[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

Exhibit 10.1

PPAR-d LICENSE AGREEMENT

THIS LICENSE AGREEMENT (the “Agreement”) is made and entered into as of the
Effective Date (as defined below), by and between METABOLEX, INC., a Delaware
corporation having its principal place of business at 3876 Bay Center Place,
Hayward, CA 94545 (“Metabolex”), and JANSSEN PHARMACEUTICA NV, a corporation
organized under the laws of Belgium having a place of business at 30
Turnhoutseweg, 2340 Beerse, Belgium (“Janssen”). Metabolex and Janssen are
sometimes referred to herein individually as a “Party” and collectively as the
“Parties.”

RECITALS

WHEREAS, Ortho-McNeil, Inc. (an Affiliate of Janssen) and Metabolex are party to
a Strategic Alliance Agreement setting forth the scope and terms of a strategic
alliance between the Parties in the area of metabolic diseases;

WHEREAS, as part of such alliance, Metabolex desires to obtain from Janssen an
exclusive, worldwide license under certain patents, know-how and other
intellectual property relating to Janssen’s PPAR-d program; and

WHEREAS, Janssen is willing to grant such license under the terms and conditions
set forth in this Agreement.

NOW, THEREFORE, the Parties agree as follows:

ARTICLE 1

DEFINITIONS

As used herein, the following terms shall have the following meanings:

1.1 “Affiliate” means, with respect to a particular Party, a corporation,
partnership, or other entity that controls, is controlled by or is under common
control with such Party. For the purposes of the definition in this Section 1.1,
the word “control” (including, with correlative meaning, the terms “controlled
by” or “under common control with”) means the actual power, either directly or
indirectly through one or more intermediaries, to direct or cause the direction
of the management and policies of such entity, whether by the ownership of at
least fifty percent (50%) of the voting stock of such entity, or by contract or
otherwise.

1.2 “Confidential Information” has the meaning set forth in Section 6.1.

--------------------------------------------------------------------------------

1.3 “Controlled” means, with respect to an item of Information or an
intellectual property right, that a Party or one of its Affiliates owns or has a
license to such item or right and has the ability to disclose to the other Party
and/or grant a license or sublicense under such item or right as provided for in
this Agreement without violating the terms of any agreement with any Third
Party, or other obligation to any Third Party.

1.4 “CTA” means a clinical trial authorization, as described in Article 9 of
Directive 2001/20/EC of the European Parliament and of the Council.

1.5 “Diligent Efforts” means, with respect to a Party’s obligation under this
Agreement, the level of efforts required to carry out a task or obligation in a
manner consistent with its normal business practices the Party would devote to a
product at a similar stage of development or commercialization and of similar
market potential, profit potential or strategic value, based on conditions then
prevailing.

1.6 “Effective Date” means the Effective Date as defined in the PPAR-g License
Agreement.

1.7 “Execution Date” means June 20, 2006, the date upon which this Agreement has
been executed and delivered by both Parties.

1.8 “FDA” means the U.S. Food and Drug Administration, or a successor federal
agency thereto.

1.9 “First Commercial Sale” means, with respect to a PPAR-d Product in a
particular country, the first commercial sale of such product in such country
after all needed Regulatory Approvals have been obtained in such country.

1.10 “IND” means an investigational new drug application filed with the FDA for
approval to commence human clinical trials, or any equivalent application filed
with any equivalent regulatory authority in a country other than the U.S.

1.11 “Information” means all tangible and intangible (a) information,
techniques, technology, practices, trade secrets, inventions (whether patentable
or not), methods, knowledge, know-how, skill, experience, data, results
(including pharmacological, toxicological and clinical test data and results),
analytical and quality control data, results or descriptions, software and
algorithms and (b) compositions of matter, cells, cell lines, assays, animal
models and physical, biological or chemical material.

1.12 “Major Market” means France, Germany, Italy, Japan, Spain, the United
Kingdom, or the U.S.

1.13 “Metabolex Know-How” means all Information that (a) is Controlled by
Metabolex or its Affiliates during the Term, (b) is developed or acquired by
Metabolex or its Affiliates after the Effective Date and (c) relates to a PPAR-d
Compound or a PPAR-d Product or its development, manufacture, promotion or use,
but excluding the Metabolex Patents, PPAR-d Patents, and PPAR-d Know-How.

 

2

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

1.14 “Metabolex Patents” means all Patents (other than PPAR-d Patents) that
(a) are filed during the Term with a priority date after the Effective Date;
(b) are Controlled during the Term by Metabolex or a Metabolex Affiliate; and
(c) claim or cover the composition of matter, manufacture or use of a PPAR-d
Compound or a PPAR-d Product.

1.15 “NDA” means a New Drug Application filed pursuant to the requirements of
the FDA, as more fully defined in 21 C.F.R. § 314.5 et seq. or any equivalent
application filed with any equivalent regulatory authority in a country other
than the U.S.

1.16 “Net Sales” means, with respect to a given period of time, [*], less the
following deductions and offsets that are actually incurred, allowed, accrued
and/or taken and are specifically allocated with respect to such sale or
distribution, but solely to the extent that such deductions or offsets are not
otherwise recovered by or reimbursed to Metabolex or its Affiliates,
distributors or sublicensees:

[*]

The methodology for calculating (a) – (f), on a country-by-country basis, shall
conform to generally accepted accounting principles consistently applied by
Metabolex and its Affiliates across its product lines.

Net Sales shall also include the fair market value of all consideration received
by Metabolex and its Affiliates and their distributors and sublicensees in
respect of any sale of PPAR-d Products, whether such consideration is in cash,
payment in kind, exchange for value or another form.

In the case of discounts, reductions, payments or rebates offered for the PPAR-d
Products where the PPAR-d Products are sold to a customer as a grouped set of
products and/or services, Metabolex may discount the bona fide list price of a
PPAR-d Product by no more than the average weighted percentage discount (off of
the applicable list prices) of all the products of Metabolex and/or its
Affiliates in such particular grouped set of products. The methodology for
calculating the “average weighted percentage discounts” for PPAR-d Products will
be consistent with Metabolex’s and its Affiliates’ usual course of dealing with
all its products other than the PPAR-d Products. An example of the calculation
of “average weighted percentage discount” for a particular grouped set is set
forth in the attached Exhibit A.

If a PPAR-d Product is sold in the form of a combination product containing both
a PPAR-d Product and one or more independently therapeutically active
pharmaceutical molecules that are not PPAR-d Products (for the purpose of this
Section 1.16, a “Combination Product”), [*].

[*]

 

3

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

If Metabolex (or its Affiliate) sublicenses the development and/or
commercialization of a PPAR-d Product to a Third Party in consideration of the
payment (inter alia) of royalties by such sublicensee on sales by such
sublicensee of the PPAR-d Product, then Metabolex (or its Affiliate) shall use
commercially reasonable efforts to use a definition of net sales in the
sublicense agreement between Metabolex and such sublicensee that exactly matches
the definition of “Net Sales” as used in this Agreement. However, in the event
such definitions differ, for purposes of calculating the royalty owed by
Metabolex to Janssen based on such sublicensee’s sales of such PPAR-d Product,
the definition of “Net Sales” as used in this Agreement, solely for purposes of
calculating such royalty owed, shall be deemed to be the definition of net sales
in the sublicense agreement between Metabolex (or such Affiliate) and such
sublicensee, provided, however, that (i) the two definitions are substantially
similar and (ii) the methodology for calculating any deductions or offsets
listed in such definition, on a country-by-country basis, conforms to generally
accepted accounting principles consistently applied by such sublicensee across
its product lines.

1.17 “Other Product” means any pharmaceutical product (other than a PPAR-d
Product) containing a Selective PPAR-d Modulator, and including all
formulations, line extensions and modes of administration thereof.

1.18 “Patents” means (a) U.S. patents, re-examinations, reissues, renewals,
extensions and term restorations, and foreign counterparts thereof, and
(b) pending applications for U.S. patents, including, without limitation,
provisional applications, continuations, continuations-in-part, divisional and
substitute applications, inventors’ certificates, and extensions, and foreign
counterparts of any of the foregoing.

1.19 “Phase III Trial” means that portion of the clinical development program
that provides for trials of a PPAR-d Product in an extended human patient
population designed to obtain data determining efficacy and safety of the PPAR-d
Product to support Regulatory Approvals in the proposed therapeutic indication
as more fully defined in 21 C.F.R. § 312.21(c), or its successor regulation, or
the equivalent in any foreign country.

1.20 “PPAR-d Compound” means: (a) any of the compounds known as RWJ 800025, [*]
(each as described in Exhibit B); (b) any other compound that is a Selective
PPAR-d Modulator [*] as defined in: [*], or [*] or [*], and/or [*]; and (c) any
[*] of any of the foregoing compounds.

1.21 “PPAR-d Know-How” means all Information that is Controlled by Janssen or
its Affiliates as of the Effective Date and relates to a PPAR-d Compound, or is
otherwise necessary for the development, manufacture, promotion, or use of a
PPAR-d Compound, but excluding the PPAR-d Patents. For clarity, PPAR-d Know-How
shall include the Product Data Package.

1.22 “PPAR-d Patents” means all Patents that are Controlled during the Term by
Janssen or a Janssen Affiliate and that include one or more claims that claim or
cover a PPAR-d Compound, or the manufacture or use of a PPAR-d Compound,
including without limitation those listed on Exhibit C. In addition, “PPAR-d
Patents” shall include all Patents that are Controlled as of the Effective Date
by Janssen or a Janssen Affiliate to the extent that such Patents include one or
more claims that claim or cover the formulation, manufacture or use of a PPAR-d
Product as it exists as of the Effective Date.

 

4

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

1.23 “PPAR-d Product” means any pharmaceutical product that contains a PPAR-d
Compound, and including all formulations, line extensions and modes of
administration thereof.

1.24 “PPAR-g License Agreement” means the Development and License Agreement
executed on June     , 2006, by and between Metabolex and Ortho-McNeil, Inc.

1.25 “Product Data Package” shall mean any and all files, data, records and
other Information (including without limitation regulatory documents,
pre-clinical and clinical protocols, data, and reports, product complaint files,
and adverse event files) relating to development of PPAR-d Compounds or PPAR-d
Products anywhere in the world, to the extent such files, data, records or
Information are Controlled by Janssen or its Affiliates.

1.26 “Regulatory Approval” means any and all approvals (including supplements,
amendments, pre- and post-approvals, pricing and reimbursement approvals),
licenses, registrations or authorizations of any national, supra-national (e.g.,
the European Commission or the Council of the European Union), regional, state
or local regulatory agency, department, bureau, commission, council or other
governmental entity, that are necessary for the manufacture, distribution, use
or sale of a PPAR-d Product in the particular regulatory jurisdiction.

1.27 “Selective PPAR-d Modulator” means any small molecule compound that (a) [*]
interacts with the PPAR-d receptor to [*] or [*], and (b) shows activity toward
[*] the PPAR-d receptor in the [*] assay using [*] (or any [*] thereof). To
constitute a Selective PPAR-d Modulator, the compound must not [*] (i) [*] or
(ii) [*]. For the purposes of clause (i) of this Section 1.27, “[*]” means [*]
in either the [*] and/or [*], as applicable, that is [*] obtained in the [*]
assay. For the purposes of clause (ii) of this Section 1.27, “[*]” means [*] of
the [*] of the compound for the [*] (measured at [*] determined in the [*]
assay) in the generally accepted assay for the [*] (or if there is no such
generally accepted assay, a validated assay for the [*]). Notwithstanding the
above, the term “Selective PPAR-d Modulator” shall include, without limitation,
RWJ 800025, [*].

1.28 “Term” means the term of this Agreement as provided in Section 9.1.

1.29 “Third Party” means any Person other than (a) Metabolex, (b) Janssen, or
(c) an Affiliate of either Metabolex or Janssen.

1.30 “U.S.” means the United States of America, including its territories,
protectorates and possessions.

