exercise any right arising out of this
Agreement shall neither impair that provision or right nor constitute a waiver
of that provision or right, in whole or in part, in that instance or in any
other instance. Any waiver by a Party of a particular provision or right shall
be in writing, shall be as to a particular matter and, if applicable, for a
particular period of time and shall be signed by such Party.

 

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14.6    Force Majeure. Neither Party shall be held liable to the other Party nor
be deemed to have defaulted under or breached this Agreement for failure or
delay in performing any obligation under this Agreement to the extent such
failure or delay is caused by or results from causes beyond the reasonable
control of the affected Party, including embargoes, war, acts of war (whether
war be declared or not), acts of terrorism, insurrections, riots, civil
commotions, strikes, fire, floods, or other acts of God, or acts, omissions or
delays in acting by any Government Authority. The affected Party shall notify
the other Party of such force majeure circumstances as soon as reasonably
practical, and shall promptly undertake and continue diligently all reasonable
efforts necessary to cure such force majeure circumstances or to perform its
obligations in spite of the ongoing circumstances.

14.7    Severability. If any one or more of the provisions contained in this
Agreement is held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby, unless the absence
of the invalidated provision(s) adversely affects the substantive rights of the
Parties. The Parties shall in such an instance use their best efforts to replace
the invalid, illegal or unenforceable provision(s) with valid, legal and
enforceable provision(s) which, insofar as practical, implement the purposes of
this Agreement.

14.8    Notices. Any notice to be given under this Agreement must be in writing
and delivered either (a) in person, (b) by air mail (postage prepaid) requiring
return receipt, (c) by overnight courier, or (d) by e-mail with delivery and
return receipts requested and confirmation of delivery thereafter, to the Party
to be notified at its address(es) given below, or at any address such Party may
designate by prior written notice to the other. Notice shall be deemed
sufficiently given for all purposes upon the earliest of: (i) the date of actual
receipt; (ii) if air mailed, five (5) days after the date of postmark; (iii) if
delivered by overnight courier, the next day the overnight courier regularly
makes deliveries or (iv) if sent by e-mail, the date of confirmation of receipt.

 

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If to MEI:

MEI Pharma, Inc.

3611 Valley Centre Drive STE 500

San Diego, CA 92130

Attention: CEO

If to KHK:

Kyowa Hakko Kirin Co., Ltd.

1-9-2 Otemachi, Chiyoda-ku, Tokyo 100-0004, Japan

Attention: Director, Business Development Department

14.9    Dispute Resolution.

(a)    The Parties shall negotiate in good faith and use reasonable efforts to
settle any dispute, controversy or claim arising from or related to this
Agreement or the breach thereof. Subject to Section 14.9(h) (Dispute
Resolution), in the event the Parties cannot resolve such dispute, controversy
or claim within a period of [*CONFIDENTIAL*] , then the matter shall be referred
to designated senior executives of the Parties for resolution. The initial
designated senior executives shall be the Head of Business Development
Department of KHK and Chief Operating Officer of MEI. Each Party shall be
entitled to name substitute senior executives upon written notice to the other
Party.

(b)    Except as expressly set forth in Section 14.9(h) (Dispute Resolution),
if, after going through this procedure, the Parties do not fully settle, and a
Party wishes to pursue the matter, each such dispute, controversy or claim that
is not an Excluded Claim (defined in Section 14.9(g) (Dispute Resolution) shall
be finally resolved by binding arbitration administered by the American
Arbitration Association (“AAA”) pursuant to the arbitration rules then in
effect.

(c)    The arbitration shall be conducted by a panel of three (3) neutral
arbitrators experienced in the pharmaceutical business, none of whom shall be a
current or former employee or director, or a current stockholder, of either
Party or any of their respective Affiliates or any Sublicensee: within thirty
(30) days after initiation of arbitration, each Party shall select one
(1) person to act as arbitrator and the two (2) Party-selected arbitrators shall
select a third (3rd) arbitrator within thirty (30) days of their appointment. If
the arbitrators selected by the Parties are unable or fail to agree upon the
third (3rd) arbitrator, the third (3rd) arbitrator shall be appointed by AAA.
The place of arbitration shall be San Francisco, California, and all proceedings
and

 

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communications shall be in English. The arbitrators shall take into account both
the desirability of making discovery efficient and cost-effective and the needs
of the Parties for an understanding of any legitimate issue raised in the
arbitration. The award rendered by the arbitrators shall be final, binding and
non-appealable (except in the event of gross error or fraud), and judgment may
be entered upon it in any court of competent jurisdiction.

