Exhibit 10.35

 

[***] Certain information in this document has been omitted and filed separately
with the
Securities and Exchange Commission. Confidential treatment has been requested
with respect to
the omitted portions.

 

Confidential

LICENSE AGREEMENT

 

BY AND BETWEEN

 

KYOWA HAKKO KIRIN CO., LTD.

 

AND

 

ARDELYX, INC.

 

November 27, 2017

 

 

Confidential Portions of this Exhibit marked as [***] have been omitted

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Confidential

 

TABLE OF CONTENTS

 

 

 

 

 

 

    

 

    

Page

 

 

 

 

 

ARTICLE I. DEFINITIONS AND CONSTRUCTION

 

1

 

 

 

 

 

ARTICLE II. GRANT OF RIGHTS AND LICENSES; EXCLUSIVITY

 

13

 

 

 

 

 

Section 2.01

 

Licenses to KHK

 

13

Section 2.02

 

Sublicenses

 

14

Section 2.03

 

Distributorships

 

15

Section 2.04

 

Provision of Development Data, Regulatory Documentation and Assistance.

 

15

Section 2.05

 

Rights Retained by Ardelyx

 

17

Section 2.06

 

License to Ardelyx

 

17

Section 2.07

 

Additional Indication Development

 

17

Section 2.08

 

No Implied Rights

 

19

Section 2.09

 

Exclusivity Term

 

19

Section 2.10

 

Right of First Negotiation for Licensed Products Outside of the Field

 

19

Section 2.11

 

Right of First Negotiation for New NHE3 Inhibitor

 

20

Section 2.12

 

Exclusivity Covenant.

 

21

 

 

 

 

 

ARTICLE III. COLLABORATION GOVERNANCE; DEVELOPMENT AND COMMERCIALIZATION PLANS

 

22

 

 

 

 

 

Section 3.01

 

Steering Committee

 

22

Section 3.02

 

Composition of the SC

 

22

Section 3.03

 

Responsibilities of the SC

 

22

Section 3.04

 

Development Plans

 

23

Section 3.05

 

Commercialization Plans

 

23

Section 3.06

 

Meetings of the SC

 

23

Section 3.07

 

SC Decision Making

 

24

Section 3.08

 

Joint Project Team

 

24

Section 3.09

 

Alliance Managers

 

24

 

 

 

 

 

ARTICLE IV. GENERAL PROVISIONS ON DEVELOPMENT AND COMMERCIALIZATION;

 

24

 

 

 

 

 

Section 4.01

 

Record Keeping

 

24

Section 4.02

 

Conduct of Certain Development Activities

 

25

Section 4.03

 

Diligence Obligations

 

25

Section 4.04

 

Reports of Development Activities

 

25

Section 4.05

 

Regulatory Matters

 

25

Section 4.06

 

Adverse Event Reporting and Product Recall

 

26

Section 4.07

 

General Provisions Regarding Commercialization

 

27

 

 

 

 

 

 

i

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Confidential

 

 

 

 

 

ARTICLE V. MANUFACTURE AND SUPPLY

 

27

 

 

 

 

 

Section 5.01

 

Supply.

 

27

Section 5.02

 

Development Work

 

28

Section 5.03

 

Technology Transfer

 

29

Section 5.04

 

Manufacturing Option

 

29

Section 5.05

 

Technology Transfer upon Exercise of the Manufacturing Option

 

29

Section 5.06

 

Other Supply

 

29

Section 5.07

 

Supply of Backup Licensed Compound

 

29

 

 

 

 

 

ARTICLE VI. CONSIDERATION

 

30

 

 

 

 

 

Section 6.01

 

Upfront

 

30

Section 6.02

 

Milestone Payments

 

30

Section 6.03

 

Sales Related Milestones.

 

31

Section 6.04

 

Royalties.

 

31

Section 6.05

 

Combination Products

 

33

Section 6.06

 

Sales by Sublicensees

 

33

Section 6.07

 

Royalty Payments and Report

 

33

Section 6.08

 

Taxes

 

34

Section 6.09

 

Payments or Reports by Affiliates

 

35

Section 6.10

 

Mode of Payment

 

35

Section 6.11

 

Payment Currency

 

35

Section 6.12

 

Imports

 

35

Section 6.13

 

Discounted Sales

 

35

 

 

 

 

 

ARTICLE VII. CONFIDENTIALITY

 

36

 

 

 

 

 

Section 7.01

 

Confidentiality

 

36

Section 7.02

 

Exceptions

 

36

Section 7.03

 

Receipt of Third Party Information

 

36

Section 7.04

 

Exceptional Disclosure

 

36

Section 7.05

 

Legally Compelled Disclosure

 

37

Section 7.06

 

Survival

 

37

Section 7.07

 

Termination of Prior Agreements

 

37

Section 7.08

 

Publications

 

37

 

 

 

 

 

ARTICLE VIII. OWNERSHIP OF INTELLECTUAL PROPERTY AND PATENT RIGHTS

 

38

 

 

 

 

 

Section 8.01

 

Disclosure

 

38

Section 8.02

 

Prosecution and Maintenance of Patent Rights.

 

39

Section 8.03

 

Third Party Patent Rights

 

41

Section 8.04

 

Enforcement Rights.

 

41

Section 8.05

 

Trademarks, Packaging and Labeling.

 

45

 

 

 

 

 

 

ii

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Confidential

 

 

 

 

 

 

ARTICLE IX. REPRESENTATIONS, WARRANTIES, AND COVENANTS

 

46

 

 

 

 

 

Section 9.01

 

Representations, Warranties, and Covenants

 

46

Section 9.02

 

Manufacturing by Ardelyx and KHK.

 

49

Section 9.03

 

No Debarment

 

49

Section 9.04

 

Anti-Bribery and Anti-Corruption Compliance.

 

49

Section 9.05

 

Disclaimer

 

51

 

 

 

 

 

ARTICLE X. RECORD RETENTION, AUDIT AND USE OF NAME

 

51

 

 

 

 

 

Section 10.01

 

Records Retention; Audit

 

51

Section 10.02

 

Publicity Review

 

52

Section 10.03

 

Use of Names

 

52

 

 

 

 

 

ARTICLE XI. TERM AND TERMINATION

 

53

 

 

 

 

 

Section 11.01

 

Term

 

53

Section 11.02

 

Termination Rights

 

53

Section 11.03

 

Consequences of a KHK Triggered Termination

 

55

Section 11.04

 

Consequences of Ardelyx Triggered Termination (or Right to Terminate)

 

58

Section 11.05

 

Bankruptcy

 

59

Section 11.06

 

Surviving Rights and Obligations

 

59

 

 

 

 

 

ARTICLE XII. INDEMNIFICATION

 

60

 

 

 

 

 

Section 12.01

 

Indemnification

 

60

Section 12.02

 

Mechanism

 

60

Section 12.03

 

Insurance

 

61

 

 

 

 

 

ARTICLE XIII. DISPUTE RESOLUTION

 

61

 

 

 

 

 

Section 13.01

 

Referral of Disputes to the Parties Senior Executives

 

61

Section 13.02

 

Mediation and Arbitration.

 

61

Section 13.03

 

Preliminary Injunctions

 

62

Section 13.04

 

Patent Disputes

 

62

Section 13.05

 

Confidentiality

 

62

 

 

 

 

 

ARTICLE XIV. MISCELLANEOUS

 

62

 

 

 

 

 

Section 14.01

 

Assignment; Performance by Affiliates

 

62

Section 14.02

 

Force Majeure

 

63

Section 14.03

 

Further Actions

 

64

Section 14.04

 

Notices

 

64

Section 14.05

 

No Waiver

 

64

Section 14.06

 

Severability

 

64

Section 14.07

 

Governing Law

 

65

Section 14.08

 

Counterparts

 

65

 

iii

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Confidential

 

Section 14.09

 

Entire Agreement

 

65

Section 14.10

 

Limitation of Liability

 

65

Section 14.11

 

No Partnership

 

65

 

 

EXHIBITS

 

Exhibit A:

Tenapanor Structure

Exhibit B:

Compound Patents

Exhibit C:

Additional Patents

Exhibit D:

Initial Delivery of Development Data and Regulatory Documentation

Exhibit E:

Development API Supply

Exhibit F:

Development Product Supply

 

 

iv

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Confidential

 

LICENSE AGREEMENT

This License Agreement (the “Agreement”) is entered into as of the November 27,
2017 (the “Effective Date”) by and between Kyowa Hakko Kirin Co., Ltd., a
Japanese corporation with a place of business at 1-9-2 Otemachi, Chiyoda-ku,
Tokyo 100-0004, Japan (“KHK”) and Ardelyx, Inc., a Delaware corporation having
its principal place of business at 34175 Ardenwood Boulevard, Fremont,
California United States of America 94555 (“Ardelyx”).  Ardelyx and KHK are
sometimes referred to herein individually as a “Party” and collectively as the
“Parties”.

RECITALS

WHEREAS, KHK is a pharmaceutical company engaged in the research, development
and commercialization of products useful in the amelioration, treatment or
prevention of human diseases and conditions;

WHEREAS, Ardelyx is a biotechnology company developing a certain proprietary
compound known as tenapanor, having the structure set forth on Exhibit A for use
in the treatment of human diseases and disorders;

WHEREAS, KHK and Ardelyx desire to establish a license agreement for the further
development and commercialization of tenapanor (or its back-up compound(s)),
with the objective of providing pharmaceutical products to patients derived from
application of the expertise of each of Ardelyx and KHK.

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

ARTICLE I.

 DEFINITIONS AND CONSTRUCTION

The following terms shall have the following meanings as used in this Agreement:

Section 1.01    “Additional Indication” shall have the meaning assigned in
Section 2.07(a).

Section 1.02    “Additional Patents” means the Patents listed in Exhibit C, and
any Patents issuing after the Effective Date in the Territory claiming priority
to any such Patents listed on Exhibit C.

Section 1.03   “Affiliate” means with respect to either Party, any Person
controlling, controlled by or under common control with such Party, from time to
time and for so long as such control exists.  For purposes of this definition of
Affiliate, “control” (and, with correlative meanings, the terms “controlled by”
and “under common control with”) means (a) direct or indirect ownership of more
than fifty percent (50%) of the stock or shares having the right to vote for the
election of directors of a Person or (b) the possession, directly or indirectly,
of the power to direct, or cause the direction of, the management or policies of
a Person, whether through the ownership of voting securities, by contract or
otherwise.

 

 

 

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

 

 

Section 1.04    “Annual Net Sales” means the Net Sales made during any given
Calendar Year.

Section 1.05    “Anti-Corruption Laws” means the U.S. Foreign Corrupt Practices
Act, as amended, the UK Bribery Act 2010, as amended, and any other applicable
anti-corruption laws and laws for the prevention of fraud, racketeering, money
laundering or terrorism.

Section 1.06  “Applicable Laws” means all applicable statutes, ordinances,
codes, executive or governmental orders, laws, rules and regulations of any
jurisdiction where either Party operates or does business, including without
limitation, any rules, regulations, guidelines or other requirements of
Regulatory Health Authorities, that may be in effect from time to time.

Section 1.07    “Ardelyx [***] Know-How” means Know-How that [***]; provided,
that, (i) such Know-How is used by [***] a Licensed Compound or a Licensed
Product, (ii) such Know-How is [***] for a Licensed Product or Licensed
Compound, or (iii) such Know-How [***] a Licensed Product in the Field.  Ardelyx
[***] Know-How specifically excludes any Excluded Know-How.

Section 1.08    “Ardelyx [***] Patents” means all Patents that [***] (i)
inventions that [***] of a Licensed Compound or a Licensed Product, (ii) [***]
for a Licensed Product or Licensed Compound (collectively (i) and (ii) “Ardelyx
[***]”), or (iii) is [***] a Licensed Product in the Field (“Ardelyx [***] Use
Patents”).  Ardelyx [***] Patents specifically excludes Excluded Patents.

Section 1.09    Ardelyx [***] Technology” means Ardelyx [***] Know-How and
Ardelyx [***] Patents.

Section 1.10    “Ardelyx Controlled Patents” shall have the meaning assigned in
Section 8.02(a).

Section 1.11    “Ardelyx Development Data” means Development Data that (i)
Ardelyx or its Affiliates Control as of the Effective Date, or (ii) that comes
into the Control of Ardelyx or its Affiliates after the Effective Date, and in
the case of each of (i) and (ii), that is necessary or useful to Exploit any
Licensed Compound or Licensed Product pursuant to the rights granted to KHK
under this Agreement.

Section 1.12    “Ardelyx Sole Invention Patent” means any Patent claiming Sole
Program Know-How owned solely by Ardelyx or its Affiliates.

Section 1.13   Ardelyx Sole Invention Process and Formulation Patents” means all
Ardelyx Sole Invention Patents which claim the Manufacture or formulation of a
Licensed Compound or a Licensed Product.

Section 1.14    “Ardelyx Sole Invention Use Patents” means all Ardelyx Sole
Invention Patents which claim methods for using a Licensed Product in the Field.

Section 1.15    “Ardelyx Trademark” shall have the meaning assigned in Section
8.05(a).

2

Confidential Portions of this Exhibit marked as [***] have been omitted

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Section 1.16    “Backup Licensed Compounds” means (i) any compound, other than
the Lead Licensed Compound, that is claimed by the Compound Patent(s) and (ii)
any [***] of any such compound described in (i) that Ardelyx or its Affiliates
may Develop during the Term.

Section 1.17   “Bankruptcy Code” means Title 11, United States Code, as amended,
or analogous provisions of Applicable Laws outside the United States.

Section 1.18    “Breaching Party” shall have the meaning assigned in Section
11.02(a).

Section 1.19    “Business Day” means any day other than (a) a Saturday or a
Sunday or (b) a day on which commercial banking institutions are authorized or
required by Applicable Laws to be closed in New York City, New York or in Japan.

Section 1.20   “Calendar Quarter” means each successive period of three (3)
consecutive calendar months commencing on 1st January, 1st April, 1st July and
1st October.

Section 1.21   “Calendar Year” means each successive period of twelve (12)
consecutive calendar months commencing on 1st January.

Section 1.22    “Clinical Trials” means any clinical study of a pharmaceutical
product on human subjects to assess the dosing, safety and/or efficacy of such
pharmaceutical product, including but not limited to phase 1 clinical trials,
phase 2 clinical trials and phase 3 clinical trials and, if imposed by the
Regulatory Authorities as a condition to Regulatory Approval, phase 4 clinical
trials.  For the avoidance of doubt, post-marketing surveillance clinical
studies are not Clinical Trials.

Section 1.23   “Combination Product” means a product in form suitable for human
or animal applications containing a Licensed Compound as an active ingredient
and containing one or more other active ingredients, that is sold either as a
fixed dose or as separate doses in a single package; provided, that if any other
active ingredient is Controlled by Ardelyx and is not a Licensed Compound, it is
understood that KHK is not being granted any license under any Intellectual
Property Rights to Exploit such other active ingredient.

Section 1.24    “Commercialization” means all activities undertaken relating to
the import, marketing, promotion, pricing and reimbursement, detailing, medical
education and medical liaison activities, shipping, handling, offering for sale
and selling, customer service and support of a Licensed Product, advertising,
education, planning, marketing, promotion, distribution, market and product
support, and post-marketing surveillance.

Section 1.25    “Commercialization Plan” shall have the meaning assigned in
Section 3.05.

Section 1.26    “Commercialize” means the conduct of Commercialization
activities.

Section 1.27    “Commercially Reasonable Efforts” means the efforts and
resources typically used by pharmaceutical companies to perform the obligations
at issue, which efforts shall not be less than those efforts made or resources
expended by the performing Party with respect to other products owned by it or
to which it has similar rights, which product is at a similar stage of

3

Confidential Portions of this Exhibit marked as [***] have been omitted

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development or product life and is of similar market and commercial potential,
taking into account [***] efficacy, safety, the competitiveness of the market
place, the proprietary position of the products, the regulatory structure
involved, the profitability of the applicable products [***].

Section 1.28    “[***]” shall have the meaning assigned in [***].

Section 1.29    “Comparable Licensed Product” shall have the meaning assigned in
Section 6.05.

Section 1.30    “Compound Patents” means the Patents listed in Exhibit B, and
any Patents issuing after the Effective Date in the Territory claiming priority
to any such Patents listed on Exhibit B.

Section 1.31   “Confidential Information” means nonpublic information and
materials (including Information) of a Party that is disclosed or furnished in
connection with this Agreement (whether oral or in writing or in any other form)
by or on behalf of such Party to the other Party, its Affiliates or any of its
designees before, on or after the Effective Date.  Except as otherwise expressly
provided in this Agreement.  Ardelyx Development Data shall be the Confidential
Information solely of Ardelyx and KHK Development Data shall be the Confidential
Information solely of KHK.  Joint Know-How and the terms and conditions of this
Agreement shall be the Confidential Information jointly of the Parties.

Section 1.32   “Control” means, with respect to an item of Know-How, Patent or
other Intellectual Property Rights, the ability and authority of a Party or its
Affiliates, whether arising by ownership, possession, or pursuant to a license
or sublicense, to grant licenses, sublicenses, or other rights to the other
Party under or to such item of Know-How, Patent or Intellectual Property Rights
as provided for in this Agreement without breaching the terms of any agreement
between such Party and any Third Party.

Section 1.33   “Cost of Goods” means amounts [***], as the case may be, in all
cases recorded in accordance with GAAP, wherein any estimates of the components
of cost of goods that are adjusted in accordance with GAAP after invoicing KHK
shall be provided in the following invoice with appropriate explanation as to
the reason for the adjustment of estimates.

Section 1.34    “Develop” means the conduct of Development activities.

Section 1.35   “Development” means all activities relating to obtaining
Regulatory Approval of a Licensed Product, Licensed Product line extensions,
alternative delivery systems and new indications therefor, and all activities
relating to developing the ability to Manufacture the same.  This includes, for
example, (a) nonclinical testing, toxicology, formulation, clinical studies, and
regulatory affairs, (b) manufacturing process development for finished forms of
Licensed Products, CMC drug product development and manufacturing and quality
assurance technical support activities prior to the First Commercial Sale of a
Licensed Product anywhere in the Territory and (c) the conduct of advisory
boards with relevant experts, e.g. clinical experts or payer
representatives.  Development shall [***].  For the avoidance of doubt,
Development in the Territory includes all activities relating to obtaining
Regulatory Approval of the Licensed Product in the Field in the Territory, such
as nonclinical and clinical studies and any CMC drug product development that
may be necessary for the Territory, as well as conducting in vitro,  in vivo or
in

4

Confidential Portions of this Exhibit marked as [***] have been omitted

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silico studies for the purposes of determining which indication to pursue or of
supporting Commercialization of the Licensed Product in the Field in the
Territory.

Section 1.36    “Development API Supply” shall have the meaning assigned in
Section 5.01(a).

Section 1.37   “Development Data” means any and all research data, pharmacology
data, chemistry, manufacturing and control data, nonclinical data, clinical data
and all other documentation (including raw data).

Section 1.38    “Development Plan” shall have the meaning assigned in Section
3.04.

Section 1.39    “Development Product Supply” shall have the meaning assigned in
Section 5.01(a).

Section 1.40    “[***]” shall have the meaning assigned in [***].

Section 1.41    “Distributor” shall have the meaning assigned in ‎Section 2.03.

Section 1.42    “Drug Approval Application” means an application for Regulatory
Approval required before commercial sale or use of a Licensed Product as a drug
in a regulatory jurisdiction.

Section 1.43    “Effective Date” shall have the meaning assigned in the first
paragraph of this Agreement.

Section 1.44   “Excluded Know-How” means Know-How related to Ardelyx’s
proprietary platform technology known as Ardelyx Primary Enterocyte and
Colonocyte Culture System.

Section 1.45    “Excluded Patents” means any Patents claiming aspects of
Ardelyx’s proprietary platform technology known as Ardelyx Primary Enterocyte
and Colonocyte Culture System.

Section 1.46    “Exploit” means to Develop, Manufacture, have Manufactured,
Commercialize a product or process.

Section 1.47    “Exploitation” means the act of Exploiting a product or process.

Section 1.48    “FDA” means the United States Food and Drug Administration or
any successor thereto.

Section 1.49    “FFDCA” means the Federal Food, Drug, and Cosmetic Act, 21
U.S.C. §§ 301, et seq., as amended from time to time.

Section 1.50   “Field” means the treatment of any cardiorenal diseases and
conditions, but excluding cancer.

5

Confidential Portions of this Exhibit marked as [***] have been omitted

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Section 1.51    “Filing” means, with respect to a submission to a Regulatory
Health Authority, the date that such submission is confirmed to have been
received by the relevant Regulatory Health Authority.

Section 1.52    “First Commercial Sale” means, with respect to any Licensed
Product, the first bona fide arm’s length sale for monetary value by KHK, its
Affiliates, or its Sublicensees to a Third Party of such Licensed Product in the
Territory; provided,  however, that in no event shall any sale or distribution
of a Licensed Product for use in a Clinical Trial or any sampling or similar
uses or any sales prior to receipt of all Regulatory Approvals necessary to
commence regular commercial sales be deemed a First Commercial Sale.

Section 1.53    “FTE” means a full time equivalent person year of eighteen
hundred and eighty (1,880) hours of scientific, technical or operational work
(excluding administrative services).

Section 1.54   “GAAP” means United States Generally Accepted Accounting
Principles, consistently applied.

Section 1.55   “GCP” or “Good Clinical Practices” means the current standards,
practices and procedures for clinical trials for pharmaceuticals, as set forth
in the United States Code of Federal Regulations, ICH guidelines and applicable
regulations, laws or rules as promulgated thereunder, as amended from time to
time, and such comparable standards, practices and procedures promulgated by any
Regulatory Authority in the Territory.

Section 1.56    “Generic Product” means with respect to a Licensed Product in
the Territory a product (a) that is sold in the Territory by a Third Party who
is not a Sublicensee or a Distributor selling such product under authorization
from KHK or its Affiliates, (b) that has received Regulatory Approval necessary
for sale in the Territory, (c) that [***] and (d) that contains as the active
ingredient the same compound (or, solely for products that are described by
subsection (c)(ii), an equivalent salt thereof), as is contained in such
Licensed Product.

Section 1.57    “GLP” or “Good Laboratory Practices” means good laboratory
practices required under the regulations set forth in 21 C.F.R. Part 58, as in
effect during the Term, and the requirements thereunder imposed by the FDA, and
the equivalent practices promulgated by any Regulatory Authority in any
jurisdiction.

Section 1.58   “GMP” or “Good Manufacturing Practices” means the current good
manufacturing practices required under the applicable regulations set forth in
21 C.F.R. Subchapter C (Drugs) and Subchapter H (Medical Devices), including
without limitation Parts 210–211, 808, 812, and 820, and the requirements
thereunder imposed by the FDA, the EU/PIC guidelines (and the corresponding
national laws and regulations), and the laws, regulations, guidelines, guidance,
pharmaceutical industry standards and requirements in force that apply to the
Manufacture of each Licensed Compound or Licensed Product in any jurisdiction,
all as amended from time to time.

Section 1.59   “Government Official” means any Person employed by or acting on
behalf of a Governmental Body, government-controlled entity or public
international organization.

6

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Section 1.60    “Governmental Body” means any: (a) nation, state, commonwealth,
province, territory, county, municipality, district or other jurisdiction of any
nature; (b) federal, state, local, municipal, foreign or other government; (c)
governmental or quasi-governmental authority of any nature (including any
governmental division, department, agency, commission, instrumentality,
official, ministry, fund, foundation, center, organization, unit, body or entity
and any court or other tribunal); or (d) self-regulatory organization (including
the NASDAQ Global Market and the NASDAQ Global Select Market).

Section 1.61   “IND” means an Investigational New Drug application or the
equivalent filed with or submitted to the relevant Regulatory Health Authority,
including, for example, the FDA, for authorization to commence human clinical
trials.

Section 1.62   “Indirect Taxes” means value added taxes, sales taxes,
consumption taxes and other similar taxes.

Section 1.63    “Information” means (a) Development Data necessary or useful to
Exploit the Licensed Compounds and/or Licensed Products, and (b) Know-How, other
than Development Data, necessary or useful to Exploit the Licensed Compounds
and/or Licensed Products.

Section 1.64    “Initial Delivery of Development Data and Regulatory
Documentation” shall have the meaning assigned in Section 2.04(a).

Section 1.65    “Initial Indication” means [***].

Section 1.66   “Intellectual Property Rights” or “IPR” means Patents,
Trademarks, service marks, Know-How, trade names, registered designs, design
rights, copyrights (including rights in computer software), domain names,
database rights and any rights or property similar to any of the foregoing in
any part of the world, whether registered or not, together with the right to
apply for the registration of any such rights.