1.31 “Valid Claim” means (i) a valid and enforceable claim of an issued,
unexpired PPAR-d Patent, or (ii) a claim in any pending application for a PPAR-d
Patent for which not more than [*] years have elapsed from the [*]. A claim of
an issued, unexpired patent shall be deemed to be valid and enforceable unless
and until it has been held to be invalid and/or

 

5

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

unenforceable by a final judgment of a court of competent jurisdiction from
which no further appeal can be taken. If a claim of a patent application that
ceased to be a Valid Claim under clause (ii) of this Section 1.31 later issues
or grants as a patent within the scope of clause (i) of this Section 1.31, then
such claim shall again be considered to be a Valid Claim, effective as of the
earlier of the grant or issuance of such patent.

ARTICLE 2

LICENSES

2.1 License Grant. Subject to the terms and conditions of this Agreement,
Janssen hereby grants to Metabolex an exclusive (even as to Janssen and its
Affiliates), worldwide, royalty-bearing license, with the right to grant
sublicenses to Affiliates and/or Third Parties through multiple tiers, under the
PPAR-d Patents and PPAR-d Know-How solely to research, develop, use, market,
offer for sale, sell, import, manufacture, have manufactured, and distribute the
PPAR-d Products.

2.2 Third Party Licenses. Janssen shall be solely responsible for all costs and
expenses of any licenses in effect as of the Effective Date between a Third
Party and Janssen or its Affiliates related to the PPAR-d Products. Subject to
Section 4.2(a), Metabolex shall be solely responsible for all costs and expenses
of any other license required in order to lawfully develop and commercialize the
PPAR-d Products.

2.3 No Other Licenses. Neither Party grants to the other Party any rights or
licenses in or to any intellectual property, whether by implication, estoppel,
or otherwise, other than the license rights that are expressly granted under
this Agreement.

2.4 No Non-Permitted Use. Metabolex hereby covenants that it shall not, nor
shall it cause or permit any Affiliate or sublicensee to use or practice, any
PPAR-d Patents or PPAR-d Know-How, for any purposes other than those expressly
permitted in Section 2.1, or Section 9.5(f) or (h). Janssen hereby covenants
that it shall not, nor shall it cause or permit any Affiliate or sublicensee to
use or practice any PPAR-d Patents or PPAR-d Know-How, for any purposes other
than those expressly set forth in Section 9.5(a).

2.5 Third Party Contracts. Metabolex shall use reasonable commercial efforts to
ensure that each Third Party contract that Metabolex (or any Affiliate) enters
into solely related to PPAR-d Products contains provision(s) permitting such
Third Party contract to be assigned in accordance with Section 9.5(e). As to
other contracts entered into by Metabolex (or its Affiliates) that relate to
PPAR-d Products, Metabolex shall reasonably cooperate (if requested by Janssen
after termination of the Agreement under Article 9) to assist Janssen in
obtaining the benefits of such contracts. To the extent any such Third-Party
contract relates to products or services generally available upon commercially
reasonable terms, Metabolex shall not be required to assign such agreement(s),
or provide such assistance (as applicable), to Janssen.

2.6 Sublicensee Agreements. Metabolex shall, in each sublicense that it grants
hereunder, require the sublicensee to transfer any regulatory filings with
respect to any PPAR-d Product or PPAR-d Compound in the event of a termination
of this Agreement or such sublicense, to Janssen if this Agreement terminates,
and to Metabolex if only such sublicense terminates.

 

6

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

2.7 Exclusivity.

(a) Metabolex. Metabolex hereby covenants that Metabolex and its Affiliates
shall not [*] for the period of [*], or until [*], any compound (other than a
PPAR-d Compound), or product that contains a compound (other than a PPAR-d
Product), that has [*] that such compound or product [*] unless that compound,
or compound in the product, also has [*] that is either (i) [*] or (ii) [*], as
well as [*] that is not [*] (such compound or product that [*] hereinafter
referred to as an “Excluded Product”). If the product is a combination product
(i.e., it contains multiple independently therapeutically active pharmaceutical
molecules), the product shall be analyzed on a therapeutically active
pharmaceutical molecule by therapeutically active pharmaceutical molecule basis
to determine if it is an Excluded Product. Notwithstanding the above, RWJ
800025, [*] shall be deemed to be Excluded Products.

(b) Metabolex Sublicensees. Metabolex hereby covenants that any sublicense
related to the [*] of a PPAR-d Product that Metabolex or its Affiliates grant
under this Agreement shall include a covenant by the sublicensee that such
sublicensee shall not [*] for the period of [*], or until [*]. Metabolex hereby
agrees to use reasonable efforts to enforce such covenant [*] if it, or its
Affiliates, become aware of a breach or anticipated breach of such covenant by
any sublicensee.

(c) Janssen. Janssen hereby covenants that Janssen and its Affiliates shall not
[*] for the period of [*], or until [*].

(d) [*]. For the purposes of this Section 2.7, [*] means [*] that is responsible
for the achievement of a [*] in one of the [*] used to [*] in the [*], which [*]
as indicated in the [*] and [*] may be used to [*].

(e) Exception for Acquired Excluded Products. Notwithstanding the foregoing, if
either Party or any of its respective Affiliates, enters into a definitive
agreement with respect to a merger or acquisition by operation of which such
Party or its Affiliate would (i) acquire an Excluded Product that at the time of
the closing of the acquisition [*] or (ii) be acquired by, or merge with, a
Third Party that has an Excluded Product that at the time of the closing of the
acquisition [*], then such Party or its Affiliate (or the entity that acquired
such Party or its Affiliate or the entity into which such Party or its Affiliate
has merged) shall have [*] from the execution date of such definitive agreement
to divest itself of such Excluded Product and, during such [*] period, the [*]
of such Excluded Product shall be deemed to be not in violation of
Section 2.7(a) or Section 2.7(c), as applicable. Such divestiture can occur by
either (1) an outright sale to a Third Party of all rights to such Excluded
Product, or (2) an out-license (exclusive as to the divesting Party and its
Affiliates) to a Third Party of all rights to [*] such Excluded Product;
provided, however, that the divesting Party or its Affiliate must not exercise
or have the ability to exercise any role, or influence in any manner, the [*] of
such Excluded Product. If a Party or its Affiliate fails to divest itself of
such Excluded Product during such [*] period, then if such Party is
(A) Metabolex, then [*]; or (B) Janssen, then Metabolex shall have the right
[*], at its discretion, upon written notice to Janssen, to [*] and/or [*] under
this Agreement.

 

7

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

ARTICLE 3

DEVELOPMENT & COMMERCIALIZATION

3.1 Development and Commercialization of PPAR-d Compounds. Subject to
Section 3.6, Metabolex shall have full control and responsibility over the
research, development and registration (including but not limited to, clinical
activities and submissions to regulatory agencies, and all expenses related
thereto) of any PPAR-d Products, subject to the terms of this Agreement.
Metabolex shall use Diligent Efforts to conduct all such research, development,
and regulatory activities.

3.2 Development Information and Reporting. Metabolex shall use Diligent Efforts
to prepare and maintain complete and accurate records regarding the worldwide
clinical development of PPAR-d Products. Metabolex shall provide to Janssen on a
semi-annual basis a summary of the development efforts being conducted on PPAR-d
Product and the results of such development. Metabolex shall also provide to
Janssen copies of all FDA and other Regulatory Authority communications
associated with Major Market filings and shall inform Janssen promptly following
the occurrence of any significant development event that occurs relating to such
PPAR-d Products (e.g. initiation or completion of a clinical trial, submission
of a U.S. or international regulatory filing, receipt of a response to such U.S.
or international regulatory filing, or serious adverse clinical safety event
associated with a PPAR-d Product).

3.3 Diligence in Development of PPAR-d Products. Metabolex shall use Diligent
Efforts to clinically develop at least one PPAR-d Product under this Agreement,
provided that in Metabolex’s reasonable judgment it is commercially feasible to
file for Regulatory Approval for such PPAR-d Product in at least the U.S. and
the other Major Markets.

3.4 Technology Transfer. Janssen and its Affiliates shall cooperate with
Metabolex and provide access and transfer to Metabolex of its PPAR-d Know-How by
such dates after the Effective Date as are reasonably requested by Metabolex.
For the avoidance of doubt, neither providing access to nor transfer of any
PPAR-d Know-How pursuant to this Section 3.4 shall alter the ownership or other
rights of any Party or its Affiliates with respect to such PPAR-d Know-How. Each
Party shall be responsible for its own costs and expenses related to any such
cooperation, provided however, that the costs of the transfer of any Materials
by Janssen and its Affiliates shall be borne by Janssen.

3.5 Materials Transfer. In order to facilitate the technology transfer provided
in Section 3.4 and facilitate Metabolex’s research and development of PPAR-d
Products, Janssen shall provide to Metabolex upon the prior written request of
Metabolex, at no charge, the biological material, chemical compounds and
Information Controlled by Janssen and its Affiliates listed on Exhibit D that
Janssen and/or its Affiliates have on hand at the relevant time, and other
material reasonably requested by Metabolex prior to [*] that Janssen and/or its

 

8

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

Affiliates have on hand at the relevant time (collectively, the “Materials”) for
use by Metabolex solely to research and develop PPAR-d Products. To the extent
that such Materials consist of reports that are in the process of being
written/completed as of the relevant time, Janssen agrees to write/complete such
reports prior to providing them to Metabolex. It is agreed that Janssen and/or
its Affiliates shall transfer to Metabolex upon prior written request of
Metabolex, all of its stock of the compounds known as RWJ 800025, [*] (including
any clinical materials containing such compounds), other than such amounts that
Janssen needs to retain for regulatory purposes. The Materials shall be
transferred within a reasonably practicable time after the written request of
Metabolex. It is the expectation of the Parties that prior to [*], Metabolex
shall only request the transfer of Materials that it needs in order to [*]. All
Materials provided by Janssen and/or its Affiliates under this Agreement will be
used by Metabolex only for the specific research and development purposes as
disclosed and as permitted under the applicable license rights granted under
Section 2.1 and subject to all the other restrictions and obligations under this
Agreement. Such Materials will not be used or delivered to or for the benefit of
any Third Party except as otherwise permitted under this Agreement without the
prior written consent of Janssen, and will be used in compliance with all
applicable laws, rules and regulations. The Materials supplied under this
Agreement must be used with prudence and appropriate caution in any experimental
work because not all of their characteristics may be known. Except as expressly
set forth herein, THE MATERIALS ARE PROVIDED “AS IS” AND WITHOUT ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY
IMPLIED WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE OR
EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT ANY WARRANTY THAT THE USE OF THE
MATERIALS WILL NOT INFRINGE OR VIOLATE ANY PATENT OR OTHER PROPRIETARY RIGHTS OF
ANY THIRD PARTY.

3.6 Regulatory Matters. At all times after the Effective Date, Metabolex shall
own and maintain, at its own cost, all regulatory filings and Regulatory
Approvals for PPAR-d Products that Metabolex is developing or commercializing
pursuant to this Agreement, including all INDs, CTAs, NDAs, and statistical
analyses. As such, Metabolex shall be responsible for reporting all adverse drug
reactions related to PPAR-d Products to the appropriate regulatory authorities
in the relevant countries, in accordance with the applicable laws and
regulations of such countries. As soon as practicable, but not more than thirty
(30) days after the Effective Date, Janssen shall transfer ownership of, and all
files relating to, its regulatory filings and associated with PPAR-d Products to
Metabolex (including, but not limited to, any INDs Controlled by Janssen or its
Affiliates). Metabolex shall provide Janssen with copies of the draft
registration submissions in connection with obtaining Regulatory Approval for a
PPAR-d Product in the Major Markets, prior to their submission, and Janssen
shall have the right to review such draft submission and provide comments
thereon to Metabolex, which Metabolex agrees to reasonably consider. Janssen
also agrees to discuss and answer any questions relating to PPAR-d Know-How that
Metabolex may have regarding regulatory matters for PPAR-d Products. Metabolex
shall also be responsible for all meetings with regulatory authorities and all
post-approval commitments. Notwithstanding the above, Janssen shall prepare and
file a FDA regulatory submission covering the [*]. Janssen shall provide
Metabolex with a copy of the draft submission prior to its submission, and
Metabolex shall review such draft submission and provide comments thereon to
Janssen, which Janssen agrees to consider and incorporate into the submission if
in Janssen’s reasonable judgment such suggestions are justified and proper.