(d)    Either Party may apply to the arbitrators for interim injunctive relief
until the arbitration award is rendered or the controversy is otherwise
resolved. The arbitrators’ authority to award punitive or any other type of
damages not measured by a Party’s compensatory damages shall be subject to the
limitation set forth in Section 13.5 (Special, Indirect and Other Losses). Each
Party shall bear its own costs and expenses and attorneys’ fees and an equal
share of the arbitrators’ fees and any administrative fees of arbitration.

(e)    Except to the extent necessary to confirm or enforce an award or as may
be required by law, neither Party nor an arbitrator may disclose the existence,
content, or results of an arbitration without the prior written consent of the
other Party. In no event shall an arbitration be initiated after the date when
commencement of a legal or equitable proceeding based on the dispute,
controversy or claim would be barred by the applicable New York statute of
limitations.

(f)    The Parties agree that, in the event of a dispute over the nature or
quality of performance under this Agreement, neither Party may terminate this
Agreement until final resolution of the dispute through arbitration or other
judicial determination. The Parties further agree that any payments made
pursuant to this Agreement pending resolution of the dispute shall be refunded
if an arbitrator or court determines that such payments are not due.

(g)    As used in this Section, the term “Excluded Claim” means a dispute,
controversy or claim that concerns the construction, scope, validity,
enforceability, inventorship or infringement of a patent, patent application,
trademark or copyright.

(h)    Nothing contained in this Agreement shall deny either Party the right to
seek injunctive or other equitable relief from a court of competent jurisdiction
in the context of a bona fide emergency or prospective irreparable harm, and
such an action may be filed and maintained notwithstanding any ongoing
discussions between the Parties or any ongoing arbitration proceeding. In
addition, either Party may bring an action in any court of competent
jurisdiction to resolve disputes pertaining to the construction, scope,
validity, enforceability, inventorship or infringement of a patent, patent
application, trademark or copyright, and no such claim shall be subject to
arbitration pursuant to subsections (b) and (c) of this Section 14.9 (Dispute
Resolution). In the event that injunctive or other equitable relief is granted
by a court, no bond or other security will need to be posted.

14.10    Performance by Affiliates. Each Party may discharge any obligations and
exercise any rights hereunder through any of its Affiliates. Each Party hereby
guarantees the performance by its Affiliates of such Party’s obligations under
this Agreement, and shall cause its Affiliates to comply with the provisions of
this Agreement in connection with such performance.

 

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Any breach by a Party’s Affiliate of any of such Party’s obligations under this
Agreement shall be deemed a breach by such Party, and the other Party may
proceed directly against such Party without any obligation to first proceed
against such Party’s Affiliate.

14.11    Headings. The captions to the several Articles, Sections and
subsections hereof are not a part of this Agreement, but are merely for
convenience to assist in locating and reading the several Articles and Sections
hereof.

14.12    Waiver of Rule of Construction. Each Party has had the opportunity to
consult with counsel in connection with the review, drafting and negotiation of
this Agreement. Accordingly, the rule of construction that any ambiguity in this
Agreement shall be construed against the drafting Party shall not apply.

14.13    Interpretation. Except where the context expressly requires otherwise,
(a) the use of any gender herein shall be deemed to encompass references to
either or both genders, and the use of the singular shall be deemed to include
the plural (and vice versa), (b) the words “include”, “includes” and “including”
shall be deemed to be followed by the phrase “without limitation”, (c) the word
“will” shall be construed to have the same meaning and effect as the word
“shall”, (d) any definition of or reference to any agreement, instrument or
other document herein shall be construed as referring to such agreement,
instrument or other document as from time to time amended, supplemented or
otherwise modified (subject to any restrictions on such amendments, supplements
or modifications set forth herein), (e) any reference herein to any person shall
be construed to include the person’s successors and assigns, (f) the words
“herein”, “hereof” and “hereunder”, and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any particular
provision hereof, (g) all references herein to Articles, Sections, or Schedules
shall be construed to refer to Articles, Sections, or Schedules of this
Agreement, and references to this Agreement include all Schedules hereto,
(h) the word “notice” means notice in writing (whether or not specifically
stated) and shall include notices, consents, approvals and other written
communications contemplated under this Agreement, (i) provisions that require
that a Party, the Parties or any committee hereunder “agree”, “consent” or
“approve” or the like shall require that such agreement, consent or approval be
specific and in writing, whether by written agreement, letter, approved minutes
or otherwise (but excluding electronic mail and instant messaging), (j)
references to any specific law, rule or regulation, or article, section or other
division thereof, shall be deemed to include the then-current amendments thereto
or any replacement or successor law, rule or regulation thereof, and (k) the
terms “or” and “and/or” shall be interpreted in the inclusive sense commonly
associated with the term “and/or”.