Section 1.67    “Joint Know-How” shall have the meaning assigned in Section
8.01(a).

Section 1.68    “Joint Patent” means any Patent claiming any invention within
the Joint Know-How.

Section 1.69    “Joint Project Team” means the committee described in Section
3.08.

Section 1.70    “Joint Technology” means collectively, Joint Patents and Joint
Know-How.

Section 1.71    “KHK [***] Know-How” means Know-How (a) that [***]; provided,
that, (i) such Know-How is used by [***] a Licensed Compound or a Licensed
Product, (ii) such Know-How is [***] for a Licensed Product or Licensed
Compound, or (ii) such Know-How [***] a Licensed Product.

Section 1.72    “KHK [***] Patents” means all Patents (a) that [***]; provided,
that, such Patents claim (i) inventions that [***] a Licensed Compound or a
Licensed Product, (ii) [***] for

7

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a Licensed Product or Licensed Compound (collectively, “KHK [***]”), or (iii) is
[***] a Licensed Product (“KHK [***] Patents”).

Section 1.73    “KHK [***] Technology” means KHK [***] Know-How and KHK [***]
Patents.

Section 1.74    “KHK Development Data” means any Development Data that comes
into and under the Control of KHK or its Affiliates after the Effective Date
that is necessary or useful to Exploit any Licensed Compound and/or Licensed
Product outside the Territory or within the Territory and outside the Field.

Section 1.75   “KHK Sole Invention Patent” means any Patent claiming Sole
Program Know-How owned solely by KHK.

Section 1.76    “KHK Triggered Termination” shall have the meaning assigned in
Section 11.03.

Section 1.77   “Know-How” means all inventions, discoveries, data, information
(including scientific, technical or regulatory information), trade secrets,
processes, means, methods, practices, formulae, instructions, procedures,
techniques, materials, technology, results, analyses, designs, drawings,
computer programs, apparatuses, specifications, technical assistance,
laboratory, nonclinical and clinical data (including laboratory notes and
notebooks), and other material or know-how, in written, electronic or any other
form, whether or not confidential, proprietary or patentable, including without
limitation: development technology; biology, chemistry, pharmacology,
toxicology, drug stability, Manufacturing and formulation, test procedures,
synthesis, purification and isolation techniques, quality control data and
information, methodologies and techniques; information regarding clinical and
nonclinical safety and efficacy studies, including study designs and protocols,
marketing studies, absorption, distribution, metabolism and excretion studies;
assays and biological methodology.

Section 1.78   “Knowledge” means the good faith understanding of the officers of
Ardelyx and its Affiliates, [***].  For clarity, for purposes of the
representations and warranties set forth in Section 9.01(b), “Knowledge” will
not include obligations to conduct any special searches or analyses such as, but
not limited to, any analysis of Ardelyx’s freedom to operate with respect to
Patents relevant to Licensed Compounds or Licensed Products.

Section 1.79   “Lead Licensed Compound” means the compound of Ardelyx, known as
tenapanor, having the structure set forth on Exhibit A, and any [***] of such
compound.

Section 1.80   “Lead Licensed Product” means a Licensed Product containing the
Lead Licensed Compound as an active ingredient.

Section 1.81   “Licensed Compounds” means the Lead Licensed Compound and any and
all Backup Licensed Compounds.

Section 1.82    “Licensed Know-How” means (a) Know-How that Ardelyx or its
Affiliates Control as of the Effective Date and (b) Sole Program Know-How owned
by Ardelyx; provided that, such Know-How is necessary or useful to Exploit any
Licensed Compound and/or Licensed

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Product pursuant to the terms and conditions of this Agreement.  Licensed
Know-How specifically excludes the Ardelyx [***] Know-How and the Excluded
Know-How.

Section 1.83    “Licensed Patents” means (a) the Compound Patents, (b) the
Additional Patents, and (c) all Ardelyx Sole Invention Patents; provided that in
the case of (b) and (c) above, such Patents claim any inventions necessary or
useful for the Exploitation of the Licensed Compounds and/or Licensed Products
pursuant to the terms and conditions of this Agreement.  Licensed Patents
exclude Ardelyx [***] Patents and the Excluded Patents.

Section 1.84   “Licensed Product” means any and all pharmaceutical preparations,
compositions and formulations in forms suitable for human applications
containing a Licensed Compound as an active ingredient.

Section 1.85    “Licensed Technology” means all Licensed Patents and Licensed
Know-How.

Section 1.86    “Losses” means any and all direct or indirect liabilities,
claims, actions, damages, losses or expenses, including interest, penalties, and
reasonable lawyers’ fees and disbursements.  In calculating Losses, the legal
duty to mitigate on the part of the Party suffering the Loss shall be taken into
account.

Section 1.87    “Manufacture” or “Manufacturing” means activities in connection
with the synthesis, manufacture, processing, formulating, testing (including,
without limitation quality control, quality assurance, lot release testing, and
development of any relevant analytical methods), bulk packaging or storage and
delivery of Licensed Compound or Licensed Product.

Section 1.88    “Manufacturing Option” shall have the meaning assigned in
Section 5.04.

Section 1.89    “Material Anti-Corruption Law Violation” means a violation of an
Anti-Corruption Law relating to the subject matter of this Agreement which
would, if it were publicly known, be reasonably expected to have a material
adverse effect on the Party committing such violation or on the reputation of
the other Party because of its relationship with the Party committing such
violation.

Section 1.90    “Materials” means compounds, compositions of matter,
intermediates or assays necessary or useful for the Development, Manufacture or
Commercialization of Licensed Compounds or Licensed Products.

Section 1.91    “Net Sales” means the gross amount invoiced by a Party, its
Affiliate and Sublicensees for sales of Licensed Products to a Third Party
(including Distributors but excluding, for the avoidance of doubt, Sublicensees)
less deductions for the following:

(a)         customary trade, quantity discounts, including cash, settlement
discounts, or chargebacks actually granted, allowed, or incurred in the ordinary
course of business in connection with the sale of the Licensed Products;

(b)         credits to customers, not in excess of the selling price of the
Licensed Products, on account of defects, rejection, recalls, or return of the
Licensed Products;

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(c)         Distributors’ fees, rebates, or allowances actually granted or
allowed, including without limitation government and managed care rebates;

(d)         Indirect Taxes and excise taxes or customs duties paid by the
selling entity and any other governmental charges imposed upon the sale;
importation, use or distribution of the Licensed Products; and

(e)         transportation costs, distribution expenses, special packaging and
related insurance charges actually incurred.

Section 1.92    “NHE-3” means [***].

Section 1.93    “Non-Breaching Party” shall have the meaning assigned in Section
11.02(a).

Section 1.94    “Other Ingredients” shall have the meaning assigned in Section
6.05.

Section 1.95    “Party Representatives” shall have the meaning assigned in
‎Section 9.04(a).

Section 1.96    “Patent” means (a) all national, regional and international
patents and patent applications, including provisional patent applications, (b)
all patent applications filed either from such patents, patent applications or
provisional applications or from an application claiming priority from any of
these, including divisionals, continuations, continuations-in-part,
provisionals, converted provisionals, and continued prosecution applications,
(c) any and all patents that have issued or in the future issue from the
foregoing patent applications ((a) and (b)), including utility models, petty
patents and design patents and certificates of invention, (d) any and all
extensions or restorations by existing or future extension or restoration
mechanisms, including revalidations, reissues, re-examinations and extensions
(including any supplementary protection certificates and the like) of the
foregoing patents or patent applications ((a), (b) and (c)), and (e) any similar
rights, including so-called pipeline protection, or any importation,
revalidation, confirmation or introduction patent or registration patent or
patent of additions to any such foregoing patent applications and patents.

Section 1.97    “Payments” shall have the meaning assigned in Section 6.08.

Section 1.98    “Person” means any individual, sole proprietorship, corporation,
partnership, association, joint-stock company, trust, unincorporated
organization, joint venture or other similar entity or organization, including a
government or political subdivision, department or agency of a government.

Section 1.99   “Phase 2 Clinical Trial” means any clinical study that is not
intended to be used as a Pivotal Study for purposes of seeking Regulatory
Approval and that is conducted on human patients who have the relevant disease
or condition with primary endpoints to establish the efficacy of a Licensed
Product for its intended use and to define warnings, precautions, and adverse
reactions that may be associated with the pharmaceutical product in the dosage
range to be prescribed.  “Phase 2 Clinical Trial” shall include without
limitation any clinical trial that would satisfy requirements of 21 C.F.R. §
312.21(b).

 

 

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Section 1.100 “Pivotal Trial” or “Pivotal Clinical Study”  means a randomized,
well-controlled, appropriately powered pivotal human clinical study or studies
as defined in 21 C.F.R. § 312.21(c), as amended, or its equivalent, as
appropriate, in foreign jurisdictions, the results of which, if the pre-defined
endpoints are met, are intended to provide data necessary to support Regulatory
Approval for a Licensed Product in a particular country.

Section 1.101  “Product Trademark” shall have the meaning assigned in Section
8.05(a).

Section 1.102  “Regulatory Approval” means any and all approvals (including
without limitation pricing and reimbursement approvals), product or
establishment licenses, registrations, or authorizations of any regional,
federal, state, or local Regulatory Health Authority, department, bureau, or
other governmental entity, necessary to commercially distribute, sell or market
a Licensed Product in a regulatory jurisdiction, including, where applicable,
(a) pricing or reimbursement approval in such jurisdiction, (b) pre- and
post-approval marketing authorizations (including any prerequisite Manufacturing
approval or authorization related thereto), (c) labeling approval and (d)
technical, medical and scientific licenses.

Section 1.103  “Regulatory Authority” means any court or government body,
whether national, supra-national, federal, state, local, foreign or provincial,
including any political subdivision thereof, including any department,
commission, board, bureau, agency, or other regulatory or administrative
governmental authority or instrumentality, and further including any
quasi-governmental Person or entity exercising the functions of any of these.

Section 1.104 “Regulatory Documentation” means all applications, registrations,
licenses, authorizations and approvals, all correspondence submitted to or
received from Regulatory Health Authorities (including minutes and official
contact reports relating to any communications with any Regulatory Health
Authority) and all supporting documents, including documentation arising in the
course of all clinical studies and tests, in each case relating to any Licensed
Compounds or Licensed Products, including all INDs, Regulatory Approvals,
regulatory drug lists, advertising and promotion documents, adverse event files
and complaint files.

Section 1.105  “Regulatory Exclusivity” means any exclusive marketing rights or
data exclusivity rights conferred by any Regulatory Health Authority in the
Territory with respect to a Licensed Product other than Patents.

Section 1.106 “Regulatory Health Authority” means any applicable national (for
example, FDA or Japan’s Pharmaceuticals and Medical Devices Agency),
supra-national, regional, state, provincial or local regulatory health
authority, department, bureau, commission, council, or other government entity
regulating or otherwise exercising authority with respect to the Exploitation of
Licensed Compounds or Licensed Products in the Territory pursuant to the terms
and conditions of this Agreement, including any such entity involved in the
granting of Regulatory Approval for pharmaceutical products.

Section 1.107  “Review Period” shall have the meaning assigned in Section 7.08.

Section 1.108  “Safety Agreement” shall have the meaning assigned in Section
4.06.

 

 

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Section 1.109  “Senior Executives” means (a) the Chief Executive Officer of
Ardelyx and (b) the Chief Executive Officer of KHK or, in either case, an
individual nominated by the relevant Chief Executive Officer.

Section 1.110  “Sole Invention Patent” means any Patent claiming any invention
within the Sole Program Know-How.

Section 1.111  “Sole Program Know-How” shall have the meaning assigned in
Section 8.01(a).

Section 1.112  “Specifications” means the specifications applicable to the
Manufacture, packaging and labeling of Licensed Compound or Licensed Products in
effect at a given time.

Section 1.113  “Sublicensee” shall have the meaning assigned in Section 2.02.

Section 1.114  “Tax” or “Taxation” means any form of tax or taxation, levy,
duty, charge, social security charge, contribution or withholding of whatever
nature (including any related fine, penalty, surcharge or interest) imposed by,
or payable to, a Tax Authority.

Section 1.115  “Tax Authority” means any government, state or municipality, or
any local, state, federal or other fiscal, revenue, customs, or excise
authority, body or official anywhere in the world, authorized to levy Tax.

Section 1.116  “Term” shall have the meaning assigned in ‎Section 11.01.

Section 1.117  “Territory” means Japan.

Section 1.118  “Third Party” means any Person other than Ardelyx or KHK, or
their respective Affiliates.

Section 1.119  “Third Party Claims” shall have the meaning assigned in Section
12.01(a).

Section 1.120  “Third Party Compensation” shall have the meaning assigned in
Section 6.04(e).

Section 1.121  “Trademark” means any registered trademark, application for
registration thereof, trade name, service mark, service name, brand, domain
name, trade dress, logo, slogan or other indicia of origin or ownership,
including the goodwill and activities associated with each of the foregoing.

Section 1.122 “Transfer Price” means (i) with respect to Lead Licensed Compound,
Lead Licensed Product, and placebo supplied by Ardelyx for KHK’s [***], (ii)
with respect to Lead Licensed Compound, Lead Licensed Product supplied by
Ardelyx for KHK’s [***] and (iii) with respect to Materials and any other
physical materials that KHK requests that Ardelyx deliver and which Ardelyx
agrees to deliver which are supplied by Ardelyx to KHK during the Term, [***].

Section 1.123  “Valid Claim” means (a) a claim of an issued and unexpired Patent
within the Licensed Patents, Ardelyx [***] Patents, Joint Patents, or [***]
covering a method of using

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the Licensed Product as applicable, that has not been held unpatentable,
invalid, or unenforceable by a court or other government agency of competent
jurisdiction in an unappealable decision or has not been admitted to be invalid
or unenforceable through reissue, re-examination, disclaimer, or otherwise or
(b) a claim of a pending patent application within the Licensed Patents, Ardelyx
[***] Patents, Joints Patents or [***] covering a method of using the Licensed
Product, as applicable, which patent application has not been abandoned, finally
rejected or expired without the possibility of appeal or re-filing.  For
purposes hereof, a claim in a patent application that has not been granted
within [***] ([***]) years of the priority date for such claim shall not be
considered to be a Valid Claim unless and until such claim issues thereafter
such that it is included in subsection (a).

Section 1.124  “Written Disclosure” shall have the meaning assigned in Section
10.02.

Section 1.125 Construction.  Except where the context requires otherwise,
whenever used in this Agreement, the singular includes the plural, the plural
includes the singular, the use of any gender is applicable to all genders and
the word “or” has the inclusive meaning represented by the phrase
“and/or”.  Whenever this Agreement refers to a number of days, unless otherwise
specified, such number refers to calendar days.  The term “including” or
“includes” as used in this Agreement means including, without limiting the
generality of any description preceding such term.  The article, section, and
subsection headings contained in this Agreement are for the purposes of
convenience only and are not intended to define or limit the contents of such
articles, sections, and subsections.  The wording of this Agreement shall be
deemed to be the wording mutually chosen by the Parties and no rule of strict
construction shall be applied against any Party.

ARTICLE II.

GRANT OF RIGHTS AND LICENSES; EXCLUSIVITY

Section 2.01    Licenses to KHK.

(a)        Subject to the terms of this Agreement, Ardelyx grants to KHK an
exclusive right and license (including with regard to Ardelyx and its
Affiliates, except with respect to the retained rights set forth in ‎Section
2.05 below) under the (A) Licensed Technology, (B) Ardelyx’s rights in the Joint
Technology and (C) Ardelyx [***] Technology to (i) Develop, have Developed,
Commercialize (but not Manufacture), have Commercialized (but not have
Manufactured),  import, and otherwise use the Licensed Products in Field in the
Territory, and (ii) Manufacture, have Manufactured, package and have packaged
the Licensed Products (but not the Licensed Compound) within or outside of the
Territory, in the case of (i) and (ii), for the sole purpose of Developing and
Commercializing Licensed Products, in each case in the Field and in the
Territory.

(b)        Effective as of the exercise of the Manufacturing Option under
Section 5.04 Ardelyx hereby grants to KHK a non-exclusive license under the (i)
Licensed Technology, (ii) Ardelyx’s rights in the Joint Technology, and (iii)
Ardelyx [***] Technology to Manufacture and to have Manufactured Lead Licensed
Compound within or outside of the Territory, for the sole purpose of Developing
and Commercializing Licensed Products in the Field and in the
Territory.  Effective as KHK’s assumption of responsibility for the Manufacture
of Licensed Compound (other than the Lead Licensed Compound) under Section 5.07,
Ardelyx hereby grants to KHK a non-exclusive license under the (i) Licensed
Technology, (ii) Ardelyx’s rights in the Joint

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Technology, and (iii) Ardelyx [***] Technology to Manufacture and to have
Manufactured Licensed Compound (other than the Lead Licensed Compound) within or
outside of the Territory, for the sole purpose of Developing and Commercializing
Licensed Products in the Field and in the Territory.

(c)        Ardelyx [***] (i) cause each of its licensees to grant back to
Ardelyx,  with a right to sublicense KHK without additional consideration [***]
(A) Know-How that arises under [***] agreement with Ardelyx and such licensee;
provided that such Know-How embodies or relates to [***] (“Ardelyx Licensee
[***] Know-How”) and (B) Patents that arise under [***] agreement between
Ardelyx and such licensee; provided that such Patents claim [***], (“Ardelyx
Licensee [***] Patent”) (collectively (A) and (B), “Ardelyx Licensee [***]
Technology”) and (ii) [***] cause each of its licensees to grant back to
Ardelyx, with a right to sublicense KHK without additional consideration [***]
(A) Know-How that arises under [***] agreement with Ardelyx and such licensee;
provided that [***] or [***] Know-How that arises under [***] agreement with
Ardelyx and such licensee and that [***] (“Ardelyx Licensee [***] Know-How”),
and (B) Patents that arise under [***] agreement between Ardelyx and such
licensee; provided that such Patents claim the Ardelyx Licensee [***] Know-How
(“Ardelyx Licensee [***] Patents”) (collectively, (A) and (B), “Ardelyx Licensee
[***] Technology”).  [***]   For clarity, Ardelyx Licensee [***] Know-How and
Ardelyx Licensee [***] Patents are included in the [***] and in the [***],
respectively.  To the extent that Ardelyx has obtained a license, with the right
to sublicense KHK without additional consideration to the Ardelyx Licensee [***]
Know-How and the Ardelyx Licensee [***] Patents, the Ardelyx Licensee [***]
Know-How and the Ardelyx Licensee [***] Patents are included in [***], and
[***], respectively.

Section 2.02    Sublicenses.

(a)        KHK shall have the right to grant sublicenses, through multiple tiers
of sublicenses, under the licenses granted to KHK hereunder, to its Affiliates,
and to any other Person with the prior written consent of Ardelyx, such consent
not to be unreasonably withheld, delayed or conditioned.  Notwithstanding the
above, to the extent that KHK is unsuccessful, under Section 2.02(c) in
obtaining from its Sublicensee, [***], a grant back to KHK, with a right to
sublicense Ardelyx without additional consideration, of the KHK Sublicensee
[***] Technology, KHK shall not have the right to grant such Sublicensee a
sublicense under any Ardelyx [***], or under any Ardelyx [***] Know-How that
Ardelyx, its Affiliates or licensees is using [***].

(b)        Where KHK or its Affiliates grants such sublicense to a Person that
is not an Affiliate of KHK, and such Person is not a Distributor, such Person
shall be a “Sublicensee” for the purposes of this Agreement, and any Person to
which a Sublicensee grants a further sublicense shall also be a Sublicensee;
provided,  however, that any Person that (i) is granted a sublicense under a
license granted to KHK pursuant to Section 2.01 solely to enable such Person to
provide Development services or contract manufacturing services for KHK, its
Affiliates or Sublicensees and (ii) does not have the right to distribute,
market or sell the Licensed Products shall not be a “Sublicensee” for purposes
of this Agreement.  KHK, its Affiliates and its Sublicensees shall ensure that
all Persons to which they grant sublicenses comply with all terms and conditions
of this Agreement.  KHK shall remain liable for any action or failure to act by
any Sublicensee, or any other Party that is granted a sublicense under the
licenses granted in Section 2.01 by KHK, its Affiliates or its Sublicensees, if
such action or failure to act by the Sublicensee, or other sublicensee,

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would have constituted a breach of this Agreement if such action or failure were
committed by KHK.

(c)        KHK [***] (i) cause each of its Sublicensees to grant back to KHK,
 with a right to sublicense Ardelyx without additional consideration [***] (A)
Know-How that arises under [***] agreement with KHK and such Sublicensee;
provided that such Know-How embodies or relates to [***] (“KHK Sublicensee [***]
Know-How”) and (B) Patents that arise under [***] agreement between KHK and such
Sublicensee; provided that such Patents claim [***], (“KHK Sublicensee [***]
Patents”) (collectively (A) and (B), “KHK Sublicensee [***] Technology”) and
(ii) [***] cause each of its Sublicensees to grant back to KHK, with a right to
sublicense Ardelyx without additional consideration [***] (A) Know-How that
arises under [***] agreement with KHK and such Sublicensee; provided that [***]
or [***] Know-How that arises under [***] agreement with KHK and such
Sublicensee and that [***] (“KHK Sublicensee [***] Know-How”), and (B) Patents
that arise under [***] agreement between KHK and such Sublicensee; provided that
such Patents claim the KHK Sublicensee [***] Know-How (“KHK Sublicensee [***]
Patents”) (collectively, (A) and (B), “KHK Sublicensee [***] Technology”).  For
clarity, KHK Sublicensee [***] Know-How and KHK Sublicensee [***] Patents are
included in KHK [***] Know-How and KHK [***] Patents, respectively.  To the
extent that KHK has obtained a license, with the right to sublicense Ardelyx
without additional consideration, to the KHK Sublicensee [***] Know-How and the
KHK Sublicensee [***] Patents, the KHK Sublicensee [***] Know-How and the KHK
Sublicensee [***] Patents are included in KHK [***] Know-How, and KHK [***]
Patents, respectively.

Section 2.03    Distributorships.  KHK, its Affiliates and its Sublicensees
shall have the right, in their sole discretion, to appoint any other Persons in
the Territory to distribute, market and sell the Licensed Products, with or
without packaging rights.  In circumstances where such appointed Person
purchases its requirements of Licensed Products from KHK, its Affiliates or its
Sublicensees, but does not otherwise make any royalty or other payment to KHK,
its Affiliates or its Sublicensees with respect to Intellectual Property Rights,
and where such Person is not an Affiliate of KHK and neither KHK nor any of its
Affiliates shares in the profits from, or has an equivalent interest in the
proceeds from, the sale of Licensed Products by such Person, that Person shall
be a “Distributor” for purposes of this Agreement.  The term “packaging rights”
in this ‎Section 2.03 shall mean the right for the Distributor to package
Licensed Products supplied in unpackaged bulk form into individual
ready-for-sale packs.  KHK shall remain liable for any action or failure to act
by the Distributor, if such action or failure to act by the Distributor would
have constituted a breach of this Agreement if such action or failure were
committed by KHK.

Section 2.04    Provision of Development Data, Regulatory Documentation and
Assistance.

(a)        In the furtherance of the rights and licenses granted by Ardelyx to
KHK under this Agreement, as soon as reasonably practicable, Ardelyx shall
furnish [***], to KHK a data package in electronic format that shall include
Development Data and Regulatory Documentation described on Exhibit D (the
“Initial Delivery of Development Data and Regulatory Documentation”).  Ardelyx
shall, [***] provide KHK with the Initial Delivery of Development Data and
Regulatory Documentation electronically in the formats of (i) CDISC (Clinical
Data Interchange Standards

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Consortium), and (ii) additionally, other formats, if any, in which Ardelyx
files such data with the FDA.

(b)        During the Term, [***], (i) as soon as reasonably practicable
following request by KHK, Ardelyx shall provide KHK with copies of [***]
additional Ardelyx Development Data and Regulatory Documentation specifically
requested by KHK that [***] would be necessary or useful to Develop, Manufacture
or Commercialize Licensed Products in the Field in the Territory, and (ii) as
soon as reasonably practicable, Ardelyx shall disclose Ardelyx [***] Know-How
and Sole Program Know-How that comes to Ardelyx’s Control (or that are
reasonably requested by KHK) and that have not previously been provided to KHK
by Ardelyx.  Subject to, and limited by, the provisions of Section 2.01(c) above
relating specifically to Ardelyx’s obligations with respect to Ardelyx Licensee
[***] Technology and Ardelyx Licensee [***] Technology, Ardelyx shall (A) obtain
rights and licenses from its licensees, research and clinical partners or other
Third Parties with which Ardelyx conducts Development or Manufacturing with
respect to the Licensed Compound and/or Licensed Product to grant Ardelyx such
rights and licenses as necessary to enable Ardelyx to comply with the
obligations set forth in this Section 2.04(b).