 

9

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

3.7 Commercialization of PPAR-d Products. Metabolex will plan, control, carry
out and fund all activities related to the promotion, marketing and sale of any
PPAR-d Products. Metabolex shall use Diligent Efforts to market, promote and
commercialize any and all PPAR-d Products as to which Regulatory Approval has
been achieved in a Major Market provided that such commercial launch is
commercially reasonable given label and pricing issue. Prior to launch of any
PPAR-d Product and from time to time thereafter (but no less frequently than
annually), Metabolex will provide Janssen with updates on marketing activities
relating to PPAR-d Products.

3.8 Commercialization Costs. Metabolex shall be responsible for all costs and
expenses associated with its commercialization activities, including
manufacturing of PPAR-d Products.

3.9 Right of First Negotiation.

(a) Right of First Negotiation. Metabolex hereby grants to Janssen a right of
first negotiation under the terms of this Section 3.9 (the “Right of First
Negotiation”) to license a particular PPAR-d Product or Other Product from
Metabolex in the event that Metabolex elects to seek a Third Party corporate
partner for the research, development, promotion, and/or commercialization of
such PPAR-d Product or Other Product.

(b) Notice; Exercise. In the event that Metabolex decides to seek a partner for
the research, development, promotion, and/or commercialization of a PPAR-d
Product or Other Product, Metabolex shall provide notice in writing (the “Notice
to Partner”) to Janssen of such intention. Within thirty (30) days of receipt of
such Notice to Partner, Janssen shall submit a reasonable due diligence request
to Metabolex (“Diligence Request”) in order for Janssen to evaluate Janssen’s
interest in such PPAR-d Product or Other Product (as the case may be). Janssen
shall then have thirty (30) days from the date of receipt of either
(i) Metabolex’s detailed answer to the Diligence Request (which answer may be
provided by Metabolex allowing appropriate Janssen employees access to a
facility having the Metabolex Information that is responsive to such Diligence
Request and reasonable time to review such Information), or (ii) the Notice to
Partner, if no such Diligence Request was timely submitted by Janssen (as
applicable), to notify Metabolex in writing of its desire to exercise the PPAR-d
Right of First Negotiation (the “Exercise”). After receipt of Janssen’s timely
Exercise, the Parties shall then negotiate in good faith, for up to [*] after
the date of such Exercise, the terms of an agreement (the “PPAR-d License
Agreement”) under which Janssen would receive an exclusive license to the PPAR-d
Product or Other Product (as the case may be) on commercially reasonable terms,
taking into account the stage of development of the PPAR-d Product or Other
Product at the time of such negotiations and Metabolex’s prior efforts and
resources expended in developing the PPAR-d Product or Other Product.

(c) Failure to Reach Agreement. If the Parties do not enter into the License
Agreement within [*] after the date of the Notice to Partner, then Metabolex
shall have no

 

10

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

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further restrictions or obligations vis-à-vis Janssen with respect to the
applicable PPAR-d Product or Other Product under this Section 3.9, and Metabolex
shall be free to enter into a license, collaboration, joint venture or other
agreement with a Third Party covering such PPAR-d Product or Other Product (a
“Third Party Agreement”) at its discretion.

(d) Failure to Consummate Partnering Transaction. If Metabolex does not execute,
within [*] after the expiration of the [*] period contemplated in
Section 3.9(b), a definitive Third Party Agreement with a Third Party, then the
Right of First Negotiation would then again apply if Metabolex subsequently
seeks to partner such PPAR-d Product or Other Product.

(e) Independent Development. Subject to Section 2.7(a), Metabolex and its
Affiliates shall at all times retain the right, at its discretion, to develop
and commercialize any PPAR-d Product or Other Product independently.

3.10 Replacement Product.

(a) Metabolex shall have the option (the “Replacement Product Option”) to
discontinue its development of the PPAR-d Compounds and PPAR-d Products and
select [*] as a Replacement Compound (as defined below), which option shall
become exercisable on the Effective Date and shall terminate on [*].

(b) In the event Metabolex exercises the Replacement Product Option, such
Replacement Compound (and any applicable product) shall be subject to the terms
and conditions set forth in this Agreement in the same manner as a PPAR-d
Compound (and associated PPAR-d Product) and all other terms and obligations
accordingly modified, including without limitation, the representations and
warranties in Section 7.2. Without limiting the generality of the foregoing, the
terms PPAR-d Compound, PPAR-d Know-How, PPAR-d Patent, and PPAR-d Product shall
be replaced with appropriate acronyms and definitions relating to such
replacement product, as follows:

(i) “Replacement Compound” means the composition known as [*] as described in
Exhibit E.

(ii) “Replacement Know-How” means all Information that is Controlled by Janssen
or its Affiliates as of the Effective Date and relates to the Replacement
Compound, or is otherwise necessary for the development, manufacture, promotion,
or use of the Replacement Compound, but excluding the Replacement Patents. For
clarity, Replacement Know-How shall include the Product Data Package.

(iii) “Replacement Patents” means all Patents that are Controlled during the
Term by Janssen or a Janssen Affiliate and that include one or more claims that
claim or cover the Replacement Compound, or the manufacture or use of the
Replacement Compound, including without limitation those listed on Exhibit F. In
addition, “Replacement Patents” shall include all Patents that are Controlled,
as of the date the option is exercised, by Janssen or a Janssen Affiliate to the
extent that such Patents include one or more claims that claim or cover the
formulation, manufacture or use of the Replacement Compound as it exists as of
the date the option is exercised.

 

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[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

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(iv) “Replacement Product” means any pharmaceutical product that contains the
Replacement Compound, and including all formulations, line extensions and modes
of administration thereof.

(c) In addition, in the event Metabolex exercises the Replacement Product
Option, Section 2.7 shall be deleted in its entirety and replaced with the
following;

(i) Metabolex. Metabolex hereby covenants that Metabolex and its Affiliates
shall not [*] any [*] product (other than a Replacement Product) for the period
of [*].

(ii) Metabolex Sublicensees. Metabolex hereby covenants that any sublicense
related to the [*] of a Replacement Product that Metabolex or its Affiliates
grant under this Agreement shall include a covenant by the sublicensee that such
sublicensee shall not [*] any [*] product (other than a Replacement Product) for
the period of [*]. Metabolex hereby agrees to use reasonable efforts to enforce
such covenant [*] if it, or its Affiliates, become aware of a breach or
anticipated breach of such covenant by any sublicensee.

(iii) Janssen. Janssen hereby covenants that Janssen and its Affiliates shall
not [*] any [*] product for the period of [*].

(d) In the event Metabolex exercises the Replacement Product Option, all rights
with respect to the PPAR-d Patents and PPAR-d Know-How shall revert back to
Janssen and the terms of Section 9.5 (without giving effect to the replacement
of terms contemplated by Section 3.10(b)) shall apply to the PPAR-d Products and
PPAR-d Compounds.

ARTICLE 4

PAYMENTS

4.1 Royalties.

(a) Royalty Percentage. For the term specified in Section 4.1(b), Metabolex
shall pay to Janssen a running royalty equal to eight percent (8%) of Net Sales;
provided, however, that the royalties owed to Janssen on Net Sales attributable
to [*] shall [*] eight percent (8%) of such Net Sales and [*]; provided,
further, that the royalties owed to Janssen on Net Sales attributable to [*]
shall not [*]. For the purpose of this Section 4.1(a), the [*] on Net Sales
shall be equal to [*] plus [*] as a result of such Net Sales [*].

(b) Royalty Term. Metabolex’s royalty obligations under this Section 4.1 as to a
particular PPAR-d Product in a particular country shall be in effect from the
First Commercial Sale in the country and shall expire, on a country-by-country
basis, on the later of (i) [*] years following the First Commercial Sale of such
PPAR-d Product in such country and (ii) the expiration of the last to expire
Valid Claim of a PPAR-d Patent covering such PPAR-d

 

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[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

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Compound or PPAR-d Product, or its manufacture or use in such country.
Notwithstanding the foregoing, Metabolex shall be obligated to pay the royalties
set forth in Section 4.1(a) on sales of a PPAR-d Product in any country where
such PPAR-d Product [*] at the time [*].

4.2 Royalty Reductions.

(a) Janssen shall be solely responsible for all costs and expenses of any
licenses between a Third Party and Janssen or its Affiliates in effect as of the
Effective Date related to the PPAR-d Products. If a Patent or Patents of a Third
Party should exist in any country during the Term covering the development,
manufacture, use or sale of any PPAR-d Product, and which Metabolex believes in
Metabolex’s reasonable judgment impractical or impossible for Metabolex or any
Affiliate or sublicensee to engage in the activity or activities licensed under
this Agreement without obtaining a royalty bearing license from such Third Party
under such Patent or Patents in a particular country, then Metabolex shall be
entitled to a credit, against the royalty payments due to Janssen upon sales of
such PPAR-d Product in the applicable country, of an amount equal to [*] the
royalty paid to such Third Party based upon the sales of the PPAR-d Product in
such country, but provided that such credit shall not exceed [*] the royalty
otherwise payable to Janssen in the absence of such royalty offset.

(b) If (i) [*] generic products or [*] equivalent (in either case, “Generic
Products”) are sold by Third Parties in a country where Metabolex is selling a
PPAR-d Product, (ii) the Generic Products each contain the PPAR-d Compound in
the PPAR-d Product, or any [*] of such PPAR-d Compound; and (iii) sales of the
Generic Products [*] in such country [*], the royalty owed under Section 4.1 for
such PPAR-d Product shall be determined under the following formula: The
contribution of sales of such PPAR-d Product in such country shall be reduced by
[*] when calculating aggregate Metabolex Net Sales, but only for so long as the
conditions set forth in subclauses (i), (ii), and (iii) continue to be
satisfied.

4.3 Timing of Payment. Royalties obligations under Section 4.1 shall accrue at
the time the sale of the royalty-bearing product is made, or invoice is
delivered, whichever is earliest, and royalty or other payment obligations that
have accrued during a particular calendar quarter shall be paid, on a quarterly
basis, within forty-five (45) days after the end of the calendar quarter during
which the obligation accrued. For clarity, Metabolex’s obligation to pay
royalties under this Agreement is imposed only once with respect to the same
unit of PPAR-d Product regardless of the number of Patents pertaining thereto.

4.4 Sublicenses. In the event Metabolex grants licenses or sublicenses to others
to sell PPAR-d Products that are subject to royalties under Section 4.1, such
licenses or sublicenses shall include an obligation for the sublicensee to
account for and report its sales of PPAR-d Products on the same basis as if such
sales were sales by Metabolex, and Metabolex shall pay to Janssen, with respect
to such sales, such royalties and payments as if such sales of the sublicensee
were sales of Metabolex.

4.5 Mode of Payment. All payments to a Party hereunder shall be made by deposit
of U.S. Dollars by wire transfer in immediately available funds in the requisite
amount to such bank account as such Party may from time to time designate by
notice to the other Party. With

 

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[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

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respect to sales outside the U.S., royalty and other sales-based amounts owed
shall first be calculated in the currency of sale, and then such amounts shall
be converted into U.S. Dollars using the average exchange rates as calculated
and utilized by Metabolex’s reporting systems and published accounts as used
throughout Metabolex’ business.

4.6 Royalty Reports and Records Retention. Within forty-five (45) days after the
end of each calendar quarter during which PPAR-d Products have been sold,
Metabolex shall deliver to Janssen a written report of the amount of gross sales
of each PPAR-d Product in each country during the applicable calendar quarter,
an itemized calculation of Net Sales, consistent with Metabolex’s normal and
customary reporting procedure, and a calculation of the amount of royalty
payment due on such sales during such calendar quarter. For three (3) years
after each sale of each PPAR-d Product, Metabolex shall keep (and shall ensure
that its Affiliates and sublicensees shall keep) complete and accurate records
of such sale in sufficient detail to confirm the accuracy of the royalty and
other payment calculations hereunder.

4.7 Audits.

(a) Upon the written request of Janssen, and not more than once in each calendar
year, Metabolex shall permit an independent certified public accounting firm of
internationally recognized standing selected by Janssen, and reasonably
acceptable to Metabolex, to have access to and to review, during normal business
hours and upon no less than thirty (30) days prior written notice, the
applicable records of Metabolex and its Affiliates to verify the accuracy and
timeliness of the reports and payments made by Metabolex under this Agreement.
Such review may cover the records for sales made in any calendar year ending not
more than thirty-six (36) months prior to the date of such request. The
accounting firm shall disclose to Janssen only whether the royalty reports are
correct or incorrect and the specific details concerning any discrepancies.