14.14    Business Day Requirements. In the event that any notice or other action
or omission is required to be taken by a Party under this Agreement on a day
that is not a Business Day then such notice or other action or omission shall be
deemed to require to be taken on the next occurring Business Day.

 

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14.15    Offset Rights. Except as expressly permitted in this Agreement, neither
Party may, at any time or for any reason, offset any payments due to the other
Party or its Affiliates under this Agreement.

14.16    English Language. This Agreement has been prepared in the English
language, and the English language shall control its interpretation. In
addition, all notices required or permitted to be given hereunder, and all
written, electronic, oral or other communications between the Parties regarding
this Agreement shall be in the English language.

14.17    Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

{REMAINDER OF PAGE INTENTIONALLY LEFT BLANK}

 

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IN WITNESS WHEREOF, the Parties intending to be bound have caused this Agreement
to be executed by their duly authorized representatives.

 

KYOWA HAKKO KIRIN CO., LTD.     MEI PHARMA, INC. By:   /s/ Masashi Miyamoto,
Ph.D.     By:   /s/ Daniel P. Gold, Ph.D. Name: Masashi Miyamoto, Ph.D.    
Name: Daniel P. Gold, Ph.D. Title: President & Chief Operating Officer    
Title: President & Chief Executive Officer Date:   October 31, 2018     Date:  
October 31, 2018

 

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LIST OF SCHEDULES

 

  •  

Schedule 1.30 (Compound Structure)

 

  •  

Schedule 1.72 (MEI Patents)

 

  •  

Schedule 2.4 (Transfer Plan)

 

  •  

Schedule 4.2 (Development Plan)

 

  •  

Schedule 5.9 (Data Protection Agreement)

 

  •  

Schedule 6.1 (Development Supply)

 

  •  

Schedule 10.6 (Joint Press Release)

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Schedule 1.30

Compound Structure [ONE PAGE HAS BEEN REDACTED]

[*CONFIDENTIAL*]

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Schedule 1.72

MEI Patents [13 PAGES HAVE BEEN REDACTED]

[*CONFIDENTIAL*]

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Schedule 2.4

Transfer Plan

MEI, at its own cost and expense, shall disclose and make available to KHK the
MEI Know-How in accordance with the following timeline. Additional transfer of
MEI Know-How which are necessary for Development in the Field in the Territory,
and that are not listed in this Transfer Plan will be disclosed upon reasonable
request by KHK and MEI will use Commercially Reasonable Efforts to disclose and
make available such MEI Know-How to KHK during the Term.

[*CONFIDENTIAL*]

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Schedule 4.2

Development Plan

Version: 0.0 (Initial)

Effective date of the Development Plan: Effective Date of the Agreement

[*CONFIDENTIAL*] [THREE PAGES HAVE BEEN REDACTED]

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Schedule 5.9

GDPR JOINT CONTROLLER AND ONWARD TRANSFER AGREEMENT

 

1.

Kyowa Hakko Kirin Co. Ltd. (“KHK”) and MEI Pharma, Inc. (“MEI”) will both act as
a “joint controller” with respect to the “Personal Data” (terms as defined under
Art. 26 and 4 (1) EU Regulation 2016/679 (“GDPR”)) and any other applicable data
protection, data privacy and data security laws applicable in the jurisdictions
in the EU/EEA or Switzerland (together the “Data Protection Laws”) where either
or both of the Parties are performing medical studies, and the Personal Data are
provided to the Parties, or are made accessible under the terms of the License,
Development and Commercialization Agreement , dated as of October 31, 2018 (the
“License Agreement” (to which this Schedule 5.9 is attached)) for the studies
related to MEI’s proprietary compound, ME-401 (each a “Study”).

 

2.

Except as provided in the License Agreement, KHK shall not engage any processors
to process any Personal Data or share the Personal Data with any other third
party without the prior specific or general written authorization of MEI.

 

3.

MEI’s Privacy Representative, DPO Consultancy LLC, Reitscheweg 37, 5237 BB
‘s-Hertogenbosch, The Netherlands, is hereby designated as contact point for all
data subjects and regulatory inquiries under this GDPR Data Joint Controller and
Onward Transfer Agreement and Data Protection Laws.

 

4.