(c)        During the Term, [***], (i) as soon as reasonably practicable
following request by Ardelyx, KHK shall provide Ardelyx with copies of KHK
Development Data and Regulatory Documentation specifically requested by Ardelyx
and that [***] would be necessary or useful to Develop, Manufacture or
Commercialize Licensed Products outside of the Territory, or outside of the
Field in the Territory, and (ii) as soon as reasonably practicable, KHK shall
disclose KHK [***] Technology and Sole Program Know-How that comes to KHK’s
Control (or that are reasonably requested by Ardelyx) and that have not
previously been provided to Ardelyx by KHK.  Subject to, and limited by, the
provisions of Section 2.02(c) above relating specifically to KHK’s obligations
with respect to KHK Sublicensee [***] Technology and KHK Sublicensee [***]
Technology, KHK shall obtain rights and licenses from KHK’s Sublicensees,
research and clinical partners or other Third Parties with which KHK conducts
Development or Manufacturing with respect to the Licensed Compound and/or
Licensed Product to grant KHK such rights and licenses as necessary to enable
KHK to comply with the obligations set forth in this Section 2.04(c).

(d)        [***], KHK, its Affiliates and its Sublicensees shall have the right
to reference Regulatory Documentation of Licensed Products for the Initial
Indication and any Additional Indication, to the extent such Regulatory
Documentation are Controlled by Ardelyx, its Affiliates or licensees (including
any future licensees), in connection with any Regulatory Approval that KHK or
its Affiliates or Sublicensees may seek for Exploitation of Licensed Products in
the Initial Indication and any Additional Indication in Field and in the
Territory.

(e)        [***], Ardelyx, its Affiliates and its licensees shall have the right
to reference Regulatory Documentation for Licensed Products for the Initial
Indication and any Additional Indication, to the extent such Regulatory
Documentation are Controlled by KHK or its Affiliates or Sublicensees, in
connection with any Regulatory Approvals that Ardelyx, its Affiliates or
licensees (including those in the future) may seek for use of Licensed Products
in the Initial Indication and any Additional Indication outside of the
Territory, or outside of the Field in the Territory.

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(f)        In addition to the foregoing Section 2.04(a),  Section 2.04(b) and
Section 2.04(d), Ardelyx shall provide to KHK reasonable assistance as KHK may
request in order to assist KHK in obtaining Regulatory Approval for the Licensed
Product in the Territory; provided,  however, that KHK shall (i) [***] and (ii)
in the event that Ardelyx is required to spend any FTE hours in supporting KHK
under this Section 2.04(f) for any purpose, including [***]  KHK shall reimburse
Ardelyx for such FTE hours spent by Ardelyx pursuant to this Section 2.04(f) at
a rate of US $[***] annually or an hourly rate of US $[***].  Notwithstanding
the foregoing, until KHK, its Affiliates or Sublicensees obtain Regulatory
Approval for the Lead Licensed Product in the Territory, Ardelyx shall, [***]
maintain or cause its contract manufacturing organizations and contract research
organizations to maintain Ardelyx Development Data for the Licensed Product
consisting of GMP, GCP and GLP data that Ardelyx is required to file with the
FDA in order to obtain Regulatory Approval in the United States, and Ardelyx
shall [***] of any such Ardelyx Development Data in connection with any
Regulatory Documentation for the Lead Licensed Product.  If any such GLP, GCP or
GMP Ardelyx Development Data that Ardelyx is required to file with the FDA in
order to obtain Regulatory Approval for the Lead Licensed Product in the United
States is missing, destroyed or cannot be traced and any additional Clinical
Trials or nonclinical studies are required to be conducted by KHK, its
Affiliates or Sublicensees as a result thereof, the Parties shall discuss in
good faith the possibility of [***].

Section 2.05    Rights Retained by Ardelyx.  Notwithstanding the foregoing,
Ardelyx retains the right under (i) the Licensed Technology, (ii) Ardelyx’s
rights in the Joint Technology and (iii) Ardelyx [***] Technology to Exploit the
Licensed Compounds and the Licensed Products outside the Field and/or outside
the Territory and to conduct any other activities expressly assigned to Ardelyx
under this Agreement, including the Manufacturing of the Licensed Compound and
the Lead Licensed Products.

Section 2.06   License to Ardelyx.  KHK grants to Ardelyx an exclusive, fully
paid, royalty free, sublicensable, irrevocable license under the KHK [***]
Technology, any Sole Program Know-How owned by KHK, the KHK Sole Invention
Patents, and KHK’s interest in the Joint Technology to Exploit the Licensed
Compounds and Licensed Products outside the Field and/or outside the
Territory.  Notwithstanding the above, [***].

Section 2.07    Additional Indication Development.

(a)        If either Party, its Affiliates or licensees (or Sublicensees, in the
case of KHK) elect to Develop a Licensed Product in the Field pursuant to the
terms of this Agreement for an indication other than the Initial Indication
(“Additional Indication”), and such Party (the “Initiating Party”) conducts a
Phase 2 Clinical Trial for such Additional Indication outside of the Territory
in the case of Ardelyx or in the Territory in the case of KHK, the Party
conducting such Phase 2 Clinical Trial shall share any and all Development Data
generated therefrom (“Phase 2 Data”) with the other Party (the “Responding
Party”).  Such Phase 2 Data shall be deemed Ardelyx Development Data if
generated by Ardelyx, its Affiliates or licensees, or KHK Development Data if
generated by KHK, its Affiliates or Sublicensees.   Following the delivery of
the Phase 2 Data, the Parties shall discuss in good faith whether to proceed
with a Pivotal Clinical Study for the Additional Indication that would include
both clinical sites in the Territory and clinical sites outside of the
Territory, and such decision shall occur within the time frame presented by the
Initiating Party when the Phase 2 Data is presented to the Responding Party,
which time

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frame shall be no more than [***] ([***]) days after the delivery of the Phase 2
Data unless the Parties shall agree otherwise.  For clarity, (i) neither Party
shall be obligated to proceed with a Pivotal Clinical Study regardless of
whether it is the Initiating Party or the Responding Party, (ii) KHK, its
Affiliates or its Sublicensees shall not be obligated to include any clinical
sites outside of the Territory if KHK is the Initiating Party, and (iii)
Ardelyx, its Affiliates or its licensees shall not be obligated to include any
clinical sites within the Territory if Ardelyx is the Initiating Party.  Should
the Parties determine to proceed collaboratively with a Pivotal Clinical Study
that includes both clinical sites in the Territory and clinical sites outside of
the Territory, the mechanism set out in Sections 2.07(b) and 2.07(c) below shall
apply.

(b)        If Ardelyx is the Initiating Party and Ardelyx and KHK agree to
proceed with a global Pivotal Clinical Study that includes both clinical sites
in the Territory and clinical sites outside of the Territory,  [***] shall [***]
attributable to [***].  Either Party, and their respective Affiliates, licensees
and Sublicensees, may use the data generated by the global Pivotal Clinical
Study at no cost for the purposes of any regulatory submission in the Territory
(in the case of KHK, its Affiliates and Sublicensees) or outside the Territory
(in the case of Ardelyx, its Affiliates or licensees).  KHK shall pay relevant
milestone payments to the extent that the Additional Indication triggers
milestone payments, as well as any applicable royalties and sales milestones. 
In the event that the Parties determine not to proceed with a global Pivotal
Clinical Study that includes both clinical sites in the Territory and clinical
sites outside of the Territory, Ardelyx may proceed with a Pivotal Clinical
Study at its own cost outside the Territory without including clinical sites in
the Territory.  KHK, its Affiliates or Sublicensees may elect to pursue the
Additional Indication by conducting a Pivotal Clinical Study or a bridging study
at its own cost in the Territory.  KHK shall pay relevant milestone payments to
the extent that the Additional Indication triggers milestone payments, as well
as any applicable royalties and sales milestones.  Either Party, and their
respective Affiliates, licensees and Sublicensees may use the data generated by
the other Party (Ardelyx Development Data if generated by Ardelyx and KHK
Development Data if generated by KHK) at no cost for the purposes of any
regulatory submission in the Territory (in the case of KHK, its Affiliates and
Sublicensees) or outside of the Territory (in the case of Ardelyx, its
Affiliates or licensees),

(c)        If KHK is the Initiating Party, and KHK and Ardelyx agree to proceed
with a global Pivotal Clinical Study that includes both clinical sites in the
Territory and clinical sites outside of the Territory, [***] shall [***]
attributable to [***].  Either Party, and their respective Affiliates, licensees
and Sublicensees, as the case may be, may use the data generated by the global
Pivotal Clinical Study at no cost for the purposes of any regulatory submission
in the Territory (in the case of KHK, its Affiliates or Sublicensees) or outside
the Territory (in the case of Ardelyx, its Affiliates or licensees).  KHK shall
pay relevant milestone payments to the extent that the Additional Indication
triggers such milestone payment, as well as any applicable royalties and sales
milestones.  In the event that the Parties determine not to proceed with a
global Pivotal Clinical Study that includes both clinical sites in the Territory
and clinical sites outside of the Territory, KHK may proceed with a Pivotal
Clinical Study at its own cost, in the Territory.  KHK shall pay relevant
milestone payments to the extent that the Additional Indication triggers such
milestones, as well as any applicable royalties and sales milestones.  Ardelyx,
its Affiliates or licensees may elect to pursue the Additional Indication by
conducting its own Pivotal Clinical Study outside the Territory at Ardelyx’s
cost.  In such circumstances, KHK may pursue the Additional Indication by
conducting a bridging study in the Territory at its own cost.  Either Party, and
their respective

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Affiliates, licensees and Sublicensees, may use the data generated by the other
Party (Ardelyx Development Data if generated by Ardelyx and KHK Development Data
if generated by KHK) at no cost for the purposes of any regulatory submission in
the Territory (in the case of KHK, its Affiliates and Sublicensees) or outside
the Territory (in the case of Ardelyx, its Affiliates or licensees).

Section 2.08    No Implied Rights.  This Agreement confers no right, license, or
interest by implication, estoppel, or otherwise under any Patents, Know-How, or
other Intellectual Property Rights of either Party except as expressly set forth
in this Agreement.  Each Party hereby expressly retains and reserves all rights
and interests with respect to Patents, Know-How, or other Intellectual Property
Rights not expressly granted to the other Party hereunder.  Without limiting the
generality of the foregoing, no license or other rights are granted to KHK under
this Agreement to any compounds claimed or disclosed in any Ardelyx [***]
Patents or any Licensed Patents, other than the Lead Licensed Compound and the
Backup Licensed Compounds.

Section 2.09    Exclusivity Term.  KHK’s exclusive licenses granted under
Section 2.01, shall expire with respect to each separate Licensed Product on the
date when KHK’s obligation to pay royalties with respect to such Licensed
Product expires pursuant to Section 6.04(d).  Upon expiry of KHK’s exclusive
licenses with respect to a Licensed Product in the Territory, KHK’s licenses
with respect to such Licensed Product in the Territory shall become
non-exclusive, fully paid-up, perpetual and irrevocable and the Net Sales of
such Licensed Product in the Territory shall be excluded from the royalty and
sales milestone calculations under Section 6.04 (including the thresholds and
ceilings).  KHK and its Affiliates and Sublicensees shall be allowed to continue
exercising KHK’s rights under the licenses granted in Section 2.01 with respect
to such Licensed Product on a non-exclusive basis in the Territory with no
further consideration to Ardelyx.

Section 2.10    Right of First Negotiation for Licensed Products Outside of the
Field.

(a)        Ardelyx hereby grants to KHK the exclusive right of first negotiation
as set forth in this Section 2.10 with respect to the grant of rights to Develop
and/or Commercialize outside of the Field in the Territory a Licensed Compound
that is being Developed or Commercialized by KHK, its Affiliates or Sublicensees
(“ROFN Licensed Product”) in the Field in the Territory.

(b)        During the Term, if Ardelyx decides to (i) Develop and/or
Commercialize a ROFN Licensed Product outside of the Field in the Territory, or
to grant a Third Party a license under the Licensed Technology, Ardelyx’s rights
in the Joint Technology and/or Ardelyx [***] Technology to Develop and/or
Commercialize such ROFN Licensed Product outside of the Field in the Territory
(“Ardelyx License”), Ardelyx shall notify KHK in writing, and shall provide to
KHK [***] information regarding the Development and/or Commercialization
activities undertaken by Ardelyx with respect to the ROFN Licensed Product
[***].  KHK shall have [***] ([***]) days from receipt of such written notice to
notify Ardelyx in writing if KHK would like to exercise its right of first
negotiation with respect to the ROFN Licensed Product.  Upon any exercise by KHK
of such right, the Parties shall enter into exclusive good faith negotiations
for a period of up to [***] ([***]) days (“Negotiation Period”) (unless extended
upon mutual agreement of the parties) regarding the terms and conditions of a
definitive agreement.

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(c)        If (i) Ardelyx and KHK cannot reach mutually agreeable terms and
conditions of an Ardelyx License during the Negotiation Period, (ii) the Parties
otherwise mutually agree in writing to terminate negotiations, or (iii) KHK
fails to exercise its right of first negotiation within the [***] ([***]) day
period set forth in Section 2.10(b) (or KHK indicates in writing that it elects
not to exercise such right), then Ardelyx shall be free to Develop and/or
Commercialize the ROFN Licensed Product in the Territory outside of the Field or
negotiate and enter into an Ardelyx License with a Third Party; provided that,
upon written request from KHK, Ardelyx shall use or cause its Third Party
licensee to use Commercially Reasonable Efforts to [***] that is [***] at the
expiration or termination of the Negotiation Period, [***].  Further, Ardelyx
shall not, and shall cause its Third Party licensee not to, Commercialize the
ROFN Licensed Product using [***] at the expiration or termination of the
Negotiation Period pursuant to the terms and conditions of this Agreement.

Section 2.11    Right of First Negotiation New NHE3 Inhibitors

(a)        In the event that Ardelyx, its Affiliates or licensee generates [***]
a NHE3 inhibitor that is owned by Ardelyx but is not a Licensed Compound, and
such [***] was conducted to evaluate the use of the NHE3 inhibitor to treat a
[***]  (the “Licensed Product Indication”) at the time that Ardelyx completes
the [***] (as documented in the most recent Development Plan or
Commercialization Plan delivered to the SC prior to the completion of Ardelyx’s
[***]), then such NHE3 inhibitor shall be a “ROFN New Product.”  For clarity, if
KHK elects to [***] after the time that Ardelyx completes the [***], then the
NHE3 inhibitor shall not be a ROFN New Product.

(b)        Ardelyx hereby grants to KHK the exclusive right of first negotiation
as set forth in this Section 2.11 with respect to the grant of rights to Develop
and/or Commercialize a ROFN New Product in the Territory for the Licensed
Product Indication.

(c)        During the Term, if Ardelyx decides to (i) Develop and/or
Commercialize a ROFN New Product in the Territory for the Licensed Product
Indication, or to grant a Third Party a license to Develop and/or Commercialize
such ROFN New Product in the Territory for the Licensed Product Indication,
(“Ardelyx NHE3 License”), Ardelyx shall notify KHK in writing, and shall provide
to KHK [***] information regarding the Development and/or Commercialization
activities undertaken by Ardelyx with respect to the ROFN New Product
[***].  KHK shall have [***] ([***]) days from receipt of such written notice to
notify Ardelyx in writing if KHK would like to exercise its right of first
negotiation with respect to the ROFN New Product.  Upon any exercise by KHK of
such right, the Parties shall enter into exclusive good faith negotiations for a
period of up to [***] ([***]) days (“Negotiation Period”) (unless extended upon
mutual agreement of the parties) regarding the terms and conditions of a
definitive agreement.

(d)        If (i) Ardelyx and KHK cannot reach mutually agreeable terms and
conditions of an Ardelyx NHE3 License during the Negotiation Period, (ii) the
Parties otherwise mutually agree in writing to terminate negotiations, or (iii)
KHK fails to exercise its right of first negotiation within the [***] ([***])
day period set forth in Section 2.11(c) (or KHK indicates in writing that it
elects not to exercise such right), then Ardelyx shall be free to Develop and/or
Commercialize the ROFN New Product in the Territory or negotiate and enter into
an Ardelyx NHE3 License with a Third Party.

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Section 2.12    Exclusivity Covenant.

(a)        During the period starting on the Effective Date and continuing until
[***] (such period being the “Covenant Period 1”), KHK, its Affiliates and
Sublicensees shall not, except as otherwise expressly permitted in this
Agreement, either by themselves or through a Third Party, [***].  If this
Agreement is terminated as a result of a [***]), then for the purpose of this
Section 2.12(a), the Covenant Period 1 shall expire on the [***] ([***])
anniversary of the effective date of the [***].

(b)       During the period starting on the Effective Date and continuing until
the earlier to occur of (i) [***] and (ii) [***] (such period being the
“Covenant Period 2”), KHK, its Affiliates and Sublicensees shall not, except as
otherwise expressly permitted in this Agreement, either by themselves or through
a Third Party, [***].  If this Agreement is terminated as a result of a [***],
then for the purpose of this Section 2.12(b), the Covenant Period 2 shall expire
on the [***] ([***]) anniversary of the effective date of the [***], unless the
Covenant Period 2 has expired prior to such date by reason of the expiry or
termination of the Agreement.

(c)        During Covenant Period 1, Ardelyx, its Affiliates and each of its
licensees shall not, except as otherwise expressly permitted in this Agreement,
either by themselves or through a Third Party, [***].

(d)       Notwithstanding the aforesaid, neither Party’s (nor that of its
Affiliates’) direct or indirect acquisition of or merger with, in whole or in
part, a Person (or group of companies) or the business of a Person (or group of
companies) having any activity contravening the covenants set forth above in
this Section 2.12, shall constitute a breach of such covenants by the Party, if,
[***] the Party either (i) provides the other Party with written notice of its,
or its Affiliates’, as the case may be, [***] or (ii) in the case of KHK,
exercises its right to terminate this Agreement pursuant to Section 11.02(b)(i),
in which case such termination shall be effective [***]  ([***])  days after
Ardelyx’s receipt of a written notice of termination from KHK.  In the event
that a Party provides a written notice of its or its Affiliates’ [***] pursuant
to the above, then (X) such the Party shall (or, as the case may be, cause its
relevant Affiliate to) diligently pursue [***] and in any case, [***] under
which the relevant business was acquired, and (Y) neither the Party nor its
Affiliates, as the case may be, shall [***].  KHK shall, notwithstanding
anything to the contrary in this Section 2.12(d), at all times continue to be
obligated to use Commercially Reasonable Efforts to Develop or Commercialize
Licensed Products in accordance with its obligations under and subject to
Section 4.03.

(e)        The words [***] and all variations thereof included in this Section
2.12 with reference to products discussed in this Section 2.12 shall include the
activities described in the [***], but with such activities being with respect
to such products described in this Section 2.12 rather than with respect to
Licensed Product as set forth in the definition.

(f)        The Parties agree that the restrictions contained in this Section
2.12 are reasonable and necessary for the protection of the Parties’ and their
Affiliates’ respective Confidential Information and business, that such
restrictions are reasonable in all the circumstances and that the Parties would
not have entered into this Agreement without the protections afforded to them
under this Section 2.12.

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ARTICLE III.

COLLABORATION GOVERNANCE; DEVELOPMENT AND
COMMERCIALIZATION PLANS

Section 3.01    Steering Committee.  Ardelyx and KHK shall establish a steering
committee in accordance with this Article III (the “SC”).  The SC shall remain
in effect from the Effective Date through the Term.  The SC shall serve as a
forum for discussing and sharing Information in accordance with this Agreement
and discussing strategy regarding the Development and Commercialization of the
Licensed Products, among other activities.

Section 3.02    Composition of the SC.  Each Party shall appoint [***] ([***])
representatives as its voting members of the SC.  The first meeting of the SC
shall be held within [***] ([***]) days of the Effective Date.  The SC shall be
chaired by a representative of [***].  The chairperson shall be responsible for
calling meetings, setting the agenda, circulating the agenda at least [***]
([***]) days prior to each meeting and distributing minutes of the meetings
within [***] ([***]) days following such meetings (provided that the chairperson
may elect to delegate the performance of its responsibilities to other members
of the SC from time to time), but shall not otherwise have any greater power or
authority than any other member of the SC.  Alliance Managers shall coordinate
to schedule the subsequent SC meetings and the date for each subsequent SC
meeting shall be established at least [***] ([***]) months in advance of the
scheduled meeting, or – with regard to meetings that are called for on shorter
notice – as early as reasonably practicable in advance of such meeting.  Each
Party shall disclose to the chairperson any proposed agenda items, along with
appropriate Information at least [***] ([***]) Business Days in advance of each
meeting of the SC.  With respect to the first members of the SC selected by each
Party, at least one (1) member selected by Ardelyx and one (1) member selected
by KHK shall have [***], and all of the members of the SC shall have such
expertise as appropriate to the activities of the SC.  Each Party may replace
its members of the SC upon written notice to the other Party and shall replace
its members as the expertise required by the SC changes over time and as the
Licensed Products advance through Development and Commercialization.  From time
to time, the SC may invite non-voting personnel of either Party having
formulation, Manufacturing, Commercialization, marketing or other expertise to
participate in discussions of the SC.  Up to one (1) alternate voting member
designated by a Party may serve temporarily in the absence of a permanent voting
member appointed by such Party, and either Party may also designate one or more
non-voting consultants to such Party who are under written obligations of
confidentiality to such Party as SC observers who may attend the SC meetings in
an observational capacity only.

Section 3.03   Responsibilities of the SC.  The SC’s responsibilities shall
include, among others, the following:

(a)        reviewing and discussing each Development Plan, and each
Commercialization Plan and any amendments thereto;

(b)       reviewing KHK’s progress under each Development Plan and
Commercialization Plan;

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(c)        facilitating the exchange of Information and regulatory strategies
between the Parties with respect to the Development of the Licensed Product both
in the Territory and outside the Territory as well as both in the Field and
outside the Field; and

(d)       discussing such other matters as the Parties mutually agree to discuss
at the SC.

Section 3.04   Development Plans.  Following the Effective Date, KHK shall
prepare the draft Development Plan and hold consultations with PMDA to finalize
the draft Development Plan (the finalized plan, as amended from time to time in
accordance with this Agreement being the “Development Plan”).  The finalization
of the draft Development Plan shall be effected by KHK within [***] ([***])
months after the issuance of the minutes of the final consultations with
PMDA.  During the Term, KHK shall consult with Ardelyx while finalizing each
Development Plan and shall take into consideration any reasonable concerns of
Ardelyx in finalizing each such Development Plan.  Any material deviations from
the draft Development Plan and from each Development Plan including, but not
limited to, [***] shall be reviewed and discussed at SC.  Other than as set
forth in Section 3.07, and notwithstanding that [***] agrees to consider in good
faith all reasonable concerns of [***] with respect to each Development Plan and
all material changes thereto, [***] shall have the final decision making
authority with respect to each Development Plan.

Section 3.05   Commercialization Plans. The planned activities regarding
Commercialization of the Licensed Product in the Field in the Territory to be
conducted by KHK shall be set out in a commercialization plan.  KHK shall
present an initial commercialization plan to the SC within [***] ([***]) months
after [***] (the initial commercialization plan, as amended from time to time in
accordance with this Agreement, being the “Commercialization Plan.”  The
Commercialization Plan shall consist of non-binding sales forecasts and planned
promotional activities.  The initial Commercialization Plan shall include the
following, among other things, [***].  KHK shall provide an annual update of the
Commercialization Plan every December that covers the following calendar year
until the SC shall unanimously determine that such annual updates are no longer
required.  [***] shall consider in good faith all reasonable concerns of [***]
with respect to each Commercialization Plan, and all material changes
thereto.   However, other than as set forth in Section 3.07 below, [***] shall
have the final decision making authority with respect to each Commercialization
Plan.

Section 3.06    Meetings of the SC.  The SC shall hold meetings at such times
and places as shall be determined by a majority of the entire membership of the
committee, but in no event, shall such meetings be held less frequently than
once [***] ([***]) [***] through the first [***] ([***]) years following the
First Commercial Sale of a Licensed Product in the Territory.  Meetings of the
SC shall alternate between the offices of the Parties, unless otherwise agreed
upon by the members of the SC, or may be held via internet, telephonically or by
videoconference; provided that at least [***] ([***]) meetings per year shall be
held in person until [***] ([***]) years following the First Commercial Sale of
a Licensed Product in the Territory.  Thereafter, the SC may determine how
frequently to require meetings of the SC and how frequently to require in person
meetings of the SC.  Meetings of the SC shall be effective if at least [***]
([***]) representatives of each Party are in attendance or participating in the
meeting.  Each Party shall be responsible for the expenses incurred in
connection with its employees, consultants and its members of the SC attending
or otherwise participating in SC meetings.