(b) If such accounting firm concludes that any payments were late or additional
amounts were owed during such period, Metabolex shall pay the late payments
and/or additional amounts, with interest from the date originally due as set
forth in Section 4.8, within thirty (30) days after the date Janssen delivers to
Metabolex a notice referencing the accounting firm’s written report and
requesting such payment. If the amount of the underpayment is greater than [*]
of the total amount actually owed for the period audited, then Metabolex shall
in addition reimburse Janssen for all reasonable costs related to such audit;
otherwise, Janssen shall pay all costs of the audit. In the event of
overpayment, any amount of such overpayment shall be fully creditable against
amounts payable for the immediately succeeding calendar quarter(s); provided,
however, that if the overpayment exceeds [*], then such credit cannot be applied
to reduce the amounts payable by Metabolex to Janssen for any particular
calendar quarter by more than [*] of the amount otherwise due to Janssen.

(c) Metabolex shall include in each distribution agreement or sublicense granted
by it pursuant to this Agreement a provision requiring the distributor or
sublicensee to make reports to Metabolex, to keep and maintain records of sales
made pursuant to such distribution agreement or sublicense and to grant access
to such records by Janssen’s independent accountant to the same extent required
by Metabolex under this Agreement.

 

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[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

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(d) Janssen shall (i) treat all information that it receives under this
Section 4.7 or under any sublicense agreement of Metabolex in accordance with
the confidentiality provisions of Article 6 of this Agreement and (ii) cause its
accounting firm to enter into an acceptable confidentiality agreement with
Metabolex obligating such firm to retain all such financial information in
confidence pursuant to such confidentiality agreement, in each case except to
the extent necessary for Janssen to enforce its rights under the Agreement.

4.8 Interest. If either Party fails to make any payment due to the other Party
under this Agreement, then interest shall accrue on a daily basis at an annual
rate of [*] above the then-applicable prime commercial lending rate of Citibank,
N.A. San Francisco, California, or at the maximum rate permitted by applicable
law, whichever is the lower. Notwithstanding the foregoing, the interest shall
only accrue on payments actually owed, from the original due date until payment
made. If the Parties have a dispute regarding the results of the audit, they
shall resolve the dispute through the mechanisms set forth in Section 10.9
below.

4.9 Taxes.

(a) Metabolex will make all payments to Janssen under this Agreement without
deduction or withholding for taxes except to the extent that any such deduction
or withholding is required by applicable law to be made on account of Taxes (as
defined in Section 4.9(e)).

(b) Any tax required to be withheld under applicable law on amounts payable
under this Agreement will promptly be paid by Metabolex on behalf of Janssen to
the appropriate governmental authority, and Metabolex will furnish Janssen with
proof of payment of such tax. Any such tax required to be withheld will be an
expense of and borne by Janssen.

(c) Metabolex and Janssen will cooperate with respect to all documentation
required by any taxing authority or reasonably requested by Metabolex to secure
a reduction in the rate of applicable withholding taxes.

(d) If Metabolex had a duty to withhold taxes in connection with any payment it
made to Janssen under this Agreement but Metabolex failed to withhold, and such
taxes were assessed against and paid by Metabolex, then Janssen will reimburse
Metabolex for such taxes (including interest but excluding penalties), upon
delivery by Metabolex of the documents evidencing Metabolex payment of the taxes
and the basis for such payment. If Metabolex makes a claim under this
Section 4.9(d) it will comply with the obligations imposed by Section 4.9(b) as
if Metabolex had withheld taxes from a payment to Janssen.

(e) Solely for purposes of this Section 4.9, “Tax” means any present or future
taxes, levies, imposts, duties, charges, assessments or fees of any nature
(including interest, penalties and additions thereto) that are imposed by the
applicable federal government or other taxing authority.

 

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[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

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ARTICLE 5

PATENTS

5.1 Patent Prosecution.

(a) Janssen will have the sole (except as otherwise provided below),
responsibility, [*] for the preparation, filing, prosecution and maintenance of,
and conducting or defending any interferences or similar proceedings and in
obtaining and maintaining any patent extensions, supplementary protection
certificates and the like with respect to, the PPAR-d Patents. [*] Janssen will
keep Metabolex informed of the progress with regard to all activities relating
to the Janssen patent prosecution, including providing to Metabolex copies of
all proposed filings and patent office responses and of all office actions and
other material communications from patent offices relating to such prosecution
efforts a reasonable time in advance of any proposed filing or required
response, and Metabolex will have the right to comment on any such filings and
responses. Janssen will consider in good faith the timely received requests and
suggestions of Metabolex with respect to such filings or responses and
Metabolex’ strategies for Janssen patent prosecution. During [*], Janssen shall
not discontinue the filing, prosecution or maintenance of any PPAR-d Patent in a
Major Market without Metabolex’s prior written consent.

(b) Subject to the last sentence of Section 5.1(a), if Janssen intends to
abandon or not maintain any PPAR-d Patent and Janssen is not abandoning such
PPAR-d Patent in favor of another PPAR-d Patent, Janssen will provide reasonable
prior written notice to Metabolex of such intention to abandon (which notice
will, in any event, [*] prior to the next deadline for any action that may be
taken with respect to such Patent with the U.S. Patent & Trademark Office or any
applicable foreign patent office) and, unless Janssen reasonably believes
prosecution by Metabolex could have a material adverse impact on other patent
applications or patents owned or Controlled by Janssen, then Janssen shall
provide Metabolex the opportunity to assume responsibility for prosecuting and
maintaining such PPAR-d Patent. The foregoing sentence shall not apply to any
patent application or patent for which Janssen does not have the right to grant
to Metabolex such rights. In the event that Metabolex, in its sole discretion,
elects to assume responsibility for prosecuting and maintaining such PPAR-d
Patent, then [*] such PPAR-d Patent will then be deemed [*] for all purposes of
this Agreement.

5.2 Common Interest Disclosures. With regard to any information or opinions
disclosed pursuant to this Agreement by one Party to each other regarding
intellectual property and/or technology owned by Third Parties, Metabolex or
Janssen (or its Affiliates), Metabolex and Janssen agree that they have a common
legal interest in determining whether, and to what extent, third party
intellectual property rights may affect the conduct of the development,
manufacturing, marketing and/or sale of PPAR-d Products, and have a further
common legal interest in defending against any actual or prospective Third Party
claims based on allegations of misuse or infringement of intellectual property
rights relating to the development, manufacturing, marketing and/or sale of
PPAR-d Products. Accordingly, Metabolex and Janssen agree that all such
information and materials obtained by Metabolex and Janssen from each other

 

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[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

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will be used solely for purposes of the Parties’ common legal interests with
respect to the conduct of the Agreement. All information and materials will be
treated as protected by the attorney-client privilege, the work product
privilege, and any other privilege or immunity that may otherwise be applicable.
By sharing any such information and materials, neither Party intends to waive or
limit any privilege or immunity that may apply to the shared information and
materials. Neither Party shall have the authority to waive any privilege or
immunity on behalf of the other Party without such other Party’s prior written
consent, nor shall the waiver of privilege or immunity resulting from the
conduct of one Party be deemed to apply against any other Party.

5.3 Enforcement of PPAR-d Patents.

(a) Notice. The Parties shall promptly inform each other of any information that
comes to their attention involving actual or apparent infringements or
misappropriations by any Third Party of any PPAR-d Patent or PPAR-d Know-How
used in connection with this Agreement.

(b) PPAR-d Patents. If any PPAR-d Patent is infringed by a Third Party in any
country, in connection with the manufacture, use, importation, offer for sale,
or sale in such country of a compound that is a PPAR-d Compound, which
manufacture, use or sale is likely to have a material adverse effect on current
or future sales of any PPAR-d Product being researched, developed or
commercialized by Metabolex or its Affiliates or sublicensees (a “Field
Infringement”), Metabolex shall have the first right, but not the obligation, to
bring an action or suit with respect to such Field Infringement at its own
expense using counsel chosen by Metabolex, and approved by Janssen, which
approval shall not be unreasonably withheld. In any such action or suit
involving a PPAR-d Patent, Janssen shall have the opportunity to review any
pleadings and provide comments with respect to such pleadings, which comments
shall be reasonably considered by Metabolex. If requested by Janssen in writing,
Metabolex will allow Janssen to join as a party in such action or suit, to the
extent permitted by law, and in such regard Janssen may have counsel of its
choosing and at its expense to represent its interest in such action or suit,
but Metabolex will control the conduct of the action or suit, and Janssen shall
not bring any claim against Metabolex based on the conduct of such action or
suit. If Metabolex does not choose to commence such action within [*] after
Metabolex becomes aware of such Field Infringement ([*] in the event of
receiving a Paragraph IV Certification as described in 21 C.F.R.
§314.50(i)(1)(i)(A)(4)), then Janssen may, at its discretion, choose to bring an
action or suit at Janssen’s own expense. In any such action or suit brought by
Janssen, Metabolex will have the right, at its own expense, to be represented in
any such action by counsel of its own choice, but shall not have any right to
control or interfere with Janssen’s conduct of the suit or action. In no event
shall Janssen notify any Third Party of any alleged Field Infringement or bring
any suit or other action against any Third Party seeking to enforce any PPAR-d
Patents against any alleged Field Infringement (or otherwise), without first
obtaining Metabolex’s prior written consent. Janssen will have the sole and
exclusive right and discretion (i) to defend or otherwise respond to any alleged
invalidity or unenforceability of a PPAR-d Patent, unless Janssen provides
Metabolex such right or (ii) to bring an action or suit against or otherwise
respond to Third Party activity that allegedly infringes a PPAR-d Patent, that
is not a Field Infringement. Notwithstanding the foregoing, in any such action
or suit involving a PPAR-d Patent, Metabolex shall have the opportunity to
review any pleadings and provide comments with respect to such pleadings, which
comments shall be reasonably considered by Janssen.

 

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brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

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(c) Settlement. The Party bringing suit under this Section 5.3 shall keep the
other Party reasonably informed as to the progress of the suit and all
settlement discussions. A settlement or consent judgment or other voluntary
final disposition of a suit brought by a Party under this Section may not be
entered into without the prior written consent of the other Party (which consent
shall not be unreasonably withheld or delayed); provided, however, that such
settlement, consent judgment or other disposition does not admit the invalidity
or unenforceability of any Patent; and provided further, that any rights to
continue the infringing activity in such settlement, consent judgment or other
disposition shall be limited to the product or activity that was the subject of
the suit.

(d) Recovery. Except as otherwise agreed to by the Parties as part of a
cost-sharing arrangement, any recovery realized by a Party as a result of a
litigation or other action with respect to a Field Infringement will first be
applied to reimburse Metabolex for any actual litigation costs and expenses
borne by Metabolex and not yet reimbursed by Janssen, and Janssen for any actual
litigation costs and expenses borne by Janssen (including amounts paid to
Metabolex to reimburse Metabolex for its litigation costs), and any amounts
remaining after such reimbursement (a “Net Recovery”) will be shared by the
Parties as follows: (i) if recovered by Metabolex, Metabolex will retain [*] of
such Net Recovery and pay Janssen [*] of such Net Recovery [*] of receipt of
payment, or (ii) if recovered by Janssen, Janssen will retain [*] of such Net
Recovery and pay Metabolex [*] of such Net Recovery [*] of receipt of payment.
Janssen will have the sole right to bring and control, and to retain all
recovery from, any action or proceeding with respect to infringement of any
PPAR-d Patent at its own expense and by counsel of its own choice with respect
to any activities by a Third Party that are not Field Infringements.

(e) Assistance. In the event of any patent infringement litigation involving a
PPAR-d Product and any Patent, the non-prosecuting or non-defending Party shall
render such reasonable assistance as may be requested by the prosecuting or
defending Party in connection with such infringement actions. If one Party
requests the other Party’s reasonable assistance in connection with such
infringement claims or actions, the requesting Party shall reimburse the other
Party for such direct, documented out-of-pocket expenses as are reasonably
incurred during the course of its providing such requested assistance. Before
incurring such expenses, the Parties shall in good faith agree on the nature and
extent of assistance to be rendered. The non-prosecuting or non-defending Party
agrees to be joined as a party plaintiff, at the other Party’s expense, in any
such action if necessary for such other Party to have standing to bring or
continue an infringement action hereunder. If a PPAR-d Patent is licensed-in to
Janssen, Janssen agrees to use reasonable commercial efforts to obtain the
licensor’s consent to sue under such licensed-in Patent.