KHK and MEI both shall always comply with Data Protection Laws as applicable to
joint controllers as defined by Art. 26 GDPR and shall, in particular, fully
comply with the following provisions:

 

  (a)

keep the Personal Data confidential in accordance with the License Agreement and
applicable Data Protection Laws;

 

  (b)

take all appropriate technical and organisational measures necessary to ensure
that Personal Data are protected against loss, destruction and damage,
unauthorised access, use, modification, disclosure or other misuse and, at a
minimum, comply with MEI’s Privacy Notice available at
http://www.meipharma.com/privacy-notice;

 

  (c)

use the Personal Data obtained as a result of the License Agreement only for the
purposes permitted in the License Agreement and/or by Data Protection Laws and
for no other purposes;

 

  (d)

ensure that only persons authorised by the joint controller have access to
Personal Data and ensure the reliability of the persons who will be approved by
the joint controller to have

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access to Personal Data and who otherwise process the Personal Data;

 

  (e)

notify each other immediately (within 24 hours) on becoming aware of a breach of
its obligations as a joint controller, and/or any actual, threatened, alleged or
suspected data security incident involving the actual or alleged or threatened
unlawful access, loss, destruction, restriction, anonymization and/or deletion
of Personal Data; further, each joint controller must keep records of processing
activities it provided to the other joint controller;

 

  (f)

provide reasonable and prompt assistance with requests of the other joint
controller in the management of any actual, threatened, alleged or suspected,
data security incident where the assistance of the joint controller is
reasonably requested;

 

  (g)

provide reasonable and prompt assistance with requests of a joint controller to
enable it to comply with its obligations of providing access to Personal Data,
restriction, anonymization, deletion and/or rectification of Personal Data under
the Data Protection Laws; and

 

  (h)

allow the other joint controller or its representatives to audit its processing
operations, systems and/or facilities where reasonably required by the
requesting joint controller to assess the other joint controller’s compliance
with this GDPR Data Joint Controller and Onward Transfer Agreement and/or, at
the requesting joint controller’s option, promptly and fully co-operate and
respond to all requests of the requesting joint controller for information to
demonstrate the other joint controller’s compliance with this GDPR Data Joint
Controller and Onward Transfer Agreement and Data Protection Laws. The
requesting joint controller shall pay for the costs of any third party it may
engage to conduct an audit, unless in the case of a data security breach at the
other joint controller receiving such request.

 

5.

On the termination of the License Agreement, howsoever arising, KHK shall return
all copies of the Personal Data to MEI, or, at MEI’s specific and written
request, delete all copies of the Personal Data subject to applicable legal
obligations on each joint controller to retain any such documents containing
Personal Data (in which event the other joint controller shall restrict the
access to and processing of such Personal Data to the extent necessary to meet
the requirements of such legally required obligations).

 

6.

The License Agreement between the parties shall remain valid and in full force.
In case of a conflict between the License Agreement and this GDPR Data Joint
Controller and Onward Transfer Agreement, this GDPR Data Joint Controller and
Onward Transfer Agreement shall govern.

 

7.

For the Personal Data that KHK will receive from MEI, or to which MEI will grant
KHK access, the following provisions shall apply:

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  a.

KHK is obligated to provide at least the same level of privacy protection for
the Personal Data received from MEI as is required by the EU-US and Swiss US
Privacy Shield Principles (“Privacy Shield Principles”). This obligation shall
apply at all times when Personal Data is transferred from the EU, EEA and/or
Switzerland to MEI, either directly or via onward transfer. A summary of the
Privacy Shield Principles is attached as APPENDIX to this GDPR Data Joint
Controller and Onward Transfer Agreement. A more detailed description is
available at www.privacyshield.gov.

 

  b.

KHK may only process Personal Data for the limited and specific purposes
consistent with the License Agreement and shall Process Personal Data through
the performance of its obligations under the License Agreement.

 

  c.

KHK will take reasonable and appropriate technical and organizational security
measures to protect the Personal Data received from MEI from loss, misuse and
unauthorized access, disclosure, alteration and destruction, taking into due
account the risks involved in the processing and the nature of the Personal
Data. KHK will regularly monitor compliance with the safeguards in this
Section 8 and the Appendix. KHK will not decrease its overall security efforts
during the term of the License Agreement.

 

  d.

KHK will cooperate and take reasonable and appropriate steps to ensure that the
Personal Data are processed in a manner consistent with MEI’s obligations
pursuant the Privacy Shield Principles. In particular, KHK will

 

  i.

reasonably respond to all inquiries from MEI relating to the processing of
Personal Data subject to this GDPR Data Joint Controller and Onward Transfer
Agreement;

 

  ii.

fully cooperate with audit procedures, whereby audit procedures may not infringe
on KHK’s contractual confidentiality obligations towards third parties.

 

  e.

KHK will reasonably assist MEI in responding to individuals exercising their
rights under the Privacy Shield Principles and in case of complaints MEI
receives under its Privacy Shield certification without directly responding to
such requests by individuals, unless it has been otherwise authorised to do so.
KHK will inform MEI about any legally binding request for disclosure of Personal
Data received from MEI unless applicable law prohibits such information.

