EXHIBIT 10.14C

Execution Copy

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INCRELEX™

LICENSE AND COLLABORATION AGREEMENT

THIS INCRELEX™ LICENSE AND COLLABORATION AGREEMENT (the “Agreement”), is entered
into as of the Effective Date (defined below) by and between Tercica, Inc., a
company incorporated under the laws of Delaware with offices at 2000 Sierra
Point Parkway, Suite 400, Brisbane, CA 94005, United States of America
(“Licensor”) and Beaufour Ipsen Pharma, a company incorporated under the laws of
France with offices at 24 rue Erlanger, 75016 Paris, France (“Licensee”).
Licensor and Licensee are sometimes referred to herein individually as a “Party”
and collectively as the “Parties”.

Whereas, Licensor is engaged in the business of developing and marketing of
pharmaceutical products; and

Whereas, Licensor and Genentech Inc. (“GNE”) have entered into that certain
License and Collaboration Agreement dated April 15, 2002 (the “GNE US License”);
and Licensor and GNE have also entered into that certain International License
and Collaboration Agreement dated July 25, 2003 (the “GNE Ex-US License”);
whereby GNE has granted to Licensor certain rights in the Licensed Product (as
defined below) under GNE’s technology, know-how and/or intellectual property
rights to permit Licensor to develop, commercialize, market and promote the
Licensed Product in the United States of America, and outside the United States
of America, respectively; and

Whereas, Licensor and Fujisawa Pharmaceutical Co, Ltd (“Fujisawa”) have entered
into a license agreement dated December 25, 2003 whereby Fujisawa has granted to
Licensor certain rights in the Licensed Product under certain patent rights of
Fujisawa to permit Licensor to label, promote, distribute, manufacture, use,
import and sell the Licensed Product in all countries and territories worldwide
but excluding Japan (the “Fujisawa License”); and

Whereas, Licensor, as of the Execution Date has obtained regulatory approval
for, and is marketing the Initial Product (as defined below) under the tradename
Increlex® in the United States and is currently conducting additional research
and development activities with respect to obtaining regulatory approval for the
Licensed Product (the “Licensor On-going Development” as further defined below);
and

Whereas, Licensor is seeking a partner for the development and, following
regulatory approval, distribution of the Licensed Product in the Territory (as
defined below); and

 

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Whereas, Licensee has the marketing and sales force in the Territory to enable
it to effectively market the Licensed Product in the Territory; and

Whereas, Licensor and Licensee (or its Affiliate), on the Execution Date, also
are entering into that certain Stock Purchase and Master Transaction Agreement,
and will enter into pursuant thereto such other agreements, including the Voting
Agreement, Registration Rights Agreement, Investor Rights Agreement, Convertible
Note Agreement, and related transaction documents, including the issuance of a
Warrant to purchase shares of Common Stock of Licensee (collectively, the
“Equity Transaction Documents”); and

Whereas, Licensee, Licensee’s Affiliate, and Licensor, on the Effective Date,
are also entering into that certain Somatuline License and Collaboration
Agreement pursuant to which, among other things, Licensee will exclusively
license to Licensor, Licensee’s product Somatuline Autogel, for sale by Licensor
in the United States and Canada (the “Somatuline Agreement”).

THE PARTIES DO HEREBY AGREE AS FOLLOWS:

 

1. DEFINITIONS

1.1 “18-Month Rolling Order Forecast” has the meaning set forth in Section 6.7.1
of this Agreement.

1.2 “Affiliate” means, in respect of any Person (i.e. any individual or any
corporation, limited liability company, partnership, trust, association or other
entity of any kind, a Person that is directly or indirectly controlling,
controlled by, or under common control with such first-mentioned Person or any
of its Subsidiaries, and for the sole purpose of this paragraph, the term
“control” (including the terms “controlled by” and “under common control with”)
means having, directly or indirectly, the power to direct or cause the direction
of the management and policies of a Person, whether through ownership of voting
securities or by contract or otherwise. As used in this Section 1.2,
“Subsidiary” means any corporation or other organization, whether incorporated
or unincorporated, of which (i) at least fifty percent (50%) of the securities
(or other interests having by their terms ordinary voting power to elect a
majority of the board of directors or others performing similar functions with
respect to such corporation or other organization) is directly or indirectly
owned or controlled by the relevant Person or (ii) the relevant Person (or any
other subsidiary of the relevant Person) is a general partner.

1.3 “Agreement” shall have the meaning set forth in the preamble.

1.4 “Binding Order” has the meaning set forth in Section 6.7.2 of this
Agreement.

1.5 “BLA” means a Biologics License Application (as defined in Title 21 of the
United States Code of Federal Regulations, Section 600 et seq, as amended from
time to time), or such application’s foreign equivalent, filed pursuant to the
requirements of a Regulatory Authority for Marketing Authorization of a Licensed
Product.

 

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1.6 “Calendar Quarter” means the respective period of three (3) consecutive
calendar months ending on March 31, June 30, September 30 and December 31.

1.7 “Calendar Year” means the respective period of twelve (12) consecutive
months commencing on January 1 and ending on December 31.

1.8 “Combination Product” shall mean a pharmaceutical formulation or product for
use in the Field that contains IGF-1 and any other active ingredient, including
without limitation IGFBP-3 or growth hormone.

1.9 “Commercialization Plan” shall mean the most recent version of any given
three Calendar Year rolling plan as from First Commercial Sale until termination
or expiration of the Agreement (the first Calendar Year being for the purpose of
this clause, the period starting from the date of the First Commercial Sale in
the country until December 31 of the same year), with respect to the promotion,
sales plan and budget for each Licensed Product in each country of the Territory
including in particular: (a) the Promotional Efforts planned for such three
Calendar Years and (b) the Sales Forecast anticipated for such three Calendar
Years. Such Commercialization Plan shall also include provisions for the
manufacturing, supply and distribution planning of Licensed Products for sale in
the Territory.

1.10 “Commercial Sale” means the sale of Licensed Products whether by Licensee
or Licensee’s Affiliates or Sub-licensees to a third party and shall exclude
(i) any transfer of Licensed Product by Licensee to its Affiliates or
Sub-licensees and (ii) any distribution of Licensed Product for use in
Development activities or as Samples.

1.11 “Confidential Information” has the meaning set forth in Section 10.1 of
this Agreement.

1.12 “Control” with the correlative meaning “Controlled by” means, with respect
to intellectual property, possession of the right to grant a license or
sublicense as provided for herein without violating (a) any law or governmental
regulation applicable to such license or sublicense or (b) the terms of any
agreement or other arrangement with any third party that exists as of the
Effective Date, or if such right is acquired after the Effective Date, as of the
date a Party first gained possession of such right.

1.13 “Cover” and with correlative meaning “Covered” shall mean with respect to
Patent Rights, that such Patent Rights claim the composition of matter, method
of making or any use of such Licensed Product.

1.14 “current Good Manufacturing Practices” or “cGMP” shall mean the
requirements found in the legislation, regulation and administrative provisions
for methods to be used in, and the facilities or controls to be used for, the
manufacturing, processing, packing and/or holding of a drug to assure that such
drug meets the requirements as to the safety and has

 

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the identity and strength and meets the quality characteristics that it purports
or is represented to possess, all of which as defined by the competent
authorities of each country of the Territory where and at the time Licensee
sells the Licensed Products in each such country and by the competent
authorities of the country where any manufacturing or testing operation is
conducted.

1.15 “Delivery Point” shall have the meaning ascribed to it in Section 6.4 of
this Agreement.

1.16 “Developing Party” shall mean a Party Developing solely a Product
Improvement, a Combination Product or an Other Product under a Subsequent
Development Plan as set forth in Section 4.4.4 (i) of this Agreement.

1.17 “Development” and with correlative meaning “Develop” and “Developing” means
all activities related to preclinical testing, toxicological, pharmacokinetic,
metabolic, or clinical aspects of the Licensed Product (or where applicable an
Other Product), process development, stability studies, formulation development,
clinical studies regulatory affairs, and other development activities for the
Licensed Product (or where applicable an Other Product).

1.18 “Development Costs” shall mean costs incurred jointly by the Parties under
the Initial Development Plan or Joint Subsequent Development Plan or solely by a
Developing Party under a Subsequent Development Plan as determined in accordance
with Section 4.4.2 of this Agreement.

1.19 “Development Plan” shall mean either the Initial Development Plan or any
Subsequent Development Plan.

1.20 “Diabetes” shall mean a progressive disease of carbohydrate metabolism
involving inadequate production or utilization of insulin that is characterized
by hyperglycemia and glycosuria. The term shall apply to any form of diabetes,
including without limitation, Type 1 and Type 2 diabetes, as well as other
hyperglycemic disorders, such as hyperinsulinemia, hyperlipidemia,
insulin-resistant diabetes such as Mendenhall’s Syndrome, Werner Syndrome,
leprechaunism, lipoatrophic diabetes.

1.21 “Diabetes Covenant Expiration” shall have the meaning set forth in
Section 2.7.

1.22 “Diligent Efforts” shall mean the efforts consistent with the exercise of
prudent scientific and business judgment, consistent with the effort applied to
other pharmaceutical products of similar potential and market size by the Party
in question (or, if the Party in question has no other pharmaceutical product of
similar potential and market size, by other similarly sized pharmaceutical
companies that do).

1.23 “Dominating Patent” means with respect to a given country in the Territory,
an unexpired patent of a third party which has not been finally invalidated by a
court or other governmental agency of competent jurisdiction and which would be
infringed by the use, manufacture, sale or import of the Licensed Product in
such country under this Agreement

 

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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
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1.24 “Effective Date” shall mean the date of the First Closing.

1.25 “EU Marketing Authorization” shall mean the Marketing Authorization granted
by the European Union Commission for the Licensed Product under the centralized
procedure.

1.26 “EU Territory” shall mean the member states of the European Union, Iceland,
Norway and Liechtenstein.

1.27 “EMEA” means the European Medicine Agency, a decentralized body of the
European Union.

1.28 “Excluded Indications” shall mean the use of IGF-1 as a therapeutic or
potential therapeutic for any human disease or condition of the central nervous
system as described in Section 1.19 and Exhibit A of the GNE Ex-US License.

1.29 “Execution Date” shall mean July 18, 2006, the date of execution of the
Purchase Agreement.

1.30 “Field” means all uses in humans and all in vitro uses, excluding the
Excluded Indications and excluding, unless and until and only to the extent that
the Diabetes Covenant Expiration occurs as set forth in Section 2.7, Diabetes.

1.31 “First Closing” shall have the meaning ascribed to it in the Purchase
Agreement.

1.32 “First Commercial Sale” means the first Commercial Sale in the relevant
countries of the Territory, as evidenced by the first payment received by
Licensee, its Affiliates or Sub-licensees in connection with this Commercial
Sale on a country-by-country basis.

1.33 “FTE” shall mean full time equivalent of, and is equal to the amount of
work one full time employee would accomplish during any one year period.

1.34 “Fujisawa” and “Fujisawa License” shall have the meaning set forth in the
preamble of this Agreement.

1.35 “GNE” shall have the meaning set forth in the preamble of this Agreement.

1.36 “GNE Ex-US License” shall have the meaning set forth in the preamble of
this Agreement.

1.37 “GNE US License” shall have the meaning set forth in the preamble of this
Agreement.

 

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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

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1.38 “IGF-1” means native-sequence insulin-like growth factor-1 from any species
with or without an N-terminal methionine, allelic variants thereof, and sequence
variants thereof wherein substitutions and/deletions are made in the region from
1 to 5 amino acids from the N-terminus of the mature native-sequence IGF-1 of
any species, including des-IGF-1 and variants wherein at least the glutamic acid
residue is absent at position 3 from the N-terminus of native-sequence human
IGF-1.

1.39 “IND” means an investigational new drug application as defined under US law
and foreign equivalents.

1.40 “Indication” means the prevention, therapeutic treatment, or diagnosis of
any particular human disease or, disorder or condition, but shall not include
the Excluded Indication and shall not include, unless and until and only to the
extent that the Diabetes Covenant Expiration occurs as set forth in Section 2.7,
Diabetes.

1.41 “Initial Development Plan” means the plan for the conduct of specified
Development activities with regards to the Initial Product, or Product
Improvements or Combination Products as agreed between the Parties pursuant to
Section 4.3.1 of this Agreement for the purpose of obtaining initial Marketing
Authorization or Marketing Authorization for label expansion for such Licensed
Product, which shall exclude any Licensor On-going Development.

1.42 “Initial Product” means that certain pharmaceutical formulation for use in
the Field containing IGF-1 and as of the Execution Date marketed by Licensor in
the United States under the tradename Increlex™, the specifications of which, as
of the Execution Date and filed with the EMEA are attached as Schedule 2 to this
Agreement, which specifications may be amended from time to time by the written
agreement of the Parties.

1.43 “JFC” shall mean the joint finance committee as defined in Section 3.2 of
this Agreement.

1.44 “Joint Know-How” shall mean any and all Know-How owned jointly by the
Parties pursuant to Section 8.3.

1.45 “Joint Patents” shall mean any and all Patent Rights owned jointly by the
Parties pursuant to Section 8.3.

1.46 “Joint Patent Committee” shall mean the committee defined in Section 8.3.

1.47 “Joint Subsequent Development Plan” shall mean a Subsequent Development
Plan conducted and funded jointly by the Parties in accordance with
Section 4.4.3 of this Agreement.

1.48 “JSC” shall mean the joint steering committee as defined in Section 3.1 of
this Agreement.

 

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1.49 “Know-How” means all non public proprietary information, trade secrets,
techniques and data of a Party (including Confidential Information as defined in
Section 10.1) including, but not limited to, discoveries, formulae, materials,
practices, methods, knowledge, know-how, processes, experience, test data
(including pharmacological, toxicological and clinical information and test
data), analytical and quality control data, marketing, pricing, distribution,
cost and sales data or descriptions and any and all submissions to Regulatory
Authorities with respect to Licensed Products, and preclinical and clinical
data, assays and associated materials, and protocols and procedures and
documentation associated with the foregoing.

1.50 “Licensed Know-How” shall mean Know-How owned or Controlled by Licensor
that is reasonably necessary for the characterization, optimization, assaying,
Development, import, offer for sale, use or sale of IGF-1 or any Licensed
Product in the Field including without limitation all Know-How resulting from
Licensor On-going Development.

1.51 “Licensed Patent Rights” shall mean all Patent Rights owned or Controlled
by Licensor in the Territory which Cover the Licensed Product, but excluding
Licensor Related Patent Rights except and to the extent agreed by the Licensor
and Licensee pursuant to Section 2.9. As at the Execution Date, Licensed Patent
Rights include all Patent Rights listed in Schedule 1 of this Agreement.

1.52 “Licensed Product” means, as the context requires, the Initial Product, and
any Product Improvements and/or any Combination Products that accrue from the
Initial Development Plan and/or Joint Subsequent Development Plans, and/or any
Subsequent Development Plan as to which the Opt-in Party (as that term is
defined in Section 4.4.4(ii)(F)(a) below) has exercised its rights to Opt-In (as
that term is described in Section 4.4.4(ii)(F)(a) below) pursuant to
Section 4.4.4(ii)F.

1.53 “Licensed Trademarks” shall mean the trademarks listed in Schedule 3.

1.54 “Licensee Allocation” shall have the meaning ascribed to it in
Section 4.4.3.

1.55 “Licensee Group” means Licensee and its Affiliates.

1.56 “Licensee Independent Patent Rights” shall have the meaning set forth in
Section 2.5.2 of this Agreement.

1.57 “Licensee Related Patent Rights” means, any Patent Rights owned or
Controlled by Licensee which Cover a Licensed Product other than the Initial
Product in the Licensor Territory and either (i) are acquired by or licensed to
Licensee from a third party and as to which Licensee would owe such third party
royalties or other payments for the license to such Patent Rights in the
Licensor Territory based on Licensee’s (or Licensor’s) use and exploitation of
such Patent Rights; or (ii) do not cover inventions made in the conduct of the
Development or a Development Plan under this Agreement, which inventions are
solely or jointly owned by Licensee as provided in Section 8.3.

1.58 “Licensor Allocation” shall have the meaning ascribed to it in
Section 4.4.3.

 

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1.59 “Licensor IP Rights” means any and all Licensed Patent Rights and Licensed
Know-How.

1.60 “Licensor On-going Development” shall mean those clinical, non-clinical
studies and regulatory activities anywhere including in the Territory
(a) ongoing as of the Execution Date and set forth in Schedule 11 hereto or
(b) that either (i) are required for securing Marketing Authorization for the
Initial Product for the Target Label in the Territory, or (ii) the conduct of
which is a condition upon which such Marketing Authorization has been granted.
Licensor On-going Development are carried out and funded solely by Licensor.

1.61 “Licensor Related Patent Rights” means, any Patent Rights owned or
Controlled by Licensor that are other than those listed on Schedule 1, but which
Cover any Licensed Product other than the Initial Product, and either (i) are
acquired by or licensed to Licensor from a third party and as to which Licensor
would owe such third party royalties or other payments for the license to such
Patent Rights in the Territory based on Licensor’s (or Licensee’s) use and
exploitation of such Patent Rights; or (ii) do not cover inventions made in the
conduct of the Development or a Development Plan under this Agreement, which
inventions are solely or jointly owned by Licensor as provided in Section 8.3.

1.62 “Licensor Territory” means the United States of America, Canada, and Japan,
and including, until the license provided for in Section 2.4 is in effect, the
Third Party Countries, and the territories and possessions of each of the
foregoing countries.

1.63 “Manufacturing Option” shall have the meaning ascribed to it in
Section 6.18.1 of this Agreement.

1.64 “Market Competition” means with respect to a given country of the
Territory, the written notification to Licensor by Licensee that the sale in a
given country of the Territory of one or more products containing IGF-1 produced
in a prokaryotic expression system by one or more third parties that are not
Sub-licensees of Licensee has achieved greater than twenty-five percent
(25%) Market Share. For purposes of this Section 1.64, “Market Share” shall mean
the percentage market share in value for the product or products in question
containing IGF-1, such percentage to be established by measuring a full Calendar
Quarter of reported prescription data for the applicable product(s) and any
competing products (including Licensed Products) sold in the relevant country of
the Territory. If the Parties are unable to mutually agree on the Market Share
of a given product or products based on such prescription data, the Parties
shall submit the issue to a mutually-agreeable third party market research firm
having expertise in pharmaceutical sales in the relevant country of the
Territory (the “Research Firm”). The Research Firm shall be instructed to
provide an independent assessment of the Market Share for purposes of
determining Market Competition hereunder. Licensee shall bear all costs
associated with the services of the Research Firm; provided that in the event
that the Research Firm establishes that the Market Share is twenty five percent
(25%) or higher for a particular Indication, Licensor shall reimburse Licensee
for the full cost of the Research Firm’s services for such assessment.

1.65 “Marketing Authorizations” means the regulatory authorizations required to
sell the Licensed Product in the Territory on a country-by country basis.