5.4 Cooperation by Metabolex and Janssen in Patent and Regulatory Filings. The
Parties shall cooperate in order to avoid loss of any rights that may otherwise
be available to the Parties under the U.S. Drug Price Competition and Patent
Term Restoration Act of 1984, the Supplementary Certificate of Protection of the
Member States of the European Union and other

 

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[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

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similar measures in any other country. Without limiting the foregoing, Metabolex
shall notify Janssen upon receipt of Regulatory Approval to market a PPAR-d
Compound or PPAR-d Product in the U.S., and timely supply Janssen with all
information necessary to file an application for patent term extension for a
relevant PPAR-d Patent within the required period following Regulatory Approval.
The Parties shall, if necessary and appropriate use reasonable efforts to agree
upon a joint strategy relating to patent term extension, but in the absence of
mutual agreement with respect to such extension issue, Metabolex shall make the
final decision on which Patent and/or the claims of the Patent will be selected
for patent term extension. The obligations set forth in this Section 5.4 shall
apply with respect to patent term extensions, or the equivalent, in any other
country. Any application for patent term extension in the U.S. shall be made by
the Party who Controls the relevant patent.

ARTICLE 6

CONFIDENTIALITY

6.1 Confidentiality Obligations. All Information disclosed by one Party to the
other Party pursuant to this Agreement and all Information relating to a PPAR-d
Compound disclosed pursuant to the Confidentiality Agreements entered into by
and between Affiliates of Janssen and Metabolex dated [*] (as amended) and [*],
shall be “Confidential Information” of the disclosing Party for all purposes
hereunder. Each Party agrees that, for the Term and for [*] years thereafter,
such Party shall, and shall ensure that its officers, directors, employees and
agents shall, keep completely confidential (using at least the same standard of
care as it uses to protect proprietary or confidential information of its own,
but in no event less than reasonable care) and not publish or otherwise disclose
and not use for any purpose except as expressly permitted hereunder any
Confidential Information furnished to it by the other Party (including, without
limitation, know-how of the disclosing Party). The foregoing obligations shall
not apply to any Information disclosed by a Party hereunder to the extent that
the receiving Party can demonstrate with competent evidence that such
Information:

(a) was already known to the receiving Party or its Affiliate, other than under
an obligation of confidentiality, at the time of disclosure;

(b) was generally available to the public or otherwise part of the public domain
at the time of its disclosure to the receiving Party;

(c) became generally available to the public or otherwise part of the public
domain after its disclosure and other than through any act or omission of the
receiving Party in breach of this Agreement;

(d) was subsequently lawfully disclosed to the receiving Party or its Affiliate
by a Third Party other than in contravention of a confidentiality obligation of
such Third Party to the disclosing Party; or

(e) was developed or discovered by employees of the receiving Party or its
Affiliates who had no access to the Confidential Information of the disclosing
Party.

 

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[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

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6.2 Authorized Disclosure. A Party may disclose the Confidential Information
belonging to the other Party to the extent such disclosure is reasonably
necessary in the following instances:

(a) Filing or prosecuting Patents relating to PPAR-d Products as permitted under
this Agreement;

(b) Regulatory filings relating to PPAR-d Products;

(c) Prosecuting or defending litigation as permitted under this Agreement;

(d) Disclosure, in connection with the performance of this Agreement, to
Affiliates, sublicensees, research collaborators, employees, consultants,
subcontractors or agents, each of whom prior to disclosure must be bound by
similar obligations of confidentiality and non-use at least equivalent in scope
to those set forth in this Article 6.

Further, a Party may disclose the other Party’s Confidential Information to the
extent such disclosure is required by valid court order or legal process,
provided that such Party gives the other Party advance notice of such required
disclosure, limits the disclosure to that actually required, and cooperates in
the other Party’s attempts to obtain a protective order or confidential
treatment of the information required to be disclosed.

6.3 Confidentiality of Agreement Terms. The Parties acknowledge that the terms
of this Agreement shall be treated confidentially as Confidential Information of
both Parties. Notwithstanding the foregoing, such terms may be disclosed by a
Party to investment bankers, investors, and potential investors or acquirers, in
the context of a potential transaction, each of whom prior to disclosure must be
bound by similar obligations of confidentiality and non-use at least equivalent
in scope to those set forth in this Article 6. A copy of this Agreement may be
filed with the Federal Trade Commission or the Justice Department for HSR
review. In addition, a copy of this Agreement may be filed by a Party with the
Securities and Exchange Commission, The New York Stock Exchange and/or the
Nasdaq National Market as required by applicable law or regulation. In
connection with any such filing, such Party shall endeavor to obtain
confidential treatment of economic and trade secret information. In any event,
the Parties agree to take all reasonable action to avoid disclosure of
Confidential Information except as permitted hereunder.

6.4 Publicity. Upon the execution of this Agreement, Metabolex may issue a press
release announcing the execution of this Agreement, the text of which is set
forth in an Exhibit to the PPAR-g License Agreement. After such initial press
release, Metabolex may make periodic press releases or other public disclosures
relating to the Agreement or developments under the Agreement at its discretion.
Metabolex shall not disclose the Confidential Information of Janssen in any
press release and shall not use the name of Janssen or any Janssen Affiliate in
any press release, in each case without the prior written approval of Janssen.
Janssen and its Affiliates shall not issue a press release or public
announcement relating to the PPAR-d Product or this Agreement without the prior
written approval of Metabolex, which approval shall not be unreasonably withheld
or delayed.

 

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[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

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6.5 Publications. Metabolex and its Affiliates and sublicensees shall be free to
publish or present the results of any research or development carried out under
this Agreement, provided that Metabolex shall provide Janssen the opportunity
for prior review and comment on any such publication to the extent it would
disclose specific, proprietary Confidential Information of Janssen. In such
latter case, Metabolex would provide Janssen the opportunity to review any
proposed abstracts, manuscripts or presentations (including verbal
presentations) that contain specific, proprietary Confidential Information of
Janssen at least thirty (30) days prior to its intended submission for
publication, and to reasonably consider deleting such Confidential Information
at Janssen’s reasonable request.

ARTICLE 7

REPRESENTATIONS AND WARRANTIES

7.1 Representations and Warranties. Each Party represents and warrants to the
other Party that, as of the Execution Date:

(a) such Party is duly organized and validly existing under the laws of the
state or jurisdiction of its incorporation and has full corporate power and
authority to enter into this Agreement and to carry out the provisions hereof;

(b) such Party has taken all corporate action necessary to authorize the
execution and delivery of this Agreement and the performance its obligations
under this Agreement;

(c) this Agreement is a legal and valid obligation of such Party, binding upon
such Party and enforceable against such Party in accordance with the terms of
this Agreement, except as enforcement may be limited by applicable bankruptcy or
other debtor’s rights laws and regulations. The execution, delivery and
performance of this Agreement by such Party does not violate any agreement or
instrument to which such Party is a party or by which such Party is bound, and
does not violate any law or regulation of any court, governmental body or
administrative or other agency having authority over such Party. All consents,
approvals and authorizations from all governmental authorities or other Third
Parties required to be obtained by such Party in connection with this Agreement
have been obtained, or will be obtained on or prior to the Effective Date;

(d) it has the full right, power and authority to enter into this Agreement, and
to perform its obligations hereunder; and

(e) has independently in good faith determined whether or not notification is
required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and will file such notification if deemed necessary.

 

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[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

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7.2 Janssen Warranties. Janssen represents and warrants that:

(a) Exhibit C accurately identifies all Patent rights Controlled by Janssen as
of the Execution Date that claim a PPAR-d Compound, PPAR-d Product or its
manufacture or use;

(b) as of the Execution Date it has not granted any right, license or interest
in or to the PPAR-d Patents or PPAR-d Know-How that is in conflict with the
rights and licenses granted to Metabolex under this Agreement; and

(c) as of the Execution Date, other than Third Party allegations disclosed to
Metabolex with respect to the Replacement Patents, it owns or has a license to
the PPAR-d Patents and PPAR-d Know-How and has the ability to grant to Metabolex
the licenses thereunder as granted in this Agreement.

7.3 Neither Party makes any representation or warranty that development and
marketing of PPAR-d Product shall be the exclusive means by which such Party
will participate in development, manufacture, use and/or sale of pharmaceutical
products for treatment or prevention of metabolic syndrome, insulin resistance,
diabetes, obesity, or dyslipidemia.

7.4 Disclaimer of Warranties. EXCEPT AS SET FORTH IN SECTIONS 7.1 AND 7.2, EACH
PARTY EXPRESSLY DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT
LIMITATION WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR
NON-INFRINGEMENT OF THIRD PARTY RIGHTS. IN PARTICULAR, THE PPAR-d COMPOUNDS AND
PPAR-d PRODUCTS ARE PROVIDED “AS IS” AND WITHOUT ANY REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE OR ANY WARRANTY THAT
THE USE OF PPAR-d PRODUCTS WILL NOT INFRINGE OR VIOLATE ANY PATENT OR OTHER
PROPRIETARY RIGHTS OF ANY THIRD PARTY, OTHER THAN AS EXPRESSLY SET FORTH IN
SECTION 7.2.

ARTICLE 8

INDEMNIFICATION

8.1 Indemnification by Metabolex. Metabolex shall indemnify, defend and hold
Janssen and its Affiliates and each of their respective employees, officers,
directors and agents (the “Janssen Indemnitees”) harmless from and against any
and all liability, damages, loss, cost or expense (including reasonable
attorneys’ fees) arising out of Third Party claims, actions, proceedings, or
suits against an Janssen Indemnitee resulting from (a) Metabolex’s performance
or non-performance of its obligations under this Agreement; (b) the development,
manufacture, use, importation, promotion or sale of PPAR-d Products and/or
PPAR-d Compounds by Metabolex and/or its Affiliates, sublicensees, distributors,
agents and customers; or (c) breach by Metabolex of its representations and
warranties set forth in Article 7; provided, however, Metabolex’s obligations
pursuant to this Section 8.1 shall not apply to the extent such claims or suits
result from the negligence or willful misconduct of any of the Janssen
Indemnitees or breach by Janssen of its representations and warranties set forth
in Article 7.

 

22

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

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8.2 Indemnification by Janssen. Janssen shall indemnify, defend and hold
Metabolex and its Affiliates and each of their respective agents, employees,
officers and directors (the “Metabolex Indemnitees”) harmless from and against
any and all liability, damage, loss, cost or expense (including reasonable
attorney’s fees) arising out of Third Party claims or suits against a Metabolex
Indemnitee resulting from (a) Janssen’s performance or non-performance of its
obligations under this Agreement; or (b) breach by Janssen of its
representations and warranties set forth in Article 7; provided, however, that
Janssen’s obligations pursuant to this Section 8.2 shall not apply to the extent
that such claims or suits result from the negligence or willful misconduct of
any of the Metabolex Indemnitees or breach by Metabolex of its representations
and warranties set forth in Article 7.

8.3 Notification of Claims; Conditions to Indemnification Obligations. As a
condition to a Party’s right to receive indemnification under this Article 8, it
shall (a) promptly notify the other Party as soon as it becomes aware of a claim
or action for which indemnification may be sought pursuant hereto, (b) cooperate
with the indemnifying Party in the defense of such claim or suit, and (c) permit
the indemnifying Party to control the defense of such claim or suit, including
without limitation the right to select defense counsel, which counsel shall be
reasonably satisfactory to the indemnified Party. In no event, however, may the
indemnifying Party compromise or settle any claim or suit in a manner that
admits fault or negligence on the part of the indemnified Party without the
prior written consent of the indemnified Party. The indemnifying Party shall
have no liability under this Article 8 with respect to claims or suits settled
or compromised without its prior written consent.