 

  f.

KHK will notify MEI in writing and without undue delay if it makes a
determination that it can no longer meet the obligations and assurances as set
out under this GDPR Data Joint Controller and Onward Transfer Agreement. When
such a determination is made, KHK will assist MEI with any reasonable and
appropriate steps to stop and remediate unauthorized processing of Personal
Data. If KHK’s ability to meet the obligations and assurances as set out under
this GDPR Data Joint Controller and Onward Transfer

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Agreement cannot be restored by reasonable and appropriate means, MEI shall have
the right to terminate the License Agreement pursuant to Section 11.2(g) of the
License Agreement.

 

  g.

If KHK processes Personal Data on behalf of MEI in a manner that is inconsistent
with the Privacy Shield Principles, KHK will indemnify MEI for any damages
incurred should MEI be held liable by an individual or entity, unless KHK
demonstrates that it is not responsible for the event giving rise to the
damages.

 

8.

This Joint Controller and Onward Transfer Agreement shall be governed by and
construed in accordance with the laws of the State of New York without reference
to any rules of conflict of laws with the exception of sections 5-1401 and
5-1402 of New York General Obligations Law, unless mandatory Data Protection Law
applies. Section 14.9 of the License Agreement (Dispute Resolution) shall also
apply to any disputes between the Parties related to this Joint Controller and
Onward Transfer Agreement.

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IN WITNESS WHEREOF, the parties hereto have executed or caused this GDPR Data
Joint Controller and Onward Transfer Agreement to be executed as of the day,
month and year first below written.

 

MEI PHARMA, INC.

By:    

Print Name: David M. Urso Title: SVP Corporate Development, COO & General
Counsel

Date:    

Address:  3611 Valley Centre Drive, Suite 500
San Diego, CA 92130, USA

KYOWA HAKKO KIRIN CO. LTD.

By:    

Print Name: Satoshi Nakanishi

Title:  Director, Corporate Social Responsibility Management Department

Date:    

Address:  1-9-2 Otemachi, Chiyoda-ku,
Tokyo 100-0004, Japan

 

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APPENDIX TO SCHEDULE 5.9

Summary of the Privacy Shield Principles (“Principles”)

(see www.privacyshield.gov for further information:

https://www.privacyshield.gov/servlet/servlet.FileDownload?file=015t00000004qAg
= and EU- U.S. Privacy Shield Framework

https://www.trade.gov/td/services/odsi/swiss-us-privacyshield-framework.pdf =
Swiss-U.S. Privacy Shield Framework – together the “Framework”)

Introduction:

The Principles state:

Sec 3. ACCOUNTABILITY FOR ONWARD TRANSFER

“a. To transfer personal information to a third party acting as a controller,
organizations must comply with the Notice and Choice Principles. Organizations
must also enter into a contract with the third-party controller that provides
that such data may only be processed for limited and specified purposes
consistent with the consent provided by the individual and that the recipient
will provide the same level of protection as the Principles and will notify the
organization if it makes a determination that it can no longer meet this
obligation. The contract shall provide that when such a determination is made
the third party controller ceases processing or takes other reasonable and
appropriate steps to remediate.”

Sec. 10 c (i):

“For transfers between controllers, the recipient controller need not be a
Privacy Shield organization or have an independent recourse mechanism. The
Privacy Shield organization must enter into a contract with the recipient
third-party controller that provides for the same level of protection as is
available under the Privacy Shield, not including the requirement that the third
party controller be a Privacy Shield organization or have an independent
recourse mechanism, provided it makes available an equivalent mechanism.”

The following text, based on the wording of the US Department of Commerce posted
at https://www.privacyshield.gov/article?id=Requirements-of-Participation,
describes the obligations of KHK as the recipient (third party) controller for
the Personal Data under the Framework, in particular under its cited Sections 3
(a) and 10 c (i):

1. NOTICE

a. An organization must inform individuals about:

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i. the types of personal data collected and, where applicable, the entities or
subsidiaries of the organization also adhering to the Principles,

ii. its commitment to subject to the Principles all personal data received from
the EU in reliance on the Privacy Shield,

iii. the purposes for which it collects and uses personal information about
them,

iv. how to contact the organization with any inquiries or complaints, including
any relevant establishment in the EU that can respond to such inquiries or
complaints,

v. the type or identity of third parties to which it discloses personal
information, and the purposes for which it does so,

vi. the right of individuals to access their personal data,

vii. the choices and means the organization offers individuals for limiting the
use and disclosure of their personal data,

viii. an equivalent recourse designated to address complaints and provide
appropriate recourse free of charge to the individual,

ix. the requirement to disclose personal information in response to lawful
requests by public authorities, including to meet national security or law
enforcement requirements, and

x. its liability in cases of onward transfers to third parties.

b. This notice must be provided in clear and conspicuous language when
individuals are first asked to provide personal information to the organization
or as soon thereafter as is practicable, but in any event before the
organization uses such information for a purpose other than that for which it
was originally collected or processed by the transferring organization or
discloses it for the first time to a third party.