 

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1.66 “Net Sales” means the consolidated gross amount recognized as sold for any
particular period using IFRS criteria for sales recognition for the Licensed
Product by Licensee or its Affiliates or Sublicensees to third parties, minus
the following as applicable, using IFRS criteria, (a) returned goods; (b) trade
cash, and quantity discounts accrued and actually taken from the invoiced
amount; (c) rebates, including payments in respect of any governmental
subsidized programs, rebate payments given to wholesalers or other Licensee
buying groups, healthcare insurance carriers or other institutions; (d) credits
or allowances actually given or made for rejection or return of previously sold
Licensed Products or for retroactive price reductions (including government
mandated rebates and chargebacks); (e) sales, value added or other taxes or
duties levied on or measured by the billing amount for Licensed Products, to the
extent billed separately on the invoice and paid for by the customer, as
adjusted for rebates and refunds, as applicable; (f) one percent (1%) of such
consolidated gross amount recognized as sold to account for estimated charges
for freight and insurance directly related to the delivery or return of Licensed
Products to the extent billed separately on the invoice and paid for by the
customer; (g) adjustments for Combination Products as mutually agreed upon in
good faith by the Parties, and by Licensor and GNE, (h) uncollectible debts, as
incorporated in Licensee Group’s consolidated accounts consistently applied to
all products of Licensee Group, provided however that if collected at a later
date such amounts will be added to Net Sales in the Calendar Quarter in which it
is received, in all cases as adjusted periodically to reflect amounts actually
incurred in the Territory for items (a) through (f). If a Licensed Product is
sold for consideration other than cash, the fair market value of such other
consideration shall be included in Net Sales.

1.67 “Opt-In” shall have the meaning assigned to it in Section 4.4.4(ii)(F).

1.68 “Opt-in Information” shall have the meaning assigned to it in
Section 4.4.4(ii)(F)(d)(A)(b).

1.69 “Opt-in Notice Date” shall have the meaning assigned to it in
Section 4.4.4(ii)(F)(d)(A)(a).

1.70 “Other Product” shall mean any chemical entity or pharmaceutical product
other than a Licensed Product which is acquired, owned, Controlled or being the
object of research and development activities by Licensor in the field of
endocrinology, or other areas as may be mutually agreed by the Parties in
writing.

1.71 “Patent Rights” means any patents, patent applications, certificates of
invention, or applications for certificates of invention and any supplemental
protection certificates together with any extensions, registrations,
confirmations, reissues, substitutions, divisions, continuations or
continuations-in-part, reexamination or renewals thereof.

1.72 “Phase I Clinical Trials” shall mean those clinical trials on sufficient
number of volunteers/subjects that are designed to establish safe drug doses and
to support testing in Phase II Clinical Trials.

 

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1.73 “Phase II Clinical Trials” shall mean those clinical trials on sufficient
number of patients that are designed to explore the dosage, safety and
biological activity of a drug for intended use, and to define warnings,
precautions and adverse reactions that are associated with the drug in the
dosage range to be prescribed.

1.74 “Phase III Clinical Trials” shall mean those clinical trials on sufficient
number of patients that are designed to establish that a drug is safe and
efficacious for its intended use, and to define warnings, precautions, and
adverse reactions that are associated with the drug in the dosage range to be
prescribed and supporting Marketing Authorization of such drug or label
expansion of such drug.

1.75 “Product Improvement” shall mean any improvements and/or enhancements or
other desirable change to the technical/pharmacological characteristics of the
Initial Product (or an enhanced or improved version of the Initial Product),
whether patentable or not, including, without limitation, improvements or
enhancements in the manufacture, formulation, ingredients, preparation,
presentation, means of delivery or administration, dosage, indication for use or
packaging of the Initial Product.

1.76 “Promotional Efforts” shall mean, as to a given Licensed Product, the
annual sales, medical and marketing efforts planned by the Licensee in the
promotion and marketing of such Licensed Product in a country of the Territory
after the First Commercial Sale in such country. The Promotional Efforts shall
be detailed in the Commercialization Plan which shall include without limitation
sales plan, number of calls by medical representatives, intended Phase IV
(post-approval) studies and budget related thereto for such Licensed Product in
such country (although the actual Phase IV study design and budget therefor will
be addressed in a Development Plan for such Licensed Product).

1.77 “Purchase Agreement” means that certain Stock Purchase and Master
Transaction Agreement, dated as of July 18, 2006, by and between Licensee’s
Affiliate, and Licensor.

1.78 “Regulatory Authority” means any government agency having the
responsibility for granting Marketing Authorizations and any other government
entities with authority over the manufacturing and the marketing of the Licensed
Product.

1.79 “Related Patent Rights” shall have the meaning set forth in Section 2.9 of
this Agreement.

1.80 “Royalty Term” shall have the meaning ascribed to it in Section 7.2.1 of
this Agreement.

1.81 “Sales Forecasts” shall mean, as to a given Licensed Product, the annual
sales forecasts for the Licensed Product in a country of the Territory with
respect to the Indication(s) for which Licensee has obtained Marketing
Authorization.

 

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

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1.82 “Sample” means Licensed Product delivered to Licensee by Licensor for
distribution by Licensee or otherwise, to health care professionals for trial
use by patients at no cost to the patient and not for re-sale pursuant to
applicable laws.

1.83 “Schedule(s)” refers to the Schedules attached to this Agreement and
incorporated herein by this reference.

1.84 “SKU” shall mean stock-keeping unit.

1.85 “Specifications” means the standards and specifications relating to the
manufacture, testing and packaging of the Licensed Product, which shall be those
approved by the Regulatory Authorities in the Territory from time to time and on
a country-by-country basis. The Specifications of the Initial Product as at the
Execution Date and as filed with the EMEA are set forth in Schedule 2 attached
hereto.

1.86 “Sub-licensee” means a third party to whom Licensee or its Affiliates
sublicenses, assigns or otherwise delegates some or all of their rights and
obligations under this Agreement. Sub-licensee shall also include any third
party who purchases its supply of Licensed Product, in finished form from
Licensee, its Affiliates or Sublicensee for resale into the market, where, as a
partial or full consideration for such purchase, such third party has a payment
obligation to Licensee, its Affiliates or Sublicensee that is a percentage of
its net sales, including without limitation a royalty obligation.

1.87 “Subsequent Development Plan” shall mean the specific plan for Development
activities to obtain initial Marketing Authorization or Marketing Authorization
for a Product Improvement, Combination Product or, as the case may be and where
agreed pursuant to Section 4.3.3, Other Product, submitted by one Party to the
other Party pursuant to Sections 4.3.2 and 4.3.3 of this Agreement.

1.88 “Supply Price” shall have the meaning ascribed to it in Section 6.5 of this
Agreement.

1.89 “Target Label” shall mean the Indication for which the Parties intend that
the Marketing Authorization will be granted, and the correlative estimated
patient population which the Parties expect may be treated by such Indication
(the “EU Target Population”), with respect to the Initial Product in the member
states of the European Union, Norway, Iceland and Liechtenstein as further
described in Schedule 4.

1.90 “Technical Agreement” shall have the meaning ascribed to it in
Section 6.1.1 of this Agreement.

1.91 “Territory” means all countries of the world, excluding the United States
of America, Canada, Japan, and excluding until the license provided for in
Section 2.4 is in effect with respect thereto, the Third Party Countries.

 

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

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1.92 “Third Party Countries” means Taiwan, Israel, the Kingdom of Saudi Arabia,
United Arab Emirates, Oman, Kuwait, Syria, Jordan, Lebanon, Iran, Iraq, Morocco,
Algeria, Tunisia, Libya, Egypt, Bahrain, Qatar, Yemen, and the territories and
possessions of each of the foregoing countries.

1.93 “Valid Claim” means any claim of a pending patent application of a Licensed
Patent Rights which has not been abandoned or finally rejected without the right
of appeal or which is not known to be unpatentable, or any claim from an issued
and unexpired Licensed Patent Rights which has not been revoked or held
unenforceable or invalid by a decision of a court or other governmental
authority of competent jurisdiction without the right of appeal, and which has
not been disclaimed, denied or admitted to be invalid or unenforceable through
reissue or disclaimer or otherwise.

 

2. LICENSE GRANT

2.1 Exclusive License.

2.1.1 Subject to the terms and conditions of this Agreement Licensor grants to
Licensee and Licensee’s Affiliates (for so long as they remain Affiliates of
Licensee):

(i) an exclusive, royalty-bearing license right, with the right to grant
sublicenses pursuant to Section 2.2, to use and exploit Licensor IP Rights
(including Licensor’s interest in any and all Joint Know-How and Joint Patents)
to import, have imported, use, and have used to research and Develop the Initial
Product and those other Licensed Products which are jointly Developed by the
Parties or solely developed by Licensee or as to which Licensee elects to
exercise its Opt-in rights pursuant to Section 4.4.4(ii)F, in the Field and in
the Territory, as and to the extent permitted under this Agreement;

(ii) a non- exclusive, royalty-bearing license right, to use and exploit
Licensor IP Rights (including Licensor’s interest in any and all Joint Know-How
and Joint Patents) to use and have used to research and Develop the Initial
Product and those other Licensed Products which are jointly Developed by the
Parties or solely developed by Licensee or as to which Licensee elects to
exercise its Opt-in rights pursuant to Section 4.4.4(ii)F, in the Field and in
the Licensor Territory, as and to the extent permitted under this Agreement; and

(iii) an exclusive (even as to Licensor or Licensor’s Affiliates),
royalty-bearing license right, with the right to grant sublicenses pursuant to
Section 2.2, to use and exploit Licensor IP Rights (including Licensor’s
interest in any and all Joint Know-How and Joint Patents) to use, have used,
import, have imported, offer for sale, sell and have sold Licensed Products in
the Territory, in the Field.

The grant of exclusive rights to Licensee in subsections (i) and (iii) of this
Section 2.1.1 shall be subject to Licensor’s reservation of the right to use,
have used, import, and have imported in the Territory Initial Product and those
other Licensed Products which are

 

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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

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jointly Developed by the Parties or solely developed by Licensor or as to which
Licensor elects to exercise its Opt-in rights pursuant to Section 4.4.4(ii)F,
for the purpose of supporting Development of Initial Product or such other
Licensed Products in the Field for sale in the Licensor Territory, as and to the
extent permitted under this Agreement.

2.1.2 Notwithstanding the foregoing, Licensor reserves all rights:

(i) under the Licensor Related Patent Rights unless otherwise agreed among the
Parties pursuant to Section 2.9 of this Agreement in a separate written
agreement, and

(ii) under the Licensor IP Rights to the extent necessary to conduct or have
conducted research, use, manufacture or Development of Licensed Products for
sale in the Licensor Territory, as and to the extent permitted under this
Agreement. In addition, the license granted in Section 2.1.1 is made subject to
GNE’s retained rights to perform in vitro research and development activities
with respect to IGF-1 in the Field in the Territory (as provided in the Section
F.1(f) of the GNE Ex-US License).

2.1.3 Subject to the terms and conditions of this Agreement, Licensor hereby
grants to Licensee and Licensee’s Affiliates (for so long as they remain
Affiliates of Licensee) an exclusive (even as to Licensor or Licensor’s
Affiliates), royalty-bearing license right, with the right to grant sublicenses,
to use and exploit the Licensed Trademarks on and solely in connection with the
Development and commercialization of the Licensed Product throughout the
Territory, in the Field.

2.1.4 Licensee acknowledges and understands that as of the Execution Date,
Licensor is in patent litigation proceedings in the United Kingdom with regard
to the alleged infringement by Insmed Incorporated and Avecia Limited of certain
of the Licensed Patent Rights in the United Kingdom (and related patent validity
proceedings involving GNE), and Licensor and GNE are co-plaintiffs in patent
litigation proceedings in the U.S. with respect to the alleged infringement by
Insmed Incorporated of certain Patent Rights of Licensor in the U.S., and that
as part of the possible global settlement of such litigation, Insmed
Incorporated may require a license to use and exploit the Licensed Patent Rights
in the Territory to make, use and sell (A) its product IPLEX™ (mecasermin
rinfabate [rDNA origin] injection) product (hereinafter referred to as “IPLEX”),
(B) a product that is a preserved reformulation of IPLEX in a multi-use vial,
which product is to be selected by Insmed (hereinafter referred to as
“MULTIPLEX”) and/or (C) any product containing IGF-1 in combination with
IGFBP-3. Accordingly, and notwithstanding the grant of rights to Licensee by
Licensor in this Section 2.1, Licensee agrees to consider in good faith,
promptly following the reasonable request of Licensor, the conditions under
which such license may be granted to Insmed Incorporated, its Affiliates and its
successors-in-interest, (which entities are collectively and individually
referred to herein as “Insmed”) by Licensee (either directly, or by reverting
such rights to Licensor for direct grant to Insmed). These issues of alleged
infringement by and grant of license rights to Insmed shall first be addressed
within the Joint Patent Committee following the request of either Party, and
such Joint Patent Committee shall recommend a course of action to the Joint
Steering Committee. The Joint Patent Committee

 

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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

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shall in particular consider the following: (i) the outcome or likely outcome of
the ongoing patent litigations involving Insmed, (ii) the management of such
patent litigation, and costs associated therewith as weighed against the
benefits of possible settlement, (iii) the possible means of settlement of such
patent litigation including the granting of a non-exclusive right and license to
use and exploit the Licensed Patent Rights to use, have used, make, have made,
sell, have sold, offer for sale, have offered for sale, import, have imported,
export and have exported in the Territory (A) IPLEX™ and/or (B) MULTIPLEX and/or
(C) any product containing IGF-1 in combination with IGFBP-3 together with a
right to sub-license wholesalers and distributors on agreed terms and subject to
prior agreement of Licensee and GNE, (iv) the allocation among the Parties and
GNE of all monies paid by Insmed pursuant to such litigation, settlement or
license agreement, and (v) the allocation among the Parties and GNE of all costs
incurred in the conduct of the litigation. It is also understood that as between
the Parties and to the extent permitted under Section 8.2.2 Licensee shall be
entitled to elect to manage and assume control of (subject to GNE’s consent) the
ongoing patent litigation proceedings against Insmed in the Territory, in which
event the conditions thereon shall also be discussed within the Joint Patent
Committee and Licensor shall use its reasonable endeavors to assist with the
handover of the management of the ongoing proceedings in the Territory in
accordance with the foregoing provisions in the event Licensee so elects. If, as
part of the overall strategy, either Party considers it desirable to institute
new proceedings in the Territory against Insmed or its manufacturers, this issue
shall also be referred to the Joint Patent Committee for consideration. The
Joint Patent Committee shall work together with the Joint Finance Committee to
propose to the Joint Steering Committee an action plan with respect to issues
set forth in this Section 2.1.4 and the JSC shall make a determination based
upon such action plan for implementation by the Parties. Within the framework of
the Joint Patent Committee and the Joint Finance Committee, Licensor and
Licensee shall keep each other appraised on a regular basis of the status of
such litigation proceedings and any settlement discussions, and review and
consider in good faith, all comments or input received from the other with
respect thereto.

2.2 Sublicense Rights, Third Party Distributors. Licensee shall have the right
to sublicense the rights granted in Section 2.1 to Sub-licensees and/or to
appoint third party distributors, subject to the prior written consent of
Licensor and GNE which shall not be unreasonably withheld or delayed.
Notwithstanding the foregoing, Licensee shall remain responsible for complying,
and for ensuring that such Sub-licensees and distributors comply, with this
Agreement, all relevant laws, regulations and requirements relating to the
importation, distribution, marketing, promotion and sale of the Licensed Product
in the Territory. Any sub-license and distributorship agreement shall contain
terms and conditions that are not inconsistent with those of this Agreement.

2.3 Excluded Indications. In the event at any time after the Effective Date,
Licensor possesses, acquires, or regains rights to Develop, sell, offer for
sale, use, export and/import the Licensed Product for the Excluded Indications,
such Excluded Indications shall be automatically included in the Field, subject
to Section F.5 of the GNE Ex-US License.

 

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

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2.4 Territory; Third Party Countries. With respect to each Third Party Country,
Licensor shall keep Licensee apprised of any anticipated and actual expiry or
termination of the relevant distribution agreement for such Third Party Country
with one or more third parties with whom Licensor has entered into such
distribution agreement. Distribution Agreements for the Third Party Countries in
effect as of the Execution Date are listed in Schedule 5. Licensor shall notify
Licensee reasonably in advance of the expected date of expiry or termination of
such third parties’ rights. With respect to each Third Party Country, Licensor
hereby agrees that it shall not seek to renew or extend the term of such
Distribution Agreement, and that Licensee shall automatically be granted all
rights as provided for in Section 2.1 above upon both (i) expiry or termination
of the relevant distribution agreement with one or more third parties with whom
Licensor has entered into such distribution agreement, and (ii) the written
consent of GNE, not to be unreasonably withheld or delayed, and which Licensor
shall, where practicable, seek at least six (6) months ahead of the foreseen
expiry or termination thereof. Licensor shall indemnify and hold harmless
Licensee against any claim from these third parties in relation to the
execution, termination or expiry of their contractual arrangements with
Licensor.

2.5 Licenses to Licensor.

2.5.1 Licensee hereby grants to Licensor,

(i) a non-exclusive, sublicensable license under Licensee’s interest in any
Joint Patent Rights and any Joint Know-How to use, have used, make, have made,
research and Develop the Initial Product and those other Licensed Products which
are jointly Developed by the Parties or as to which Licensor elects to exercise
its Opt-in rights pursuant to Section 4.4.4(ii)F, in the Field and in the world,
as and to the extent permitted under this Agreement; and

(ii) an exclusive, sublicensable license under Licensee’s interest in any Joint
Patent Rights and any Joint Know-How to sell, offer for sale, import, have
imported and export in the Field and in the Licensor Territory, the Initial
Product and those other Licensed Products which are jointly Developed by the
Parties or as to which Licensor elects to exercise its Opt-in rights pursuant to
Section 4.4.4(ii)F.

2.5.2 Licensee hereby represents and warrants that, as of the Execution Date,
Licensee does not own or Control any Patent Rights that claim the composition of
matter of, or the method of making or any use of, the Initial Product in the
Licensor Territory (“Licensee Independent Patent Rights”). Notwithstanding the
foregoing, to the extent any such Licensee Independent Patent Rights are after
the Execution Date found to exist, Licensee hereby covenants that, during the
term of this Agreement, neither it, nor its Affiliates, shall assert against
Licensor, its Affiliates or any sublicensees, a claim of infringement of such
Licensee Independent Patent Rights based upon the research, development, use,
manufacture, sale, offer for sale, import and export of the Initial Product in
the Field and in the Licensor Territory or the research, development, use and
manufacture of the Initial Product in the Field and in the Territory. Provided
however that Licensor acknowledges and agrees that Licensee does not covenant
that, during the term of this Agreement, neither it, nor its Affiliates, would
not assert against Licensor, its Affiliates or any sub-licensees, a claim of
infringement of Related Patent Rights Controlled by Licensee unless otherwise
agreed among the Parties pursuant to Section 2.9 of this Agreement in a separate
written agreement

 

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

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2.6 Right of First Negotiation for Other Products.

2.6.1 When acquiring or gaining Control of any Other Product with respect to
Licensor Territory, to the extent it is on commercially reasonable terms and
does not have an adverse effect on the interests of Licensor to do so, Licensor
shall endeavor to acquire or obtain Control of such Other Product with respect
to the Territory. With respect to those Other Products owned or Controlled by
Licensor as of the Effective Date, Licensor shall provide or cause to be
provided to the JSC a list of such Other Products and their status of
development.

2.6.2 For a period of six (6) years from the Execution Date (the “Option
Period”) Licensee shall have a right of first negotiation with respect to the
development and commercialization of Other Products for the Territory as set
forth in this Section 2.6. During the Option Period, promptly following the
acquisition or obtaining Control of any Other Product by Licensor for the
Territory, Licensor shall notify Licensee of such Other Product and
simultaneously provide to Licensee all necessary information relating to such
Other Product to enable Licensee to decide as to whether it wishes to exercise
its right to negotiate with Licensor to obtain the exclusive rights to develop
and/or commercialize the Other Product in the Territory, as the case may be,
depending upon the development stage of such Other Product and Licensor shall
not market or commercialize such Other Product in the Territory (either itself
or through its Affiliates, Sublicensees or other third party) unless and until
Licensee has either notified Licensor of its decision to negotiate rights on
such Other Product for the Territory or the time for such notification has
lapsed. Licensee shall notify Licensor of its decision to so negotiate within
thirty (30) days as from receipt of the above information. Failure by Licensee
to make such notification will be deemed as a refusal of its first right of
negotiation for the development and/or commercialization of the Other Product in
the Territory.