8.4 Insurance. Metabolex at its own expense, will maintain during the term of
the Agreement clinical trial insurance in compliance with local regulations but
in no event shall such coverage be in amounts less than [*] per occurrence. In
addition, prior to any First Commercial Sale, Metabolex at its own expense, will
maintain through termination of the Agreement and for a period of at least [*]
years thereafter, product liability insurance in amounts not less than [*] per
occurrence and [*] annual aggregate. Such insurance shall include worldwide
coverage. Janssen agrees during the term of the Agreement and for a period of at
least [*] years thereafter to maintain (a) workers’ compensation insurance for
all of its employees, the limits of which shall be as required under statute;
(b) commercial general liability insurance having limits of not less than [*] in
the aggregate and [*] per occurrence. Each Party shall provide evidence of
insurance in accordance with this Section 8.4 to the other Party upon the
request of the other Party.

ARTICLE 9

TERM; TERMINATION

9.1 Term and Expiration. The term of this Agreement shall commence upon the
Effective Date and, unless earlier terminated pursuant to Section 9.2 or 9.3,
shall expire on a

 

23

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

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country-by-country and PPAR-d Product-by-PPAR-d Product basis, upon the
expiration of the royalty term as set forth in Section 4.1(b) as to such country
with regard to such PPAR-d Product. Thereafter, the licenses granted to
Metabolex in Section 2.1 as to such PPAR-d Product in such country shall survive
but shall be non-exclusive, fully-paid and royalty-free.

9.2 Termination for Material Breach.

(a) If a Party breaches any of its material obligations under the Agreement, the
Party not in default may give to the breaching Party a written notice specifying
the nature of the default, requiring it to make good or otherwise cure such
breach, and stating its intention to terminate this Agreement if such breach is
not cured. Subject to Section 10.12 of this Agreement, if such breach is not
cured within [*] (or [*] with respect to breach of a payment obligation) after
the receipt of such notice, the Party not in default shall be entitled, without
prejudice to any of its other rights conferred under this Agreement, and in
addition to any other remedies available to it by law or in equity, to terminate
this Agreement by written notice to the other Party.

(b) The right of a Party to terminate this Agreement, as herein above provided,
shall not be affected in any way by its waiver or failure to take action with
respect to any prior default or breach.

9.3 Termination by Metabolex. Metabolex may terminate this Agreement in its
entirety for any reason or no reason upon at least [*] prior written notice to
Janssen.

9.4 “Anti-Shelving” Provision.

(a) If Metabolex does not expend more than a de minimus amount of effort and
resources on the research and/or development of at least one (1) PPAR-d Product
for any period of [*] or more, then (regardless of whether such failure
constitutes a failure to expend Diligent Efforts) Janssen shall have the right
to terminate this Agreement on written notice with respect to all PPAR-d
Products, provided that Metabolex does not commence and thereafter continue to
expend a material amount of effort and resources on the research and/or
development of at least one (1) PPAR-d Product within [*] of such written notice
by Janssen. This Section 9.4(a) shall automatically terminate at such time as
Metabolex (or its Affiliate or sublicensee) has [*] on a PPAR-d Product.

(b) Notwithstanding Section 9.4(a), Janssen shall not have the right to
terminate this Agreement pursuant to Section 9.4(a) if Metabolex has delayed
development of its PPAR-d Products due to either:

(i) financial constraints that have caused Metabolex to delay its PPAR-d
programs as well as a majority of its other programs; provided, however, that:

(1) Metabolex has provided written to notice to Janssen that it wishes to rely
on this Section 9.4(b)(i);

 

24

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

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(2) [*] the written notice described in Section 9.4(b)(i)(1); and

(3) Metabolex restarts development of its PPAR-d Products within [*] after the
conclusion of the [*] period of inactivity described in Section 9.4(a); or

(ii) safety or material technical or regulatory cause; provided, however, that
Metabolex in good faith intends to continue development of its PPAR-d Products
as soon as practicable if and after the safety, technical and/or regulatory
issues are resolved.

9.5 Consequences of Termination. If a Party terminates this Agreement pursuant
to Section 9.2(a); Janssen terminates this Agreement pursuant to Section 9.4; or
Metabolex terminates this Agreement pursuant to Section 9.3, then:

(a) Licenses to Janssen. Metabolex shall grant to Janssen a worldwide, exclusive
(even as to Metabolex and its Affiliates), irrevocable, license (with full
rights to sublicense) under the Metabolex Know-How and Metabolex Patents, to
make, have made, import, use, offer for sale and sell PPAR-d Products and PPAR-d
Compounds. Metabolex shall also grant to Janssen a worldwide, exclusive (even as
to Metabolex and its Affiliates), irrevocable, license (with full rights to
sublicense) under Patents that are Controlled as of the Effective Date by
Metabolex or a Metabolex Affiliate to the extent that such Patents include one
or more claims that claim or cover the composition of matter, formulation,
manufacture or use of a PPAR-d Compound or PPAR-d Product as such exists on the
date of termination, to make, have made, import, use, offer for sale and sell
such PPAR-d Compound and PPAR-d Product (as such may be further developed and
commercialized). Notwithstanding the foregoing, Janssen shall reimburse
Metabolex for Third Party royalties and other out-of-pocket payments incurred by
Metabolex as a result of any Third-Party obligations of Metabolex triggered by
supplying such licenses to Janssen. Further, the licenses granted in this
Section 9.5(a) shall be [*] to the extent such licenses [*] PPAR-d Products and
PPAR-d Compounds. To the extent that such licenses [*] PPAR-d Products and
PPAR-d Compounds, the licenses shall be [*] and shall be [*].

(b) Regulatory Filings. Metabolex shall assign to Janssen, and will provide full
copies of, all Regulatory Approvals and INDs, NDAs and other similar regulatory
applications that relate to PPAR-d Products and/or PPAR-d Compounds and are
owned or Controlled by Metabolex or its Affiliates. Metabolex shall also take
such actions and execute such other instruments, assignments and documents as
may be necessary to effect the transfer of rights thereunder to Janssen.

(c) Data Disclosure. Metabolex will provide to Janssen copies of the relevant
portions of all material reports and data, including clinical and non-clinical
data and reports, obtained or generated by or on behalf of Metabolex or its
Affiliates pursuant to this Agreement to the extent that they relate to PPAR-d
Products and PPAR-d Compounds, within sixty (60) days of such termination unless
otherwise agreed, and Janssen shall have the right to use any such Information
in developing and commercializing PPAR-d Products and PPAR-d Compounds, and to
license any Third Parties to do so.

 

 

25

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

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(d) Trademarks. If Metabolex used with regard to any PPAR-d Product or PPAR-d
Compound in a country any trademark, tradename or logo related solely to a
PPAR-d Product and/or PPAR-d Compound (“Metabolex PPAR-d Product Mark(s)”)
Metabolex shall assign to Janssen, at Janssen’s cost for the transactional
documents and any governmental fees for effecting such assignment (upon written
request from Janssen within one (1) year of such termination under this
Section 9.5), the Metabolex PPAR-d Product Mark(s). For clarity, Janssen shall
under no circumstance receive any rights under the housemarks of Metabolex or
its Affiliates, except with respect to selling off existing inventory.

(e) Third-Party Contracts. At Janssen’s request, Metabolex shall promptly
provide to Janssen copies of all Third-Party agreements with Metabolex or its
Affiliates containing a license under Patents or patent applications claiming
inventions or know-how specific to or used or incorporated into the development,
manufacture and/or commercialization of the PPAR-d Products and PPAR-d
Compounds. At Janssen’s reasonable request, Metabolex shall reasonably cooperate
with Janssen to make available to Janssen the benefits of such Third-Party
agreements, at Janssen’s expense.

(f) Further Sales. In the event of any such termination, Metabolex may continue
to sell its remaining inventory of the PPAR-d Product or PPAR-d Compound for a
period of [*] from the effective date of such termination, subject to the
payment of royalties pursuant to Section 4.1. Metabolex covenants that promptly
after such [*] period it and its Affiliates and former sublicensees hereunder
shall cease to sell, and thereafter shall not sell, any PPAR-d Products or
PPAR-d Compounds.

(g) Remaining Materials. At the end of the period described in Section 9.5(f) or
if this Agreement is terminated prior to the First Commercial Sale, at the
request of Janssen, Metabolex shall transfer to Janssen, at a price to be agreed
in good faith, which shall not be lower than [*] of Metabolex’s manufacturing
cost for the PPAR-d Products and/or PPAR-d Compounds or higher than [*] of
Metabolex’s manufacturing cost for the PPAR-d Products and/or PPAR-d Compounds,
all quantities of PPAR-d Products and/or PPAR-d Compounds in the possession of
Metabolex or its Affiliates (including, without limitation, clinical trial
supplies and PPAR-d Products and/or PPAR-d Compounds intended for commercial
sale).

(h) PPAR-d Product/Compound Manufactured by Metabolex. If any PPAR-d Product
and/or PPAR-d Compound was manufactured by Metabolex (including, without
limitation, any testing and/or release) at the time of such termination, at
Janssen’s request, Metabolex shall continue to manufacture such PPAR-d Product
and/or PPAR-d Compound for Janssen, unless such would be an undue burden on
Metabolex, at a cost equal to [*] of Metabolex’s manufacturing cost for the
PPAR-d Product and/or PPAR-d Compound from the time of the effective date of
termination, until such time (not to exceed [*]) as Janssen is able to secure an
equivalent alternative commercial manufacturing source from which quantities of
PPAR-d Product and/or PPAR-d Compound are registered for commercial sale in each
country of the Territory; provided, however, that this Section 9.6(h) shall not
be construed to require Metabolex to manufacture the PPAR-d Product and/or
PPAR-d Compound beyond the capacity of Metabolex as of the date of termination
and provided that this Section 9.5(h) shall not be construed to require
Metabolex in its reasonable judgment to infringe any Patent of a Third Party for
which it does not have an appropriate license.

 

26

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

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(i) Technical Assistance. Promptly after the effective date of such termination,
Metabolex shall provide, at Janssen’s request and expense (at Metabolex’s actual
cost) technical assistance of the equivalent of up to a total of [*] full-time
equivalent persons (i.e., a total not to exceed [*] of person-time), in the
period from the effective date of such termination until [*] months after such
date, to provide technology transfer necessary for Janssen to commence or
continue to commercially manufacture PPAR-d Products and/or PPAR-d Compounds,
and a non-exclusive, royalty-free, perpetual license under any Know-How
disclosed by Metabolex to Janssen in the course of such activities to
manufacture PPAR-d Products and/or PPAR-d Compounds.

(j) No Further Representations. Subject to Sections 9.5(f) and (h), Metabolex
and its Affiliates shall (1) discontinue making any representation regarding its
status as a licensee of or distributor for Janssen, for all PPAR-d Products
and/or PPAR-d Compounds and (2) cease conducting any activities with respect to
the marketing, promotion, sale or distribution of the PPAR-d Products and/or
PPAR-d Compounds.

(k) Commercialization. Janssen shall have the sole right under the PPAR-d
Patents and PPAR-d Know-How to develop and commercialize the PPAR-d Products
and/or PPAR-d Compounds itself or with one or more Third Parties, and shall have
the right, without obligation to Metabolex, to take any such actions in
connection with such activities as Janssen (or its designee), at its discretion,
deems appropriate.

(l) Other Consequences. Subject to Section 9.6 and this Section 9.5, each Party
shall promptly return to the other Party all relevant records and materials in
its possession or control containing or comprising the other Party’s
Confidential Information and to which the Party does not retain rights
hereunder; provided, however, that each Party shall be entitled to retain copies
of the other Party’s Confidential Information to the extent necessary to comply
with applicable regulatory obligations and shall be entitled to retain one copy
of the other Party’s Confidential Information for archival purposes; (ii) all
licenses granted by each Party to the other under this Agreement shall terminate
(except as set forth in this Section 9.5); (iii) all rights in any and all
PPAR-d Patents and PPAR-d Know-How shall revert to Janssen, and (iv) any and all
claims and payment obligations that accrued prior to the date of such
termination shall survive such termination.

9.6 Accrued Rights; Surviving Obligations.

(a) Termination, relinquishment or expiration of this Agreement for any reason
shall be without prejudice to any rights that shall have accrued to the benefit
of a Party prior to such termination, or expiration. Such termination,
relinquishment or expiration shall not relieve a Party from obligations that are
expressly indicated to survive termination or expiration of this Agreement.