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Section 3.07    SC Decision Making.  The SC shall make decisions within its
remit only by [***].  The presence of [***] ([***]) SC members representing each
Party shall constitute a quorum.  In the event that [***] on a matter before it
for decision within [***] ([***]) days after the matter was first considered by
it, then [***] shall have the final decision making authority except for
decisions that (i) [***]; or (ii) [***], with respect to which decisions, [***]
shall have the right to refer such matter to the Senior Executives, who shall
meet (in person, via internet, telephonically or by videoconference) and attempt
to resolve the matter within [***] ([***]) days of such referral.  If Senior
Executives of the Parties are unable to reach an agreement, the Parties shall
follow the procedures as set forth in Article XIII.  Notwithstanding that the
Development Plans and the Commercialization Plans are to be presented to the SC
without a formal approval by SC, if (i) [***]; or (ii) [***], then [***] shall
have the right to refer such matter to the Senior Executives, who shall meet (in
person, via internet, telephonically or by videoconference) and attempt to
resolve the matter within [***] ([***]) days of such referral.  If Senior
Executives of the Parties are unable to reach an agreement, the Parties shall
follow the procedures as set forth in Article XIII.

Section 3.08   Joint Project Team.  As a subcommittee of the Steering Committee,
the Parties shall establish a Joint Project Team (the “JPT”).  The JPT shall
remain in effect as from the Effective Date and continue in effect until such
time as the Parties shall mutually determine that the JPT is no longer
necessary.  The JPT shall serve as a joint working group for the purpose of
implementing the Development Plan, coordinating the practical aspects of the
Parties’ collaboration under this Agreement, handling day-to-day issues in
relation thereto, facilitating communication between the Parties in respect
thereof and otherwise performing such specific tasks as may be assigned to it by
the SC.  The JPT shall consist of two project leaders, one appointed by KHK and
the other by Ardelyx, and such additional members as each Party may appoint from
time to time as necessary or useful for the performance of the JPT’s
responsibilities hereunder.  Each Party shall have the right to withdraw or
replace its JPT representatives upon written notice to the other Party, provided
that any such substitute representative shall have substantially the equivalent
position and experience as the representative that such person replaces, and
further provided that replacements for the Parties’ respective project leaders
shall be subject to the prior written consent of the other Party, such consent
not to be unreasonably withheld, delayed or conditioned.  Each Party shall bear
its own expenses of its JPT members related to such members’ participation on
the JPT.

Section 3.09   Alliance Managers.  As soon as practicable after the Effective
Date, each Party shall appoint a representative to act as its alliance manager
under this Agreement (the “Alliance Manager”).  The Alliance Managers shall
serve as the key contact point between the Parties.  A Party may replace its
Alliance Manager at any time by providing written notice to the other Party.

ARTICLE IV.

 GENERAL PROVISIONS ON DEVELOPMENT AND COMMERCIALIZATION;

Section 4.01   Record Keeping.  Each Party shall maintain, or cause to be
maintained, records of its activities under this Agreement in sufficient detail
and in good scientific manner appropriate for patent and regulatory purposes in
accordance with Applicable Laws.

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Section 4.02    Conduct of Certain Development Activities.  Subject to Section
2.07, any clinical trial(s) and other Development studies that are commenced
after the Effective Date to support Regulatory Approval of Licensed Products in
the Field in the Territory shall be conducted solely by KHK, at [***].  Subject
to Section 2.07, any clinical trial(s) and other Development studies commenced
after the Effective Date to support Regulatory Approval of Licensed Products
outside the Field and/or outside the Territory shall be conducted solely by
Ardelyx, at Ardelyx’s sole expense.  [***].

Section 4.03    Diligence Obligations

(a)        KHK shall use Commercially Reasonable Efforts at its own cost and
expense to carry out its activities under this Agreement to develop (including
to seek Regulatory Approval in the Territory), Manufacture (as set forth herein)
and Commercialize the Lead Licensed Product in the Territory [***].  KHK shall
act reasonably in preparing the Development Plan and Commercialization Plan, and
any amendments thereto.  For purposes of this Section 4.03(a) the Parties agree
that in order to be deemed to have utilized Commercially Reasonable Efforts
carrying out its activities under this Agreement, KHK shall, at a minimum, meet
the timelines and objectives set forth below:

(i)         [***] within [***] ([***]) months after [***];

(ii)       [***] on or before [***] ([***]) months following [***], provided
that [***] (A) [***] and (B) [***];

(iii)      [***] within [***] ([***]) months after [***];

(iv)       [***] within [***] ([***]) months after [***], as long as [***];

(v)        [***] such that [***] of which [***] in the Territory within [***]
([***]) months [***]; and

(vi)       [***] such that it [***] in the Territory for [***] ([***]) years
[***].

(b)       If Ardelyx believes that KHK may be in material breach of its
obligations under Section 4.03(a), then Ardelyx may exercise its rights under
Section 13.02(a) or proceed directly to exercise its rights under Section
11.02(a).

Section 4.04    Reports of Development Activities.  KHK shall report on the
Development activities of the Licensed Product undertaken by it in accordance
with the Development Plan at each meeting of the SC or at such other intervals
as may be set forth in the Development Plan.  The Development reports shall
include a reasonably detailed summary of all results, data and material
inventions, if any, obtained from such Development activities.  In addition, KHK
shall, at its own expense, make appropriate scientific or regulatory personnel
available to Ardelyx, either by telephone or in person as the Parties may
mutually agree, as reasonably required to keep Ardelyx informed of Development
activities conducted by KHK.

Section 4.05    Regulatory Matters

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(a)        KHK shall have the responsibility of preparing, filing and submitting
all regulatory filings related to the Licensed Compounds and Licensed Products
with the Regulatory Health Authority in the Territory for any indication in the
Field pursued by KHK, including all applications for Regulatory
Approval.  Ardelyx shall provide [***] Development Data relating to the
Manufacturing of the Licensed Compound and Licensed Product [***].    [***]
shall be responsible for filing a Drug Master File, or any similar document,
unless KHK is required in its Drug Approval Application to provide Information
relating to the Manufacture of the Licensed Compound and Licensed Product [***],
and [***] to provide such information to KHK.  In such case, [***], shall file a
Drug Master File, or any similar document to support KHK’s Drug Approval
Application. KHK shall own any and all applications for Regulatory Approvals,
the Regulatory Approvals, and other regulatory filings related to the Licensed
Compounds and Licensed Products, which shall be held in the name of KHK.  Such
regulatory filings shall include, in the format required by the applicable
Regulatory Health Authorities, the data and information required to be submitted
to such Regulatory Health Authorities for Regulatory Approval of the Licensed
Products for the indication in the Field pursued by KHK in the Territory.  KHK
shall, subject to the conditions and within the limitations set forth in
‎Section 4.03(a), use Commercially Reasonable Efforts to obtain Regulatory
Approval for Licensed Products [***] in the Territory.  Upon request by KHK,
Ardelyx shall use Commercially Reasonable Efforts to assist KHK in seeking and
obtaining Regulatory Approvals for the Licensed Products, including without
limitation: (i) [***]; (ii) [***]; (iii) [***]; and (iv) [***].  Notwithstanding
the above, Ardelyx’s obligation in (iv) above, shall be limited to [***], and
within [***] ([***]) days following the [***], KHK shall provide Ardelyx with
[***].  [***].  As set forth in Section 2.04(f), KHK shall (i) [***], and (ii)
in the event that Ardelyx is required to spend any FTE hours in supporting KHK
under this Section 4.05(a) [***], KHK shall reimburse Ardelyx for the additional
FTE hours spent by Ardelyx under this Section 4.05(a) at a rate of US $[***] per
FTE and with an hourly FTE basis of $US [***] per hour).

(b)       During the Term, KHK shall report to Ardelyx regarding the status of
each pending or proposed IND equivalent application or Drug Approval Application
covering a Licensed Product in the Territory.

(c)        KHK shall notify Ardelyx of any request for [***] and KHK shall allow
[***].  The foregoing shall apply with respect to [***].  KHK shall as soon as
reasonably practicable furnish Ardelyx with copies of all substantive
correspondence KHK has had with any Regulatory Health Authority, and contact
reports concerning substantive conversations or substantive meetings with any
Regulatory Health Authority, in each case relating to any such IND equivalent or
Drug Approval Application.

Section 4.06    Adverse Event Reporting and Product Recall.

(a)        Each Party agrees to provide the other Party with the necessary
safety information required by Regulatory Health Authorities to comply with
Applicable Laws.  Ardelyx shall hold the safety database for the Licensed
Compounds and the Licensed Products and KHK shall provide safety information as
required by Applicable Laws, in a timely manner.  As promptly as possible
following the Effective Date, but no later than the commencement of the first
clinical trial by KHK in the Territory, the Parties shall enter into a detailed
safety agreement (the “Safety Agreement”),

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governing, among other things, appropriate adverse event reporting procedures
relating to Licensed Products and reflecting the provisions set forth above in
this Section 4.06.

(b)       In the event that any government agency or authority issues or
requests a recall or takes similar action in connection with the Licensed
Compounds or the Licensed Products, or in the event either Party determines that
an event, incident or circumstance has occurred that may result in the need for
a recall or market withdrawal, the Party notified of or desiring such recall or
market withdrawal shall promptly advise the other Party thereof.

Section 4.07   General Provisions Regarding Commercialization.  KHK shall
control and perform, itself or through its Affiliates, Sublicensees or
Distributors, the Commercialization of all Licensed Products in the Field
throughout the Territory and, as a result, shall, subject to the conditions and
within the limitations set forth in ‎Section 4.03(a), be obligated and
responsible for using Commercially Reasonable Efforts to carry out each
Commercialization Plan.  For the avoidance of doubt KHK (or, as the case may be,
its Affiliates or Sublicensees) shall book all of their sales of each Licensed
Product, coordinate the Manufacture and supply of all Licensed Products (but not
Licensed Compounds) required for Commercialization, invoice Third Parties
(including Distributors) that purchase Licensed Products from KHK (or its
Affiliates or Sublicensees), and collect payment for all Licensed Products sold
by KHK (or its Affiliates or Sublicensees).  Except to the extent otherwise
described in this Agreement, KHK shall be solely responsible for, and shall bear
all costs relating to, the Commercialization of the Licensed Products in the
Territory.  With respect to Commercialization of Licensed Products, such
Commercialization shall be conducted independently of Ardelyx by KHK, its
Affiliates and Sublicenses.

ARTICLE V.

MANUFACTURE AND SUPPLY

Section 5.01    Supply.

(a)        Ardelyx shall be responsible for supplying the Lead Licensed Compound
for use in the Development and Regulatory Approval of the Licensed Products
under this Agreement (the “Development API Supply”) as well as Materials.  The
Parties have agreed to the quantities of and timing for delivery of initial
quantities of Development API Supply and Materials as described on Exhibit
E.  Ardelyx shall also be responsible for supplying the Lead Licensed Product
and placebos for KHK’s Development activities hereunder, and the Parties have
agreed to the quantity and delivery time as described in Exhibit F (the
“Development Product Supply”).  The Parties acknowledge that KHK may request
changes to the timing and quantities set forth on Exhibit E and Exhibit F from
time to time following the consultations with PMDA, and Ardelyx shall use
Commercially Reasonable Effort to comply with such changes in Development API
Supply or Development Product Supply.  All Development API Supply, Materials and
Development Product Supply delivered to KHK for Development purposes prior to
such time as the first Licensed Product has received Regulatory Approval shall
be at the [***] Price (but with regard to the Materials at the Transfer Price as
set out in Section 1.122 (iii)).  Ardelyx shall use Commercially Reasonable
Efforts to deliver the Development API Supply and the Development Product Supply
required by KHK and agreed to by Ardelyx.  KHK shall use Commercially Reasonable
Efforts to Develop a process for the Manufacture of the Lead Licensed Product
and to scale up or scale down

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that process to Manufacture and supply the Lead Licensed Product in such volumes
as reasonably take into account the anticipated demand for the Lead Licensed
Product for use in the Field throughout the Territory.  KHK shall use
Commercially Reasonable Efforts to make necessary filings to obtain, or to cause
a Third Party Manufacturer of the Lead Licensed Product to make necessary
filings to obtain, Regulatory Approval for the Manufacture of the Lead Licensed
Product.

(b)       Ardelyx shall be responsible for: (i) supplying the Lead Licensed
Compound for use in the Commercialization of the Licensed Products under this
Agreement (the “Commercial API Supply”); and (ii) [***].   Ardelyx shall
continue to supply Lead Licensed Product to KHK for Commercialization until such
time as KHK assumes responsibility for such supply hereunder (“Temporary
Commercial Product Supply”).  Commercial API Supply and Temporary Commercial
Product Supply shall be delivered to KHK at the [***] Price.  Additionally, any
Development API Supply and Development Product Supply delivered to KHK for
Development that is to be conducted after the Regulatory Approval has been
received for the first Licensed Product shall be delivered to KHK at the [***]
Price.

(c)        The Parties agree and acknowledge that a separate manufacturing and
supply agreement (“MSA”) is required to be entered into between the Parties to
further govern the supply obligations undertaken by Ardelyx hereunder.  The
Parties shall also enter into a separate Quality Assurance Agreement (“QAA”)
that shall define the manufacturing and supply quality responsibilities of the
Parties for the Lead Licensed Compound and the Lead Licensed Product. 
Notwithstanding foregoing, if Ardelyx has a contract manufacturing organization
Manufacture the Lead Licensed Compound or the Lead Licensed Product, Ardelyx
shall cause such contract manufacturing organization to be a party to the QAA if
required by Applicable Law.  The MSA and the QAA shall be negotiated in good
faith between the Parties and shall be executed as promptly as possible
following the Effective Date.  The Parties’ objective is that the MSA and the
QAA for Development API Supply and Development Product Supply shall be entered
into as soon as possible and within [***] ([***]) days of the Effective
Date.  The MSA and QAA for Commercial API Supply and Temporary Commercial
Product Supply, if needed, shall be entered into at least [***] ([***]) month
prior to the date of the expected Regulatory Approval of the Licensed Product in
the Territory.

(d)       When KHK’s obligation to pay a royalty  under Section 6.04 expires
with respect to a Licensed Product, unless KHK has exercised the Manufacturing
Option, at the option of [***], one of the following shall occur:

(i)         [***];

(ii)       [***]; or

(iii)      [***].

Section 5.02    Development Work.  In the event that Ardelyx is required to
engage in any Development activities [***] for the purposes of (i) [***], (ii)
[***], and (iii) [***], then in any such event KHK shall reimburse Ardelyx for
[***] (calculated on an FTE basis of US $[***] per

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FTE and with an hourly FTE basis of $US [***] per hour) and [***] incurred by
Ardelyx in connection with completing such Development work.

Section 5.03    Technology Transfer.  The SC shall coordinate the transfer of
all Licensed Know-How,  Ardelyx [***] Know-How, and Ardelyx Development Data
that have not previously been delivered to KHK and are necessary and/or useful
to Manufacture the Lead Licensed Product as currently being Manufactured.  Such
transfer shall take place in a manner and at such time as not to disrupt the
manufacture and delivery of the Development API Supply or the Development
Product Supply in satisfaction of the obligations set forth in Section 5.01(a)
and Exhibit F.  [***]

Section 5.04    Manufacturing Option.  Notwithstanding anything to the contrary
set forth herein, KHK shall have the right to exercise its option to assume
responsibility for the manufacture of the Lead Licensed Compound (“Manufacturing
Option”) in the event that: (i) [***]; (ii) [***]; or (iii)  [***].  In the
event that KHK exercises the Manufacturing Option, Ardelyx shall continue to
supply, and KHK shall continue to purchase, all of KHK’s requirement for the
Commercialization of Lead Licensed Product for a period of [***] ([***])
years.  Thereafter, Ardelyx shall no longer be obligated to supply Lead Licensed
Compound to KHK and KHK shall no longer be obligated to purchase Lead Licensed
Compound from Ardelyx.

Section 5.05    Technology Transfer upon Exercise of the Manufacturing
Option.  In the event that KHK exercises the Manufacturing Option set forth in
Section 5.04, Ardelyx shall promptly transfer to KHK all Licensed Know-How,
 Ardelyx [***] Know-How, and Ardelyx Development Data, in each case to the
extent not previously provided to KHK,  [***] for KHK, its Affiliates or
Sublicensees or their contract manufacturers to Manufacture the Licensed
Compound as being Manufactured at the time of the exercise of the Manufacturing
Option (the “API Technology Transfer”).  [***]  In addition, Ardelyx shall
provide KHK with reasonable assistance to facilitate the practice of such
Manufacturing rights by KHK, its Affiliate or its Sublicensee, including making
regulatory filings available to KHK and providing reasonable technical and other
assistance in order to enable KHK to practice the foregoing Manufacturing rights
in accordance with Applicable Law.  In the event that Ardelyx and its contract
manufacturing organizations are required to continue to provide KHK, its
Affiliates or its Sublicensees with reasonable assistance to facilitate the
practice of such Manufacturing rights after the API Technology Transfer is
complete, KHK shall reimburse Ardelyx for [***] at an FTE rate of US $[***] per
FTE and with an hourly FTE basis of $US [***] per hour).

Section 5.06    Other Supply.  Notwithstanding anything to the contrary herein,
KHK shall not supply Licensed Compound or Licensed Products to any Third Party
for any Third Party use, other than to Develop and Commercialize Licensed
Products in compliance with this Agreement.  In addition, KHK shall not license
any Third Party (other than a Sublicensee or other sublicensee consistent with
the terms and conditions of this Agreement) to make or have made Licensed
Compounds or Licensed Products, except to carry out the provisions of this
Article V.

Section 5.07   Supply of Backup Licensed Compound.  In the event that KHK
Exploits a Licensed Product which contains a Backup Licensed Compound in the
Territory, both Parties shall discuss the supply of such Licensed Product or
Backup Licensed Compound in good faith.  If Ardelyx decides not to supply such
Licensed Product or Backup Licensed Compound to the Territory, KHK shall be
entitled to assume responsibility for the Manufacture of such Licensed

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Product and Backup Licensed Compound.  In the event that Ardelyx has commenced
any Manufacturing efforts with respect to such Licensed Product or Backup
Compound, Ardelyx shall conduct Technology Transfer to KHK in accordance with
Section 5.03 and Section 5.05.

ARTICLE VI.

 CONSIDERATION

Section 6.01    Upfront.  As payment for the rights and licenses granted to KHK
by Ardelyx under this Agreement, KHK shall pay to Ardelyx a nonrefundable
one-time upfront payment of 30 million U.S. dollars (U.S. $30,000,000) within
[***] ([***]) days after the Effective Date.  The upfront payment shall not be
creditable against any other payments KHK is obligated to make to Ardelyx under
this Agreement.

Section 6.02    Milestone Payments.

(a)        KHK shall make the following one-time, nonrefundable milestone
payments to Ardelyx within [***] ([***]) days following the first achievement of
each of the following milestone events for a Licensed Product, subject to the
limitations and additional provisions set forth below in this Section 6.02:

 

Milestone Event for a Licensed Product

Milestone
Number

Milestone Payment

[***]

01

USD [***]

[***]

02

USD [***]

[***]

03

USD [***]

[***]

04

USD [***]

[***]

05

USD [***]

[***]

06

USD [***]

[***]

07

USD [***]

 

The milestones for the [***] (Milestone Number [***]) shall not apply to the
[***] if [***].  In such case, the [***] shall trigger Milestone Numbers [***],
and the next indication pursued by KHK that is not subject to exceptions set
forth herein shall trigger Milestone Numbers [***]).   With respect to [***],
Milestone Numbers [***]) shall not apply if (i) [***], or (ii) [***], or (iii)
[***].  For clarity, Milestones [***] shall each be paid once before the
obligation to pay milestones under this Section 6.02(a) expires, regardless of
[***] from the milestone obligations.

(b)        With respect to the milestones set forth in Section 6.02(a), it is
the intention of the Parties that each preceding milestone will be earned before
the subsequent milestone is earned,

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and that no milestones shall be skipped.  For example, [***] KHK shall pay
Ardelyx both milestone 01 and milestone 02 when milestone 02 is earned.

(c)        Each of the milestones set forth in Section 6.02(a) eligible to be
earned individually.

(d)        Notwithstanding anything else set forth herein, none of the milestone
payments set forth in Section 6.02(a) (i.e., none of milestones number 01
through 07) shall be payable more than once irrespective of the number of
Licensed Products or indications that have achieved the relevant milestone
events set forth in Section 6.02(a), in which such milestone events have been
achieved.

(e)        No payments pursuant to Section 6.02(a) shall be creditable against
any other payments KHK is obligated to make to Ardelyx under this Agreement.

Section 6.03    Sales Related Milestones.

(a)        KHK shall make the following one-time, nonrefundable milestone
payments to Ardelyx within [***] ([***]) days following the first achievement of
each of the following milestones, subject to the limitations and additional
provisions set forth below in this Section 6.03.

 

Milestone Event

Milestone Payment

[***]

[***] ([***]) Japanese Yen

[***]

[***] ([***]) Japanese Yen

[***]

[***] ([***]) Japanese Yen

[***]

[***] ([***]) Japanese Yen

[***]

[***] ([***]) Japanese Yen

 

(b)        In the event that more than one of the sales milestones set forth in
Section 6.03 is achieved in the same Calendar Year, the payment associated with
each sales milestone achieved in such Calendar Year shall be due and payable by
KHK to Ardelyx following the end of such Calendar Year.

(c)        Notwithstanding anything else set forth herein, no milestone payment
pursuant to Section 6.03 shall be made more than once.

(d)        No payments pursuant to Section 6.03 shall be creditable against any
other payments KHK is obligated to make to Ardelyx under this Agreement.

Section 6.04    Royalties.

(a)        Subject to the provisions set forth below in Section 6.04(b) through
Section 6.04(e), and Section 6.05, KHK shall pay to Ardelyx a royalty on
aggregate Annual Net Sales of the Licensed Products made by KHK, its Affiliates,
or its Sublicensees at a rate of [***] ([***]%).

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(b)        Sales between KHK, its Affiliates and Sublicensees shall not be
subject to royalties hereunder.  Royalties shall be calculated on KHK’s, its
Affiliates’ and Sublicensees’ sales of the Licensed Products to a Third Party,
including Distributors (but excluding for the avoidance of doubt Sublicensees).

(c)        If, at any time, a Generic Product receives Regulatory Approval then
(i) the royalties that would otherwise have been payable on Net Sales of such
Licensed Product in the Territory under this Agreement shall be reduced to [***]
percent ([***]%) effective as of the first day of the first Calendar Quarter
following the Calendar Quarter in which the NHI Price of the Licensed Product is
reduced to a NHI Price being less than [***] percent ([***]%) of the NHI Price
in effect immediately prior to the launch of the Generic Product, and (ii) to
[***] percent ([***]%) effective as of the first day of the first Calendar
Quarter following the Calendar Quarter in which the NHI Price of the Licensed
Product is reduced to a NHI Price being less than [***] percent ([***]%) of the
NHI Price in effect immediately prior to the launch of the Generic Product.

(d)        KHK’s s obligation to pay royalties due under this Section 6.04 shall
commence with respect to each separate Licensed Product, on the date of the
First Commercial Sale of such Licensed Product in the Territory and shall expire
with respect to such Licensed Product, at the latest of: (i) the [***] ([***])
anniversary of the First Commercial Sale of such Licensed Product in the
Territory, (ii) the date on which there is no longer a Valid Claim that covers
the Exploitation of the Licensed Product or the Licensed Compound contained
within such Licensed Product in the Territory, and (iii) the expiration of all
Regulatory Exclusivities associated with the indication of [***] for such
Licensed Product in the Territory; provided that in the event that the only
Valid Claim that claims the Licensed Product is a [***], the royalty that would
otherwise have been payable on Net Sales of such Licensed Product shall be
reduced to [***] percent ([***]%) subject to the reduction of the Third Party
Compensation set out in Section 6.04(e).  At such time as KHK’s obligation to
pay royalties under this Section 6.04 have expired with respect to a Licensed
Product, the license granted to KHK under Section 2.01 shall automatically, and
without further action on the part of Ardelyx or KHK, become non-exclusive,
fully-paid, irrevocable and perpetual with respect to such Licensed Product and
the Net Sales of such Licensed Product shall be excluded from royalty
calculations under this Section 6.04 (including for purposes of applying
thresholds and ceilings) and shall be excluded from the sales milestones set
forth in Section 6.03.