2.6.3 In the event Licensee notifies Licensor of its decision to develop and
commercialize the Other Product in the Territory, the Parties shall have one
hundred-twenty (120) days or more if mutually agreed in writing (the
“Negotiation Period”) to negotiate exclusively the terms and conditions
applicable to such collaboration, including, as appropriate, any co-development
of such Other Product, and the payment of any license fees or other payments
owed any third party by Licensor with respect to the development or
commercialization of the Other Product in the Territory.

2.6.4 In case of failure by Licensee to notify Licensor of Licensee’s decision
to exercise its right of first negotiation within the thirty-day (30) period or
failure of the Parties to reach an agreement within the Negotiation Period,
Licensor shall be free to itself develop and commercialize such Other Product in
the Territory and/or enter into any agreement with any third parties to develop
and/or commercialize the Other Product in the Territory, provided, however, that
for a period of twelve (12) months after the end of the Negotiation Period,
Licensor shall not enter into any agreement with such a third party for rights
to such Other Product in the Territory on terms less favorable to Licensor, when
viewed in their totality, than those last offered by or to Licensee.

 

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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

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2.6.5 Notwithstanding Licensee’s right of first negotiation as set forth above,
Licensor may propose to Licensee that the Parties conduct a Joint Subsequent
Development Plan for such Other Product or that a Subsequent Development Plan
for such Other Product be conducted solely by the Licensor with the right for
the Licensee to Opt-in, pursuant to the provisions of Sections 4.4.3 and 4.4.4
either prior to, or subsequent to any exercise by Licensee of its rights to
negotiate for the exclusive license to such Other Product as provided for above.
It is expressly understood and agreed however that nothing in this Agreement
shall be interpreted as a license by Licensor to Licensee of any rights to such
Other Product and that any such license will be only as may be agreed upon in
writing by the Parties following the Effective Date.

2.7 Limitations on Commercializing Licensed Products for Diabetes.
Notwithstanding Section 2.1, Licensee agrees and acknowledges the limitations
placed upon Licensor pursuant to Section F.1(e) of the GNE Ex-US License.
Accordingly, Licensee covenants that, with respect to Diabetes in the Territory,
it will not (i) market, sell, offer for sale or have sold IFG-1 for which the
manufacture, use or sale would infringe, if not for the licenses granted under
this Agreement, the Patent Rights licensed to Licensor under the GNE Ex-US
License; and (ii) market, sell, offer for sale or have sold IGF-1 that was
manufactured or for which approval was received using the Licensed Know-How
licensed to Licensor pursuant to the GNE Ex-US License, unless and until the
Diabetes Covenant Expiration. As used herein, the “Diabetes Covenant Expiration”
means the date upon which Licensor enters into a written agreement with F.
Hoffman-La Roche AG granting Licensor the right to market, sell, offer for sale
or have sold Licensed Products for Diabetes in the Territory. Upon the Diabetes
Covenant Expiration, the license granted to Licensee in Section 2.1 shall
automatically be deemed to include Diabetes in the Field definition to the
extent, and only to the extent, Licensor obtains such rights and the right to
sublicense the same to Licensee from F. Hoffmann-La Roche AG and as provided in
Section F.1(e) of the GNE Ex-US License.

2.8 Limitations on Certain Combination Products.

Notwithstanding Section 2.1, Licensee agrees and acknowledges the limitations
placed upon Licensor pursuant to Section F.4 of the GNE Ex-US License as of the
Execution Date with respect to any Combination Product containing either IGF-I,
or IGF-I combined with BP3, complexed or combined in any manner with any form of
GH (a “GNE Combination Product”), in keeping with which limitations Licensee
shall receive no right or license hereunder to engage in the human clinical
development, marketing, or sale of any GNE Combination Product. In addition,
Licensee agrees and covenants that it and its Affiliates will not, without
Licensor’s prior written consent:

(a) engage in human clinical development, market or sell any GNE Combination
Product; or

(b) sublicense the rights to engage in the activities set forth in Subsection
2.8 (a) to any Affiliate or third party. Nothing in this Section 2.8 shall be
interpreted as prohibiting GNE from marketing and/or selling its growth hormone
products and IGF-I (as permitted under the GNE Ex-US License) separately, even
if such activities result in both products being prescribed on one or more
occasion to the same patient(s), provided GNE does not actively market the
products to be used in combination with each other without Licensee’s prior
written consent.

 

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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

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2.9 Other Cross Licenses. In the event either Party desires to incorporate
technology in the discovery, research, composition of matter of, or the making
or using of Licensed Products pursuant to a Development Plan (“Technology”), and
if such Technology is Covered by Patent Rights which are necessary for the
performance of the works contemplated by such Development Plan, in that such
Patent Rights would be infringed by the commercial exploitation of the Licensed
Product resulting from the performance of such Development Plan and which either
are (i) Licensor Related Patent Rights; or (ii) Licensee Related Patent Rights,
or (iii) owned by a third party (collectively, “Related Patent Rights”) such
Party shall inform the JSC of such Related Patent Rights for the JSC’s
consideration as part of its consideration of the Development Plan at issue. If
the JSC approves incorporation of such Related Patent Rights, it shall determine
(i) the allocation between the Parties of any costs owed or to be owed to such
third party owning or Controlling such Patent Rights; or (ii) the consideration
to be paid by one Party to the other Party for obtaining a cross license under
such Related Patent Rights. If the JSC does not approve such incorporation or
the Parties cannot agree upon such allocation of costs or consideration to be
paid to the other Party, then the Party that made the proposal (Licensor or
Licensee) may incorporate such Technology in the discovery, research or
Development of the Licensed Product within the framework of a sole Development
Plan, as and to the extent permitted under this Agreement, and use, have used
import, have imported offer for sale, sell and have sold the result of such sole
Development Plan in the Licensor Territory or Licensee Territory, as the case
may be. The foregoing shall remain subject to the Opt-in right of the other
Party as set out in Section 4.4.4 of this Agreement, itself subject to prior
written agreement among the Parties on the consideration to be paid by the
Opt-in Party to the Developing Party for a license under such Related Patent
Rights, without which prior written agreement such Opt-in right shall not
include a license under such Related Patent Rights.

 

3. GOVERNANCE

3.1 Joint Steering Committee

3.1.1 Constitution and Powers.

The Parties shall establish a Joint Steering Committee (“JSC”) which will
consist of an equal number of representatives of each Party, initially
designated at four (4) representatives appointed by each Party among its
employees or consultants. Each Party shall, within thirty (30) days after the
Effective Date, select its initial representatives and inform the other Party of
such representatives and set a date shortly thereafter (no later than thirty
(30) days) for the first meeting of such JSC, provided that such representatives
shall be senior persons responsible for the applicable functional area (i.e.,
research, clinical development and regulatory, manufacturing, or
commercialization) within each Party. The initial representatives from the
Parties are set forth in Schedule 12. Each Party may replace its representatives
at any time on prior written notice to the other Party. Each Party will have the
right from time to time to invite to JSC meetings employees or consultants other
than its representatives to address specific issues discussed at such JSC
meetings. The chairperson of the JSC shall be appointed by Licensor.

 

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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
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The JSC shall act as a consultative and decision making body for the purpose of
designing and monitoring the implementation of Development Plans and generally
shall act as the forum for information sharing among the Parties with respect to
the Development of the Licensed Product, Commercialization Plans, Product
Improvements, Combination Products and potentially Other Products (as and to the
extent agreed by the Parties), their manufacture, supply and marketing. In
particular, the JSC shall :

(i) exchange information (including Development, manufacture, supply and
marketing information) related to the Licensed Product, Product Improvements,
Combination Products and potentially Other Products and facilitate cooperation
and coordination between the Parties as they exercise their respective rights
and meet their respective obligations under this Agreement,

(ii) design an Initial Development Plan within one hundred and eighty (180) days
following the Effective Date and which shall be undertaken by the Parties
jointly as set forth in Section 4.3.1,

(ii) review proposals from either Party on any Subsequent Development Plans,

(iv) review and decide on any changes to the Development Plans,

(v) with respect to the Initial Development Plan and Joint Subsequent
Development Plans :

 

  •  

Allocate the duties among the Parties,

 

  •  

Implement all activities and monitor and coordinate all activities, including
scheduling and prioritization thereof,

 

  •  

Develop a publication strategy and a calendar of key scientific and clinical
meetings or other events,

 

  •  

Determine the priorities with respect to seeking Marketing Authorization.

(vi) with respect to Subsequent Development Plans that is the object of sole
Development by a Developing Party:

 

  •  

Review the activities of the Developing Party under such Subsequent Development
Plan,

 

  •  

Review all Opt-In Information.

(vii) appoint working sub-groups whose duties and power shall be determined by
the JSC and who shall meet as necessary to provide relevant information for the
JSC to carry out its duties under this Agreement ; and

(viii) Liaise with and manage the JFC.

 

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(ix) promptly following the Effective Date, itself or through an appointed
sub-group, become the forum for the discussion and analysis of the handling of
regulatory matters in the Territory and the specific determination of the role
of Licensee in acting as Licensor’s regulatory agent under Section 5.1.

3.1.2 Meetings of the Joint Steering Committee and Minutes.

The JSC shall meet at least twice (2) per Calendar Year for so long as the
Initial Development Plan is being carried out by the Parties and Subsequent
Development Plans are being jointly Developed by the Parties. Meetings of the
JSC may be attended in person or by telephone or video conference. If in person,
the location of the meeting shall alternate at a place decided by Licensor and
Licensee, sequentially. The chairperson of the JSC shall be responsible for
providing an agenda for each meeting at least ten (10) business days in advance
of such meeting.

In the event one Party solely carries out Development under a Subsequent
Development Plan, the JSC shall meet once a Calendar Year, unless otherwise
mutually agreed (on a date and location to be mutually agreed in good faith
between the Parties) only to review (i) the Subsequent Development Plan and
material modifications thereto, (ii) implementation thereof and progress and
(iii) Opt-in Information during the Opt-in Notice Period as set forth in
Section 4.4.4 of this Agreement.

Responsibility for the preparation of minutes setting forth discussions held at
each JSC meeting shall alternate between the Parties as directed by the
chairperson, provided, however, that such minutes will not become official until
agreed upon by the JSC representatives of both Parties. The minutes of such JSC
meetings shall be reasonably detailed and distributed in draft minutes to all
members of the JSC for comment and review within ten (10) business days after
the relevant meeting. The JSC members shall have seven (7) business days to
provide comments. The Party preparing the minutes shall incorporate timely
received comments and distribute finalized minutes to all members of the JSC
within twenty-four (24) business days of the relevant meeting.

3.1.3 Decision-making Authority.

Decisions of the JSC shall be taken unanimously. In the event of a disagreement
or a deadlock, the matter shall be referred to senior executives of the Parties
pursuant to Section 15.1. If the disagreement or deadlock persists and is not
resolved in the period provided for in Section 15.1, Licensor shall have the
right to cast a tie-breaking vote which shall be reasonably exercised. It is
understood and agreed that the exercise by Licensor of a tie-breaking vote so as
to resolve a disagreement or deadlock at the JSC shall in no way result in the
elimination or reduction of Licensor’s obligation to use Diligent Efforts to
participate and co-fund the Initial Development Plan and any Joint Subsequent
Development Plans under the terms of this Agreement.

However, in the event that a dispute referred to the Parties pursuant to
Section 15.1 is in relation to matters contemplated in Section 3.2.3 of this
Agreement as to which the JFC is to agree, including those matters set forth in
Section 2.1.4, or with respect to matters related to the manufacture, supply and
marketing of Licensed Product in the Territory is referred

 

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

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to the JSC, Licensor shall have no tie-breaking vote in which event the
provisions of Article 15 shall apply. For clarity, it is understood that as
between the Parties, Licensor shall at all times have the right to control all
decisions relating to the marketing and selling of the Licensed Product in the
Licensor Territory.

3.2 Joint Finance Committee.

3.2.1 Membership. Upon the establishment of the JSC, the Parties shall establish
a Joint Finance Committee (“JFC”) to be composed of one (1) employee
representative appointed by each Party. Such representative shall be an employee
with expertise and responsibilities in the areas of accounting, cost allocation,
budgeting and financial reporting. The JFC representative of each Party may call
on any additional employee of that Party to attend the JFC meeting on an ad hoc
basis.

3.2.2 Meetings. The JFC will meet as appropriate but at least quarterly to
review the following, as applicable: (i) each Party’s Development Costs;
(ii) Net Sales, milestone payments, royalty payments; (iii) the results of any
completed audits conducted in accordance with Section 7.2.4. In addition to the
foregoing, in the event one Party solely conducts any Subsequent Development
Plan, the JFC shall meet (on a date and location to be mutually agreed in good
faith between the Parties) to review the Pre Opt-in Development Costs during the
Opt-in Notice Period after receipt of the Opt-in Information.

3.2.3 Decisions of JFC. The JFC shall operate by consensus and decisions of the
JFC shall be taken unanimously. If the JFC is unable to resolve a dispute
regarding any issue presented to it, such dispute shall be referred to the JSC
for resolution. The JFC shall operate under the direction of the JSC to provide
services to and consult with the JSC in order to address the financial,
budgetary and accounting issues under the Agreement. The JFC members may
participate in any meetings of the JSC upon request of the JSC.

3.3 Coordination of JSCs and JFCs. The Parties acknowledge and agree that there
is to be a separate Joint Steering Committee and Joint Finance Committee created
pursuant to the Somatuline Agreement, with equal and potentially overlapping
membership as that present on the JSC and JFC created pursuant to Section 3.1
and 3.2 above. Where possible, the Parties shall endeavor to coordinate and
potentially combine meetings of the respective Joint Steering Committees and
Joint Finance Committee meetings so as to ensure efficient governance and
oversight of both collaborations between the Parties, including for example,
holding such meetings on the same dates and/or same locations.

 

4. DEVELOPMENT PLAN AND CONDUCT OF DEVELOPMENT ACTIVITIES

4.1 Licensor On-going Development.

Licensor shall be solely responsible for the completion of the Licensor On-going
Development at its own cost and expense with a view to obtain Marketing
Authorization in the Target Label in the countries of the European Union in the
Territory.

 

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

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Licensor shall promptly provide (or make available) to Licensee all relevant
information relating to such Licensor On-going Development including without
limitation the clinical data reports, regulatory files and submissions and
correspondence with Regulatory Authorities resulting therefrom.

4.2 Development Plan – General.

Any Development Plan shall provide for the Development activities to be carried
out by the Parties, either jointly or separately as the case may be. A
Development Plan should avoid unnecessary duplication by the Parties in any
activity and have a goal of an appropriate allocation of responsibilities in
light of the Development activities involved. Each Party shall provide
information to the JSC (including Confidential Information) necessary for the
JSC coordinating and deciding on such Development Plan activities with the other
Party.

Consistent with the above principles, the Development Plan should include:

 

  •  

specific tasks, location of work, milestones, budgets (determined with reference
to Development Costs), estimated timelines, immediate objectives, and long term
objectives and a determination of the various research and development
activities that shall be performed by each Party:

 

  •  

provisions for manufacturing and supply of Licensed Product for clinical uses;

 

  •  

Development activities including preclinical safety and other studies to support
Phase I Clinical Trials, Phase II Clinical Trials and/or Phase III Clinical
Trials and/or filing for and obtaining and maintaining Marketing Authorization;
and

 

  •  

identification of resource requirements of the Development Plan and allocation
of those resources between the Parties.

4.3 Initial Development Plan and Subsequent Development Plans of Licensed
Products and Other Products.

4.3.1 Initial Development Plan.

Each Party shall require its representatives at the JSC to use their Diligent
Efforts to negotiate in good faith and prepare an Initial Development Plan
within one hundred and eighty (180) days following the Effective Date along the
guidelines set out in Schedule 6 to this Agreement. If the JSC approves an
Initial Development Plan, it shall be attached hereto as Schedule 6-bis and may
be amended or updated only upon approval by the JSC. The Initial Development
Plan shall be updated annually by the JSC at a time decided by the JSC and
suitable for both Parties’ planning and budgeting processes. The Initial
Development Plan and any modifications thereto (including a change of scope of
the responsibilities of the Parties or changes to the budgets) shall be approved
by the JSC

 

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

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in the written minutes of the applicable JSC meeting. In the event the Parties
agree on such Initial Development Plan, the Parties shall jointly perform and
fund such Initial Development Plan as set forth in Section 4.4.3 and the Parties
shall each have access to, and the rights to use in their respective territory,
data arising out of such Initial Development Plan and shall jointly own the same
(as Joint Know-How) as set forth in Section 8.3 of this Agreement.

4.3.2 Subsequent Development Plans for Product Improvements and Combination
Products.

All Development activities for the Initial Product, Product Improvements or
Combination Products (other than those set forth in the Initial Development
Plan), shall be conducted pursuant to a Subsequent Development Plan in
conformance with this Section 4.3.2, unless otherwise agreed by the Parties in
writing. Each Party may propose to the other Party to perform a Subsequent
Development Plan for a Product Improvement or a Combination Product : the JSC
shall reasonably consider such proposals and the other Party may make comments
or counter proposals with respect to all parameters of such proposal, including
budget and the Parties shall thereafter negotiate in good faith with a view to
agreeing on a Subsequent Development Plan.

In the event the Parties agree on such Subsequent Development Plan, the Parties
shall jointly perform and fund such Subsequent Development Plan as set forth in
Section 4.4.3 and the Parties shall each have access to, and the rights to use
in their respective territory, data arising out of such Subsequent Development
Plan and shall jointly own the same (as Joint Know-How) as set forth in
Section 8.3 of this Agreement.

In the event a Party does not agree with and does not want at such time to
participate in, a Subsequent Development Plan proposed by the other Party, the
proposing Party may, at its own risk, decide unilaterally to perform such
Subsequent Development Plan and may subcontract whole or part of such Subsequent
Development Plan to the extent such subcontract is not detrimental to the Opt-In
rights of the non-Developing Party set forth in Section 4.4.4(ii)(F) of this
Agreement; provided, however that at any time during the Opt-In Period, the
non-Developing Party may opt to perform and/or co-fund such Subsequent
Development Plan, in which event the Opt-in Party may develop, market, promote,
sell, have sold the Product Improvement or Combination Product arising from such
Subsequent Development Plan in the Territory (where the Opt-in Party is the
Licensee) or in the Licensor Territory (where the Opt-in Party is the Licensor).

Notwithstanding the foregoing paragraph, Licensor may only conduct Development
activities in a Subsequent Development Plan and designed to take place in the
Territory with the prior written agreement of Licensee, which shall not be
unreasonably withheld or delayed; provided, however, that nothing herein shall
be deemed to prevent Licensor from applying for a Marketing Authorization in the
Territory as Licensor may deem appropriate. Once granted, the agreement of
Licensee can not be withdrawn unless otherwise agreed with Licensor.

 

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

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For the avoidance of doubt, Licensee shall have no right to carry out any
Development activity with regards to the Initial Product, Product Improvements,
or Combination Products, except in the context of a Subsequent Development Plan,
in compliance with this Section 4.3.2. In addition, Licensee may only conduct
Development activities in a Subsequent Development Plan which are designed to
take place in the Licensor Territory with the prior written agreement of
Licensor, which shall not be unreasonably withheld or delayed, and which
agreement, once granted, cannot be withdrawn unless otherwise agreed with
Licensee, but which in all cases is subject to any rights GNE may have pursuant
to Article IV of the GNE US License in the Licensor Territory.