(b) Without limiting the foregoing,

 

 

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[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

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(i) Sections [*] of this Agreement shall survive the expiration or termination
of this Agreement for any reason; and

(ii) Section [*] of this Agreement shall survive the expiration or termination
of this Agreement for any reason but only to the extent relating to matters
commenced, or facts occurring, prior to the date of termination or relating to
obligations or rights set forth in this Article 9.

9.7 Rights in Bankruptcy. All licenses granted under this Agreement by Janssen
are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the
U.S. Bankruptcy Code, licenses of rights to “intellectual property” as defined
under Section 101(34A) of the U.S. Bankruptcy Code. The Parties agree that
Metabolex, as a licensee of such rights under this Agreement, shall retain and
may fully exercise all of its rights and elections under the U.S. Bankruptcy
Code. The Parties further agree that, in the event of the commencement of a
bankruptcy proceeding by or against Janssen under the U.S. Bankruptcy Code,
Metabolex shall be entitled to a complete duplicate of (or complete access to,
as appropriate) any such intellectual property and all embodiments of such
intellectual property (including all Information related to such intellectual
property and rights of reference with respect to Regulatory Approvals), and
same, if not already in its possession, shall be promptly delivered to it
(a) upon any such commencement of a bankruptcy proceeding upon its written
request therefore, unless Janssen continues to perform all of its obligations
under this Agreement, or (b) if not delivered or granted under (a) above,
following the rejection of this Agreement by or on behalf of Janssen upon
written request therefore by Metabolex.

9.8 Consequences of Material Breach by Janssen. If Janssen breaches a material
obligation under Section [*], Metabolex shall give Janssen a written notice
specifying the nature of the default, requiring Janssen to make good or
otherwise cure such breach, and stating its intention to terminate the rights
specified below if such breach is not cured. Subject to Section 10.12 of this
Agreement, if such breach is not cured within [*] (or [*] with respect to breach
of a payment obligation) after the receipt of such notice, and Metabolex does
not wish to terminate the Agreement in its entirety pursuant to Section 9.2(a),
then Metabolex shall be entitled, without prejudice to any of its other rights
conferred under this Agreement, and in addition to any other remedies available
to it by law or in equity, to [*] and/or [*] under this Agreement, upon written
notice to Janssen.

ARTICLE 10

MISCELLANEOUS PROVISIONS

10.1 Relationship of the Parties. Nothing in this Agreement is intended or shall
be deemed to constitute a partnership, agency or employer-employee relationship
between the Parties. Neither Party shall incur any debts or make any commitments
for the other.

10.2 Assignments. Except as expressly provided herein, neither this Agreement
nor any interest hereunder shall be assignable, nor any other obligation
delegable, by a Party without the prior written consent of the other; provided,
however, that a Party may assign this Agreement

 

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[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

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to any Affiliate or to any successor in interest by way of merger, acquisition
or sale of all or substantially all of its assets provided that such successor
agrees in writing to be bound by the terms of this Agreement as if it were the
assigning Party. This Agreement shall be binding upon the successors and
permitted assigns of the Parties. Any assignment not in accordance with this
Section 10.2 shall be void. Notwithstanding the foregoing, in the event that a
Party assigns this Agreement to its successor in interest by way of merger,
acquisition, or sale of all or substantially all of its assets, the intellectual
property rights of such successor in interest, and of any of its Affiliates as
of just prior to such assignment, as existing immediately prior to the closing
of such transaction, shall be automatically excluded from the rights licensed to
the other Party under this Agreement.

10.3 Responsibility for Affiliates. Either Party may use one or more of its
Affiliates to perform its obligations and duties hereunder; provided however,
that each Party shall remain liable hereunder for the prompt payment and
performance of all its obligations hereunder. To the extent that the rights
granted to a Party hereunder are exercised by an Affiliate of such Party (or by
any sublicensee of an Affiliate), such Affiliate or sublicensee shall be bound
by the corresponding obligations of such Party. To the extent that this
Agreement imposes obligations on Affiliates of a Party, such Affiliates shall
perform such obligations and such Party shall be responsible for any failure of
such Affiliate to perform such obligations.

10.4 Further Assurances. Each Party agrees to execute, acknowledge and deliver
such further instruments and to do all such other reasonable acts as may be
necessary or appropriate in order to carry out the purposes and intent of this
Agreement.

10.5 Force Majeure. Neither Party shall be liable to the other for failure or
delay in the performance of any of its obligations under this Agreement for the
time and to the extent such failure or delay is caused by earthquake, riot,
civil commotion, war, strike, flood, act of terrorism, governmental acts or
restrictions or any other reason that is beyond the control of the respective
Party. The Party affected by force majeure shall provide the other Party with
full particulars thereof as soon as it becomes aware of the same (including its
best estimate of the likely extent and duration of the interference with its
activities), and will use Diligent Efforts to overcome the difficulties created
thereby and to resume performance of its obligations as soon as practicable.

10.6 Entire Agreement of the Parties; Amendments. This Agreement and the
attachments hereto constitute and contain the entire understanding and agreement
of the Parties respecting the subject matter hereof and cancel and supersede any
and all prior negotiations, correspondence, understandings and agreements
between the Parties, whether oral or written, regarding such subject matter
(including the Confidentiality Agreement entered into by and between Affiliates
of Janssen and Metabolex [*] and the addendums thereto); provided, however, the
Four-Party Nondisclosure Agreement, by and among an Affiliate of Janssen,
Metabolex and two Third Parties, dated [*], and a second Four-Party
Nondisclosure Agreement, by and among an Affiliate of Janssen, Metabolex and two
other Third Parties, dated [*] shall remain in force and effect in accordance
with their terms. No waiver, modification or amendment of any provision of this
Agreement shall be valid or effective unless made in writing and signed by a
duly authorized officer of each Party.

 

29

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

10.7 Captions. The captions to this Agreement are for convenience only, and are
to be of no force or effect in construing or interpreting any of the provisions
of this Agreement.

10.8 Applicable Law. This Agreement shall be governed by and interpreted in
accordance with the laws of California, USA, excluding application of any
conflict of laws principles that would require application of different law.
Notwithstanding the above, any dispute regarding and limited to validity or
enforceability of any patent shall be governed by the patent laws of the
jurisdiction in which such patent was granted.

10.9 Disputes. In the event of any controversy or claim arising out of, relating
to or in connection with any provision of this Agreement, or the rights or
obligations of the Parties hereunder, the Parties shall try to settle their
differences amicably between themselves. Either Party may initiate such informal
dispute resolution by sending written notice of the dispute to the other Party,
and within ten (10) days after such notice appropriate representatives of the
Parties shall meet for attempted resolution by good faith negotiations. If such
representatives are unable to resolve promptly such disputed matter, it shall be
referred to the Chief Executive Officer of Metabolex and to the President of
Janssen, for discussion and resolution. If such personnel are unable to resolve
such dispute within thirty (30) days of initiating such negotiations, unless
otherwise agreed by the Parties, such dispute shall be finally settled under
Sections 10.10 and 10.11.

10.10 Mediation

(a) Any dispute, controversy or claim arising out of or related to this
agreement, or the interpretation, application, breach, termination or validity
thereof, including any claim of inducement by fraud or otherwise, which claim
would, but for this provision, be submitted to arbitration shall, before
submission to arbitration, first be mediated through non-binding mediation in
accordance with the CPR Mediation Procedure then in effect of the CPR Institute
for Dispute Resolution (“CPR”) available at www.cpradr.org/m_proced.htm, except
where that procedure conflicts with these provisions, in which case these
provisions control. The mediation shall be conducted in San Francisco, CA and
shall be attended by a senior executive with authority to resolve the dispute
from each of the operating companies that are Parties.

(b) The mediator shall be neutral, independent, disinterested and shall be
selected from a professional mediation firm such as ADR Associates or
JAMS/ENDISPUTE or CPR.

(c) The Parties shall promptly confer in an effort to select a mediator by
agreement. In the absence of such an agreement within ten (10) days of
initiation of the mediation, the mediator shall be selected by CPR as follows:
CPR shall provide the Parties with a list of at least fifteen (15) names from
the CPR Panels of Distinguished Neutrals. Each Party shall exercise challenges
for cause, two (2) peremptory challenges, and rank the remaining candidates
within five (5) working days of receiving the CPR list. The Parties may together
interview the three top-ranked candidates for no more than one hour each and,
after the interviews, may each exercise one peremptory challenge. The mediator
shall be the remaining candidate with the highest aggregate ranking.

 

30

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

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(d) The mediator shall confer with the Parties to design procedures to conclude
the mediation within no more than forty-five (45) days after initiation. Under
no circumstances may the commencement of arbitration under Section 10.11 be
delayed more than forty-five (45) days by the mediation process specified herein
absent contrary agreement of the Parties.

(e) Each Party agrees not to use the period or pendency of the mediation to
disadvantage the other Party procedurally or otherwise. No statements made by
either side during the mediation may be used by the other or referred to during
any subsequent proceedings.

(f) Each Party has the right to pursue provisional relief from any court, such
as attachment, preliminary injunction, replevin, etc. to avoid irreparable harm,
maintain the status quo, or preserve the subject matter of the arbitration, even
though mediation has not been commenced or completed.

10.11 Dispute Resolution

(a) Any dispute, claim or controversy arising from or related in any way to this
Agreement or the interpretation, application, breach, termination or validity
thereof, including any claim of inducement of this Agreement by fraud or
otherwise, will be submitted for resolution to arbitration pursuant to the rules
then pertaining of the CPR Institute for Dispute Resolution for Non-Administered
Arbitration (available at www.cpradr.org/arb-rules.htm), or successor (“CPR”),
except where those rules conflict with these provisions, in which case these
provisions control. The arbitration will be held in San Francisco, CA.

(b) The panel shall consist of three (3) arbitrators chosen from the CPR Panels
of Distinguished Neutrals (or, by agreement, from another provider of
arbitrators) each of whom is a lawyer with at least fifteen (15) years
experience with a law firm or corporate law department of over twenty-five
(25) lawyers or who was a judge of a court of general jurisdiction. In the event
the aggregate damages sought by the claimant are stated to be less than
$5 million, and the aggregate damages sought by the counterclaimant are stated
to be less than $5 million, and neither side seeks equitable relief, then a
single arbitrator shall be chosen, having the same qualifications and experience
specified above. Each arbitrator shall be neutral, independent, disinterested,
impartial and shall abide by the CPR-Georgetown Commission Proposed Model Rule
for the Lawyer as Neutral available at www.cpradr.org/cpr-george.html.

(c) The Parties agree to cooperate (1) to attempt to select the arbitrator(s) by
agreement within forty-five (45) days of initiation of the arbitration,
including jointly interviewing the final candidates, (2) to meet with the
arbitrator(s) within forty-five (45) days of selection and (3) to agree at that
meeting or before upon procedures for discovery and as to the conduct of the
hearing which will result in the hearing being concluded within no more than
nine (9) months after selection of the arbitrator(s) and in the award being
rendered within sixty (60) days of the conclusion of the hearings, or of any
post-hearing briefing, which briefing will be completed by both sides within
forty-five (45) days after the conclusion of the hearings.

 

31

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

(d) In the event the Parties cannot agree upon selection of the arbitrator(s),
the CPR will select arbitrator(s) as follows: CPR shall provide the Parties with
a list of no less than twenty-five (25) proposed arbitrators (fifteen (15) if a
single arbitrator is to be selected) having the credentials referenced above.
Within twenty-five (25) days of receiving such list, the Parties shall rank at
least sixty-five percent (65%) of the proposed arbitrators on the initial CPR
list, after exercising cause challenges. The Parties may then interview the five
(5) candidates (three (3) if a single arbitrator is to be selected) with the
highest combined rankings for no more than one (1) hour each and, following the
interviews, may exercise one (1) peremptory challenge each. The panel will
consist of the remaining three (3) candidates (or one, if one arbitrator is to
be selected) with the highest combined rankings. In the event these procedures
fail to result in selection of the required number of arbitrators, CPR shall
select the appropriate number of arbitrators from among the members of the
various CPR Panels of Distinguished Neutrals, allowing each side challenges for
cause and three (3) peremptory challenges each.