2. CHOICE

a. An organization must offer individuals the opportunity to choose (opt out)
whether their personal information is (i) to be disclosed to a third party or
(ii) to be used for a purpose that is materially different from the purpose(s)
for which it was originally collected or subsequently authorized by the
individuals. Individuals must be provided with clear, conspicuous, and readily
available mechanisms to exercise choice.

b. By derogation to the previous paragraph, it is not necessary to provide
choice when disclosure is made to a third party that is acting as an agent to
perform task(s) on behalf of and under the instructions of the organization.
However, an organization shall always enter into a contract with the agent.

c. For sensitive information (i.e., personal information specifying medical or
health conditions, racial or

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ethnic origin, political opinions, religious or philosophical beliefs, trade
union membership or information specifying the sex life of the individual),
organizations must obtain affirmative express consent (opt in) from individuals
if such information is to be (i) disclosed to a third party or (ii) used for a
purpose other than those for which it was originally collected or subsequently
authorized by the individuals through the exercise of opt-in choice. In
addition, an organization should treat as sensitive any personal information
received from a third party where the third party identifies and treats it as
sensitive.

3. ACCOUNTABILITY FOR ONWARD TRANSFER

a. To transfer personal information to a third party acting as a controller,
organizations must comply with the Notice and Choice Principles (Sections 1 and
2 above). Organizations must also enter into a contract with the third-party
controller that provides that such data may only be processed for limited and
specified purposes consistent with the consent provided by the individual and
that the recipient will provide the same level of protection as the Principles
and will notify the organization if it makes a determination that it can no
longer meet this obligation. The contract shall provide that when such a
determination is made the third party controller ceases processing or takes
other reasonable and appropriate steps to remediate.

b. To transfer personal data to a third party acting as an agent, organizations
must: (i) transfer such data only for limited and specified purposes;
(ii) ascertain that the agent is obligated to provide at least the same level of
privacy protection as is required by the Principles; (iii) take reasonable and
appropriate steps to ensure that the agent effectively processes the personal
information transferred in a manner consistent with the organization’s
obligations under the Principles; (iv) require the agent to notify the
organization if it makes a determination that it can no longer meet its
obligation to provide the same level of protection as is required by the
Principles; (v) upon notice, including under (iv), take reasonable and
appropriate steps to stop and remediate unauthorized processing; and
(vi) provide a summary or a representative copy of the relevant privacy
provisions of its contract with that agent to the US Department of Commerce upon
request.

4. SECURITY

a. Organizations creating, maintaining, using or disseminating personal
information must take reasonable and appropriate measures to protect it from
loss, misuse and unauthorized access, disclosure, alteration and destruction,
taking into due account the risks involved in the processing and the nature of
the personal data.

5. DATA INTEGRITY AND PURPOSE LIMITATIONS

a. Consistent with the Principles, personal information must be limited to the
information that is relevant for the purposes of processing. An organization may
not process personal information in a way

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that is incompatible with the purposes for which it has been collected or
subsequently authorized by the individual. To the extent necessary for those
purposes, an organization must take reasonable steps to ensure that personal
data is reliable for its intended use, accurate, complete, and current. An
organization must adhere to the Principles for as long as it retains such
information.

b. Information may be retained in a form identifying or making identifiable the
individual only for as long as it serves a purpose of processing within the
meaning of 5a. This obligation does not prevent organizations from processing
personal information for longer periods for the time and to the extent such
processing reasonably serves the purposes of archiving in the public interest,
journalism, literature and art, scientific or historical research, and
statistical analysis. In these cases, such processing shall be subject to the
other Principles and provisions of the Framework. Organizations should take
reasonable and appropriate measures in complying with this provision.

2. Depending on the circumstances, examples of compatible processing purposes
may include those that reasonably serve customer relations, compliance and legal
considerations, auditing, security and fraud prevention, preserving or defending
the organization’s legal rights, or other purposes consistent with the
expectations of a reasonable person given the context of the collection.

3. In this context, if, given the means of identification reasonably likely to
be used (considering, among other things, the costs of and the amount of time
required for identification and the available technology at the time of the
processing) and the form in which the data is retained, an individual could
reasonably be identified by the organization, or a third party if it would have
access to the data, then the individual is “identifiable.”