4.3.3 Subsequent Development Plans For Other Products.

Notwithstanding each Party’s right of first negotiation for Other Products as
set forth in Section 2.6, either Party may propose to the other Party, through
the JSC, to participate in and perform a Subsequent Development Plan for an
Other Product in which event the JSC shall reasonably consider such proposals
and the other Party may make counter proposals with respect to all parameters of
such proposal, including budget and the Parties shall thereafter negotiate in
good faith with a view to agreeing on a Subsequent Development Plan for such
Other Product.

In the event the Parties agree on such Subsequent Development Plan for an Other
Product, the Parties shall jointly perform and fund such Subsequent Development
Plan for an Other Product as set forth in Section 4.4.3. The Parties shall each
have access to, and the rights to use in their respective territory, data
arising out of such Subsequent Development Plan and shall jointly own the same
(as Joint Know-How) as set forth in Section 8.3 of this Agreement.

In the event a Party does not agree with a Subsequent Development Plan for an
Other Product proposed by the other Party, such other Party may, at its own
risk, decide to perform such Subsequent Development Plan for an Other Product
wherever in the world. To the extent a Party does not agree to participate in
such Subsequent Development Plan, it shall not forfeit its rights of first
negotiation under Section 2.6 but such Party shall not have any Opt-In right
under Section 4.4.4(ii)F with respect to such Other Product unless and until
mutually agreed upon by the Parties. The Developing Party may subcontract whole
or part of such Subsequent Development Plan provided however that if such
Developing Party is Licensor, such subcontract shall not be detrimental to the
right of first negotiation of Licensee as set forth in Section 2.6 of this
Agreement.

4.4 Conduct of Development Activities.

4.4.1 General Rules Applicable to Joint and Sole Development

The Parties shall use Diligent Efforts to conduct their tasks and obligations
under any Development Plan:

 

  •  

in accordance with good laboratory, good clinical and current Good Manufacturing
Practices, to the extent these are applicable;

 

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

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  •  

in accordance with all relevant legal requirements and shall be responsible for
obtaining all necessary approvals therefor from any Regulatory Authorities or
applicable competent authority; and,

 

  •  

keeping or causing to be kept written laboratory notebooks and other records and
reports of the results and progress of the works to be performed in sufficient
detail for the Parties to accomplish their obligations under this Agreement.

The Parties acknowledge that time shall be of the essence in this Agreement and
thus that the time deadlines defined in the Initial Development Plan and any
Joint Subsequent Development Plan should be complied with and, as a matter of
principle, not be postponed. However, the Parties agree that the time deadlines
defined in the Initial Development Plan and any Joint Subsequent Development
Plan may be reasonably modified by the JSC.

The obligations of any Developing Party pursuing sole Development under a
Subsequent Development Plan shall be as set forth in Section 4.4.4.

Licensor reserves the right to reasonably exercise a tie breaking vote at the
JSC at any time to change or modify the Initial Development Plan or any Joint
Subsequent Development Plan, or to abandon whole or part thereof, if (i) it is
required by Regulatory Authorities, (ii) there are duly justified scientific
constraints, (iii) there are significant increases in the anticipated costs of
Development, (iv) there are significant adverse events or conditions relating to
the safety or efficacy of the Licensed Product, (v) there are significant, duly
justified changes in the anticipated costs of manufacturing or (vi) the benefits
of continued Development do not outweigh the risks. In the event Licensor
requests a modification or successive modifications of the Initial Development
Plan or of a Joint Subsequent Development Plan which shall , individually or
cumulatively, result in an increase of the aggregate Development Costs to be
incurred by more than fifty (50) percent, such modification shall not be
effective unless and until approved by the senior executives of the Parties as
provided for in Section 15.1. In case of failure of the senior executives of the
Parties to find a common agreement on such modification, Licensee shall have the
right to terminate its performance and funding of the Initial Development Plan
or the Joint Subsequent Development Plan, as the case may be, provided however
that Licensee shall nonetheless retain it’s Opt-In rights set forth in
Section 4.4.4 (ii) F of this Agreement.

4.4.2 Determination of Development Costs

All Development Costs associated with the Development activities carried out by
the Parties jointly under the Initial Development Plan or any Joint Subsequent
Development Plans or solely by the Developing Party shall be accounted for as
follows:

 

  •  

Internal costs of Licensee: EUR [*] per FTE; and Internal costs of Licensor :
$[*] per FTE. This reference unit cost shall be reviewed annually by the Parties
on the basis of the inflation rate in the European Union and the U.S.,
respectively.

 

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

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  •  

External costs: at cost, as properly documented and consistent with the cost
recorded for services rendered by third parties in the Developing Party’s books
in any corresponding period.

4.4.3 Funding of Joint Development.

The Initial Development Plan shall be jointly performed and funded by the
Parties. To the extent any Subsequent Development Plan is agreed upon by both
Parties pursuant to Section 4.3.2 or 4.3.3, the Parties shall be obligated to
jointly perform or fund such Subsequent Development Plan at the percentage set
forth below (“Joint Subsequent Development Plan”).

All activities undertaken by the Parties pursuant to the Initial Development
Plan and any Joint Subsequent Development Plan shall be funded by the Parties in
the following proportion: Licensor shall be responsible for sixty percent
(60%) of all Development Costs, and Licensee shall be responsible for forty
percent (40%) of all Development Costs. As used in this Agreement, “Licensor
Allocation” shall mean such sixty percent (60%) of the Development Costs as
provided in the foregoing sentence, as the case may be and “Licensee Allocation”
shall mean such forty percent (40%) of the Development Costs as provided in the
foregoing sentence, as the case may be. Within thirty (30) days of the end of
each Calendar Quarter, each Party will notify the JFC in writing of the
Development Costs incurred by such Party during such Calendar Quarter, and the
JFC shall aggregate such Development Costs and allocate them to the Parties in
accordance with the percentages set forth in the foregoing sentence. Where
needed in order to reflect such allocated Development Costs, corresponding “true
up” payments will be made by the Party underpaying its share of Development
Costs to the Party having overpaid its share, quarterly within sixty (60) days
following the end of each Calendar Quarter.

4.4.4 Sole Development by one Party and Opt-in Rights.

(i) Decision for Sole Development. In the event that the Parties have not agreed
to jointly perform or fund any Subsequent Development Plan pursuant to
Section 4.3.2, either Party may pursue and fund at its own risk the Subsequent
Development Plans (the “Developing Party”) as and to the extent permitted by
this Agreement, in which case the provisions of this Section 4.4.4 shall apply.

(ii) Development Efforts.

A. General. Subject to the restrictions set forth in subsection B below
regarding conducting Development activities in the non-Developing Party’s
territory, the Developing Party shall make Diligent Efforts (without the duty to
make additional expenditures beyond that required to obtain regulatory approval
in its own Territory) to perform pre-clinical and clinical activities in a
manner that would be suitable for filings for Marketing Authorization in the
Licensor Territory (if Licensee is the Developing Party) or in the Territory (if
Licensor is the Developing Party), as applicable, should the non-Developing
Party subsequently exercise its Opt-in rights pursuant to subsection F below.
The Developing Party shall provide the JSC with quarterly reports outlining the
results of each completed material pre-clinical and clinical study during the
preceding Calendar Quarter. Notwithstanding the foregoing, the Developing Party
shall not be required to continue any Subsequent Development Plan or to complete
any tasks enumerated therein, prior to the time the other Party exercises its
rights to Opt-in.

 

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

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B. Territorial Restrictions. If Licensee is the Developing Party, it shall only
carry out the Development activities in the Territory or, outside the Territory
but only with the prior written consent of Licensor. If Licensor is the
Developing Party, it shall only carry out Development activities outside the
Territory or, in the Territory, but only with the prior written consent of
Licensee.

C. Supply Obligations. If Licensee is the Developing Party, Licensor shall
supply Licensee with IGF-1 or Licensed Product as clinical supplies in
accordance with Article 6 and in quantities to be reasonably determined by the
JSC.

D. Subsequent Development Plan.

Each Party shall have the opportunity to provide input and suggestions with
regard to such Subsequent Development Plan. Notwithstanding the foregoing,
Licensor shall have the sole right to prohibit any activity related to any
Development under a Subsequent Development Plan pursued by the Licensee as
Developing Party if Licensor exercises a tie breaking vote as set forth in
Section 4.4.1. If Licensor prohibits such activity, the JSC and the Developing
Party shall comply with such decision and such activity shall be excluded from
the Subsequent Development Plan. The Subsequent Development Plan shall be
updated by the Developing Party in accordance with the next sentence and be
presented to the JSC at its next meeting. Material modifications to the
Subsequent Development Plan shall be submitted to the JSC for review.

E. Development Costs under Subsequent Development Plan.

The Developing Party shall be responsible for all Development Costs related to
such Subsequent Development Plan, subject to Opt-in by the other Party and
sharing of costs pursuant to Section 4.4.4 (ii) (F) below. The Developing Party
shall record separately in its books in an auditable manner, all its Pre Opt-in
Development Costs.

F. Opt-in.

(a) General. With respect to each Subsequent Development Plan pertaining to the
Development of a Licensed Product for a particular Indication, the
non-Developing Party (the “Opt-in Party”) shall have the option to decide to
participate (“Opt-In”) in the performance and the funding of such Subsequent
Development Plan at such times during the performance of the Subsequent
Development Plan as are set forth below (each, an “Opt-In Period”):

 

  •  

At any time during pre-clinical development and up to the date of allowance of
the first IND in the Licensor Territory or the Territory under the relevant
Subsequent Development Plan (“Opt-In Period 1”);

 

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

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  •  

Within thirty (30) days of receipt of data following completion of each Phase I
Clinical Trial under the relevant Subsequent Development Plan (“Opt-in Period
2”);

 

  •  

Within sixty (60) days of receipt of data following completion of each Phase II
Clinical Trial under the relevant Subsequent Development Plan (“Opt-in Period
3”);

 

  •  

Within thirty (30) days of receipt of data following completion of each Phase
III Clinical Trial with the Licensed Product under the relevant Subsequent
Development Plan and until the filing of a New Drug Application (or equivalent
in any country of the Territory) under such relevant Subsequent Development
Plan, (“Opt-in Period 4”);

 

  •  

At any time after the filing of the first New Drug Application (or equivalent in
any country of the Territory) under the relevant Subsequent Development Plan and
before the end of the thirty (30)-day period following the date of obtaining the
first Marketing Authorization under such relevant Subsequent Development Plan
(“Opt-in Period 5”),

 

  •  

Within the thirty (30) day period after expiry of Opt-in Period 5 (i.e.,
following expiration of the initial thirty-day period following the date of
obtaining Marketing Authorization) (“Opt-in Period 6”). In the event the
Licensor is the Developing Party and the Licensee has failed to Opt-in by the
end of the Opt-in Period 6, through the failure to deliver either the Opt-in
Notification or Opt-in Payment as set forth below to the Developing Party,
Licensor shall be entitled to serve a termination notice pursuant to
Section 4.4.4(ii)F(e).

Notwithstanding the foregoing general framework, the Parties agree that at the
time the non-Developing Party elects not to pursue a Subsequent Development
Plan, they shall also agree upon in good faith, through the JSC, for that
Subsequent Development Plan, and depending upon the nature and subject matter
thereof, which trials proposed to be conducted thereunder shall comprise a
“Phase I Clinical Trial” or “Phase II Clinical Trial” or “Phase III Clinical
Trial” to best provide a fair and reasonable opportunity for the non-Developing
Party to Opt-in at appropriate value creation events, and the Developing Party
to receive the appropriate Opt-in Payment associated with those value creation
events, as specified in Section 4.4.4(ii) F(c) below. Upon generation of the
statistical analyses for the primary endpoint(s) for any such trial, the
Developing Party shall provide a report of such statistical analyses and all
other analyses available at the same time, as defined in the statistical
analysis plan for such trial. In addition, the Developing Party shall also
provide to the other Party a final clinical study report signed by the relevant
responsible person in the respective Party (the “Final Report”).

In such event of Opt-in, the Opt-in Party shall notify its exercise of its right
to Opt-in in writing to the Developing Party (the “Opt-In Notification”). The
Opt-in Notification shall contain confirmation that the Opt-in Party has paid
the relevant Opt-in Payment (as defined in Section 4.4.4 (ii) F (c) below) to
the Developing Party. In case of failure to Opt-in pursuant to this paragraph,
the provisions of Section 4.4.4 (ii) F (e) shall apply.

 

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

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As used above with respect to a clinical trial, “receipt of data following
completion” shall mean the receipt by the Opt-in Party of the Final Report,
provided however that the Opt-in Party may, at its discretion elect to Opt-in on
the basis of the final statistical analysis, tables figures and listing
delivered by the Developing Party as discussed above.

(b) Pre Opt-in Development Costs and Post Opt-in Development Costs. As used
herein, “Pre Opt-in Development Costs” means Development Costs incurred by the
Developing Party with respect to the Subsequent Development Plan up until the
applicable Opt-in Notice Date, including costs of acquiring ownership or Control
of Patent Rights or Know-How in relation to the Product Improvements, the
Combination Products or the Other Products, as the case may be, as are the
subject of such Subsequent Development Plan and related to the Opt-in
Information supplied by the Developing Party to the Opt-in Party. “Post Opt-in
Development Costs” means Development Costs incurred thereafter for the
continuation of the Subsequent Development Plan.

(c) Opt-in Payment. The Opt-in Payment will vary with the specific Opt-in Period
during which the Opt-in Notification is received by the Developing Party and
shall be paid by the Opt-in Party to the Developing Party concomitantly with the
Opt-in Notification. The Opt-in Payment will be equal to the relevant percentage
as set forth below of (i) the Licensor Allocation of the Pre Opt-in Development
Costs if Licensor is the Opt-in Party and (ii) the Licensee Allocation of the
Pre Opt-in Development Costs if Licensee is the Opt-in Party:

 

  •  

The relevant percentage shall be [*]% if the Opt-in Party exercises its Opt-in
during Opt-in Period 1 or Opt-in Period 2;

 

  •  

The relevant percentage shall be [*]% if the Opt-in Party exercises its
Opt-in-during Opt-in Period 3,

 

  •  

The Opt-in Payment shall be [*]% if the Opt-in Party exercises its Opt-in during
Opt-in Period 4

 

  •  

The Opt-in Payment shall be [*]% if the Opt-in Party exercises its Opt-in during
Opt-in Period 5

 

  •  

The Opt-in Payment shall be [*]% if the Opt-in Party exercises its Opt-in during
Opt-in Period 6.

(d) Exercise of Opt-in.

A. Provision of Opt-in Information.

(a) Timing. The Developing Party shall provide, on a continuing basis, Opt-in
Information (as defined below) to the other Party as provided herein. Such Party
shall provide such Opt-in Information on any on-going preclinical activities
promptly following accrual thereof and such Opt-in Information upon completion
(as defined below) of the

 

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

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first Phase I Clinical Trial, Phase II Clinical Trial and Phase III Clinical
Trial with respect to any Subsequent Development Plan but in no event more than
thirty (30) days after completion of the data analysis for such clinical trial.
For the purposes of this Section, the term “end” or “completion” shall mean that
results from the clinical trial at issue have been fully collected, analyzed and
formatted consistently with the guidance provided by the appropriate Regulatory
Authority. The date of receipt by the other Party of all information accrued
from the Subsequent Development Plan which is reasonably available to the
Developing Party and which would be reasonably material and necessary for the
other Party to make a decision regarding exercising such Opt-in during the
Opt-in Period at issue for such indication shall be the “Opt-in Notice Date”.

(b) Content. “Opt-in Information” shall include but is not limited to: a copy of
the final clinical study report and data, results (including but not limited to
results from the clinical trial at issue), reports and protocols and
interpretations of clinical trials, a detailed accounting of all Pre Opt-in
Development Costs; all analyses and information relating to predicted
manufacturing costs and any other pertinent manufacturing information (if
available to the relevant Party); anticipated regulatory costs and fees;
Regulatory Authority documentation and correspondence; and information relating
to expected third party royalty obligations. The Party receiving such Opt-in
Information shall only use such Opt-in Information to decide whether to exercise
an Opt-in. If such Party does not exercise an Opt-in, such Party shall not use
such Opt-in Information for any other purpose, shall return the same to the
Developing Party and shall maintain its confidentiality, provided that such
information qualifies as Know-how of the Developing Party.

B. Opt-in Procedure and Providing Additional Information.

(a) Opt-in Procedure. Following the Opt-in Notice Date, the non-Developing Party
shall have the right, up until the end of the relevant Opt-in Period (the
“Opt-in Notice Period”), to cause the JSC to meet to address any issues arising
out of the Opt-in Information, including calculation of or accounting for any
Pre Opt-in Development Costs. Then, during such Opt-in Notice Period, the
non-Developing Party shall have the right to elect to participate together with
the other Party in the Subsequent Development Plan by providing the Developing
Party with written notice of its decision to so participate and by paying the
Opt-in Payment to the Developing Party (such notice and such reimbursement
payment are herein collectively referred to as an “Opt-in” by such Party) by a
date which is prior to the end of the Opt-in Period at issue. If the Party
electing to Opt-in fails to pay the Opt-in Payment to the Developing Party, and
continues to fail to make such payment within ten (10) business days of written
notice from the other Party (except that withholding disputed amounts shall not
be deemed a failure to make such reimbursement payment), then such Party shall
be deemed to have declined such Opt-in for such Subsequent Development Plan
during the Opt-in Period at issue, but shall continue to have the right to
Opt-in unless and until expiration of Opt-in Period 6.

(b) Obligation to Provide Additional Information. During the Opt-in Notice
Period, (1) the Developing Party shall have an affirmative obligation to provide
the other Party with any additional available information which would be
reasonably

 

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

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material for such other Party to make an Opt-in decision and, (2) each Party may
request additional information which would be reasonably material for it to make
an Opt-in decision and the Developing Party shall supply such information to the
extent it is reasonably available and necessary for the Opt-in decision.

(c) Extension. In the event a Developing Party supplies additional information
pursuant to the preceding sentence and there are fewer than thirty (30) days
remaining in the relevant Opt-in Period, such Opt-in Period shall be extended to
such date that is thirty (30) days after the provision of such additional
information. A Party may, at its sole discretion, notify the Developing Party in
writing before the expiration of its rights set forth herein, that it waives
such rights and such Opt-in rights shall thereby terminate. The Opt-in Period
may be extended by this Section only once with respect to each Subsequent
Development Plan.

C. Pre Opt-in Development Costs and Post Opt-in Development Costs.

(a) Timing of Reimbursement of Pre Opt-in Development Costs. At the same time a
Party provides the Opt-in Notification, such Party shall pay to the other Party
the Pre-Opt in Development Costs.

(b) Disputes. A Party may audit Pre Opt-in Development Costs submitted by the
other Party pursuant to this Agreement or may appoint internationally-recognized
professional accountants to do so. In the event that a Party reasonably disputes
specific items contained in the other Party’s calculation of Development Costs
due to the other Party’s incorrect calculation of Pre Opt-in Development Costs,
such Party shall pay the amounts not in dispute or in question and such disputed
or questioned amounts shall be identified by the JFC and submitted to the JSC
who shall promptly meet or confer to resolve such disputes or questions. Within
seven (7) business days following resolution of such matters, one Party shall
pay or reimburse to the other Party the appropriate remaining balance. In the
event the JSC is not able to resolve a dispute concerning the reimbursement of
Development Costs under this Section, the Parties shall follow the dispute
resolution procedure in Article 15.