(e) In the event the Parties cannot agree upon procedures for discovery and
conduct of the hearing meeting the schedule set forth in paragraph (c) above,
then the arbitrator(s) shall set dates for the hearing, any post-hearing
briefing, and the issuance of the award in accord with the paragraph (c)
schedule. The arbitrator(s) shall provide for discovery according to those time
limits, giving recognition to the understanding of the Parties that they
contemplate reasonable discovery, including document demands and depositions,
but that such discovery be limited so that the paragraph (c) schedule may be met
without difficulty. In no event will the arbitrator(s), absent agreement of the
Parties, allow more than a total of ten (10) days for the hearing or permit
either side to obtain more than a total of forty (40) hours of deposition
testimony from all witnesses, including both fact and expert witnesses, or serve
more than twenty (20) individual requests for documents, including subparts, or
twenty (20) individual requests for admission or interrogatories, including
subparts. Multiple hearing days will be scheduled consecutively to the greatest
extent possible.

(f) The arbitrator(s) must render their award by application of the substantive
law of California and are not free to apply “amiable compositeur” or “natural
justice and equity.” The arbitrator(s) shall render a written opinion setting
forth findings of fact and conclusions of law with the reasons therefore stated.
A transcript of the evidence adduced at the hearing shall be made and shall,
upon request, be made available to either Party. The arbitrator(s) shall have
power to exclude evidence on grounds of hearsay, prejudice beyond its probative
value, redundancy, or irrelevance and no award shall be overturned by reason of
such ruling on evidence. To the extent possible, the arbitration hearings and
award will be maintained in confidence.

(g) In the event the panel’s award exceeds $5 million in monetary damages or
includes or consists of equitable relief, or rejects a claim in excess of that
amount or for that relief, then the losing Party may obtain review of the
arbitrators’ award or decision by a single appellate arbitrator (the “Appeal
Arbitrator”) selected from the CPR Panels of Distinguished

 

32

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

Neutrals by agreement or, failing agreement within seven (7) working days,
pursuant to the selection procedures specified in paragraph (d) above. If CPR
cannot provide such services, the Parties will together select another provider
of arbitration services that can. No Appeal Arbitrator shall be selected unless
he or she can commit to rendering a decision within forty-five (45) days
following oral argument as provided in paragraph (h). Any such review must be
initiated within thirty (30) days following the rendering of the award
referenced in (f) above.

(h) The Appeal Arbitrator will make the same review of the arbitration panel’s
ruling and its bases that the U.S. Court of Appeals of the Circuit where the
arbitration hearings are held would make of findings of fact and conclusions of
law rendered by a district court after a bench trial and then modify, vacate or
affirm the arbitration panel’s award or decision accordingly, or remand to the
panel for further proceedings. The Appeal Arbitrator will consider only the
arbitration panel’s findings of fact and conclusions of law, pertinent portions
of the hearing transcript and evidentiary record as submitted by the Parties,
opening and reply briefs of the Party pursuing the review, and the answering
brief of the opposing Party, plus a total of no more than four (4) hours of oral
argument evenly divided between the Parties. The Party seeking review must
submit its opening brief and any reply brief within seventy-five (75) and one
hundred thirty (130) days, respectively, following the date of the award under
review, whereas the opposing Party must submit its responsive brief within one
hundred ten (110) days of that date. Oral argument shall take place within five
(5) months after the date of the award under review, and the Appeal Arbitrator
shall render a decision within forty-five (45) days following oral argument.
That decision will be final and not subject to further review, except pursuant
to the Federal Arbitration Act.

(i) The Parties consent to the jurisdiction of the Federal District Court for
the district in which the arbitration is held for the enforcement of these
provisions and the entry of judgment on any award rendered hereunder (including
after review by the Appeal Arbitrator where such an appeal is pursued). Should
such court for any reason lack jurisdiction, any court with jurisdiction shall
act in the same fashion.

(j) Each Party has the right before or, if the arbitrator(s) cannot hear the
matter within an acceptable period, during the arbitration to seek and obtain
from the appropriate court provisional remedies such as attachment, preliminary
injunction, replevin, etc. to avoid irreparable harm, maintain the status quo,
or preserve the subject matter of the arbitration.

(k) EACH PARTY HERETO WAIVES ITS RIGHT TO TRIAL BY JURY OF ANY ISSUE RELATED TO
THIS AGREEMENT.

(l) EACH PARTY HERETO WAIVES ANY CLAIM TO PUNITIVE, EXEMPLARY OR MULTIPLIED
DAMAGES FROM THE OTHER RESULTING FROM THIS AGREEMENT.

(m) EACH PARTY HERETO WAIVES ANY CLAIM OF CONSEQUENTIAL DAMAGES FROM THE OTHER
RELATED TO THIS AGREEMENT.

 

33

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

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(n) NOTWITHSTANDING THE FOREGOING, NOTHING HEREIN IS INTENDED TO OR SHALL LIMIT
THE INDEMNIFICATION OBLIGATION OF A PARTY PROVIDED FOR UNDER ARTICLE 8.

10.12 Tolling of Time Periods. In the event that a controversy or claim has been
raised and is in the process of dispute resolution in accordance with Sections
10.9, 10.10 or 10.11, any applicable time period governing the underlying
controversy or claim shall be tolled pending the outcome of the resolution
process after which the time period shall again begin to run.

10.13 Notices and Deliveries. Any notice, request, delivery, approval or consent
required or permitted to be given under this Agreement shall be in writing and
shall be deemed to have been sufficiently given if delivered in person,
transmitted by telecopier (receipt verified) or by express courier service
(signature required) or five (5) days after it was sent by registered letter,
return receipt requested (or its equivalent), to the Party to which it is
directed at its address or facsimile number shown below or such other address or
facsimile number as such Party shall have last given by notice to the other
Parties.

If to Janssen, addressed to:

Janssen Pharmaceutica NV

30 Turnhoutseweg

2340 Beerse, Belgium

Attention of: Managing Director

Fax: +32 14 60 8296

With copy to:

Johnson & Johnson Law Department Europe

6 Lenneke Marelaan

1932 St. Stevens Woluwe, Belgium

Attention of: Head of the Law Department Europe

Fax: +32 2 749 2558

If to Metabolex, addressed to:

Metabolex, Inc.

3876 Bay Center Place

Hayward, CA 94545

Attention of: General Counsel

Fax: (510) 293-6853

10.14 Waiver. A waiver by either Party of any of the terms and conditions of
this Agreement in any instance shall not be deemed or construed to be a waiver
of such term or condition for the future, or of any subsequent breach hereof.
All rights, remedies, undertakings, obligations and agreements contained in this
Agreement shall be cumulative and none of them shall be in limitation of any
other remedy, right, undertaking, obligation or agreement of either Party.

 

34

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

10.15 Translation. This Agreement is in English language only, which language
shall be controlling in all respects, and all versions hereof in any other
language shall be for accommodation only and shall not be binding upon the
Parties. All communications and notices to be made or given pursuant to this
Agreement, and any dispute proceeding related to or arising hereunder, shall be
in the English language. If there is a discrepancy between any translation of
this Agreement and this Agreement, this Agreement shall prevail.

10.16 Export Laws. Notwithstanding anything to the contrary contained herein,
all obligations of Metabolex and Janssen are subject to prior compliance with
U.S. export regulations and such other U.S. laws and regulations as may be
applicable, and to obtaining all necessary approvals required by the applicable
agencies of the government of the U.S. or the European Union. Metabolex and
Janssen, respectively, shall each use its reasonable efforts to obtain such
approvals for its own activities. Each Party shall cooperate with the other
Party and shall provide assistance to the other Party as reasonably necessary to
obtain any required approvals.

10.17 Severability. When possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision will be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of this
Agreement. The Parties shall make a good faith effort to replace the invalid or
unenforceable provision with a valid one that conforms as nearly as possible
with the original intent of the Parties.

10.18 No Implied Licenses. Except as expressly and specifically provided under
this Agreement, the Parties agree that neither Party is granted any implied
rights to or under any of the other Party’s current or future patents, trade
secrets, copyrights, moral rights, trade or service marks, trade dress, or any
other intellectual property rights.

10.19 Third Party Beneficiaries. Except for the rights of the Metabolex
Indemnitees and Janssen Indemnitees set forth in Article 8, all rights, benefits
and remedies under this Agreement are solely intended for the benefit of
Metabolex and Janssen, and no Third Party shall have any rights whatsoever to
(i) enforce any obligation contained in this Agreement; (ii) seek a benefit or
remedy for any breach of this Agreement; or (iii) take any other action relating
to this Agreement under any legal theory, including but not limited to, actions
in contract, tort (including but not limited to negligence, gross negligence and
strict liability), or as a defense, setoff or counterclaim to any action or
claim brought or made by the Parties.

10.20 Advice of Counsel. Metabolex and Janssen have each consulted counsel of
their choice regarding this Agreement, and each acknowledges and agrees that
this Agreement shall not be deemed to have been drafted by one Party or another
and will be construed accordingly.

 

35

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

10.21 Other Obligations. Except as expressly provided in this Agreement or as
separately agreed upon in writing between Metabolex and Janssen, each Party
shall bear its own costs incurred in connection with the implementation of the
obligations under this Agreement.

10.22 Governmental Matters.

(a) To the extent, if any, that a Party concludes in good faith that it is
required to file or register this Agreement or a notification thereof with any
governmental authority, including without limitation the U.S. Securities and
Exchange Commission, the U.S. Department of Justice, the U.S. Federal Trade
Commission and the Competition Directorate of the Commission of the European
Communities, in accordance with applicable laws and regulations, such Party may
do so, and the other Party shall cooperate in such filing or notification and
shall execute all documents reasonably required in connection therewith, at the
expense of the requesting Party. The Parties shall promptly notify each other as
to the activities or inquires of any such governmental authority relating to
this Agreement, and shall cooperate, to respond to any request for further
information therefrom at the expense of the requesting Party.

(b) Metabolex may, at its expense, register the exclusive license granted under
this Agreement in any country or community or association of countries. Janssen
shall reasonably cooperate in such registration at Metabolex’s expense. Upon
request by Metabolex, Janssen agrees promptly to execute any “short form”
licenses developed in a form reasonably acceptable to both Metabolex and Janssen
and reasonably submitted to it by Metabolex from time to time in order to effect
the foregoing registration in such country. No such “short form” license shall
be deemed to amend or be used to interpret this Agreement. If there is any
conflict between such a license or other recordation document and this
Agreement, this Agreement shall control.

10.23 Counterparts. This Agreement may be executed simultaneously in any number
of counterparts, any one of which need not contain the signature of more than
one Party but all such counterparts taken together shall constitute one and the
same agreement.

[The remainder of this page has been intentionally left blank]

 

36

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their respective duly authorized officers as of the day and year first above
written.

 

JANSSEN PHARMACEUTICA NV By:  

/s/ Didier De Chaffoy De Courcelles

Name:  

Didier De Chaffoy De Courcelles

Title:  

Board member

By:  

/s/ René Hex

Name:  

René Hex

Title:  

Board member

METABOLEX, INC. By:  

/s/ Harold Van Wart

Name:  

Harold Van Wart

Title:  

Chief Executive Officer

Exhibit A: Weighted Average Percentage Discount

Exhibit B: Description of Numbered PPAR-d Compounds

Exhibit C: PPAR-d Patents

Exhibit D: Materials to be Transferred

Exhibit E: Description of [*]

Exhibit F: Replacement Compound Patents

 

37

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

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EXHIBIT A

WEIGHTED AVERAGE PERCENTAGE DISCOUNT

(see attached)

[*]

 

38

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

EXHIBIT B

DESCRIPTION OF NUMBERED PPAR-d COMPOUNDS

DESCRIPTION OF RWJ 800025 (JNJ-25873367)

Chemical Name

(R)-{4-[2-Ethoxy-3-(4-trifluoromethyl-phenoxy)propylsulfanyl]-2-methyl-phenoxy}-acetic
acid

Chemical Structure

 

LOGO [g521281g89t28.jpg]

[*]

 

39

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

EXHIBIT C

PPAR-d PATENTS

[*]

 

40

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

EXHIBIT D

MATERIALS TO BE TRANSFERRED

[*]

 

41

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

--------------------------------------------------------------------------------

EXHIBIT E

DESCRIPTION OF [*]

[*]

 

42

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

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EXHIBIT F

REPLACEMENT COMPOUND PATENTS

[*]

 

43

 

[*] = Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.