(e)        If, during the Term, (i) KHK obtains a license to Exploit any Third
Party Patent in the Territory that (i) [***] required for KHK to Develop,
Manufacture and Commercialize the Lead Licensed Compound or the Lead Licensed
Product (as Manufactured and formulated by Ardelyx prior to the transfer of the
responsibility to KHK for the Manufacture of Lead Licensed Product and with
regard to the Lead Licensed Compound prior to the exercise of the Manufacturing
Option, if such exercise occurred) in accordance with the terms of this
Agreement [***], and (ii) which [***] would, in the absence of such license, be
infringed by the Development, Manufacture or Commercialization of the Licensed
Compound or the Licensed Product (as Manufactured and formulated by Ardelyx
prior to the transfer of the responsibility to KHK for the Manufacture of the
Lead Licensed Product and with regard to the Lead Licensed Compound prior to the
exercise of the Manufacturing Option, if such exercise occurred) in the
Territory [***], (iii) KHK does not have any other [***] alternatives available
to avoid such infringement, and (iv) KHK is required to pay to such Third Party
a royalty, milestone payments or other monetary compensation in consideration
for the grant of such license (“Third Party Compensation”), then for the period

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during which KHK owes royalties to Ardelyx hereunder, the amounts that would
otherwise have been payable as royalties to Ardelyx under this Agreement shall
be reduced by [***] Third Party Compensation payable by or on behalf of KHK to
such Third Party; provided,  however, that in no event shall the amount of the
royalties payable by KHK to Ardelyx be reduced by more than [***] percent
([***]%).

Section 6.05    Combination Products.  In the event Ardelyx is entitled to
receive royalties under this Agreement from any Licensed Product sold in the
form of a Combination Product in the Territory, then Net Sales for such
Combination Product shall be calculated by multiplying the actual Net Sales of
such Combination Product in the Territory by the fraction A/(A+B), where A is
the [***] price (“[***] Price”) in the Territory of a Licensed Product,
containing the same amount of Licensed Compound as the sole active ingredient as
the Combination Product in question (a “Comparable Licensed Product”), if sold
separately, and B is the [***] price in the Territory of the ready for sale form
of a product containing the same amount of the other therapeutically active
ingredient(s) in the Combination Product that are not Licensed Compounds (the
“Other Ingredients”), if sold separately.  If the Other Ingredients are not sold
separately in the Territory, Net Sales for the purpose of determining royalties
of the Combination Product shall be calculated by multiplying actual Net Sales
of such Combination Product by the fraction A/C where A is the standard sales
price in the Territory of a Comparable Licensed Product, if sold separately, and
C is the standard sales price of the Combination Product in the Territory.  If a
Comparable Licensed Product is not sold separately, Net Sales for the purpose of
determining royalties of the Combination Product shall be calculated by
multiplying actual Net Sales of such Combination Product by the fraction
(C-B)/C, where B is the [***] price in the Territory of the Other Ingredients
and C is the [***] price in the Territory of the Combination Product.  For the
purpose of the above, the NHI price for a Comparable Licensed Product and for
each Other Ingredient shall be for a quantity comparable to that used in the
Combination Product in question and of the same class, purity and potency.  If
neither a Comparable Licensed Product nor the Other Ingredients are sold
separately in the Territory, Net Sales for the purposes of determining royalties
of such Combination Product shall be determined by the Parties on the basis of a
fair market value of such Comparable Licensed Product and Other Ingredient to be
negotiated by the Parties in good faith, taking into account costs, overheads
and profit of the relevant Licensed Compound(s), the Other Ingredients and the
Combination Product.  For purposes of the calculations set forth in this Section
6.05, prior to the First Commercial Sale of a Combination Product, the JDC shall
discuss the calculations set forth herein, including the standard sale prices to
be used in such calculation.

Section 6.06    Sales by Sublicensees.  In the event KHK grants sublicenses to
one or more Sublicensees to make or sell Licensed Products to the extent
permitted hereunder, such sublicenses shall include without limitation an
obligation for the Sublicensee to account for and report its Net Sales of such
Licensed Products on the same basis as if such sales were Net Sales by KHK, and
KHK shall pay royalties and sales milestones to Ardelyx as if the Net Sales of
the Sublicensee were Net Sales of KHK.

Section 6.07   Royalty Payments and Report.  The royalties payable under Section
6.04 shall be calculated quarterly as of the last day of March, June, September
and December respectively for the Calendar Quarter ending on that date.  KHK
shall deliver to Ardelyx a report summarizing the Net Sales of Licensed Products
during each Calendar Quarter following the First

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Commercial Sale of a Licensed Product in the Territory.  A draft of such report
shall be provided within [***] ([***]) days the end of each Calendar Quarter for
which royalties are due from KHK to allow Ardelyx to estimate its royalty
payments from KHK.  A final report shall be delivered within [***] ([***]) days
following the end of each Calendar Quarter for which royalties are due from
KHK.  Any royalties payable to Ardelyx or its designee under this Agreement
shall be paid on the due date for the report in the foregoing sentence of this
Section 6.07.

Section 6.08    Taxes.

(a)        The royalties, milestones and other amounts payable by KHK to Ardelyx
pursuant to this Agreement (“Payments”) shall not be reduced on account of Taxes
unless required by Applicable Laws.  KHK shall deduct or withhold from the
Payments any Taxes that it is required by Applicable Laws to deduct or
withhold.  Notwithstanding the foregoing, if Ardelyx is entitled (whether under
any applicable tax treaty or otherwise under Applicable Laws) to a reduction in
the rate of, or the elimination of, withholding Tax, it may deliver to KHK or
the appropriate governmental authority (with the assistance of KHK to the extent
that this is reasonably required and is expressly requested in writing) the
prescribed forms necessary to reduce the applicable rate of withholding or to
relieve KHK of its obligation to withhold Tax, and KHK shall apply the reduced
rate of withholding, or dispense with withholding, as the case may be.  If, in
accordance with the foregoing, KHK withholds any Tax, it shall make timely
payment to the proper Tax Authority of the withheld Tax, in accordance with
Applicable Laws, and send to Ardelyx proof of such payment as soon as reasonably
practicable following that payment.  KHK agrees to take reasonable and lawful
efforts to minimize such Taxes to Ardelyx.  KHK shall cooperate with Ardelyx as
reasonably requested in any claim for refund or application to any Tax
Authority.  If KHK intends to withhold Tax from any Payment, KHK shall inform
Ardelyx reasonably in advance of making such Payment to permit Ardelyx an
opportunity to provide Japanese forms or information or obtain Japanese Tax
Authority approval as may be available to reduce or eliminate such
withholding.  If Ardelyx desires, it may request cooperation from KHK in any
claim for refund or application to the Japanese Tax Authority.

(b)       Notwithstanding anything to the contrary herein, if (i) KHK
redomiciles or assigns its rights or obligations under this Agreement, (ii) as a
result of such redomiciliation or assignment, KHK (or its assignee) is required
by Applicable Law to withhold taxes, or such redomiciliation or assignment
results in the imposition of Indirect Taxes that were not otherwise applicable,
from or in respect of any amount payable under this Agreement, and (iii) such
withholding taxes or Indirect Taxes exceed the amount of withholding taxes or
Indirect Taxes that would have been applicable but for such redomiciliation or
assignment, then any such amount payable to Ardelyx pursuant to this Agreement
shall be increased to take into account such withholding taxes or Indirect Taxes
as may be necessary so that, after making all required withholdings (including
withholdings on the additional amounts payable) and/or paying such Indirect
Taxes, as the case may be, Ardelyx receives an amount equal to the sum it would
have received had no such increased withholding been made and no such Indirect
Taxes had been imposed.  The obligation to pay additional amounts pursuant to
the preceding sentence shall not apply, however, to the extent such increased
withholding tax or Indirect Taxes would not have been imposed but for the
assignment by Ardelyx of its rights or obligations under this Agreement or the
redomiciliation of Ardelyx outside of the United States, to the extent such
assignment or redomiciliation occurs after the redomiciliation or assignment by
KHK described in the first sentence of this (a).  Solely for purposes of this
(a), a

 

 

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Party’s “domicile” shall include its jurisdiction of incorporation or tax
residence and a “redomiciliation” shall include a reincorporation or other
action resulting in a change in tax residence of the applicable Party or its
assignee.

(i)         Notwithstanding anything to the contrary contained in this Section
6.08(b) or elsewhere in this Agreement, the following shall apply with respect
to Indirect Taxes.  All Payments are exclusive of Indirect Taxes.  If any
Indirect Taxes are chargeable in respect of any Payments, KHK shall pay such
Indirect Taxes at the applicable rate in respect of any such Payments following
the receipt, where applicable, of an Indirect Taxes invoice issued by Ardelyx in
respect of those Payments, such Indirect Taxes to be payable on the due date of
the payment of the Payments to which such Indirect Taxes relate or at the time
such Indirect Taxes are required to be collected by Ardelyx, in the case of
payment of Indirect Taxes to Ardelyx.  The Parties shall issue invoices for all
goods and services supplied under this Agreement consistent with Indirect Tax
requirements, and to the extent any invoice is not initially issued in an
appropriate form, KHK shall promptly inform Ardelyx and shall cooperate with
Ardelyx to provide such information or assistance as may be necessary to enable
the issuance of such invoice consistent with Indirect Tax requirements.

Section 6.09    Payments or Reports by Affiliates.  Any Payment required under
any provision of this Agreement to be made to Ardelyx or any report required to
be made by KHK shall be made by an Affiliate of KHK if such Affiliate is
designated by KHK as the appropriate payer or reporting entity.

Section 6.10    Mode of Payment.  All payments set forth in this ‎Article VI
shall be remitted by wire transfer to the bank account of Ardelyx in the United
States as designated in writing to KHK.

Section 6.11    Payment Currency.  Payments by KHK under this Agreement shall be
paid to Ardelyx in the currency in which the payments are expressed in this
Agreement.

Section 6.12    Imports.  For the avoidance of doubt, the Parties acknowledge
and agree that none of the milestones or royalties payable under this Agreement
are related to the license (or right) to import or any import of Licensed
Products.  KHK shall be responsible for any import clearance, including payment
of any import duties and similar charges, in connection with any Licensed
Products or Licensed Compounds transferred to KHK under this Agreement.  The
Parties shall co-operate in accordance with Applicable Laws to ensure where
permissible that no import duties are paid on imported materials.  Where import
duties are payable, the Parties shall co-operate to ensure that the Party
responsible for shipping values the materials in accordance with Applicable Laws
and minimizes where permissible any such duties and any related import taxes
that are not reclaimable from the relevant authorities.

Section 6.13    Discounted Sales.  In the event that one or more Licensed
Products is included as part of a package of products offered to customers of
KHK, and discounts on packages including Licensed Products are offered
independently in the Territory, KHK shall not discount the price of the Licensed
Products sold as part of a package unreasonably compared to the discount KHK
offers on prices of the other products included in such package.

 

 

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ARTICLE VII.

CONFIDENTIALITY

Section 7.01   Confidentiality.  The Parties agree that the Party receiving
Confidential Information disclosed by or on behalf of the other Party pursuant
to this Agreement, unless it has obtained the prior written consent of the other
Party, shall, and shall cause its officers, directors, employees, agents,
Affiliates, licensees, Sublicensees and other sublicensees to keep confidential
and not publish or otherwise disclose or use for any purpose other than to
conduct its activities under this Agreement or otherwise as expressly authorized
or licensed by this Agreement any Confidential Information furnished to it by or
on behalf of the other Party pursuant to this Agreement.

Section 7.02    Exceptions.  Notwithstanding the foregoing, the obligations set
forth in ‎Section 7.01 shall not apply in respect of Confidential Information to
the extent that it can be established by the receiving Party that such
Confidential Information:

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

(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)        was independently developed without use of the disclosing Party’s
information, as evidenced by contemporaneous written records;

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

(e)        was disclosed to the receiving Party, other than under an obligation
of confidentiality, by a Third Party who had no obligation to the disclosing
Party not to disclose such information to others.

Section 7.03    Receipt of Third Party Information.  Neither Party shall
knowingly receive documents relating to Licensed Products or Licensed Compounds
under an obligation of confidentiality to Third Parties that require the Party
receiving such documents to withhold access to the other Party and without such
Party’s written consent.

Section 7.04    Exceptional Disclosure.  Each Party may disclose Confidential
Information without the prior written consent of the other Party to the extent
that such disclosure is:

(a)        made to a patent office for the purposes of filing or enforcing a
Patent as permitted in this Agreement, provided,  however, that reasonable
measures shall be taken to assure confidential treatment of such information, to
the extent such protection is available;

(b)       made by a Party or its Affiliates, Distributors, licensees,
Sublicensees or other sublicensees, to Regulatory Health Authority for the
purposes of any filing, application or request

 

 

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for Regulatory Approval for Licensed Compounds or Licensed Products as permitted
in this Agreement;

(c)        made to investment bankers, financial advisors, or actual or
potential investors, licensees, or sublicensees hereunder, contractors or
subcontractors hereunder or acquirers of all or substantially all of the assets
to which this Agreement relates; provided that with respect to disclosures as
per subsection (c), the Party making such disclosures shall ensure that each
Third Party recipient is bound by obligations of confidentiality no less
restrictive than those contained in this Agreement and shall be liable to the
other Party for any breach of such confidentiality obligations by the relevant
recipient.

Section 7.05    Legally Compelled Disclosure.

Each Party may disclose, without the prior written consent of the other Party,
Confidential Information required by law, order, or regulation of a government
agency or a court of competent jurisdiction, or by the rules of a securities
exchange, provided that the Party required to make such disclosure shall give
the other Party reasonable advance notice of and an opportunity to comment on
any such required disclosure in order for the disclosing party (who controls the
Confidential Information) to have sufficient time to seek protective orders or
any available limitations on or exemptions from such disclosure requirement
where applicable and practicable;

Section 7.06   Survival.  This Article VII (other than ‎Section 7.03) shall
survive the termination or expiration of this Agreement for a period of (i)
[***] ([***]) years if termination occurs prior to the First Commercial Sale of
the Lead Licensed Product, (ii) [***] ([***]) years if the termination occurs
after the First Commercial Sale of the Lead Licensed Product and less than [***]
([***]) years after the First Commercial Sale of the Lead Licensed Product, or
(ii) [***] ([***]) years if the termination or expiration occurs [***] ([***])
or more years after the First Commercial Sale of the Lead Licensed Product.

Section 7.07   Termination of Prior Agreements.  This Agreement supersedes, in
the relationship between the Parties hereunder, the Confidentiality Agreement
between Ardelyx and KHK dated as of April 14, 2017, the Three-Way
Confidentiality Agreement among Ardelyx, KHK and Patheon dated as of October 30,
2017, the Three-Way Confidentiality Agreement among Ardelyx, KHK and Hovione
dated as of November 3, 2017, and the Three-Way Confidentiality Agreement among
Ardelyx, KHK and Dottikon dated as of November 3, 2017 (the “CDA”).  All
Information exchanged between the Parties under the CDA shall be deemed
Confidential Information and shall be subject to the terms of this Article VII,
and shall be included within the definitions of Licensed Know-How and KHK [***]
Know-How, only if applicable.

Section 7.08   Publications.  Except as required by law, each Party agrees that
it shall not publish or publicly present any information relating to Licensed
Compounds or Licensed Products in the Field, excluding marketing materials such
as presentation materials or leaflets, (a) without the opportunity for prior
review by the other Party and (b) other than in compliance with this Section
7.08.  Each Party shall provide to the other Party the opportunity to review any
proposed publications or presentations (i) to be made at medical conference but
limited to abstracts or manuscripts; (ii) other than (i) described hereabove
that relate to Licensed Compounds or Licensed Products in the Field as early as
reasonably practical, but at least in the case of (i) above [***]

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([***]) days, and in the case of (ii) above [***] ([***]) days prior to their
intended submission for publication or presentation (collectively the “Review
Period”) and such submitting Party agrees, upon written request from the other
Party within the Review Period , not to submit such abstract or manuscript for
publication or to make such presentation until the other Party agrees, which
agreement shall not be unreasonably withheld.  The other Party shall have in the
case of (i) above [***] ([***]) days, and in the case of (ii) above [***]
([***]) days after its receipt of any such publication or presentation to notify
the submitting Party in writing of any specific objections to the intended
publication or presentation.  Each Party shall, in any such publication or
presentation, delete from the proposed disclosure any Confidential Information
of the other Party.  Additionally, if the other Party notifies the submitting
Party within the Review Period that the other Party objects to such disclosure
on the basis that a patent application claiming information contained in such
disclosure should be filed prior to such disclosure, the submitting Party agrees
to reasonably delay disclosure of the relevant information, for up to [***]
([***]) days after the other Party’s timely notification of its objection as per
the above, or until such application has been filed, if earlier.  Once any such
abstract or manuscript is accepted for publication or presentation, the
submitting Party may use only the same subject matter in whole or in part, in
another publication or presentation under this Section 7.08, provided that the
wording used in such new publication or presentation does not go beyond the
scope of the subject matter disclosed in the previously approved publication or
presentation.  Notwithstanding the above, the obligations of this Section 7.08
shall not apply to publications and/or presentations that have been submitted by
Ardelyx prior to the Effective Date.

ARTICLE VIII.

 OWNERSHIP OF INTELLECTUAL PROPERTY AND PATENT RIGHTS

Section 8.01    Disclosure.  During the Term, the Parties shall promptly
disclose to one another all Joint Technology and Sole Program Know-How (whether
patentable or not).

(a)        Ownership.  Inventorship of all inventions and other Know-How
conceived or first made after the Effective Date in the course of the Parties’
performance under this Agreement shall be determined in accordance with the laws
of inventorship of the United States.  Subject to the licenses granted in
Article II and to the other provisions of this Agreement, all such inventions
and other Know-How invented by employees or independent contractors of one Party
(“Sole Program Know-How”) shall be solely owned by the inventing Party, and any
inventions and Know-How that are invented jointly by employees or independent
contractors of each Party shall be owned jointly by the Parties (“Joint
Know-How”).  For clarity, Ardelyx’s Development and Commercialization of a
Licensed Compound or Licensed Product outside of the Field and/or outside of the
Territory shall not be activities performed in the course of Ardelyx’s
performance under this Agreement, and any inventions and other Know-How
conceived or first made during the course of such Development and
Commercialization shall be Ardelyx [***] Technology rather than Sole Program
Know-How owned by Ardelyx.

(b)        To the extent permissible under Applicable Laws, each Party shall
cause each employee and contractor conducting work on such Party’s behalf under
this Agreement to sign a contract that (i) compels prompt disclosure to such
Party of all inventions and Know-How conceived or reduced to practice by such
employee or contractor during any performance under this Agreement, (ii)
automatically assigns to such Party all right, title and interest in and to all
such

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inventions and Know-How and all Intellectual Property Rights therein, and (iii)
obligates such persons to similar obligations of confidentiality as set forth in
this Agreement.  Each Party shall require each employee and contractor
conducting work on such Party’s behalf under this Agreement to maintain records
in sufficient detail and in a good scientific manner appropriate for regulatory
purposes and purposes of pursuing Patent protection on inventions to properly
reflect all work done

Section 8.02    Prosecution and Maintenance of Patent Rights.

(a)        Ardelyx.  “Ardelyx Controlled Patents” shall collectively include
Licensed Patents, Ardelyx [***] Patents and Joint Patents.  Ardelyx (or with
respect to Ardelyx [***] Patents, Ardelyx or its licensor) shall be primarily
responsible for and control the worldwide preparation, filing, prosecution
(including without limitation conducting any interferences, oppositions, reissue
proceedings, reexaminations and patent term extensions) and maintenance of the
Ardelyx Controlled Patents; provided that with respect to all Ardelyx Controlled
Patents, other than Ardelyx [***], Ardelyx shall provide KHK with advance copies
of, and a reasonable opportunity to comment upon, proposed patent filings,
related prosecution strategies and proposed correspondence with patent officials
or patent attorneys, all to the extent in the Territory and relating to any
Ardelyx Controlled Patents (other than the Ardelyx [***]), and shall consider
comments received from KHK with respect to such proposed filings, strategies and
correspondence in the Territory in good faith and shall not unreasonably reject
such comments.  Ardelyx agrees to discuss in good faith any changes reasonably
requested by KHK to such filings, strategies and correspondence in the Territory
promptly upon their being received.

(b)        KHK.  “KHK Controlled Patents” shall collectively include KHK Sole
Invention Patents and KHK [***] Patents.  KHK (or with respect to KHK [***]
Patents, KHK or its licensor) shall be primarily responsible for and control the
worldwide preparation, filing, prosecution (including without limitation
conducting any interferences, oppositions, reissue proceedings, reexaminations
and patent term extensions) and maintenance of the KHK Controlled Patents;
provided that KHK with respect to all KHK Controlled Patents, other than KHK
[***], KHK shall provide Ardelyx with advance copies of, and a reasonable
opportunity to comment upon, proposed patent filings, related prosecution
strategies and proposed correspondence with patent officials or patent
attorneys, and shall consider comments received from Ardelyx with respect to
such proposed filings, strategies and correspondence in good faith and shall not
unreasonably reject such comments.  KHK agrees to discuss in good faith any
changes reasonably requested by Ardelyx to such filings, strategies and
correspondence promptly upon their being received.

(c)        The Party responsible for prosecuting Patents pursuant to Section
8.02(a) or Section 8.02(b) shall provide all documentation it is required to
provide pursuant to such Sections so as to provide the other Party a reasonable
opportunity to review and comment thereon in advance of filing.  A Party
providing comments in accordance with  Section 8.02(a) or Section 8.02(b) shall
provide such comments expeditiously and in any event in reasonably sufficient
time to meet any filing deadline communicated to it by the other Party that is
consistent with the preceding sentence.  The Party receiving any such patent
application and correspondence shall maintain such information in confidence
pursuant to Article VII, except (for the avoidance of doubt) for patent
applications that have been published and official correspondence that is
publicly available.

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(d)        Other than as set forth in Section 8.02(e) or (f) below, after the
Effective Date, the Party prosecuting patent applications and maintaining
Patents pursuant to this Section 8.02(d) shall be solely responsible for all
costs and expenses associated with the filing, prosecution and maintenance of
such Patents.

(e)        If Ardelyx (or in the case of Ardelyx [***] Patents, Ardelyx and/or
Ardelyx’s licensor (for the avoidance of doubt in any case in this Article VIII,
Ardelyx’s licensee might be Ardelyx’s licensor)) decide not to file, prosecute
or maintain Ardelyx Controlled Patents in the Territory, Ardelyx shall give KHK
reasonable notice to that effect sufficiently in advance of any deadline for any
filing with respect to such Patent to permit KHK to carry out such activity (but
with respect to Ardelyx [***] Patents only to the extent that the Patent is an
Ardelyx [***] Patent).  After receiving such notice, KHK may elect by written
notice to Ardelyx within [***] ([***]) days after receiving such notice from
Ardelyx, to file, prosecute and maintain the relevant Patent in the Territory,
at its sole cost and expense; provided, however, that the claims of the Patent
being filed, prosecuted or maintained by KHK shall be limited to claims within
the Field and KHK shall not file, prosecute or maintain claims that are outside
of the Field without the prior written consent of Ardelyx.  For the avoidance of
doubt, where Ardelyx is in receipt of an official action with a shortened
response deadline of [***] ([***]) days or less, Ardelyx shall communicate such
notice to KHK as soon as possible and KHK make its election (pursuant to the
foregoing sentence) no later than [***] ([***]) days prior to the deadline.  If
KHK does so elect, then Ardelyx shall cooperate with KHK as necessary to enable
KHK to file, prosecute or maintain such Patent, including the execution and
filing of appropriate instruments and to facilitate the transition of such
patent activities to KHK.

(f)        If KHK (or in the case of KHK [***] Patents, KHK and/or KHK’s
licensor (for the avoidance of doubt in any case in this Article VIII, KHK’s
Sublicensee might be KHK’s licensor)) decide not to file, prosecute or maintain
KHK Controlled Patents in the Territory or outside of the Territory, KHK shall
give Ardelyx reasonable notice to that effect sufficiently in advance of any
deadline for any filing with respect to such Patent to permit Ardelyx, or its
licensees in the territories where KHK has decided not to file, prosecute or
maintain KHK Controlled Patents, to carry out such activity (but with respect to
KHK [***] Patents only to the extent that the Patent is a KHK [***]
Patent).  After receiving such notice, Ardelyx may elect by written notice to
KHK within [***] ([***]) days after receiving such notice from KHK, to file (or
to permit its licensee to file), prosecute and maintain the relevant Patent in
the Territory and/or outside of the Territory, at its sole cost and
expense.  For the avoidance of doubt, where KHK is in receipt of an official
action with a shortened response deadline of [***] ([***]) days or less, KHK
shall communicate such notice to Ardelyx as soon as possible and Ardelyx make
its election (pursuant to the foregoing sentence) no later than [***] ([***])
days prior to the deadline.  If Ardelyx (on its behalf, or that of its licensee)
does so elect, then KHK shall cooperate with Ardelyx and/or its licensee as
necessary to enable Ardelyx and/or its licensee to file, prosecute or maintain
such Patent, including the execution and filing of appropriate instruments and
to facilitate the transition of such patent activities to Ardelyx and/or its
licensee.