D. Joint Development After Opt-in. After any Opt-in, the Parties shall jointly
conduct all future Development activities that are planned in the relevant
Subsequent Development Plan for which the non-Developing Party has exercised its
Opt-in. For clarity, all such activities by either Party commencing from the
Opt-in Notice Date shall be subject to approval by the JSC pursuant to
Section 3.1.1 and thereafter the Parties will participate in co-development and
such Post Opt-in Development Costs (as of Opt-in Notice Date) shall be funded by
the Parties in the following proportion: Licensor shall be responsible for the
Licensor Allocation of such Post Opt-in Development Costs, and Licensee shall be
responsible for the Licensee Allocation of such Post Opt-in Development Costs,
only to the extent the foregoing Post Opt-in Development Costs are set forth in
the Subsequent Development Plan approved by the JSC. Corresponding payments will
be made as provided under Section 4.4.3.

 

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

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(e) Consequences of Non-Exercise of Opt-in by Licensee. In the event Licensee
has not Opted in with respect to a Subsequent Development Plan of Licensed
Product during Opt-in Period 6 or prior thereto, and therefore has not paid the
relevant Opt-in Payment as set forth in Section 4.4.4 (ii) F (c) of this
Agreement to Licensor as the Developing Party, Licensor may serve a sixty
(60) days termination notice to Licensee; in the event that Licensee does not
make such payment within such sixty-day termination notice period, Licensor
shall have the right to terminate this Agreement at any time within two
(2) months of expiration of such sixty (60) day termination notice period and
such termination shall take effect seven (7) months after the expiration of the
sixty (60) day period and the provisions of Section 9.3 (except for 9.3.1(b))
shall apply, provided however that if Licensee can reasonably demonstrate to
Licensor that (i) the market potential of such Product Improvement or
Combination Product which is the subject of such Subsequent Development Plan
does not justify the investment required from Licensee to bring such Product
Improvement or Combination Product to the market in the Territory or (ii) such
Product Improvement or Combination Product can be clearly differentiated from
the Licensed Product then being Developed or sold in the Territory, then this
Agreement may not be terminated by Licensor, but Licensor shall be entitled to
develop, market, promote sell and have sold such Product Improvement or
Combination Product anywhere in the Territory, notwithstanding the licenses
granted in Section 2.1, and with no duty of accounting or other payment to the
Licensee in such event.

 

5. COMMERCIALIZATION

5.1 Responsibility for Regulatory Affairs. Licensor shall be responsible for all
regulatory affairs related to obtaining the initial EU Marketing Authorization
of the Licensed Product, and Licensee shall be responsible for regulatory
affairs in all other countries in the Territory. For each country in the
Territory, the obligations of the Party responsible for regulatory affairs in
such country shall include the preparation and filing of applications for
Marketing Authorizations in such country. Licensor shall use Diligent Efforts to
file and obtain the initial EU Market Authorization of the Licensed Product in
its own name or that of its Affiliates, but any failure to so obtain Marketing
Authorization in any given country of the Territory shall not constitute a
material breach of this Agreement. Upon obtaining of Marketing Authorizations
and subject to applicable laws, Licensor shall promptly appoint Licensee as
Licensor’s regulatory agent to perform, on behalf of but at no cost to Licensor,
those activities that are the responsibility of the Licensor as Marketing
Authorization holder. Following the date of the grant of the Marketing
Authorization, Licensee shall (a) consult with Licensor regarding the regulatory
strategy in the EU and consider in good faith Licensor comments regarding the
same, (b) promptly provide Licensor with copies of all correspondence received
by Licensee from Regulatory Authorities within the EU, copies of any draft
response and (c) consider in good faith Licensor’s comments thereon prior to
filing any such response. The Parties agree to initiate, promptly following the
Effective Date through the JSC or a sub-group established by the JSC, discussion
and analysis of the handling of regulatory matters with respect to the Licensed
Product in the Territory and specific determination of the role of Licensee in
acting as Licensor’s regulatory agent in the Territory, as well as discussion
with regard to regulatory strategy and regulatory matters within the Territory
outside the European Union.

 

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

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Licensee will be solely responsible, at its own cost, for conducting at its cost
all formalities, steps and negotiation with Regulatory Authorities or any
governmental entity in establishing the resale pricing and acquiring
reimbursement for the Licensed Product in the Territory.

The Parties shall cooperate with each other in supplying data or documents that
may be requested or required by the other Party with respect to government
regulation, registrations, or approvals in a timely manner and in manner that
does not jeopardize the gaining or maintaining of a Marketing Authorization. In
addition, as set forth in Section 3.2(c) of the GNE US License and the GNE Ex-US
License, in the event that GNE elects under the terms of Section 3.2(c) of the
GNE US License and the GNE Ex-US License to take over Development of IGF-1 for
the Initial Indication 2 (as those terms are defined in the GNE US License),
Licensor shall so inform Licensee, and where requested by GNE, Licensor and
Licensee shall negotiate in good faith the terms under which Licensee shall
allow Licensor to allow GNE to cross-reference any INDs, BLAs, clinical data or
other submissions filed by Licensee or on its behalf with any FRA (as that term
is defined in Section 1.25 of the GNE Ex-US License) and provide Licensor (for
provision to GNE) with copies of any FRA documentation, for the purposes of
Development and/or commercialization of Licensed Product for the Initial
Indication 2 under the GNE US License and the GNE Ex-US License.

5.2 Pharmacovigilance Safety Data Exchange Agreement. A pharmacovigilance safety
data exchange agreement on standard and customary terms and conditions shall be
negotiated and executed between Licensor and Licensee within ninety (90) days as
from the Effective Date, but in any event prior to Licensee initiation of any
human clinical trials or marketing of the Licensed Product. Such
pharmacovigilance agreement shall cross reference the approved risk management
plan contained within Licensor’s submission to the EMEA.

5.3 Commercialization Efforts. Licensee shall be solely responsible and shall
use Diligent Efforts for the promotion and commercialization of the Licensed
Product in the Territory in accordance with the Commercialization Plan. However,
Licensor acknowledges that the Licensed Product’s potential may vary from
country to country or change from time to time based upon the existence of
competing products, as well as scientific, business, marketing and return on
investment considerations. Consequently, Licensee (and its Affiliates) may for
such reasons elect not to seek to market the Licensed Product in every country
of the Territory. Such election by Licensee not to perform any of these
activities in any specific country of the Territory for the reasons stated above
shall not be a material breach of this Agreement.

Without limiting the generality of the foregoing, the Parties shall agree within
the JSC upon a Commercialization Plan for each Licensed Product for each country
of the Territory where Licensee intends to commercialize the Licensed Product,
within one hundred and twenty (120) days after the Effective Date for the
Initial Product or within one hundred and twenty (120) days after the filing of
the first Marketing Authorization application for any other Licensed Product as
to which Licensee has a license under Article 2, as the case may be. The first
Commercialization Plan shall cover

 

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

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the remainder of the Calendar Year in which it is prepared and the two
subsequent Calendar Years. The Commercialization Plan shall be updated annually
in October or earlier, if in the interim a new filing of Marketing Authorization
application in any country of the Territory has occurred with respect to such
Licensed Product, or, as regards Third Party Countries, upon notification by
Licensor of the availability of the rights in a Third Party Country. Sales
Forecasts included in the Commercialization Plan shall be reviewed and agreed by
the Parties within the JSC at the time of annual update of the Commercialization
Plan, provided, however, that during such annual review the Sales Forecasts of
the Calendar Year during which the review is conducted or the subsequent
Calendar Year shall not be modified, unless agreed unanimously by the JSC, in
light of, for example, the occurrence of one or more events in the Territory of
the following nature: (i) changes in regulatory approval or compliance
requirements having an adverse impact upon the sales or projected sales of the
Licensed Product, (ii) the entrance of a generic competitor prior to the time
anticipated in such market as a result of the loss by either Party of any patent
infringement action with respect to such generic competitors and prior to
expiration of the Licensed Patent Rights; or (iii) actual or anticipated
disruption of supply of Licensed Products by Licensor, or (iv) any Force Majeure
event .

5.4 Commercial Diligence.

5.4.1 Minimum Sales. Licensee shall achieve annual minimum sales of the Licensed
Products (aggregated across all Licensed Products) which shall be equal to [*]
percent of the applicable Sales Forecasts for such Calendar Year on a
country-by-country basis (the “Country Minimum Sales”). The total of all annual
Country Minimum Sales is defined as the “Aggregate Minimum Sales Requirements”.
After the end of the first full Calendar Year following the Calendar Year in
which the First Commercial Sale of the Licensed Product in the Territory occurs,
in the event Licensee fails in any subsequent Calendar Year (e.g., if First
Commercial Sale occurs in 2007, such failure would have to occur in 2009 or
later) to achieve the Aggregate Minimum Sales Requirements (except for Force
Majeure reasons or disruption of supply of Licensed Products by Licensor),
Licensee will owe to Licensor the “Net Sales Compensation” as defined below
within thirty (30) days the end of the relevant Calendar Year. In the event
that, Licensee (i) does not pay the Net Sales Compensation due with respect to
any Calendar Year within such thirty (30) days or (ii) has paid the Net Sales
Compensation for two (2) consecutive Calendar Years and is liable for payment of
the Net Sales Compensation for a third consecutive Calendar Year, Licensor shall
have the right to terminate this Agreement with respect to such country with
respect to which Licensee has failed to pay the Net Sales Compensation or is
liable for payment of the Net Sales Compensation for a third consecutive
Calendar Year, as the case may be. The “Net Sales Compensation” for any Calendar
Year shall be equal to the Aggregate Minimum Sales Requirements applicable for
such Calendar Year less the aggregate Net Sales realized during such Calendar
Year multiplied by the applicable royalty rate.

 

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

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5.4.2 Promotional Diligence. Should Licensee fail to undertake and fund [*]
([*]%) of its Promotional Efforts as specified in the Commercialization Plan
during [*] consecutive Calendar Years in any country of the Territory and should
Licensee also have failed to achieve the Country Minimum Sales for such country
as set forth in Section 5.4.1 for each of such two (2) consecutive Calendar
Years, Licensor shall have the right to terminate this Agreement with respect to
such country. The Licensee shall provide access to its internal budget and
actual spending data as required in case there is an under spend as defined in
this Section 5.4.2 and provide available external data sources (i.e to measure
sales force activity) to the same effect.

5.4 Minimum Inventory. Licensee shall at all times maintain a sufficient
inventory of the Licensed Products available for immediate delivery to customers
in the Territory, which shall correspond at least to the Territory-wide volume
of Licensee’s sales for the next three (3) forecasted months (which inventory
amount shall be reviewed by the Parties after the first Calendar Year following
the Calendar Year in which the First Commercial Sale occurred and modified if
necessary by the Parties’ mutual written agreement), and shall use all means and
make all arrangements necessary to fulfill in due time all orders it receives
from customers.

5.5 Sales Reporting and Records.

5.5.1 Monthly Sales Report.

Licensee undertakes to forward to Licensor before the 5th working day of each
calendar month a Licensed Product sales record expressed in value (in Euros) and
volume by Licensed Products. Licensee shall use for this purpose the Monthly
Sales Report template attached in Schedule 7 to this Agreement or any other
template that may be agreed by the Parties from time to time. These reports
shall be signed and sent by email and by courier to Licensor.

5.5.2 Sales Reports.

Before February 27th of each Calendar Year, Licensee undertakes to forward to
Licensor a report on the preceding Calendar Year showing :

 

  •  

the Licensed Product sales achieved by Licensed Product in unit and in local
currency;

 

  •  

the Licensed Product sales development by customer and by Licensed Product
showing sales trends;

 

  •  

Licensed Product returns and claims from the market ;

 

  •  

Impact of competing products including those constituting Market Competition
(including the IMS data on the therapeutic classes to which the Licensed
Products pertain), pricing, acceptance of the Licensed Products by the medical
profession, hospitals, pharmacies, and chemistries, in the Territory.

These reports shall be signed and sent by email and by courier to Licensor.

 

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

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5.5.3 Sales record. Licensee shall keep complete, accurate and detailed records
of all sales of Licensed Products during a period of three (3) years as from the
date of such sales being made. Licensor or its agent may consult such records at
Licensee’s premises at any time during business hours with fifteen (15) days
notice, in order to make the customary verifications of the amount of sales
performed by Licensee.

5.6 Promotional Materials. Licensee shall forward a copy of all promotional
materials, including but not limited to brochures, video tapes and medical
information that Licensee is using for the promotion of the Licensed Products in
the Territory.

Licensee shall ensure that all promotional materials comply with local laws and
regulations of the relevant country of the Territory and do not infringe third
party’s rights. Therefore, notwithstanding the communication of Licensor on such
promotional materials, only Licensee shall be held liable in case of breach of
local laws and regulation or infringement of third parties’ rights.

All costs linked to the promotion of the Licensed Products shall be borne by
Licensee exclusively.

Upon early termination by one Party of this Agreement, subject to Licensee’s
rights to continue sales for up to six (6) months under Section 9.3.1(b)
Licensee shall, upon request and at Licensor’s discretion, either destroy or
immediately return to Licensor, at no cost, all promotional materials conceived
and printed by Licensee, for Licensor’s unrestricted use.

5.7 Restrictions. Licensee shall not actively sell, advertise nor seek customers
for the Licensed Products outside the Territory. During the term of this
Agreement, Licensee will not manufacture, promote, distribute nor sell, either
directly or indirectly, any pharmaceutical products in the Field having at least
one same Indication as the Licensed Product and/or containing IGF-1 analogs or
derivatives with more than 80% sequence homology. To the extent the foregoing
restrictions would not be enforceable in the Territory then the comparable
restrictions as set forth in the Somatuline Agreement with respect to the
activities of Licensor, shall not apply against Licensor in that Agreement.

5.8 Product Recalls. Product recalls procedure shall be set out in the Technical
Agreement.

 

6. MANUFACTURING AND SUPPLY

6.1 General.

6.1.1 Initial Product. Licensor shall manufacture and supply to Licensee the
Initial Product, as and to the extent set forth in this Article 6. With respect
to the Initial Product, the Parties will collaborate to agree and implement
within one hundred and twenty (120) days following the Execution Date, a
separate agreement relating to technical requirements including without
limitation supply organization, quality assurance, specifications, complaints
and batch recall, control of material, analytical testing and validation of the
Initial Product (the “Technical

 

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

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Agreement”). Licensee understands and acknowledges that as of the Execution
Date, Licensor does not manufacture itself the Initial Product, but rather
relies upon certain third party contract manufacturers to supply bulk active and
finished product. In that regard, Licensor has entered into that certain
Manufacturing Services Agreement, as of December 20, 2002, with Cambrex Bio
Science Baltimore, Inc. as amended (the “Cambrex Agreement”) for the manufacture
and supply of IGF-1 bulk drug substance. In addition, Licensor has entered into
that certain Drug Product Development and Clinical Supply Agreement with Baxter
Pharmaceutical Solutions LLC for finished dosage form of the Initial Product
(the “Baxter Existing Agreement”) for development or clinical purposes, and is,
as of the Execution Date in negotiations with alternative commercial
manufacturers with respect to a commercial supply arrangement for finished
dosage form of the Initial Product (once executed, or to the extent another
commercial supply agreement is entered into with a party other than Baxter, the
“Drug Product Commercial Agreement”). To the extent the terms in this Article 6
are inconsistent with those in the Technical Agreement, the terms in the
Technical Agreement shall control.

6.1.2 Product Improvements and Combination Products. In addition, as and to the
extent agreed upon by the Parties with respect to any Joint Subsequent
Development Plan or Subsequent Development Plan for which Licensee Opts-in, for
a Product Improvement or Combination Product, the manufacture and supply of such
Product Improvement or Combination Product to Licensee shall be as agreed upon
by the Parties in writing (including as needed the execution of a Technical
Agreement for each such Product Improvement or Combination Product), depending
upon the existing third party manufacturing agreements Licensor then has in
place at such time with respect to such Product Improvement or Combination
Product.

6.2 Purchase Requirements for Commercial Supply. For the first five (5) years
after the Execution Date, Licensee shall purchase exclusively from Licensor all
of its requirements for Licensed Products to conduct any Development activities
as set forth in this Agreement and to meet demand in the Territory. After the
5th anniversary of the Execution Date, Licensee shall purchase from Licensor
(i) 100% of its Licensed Products requirements for any country of the Territory
which is not a member state of the European Economic Area and (ii) 80% of its
Licensed Products requirements for any country of the Territory which is a
member state of the European Economic Area.

6.3 Clinical Supply Requirements. To the extent needed by Licensee, Licensor
shall supply clinical requirements of the Initial Product in either bulk active
form or finished dosage form, as further set forth in the Initial Development
Plan or any Subsequent Development Plan, as relevant. Such Initial Product shall
be supplied at a price equal to Licensor’s internal and out of pocket costs, on
a schedule to be determined within the Development Plan, including all costs of
carriage and insurance, and such costs shall be paid within thirty (30) days of
invoice for same.

6.4 Delivery. Delivery of the Licensed Products shall be CIP (Carriage and
Insurance Paid, Incoterms 2000), Rue Ethe Virton, 28000 Dreux (the “Delivery
Point”).

 

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

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6.5 Commercial Supply Price. For launch and the first Calendar Quarter of the
year in which launched, Licensee shall purchase the Initial Products and Samples
at the per unit prices listed in Schedule 8 (the “Supply Price”), as of the
Execution Date. The Parties acknowledge that the ongoing Supply Price of the
Licensed Products shall be equal to twenty percent (20%) of average selling
price per unit sold of the Licensed Product in the Territory, Accordingly,
following such first Calendar Quarter, Licensee, through the JFC shall calculate
the average selling price per unit sold of the Licensed Product in the Territory
over the prior Calendar Quarter, and such amount shall be used as the new
average selling price per unit sold for all units of Licensed Product purchased
during the remainder of the relevant Calendar Year. Each year prior to
30th January, the JFC shall calculate the average selling price per unit sold of
the Licensed Product in the Territory during each preceding Calendar Year and
such amount shall be used as the new average selling price per unit sold for all
units of Licensed Product to be purchased for the next Calendar Year. As the
Supply Price is or may be adjusted annually for each newly calculated average
selling price per unit sold of the Licensed Product in the Territory, Schedule 8
shall be updated to so reflect such adjusted price. Within thirty (30) days
after the end of a Calendar Year, the Parties, through the JFC, will calculate
the actual average selling price per unit sold of the Licensed Product in the
Territory and review the Supply Price of the Licensed Products paid to Licensor
in light of such actual average selling price per unit sold and Licensee shall
adjust the supply price, retroactively, to an amount equal to twenty
(20) percent of the actual average selling price per unit sold in the preceding
Calendar Year. Such adjustment shall take the form of the issuance (within ten
(10) days following such adjustment) by the Licensor of a credit for the amount
overpaid or an invoice for the amount remaining due, as the case may be; the
invoice (if applicable) shall be settled within thirty (30) days following the
date of invoice. In addition, such actual average selling price per unit sold
will also be used as the new Supply Price for the current Calendar Year. As used
herein, “average selling price per unit sold” shall mean aggregate Net Sales of
Licensed Products for the Territory during the applicable Calendar Year, divided
by actual number of units of Licensed Product comprising such Net Sales
(including free goods but excluding samples).

Licensor shall invoice Licensee upon shipping of the Licensed Products for any
Binding Orders. Payment of such invoice shall be made by Licensee to Licensor
within thirty (30) calendar days of the date of the invoice and shall be made by
wire transfer, using the information below or as Licensor may from time to time
direct in writing in its invoicing:

 

Wells Fargo Bank   

Beneficiary Name:

  

Tercica, Inc.

Account number:

  

[*]

Bank ID:

  

[*]

Swift code:

  

[*]

Contact:

  

Juan Sanchez

  

Ph (415) 396-1011

  

sanchjj@Wellsfargo.com

 

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

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Contact Information

 

Director of Accounting:    Ben Yokoyama    (650) 624-4946   
ben.Yokoyama@tercica.com Accounting Manager:    Anna Peng    (650) 624-4978   
Anna.Peng@tercica.com

If Licensee fails to pay any amounts owing to Licensor here above when due,
interest shall accrue on overdue amounts at an annual rate equal to the average
one-month European Interbank Offered Rate (EURIBOR) plus two (2) percent as
reported by the European Bank Federation (or a successor or similar
organization) from time to time, calculated on the number of days such a payment
is overdue.