6. ACCESS

Individuals must have access to personal information about them that an
organization holds and be able to correct, amend, or delete that information
where it is inaccurate, or has been processed in violation of the Principles,
except where the burden or expense of providing access would be disproportionate
to the risks to the individual’s privacy in the case in question, or where the
rights of persons other than the individual would be violated.

7. RECOURSE, ENFORCEMENT AND LIABILITY

a. Effective privacy protection must include robust mechanisms for assuring
compliance with the Principles, recourse for individuals who are affected by
non-compliance with the Principles, and consequences for the organization when
the Principles are not followed. At a minimum such mechanisms must include:

i. readily available recourse mechanisms by which each individual’s complaints
and disputes are investigated and expeditiously resolved;

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ii. follow-up procedures for verifying that the attestations and assertions
organizations make about their privacy practices are true and that privacy
practices have been implemented as presented and, in particular, with regard to
cases of non-compliance; and

iii. obligations to remedy problems arising out of failure to comply with the
Principles by organizations announcing their adherence to them and consequences
for such organizations. Sanctions must be sufficiently rigorous to ensure
compliance by organizations.

b. Organizations will respond promptly to inquiries and requests by the
Department for information relating to the Privacy Shield. All organizations
must respond expeditiously to complaints regarding compliance with the
Principles referred by EU Member State authorities through the Department.
Organizations that have chosen to cooperate with DPAs, including organizations
that process human resources data, must respond directly to such authorities
with regard to the investigation and resolution of complaints.

c. In the context of an onward transfer, a Privacy Shield organization has
responsibility for the processing of personal information it receives under the
Privacy Shield and subsequently transfers to a third party acting as an agent on
its behalf. The Privacy Shield organization shall remain liable under the
Principles if its agent processes such personal information in a manner
inconsistent with the Principles, unless the organization proves that it is not
responsible for the event giving rise to the damage.

*    *    *

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Schedule 6.1

Development Supply

 

1.

Manufacturer locations

[*CONFIDENTIAL*]

 

2.

Timing of initial supply

[*CONFIDENTIAL*]

 

3.

Amount and forms of Supply Items for initial supply

[*CONFIDENTIAL*]

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Schedule 10.6

Joint Press Release

MEI Pharma and Kyowa Hakko Kirin Announce License Agreement to Develop and
Commercialize ME-401 in Japan

MEI to Receive $10 Million Upfront Payment, Plus Milestones and Tiered Royalty
Payments

SAN DIEGO, and TOKYO, November 5, 2018 – MEI Pharma, Inc. (NASDAQ: MEIP) and
Kyowa Hakko Kirin Co., Ltd. (Tokyo: 4151, “Kyowa Hakko Kirin”), today announced
the execution of a license development and commercialization agreement (“License
Agreement”) granting Kyowa Hakko Kirin exclusive rights to develop and
commercialize ME-401 in Japan. ME-401 is MEI’s phosphatidylinositol 3-kinase
(“PI3K”) delta inhibitor being developed by MEI for the treatment of patients
with B-cell malignancies. MEI is planning to initiate a Phase 2 study to
evaluate patients with follicular lymphoma that is intended to support an
accelerated approval marketing application with the U.S. Food and Drug
Administration.

Under the terms of the License Agreement, MEI will receive a $10 million upfront
payment and is eligible to receive additional development and commercialization
milestones totaling up to $87.5 million. MEI is also eligible to receive tiered
double-digit royalties extending into the mid-teens. The agreement grants Kyowa
Hakko Kirin exclusive rights to ME-401 to develop and commercialize ME-401 in
Japan. The initial indication for development and regulatory approval under the
agreement is relapsed or refractory follicular lymphoma.

“Kyowa Hakko Kirin is a well-regarded leader in the development and
commercialization of hematology and oncology therapies in Japan,” said David M.
Urso., J.D., Chief Operating Officer of MEI Pharma. “This agreement is important
for MEI as an opportunity to expand the development of ME-401 as a potential
best-in-class PI3K delta inhibitor outside of the U.S. and is consistent with
our strategy to optimize value through partnering opportunities abroad while
developing capabilities for domestic commercialization.”

“I am delighted to enter into an agreement with MEI Pharma for the development
and commercialization of ME-401 in Japan,” said Wataru Murata, Executive
Officer, Director of Corporate Strategy & Planning Department. “We believe that
ME-401 will be an important drug candidate in our oncology pipeline.”

Kyowa Hakko Kirin plans to initiate a Phase 1 study in Japan in 2019.