(g)        In any event, KHK shall not finally abandon any KHK [***] without the
prior written notice to Ardelyx.  Additionally, KHK shall not assign any KHK
[***] to either its Affiliates or any Third Party unless such Affiliate or any
Third Party agrees in writing that the

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assignment of any such Patent shall be subject to the rights granted to Ardelyx
under this Agreement.

(h)        In any event, Ardelyx shall not finally abandon any Ardelyx [***] or
Ardelyx Sole Invention [***] without the prior written notice to KHK. 
Additionally,  Ardelyx shall not assign any Ardelyx [***] or Ardelyx Sole
Invention [***] to either its Affiliates or any Third Party unless such
Affiliate or any Third Party agrees in writing that the assignment of any such
Patent shall be subject to the rights granted to KHK under this Agreement.

Section 8.03    Third Party Patent Rights.  Except as otherwise provided in
Article IX, neither Party makes any warranty with respect to the validity,
perfection, or dominance of any Patent or proprietary right or with respect to
the absence of rights in Third Parties which may be infringed by the manufacture
or sale of any Licensed Compound or Licensed Product.  Each Party agrees to
bring to the attention of the other Party any Third Party Patent it discovers,
or has discovered, and which relates to the subject matter of this Agreement.

Section 8.04    Enforcement Rights.

(a)        Infringement by Third Parties.

(i)         The Party first having knowledge that any (x) Ardelyx Controlled
Patents or (y) KHK Controlled Patents, in each case, claiming or covering
inventions that are necessary or useful to Exploit a Licensed Compound or
Licensed Product, is infringed, or misappropriated by a Third Party, or
suspected of being infringed or misappropriated by a Third Party shall promptly
notify the other Party thereof in writing.  Such notice shall set forth the
facts of that infringement, misappropriation, or suspected infringement or
misappropriation in reasonable detail.

(ii)       Ardelyx (or in the case of Ardelyx [***] Patents, Ardelyx and/or
Ardelyx’s licensor) shall have the first right, but not the obligation, to
institute, prosecute, and control any action or proceeding or negotiation of any
settlements at its expense with respect to any infringement of Ardelyx
Controlled Patents, by counsel of its own choice.  With respect to actions,
proceedings or settlements in the Territory, KHK shall have the right to
participate in such action or negotiations at its expense and be represented if
it so desires by counsel of its own choice.  If necessary, at Ardelyx’s
discretion, KHK agrees (i) in any such action in the Territory, and (ii) in any
such action outside of the Territory with respect to a Joint Patent, to be
joined as a party plaintiff and to give Ardelyx (or Ardelyx’s licensor, as the
case may be), reasonable assistance and any needed authority in order for
Ardelyx or its licensor to control, file, and to prosecute such action, at
Ardelyx’s expense.  If Ardelyx or its licensor, as the case may be, elects not
to institute and prosecute an action or proceeding or to conduct such
negotiation to abate such infringement, within a period of [***] ([***]) days
after both Parties become aware of the infringement or suspected infringement,
then Ardelyx shall discuss with KHK the reasons for this decision.  KHK shall
then have the right, but not the obligation, to institute, prosecute, and
control any such action in the Territory at its expense (but with respect to
Ardelyx [***] Patents or Ardelyx Sole Invention Patents, only to the extent that
the Patent is an Ardelyx [***] [***] Patent or Ardelyx Sole Invention [***]
Patent).  In such case, Ardelyx, [***] shall give KHK any

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needed authority in order for KHK to control, file, and prosecute the suit as
may be necessary; provided, however, that Ardelyx, or Ardelyx and/or its
licensor (if the licensor is the owner of such Patent but only to the extent a
co-party with Ardelyx) shall have the right to participate at its expense in
such action as a party plaintiff(s) and be represented if it so desires by
counsel of its own choice.  No settlement or consent judgment or other voluntary
final disposition of a suit in the Territory under this Section 8.04(a)(ii) may
be entered into without the consent of Ardelyx and KHK, which consent shall not
be withheld, delayed or conditioned unreasonably.  If a Japanese court denies
KHK’s request for an injunction, provisional order or other legal actions
brought pursuant to KHK’s right to control a legal action under this Section
8.04(a)(ii) for lack of standing, Ardelyx shall, upon KHK’s reasonable request
and under KHK’s direction, file for an injunction, provisional order or other
legal actions by counsel of KHK’s choice, at the sole cost and expense of KHK. 
Ardelyx shall not grant a registered exclusive license (a senyo jisshiken under
Section 77 of the Japanese Patent Law) in the Territory to any Third Party with
respect to the Ardelyx Controlled Patents.

(iii)      KHK (or in the case of KHK [***] Patents, KHK and/or KHK’s licensor)
shall have the first right, but not the obligation, to institute, prosecute, and
control any action or proceeding or negotiation of any settlements at its
expense with respect to any infringement of KHK Controlled Patents, by counsel
of its own choice with Ardelyx (or, with respect to actions or proceedings or
negotiations outside of the Territory, Ardelyx, or Ardelyx and its licensees in
such territory where the infringement is alleged to have occurred) having the
right to participate in such action or negotiations at its or their own expense
and be represented by counsel of its or their own choice.  If necessary, at
KHK’s discretion, Ardelyx agrees in any such action to be joined as a party
plaintiff and to give KHK reasonable assistance and any needed authority in
order for KHK to control, file, and to prosecute such action, at KHK’s
expense.  If KHK elects not to institute and prosecute an action or proceeding
or to conduct such negotiation to abate such infringement, within a period of
[***] ([***]) days after both Parties become aware of the infringement or
suspected infringement, then KHK shall discuss with Ardelyx the reasons for this
decision.  Ardelyx (or in the case of alleged infringement outside of the
Territory, Ardelyx and/or its licensees in such territories where the
infringement is alleged to have occurred) shall then have the right, but not the
obligation, to institute, prosecute, and control any such action at its expense
(but with respect to KHK [***] Patents, only to the extent Patent is a KHK [***]
Patent).  In such case, KHK, [***] shall give Ardelyx (or its licensee, as the
case may be) any needed authority in order for Ardelyx or its licensee to
control, file, and prosecute the suit as may be necessary; provided,  however,
that KHK shall have the right to participate at its expense in such action as a
party plaintiff and be represented if it so desires by counsel of its own
choice.  No settlement or consent judgment or other voluntary final disposition
of a suit (i) in the Territory under this Section 8.04(a)(iii) may be entered
into without the consent of Ardelyx and KHK, which consent shall not be
withheld, delayed or conditioned unreasonably, and (ii) outside of the Territory
under this Section 8.04(a)(iii) may entered into without the consent of Ardelyx,
and KHK, which consent shall not be withheld, delayed or conditioned
unreasonably.

(iv)       With respect to any proceeding, negotiation or settlement with
respect to an alleged infringement within or outside of the Territory, any and
all costs that are incurred

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by a Party bringing suit in the exercise of rights under Section 8.04(a)(ii) and
(iii) (including without limitation the internal costs and expenses specifically
attributable to such suit) shall be reimbursed first out of any damages or other
monetary awards recovered in favor of the Parties.  If such recovery is
insufficient to reimburse the costs of KHK, KHK’s licensor, Ardelyx and
Ardelyx’s licensor or licensee, if applicable, then [***].

 

(v)        With respect to any proceeding, negotiation or settlement with
respect to an alleged infringement within or outside of the Territory, any
damages remaining after all costs have been reimbursed pursuant to Section
8.04(a)(iv) above, shall be allocated as follows:

 

Type of Patent

Where Suit
Occurs

Party Bringing Suit in the
Exercise of its Rights under
this Article 8, whether as a
first right or a second right

Split of Remaining
Damages

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

43

Confidential Portions of this Exhibit marked as [***] have been omitted

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(b)        Defense and Settlement of Third Party Claims Against Licensed
Products.  If a Third Party asserts that a Patent or other right owned by it is
infringed by the Development, Manufacture, or Commercialization of any Licensed
Compound or Licensed Product in the Territory, the Party first obtaining
knowledge of such a claim shall immediately provide the other Party written
notice of such claim and the related facts in reasonable detail.  In such event,
Ardelyx shall have the first right, but not the obligation to defend and control
the defense of such claim at its own expense, using counsel of its own
choice.  KHK shall have the right to participate in such defense and to be
represented in any such action by counsel of its selection at its sole
discretion and at its expense.  If Ardelyx elects not to defend or control the
defense of such claim within a period of [***] ([***]) days, KHK may conduct and
control the defense of such claim at its own expense.  Each Party shall keep the
other Party reasonably informed of all material developments in connection with
any such claim.  The Party that controls the defense of a given claim with
respect to a Licensed Product, shall also have the right to control settlement
of such claim; provided,  however, that no settlement of any action or suit in
the Territory shall be entered into without the written consent of the other
Party, which consent shall not be withheld, delayed or conditioned unreasonably.

(c)        Settlement of Third Party Claims for Infringement in the Territory;
Payment of Third Party Royalties.  If a Third Party asserts that a Patent or
other right owned by it is infringed by the Development, Manufacture, or
Commercialization or other Exploitation of any Licensed Compound or Licensed
Product in the Territory, and as a result of settlement procedures or litigation
under (b), KHK is required to pay the Third Party a royalty or make any payment
of any kind for the right to Exploit a Licensed Product in the Territory, [***].

(d)        Oppositions by Parties.  If either Party desires to bring an
opposition, action for declaratory judgment, nullity action, interference,
reexamination, or other attack upon the validity, title, or enforceability of
any Patents Controlled by a Third Party in the Territory or in a country where
the a Licensed Compound or a Licensed Product is Manufactured that claim the
Manufacture, use, or sale or other Exploitation of any Licensed Compound or
Licensed Product, such Party shall so notify the other Party in writing, and the
Parties shall promptly confer to discuss whether to bring such action or the
manner in which to settle such action and Ardelyx shall be entitled to determine
the matter after having taken any reasonable views presented by KHK into due
consideration.  The Party not bringing an action under this (d) shall be
entitled to separate representation in such proceeding by counsel of its own
choice and at its own expense, and shall otherwise cooperate fully with the
Party bringing such action at the other Party’s expense.

(e)        Oppositions by Third Parties.  If any Patent becomes the subject of
any proceeding commenced by a Third Party in connection with an opposition,
reexamination request, action for declaratory judgment, nullity action,
interference, or other attack upon the validity, title, or enforceability
thereof in the Territory, then the Party having the right to prosecute such
Patent at such time pursuant to Sectio 8.02(b) shall control such defense, at
its sole cost.  The prosecuting Party shall permit the non-prosecuting Party,
and in the case of an Ardelyx [***] Patent, Ardelyx’s licensor [***], to
participate in the proceeding to the extent permissible under law, and to be
represented by its own counsel in such proceeding, at the non-prosecuting
Party’s expense.  If either Party decides that it does not wish to defend
against such action, then the other Party shall have a backup right to assume
defense of such Third Party action at its own expense.  Any awards

44

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or amounts received in defending any such Third Party action shall be allocated
[***].  Any recoveries obtained in such action shall be shared, as set forth in
Section 8.04(a)(v).

(f)        Protective Order.  If, in any action brought pursuant to this Section
8.04 any information is the subject of a protective order that may be reviewed
by counsel only, the Parties shall endeavor to structure such protective order
so as to enable their respective internal counsel to be included as permitted
reviewers of such information.

Section 8.05    Trademarks, Packaging and Labeling.

(a)        Selection.  Subject to applicable regulatory requirements and on a
Licensed Product by Licensed Product basis, KHK shall have the option to (i)
select the Trademarks to be used for the marketing and sale of the Licensed
Products in the Territory or (ii) license from Ardelyx the Trademarks owned by
Ardelyx (“Ardelyx Trademarks”), in each case (i) and (ii), to use in connection
with the Commercialization of each Licensed Product (in either case, “Product
Trademarks”).

(b)        KHK Trademark.  If KHK decides to select its own Trademarks for the
Commercialization of a Licensed Product (“KHK Trademarks”), KHK shall solely
bear the full costs and expense of and be responsible for filing, prosecuting
and maintaining all KHK Trademarks.  KHK shall, in its sole discretion, protect,
defend, and maintain each KHK Trademark for use with Licensed Products in the
Territory, and all registrations therefor.  Ardelyx shall notify KHK promptly in
writing upon learning of any actual, alleged, or threatened infringement of a
KHK Trademark used in connection with Licensed Compounds or Licensed Products or
of any unfair trade practices, trade dress imitation, passing off of counterfeit
goods, or like offenses with respect to Licensed Compounds or Licensed
Products.  Ardelyx shall cooperate as reasonably requested by KHK in any actions
or proceedings brought by KHK to halt the infringement.  All of the [***] in
bringing, maintaining, and prosecuting any action to maintain, protect, or
defend a KHK Trademark (or registration therefor) shall be borne [***].  Any
recovery in any such action that is [***].

(c)        Ardelyx Trademark.

(i)         If KHK decides to license one or more Ardelyx Trademarks to
Commercialize a Licensed Product in the Field and in the Territory, KHK shall
provide a written notice (“Trademark Notice”) to Ardelyx indicating which such
Ardelyx Trademarks it wishes to license from Ardelyx.  Upon Ardelyx’s receipt of
the Trademark Notice, the Parties shall discuss in good faith a license grant
under which Ardelyx would grant KHK a royalty-free (subject to this (c))
license, sublicensable exclusive license to use the Ardelyx Trademarks indicated
in the Trademark Notice in the Field and in the Territory during the Term;
provided, that in the event KHK wishes to use the Ardelyx Trademark licensed
pursuant to this (c) upon expiration of the Term, then KHK shall pay to Ardelyx
a royalty on the Annual Net Sales of the applicable Licensed Product made by
KHK, its Affiliates, or its Sublicensees at a rate of [***] percent ([***]%).

(ii)       Ardelyx shall solely bear the full costs and expense of and be
responsible for filing, prosecuting and maintaining all Ardelyx
Trademarks.  Ardelyx shall, protect,

 

 

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defend, and maintain each Ardelyx Trademark and all registrations therefor, and
file a request for registration of the exclusive right to use the Ardelyx
Trademark (tsujyou shiyouken under Section 31 of the Japanese Trademark Law or
senyou shiyouken under Section 30 of the Japanese Trademark Law) at the Japan
Patent Office if KHK so requests.  KHK shall notify Ardelyx promptly in writing
upon learning of any actual, alleged, or threatened infringement of a Ardelyx
Trademark used in connection with Licensed Compounds or Licensed Products or of
any unfair trade practices, trade dress imitation, passing off of counterfeit
goods, or like offenses with respect to Licensed Compounds or Licensed
Products.  Ardelyx shall have the right, but not the obligation, to institute,
prosecute and control any action, proceeding or negotiation of any settlements
in the Territory with respect to any infringement of Ardelyx Trademarks.  KHK
shall cooperate as reasonably requested by Ardelyx in any actions or proceedings
brought by Ardelyx to halt the infringement.  All of the unrecovered costs,
expenses, and legal fees (including without limitation internal costs, expenses,
and legal fees) in bringing, maintaining, and prosecuting any action to
maintain, protect, or defend a Ardelyx Trademark (or registration therefor)
shall be borne solely by Ardelyx.

(iii)      If an Ardelyx Trademark becomes the subject of any proceeding
commenced by a Third Party in connection with an opposition or other attack upon
the validity, title, or enforceability thereof in the Territory, then Ardelyx
shall have the first right, but not the obligation, to control such defense, at
its sole cost.  Ardelyx shall permit KHK to participate in the proceeding to the
extent permissible under the Applicable Law, and to be represented by its own
counsel in such proceeding, at KHK’s expense.  If senyou shiyouken is registered
and upon KHK’s request, KHK shall control such defense, at its sole cost.  Then
KHK shall permit Ardelyx to participate in the proceeding to the extent
permissible under the Applicable law, and to be represented by its own counsel
in such proceeding, at Ardelyx’s expense.  Any awards or amounts or recoveries
received in defending any such Third Party action shall be allocated based on
the percentage of costs incurred by the Parties in defending such action.

(d)        KHK shall be responsible for the design and procurement of all
packaging (non-commercial and commercial) and labeling of the Licensed Products.

ARTICLE IX.

 REPRESENTATIONS, WARRANTIES, AND COVENANTS

Section 9.01    Representations, Warranties, and Covenants.

(a)        Each of the Parties hereby represents and warrants to the other Party
that:

(i)         this Agreement is a legal and valid obligation binding upon such
Party and enforceable in accordance with its terms.  The execution, delivery,
and performance of the Agreement by such Party does not conflict with any
agreement, instrument, or understanding, oral or written, to which it is a Party
or by which it is bound, nor violate any law or regulation of any court,
Governmental Body, or administrative or other agency having jurisdiction over
it;

46

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(ii)       it is not aware of any government authorization, consent, approval,
license, exemption of or filing or registration with any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, under any Applicable Laws, currently in effect, necessary for, or in
connection with, the transaction contemplated by this Agreement or any other
agreement or instrument executed in connection herewith, or for the performance
by it of its obligations under this Agreement and such other agreements (save
for Regulatory Approvals, INDs and similar regulatory authorizations necessary
for the Development or Commercialization of the Licensed Compounds and Licensed
Products as contemplated hereunder);

(iii)      such Party has not, and during the Term shall not, grant any right to
any Third Party relating to its respective Patents and Know-How which would
conflict with the rights granted to the other Party hereunder;

(iv)       such Party shall at all times and in all material respects comply
with all Applicable Laws relating to its activities under this Agreement; and

(v)        All employees of each Party or its Affiliates performing activities
under this Agreement shall be under an obligation to assign all right, title and
interest in and to their inventions, Information and discoveries, whether or not
patentable, and IPRs therein, to such Party or its Affiliate(s) as the sole
owner thereof.  The other Party shall have no obligation to contribute to any
remuneration of any inventor employed or previously employed by such Party or
any of its Affiliates in respect of any such inventions, Information and
discoveries and IPRs therein that are so assigned to such Party or its
Affiliate(s).  Such Party shall pay all such remuneration due to such inventors
with respect to such inventions, Information and discoveries and IPRs therein.

(b)       Ardelyx represents, warrants and covenants as of the Effective Date to
KHK that:

(i)         Title; Encumbrances.  It has sufficient legal or beneficial title,
ownership, rights or license in the Licensed Technology to grant the licenses to
KHK described in this Agreement.  The Compound Patents and the Additional
Patents are free and clear from any mortgages, pledges, liens, security
interests or encumbrances;

(ii)       Infringement or Misappropriation.  To Ardelyx’s Knowledge, the
Licensed Technology in the Territory will not infringe, violate or
misappropriate the intellectual property rights of any Third Party;

(iii)      Third Party Infringement.  To Ardelyx’s Knowledge, no Third Party is
infringing, violating or misappropriating, or has threatened in writing to
infringe or misappropriate, any Licensed Technology in the Territory;

(iv)       No Proceeding.  There is no actual, suspected, pending, or, to
Ardelyx’s Knowledge, threatened, adverse action, suit, proceeding, claim or
formal governmental investigations in the Territory against Ardelyx involving
the Licensed Technology;

(v)        Enforceability, Validity.  All applicable filing, maintenance and
other fees required to be paid to maintain the Licensed Patents in the Territory
as of the Effective

 

 

47

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Date have been timely paid (as such due date may be extended in accordance with
Applicable Law or patent authority rules and regulations);

(vi)       Full Disclosure.  Ardelyx has disclosed to KHK all material
information in Ardelyx’s possession requested by KHK pertaining to the Licensed
Technology, and Ardelyx has not knowingly withheld any material information
applicable to KHK’s ability to Develop, Manufacture or Commercialize the
Licensed Products in the Field in the Territory as contemplated by this
Agreement;

(vii)     No Conflicts.  During the Term, Ardelyx shall not grant any right to
any Third Party that conflicts with the rights granted to KHK under this
Agreement.  Ardelyx is not under any obligation, contractual or otherwise, to
any Third Party that conflicts with or is inconsistent in any material respect
with the terms of this Agreement;

(viii)    Patents.  Exhibits B and C include a complete and accurate list of all
Patents owned or in-licensed by Ardelyx or any of its Affiliates in the
Territory as of the Effective Date that claim the Licensed Product, or any
method of using the Licensed Product.  There are no other Patents Controlled by
Ardelyx that would be infringed by the Manufacture of the Licensed Compound or
the Licensed Product in the Territory or outside of the Territory, and there are
no Ardelyx [***] Patents as of the Effective Date;

(ix)       [***] are [***] for [***] regardless of [***] (and to the extent
[***], and the [***] for [***] regardless of [***], [***] shall [***]; and

(x)        Conduct of Development.  As of the Effective Date, Ardelyx has
conducted the Development of Licensed Products in compliance with Applicable
Laws in all material respects.

(c)        KHK represents, warrants and covenants as of the Effective Date to
Ardelyx that:

(i)         KHK has not been debarred by the FDA (and is not subject to any
similar sanction of other Regulatory Health Authorities in the Territory), and
is not subject to any such debarment or similar sanction by any such Regulatory
Health Authority, and KHK has not used, and shall not engage, in any capacity,
in connection with this Agreement, any Person who either has been debarred by
such a Regulatory Health Authority, or is the subject of a conviction described
in Section 306 of the FFDCA (21 U.S.C. §335a).  KHK shall inform Ardelyx in
writing immediately if it or any Person engaged by KHK who is performing
services under this Agreement is debarred or is the subject of a conviction
described in Section 306 of the FFDCA (21 U.S.C. §335a), or if any action, suit,
claim, investigation or legal or administrative proceeding is pending or, to
KHK’s knowledge, is threatened, relating to the debarment or conviction of KHK
or any such Person performing services hereunder.

(ii)       KHK shall not knowingly engage in any activities that use the
inventions covered or claimed in the Licensed Patents, Ardelyx [***] Patents or
any Licensed Know-How in a manner that is outside the scope of the license
rights expressly granted to it hereunder.

 

 

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(iii)      KHK has determined in good faith that no filing is required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended with respect to
this Agreement or the transactions contemplated herein, it being understood that
KHK in making such determination has relied on the information provided by
Ardelyx regarding Ardelyx’s and its Affiliates’ corporate structure and
financial status.

(iv)       KHK shall perform, or cause its Affiliates or Third Party contractors
to perform, its responsibilities under this Agreement in compliance with this
Agreement, all Applicable Laws, applicable FDA (or foreign equivalent)
requirements, including, without limitation, then-current GLP, GCP and GMP.

Section 9.02    Manufacturing by Ardelyx and KHK.

(a)        KHK covenants to Ardelyx that any Licensed Compound or Licensed
Product for Development or Commercial use that is Manufactured by or for KHK or
its Affiliates (other than by or on behalf of Ardelyx or its Affiliates) shall:
(i) be manufactured in compliance with Applicable Laws; (ii) conform to the
applicable Specifications for such Licensed Compound or Licensed Product; (iii)
conform to the certificates of analysis supplied with the shipment of such
Licensed Product; and (iv) shall be packaged and shipped in accordance with the
applicable Specifications therefor in effect at the time of delivery.

(b)       Ardelyx covenants to KHK that any Licensed Compound or Licensed
Product for Development or Commercial use by or for KHK or its Affiliates that
is Manufactured by Ardelyx, its Affiliates or any of their contract
manufacturing organizations shall: (i) be manufactured in compliance with
Applicable Laws; (ii) conform to the applicable Specifications for such Licensed
Compound or Licensed Product; (iii) conform to the certificates of analysis
supplied with the shipment of such Licensed Product; and (iv) shall be packaged
and shipped in accordance with the applicable Specifications therefor in effect
at the time of delivery.

Section 9.03    No Debarment.  In the course of the Development of Licensed
Compound and Licensed Product in accordance with this Agreement, neither Party
has used, and during the term of this Agreement neither Party shall use, any
employee or consultant that is debarred by any Regulatory Health Authority or,
to the best of such Party’s knowledge, is the subject of debarment proceedings
by any Regulatory Health Authority.  If either Party learns that its employee or
consultant performing on behalf under this Agreement has been debarred by any
Regulatory Health Authority, or has become the subject of debarment proceedings
by any Regulatory Health Authority, such Party shall so promptly notify the
other Party and shall prohibit such employee or consultant from performing on
its behalf under this Agreement.  The foregoing shall be without prejudice to
the warranties contained in ‎Section 9.01(b)(iv) and Section 9.01(c)(i).

Section 9.04    Anti-Bribery and Anti-Corruption Compliance.