6.6 Minimum Commercial Orders. The minimum quantities per order for the Licensed
Products are specified in Schedule 9.

6.7 Order Forecast – Firm Order.

6.7.1 At least ninety (90) days before the expected First Commercial Sale of the
Licensed Products in any country of the Territory, the Parties shall agree upon
a monthly rolling order forecast for the first eighteen (18) months for each SKU
of the Initial Product in such country(ies) (the “18-Month Rolling Order
Forecast”) which shall be under the form as attached in Schedule 10. Thereafter,
Licensee shall forward to Licensor before the 20th day of every calendar month a
revised and adjusted 18-Month Rolling Order Forecast for the next eighteen
(18) months for each of the countries where the Licensed Product is
commercialized or is expected to be commercialized within less than ninety
(90) days.

6.7.2 The forecast for the first three (3) months of the 18-Month Rolling Order
Forecast shall constitute a firm purchase order unless Licensor informs Licensee
of the non availability of the ordered quantities of Products (the “Binding
Order”). The Binding Order relating to the 3rd month of the 18-Month Rolling
Order Forecast shall not exceed by more than twenty (20) percent the forecasts
relating to the 4th month of the preceding 18-Month Rolling Order Forecast. In
the event the Binding Order relating to the 3rd month of the 18-Month Rolling
Order Forecast exceeds twenty (20) percent, Licensor shall use its Diligent
Efforts to supply any exceeding quantities.

6.7.3 The forecast for the fourth (4th) through sixth (6th) months of the
18-Month Rolling Order Forecast shall constitute a commitment by Licensee to
purchase at least fifty (50) percent of such forecasted amount for such months
unless Licensor informs Licensee of the non availability of the ordered
quantities of Products (the “Semi-Binding Order”). The Semi-Binding

 

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

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Order relating to the 4th, 5th, and 6th months of the 18-Month Rolling Order
Forecast shall not vary (upward or downward) by more than twenty (20) percent
the forecasts relating to the 5th, 6th, and 7th months, respectively, of the
preceding 18-Month Rolling Order Forecast.

6.7.4 Licensee agrees that a Binding Order and/or a Semi-Binding Forecast cannot
be modified, and that no changes or cancellations shall be allowed.

6.7.5 In any instance, one (1) month before the preferred shipping date,
Licensee shall send a purchase order form using the form that will be forwarded
by Licensor from time to time, with the quantities requested to be delivered to
each country and/or region and the requested dates of delivery, it being
understood that requested delivery shall occur no more frequently than once
every six (6) months.

6.7.6 Licensor will use its commercially reasonable efforts to cause its third
party manufacturer to accommodate the preferred delivery date mentioned by
Licensee on the purchase order form which shall, if possible, not be less than
ten (10) days after the date of receipt of the order form by Licensor. Licensee
shall take timely delivery of all quantities of Licensed Products supplied by
Licensor.

6.7.7 All forecasts and orders shall be sent by email and confirmed by fax or
mail to the address set forth in the Technical Agreement.

6.7.8 The Parties agree that they will discuss any improvements to be made to
the mechanism of providing forecasts and Binding Orders in a spirit of permanent
improvement process.

6.8 Storage. Licensee shall provide warehouse facilities adequate to store the
Licensed Products in accordance with the relevant and approved storage
requirement as specified within the Technical Agreement and with standard
requirements related to cGMP pharmaceutical product storage and handling.

6.9 Packaging. Licensor shall supply Licensee with finished dosage form of the
Initial Products fully packaged and labeled ready for sale in each country of
the Territory, unless otherwise agreed by the Parties in writing, unless
specified otherwise pursuant to the Commercialization Plan. Licensor shall be
entitled to modify such packaging and leaflet at any time subject to Licensee’s
prior agreement. Any modifications to the initial packaging required by Licensee
or by Regulatory Authorities shall be implemented only upon Licensor’s prior
written approval and provided that Licensee shall reimburse all costs and
expenses in relation thereto.

6.10 Minimum Shelf Life. Licensee understands and acknowledges that the expected
shelf life upon obtaining Marketing Authorization in the European Union is
eighteen (18) months. Licensor shall use Diligent Efforts to ensure that the
Initial Product shall be delivered to Licensee with a remaining shelf life of at
least twelve (12) months; provided, however, that Licensee agrees and
acknowledges that the shelf life of the Initial Product supplied by Licensor for
purposes of commercial launch may be less than twelve (12) months but will be no
less than nine (9) months, unless otherwise agreed by the JSC.

 

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

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6.11 Regulatory Compliance. Licensee shall observe any and all applicable laws
and regulations of the Territory, with respect to import, warehousing,
promotion, distribution and sale of pharmaceutical specialties, and undertakes
to make and fulfill any and all formalities in connection with all such
activities which may be required under applicable laws and regulations of the
Territory, including but not limited to, clearance of customs and/or exchange
control declarations and payment of any and all sales taxes which are or may
become due in the Territory.

6.12 Legal Requirements in Territory. Licensee shall provide Licensor (or its
designated third party manufacturer) with appropriate and updated information
related to the legal and regulatory requirements in the Territory with regards
to the Initial Products (including but not limited to quality, therapeutic use,
packaging, labeling and storage). Such information shall be forwarded to
Licensor in writing by Licensee forthwith upon its becoming aware of the same.
Licensor shall be responsible to proceed promptly to any Licensed Products
packaging or labeling modification required by the Regulatory Authorities of the
Territory. Licensee shall provide Licensor (or its designated third party
manufacturer) with the relevant technical assistance if so requested by
Licensor, to that effect.

6.13 Licensee shall solely be responsible for and support all costs and expenses
arising out of the occurrence of any damage, destruction or loss of any
quantities of Licensed Products from the time Licensor has delivered the
Licensed Products to the Delivery Point. Licensee shall contract an insurance to
cover such risks (including without limitation the risks incurred by the
Licensed Products during its transportation) and shall maintain such insurance
in force during the entire term of this Agreement.

6.14 Licensee shall obtain at its own costs any export/import license or other
official authorization and carry out, where applicable, all customs formalities
for the export/import of the Licensed Products.

6.15 Specifications and compliance with cGMP shall be set forth in the Technical
Agreement.

6.15.1 Licensor warrants that all quantities of Licensed Products delivered to
Licensee pursuant to this Agreement meet the Specifications, that the Licensed
Products are manufactured in full compliance with current Good Manufacturing
Practices for all countries of the Territory where the Licensed Products are
sold and that all necessary tests and analysis in the course of the
manufacturing processes and thereafter have been duly carried out and shall,
with each delivery pursuant hereto, provide Licensee with copies of the
appropriate quality assurance certificates issued in English by the
manufacturing plants and the Qualified Person.

 

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

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6.15.2 Licensor shall have the right to modify the Specifications subject to
prior notification to Licensee and subject to approval by the Regulatory
Authority. In the event Licensee desires other or special Specifications for the
Licensed Product or guidelines to be considered, Licensee shall notify Licensor
accordingly. Licensor agree to consider in good faith such special
Specifications or guidelines, provided, however, that any costs relating to the
implementation of such special Specifications or guidelines will be borne by
Licensee.

6.16 Checking – non conformity.

6.16.1 Upon delivery of the Licensed Products to the Delivery Point, Licensee
shall inspect the Licensed Products and shall notify Licensor within a period
set forth in the Technical Agreement, by telefax confirmed by courier, of any
damage visible from inspection or of any shortages or non-conformity of the
delivered Licensed Products with supporting detailed evidence and documents and
their translation in English shall be included. Upon request of Licensor,
Licensee shall make available to Licensor samples of the Licensed Products which
are declared as defective. In case of non conformity to the Specifications of
any quantity of the Licensed Products delivered pursuant hereto, Licensor shall
take back, at its expense, the quantities concerned and shall replace them
promptly after Licensor received the relevant notice.

6.16.2 Any dispute between the Parties regarding shortage or damages of any
quantity of the Licensed Products delivered hereunder shall be referred to an
expert jointly appointed by the Parties within thirty (30) days from the receipt
by Licensor of the notice of claim of Licensee as set forth in the Technical
Agreement.

6.16.3 Licensor shall not replace defective Licensed Products returned to
Licensee by the customers, patients, or authorities, unless the relevant
Licensed Product defect is due to (i) Licensed Product manufacturing defaults in
so far as the Licensed Product does not meet the Specifications, (ii) the
Licensed Product manufacturing process, or (iii) Licensed Product defaults that
occurred during the delivery of the Licensed Products from the manufacturer’s
import warehouse to the Delivery Point.

Without prejudice to the Party bearing defective Licensed Products replacement
costs in accordance with the provisions of this Section, if Licensor so decides,
Licensee shall destroy immediately upon written notice, any quantity of
defective Licensed Products and provide to Licensor the corresponding
certificate of destruction hereof.

6.17 Failure to Supply. In the event that at any time during the term of the
Agreement, Licensor delivers non-conforming lots of the Initial Product, as
further defined in the Technical Agreement, three (3) times in any twelve
(12) month period (a “Default”), then:

(a) Licensee shall give written notice to Licensor specifying the occurrence of
such Default (and, to the extent Licensor anticipates a possible Default,
Licensor shall inform Licensee of such possibility as it becomes known to
Licensor);

(b) The JSC shall investigate the cause of the Default. Thereafter, the Parties
shall discuss in good faith through the JSC the appropriate mechanism to cure
the Default based on the JSC’s investigation. Such mechanisms for cure may
include for example, but without limitation, the establishment by Licensor of a
secondary source for the manufacture and supply of Initial

 

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

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Product to Licensee. In addition, where there is limited supply of conforming
Licensed Product, the JSC shall determine the allocation of the available
Licensed Product between the Licensor Territory and the Territory, taking into
consideration the sales volume of such territories in the previous 6-month
period;

(c) Following the Parties’ acceptance of an appropriate mechanism to cure the
Default, Licensor shall use Diligent Efforts to implement such agreed upon
mechanism. In the event that Licensor fails to begin the implementation of the
agreed upon mechanism within 4 months of the Parties agreeing to such mechanism
or fails to successfully complete the implementation of the agreed mechanism
within 4 months of the Parties agreeing to such mechanism, then Licensee shall
have the right to execute the Manufacturing Option set forth in Section 6.18
below.

6.18 Manufacturing Option.

6.18.1 Licensor grants to Licensee an exclusive option under Licensor IP Rights
to make and have made bulk active and/or finished dosage form of the Initial
Product (the “Manufacturing Option”), as the case may be. Licensee shall have
the right to exercise the Manufacturing Option, without prejudice to other
remedies (except in case of Force Majeure events), only in the case of failure
of Licensor to implement the mechanisms for curing the Default in accordance
with Section 6.17(c).

6.18.2 Upon Licensee’s exercise of the Manufacturing Option, Licensor shall:

(i) without the need for any further agreement, grant a non-exclusive license to
Licensee under all Licensor IP Rights to make and have made the Licensed
Product, and promptly transfer at Licensee’s costs all technical information
(subject to any terms and conditions placed thereon under the GNE US Agreement,
the GNE Ex-US Agreement, the Drug Product Commercial Agreement or the Cambrex
Agreement or such other third party manufacture and supply agreement in effect
at such time) and support necessary for Licensee to make or have made the
Licensed Product. It is understood by the Parties that Licensor will use
Diligent Efforts in any of its negotiations for any future manufacture and
supply agreement with a third party to allow for such transfer of technical
information to Licensee by such third party in the event Licensee exercises its
Manufacturing Option; and

(ii) Licensor shall continue to supply Licensee with the Licensed Product at
then prevailing Supply Price as long as Licensee is not in a position to make or
have made the Licensed Product.

6.18.3 Upon Licensor beginning manufacturing of the Licensed Product pursuant to
this Section, the provisions of Sections 6.1 to 6.17 shall no longer be
applicable.

 

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

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7. PAYMENTS

7.1 Milestone Payments. In consideration of the rights granted by and
undertakings of Licensor under this Agreement, Licensee shall make the following
non-refundable and non-creditable milestone payments:

7.1.1 Licensee shall pay Licensor ten million (10,000,000) Euros no later than
within five days following the Effective Date.

7.1.2 Licensee shall pay Licensor fifteen million (15,000,000) Euros (the
“Milestone Payment”) as indicated in Section 7.1.6 below following the obtaining
of either (A) an initial EU Marketing Authorization (i) meeting the Target Label
or (ii) which does not strictly meet the Target Label, but nonetheless provides
access to a number of patients (the “EU MA Population”) which is more than [*]%
of EU Target Population or (B) where the criteria set forth in A(i) and (ii) are
not satisfied with respect to the initial EU Marketing Authorization, a
Subsequent EU Marketing Authorization (defined below) that satisfies the
criteria set forth in Section 7.1.4 below.

7.1.3 In the event that Licensor has not obtained an EU Marketing Authorization
the EU MA Population of which is greater than [*]% of the EU Target Population,
the Milestone Payment shall not be paid, and Licensor shall use its Diligent
Efforts to obtain a new EU Marketing Authorization or to extend the initial EU
Marketing Authorization with the view to meet the Target Label (the “Subsequent
EU Marketing Authorization”) within three years from the date of obtaining of
the initial EU Marketing Authorization (the “Agreed Period”).

7.1.4 Licensee shall pay Licensor the full Milestone Payment in the event
Licensor obtains a Subsequent EU Marketing Authorization within the Agreed
Period the EU MA Population of which is more than [*] percent ([*]%) of the of
EU Target Population.

7.1.5 In case of dispute of the Parties on the determination of the EU MA
Population, such dispute shall be first submitted to the JSC. In case of failure
by the JSC to find a solution acceptable to both Parties, the matter will be
referred to resolution by senior management of both Parties as provided for in
Section 15.1 and ultimately to the final decision of three (3) experts of
international reputation in the endocrinology field, one being appointed by
Licensee within fifteen (15) days following failure by the senior executive to
resolve this issue, one by Licensor within fifteen (15) days following failure
by the senior executive to resolve this issue and one by the two first experts
within fifteen (15) days following their appointment. In the event one Party
fails to appoint an expert, the other Party may appoint such expert. Once
appointed, the experts shall provide the Parties with their decision within one
(1) month from the date of the appointment of the third expert and this decision
shall be final and binding upon the Parties. The decision of the expert shall
also allocate the cost for this expertise resolution among the Parties in a
proportion the experts deems reasonable.

7.1.6 The Milestone Payment shall be paid by Licensee within thirty (30) days
following determination by the Parties as to whether the EU MA Population is
less or above [*] percent ([*]%) or [*] percent ([*]%) of the EU Target
Population and the parties shall use their Diligent Efforts to agree on such
determination no later than within sixty (60) days following the

 

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

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date of the EU Marketing Authorization or the Subsequent EU Marketing
Authorization. Each milestone payment shall be made only once with respect to
the achievement of the applicable milestone events and shall be payable the
first time such milestone event is achieved. Milestone payments set forth above
shall be due only for the first Licensed Product developed and commercialized
under this Agreement to reach the above stages.

7.2 Royalty Payments.

7.2.1 Royalty Term; Rate. In consideration of the rights granted by and
undertakings of Licensor under this Agreement, Licensee shall pay to Licensor
the following royalties which shall accrue on a country-by-country basis in the
Territory upon the First Commercial Sale of the Licensed Product until the later
of (i) the expiry date of the last Valid Claim in such country, or (ii) the
expiry date of the orphan drug status granted to the Licensed Product by
Regulatory Authorities in such country, or (iii) the expiry date of the
regulatory protection (if any) preventing any competitor to cross-refer any data
of the Marketing Authorizations files of the Licensed Product in such country;
or (iv) the date which is fifteen (15) years from First Commercial Sale (the
“Royalty Term”) :

(i) For annual Net Sales of the Licensed Products for the Territory below [*]
Euros: 15% of Net Sales ;

(ii) For annual Net Sales of the Licensed Products for the Territory between [*]
Euros and [*] Euros: [*]% of Net Sales;

(iii) For annual Net Sales of the Licensed Products for the Territory above [*]
Euros: 25% of Net Sales;

7.2.2 Royalty Reductions. The royalty rates mentioned in Section 7.2.1 shall be
reduced in the following cases, on a country-by-country basis, and the JFC shall
determine the mechanism for applying such country-specific reductions due to the
fact that annual Net Sales are determined on a total Territory basis:

(a) in the event Market Competition exists in such country and the manufacture,
use, or sale of Licensed Product would infringe a Valid Claim but for the
licenses granted under this Agreement, the above royalty rates will be reduced
to :

(i) For annual Net Sales of the Licensed Products for the Territory below [*]
Euros: [*]% of Net Sales in such country;

(ii) For annual Net Sales of the Licensed Products for the Territory between [*]
Euros and [*] Euros: [*]% of Net Sales in such country ;

(iii) For annual Net Sales of the Licensed Products for the Territory above [*]
Euros: [*]% of Net Sales in such country.

 

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

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(b) in the event the manufacture, sale or use of the Licensed Product would
infringe no Valid Claim but for the licenses granted under this Agreement and
for so long as no Market Competition Exists, the above royalty rates will be
reduced to :

(i) For annual Net Sales of the Licensed Products for the Territory below [*]
Euros: [*]% of Net Sales in such country;

(ii) For annual Net Sales of the Licensed Products for the Territory between [*]
Euros and [*] Euros: [*]% of Net Sales in such country ;

(iii) For annual Net Sales of the Licensed Products for the Territory above [*]
Euros: [*]% of Net Sales in such country.

(c) in the event the manufacture, sale or use of the Licensed Product would
infringe no Valid Claim but for the licenses granted under this Agreement and
Market Competition exists in such country, the above royalty rates will be
reduced to:

(i) For annual Net Sales of the Licensed Products for the Territory below [*]
Euros: [*]% of Net Sales in such country;

(ii) For annual Net Sales of the Licensed Products for the Territory between [*]
Euros and [*] Euros: [*]% of Net Sales in such country ;

(iii) For annual Net Sales of the Licensed Products for the Territory above [*]
Euros: [*]% of Net Sales in such country.

Notwithstanding the foregoing, in the case of scenario (a) above, in event of
Market Competition, and where the Valid Claim still exists but nonetheless
Licensee has a good faith belief, based on advise of legal counsel, that
enforcing the Valid Claim against third party competitors is not in the best
interests of the Parties, or that Licensor or itself will not prevail in the
enforcement of the Licensed Patent Rights or Licensee has other strategic
reasons for recommending that the Parties elect not to enforce the Licensed
Patent Rights, then the Parties will confer in good faith to determine an
appropriate reduction to the royalty rate set forth in Section 7.2.2(a).

(d) the royalty rates set forth in this Section 7.2 may be further off-set in
accordance with Section 8.2.3(ii), provided that in no event shall any royalty
reduction set forth in this Section 7.2.2 reduce any of the royalty rates
mentioned in Section 7.2.1 below the Royalty Floor set forth in
Section 8.2.3(ii).

For the purpose of determining whether the manufacture, use or sale of Licensed
Product in any jurisdiction in the Territory would infringe a Valid Claim if not
for the licenses granted herein, any Licensed Product not manufactured within
the jurisdiction in which use or sale of that Licensed Product occurs shall be
deemed to have been manufactured in that jurisdiction.