About ME-401 ME-401 is an investigational oral phosphatidylinositol 3-kinase
(“PI3K”) delta inhibitor; PI3K delta is often overexpressed in cancer cells and
plays a key role in the proliferation and survival of hematologic cancer cells.
ME-401 displays high selectivity for the PI3K delta isoform and has distinct
pharmaceutical properties from other PI3K delta inhibitors. It is being
clinically evaluated in patients with various B-cell malignancies. MEI is
initiating a Phase 2 study to evaluate the efficacy, safety, and tolerability of
ME-401 as a single agent in patients with follicular lymphoma after failure of
at least two prior systemic

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therapies including chemotherapy and an anti-CD20 antibody. The Phase 2 study is
intended to support an accelerated approval marketing application with the U.S.
Food and Drug Administration.

About MEI Pharma, Inc.

MEI Pharma, Inc. (Nasdaq: MEIP) is a San Diego-based pharmaceutical company
focused on leveraging its extensive development and oncology expertise to
identify and advance new therapies for cancer. The Company’s portfolio of drug
candidates includes pracinostat, an oral HDAC inhibitor that is partnered with
Helsinn Healthcare, SA. Pracinostat has been granted Breakthrough Therapy
Designation from the U.S. Food and Drug Administration for use in combination
with azacitidine for the treatment of patients with newly diagnosed acute
myeloid leukemia (AML) who are unfit for intensive chemotherapy. Pracinostat is
also being developed in combination with azacitidine for the treatment of
patients with high and very high-risk myelodysplastic syndrome (MDS). MEI
Pharma’s clinical development pipeline also includes ME-401, a highly
differentiated oral PI3K delta inhibitor currently in a Phase 1b study in
patients with relapsed refractory follicular lymphoma or CLL, and voruciclib, an
oral, selective CDK inhibitor shown to suppress MCL1, a known mechanism of
resistance to BCL2 inhibitors. The Company is also developing ME-344, a novel
mitochondrial inhibitor currently in an investigator-initiated study in
combination with bevacizumab evaluating patients with HER2-negative breast
cancer. Pracinostat, ME-401, ME-344 and voruciclib are investigational agents
and are not approved for use in the U.S. For more information, please
visit www.meipharma.com.

About Kyowa Hakko Kirin Co., Ltd.

Kyowa Hakko Kirin Co., Ltd. is a research-based life sciences company, with
special strengths in biotechnologies. In the core therapeutic areas of oncology,
nephrology and immunology/allergy, Kyowa Hakko Kirin leverages leading-edge
biotechnologies centered on antibody technologies, to continually discover
innovative new drugs and to develop and market those drugs world-wide. In this
way, the company is working to realize its vision of becoming a Japan-based
global specialty pharmaceutical company that contributes to the health and
wellbeing of people around the world.

You can learn more about the business at: www.kyowa-kirin.com.

Forward-Looking Statements

Under U.S. law, a new drug cannot be marketed until it has been investigated in
clinical studies and approved by the FDA as being safe and effective for the
intended use. Statements included in this press release that are not historical
in nature are “forward-looking statements” within the meaning of the “safe
harbor” provisions of the Private Securities Litigation Reform Act of 1995. You
should be aware that our actual results could differ materially from those
contained in the forward-looking statements, which are based on management’s
current expectations and are subject to a number of risks and uncertainties,
including, but not limited to, our failure to successfully commercialize our
product candidates; costs and delays in the development and/or FDA approval, or
the failure to obtain such approval, of our product candidates; uncertainties or
differences in interpretation in clinical trial results; our inability to
maintain or enter into, and the risks resulting from our dependence upon,
collaboration or contractual arrangements necessary for the development,
manufacture, commercialization, marketing, sales and distribution of any
products; competitive factors; our inability to protect our patents or
proprietary rights and obtain necessary rights to third party patents and
intellectual property to operate our business; our inability to operate our
business without infringing the patents and proprietary rights of others;
general economic conditions; the failure of any products to gain market
acceptance; our inability to obtain any

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additional required financing; technological changes; government regulation;
changes in industry practice; and one-time events. We do not intend to update
any of these factors or to publicly announce the results of any revisions to
these forward-looking statements.

Contacts for MEI Pharma, Inc.:

David A. Walsey

VP of IR and Corporate Communications

Tel: 858-369-7104

investor@meipharma.com

Jason I. Spark

Canale Communications for MEI

Tel: 619-849-6005

jason@canalecomm.com

Contacts for Kyowa Hakko Kirin Co., Ltd.:

Hiroki Nakamura

Tel:+81-3-5205-7205

Email: media@kyowa-kirin.co.jp