(a)        Each Party agrees, on behalf of itself, its officers, directors and
employees and on behalf of its Affiliates, agents, representatives, consultants
and subcontractors hired in connection with the subject matter of this Agreement
(together with such Party, the “Party Representatives”) that in connection with
the performance of its obligations hereunder, the Party Representatives

49

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shall not directly or indirectly pay, offer or promise to pay, or authorize the
payment of any money, or give, offer or promise to give, or authorize the giving
of anything else of value, to:

(i)         any Government Official in order to influence official action;

(ii)       any Government Official (AA) to influence such Person to act in
breach of a duty of good faith, impartiality or trust (“acting improperly”),
(BB) to reward such Person for acting improperly, or (CC) where such Person
would be acting improperly by receiving the money or other thing of value; or

(iii)      any other Person while knowing or having reason to believe that all
or any portion of the money or other thing of value will be paid, offered,
promised or given to, or will otherwise benefit, a Government Official in order
to influence official action for or against either Party in connection with the
matters that are the subject of this Agreement.

(b)       The Party Representatives shall not, directly or indirectly, solicit,
receive or agree to accept any payment of money or anything else of value in
violation of the Anti-Corruption Laws.

(c)        Each Party, on behalf of itself and its other Party Representatives,
represents and warrants to the other Party that for the Term and three (3) years
thereafter, such Party shall keep and maintain accurate books and reasonably
detailed records reasonably required to establish compliance with ‎(a) and ‎(b)
above.

(d)       Each Party shall promptly provide the other Party with written notice
of the following events:

(i)         Upon becoming aware of any breach or violation by the first Party or
its Party Representative of any representation, warranty or undertaking set
forth in ‎(a) or ‎(b).

(ii)       Upon receiving a formal notification that it is the target of a
formal investigation by a Regulatory Authority for a Material Anti-Corruption
Law Violation or upon receipt of information from any of its Party
Representatives connected with this Agreement that any of them is the target of
a formal investigation by a Regulatory Authority for a Material Anti-Corruption
Law Violation.

(e)        Without prejudice to any auditing or inspection rights that are set
forth elsewhere in this Agreement, each Party shall, for the Term and three (3)
years thereafter, for the purpose of allowing the other Party to audit and
monitor the performance of its compliance with this Article IX permit the other
Party, its Affiliates, any auditors of any of them and any Regulatory Authority
to have access, upon reasonable advance notice, during normal business hours to
any premises of such first Party or its other Party Representatives used in
connection with this Agreement, together with a right to access personnel and
records that relate to this Agreement.  The results of any such audit shall
constitute Confidential Information of the audited Party, in respect of which
the other Party shall comply with the provisions contained in Article VII
(subject to the terms and exceptions set forth therein).

 

 

50

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(f)        Each Party shall be responsible for any breach of any representation,
warranty, covenant or undertaking in this ‎Article IX or of the Anti-Corruption
Laws by its Party Representatives.

(g)       Each Party may disclose the terms of this Agreement or any action
taken under this ‎0 to prevent a potential violation or address a continuing
violation of applicable Anti-Corruption Laws, including the identity of the
other Party and the payment terms, to any governmental

authority if and to the extent the first Party reasonably determines, upon
advice of counsel, that such disclosure is necessary.

Section 9.05   Disclaimer.  EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE IX,
THE PARTIES MAKE NO REPRESENTATIONS OR WARRANTIES OF ANY KIND WHATSOEVER, EITHER
EXPRESS OR IMPLIED, WRITTEN OR ORAL, INCLUDING WITHOUT LIMITATION ANY IMPLIED
WARRANTY OF MERCHANTABILITY, WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, OR
WARRANTY OF NON-INFRINGEMENT.

ARTICLE X.

 RECORD RETENTION, AUDIT AND USE OF NAME

Section 10.01  Records Retention; Audit.

(a)        Each Party shall keep or cause to be kept accurate records of account
in accordance with Japanese Generally Accepted Accounting Principles, in the
case of KHK, and in accordance with GAAP, in the case of Ardelyx, showing
information that is necessary for the accurate determination of the royalties
and other payments due under Article VI, or any other payment due
hereunder.  Such records or books of account shall be kept until the [***]
([***]) anniversary of December 31 of the Calendar Year in which the relevant
Licensed Product are sold (in the case of royalty or other payments due under
Section 6.04) or in the period for which any other payment hereunder is required
to be made.  For clarity, each Party shall cause its Affiliates to keep, and
shall require pursuant to a written agreement that any Sublicensee, other
sublicensee or subcontractor performing activities hereunder keep accurate
records or books of account in a manner that will permit such Party to comply
with its obligations under the foregoing sentence.

(b)       Upon the written request of the other Party, each Party shall permit a
qualified accountant or a person possessing similar professional status and
associated with an independent accounting firm acceptable to the Parties to
inspect during regular business hours and no more than once a Calendar Year, and
going back no more than [***] ([***]) years preceding the current Calendar Year,
all or any part of the audited Party’s records and books necessary to check the
accuracy of any payments made or required to be made hereunder.  The accounting
firm shall enter into appropriate obligations with the audited Party to treat
all information it receives during its inspection in confidence.  The accounting
firm shall disclose to Ardelyx and KHK only whether the payments made are
correct and details concerning any discrepancies, but no other information shall
be disclosed to the Party requesting the inspection.  The charges of the
accounting firm shall be paid by the Party requesting the inspection, except
that if the payments being audited have been underpaid or the costs being
reimbursed have been overstated, in each case by more than [***] percent
([***]%), the charges shall be paid by the Party whose records and books are
being

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inspected.  Any failure by a Party to exercise its rights under this Section
10.01 with respect to a Calendar Year within the [***] ([***]) year period
allotted therefor shall constitute a waiver by such Party of its right to later
object to any payments made by the other Party under this Agreement during such
Calendar Year.

Section 10.02  Publicity Review.  Subject to the further provisions of this
Section 10.02, no Party shall originate any written publicity, news release, or
other announcement relating to this Agreement or to performance hereunder or the
existence of an arrangement between the Parties (collectively, “Written
Disclosure”), without the prior prompt review and written approval of the other,
which approval shall not be unreasonably withheld or delayed.  The disclosing
Party shall provide the other Party with a copy of the materials proposed to be
disclosed at least [***] ([***]) Business Days prior to the proposed Written
Disclosure.   Notwithstanding the foregoing provisions of this Section 10.02,
any Party may make any public Written Disclosure,  it believes in good faith
based upon the advice of counsel, to be required by Applicable Laws or any
listing or trading agreement concerning its publicly traded securities, provided
that, at least [***] ([***]) Business Days prior to making such Written
Disclosure, the disclosing Party shall provide the other Party with a copy of
the materials proposed to be disclosed and an opportunity to promptly review and
comment on the proposed Written Disclosure.  To the extent that the receiving
Party reasonably requests that any information in the materials proposed to be
disclosed be deleted, the disclosing Party shall use reasonable efforts to
request confidential treatment of such information pursuant to the Applicable
Laws so that any information that the receiving Party reasonably requests to be
deleted, to the extent permitted by the applicable government agency, are
omitted from such materials.  The terms of this Agreement may also be disclosed
to government agencies where required by Applicable Laws, provided that the
Party making such disclosure shall seek a protective order or confidential
treatment of this Agreement to the extent allowed under Applicable Laws,
Notwithstanding the foregoing, the Parties intend to issue a joint press release
regarding the transaction contemplated by this Agreement, the contents of such
press release to be mutually agreed by the Parties in writing (prior to the
Effective Date and prior to any publication thereof), subject to such additional
modifications as the Parties may mutually agree.  For clarity, Ardelyx shall
have the right to issue press releases and other public announcements regarding
the Development or Commercialization of Licensed Products outside of the
Territory and/or outside of the Field without the prior review or written
approval of KHK.

Section 10.03  Use of Names.  Neither Party shall use the name, insignia,
symbol, trademark, trade name or logotype of the other Party or its Affiliates
in relation to this transaction or otherwise in any public announcement, press
release, or other public document without the prior written consent of such
other Party, which consent shall not be unreasonably withheld, delayed or
conditioned, except for those disclosures for which consent has previously been
obtained; provided,  however, that either Party may use the name of the other
Party in any document required to be filed with any government authority,
including without limitation the FDA and the Securities and Exchange Commission
or otherwise as may be required by Applicable Law, provided that such disclosure
shall be governed by Section 7.05.  Further, the restrictions imposed on each
Party under this ‎Section 10.03 are not intended, and shall not be construed, to
prohibit a Party from identifying the other Party in its internal business
communications, provided that any Confidential Information in such
communications remains subject to ‎Article VII.

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ARTICLE XI.

 TERM AND TERMINATION

Section 11.01  Term.  The term of this Agreement shall commence as of the
Effective Date, and, unless sooner terminated as provided herein, shall continue
in effect until the date on which all of KHK’s payment obligations under Article
VI have been performed or have expired (the “Term”).  Performance or expiry of
all of KHK’s payment obligations with respect to all Licensed Products in the
Territory shall constitute expiration of this Agreement in its entirety.

Section 11.02  Termination Rights

(a)        Termination for Cause.  Subject to the provisions of this Section
11.02, if either Party (the “Breaching Party”) shall have committed a material
breach of any of its material obligations under this Agreement, and such
material breach shall remain uncured and shall be continuing for a period of
[***] ([***]) days following the Breaching Party’s receipt of notice of such
breach from the other Party (the “Non-Breaching Party”) stating the
Non-Breaching Party’s intent to terminate this Agreement in its entirety
pursuant to this Section 11.02(a) if such breach remains uncured, then, in
addition to any and all other rights and remedies that may be available, the
Non-Breaching Party shall have the right to terminate this Agreement effective
upon the expiration of such [***] ([***]) day period (subject, however, to the
provisions set forth below in this Section 11.02(a)).  Notwithstanding the
above, if (i) such material breach cannot reasonably be cured within such [***]
([***]) -day period, (ii) the Breaching Party provides, within such [***]
([***]) -day period, the Non-Breaching Party with a written detailed plan that
contains measures that can be reasonably expected to cure such breach as soon as
reasonably practicable, (iii) the Breaching Party commences to perform such
measures in accordance with such plan, and (iv) the Breaching Party thereafter
diligently continues to perform such measures as detailed in such plan, then the
Non-Breaching Party shall not be entitled to terminate this Agreement (and any
notice of termination issued pursuant to the foregoing sentence shall not become
effective) unless and until the Breaching Party ceases to diligently perform
such measures despite then not having cured the breach.  Notwithstanding the
above, if within the aforementioned [***] ([***]) -day period either Party takes
measures to resolve the dispute (for which termination is being sought) pursuant
to Section 13.01 (or Ardelyx initiates mediation pursuant to Section 13.02(b)
and thereafter (if the dispute then remains unresolved) within a period of [***]
([***]) days after the expiry of the time period set forth in Section 13.01
(and, as the case may be, Section 13.02(a), initiates arbitration as permitted
under Section 13.02(b) to resolve the dispute and diligently pursues such
procedure, then the cure period set forth in this Section 11.02(a) shall be
suspended and the Non-Breaching Party shall have the right to terminate this
Agreement due to the breach for which termination is being sought only if (x)
the arbitration tribunal determines through its final resolution of the dispute
that such breach exists and (y) such breach remains uncured for [***] ([***])
days after such final resolution.  Any notice of alleged material breach by the
Non-Breaching Party under this Section 11.02(a) shall include without limitation
a reasonably detailed description of all relevant facts and circumstances
demonstrating, supporting, or relating to each such alleged material breach by
the Breaching Party.  Actual termination of this Agreement pursuant to this
Section 11.02(a) shall only occur upon a separate written notice of termination
by the Non-Breaching Party after the end of the applicable cure period.  This
Section 11.02(a) defines exclusively the Parties’ right to terminate this
agreement for any material breach of contract.

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(b)       Termination for Convenience.

(i)        Prior to its expiration, this Agreement may be terminated in its
entirety at any time by KHK effective upon [***] ([***]) days (or such longer
period as KHK may elect at its sole discretion) prior written notice to Ardelyx.

(ii)       Additionally, if KHK ceases all Exploitation of the Licensed Products
for a continuous period of more than [***] ([***]) consecutive months, KHK
shall, at Ardelyx written request following the expiration of such [***] ([***])
month period (such request to reference explicitly this Section 11.02(b)(ii)),
provide to Ardelyx within [***] ([***]) months after KHK’s receipt of such
request a written reasonable plan under which KHK would recommence Exploitation
of the Licensed Products under this Agreement within [***] ([***]) months after
having provided such plan to Ardelyx.  KHK shall, after providing such plan to
Ardelyx, perform substantially in accordance therewith.  If KHK fails to provide
such plan to recommence Exploitation of Licensed Products within such [***]
([***]) month period or if KHK fails to recommence such Exploitation within the
aforementioned [***] ([***]) month period, KHK shall be deemed to have exercised
its right to terminate this Agreement in its entirety pursuant to this Section
11.02(b) effective upon expiration of such [***] ([***]) month or (as the case
may be) [***] ([***]) month period.

(c)        Termination for Technical Reasons.  Prior to its expiration, KHK may
terminate this Agreement with a [***] ([***]) days’ written notice to Ardelyx if
(i) KHK receives an instruction to suspend any ongoing Clinical Trial(s) for the
applicable Licensed Product by a Regulatory Authority for safety reasons, (ii)
KHK is unable to proceed or continue with the activities under the applicable
Development Plan due to safety reasons, or (iii) primary endpoints specified in
the applicable Development Plan are not met despite KHK’s Commercially
Reasonable Efforts and KHK reasonably determines that it cannot obtain
Regulatory Approval or (iv) the Pivotal Trials conducted by Ardelyx [***] do not
meet the primary endpoints. In the event that the last remaining Licensed
Product that is Exploited by KHK, its Affiliates or Sublicensees is terminated
pursuant to this (c), the Agreement in its entirety shall terminate.

(d)       Termination for Challenge of Licensed Patents.  Prior to its
expiration, Ardelyx may terminate this Agreement in its entirety by written
notice to KHK if (i) KHK or its Affiliates challenges the validity, scope or
enforceability of or otherwise opposes any Patent included in (i) the Licensed
Patents, or (ii) Ardelyx [***] Patents or, corresponding Patents outside of the
Territory, and (ii) KHK does not cause such measures to cease within [***]
([***]) days after having received written notice thereof from Ardelyx,
requesting such measures to cease and stating Ardelyx’s intention to terminate
this Agreement if such measures are not ceased within the prescribed time.   If
a Sublicensee of KHK challenges the validity, scope or enforceability of or
otherwise opposes any Patent included in the Licensed Patents or Ardelyx [***]
Patents under which such Sublicensee is sublicensed, or corresponding Patents
outside of the Territory, then KHK shall, upon written notice from Ardelyx,
terminate such sublicense as promptly as possible pursuant to the terms of the
sublicense agreement.  KHK shall include provisions in all agreements under
which a Sublicensee obtains a sublicense under any Patent included in the
Licensed Patents or Ardelyx [***] Patents, or corresponding Patents outside of
the Territory, providing that if the Sublicensee challenges the validity or
enforceability of or otherwise opposes any such Patent under which the
Sublicensee is sublicensed, KHK may terminate such sublicense.

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(e)        Termination for Insolvency.  A Party may terminate this Agreement
effective immediately upon written notice to the other Party if at any time
during the Term, the other Party (the “Debtor”) (i) becomes insolvent, (ii) has
a case commenced by or against it under the Bankruptcy Code, (iii) files for or
is subject to the institution of bankruptcy, liquidation or receivership
proceedings, (iv) assigns all or a substantial portion of its assets for the
benefit of creditors, (v) has a receiver or custodian appointed for the Debtor’s
business, or (vi) has a substantial part of its business being subject to
attachment or similar process; provided,  however, that in the event of any
involuntary case under the Bankruptcy Code, the first Party shall not
be entitled to terminate this Agreement pursuant to this subsection (e) if the
case is dismissed within [***] ([***]) days after the commencement thereof.

Section 11.03  Consequences of a KHK Triggered Termination.  In the event (a)
Ardelyx terminates this Agreement pursuant to Section 11.02(a) for KHK’s
material breach; (b) Ardelyx terminates this Agreement pursuant to Section
11.02(d) for patent challenge by KHK or its Affiliates; (c) Ardelyx terminates
this Agreement pursuant to Section 11.02(e) for KHK’s insolvency; (d) KHK
terminates this Agreement pursuant to Section 11.02(b) or (e) KHK terminates
this Agreement pursuant to Section 11.02(c) for technical reasons (a termination
as per (a) through (e) being a “KHK Triggered Termination”), KHK shall, subject
to (a), continue to be obligated during the termination notice period (as
applicable) to perform as far as reasonably practicable all of its obligations
under this Agreement.  If a KHK Triggered Termination occurs after the first
Regulatory Approval of one or more Licensed Products in the Territory, KHK shall
continue to use Commercially Reasonable Efforts to Commercialize such Licensed
Product(s) in the Territory until the earlier of: (i), if applicable, the
expiration of the [***] ([***]) -day notice period, in the event of a
termination by KHK pursuant to Section 11.02(b)(i); (ii) receipt of Ardelyx’s
written notice that KHK may cease such Commercialization activities; or (iii),
if applicable, the effective date of the termination notice issued pursuant to
Section 11.02(a),  Section 11.02(c),  Section 11.02(d) or Section 11.02(e).  In
addition, as a result of a KHK Triggered Termination the following shall apply:

(a)        All licenses and rights to the Licensed Technology and the Ardelyx
[***] Technology granted to KHK hereunder shall terminate as of the effective
date of such termination, except to the extent and for so long as is necessary
to permit KHK to meet its obligations under Section11.03 (m), to finish
work-in-progress, sell any inventory as per Section 11.03(l) below, and
otherwise to perform any responsibilities in connection with any then ongoing
Clinical Trial or other activity that cannot be terminated as of such date under
Applicable Laws, including GCP, it being agreed that all such activities and
responsibilities shall be discontinued and ceased (unless otherwise agreed or
required under Applicable Laws by transitioning such activities and
responsibilities to Ardelyx) as promptly as possible, subject to Applicable
Laws, including GCP.

(b)       KHK shall grant, and hereby grants to Ardelyx (i) an exclusive,
worldwide, royalty-free right and license, with the right to grant sublicenses,
under any KHK Sole Invention Patents, under any Sole Program Know-How owned by
KHK and under KHK’s interest in any Joint Technology, all to the extent that the
practice thereof would infringe the Licensed Patents, and (ii) a non-exclusive,
worldwide, royalty-free right and license, with the right to grant sublicenses,
under any KHK Sole Invention Patents, under any Sole Program Know-How owned by
KHK and under KHK’s interest in any Joint Technology, all to the extent that the
practice thereof would not infringe the Licensed Patents, (iii) a non-exclusive,
worldwide, royalty-free right and license, with

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the right to grant sublicenses, under the KHK [***] Technology, in the case of
each of (i), (ii) and (iii) solely to Develop, make, have made, use, sell, have
sold offer for sale and import Licensed Compounds and Licensed Products.

(c)        Ardelyx shall have the right (but not the obligation) to enforce the
KHK Sole Invention Patents against any infringement relating to Licensed
Products.

(d)       Ardelyx shall have the right (but not the obligation) to prosecute,
maintain, enforce and defend all Licensed Patents, Ardelyx [***] Patents, and
Joint Patents and KHK shall, as promptly as reasonably practicable, and to a
reasonable extent take such other actions and execute such other instruments,
assignments, and documents as may be necessary to enable Ardelyx to practice the
rights set forth in this Section 11.03(d), with such cooperation to be provided
at Ardelyx’s sole cost and expense.

(e)        KHK shall return all data, files, records and other materials in its
possession or Control containing or comprising Ardelyx’s Confidential
Information (except one copy thereof, which may be retained by KHK solely for
legal archiving purposes).   For the avoidance of doubt, should Ardelyx elect to
pursue any Development, Manufacture or Commercialization of the relevant
Licensed Compound or Licensed Product following any such KHK Triggered
Termination, Ardelyx shall, without prejudice to or limitation of any other or
further obligations Ardelyx may have to KHK under this Agreement (including
Section 12.01(b)), indemnify KHK for any Third Party claims arising from
Ardelyx’s Development, Manufacture or Commercialization of the relevant Licensed
Compound or Licensed Product after the effective date of the termination as set
forth in Section 12.01(b).

(f)        KHK shall, where permitted under Applicable Laws, as promptly as
reasonably practical transfer to Ardelyx all INDs, Drug Approval Applications,
and Regulatory Approvals with respect to Licensed Compounds and Licensed
Products, and shall take such other actions and execute such other instruments,
assignments, and documents as may be necessary to affect the transfer of rights
hereunder to Ardelyx.  Without limiting the generality of the foregoing, KHK
agrees to submit to the PMDA and other Regulatory Authorities where reasonably
appropriate and required by Applicable Laws in jurisdictions in which any
regulatory filings have been made with respect to the Licensed Product, without
delay after the effective date of such termination, a letter (with copy to
Ardelyx) notifying the PMDA and such other Regulatory Authorities of the
transfer or withdrawal, if applicable, of any regulatory filings for the
Licensed Product in such jurisdictions from KHK to Ardelyx.  Additionally, KHK
shall provide Ardelyx with copies of regulatory filings necessary to practice
the rights granted to it under this Section 11.03(f).

(g)       KHK shall use Commercially Reasonable Effort to assign (or cause its
Affiliates to assign) to Ardelyx, at Ardelyx’s request, all of KHK’s (or its
Affiliates’) rights and obligations under agreements with Third Parties with
respect to (i) the conduct of Clinical Trials for each Licensed Product,
including agreements with contract research organizations, clinical sites and
investigators that relate to Clinical Trials in support of Regulatory Approvals
in the Territory, (ii) the Manufacture of Licensed Compound or Licensed Product
(subject to KHK’s obligations under Section 11.03(m)), and (iii) any other Third
Party agreements involving the Development or Commercialization of the Licensed
Products, unless in each of (i) through (iii), (A) such agreement is not
permitted to be assigned pursuant to its terms or relates to products other than
Licensed

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Products, or (B) the assignment is not agreed by the Third Party to such
agreement, in which case KHK shall use Commercially Reasonable Effort to
cooperate with Ardelyx in all reasonable respects to transfer as promptly as
reasonably practical to Ardelyx the benefit of such contract (against Ardelyx
undertaking to perform all the obligations and assume all liabilities under such
contract) in another mutually acceptable manner and upon Ardelyx’s request
facilitate discussions between Ardelyx and such Third Parties to assist Ardelyx
in entering into a direct agreement with such Third Parties.

(h)       KHK shall [***] assign all of its rights in and to the KHK Trademarks
and the Ardelyx Trademarks for Licensed Products (and all registrations and
applications for registration therefor) that it owns pursuant to Section 8.05(b)
to Ardelyx and Ardelyx shall have the exclusive right (but not the obligation)
to enforce the KHK Trademark rights and the Ardelyx Trademark rights against
infringers.

(i)        To the extent agreed by relevant Third Parties and as requested by
Ardelyx, KHK shall execute any documents necessary to transfer to Ardelyx rights
under any Third Party licenses obtained by KHK pursuant to and during the course
of the term of this Agreement for the purpose of Exploiting the Licensed
Compounds or Licensed Products, and Ardelyx shall thereafter be responsible for
all costs, expenses and obligations associated with such Third Party licenses.

(j)        Upon Ardelyx’s reasonable request, KHK shall transfer to Ardelyx
copies of all materials, data, results, analyses, reports, websites, marketing
materials, technology, regulatory filings, including without limitation, all KHK
Development Data and KHK Additional Development Data, and other Information and
Materials existing in tangible or electronic form at the effective date of the
KHK Triggered Termination, that is Controlled by KHK or its Affiliates and have
been generated on or before the effective date of such termination by or on
behalf of KHK, its Affiliates or Sublicensees with respect to the Licensed
Products (“KHK Product Data”).  In the event that KHK has an obligation to a
Third Party to keep any KHK Product Data confidential, KHK shall use
Commercially Reasonable Efforts to obtain approval from such Third Party to
provide such KHK Product Data to Ardelyx.  Ardelyx shall have the right to use
on a non-exclusive basis such KHK Product Data to enable Ardelyx to proceed to
Develop, Manufacture and Commercialize the Licensed Compounds and/or Licensed
Products, as applicable, upon and after termination of this Agreement.  For
[***] calendar months after the Parties have mutually agreed that the transfer
of the KHK Product Data from KHK to Ardelyx has been completed, KHK shall
respond to Ardelyx’s reasonable inquiries in respect of the KHK Product Data.

(k)       Except where expressly provided for otherwise in this Agreement,
termination of this Agreement shall not relieve the Parties of any liability,
including without limitation any obligation to make payments hereunder, which
accrued hereunder prior to the effective date of such termination, nor preclude
any Party from pursuing all rights and remedies it may have hereunder or at law
or in equity with respect to any breach of this Agreement, nor prejudice any
Party’s right to obtain performance of any obligation.  In the event of such
termination, this Section 11.03 shall survive in addition to others specified in
this Agreement to survive in such event.