 

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

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7.2.3 Reports; Payment of Royalties. During the term of the Agreement, Licensee
shall furnish to Licensor two quarterly written report for each Calendar Quarter
showing for the First Report Licensee’s estimated Net Sales of all Licensed
Products sold by Licensee, its Affiliates or Sub-licensees in the aggregate and
on a country-by-country basis during the reporting period; for the Second Report
the actual Net Sales of all Licensed Products sold by Licensee, its Affiliates
or Sub-licensees in the aggregate and on a country-by-country basis during the
reporting period and the calculation of the royalties and/or other payments
payable to Licensor under this Agreement. The First Quarterly reports shall be
due on the fifth (5th) day following the close of each Calendar Quarter and will
be used as information only by Licensor for accounting purposes. The Second
Quarterly Reports shall be due on the sixtieth (60th) day following the close of
each Calendar Quarter. Royalties or other payments shown to have accrued by each
royalty report shall be due and payable on the date such report is due. Licensee
shall keep complete and accurate records in connection with the sale of Licensed
Products hereunder in sufficient detail to permit accurate determination of all
figures necessary for calculation and verification of royalty and other payment
obligations set forth in this Article 7.

7.2.4 Audits. Upon the written request of Licensor thirty (30) days in advance,
Licensee shall permit an independent certified public accounting firm of an
internationally recognized standing and selected by Licensor to have access
during normal business hours to such of the records of Licensee as may be
reasonably necessary to verify the accuracy of the reports under Section 7.2.3
provided however that it does not disrupt Licensee’s operation of business. The
accounting firm shall disclose to Licensee and Licensor whether the reports are
correct or incorrect, the specific details concerning any discrepancies and such
other information that should properly be contained in a royalty report required
under this Agreement.

If such accounting firm concludes that additional royalties or other amounts
were owed, Licensee shall pay the additional royalties or payments within thirty
(30) days of the date Licensor delivers to Licensee such accounting firm’s
written report so concluding. In the event such accounting firm concludes that
amounts were overpaid by Licensee, Licensor shall repay Licensee the amount of
such overpayment within thirty (30) days of the date Licensor delivers to
Licensee such accounting firm’s written report so concluding. The fees charged
by such accounting firm shall be paid by Licensor; provided, however, that if an
error in favor of Licensor of more than five (5) percent of the royalties due
hereunder for the period being reviewed is discovered, then the fees and
expenses of the accounting firm shall be paid by Licensee.

If such accounting firm concludes that the reports were correct, Licensor shall
not be entitled to request any further audit during the next thirty-six
(36) months.

Upon the expiration of thirty-six (36) months following the end of any Calendar
Year for which Licensee has made payment in full of all royalties and other
amounts payable with respect to such year, and in the absence of negligence or
willful misconduct of Licensee or a contrary finding by an accounting firm
pursuant to this Section, such calculation shall be binding and conclusive upon
Licensor and Licensee shall be released from any liability or accountability

 

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

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with respect to royalties or other payment for such Calendar Year.
Notwithstanding the foregoing, to the extent that section G.8 of the GNE Ex-US
License requires audit rights in addition to, or different from those granted
above to Licensor, Licensee shall cooperate in good faith to enable Licensor to
so comply with such audit rights.

7.2.5 Payment Exchange Rate. All payments to Licensor under this Agreement
related to Royalties or to Milestone Payments shall be made in Euros. When
calculating Net Sales, Licensee shall convert the amount of invoiced sales in
currencies other than Euros into Euros using the exchange rates as determined
for the purpose of consolidating its financial statements (average of the rates
of the last day of each month as published by the European Central Bank). All
payments related to Developments costs (joint development or after Opt-in) will
be made in the currency of the invoicing Party.

7.2.6 Late Payment. In case of late payment of any payment due hereunder by
Licensee (or in case of additional payment due by one Party to the other
pursuant to Section 7.2.4), Licensee shall pay to Licensor interest on the
unpaid amount until such payment is paid in full, at the average one-month
European Interbank Offered Rate (EURIBOR) plus two (2) percent as reported by
the European Bank Federation (or a successor or similar organization) from time
to time, calculated on the number of days such a payment is overdue.

7.2.7 Tax Withholding. If provision is made in law or regulation of any country
in the Territory for withholding of taxes of any type, levies or other charges
with respect to any amounts payable by Licensee to Licensor pursuant to this
Agreement, Licensee shall promptly pay such tax, levy or charge for and on
behalf of Licensor to the proper governmental authority and Licensee shall
promptly furnish Licensor with certificate of taxes deducted under such
withholding tax laws. Licensee shall have the right to offset any such tax, levy
or charge actually paid from any payment due to Licensor or shall be promptly
reimbursed by Licensor if no further payments are due. Licensor and Licensee
shall cooperate with each other in obtaining any exemption from or reduced rate
of tax available under any applicable law or tax treaty.

Licensee and Licensor shall pay for their own account all sales, turnover,
income, revenue, value added and other taxes levied on account of payments
accruing or made under this Agreement. All amounts expressed in this Agreement
exclude such taxes which were required by law shall be charged at the applicable
rate.

 

8. TRADEMARKS AND INTELLECTUAL PROPERTY RIGHTS

8.1 Licensed Trademark.

8.1.1 The Licensed Product will be marketed in the Territory under the Licensed
Trademark. In specific countries where the use of the Licensed Trademark is not
permitted by law or is not appropriate including for reasons relating to
language or custom, Licensee shall have the possibility to use a different
trademark, subject to Licensor’s prior written approval which shall not be
unreasonably withheld or delayed. Licensor shall be responsible for securing and
for maintaining registrations for the Licensed Trademark in the Territory and
shall use

 

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

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reasonable commercial efforts in that regard, provided, however, that Licensor
shall not be deemed to have breached this Agreement if it is unable to obtain
registration of the Licensed Trademark in every country in the Territory. In the
event, despite its reasonable commercial efforts, Licensor is unable to obtain
or maintain registrations for the Licensed Trademark in some country (ies) in
the Territory, the Parties shall negotiate in good faith concerning the use of
such other trademarks as may be available for marketing the Licensed Product in
those countries.

8.1.2 Enforcement. Licensee and Licensor shall cooperate with each other and use
reasonable efforts to protect the Licensed Trademark from infringement by third
parties. Without limiting the foregoing, each Party shall promptly notify the
other Party of any known, threatened or suspected infringement, imitation or
unauthorized use of or unfair competition relating to the Licensed Trademark.
Licensor shall have the first right to determine in its discretion whether to
and to what extent to institute, prosecute and/or defend any action or
proceedings involving or affecting any rights relating to the Licensed
Trademark. Upon Licensor’s reasonable request, Licensee shall, at Licensor’s
expense, cooperate with and assist Licensor in any of Licensor’s enforcement
efforts with respect to the Licensed Trademark. Licensor shall promptly inform
Licensee if Licensor elects not to take action against any actual or suspected
infringement of the Licensed Trademark, in which case, Licensee, at its own
expense, shall then have the right, but not the obligation, to bring or assume
control of any action against the allegedly infringing third party as Licensee
determines may be necessary, provided, however, that Licensee shall not enter
into any settlement or compromise of any claim relating to the Licensed
Trademark without the prior written consent of Licensor. In the event that
Licensee brings or assumes control of any such action, then Licensor agrees to,
at Licensee’s expense, reasonably assist Licensee in connection therewith. In
either case, the Party that initiated and prosecuted, or maintained the defense
of the action shall bear all costs and expenses (including reasonable attorneys’
fees) incurred in connection with the action and shall be entitled to recoup
those amounts in the event of recovery, by settlement or otherwise. The amount
of any recovery remaining shall be shared equally by the Parties.

8.1.3 Avoidance of Confusion. Licensee and its Affiliates or Sublicensee shall
not market, promote, sell and/or distribute anywhere in the Territory any
product other than Licensed Product under the Licensed Trademark or any
confusingly similar trademark, and Licensor and its Affiliates or sublicensee
shall not market, promote, sell and/or distribute anywhere in the Licensor
Territory any product other than Licensed Product under the Licensed Trademark
or any confusingly similar trademark. Licensee and its Affiliates shall not,
directly or indirectly, contest the validity of or Licensor’s rights in the
Licensed Trademark anywhere in the Territory or assist any third party in doing
so. In the event that actual confusion should arise, or either Party reasonably
believes that a likelihood of confusion may arise, in connection with the
Parties’ respective uses of the Licensed Trademark, the Parties will fully
cooperate in an effort to eliminate such confusion and to avoid the possibility
of such a likelihood of confusion.

8.2 Licensor IP Rights.

8.2.1 Securing Patent Protection. Subject to legal and contractual limitations
imposed upon Licensor as the licensee under the GNE US License, GNE Ex-US
License and the Fujisawa License, Licensor will take all commercially reasonable
actions necessary to file, prosecute and maintain patent protection for the
Licensed Product in the Territory during the term of this Agreement.

 

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

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8.2.2 Third Party Infringement of Licensor IP Rights. Each Party shall promptly
give the other Party notice of any suspected infringement in the Territory of
any patent application or patent included in the Licensor IP Rights that comes
to such Party’s attention. The Parties will thereafter consult and cooperate
fully to determine a course of action, including, without limitation, the
commencement of legal action by any Party. However, as between the Parties,
Licensor, subject to legal and contractual limitations imposed upon it as the
licensee under the GNE Ex-US License and the Fujisawa License, shall have the
first right to initiate and prosecute such legal action at its own expense and
in the name of Licensor and/or Licensee, or to control the defense of any
declaratory judgment action relating to Licensor IP Rights. Licensor shall
promptly inform Licensee if Licensor elects not to exercise such first right, in
which case Licensee shall thereafter have the right either to initiate and
prosecute such action or to control the defense of such declaratory judgment
action in the name of Licensor and, if necessary, Licensee, provided, however,
that Licensee shall not enter into any settlement or compromise of any claim
relating to the Licensor IP Rights licensed hereunder without the prior written
consent of Licensor. If Licensor elects not to initiate and prosecute such an
infringement or defend a declaratory judgment action in any country in the
Territory and Licensee elects to do so, the cost of any agreed-upon course of
action, including the costs of any legal action commenced or any declaratory
judgment action defended, shall be borne solely by Licensee. Notwithstanding the
foregoing, Licensee shall (i) have no right to initiate or prosecute an
enforcement action or defend a declaratory judgment action relating to a third
party’s infringement or anticipated infringement of any GNE Patent (as that term
is defined in the GNE Ex-US License) in the Licensed IP Rights, and
(ii) cooperate to the extent necessary for the enforcement of any GNE Patent in
the Licensed IP Rights, which cooperation shall include joining GNE and/or
Licensor as a party to such enforcement action if required by law, provided that
GNE and/or Licensor reimburse Licensee for reasonable costs incurred with
respect to such joinder or other cooperation.

If one Party elects to institute a legal proceeding to enforce Licensor IP
Rights against an alleged infringing party, the other Party shall fully
cooperate with and supply all assistance reasonably requested by the Party
instituting such proceeding, at the expense of the Party instituting such
proceeding. Any recovery or award obtained by either Party as a result of any
such action or settlement shall be shared as follows:

(a) if Licensor initiated and prosecuted, or maintained the defense of, the
action, the amount of any recovery remaining then shall be retained by Licensor;
and

(b) if Licensee initiated and prosecuted, or maintained the defense of, the
action, the amount of any recovery remaining shall be retained by Licensee,
except that Licensor shall receive a portion equivalent to the royalties it
would have received in accordance with the terms of this Agreement as if such
amount were Net Sales of Licensee.

 

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

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For any such legal action or defense, in the event that any Party is unable to
initiate, prosecute, or defend such action solely in its own name, the other
Party will join such action voluntarily and will execute all documents necessary
for the Party to prosecute, defend and maintain such action. In connection with
any such action, the Parties will cooperate fully and will provide each other
with any information or assistance that either reasonably may request. Any
recovery or award obtained by either Party as a result of any such action or
settlement shall be shared as follows:

(a) the Party that initiated and prosecuted, or maintained the defense of, the
action shall recoup all of its costs and expenses (including reasonable
attorneys’ fees) incurred in connection with the action, whether the recovery is
by settlement or otherwise;

(b) the other Party then shall, to the extent possible, recover its costs and
expenses (including reasonable attorneys’ fees) incurred in connection with the
action;

(c) if Licensor initiated and prosecuted, or maintained the defense of, the
action, the amount of any recovery remaining then shall be retained by Licensor;
and

(d) if Licensee initiated and prosecuted, or maintained the defense of, the
action, the amount of any recovery remaining shall be retained by Licensee,
except that Licensor shall receive a portion equivalent to the royalties it
would have received in accordance with the terms of this Agreement as if such
amount were Net Sales of Licensee.

8.2.3 Third Party Intellectual Property.

(i) In the event that a Party becomes aware of any claim or potential claim that
the practice by either Party of Licensor IP Rights hereunder infringes the
intellectual property rights of any third party, such Party shall promptly
notify the other Party. As between the Parties, Licensor shall have the first
right, but not the obligation, to defend the Parties against any claim by a
third party that the Development, use, sale, offer for sale, export or import of
Licensed Product in the Territory infringes third party intellectual property
rights. Licensee shall have the right to participate in the defense of such
claim but shall not take any position inconsistent with Licensor’s position on
such issues. In the event that Licensor chooses in its sole discretion not to
defend such suit, Licensee shall have the right but not the obligation to defend
such suit. Licensee shall not settle any action pursuant to this Section without
Licensor’s consent, such consent not to be unreasonably withheld.

(ii) If Licensee would be prevented from developing, manufacturing using,
selling or importing the Licensed Product in any country of the Territory on the
grounds that by doing so they would infringe a Dominating Patent held by a third
party in said country and Licensee licenses rights to such Dominating Patent in
said country, then [*] percent ([*]%) of any royalties on Licensed Product sales
paid by Licensee to such third party in any Calendar Year in such country with
respect to such Dominating Patent shall be deducted from any royalty payments
payable to Licensor by Licensee in such Calendar Year (the “Royalty Reduction”),
provided, however, that (i) Licensor has been informed of the Dominating Patent
and has had an

 

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

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opportunity to provide input on any related discussion of whether to license
such Dominating Patent and negotiation of royalty rates; and (ii) subject to the
warranties and representations made by Licensor under Section 11.1 of this
Agreement, the amount of the Royalty Reduction in any Calendar Year shall not
exceed [*] percent ([*]%) of the royalties (the “Royalty Reduction Cap”) that
would have otherwise been payable by Licensee to Licensor for such Calendar Year
and for such country. Any amount of the Royalty Reduction which is not offset
against royalty payments due to Licensor (because it exceeds the Royalty
Reduction Cap) shall be carried forward to and deducted in subsequent Calendar
Years until the expiration date of the term. The Parties shall negotiate in good
faith the consequences of several Dominating Patents if and when such several
Dominating Patents come to the attention of the Parties. Notwithstanding any
royalty reduction provided in this Section 8.2.3(ii), in no event shall any
royalty on Net Sales payable to Licensor by Licensee be reduced below a minimum
equal to the GNE Royalty on such Net Sales, which minimum royalty is referred to
herein as the “Royalty Floor.” As used herein, with respect to a given amount of
Net Sales the GNE Royalty means whatever percent of Net Sales Licensor owes as a
royalty to GNE pursuant to on G.2 of the GNE ex-US License. To demonstrate how
the Royalty Floor mechanism is intended to operate pursuant to this
Section 8.2.3(ii), a hypothetical calculation (for purposes of example only, and
not limitation) is provided in the example below, assuming the amount of Net
Sales in Euros is then converted into US dollars.

Example

1. Assumptions

 

Net Sales of Licensed Product:

   [*] USD

Market Competition:

   YES

Valid Claim:

   YES

Royalty Paid by Licensee for License Under Third Party Dominating Patent:

   [*] USD

2. Calculation of Royalty Due and Payable to Licensor by Licensee

 

a. Royalty Owed per Section 7.2 on Net Sales With Market Competition and Valid
Claim:

   [*] USD

b. Royalty Reduction Cap ([*]% of Royalty Owed by Licensee on Net Sales With
Market Competition and Valid Claim):

   [*] USD

c. Full Royalty Reduction ([*]% of Royalty Paid by Licensee for License Under
Third Party Dominating Patent):

   [*] USD

d. Royalty otherwise owed

   [*] USD

e. GNE Royalty (Owed by Licensor on Net Sales pursuant to Section G.2(g) of GNE
ex-US License):

   [*] USD

f. Royalty otherwise owed compared to GNE Royalty:

   [*] USD

g. Adjusted Royalty Reduction (c plus f.):

   [*] USD

h. Royalty Due and Payable to Licensor by Licensee (a minus g, which equals e):

   [*] USD

 

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

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8.3 Joint IP Rights. All Know-How or Patent Rights arising from Development
activities undertaken and funded jointly by the Parties pursuant to Article 4
shall be jointly owned by the Parties, regardless of inventorship, but subject
to the licenses set forth in this Agreement. The allocation of responsibilities
and costs between the Parties for filing, prosecution, maintenance and
enforcement of such Patent Rights jointly owned by the Parties shall be decided
by a joint patent committee appointed and overseen by the JSC, consisting of two
(2) members from each Party (the “Joint Patent Committee”). The initial members
for such Joint Patent Committee are set out in Schedule 13.

8.4 Patents Solely Owned.

8.4.1 Licensee shall have the sole discretion for the filing, prosecution,
maintenance and enforcement of Patent Rights that it solely owns, provided that,
if any such Patent Rights are subject to a license grant to Licensor as a result
of Licensor’s exercise of its Opt-in rights under Section 4.4.4(ii)(F), then at
the time Licensor exercises its Opt-in rights, the Parties shall agree upon
reasonable terms under which Licensor shall participate in the filing,
prosecution, maintenance and enforcement of such Patent Rights in the Licensor
Territory, in a form substantially similar in principle to those set forth in
Section 8.2.

8.4.2 Licensor shall have the sole discretion for the filing, prosecution,
maintenance and enforcement of Patent Rights that it solely owns, provided that,
if any such Patent Rights are subject to a license grant to Licensee as a result
of Licensee’s exercise of its Opt-in rights under Section 4.4.4(ii)(F), then at
the time Licensee exercises its Opt-in rights, the Parties shall agree upon
reasonable terms under which Licensee shall participate in the filing,
prosecution, maintenance and enforcement of such Patent Rights in the Territory,
in a form substantially similar in principle to those set forth in Section 8.2.

 

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

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9. TERM AND TERMINATION

9.1 Term

9.1.1 Conditions to Closing. This Agreement shall become effective upon the
Effective Date, after the Parties have obtained all consents (including without
limitation, the expiration or termination of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, if any, and
all governmental or regulatory consents, approvals or authorizations required in
connection with the valid execution and delivery of this Agreement, the
Somatuline Agreement and the Equity Transaction Documents and all necessary
stockholder consents and approvals), permits and waivers necessary or
appropriate for consummation of any of the transactions contemplated by this
Agreement, the Somatuline Agreement and the Equity Transaction Documents.

9.1.2 Term; Expiration. The term of the Agreement shall commence on its
Effective Date and, unless sooner terminated as provided herein, shall continue
in full force and effect on a Licensed Product by Licensed Product and country-
by-country basis until the expiration of the Royalty Term with respect to such
Licensed Product in such country. Upon expiration of the Royalty Term with
respect to a given Licensed Product, in a given country, Licensee shall be
granted a fully paid-up, irrevocable and perpetual non-exclusive license under
all Licensor IP Rights with respect such Licensed Product and a fully paid-up,
irrevocable and perpetual exclusive license under the Licensed Trademark with
respect to such Licensed Product and its promotional material.

9.2 Termination.

9.2.1 Either Party may terminate this Agreement, in whole or in part as
applicable, effective immediately upon receipt of written notice to the other
Party, under the following circumstances:

 

  (a) if the other Party is in material breach or default with respect to any
term or provision hereof and fails to cure the same within thirty (30) days of
receipt of written notice of said breach or default; or

 

  (b) if the other Party is adjudged bankrupt, files or has filed against it any
petition under any bankruptcy, insolvency or similar law, has a receiver
appointed for its business or property, or makes a general assignment for the
benefit of its creditors; or

 

  (c) where the right to terminate the Agreement in whole or in part is
specifically provided for herein.