(l)        KHK shall be entitled, during a period of [***] ([***]) days
following the KHK Triggered Termination, to finish any work-in-progress, and to
sell any inventory of the Licensed Product that remains on hand as of the date
of the termination, so long as KHK pays to Ardelyx

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the royalties applicable to said subsequent sales in accordance with the terms
and conditions set forth in this Agreement; provided that if such termination is
by Ardelyx pursuant to Section 11.02(a), that KHK’s rights under this Section
11.03(l) shall be subject to Ardelyx’s prior written consent, which shall not be
unreasonably withheld, delayed or conditioned.

(m)      KHK shall promptly transfer to Ardelyx all Information and Materials
that are necessary or useful for Ardelyx, its Affiliates or licensees or their
contract manufacturers to Manufacture the Licensed Products, and, if KHK has
assumed responsibility for the Manufacture of the Licensed Compounds, shall
facilitate the practice of such Manufacturing rights by Ardelyx, its Affiliates
or each of its licensees, [***] including making regulatory filings available to
Ardelyx and providing reasonable technical and other assistance in order to
enable Ardelyx to practice the foregoing Manufacturing rights in accordance with
Applicable Law.  KHK shall make Commercially Reasonable Efforts to have any
Third Party agreements under which KHK, its Affiliates or Sublicensees engage
Third Parties to manufacture the Licensed Compounds, and, if KHK assumes
responsibility for the Manufacture of the Licensed Compounds, contain provisions
regarding the allocation of Intellectual Property Rights and rights in work
product that are consistent with the terms of this Agreement and enable KHK to
fulfill its obligations to Ardelyx under this Section.

(n)       In the event that KHK terminates this Agreement in accordance with
Section 11.02(c) for technical reasons:

(i)         KHK’s obligations under Section Section 11.03(f),  (g),  (h),  (i),
 (j) and (m) shall only be triggered following receipt by KHK of a written
notice from Ardelyx requesting KHK to perform such obligations; and

(ii)       Neither Ardelyx nor KHK shall have any other remedies, or any other
obligations to the other arising solely out of the termination of this Agreement
by KHK pursuant to Section 11.02(c), than such remedies or obligations set out
in this Section 11.03.

Section 11.04  Consequences of Ardelyx Triggered Termination (or Right to
Terminate).  If KHK is entitled to terminate this Agreement pursuant to Section
11.02(a) as a result of a material breach by Ardelyx or Section 11.02(e) for an
insolvency or other transaction described therein affecting Ardelyx, KHK may
elect to terminate this Agreement subject to the provisions set forth in Section
11.04(a), or to continue the Agreement subject to the provisions set forth in
Section 11.04(b).

(a)        If KHK terminates the Agreement under Section 11.02(a) or under
Section 11.02(e),  Section 11.03 shall apply as if such termination were an KHK
Triggered Termination, except that (i) [***] and (ii) in consideration of the
[***] and any other rights granted under the above provisions in Section 11.03,
if (x) this Agreement is terminated pursuant to Section 11.02(a) by KHK after
the First Commercial Sale of the Licensed Product in the Territory, Ardelyx
shall [***]; provided,  however, that the [***].  The foregoing shall be [***]
in connection with its termination pursuant to Section 11.02(a).

(b)       If KHK has the right to terminate this Agreement under Section
11.02(a) or Section 11.02(e), but elects to continue this Agreement, this
Agreement shall continue in full force and

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effect except that if KHK is entitled to terminate this Agreement under Section
11.02(a) due to Ardelyx breach (but not if KHK’s right to terminate is based
solely on Ardelyx’s insolvency pursuant to Section 11.02(e), the royalties that
Ardelyx shall be entitled to receive on Net Sales of Licensed Products by KHK,
its Affiliates, or its Sublicensees as set forth in Section 6.04 shall each be
reduced to [***], provided that when a Generic Product is launched in the
Territory, the royalty rate shall be further reduced to [***], subject to the
reduction of the Third Party Compensation as set out in Section 6.04(e).

(c)    Except where expressly provided for otherwise in this Agreement,
termination of this Agreement by either Party shall not relieve the Parties of
any liability, including without limitation any obligation to make payments
hereunder, which accrued hereunder prior to the effective date of such
termination, nor preclude any Party from pursuing all rights and remedies it may
have hereunder or at law or in equity with respect to any breach of this
Agreement, nor prejudice any Party’s right to obtain performance of any
obligation.  In the event of such termination, this Section 11.04(c) shall
survive in addition to others specified in this Agreement to survive in such
event.

Section 11.05  Bankruptcy.  All rights and licenses granted under or pursuant to
this Agreement by a Party are, and shall otherwise be deemed to be, for the
purposes of Section 365(n) of the United States Bankruptcy Code, licenses of
rights to “intellectual property” as defined under Section 101 of the United
States Bankruptcy Code or equivalent provisions of applicable legislation in any
other jurisdiction.  The Parties agree that the Parties, as licensees of such
rights under this Agreement, shall retain and may fully exercise all of their
rights and elections under the United States Bankruptcy Code, or equivalent
provisions of applicable legislation in any other jurisdiction.  The Parties
further agree that, in the event of the commencement of a bankruptcy proceeding
by or against either Party under the Unites States Bankruptcy Code or equivalent
provisions of applicable legislation in any other jurisdiction, the Party that
is not a party to such proceeding 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, which, if not already in the
non-subject Party’s possession, shall be promptly delivered to it (a) upon any
such commencement of a bankruptcy proceeding upon the non-subject Party’s
written request therefor, unless the Party subject to such proceeding elects to
continue to perform all of its obligations under this Agreement, or (b) if not
delivered under subsection (a) above, following the rejection of this Agreement
by or on behalf of the Party subject to such proceeding upon written request
therefor by the non-subject Party.

Section 11.06  Surviving Rights and Obligations.  The rights and obligations set
forth in this Agreement shall extend beyond the expiration or termination of the
Agreement only to the extent expressly provided for herein, or to the extent
that the survival of such rights or obligations are necessary to permit their
complete fulfillment or discharge.  Without limiting the foregoing, the Parties
have identified various rights and obligations which are understood to survive,
as follows:  In the event of expiration or termination of this Agreement for any
reason, the following provisions shall survive in addition to others specified
in this Agreement to survive in such event: Article I,  Section 4.01, Section
5.01 (d), Section 6.08 through 6.11 (inclusive), Article VII (with the exception
of Section 7.03 pursuant to Section 7.06), Section 8.01 (with regard to
disclosure of the Joint Technology and the Sole Program Know-How invented during
the Term),  Section 8.03,  Section 8.04 (with regard to Sections 8.03 and 8.04
solely with respect to Joint Patents), Article

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IX,  Article X,  Section 11.03 through Section 11.06 (inclusive), Article XII,
 Article XIII and Article XIV.

ARTICLE XII.

 INDEMNIFICATION

Section 12.01  Indemnification.

(a)        KHK hereby agrees to indemnify, defend, and hold harmless Ardelyx,
its Affiliates, and each of its and their respective employees, officers,
directors and agents from and against any and all Losses incurred by them
resulting from or arising out of or in connection with any suits, claims,
actions or demands made or brought by a Sublicensee or other Third Party
(collectively, “Third Party Claims”) against Ardelyx, its Affiliates or their
respective employees, officers, directors or agents, that result from or arise
out of [***], except in any case, to the extent such Losses are Losses for which
Ardelyx has an obligation to indemnify KHK, its Affiliates or their respective
employees, officers, directors or agents pursuant to (b), as to which Losses
each Party shall indemnify the other to the extent of their respective liability
for such Losses.

(b)       Ardelyx hereby agrees to indemnify, defend and hold harmless KHK, its
Affiliates, and each of its and their respective employees, officers, directors
and agents from and against any and all Losses incurred by them resulting from
or arising out of or in connection with any Third Party Claims against KHK, its
Affiliates or their respective employees, officers, directors or agents, that
result from or arise out of [***]; except in any case, to the extent such Losses
are Losses for which KHK has an obligation to indemnify Ardelyx, its Affiliates
or their respective employees, officers, directors or agents pursuant to Section
12.01(a), as to which Losses each Party shall indemnify the other to the extent
of their respective liability for such Losses.

Section 12.02  Mechanism.

(a)        In the event that a Party (the “Indemnified Party”) is seeking
indemnification under Section 12.01(a) or Section 12.01(b), it shall notify the
other Party (the “Indemnifying Party”) in writing of the relevant Third Party
Claim and the relevant Loss for which indemnification is being sought as soon as
reasonably practicable after it becomes aware of such claim.  Each such notice
shall contain a description of the Third Party Claim and the nature and amount
of the Loss claimed (to the extent that the nature and amount of such Loss is
known at such time).  The Indemnified Party shall furnish promptly to the
Indemnifying Party copies of all papers and official documents received in
respect of any such Third Party Claim or Losses.  For the avoidance of doubt,
all indemnification claims in respect of a Party, its Affiliates, and each of
its and their respective employees, officers, directors and agents shall be made
solely by such Party to this Agreement.  The Indemnified Party shall permit the
Indemnifying Party to assume direction and control of the defense of the
relevant Third Party Claim (including without limitation the right to settle the
claim solely for monetary consideration), and shall cooperate as requested (at
the expense of the Indemnifying Party) in the defense of the claim.  The
assumption of the defense of a Third Party Claim by the Indemnifying Party shall
not be construed as an acknowledgement that the Indemnifying Party is liable to
indemnify any Indemnified Party in respect of the Third Party Claim, nor shall
it constitute a waiver by the Indemnifying Party of any defenses it may assert
against any Indemnified Party’s claim for indemnification.

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(b)       Notwithstanding Section 12.02(a), the failure to give timely notice to
the Indemnifying Party shall not release the Indemnifying Party from any
liability to the Indemnified Party to the extent the Indemnifying Party is not
prejudiced thereby and, for the avoidance of doubt, the Indemnifying Party shall
not be liable to the extent any Loss is caused by any delay by the Indemnified
Party in providing such notice.  Notwithstanding the provisions of (a) requiring
the Indemnified Party to tender to the Indemnifying Party the exclusive ability
to defend such claim, if the Indemnifying Party declines to or fails to timely
assume control of the relevant Third Party Claim, the Indemnified Party shall be
entitled to assume such control, conduct the defense of, and settle such claim,
all at the sole costs and expense of the declining or failing Party; provided,
 however, that neither Party shall settle or dispose of any such claim in any
manner that would adversely affect the rights or interests or admit fault, of
the other Party without the prior written consent of such other Party, which
shall not be unreasonably withheld, delayed or conditioned.  Each Party, at the
other Party’s expense and reasonable request, shall cooperate with such other
Party and its counsel in the course of the defense or settlement of any such
claim, such cooperation to include without limitation using reasonable efforts
to provide or make available documents, information, and witnesses.

Section 12.03  Insurance.  Each Party shall have and maintain such type and
amounts of liability insurance covering the Manufacture, supply, use and sale of
the Licensed Compounds and the Licensed Products as is normal and customary in
the pharmaceutical industry generally for Persons similarly situated, and shall
upon request provide the other Party with a copy of its policies of insurance in
that regard, along with any amendments and revisions thereto.

ARTICLE XIII.

 DISPUTE RESOLUTION

Section 13.01 Referral of Disputes to the Parties Senior Executives.  In the
event of any dispute, controversy or claim between the Parties arising out of or
in connection with this Agreement, including the existence, negotiation,
validity, formation, interpretation, breach, performance or application of this
Agreement (“Dispute”), either Party may, by written notice to the other, have
such Dispute referred to the Senior Executives for attempted resolution by good
faith negotiations.

Section 13.02  Mediation and Arbitration.

(a)        If (i) Ardelyx at any time has a good faith belief that KHK may be in
material breach of its obligations under Section 4.03, (ii) Ardelyx has notified
KHK of its belief in writing and the Parties are not in agreement as to whether
or not such breach under Section 4.03 exists, and (iii) the Parties have not
resolved the dispute through good faith negotiations pursuant to Section 13.01
within the prescribed time, then Ardelyx shall have the right (but not the
obligation) to request, through written notice to KHK (a “Mediation Notice”)
within [***] ([***]) days after the expiry of the time period set forth in
Section 13.01, that the Parties shall first refer the dispute proceedings under
the International Chamber of Commerce (“ICC”) under its Mediation Rules.  For
clarity, Ardelyx shall not be obligated to exercise its right to initiate
mediation pursuant to this Section 13.02(a) before initiating arbitration
pursuant to Section 13.02(b).  If Ardelyx elects to exercise its right to
initiate mediation within the prescribed time, then the following shall apply:
If the Parties are unable to reach agreement on the selection of the mediator
within [***] ([***]) Business Days

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after KHK’s receipt of the Mediation Notice from Ardelyx, then either or both
Parties shall immediately request the ICC to select a mediator with the
requisite background, experience and expertise in the biopharmaceutical industry
to assist the Parties in resolving the dispute amicably. The place of mediation
shall be New York City, New York, and all negotiations and communications shall
be in English.  The Parties shall have the right to be represented by counsel
during the mediation.  Each Party shall bear its own costs and expenses and
attorneys’ fees, and the Parties shall share equally all costs of engaging such
mediator and using the ICC to mediate such matter.  Any decisions or
recommendations of the mediator shall be confidential and non-binding on the
Parties.  If the Parties are unable to resolve the dispute through mediation
pursuant to this Section 13.02(a) within a period of [***] ([***]) days
following KHK’s receipt of the Mediation Notice from Ardelyx, then either Party
shall thereafter have the right to refer the dispute to arbitration pursuant to
Section 13.02(b).

(b)       Subject to Section 13.01 and Section 13.02(a), any Dispute that is not
resolved by the Senior Executives within [***] ([***]) days after such notice is
received, such Dispute shall be finally settled under the Rules of Arbitration
of the ICC by three (3) arbitrators.  If the two party-appointed arbitrators
fail to nominate the President of the Tribunal within [***] ([***]) days after
the appointment of the two party-appointed arbitrators then, the ICC shall
appoint the President of the Tribunal.  The place of arbitration shall be New
York City, New York.  The language of the arbitration shall be English.  The
Parties agree that such judgment or award may be enforced in any court of
competent jurisdiction.

Section 13.03  Preliminary Injunctions.  Notwithstanding anything to the
contrary, a Party may seek preliminary measures, including but not limited to a
temporary restraining order or a preliminary injunction from any court of
competent jurisdiction in order to prevent immediate and irreparable injury,
loss, or damage on a provisional basis, pending the decision of the arbitral
tribunal on the ultimate merits of any dispute.

Section 13.04  Patent Disputes.  Notwithstanding anything to the contrary, any
and all issues regarding the scope, inventorship, construction, validity, or
enforceability of Patents shall be determined in a court of competent
jurisdiction under the local patent laws of the jurisdictions having issued the
Patents in question.

Section 13.05  Confidentiality.  The Parties undertake to keep confidential all
awards in their arbitration, together with all materials in the proceedings
created for the purpose of the arbitration and all other documents produced by
the other Party in the proceedings not otherwise in the public domain, save and
to the extent that disclosure may be required by a Party by legal duty, to
protect or pursue a legal right or to enforce or challenge an award in legal
proceedings before a court or other judicial authority.

ARTICLE XIV.

 MISCELLANEOUS

Section 14.01  Assignment; Performance by Affiliates.

(a)        Neither Party may assign any of its rights or obligations under this
Agreement in any country in whole or in part without the prior written consent
of the other Party, except that

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each Party shall have the right, without such consent, (i) to perform any of its
obligations and exercise any of its rights under this Agreement through, and to
assign all of its rights and obligations under this Agreement to, any of its
Affiliates; provided, that, such performance or exercise by such Affiliate, or
such assignment, as applicable, [***]; and (ii) on written notice to the other
Party, to assign all of its rights and obligations under this Agreement to a
non-Affiliate successor in interest, whether by merger, consolidation,
reorganization, acquisition, stock purchase, asset purchase or other similar
transaction, to all or substantially all of the business to which this Agreement
relates.  In the event that a Party performs its obligations or exercises its
rights under this Agreement through an Affiliate (without having assigned all of
its rights and obligations to such Affiliate as permitted under this Section
14.01(a), doing so shall not relieve the relevant Party of its responsibilities
for the performance of its obligations under this Agreement and the relevant
Party shall remain responsible and be guarantor of the performance by its
Affiliates and shall cause its Affiliates to comply with the provisions of this
Agreement in connection with such performance).

(b)       This Agreement shall survive any succession of interest permitted
pursuant to Section 14.01(a)(ii) whether by merger, consolidation,
reorganization, acquisition, stock purchase, asset purchase or other similar
transaction, provided, that, in the event of such merger, consolidation,
reorganization, acquisition, stock purchase, asset purchase or other similar
transaction, no Intellectual Property Rights of the acquiring corporation shall
be included in the technology licensed hereunder, unless such Intellectual
Property Rights arise as a result of the performance of this Agreement by such
corporation after such transaction becomes effective.

(c)        This Agreement shall be binding upon and inure to the benefit of the
successors and permitted assigns of the Parties.  Any assignment not in
accordance with this Agreement shall be void.

Section 14.02  Force Majeure.  In this Agreement, “Force Majeure” means an event
which is beyond a non-performing Party’s reasonable control, including an act of
God, strike, lock-out or other industrial/labor disputes (whether involving the
workforce of the Party so prevented or of any other Person), war, riot, civil
commotion, terrorist act, epidemic, quarantine, fire, flood, storm, earthquake,
natural disaster or compliance with any law or governmental order, rule,
regulation or direction, whether or not it is later held to be invalid.  A Party
that is prevented or delayed in its performance under this Agreement by an event
of Force Majeure (a “Force Majeure Party”) shall, as soon as reasonably
practical but no later than [***] ([***]) days after the occurrence of a Force
Majeure event, give notice in writing to the other Party specifying the nature
and extent of the event of Force Majeure, its anticipated duration and any
action being taken to avoid or minimize its effect.  Subject to providing such
notice and to this Section 14.02, the Force Majeure Party shall not be liable
for delay in performance or for non-performance of its obligations under this
Agreement, in whole or in part, except as otherwise provided in this Agreement,
where non-performance or delay in performance has resulted from an event of
Force Majeure.  The suspension of performance allowed hereunder shall be of no
greater scope and no longer duration than is reasonably required and the Force
Majeure Party shall exert all reasonable efforts to avoid or remedy such Force
Majeure.

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Section 14.03  Further Actions.  Each Party agrees to execute, acknowledge, and
deliver such further instruments, and to do all such other acts, as may be
necessary or appropriate in order to carry out the purposes and intent of this
Agreement.

Section 14.04  Notices.  All notices hereunder shall be in writing and shall be
deemed given if delivered personally or by facsimile transmission (receipt
verified), mailed by registered or certified mail (return receipt requested and
postage prepaid), or sent by internationally recognized overnight delivery
service that maintains records of delivery, to the Parties at the following
addresses (or at such other address for a Party as shall be specified by like
notice; provided, that notices of a change of address shall be effective only
upon receipt thereof).

 

 

 

If to Ardelyx, addressed to:

Ardelyx, Inc.

 

34175 Ardenwood Blvd.

 

Fremont, CA 94555

 

Attention: Michael Raab, CEO

 

Facsimile: 510-745-0493

 

 

With a copy to:

Latham & Watkins LLP

 

140 Scott Drive

 

Menlo Park, CA 94025-1008

 

Attention: Judith A. Hasko, Esq.

 

Facsimile: (650) 463-2600

 

 

If to KHK, addressed to

Kyowa Hakko Kirin Co., Ltd.

 

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

 

Attention: Business Development Department

 

Facsimile:  ＋[***]

 

 

With a copy to:

Kyowa Hakko Kirin Co., Ltd.

 

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

 

 

 

Attention: Legal and Intellectual Property Department

 

Facsimile:  ＋[***]

 

Section 14.05  No Waiver.  Except as specifically provided for herein, the
waiver from time to time by either of the Parties of any of their rights or
their failure to exercise any remedy shall not operate or be construed as a
waiver of any other of such Party’s rights or remedies provided in this
Agreement.

Section 14.06 Severability.  If any term, covenant or condition of this
Agreement or the application thereof to any Party or circumstance shall, to any
extent, be held to be invalid or unenforceable, then (a) the remainder of this
Agreement, or the application of such term, covenant, or condition to Parties or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby, and each term, covenant, or condition of this
Agreement shall be valid and be enforced to the fullest extent permitted by law,
and (b) the Parties

 

 

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covenant and agree to renegotiate any such term, covenant, or application
thereof in good faith in order to provide a reasonably acceptable alternative to
the term, covenant, or condition of this Agreement or the application thereof
that is invalid or unenforceable, it being the intent of the Parties that the
basic purposes of this Agreement are to be effectuated.

Section 14.07  Governing Law.  This Agreement shall be governed by and
interpreted under the laws of the State of New York, USA, without giving effect
to any conflict of law principle that would otherwise result in the application
of the laws of any State or jurisdiction other than the State of New York, USA,
except that Section 13.02(b) and any arbitration thereunder shall be governed by
the Federal Arbitration Act, Chapters 1 and 2 as long as such Chapters are
applicable.

Section 14.08 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

Section 14.09 Entire Agreement. This Agreement, including without limitation all
exhibits attached hereto, sets forth all the covenants, promises, agreements,
warranties, representations, conditions, and understandings between the Parties
and supersedes and terminates all prior and contemporaneous agreements and
understanding between the Parties, including without limitation the agreements
and amendments set forth in Section 7.07.  There are no covenants, promises,
agreements, warranties, representations, conditions, or understandings, either
oral or written, between the Parties other than as set forth in this
Agreement.  No subsequent alteration, amendment, change, or addition to this
Agreement shall be binding upon the Parties unless reduced to writing and signed
by the respective authorized officers of the Parties.

Section 14.10  Limitation of Liability.  EXCEPT IN CIRCUMSTANCES OF GROSS
NEGLIGENCE OR INTENTIONAL MISCONDUCT BY A PARTY OR ITS AFFILIATES, OR WITH
RESPECT TO THIRD PARTY CLAIMS UNDER Section 12.01, IN NO EVENT SHALL EITHER
PARTY OR ITS RESPECTIVE AFFILIATES AND SUBLICENSEES BE LIABLE FOR SPECIAL,
INDIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES, WHETHER IN CONTRACT, WARRANTY,
TORT, STRICT LIABILITY, OR OTHERWISE, INCLUDING BUT NOT LIMITED TO LOSS OF
PROFITS, REVENUE, MILESTONES OR ROYALTIES.  This Section 14.10 shall not limit
either Party’s obligations under Article XII.

Section 14.11  No Partnership.  It is expressly agreed that the relationship
between Ardelyx and KHK shall not constitute a partnership, joint venture, or
agency.  Neither Ardelyx nor KHK shall have the authority to make any
statements, representations, or commitments of any kind, or to take any action,
which shall be binding on the other Party, without the prior consent of such
other Party to do so.

[SIGNATURE PAGE FOLLOWS]

 

 

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Confidential

 

In Witness Whereof, the Parties have executed this Agreement in duplicate
originals by their proper officers as of the Effective Date.

 

 

 

 

 

Ardelyx, Inc.

    

Kyowa Hakko Kirin Co., Ltd.

 

 

 

By:

/s/ Michael Raab

 

By:

/s/ Nobuo Hanai, Ph.D

Title:

CEO

 

Title:

President and CEO

 

 

 

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Confidential

 

TENAPANOR STRUCTURE

[***]

 

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Confidential

 

EXHIBIT B

COMPOUND PATENTS

[***]

Confidential Portions of this Exhibit marked as [***] have been omitted

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Confidential

 

ADDITIONAL PATENTS

[***]

Confidential Portions of this Exhibit marked as [***] have been omitted

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Confidential

 

EXHIBIT D

INITIAL DELIVERY OF DEVELOPMENT DATA AND REGULATORY
DOCUMENTATION

[***]

 

Study Number

Description

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

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Confidential

 

EXHIBIT E

DEVELOPMENT API SUPPLY

[***]

 

 

 

 

 

 

Compound
/ Material

Quantity

Timing
for Delivery

Purpose

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

 

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Confidential

 

EXHIBIT F

DEVELOPMENT PRODUCT SUPPLY

(i)         [***]

 

Timing for Delivery

Product

Quantity

 

 

 

[***]

[***]

[***]

 

 

[***]

[***]

 

 

[***]

[***]

 

 

[***]

[***]

 

 

[***]

[***]

 

(ii)       [***]

 

Timing for Delivery

Product

Quantity

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

 

(iii)      [***]

 

Timing for Delivery

Product

Quantity

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

 

Confidential Portions of this Exhibit marked as [***] have been omitted

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