 

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

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9.2.2 Licensee may terminate this Agreement in case of termination of the GNE
License and/or the Fujisawa License immediately upon notice to Licensor. In the
case of such termination of the GNE License and/or the Fujisawa License,
Licensor shall use Diligent Efforts to present Licensee to GNE and/or Fujisawa
so that Licensee may secure its rights under GNE’s and/or Fujisawa’s Patent
Rights and Know-How relating to the Licensed Product. The Parties acknowledge
that in the event of such termination, Licensee may obtain a direct license from
GNE or have this license modified by GNE pursuant to Section 13.6 of the GNE
Ex-US License.

9.3 Resulting Obligations. Upon early termination of this Agreement the
following shall apply:

9.3.1 Rights to Licensed Product in the Territory.

(a) In the event of termination by Licensor pursuant to Section 9.2.1 with
respect to a one or more Licensed Products, all rights to such Licensed
Product(s) shall revert to Licensor free of charge and Licensee shall have no
further rights with respect to the Licensed Product. Licensee shall, at
Licensor’s election, either (i) resell under its own responsibility all
remaining quantities of unsold Licensed Products during a maximum time period of
six (6) months as from termination of this Agreement, at the expiration of which
period, Licensee shall, upon request from Licensor, immediately destroy all
unsold quantities of Licensed Products and provide to Licensor the corresponding
certificate of destruction hereof, or (ii) immediately return any unsold stock
to Licensor or any other third party designated by Licensor provided said stock
is in good saleable condition. All expenses and costs of such return shall be
borne by Licensor unless termination of this Agreement occurs as a result of
Licensee being in breach of the provisions of this Agreement. If option (ii) is
selected by Licensor, Licensor or the third party designated by Licensor shall
repurchase all such returned stock of Licensed Products at the Licensed
Products’ Supply Price referred to in Section 6.5 hereunder provided that they
are in good saleable condition and have a remaining shelf life of no less than
six (6) months. Should the Licensed Products not be in good saleable condition,
Licensee shall destroy all such remaining stock subject to Licensor’s prior
written agreement, and provide to Licensor the corresponding certificate of
destruction hereof

(b) In the event of termination by Licensee pursuant to Section 9.2.1 or 9.2.2,
Licensee shall be entitled to the following, at the Licensee’s election, unless
termination of the GNE License or the Fujisawa License was in whole or in part
caused by Licensee’s performance under this Agreement; (i) return all unsold
Licensed Product and unused Samples to Licensor at Licensor’s expense and to
receive a full refund of the Supply Price paid to Licensor for the Licensed
Product and Samples returned by Licensee, or (ii) continue to sell Licensed
Product according to the terms of this Agreement until all inventory is sold or
for six (6) months, whichever shall occur first.

9.3.2 Licensed Trademark. Except as provided for in Section 9.3.1 (b), Licensee
shall terminate any use of the Licensed Trademark and shall, at Licensor’s
election, either destroy or return to Licensor at Licensee’s cost all
literature, labels, or other materials,

 

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

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incorporating or bearing same. Licensee shall cooperate with Licensor and
execute any and all documents requested by Licensor for the purpose of canceling
any registered user or other rights with respect to the Licensed Trademark or,
at Licensor’s election, in transferring such rights to Licensor or its designee.

9.3.3 Data. Except as provided for in Section 9.3.1(b), Licensee shall cease
using all information and technical and other data provided by Licensor relating
to the Licensed Product, and shall, at Licensor’s option, return to Licensor or
destroy all such data having physical form and all copies thereof, and shall
continue to abide by its obligation of confidentiality set forth in Section 9
below.

9.3.4 Approvals; IP Rights. Except as provided for in Section 9.3.1 (b),
Licensee shall promptly assign or otherwise cause to be transferred to Licensor,
or Licensor’s designee, all Marketing Authorizations or any other government
registrations or approvals in the Territory having to do with the Licensed
Product that are in Licensee’s name and shall make no further use of the same
and shall allow Licensor to cross-reference any INDs, BLAs (or their equivalent
in the Territory), clinical data or other submissions filed with any Regulatory
Authority in the Territory and provide Licensor with copies of all such
documentation. In addition, Licensee shall (i) provide Licensor with a copy of
Licensee’s preclinical and clinical data, assays and associated materials, and
protocols and procedures, and any Know-How Controlled by Licensee, with respect
to such Licensed Product(s) (ii) grant a non-exclusive, sublicensable license to
Licensor to use, sell, manufacture, offer for sale, import and export in the
Territory such Licensed Products under any Patent Rights and any Know-How owned
or Controlled by Licensee as of the effective date of the termination,
(iii) grant Licensor exclusive rights to use any Licensed Trademarks filed in
connection with Licensed Products, to the extent such Licensed Trademarks are
specific to one or more Licensed Products and are not generally associated with
any other product of Licensee and do not contain an element of Licensee’s trade
name, in each case solely for purposes of using, selling, offering for sale,
importing or exporting such Licensed Products in the Territory.

9.4 Survival of Rights. All of the remedies provided for in Section 9.3 are in
addition to the other rights and remedies available to the Parties on
termination and Section 9.3 is not intended to limit any of those rights or
remedies.

 

10. CONFIDENTIALITY

10.1 All information, whether in oral, written, graphic or electronic form,
disclosed by either Party (“Disclosing Party”) to the other and/or any of its
subsidiaries, subdivisions, parent companies, affiliates agents or consultants
(“Receiving Party”), and all notes, documents and materials prepared by or for
either Party which reflect, interpret, evaluate, include or are derived
therefrom, shall be deemed to be “Confidential Information.” In particular,
Confidential Information shall include, without limitation, any trade secret,
proprietary information, invention, research and development work,
work-in-process, technology, technique, know-how, design, specification,
program, unpublished data, procedure (including operating procedures), computer
software, data base or programming, idea, sample, strategy, budget, projection,
development,

 

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

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process, formulation, method, guideline, policy, proposal, contract, test data
or data file, or any engineering, manufacturing, marketing, servicing,
financing, pricing, cost, profit, personnel or salary structure/compensation
information relating to the past, present or future operations, products,
services, technology, sales, suppliers, clients, customers, employees,
investigators, investors or business of Disclosing Party. In addition,
“Confidential Information” includes any trade secrets, data (technical or
non-technical) or confidential information relating to the past, present or
future operations, organization, business, projects or finances of any third
party to which Disclosing Party owes a duty of confidentiality including,
without limitation, the mere fact that Disclosing Party is or may be working
with or for any client.

10.2 Receiving Party shall not use or disclose such Confidential Information to
others (except its employees, Affiliates and sub-licensees who reasonably
require same for the purposes hereof and who are bound to it by a like
obligation as to confidentiality except as required by law) without the express
written permission of Disclosing Party, except for Confidential Information that
(i) can be demonstrated by written records to be known to Receiving Party from a
source other than Disclosing Party at the time of receipt; or (ii) was
subsequently otherwise legally acquired by Receiving Party from a third party
having an independent right to disclose the information; or (iii) is now or
later becomes publicly known without breach of this Agreement by Receiving Party
or any Party that received such Confidential Information from Receiving Party.

10.3 Either Party may disclose the other Party’s Confidential Information to the
extent such disclosure is required by law, regulations (including without
limitation the rules and regulations promulgated by the SEC) and valid court
orders, provided that such Party gives the other Party reasonable notice of such
disclosure and uses reasonable efforts to obtain confidential treatment or a
protective order for such information. Licensor shall have the right to disclose
Licensee’s Confidential Information to the extent such disclosure is required to
satisfy its obligations under the GNE Ex-US License, the Fujisawa License, or
its agreements with third party manufacturers and suppliers provided that such
persons undertake to keep confidential such Confidential Information.

10.4 Other Permitted Disclosure. Except as otherwise expressly provided herein,
to the extent reasonably necessary to carry on the activities contemplated in
this Agreement, each Party shall be permitted to (a) disclose or grant use of
Confidential Information received under this Agreement to any of its permitted
sublicensees, agents, consultants, clinical investigators, collaborators or
contractors, under confidentiality and non-use obligations at least as stringent
as those set forth in this Article 10; (b) disclose Confidential Information
received under this Agreement to actual or potential professional investors,
acquirers, merger or other business partners or retained professional advisors
(e.g. attorneys, accountants and investment bankers), under confidentiality and
non-use obligations at least as stringent as those set forth in this Article 10;
and (c) to a Regulatory Authority to the extent necessary for obtaining
Marketing Authorization for a Licensed Product.

10.5 Publications. In the event either Party wishes to publish or orally deliver
a scientific article or speech relating to the Development of a Licensed
Product, such Party shall submit to the other Party a draft of each such
proposed oral disclosure or written publication at

 

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

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least thirty (30) days prior to the anticipated oral disclosure or the
submission of the written publication. The other Party shall review each such
proposed oral disclosure or written publication in order to avoid the
unauthorized disclosure of such Party’s Confidential Information and to preserve
the patentability of inventions arising from this Agreement. As soon as
reasonably possible, but in no event more than thirty (30) days after receipt of
an advance copy of a publishing Party’s proposed oral disclosure or written
publication, the reviewing Party shall inform the publishing Party if the
proposed oral disclosure or written publication contains any of the reviewing
Party’s Confidential Information or could be expected to have a material adverse
effect on any patent rights of the reviewing Party. If so requested by the
reviewing Party, the publishing Party shall amend any proposed oral disclosure
or written publication to the extent necessary to protect the Confidential
Information of the reviewing Party of which the publishing Party is made aware
by the reviewing Party and, if so requested by the reviewing Party, shall delay
such proposed oral disclosure or written publication for a reasonable period of
time to permit the timely preparation of a patent application by the reviewing
Party.

10.6 Press Release. In general, and except where required by law or regulation,
no public announcement or other disclosure by the Parties concerning the
existence of or terms of this Agreement shall be made, either directly or
indirectly, by either Party to this Agreement, without first obtaining the
written approval of the other Party and agreement upon the nature and text of
such announcement or disclosure, such consent not to be unreasonably withheld.
The Parties shall make a joint public announcement in English of the execution
of this Agreement in such form separately agreed upon between the Parties on or
after the Effective Date. Licensee shall be permitted to make a public
announcement in French or such other language as it desires of the execution of
this Agreement similar to the English press release. After the initial press
release concerning this Agreement, if either Party desires to make an additional
press release concerning any additional material terms of this Agreement, it
shall inform the other Party in reasonably sufficient time prior to public
release, and shall provide the other Party with a written copy thereof for
review. A Party commenting on such a proposed press release shall provide its
comments, if any, within three (3) business days after receiving the press
release for review. Each Party agrees that it shall cooperate fully with the
other with respect to all disclosures regarding this Agreement to any stock
market, governmental or regulatory agencies, including requests for confidential
treatment of proprietary information of either Party included in any such
disclosure. Where required by law or by the regulations of the applicable
securities exchange upon which such Party may be listed, each Party shall have
the right to make a press release announcing the achievement of each milestone
under this Agreement as it is achieved, and the achievements of Regulatory
Approvals in the Territory as they occur, subject only to the review procedure
set forth in the preceding sentence. Neither Party shall be required to seek the
permission of the other Party to repeat any information regarding the terms of
this Agreement that has already been publicly disclosed by such Party, or by the
other Party, in accordance with this Section 10.6.

 

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

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11. REPRESENTATIONS AND WARRANTIES

11.1 Representations and Warranties of Licensor. Licensor makes the following
covenants, representations and warranties to Licensee, as of the Execution Date,
and does so in full understanding and acknowledgement that Licensee is relying
on the said representations and warranties in entering into the present
Agreement:

11.1.1 Status. Licensor is a corporation organized and existing under the laws
of the State of Delaware, United States of America. No action has been taken by
the directors, officers or shareholders of Licensor to dissolve Licensor.
Licensor has the corporate power and authority to enter into the present
Agreement and to perform all its obligations hereunder.

11.1.2 All Necessary Proceedings. Licensor has taken all necessary corporate
actions and proceedings to enable it to enter into the present Agreement.

11.1.3 No Other Agreements for the Licensed Product. Save as regards Third Party
Countries, Licensor has not made any written or oral agreement or undertaking
with any third party regarding the rights to sell the Licensed Product in the
Territory.

11.1.4 No Violation and Consent. Licensor warrants that the execution, delivery
and performance of this Agreement by it (a) does not and will not violate or
conflict with any provision of law or any provision of its articles of
incorporation or by-laws; and (b) does not and will not, with or without the
passage of time or the giving of notice, result in the breach of, or constitute
a default, cause the acceleration of performance, or require any consent under,
or result in the creation of any lien, charge or encumbrance upon any of its
property or assets pursuant to any material instrument or agreement to which it
is a Party or by which it or its properties may be bound or affected. Licensor
warrants that (i) all consents from GNE and Fujisawa relating to the execution
of this Agreement have been properly and timely obtained by Licensor and
(ii) Licensor’s grant of the Manufacturing Option under Section 6.18 of this
Agreement does not infringe the rights of any third party to whom Licensor is
obligated.

11.1.5 Non-infringement. Licensor represents and warrants to the best of its
knowledge, as of the Execution Date, (i) that there are no outstanding claims or
allegations that the Licensed Product and/or the Licensed Trademark infringe
upon any rights of a third party in the Territory and (b) that the Licensed
Product and the Licensed Trademark do not infringe upon any rights of a third
party in the Territory.

11.1.6 GNE and Fujisawa Licenses. Licensor warrants that as of the Execution
Date, (i) the GNE Ex-US License and Fujisawa License are in full force and in
effect in accordance with their terms, (ii) Licensor is not in default or breach
in any material respect of the GNE Ex-US License and Fujisawa License, (iii) to
Licensor’s knowledge, there is no cause for early termination of the GNE Ex-US
License and Fujisawa License, and (iv) the terms under this Agreement are not in
conflict with the terms in the GNE Ex-US License or Fujisawa License. Licensor
shall (i) comply with and observe in all material respects its obligations under
the GNE Ex-US License and Fujisawa License and (ii) not terminate or otherwise
modify any terms or conditions of the GNE Ex-US License and Fujisawa License in
any manner that would materially adversely affect Licensee’s rights under this
Agreement without the prior written consent of Licensee.

 

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

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11.2 Representations and Warranties of Licensee. Licensee makes the following
covenants, representations and warranties to Licensor, as of the Execution Date,
and does so in full understanding and acknowledgement that Licensor is relying
on the said representations and warranties in entering into the present
Agreement:

11.2.1 Status. Licensee is a corporation organized and existing under the laws
of France. No action has been taken by the directors, officers or shareholders
of Licensee to dissolve Licensee. Licensee has the corporate power and authority
to enter into the present Agreement and to perform all its obligations
hereunder.

11.2.2 All Necessary Proceedings. Licensee has taken all necessary corporate
actions and proceedings to enable it to enter into the present Agreement.

11.2.3 No Violation. Licensee warrants that the execution, delivery and
performance of this Agreement by it (a) does not and will not violate or
conflict with any provision of law or any provision of its articles of
incorporation or by-laws; and (b) does not and will not, with or without the
passage of time or the giving of notice, result in the breach of, or constitute
a default, cause the acceleration of performance, or require any consent under,
or result in the creation of any lien, charge or encumbrance upon any of its
property or assets pursuant to any material instrument or agreement to which it
is a Party or by which it or its properties may be bound or affected.

11.3 THE WARRANTIES SET OUT ABOVE AND IN SECTIONS 2.5.2 AND 6.15.1 ARE THE ONLY
WARRANTIES GIVEN BY EITHER PARTY AND ARE MADE IN LIEU OF ALL OTHER WARRANTIES,
EXPRESS OR IMPLIED. THERE IS NO OTHER CONDITION OR WARRANTY RELATING TO PRODUCT
MERCHANTABILITY OR FIT FOR ANY PARTICULAR PURPOSE, ALL OF WHICH ARE HEREBY
EXCLUDED AND DISCLAIMED.

 

12. INDEMNIFICATION

12.1 Indemnity. For purposes of this Section, “Licensee Indemnified Parties”
refers to Licensee, its Affiliates and the officers, directors, employees,
shareholders, agents and successors and assigns of Licensee and its Affiliates,
and “Licensor Indemnified Parties” refers to Licensor, its Affiliates and
officers, directors, employees, shareholders, agents and successors and assigns
of Licensor and its Affiliates.

12.1.1 Indemnification by Licensor. Licensor shall defend, indemnify and hold
harmless to the fullest extent permitted by law the Licensee Indemnified Parties
and each of them, from and against any and all losses, claims, liabilities,
demands, actions, proceedings, judgments of any and all types, including,
without limitation, reasonable fees of attorneys, accountants and other experts
(collectively, “Losses”), incurred by Licensee Indemnified Parties insofar as
they arise out of or are alleged or claimed to arise out of (i) any activities
conducted by Licensor in relation with (i) the Licensed Product including
development and commercialization activities; (ii) Licensors’ enforcement of
Licensed Patent Rights in any action against a third party that is joined by
Licensee in compliance with Section 8.2.2; and (ii) any material breach by

 

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

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Licensor of its obligations under this Agreement, provided, however, that:
(a) Licensor shall not be obligated under this Section 12.1.1 to the extent that
the Losses resulted from the negligence or willful misconduct of Licensee,
Licensee’s Affiliates, Sub-licensees or Contractors; and (b) Licensee shall have
the right to participate in the defense of any such claim, complaint, suit,
proceeding or cause of action referred to in this Section 12.1.1 utilizing
attorneys of its choice, at its own expense, provided, however, that Licensor
shall have full authority and control to handle any such claim, complaint, suit,
proceeding or cause of action, including any settlement or other disposition
thereof, for which Licensee seeks indemnification under this Section 12.1.1.

12.1.2 Indemnification by Licensee. Licensee shall defend, indemnify and hold
harmless the Licensor Indemnified Parties and each of them to the fullest extent
permitted by law from and against any and all Losses incurred by Licensor
Indemnified Parties insofar as they arise out of or are alleged or claimed to
arise out of (i) any activities conducted by Licensee in connection with the
Licensed Product, and (ii) any material breach by Licensee of its obligations
under this Agreement; provided, however, that; (a) Licensee shall not be
obligated under this Section 12.1.2 to the extent that the Losses resulted from
the negligence or willful misconduct of Licensor or Licensor’s Affiliates or
contractors; and (b) Licensor shall have the right to participate in the defense
of any such claim, complaint, suit, proceeding or cause of action referred to in
this Section 12.1.2 utilizing attorneys of its choice, at its own expense,
provided, however, that Licensee shall have full authority and control to handle
any such claim, complaint, suit, proceeding or cause of action, including any
settlement or other disposition thereof, for which Licensor seeks
indemnification under this Section 12.1.2.

Notwithstanding the provisions of Sections 12.1.1 and 12.1.2, Licensee and
Licensor agree and understand that, in the event of a claim, complaint, suit,
proceeding or cause of action brought against one Party containing allegations
of liability based on activities for which such Party was responsible, such
Party shall control and bear financial responsibility for its own defense;
unless the other Party agrees to control and bear financial responsibility of
such defense.

12.2 Settlement of Indemnified Claims. The Indemnifying Party under
Section 12.1.1 or 12.1.2, as applicable (the “Indemnifying Party”), shall have
the sole authority to settle any claim against the other Party (the “Indemnified
Party”) pursuant to Sections 12.1.1 or 12.1.2 (the “Indemnified Claim”) without
the consent of the other Party, provided, however, that an Indemnifying Party
shall not, without the written consent of the other Party, as part of any
settlement or compromise (i) admit to liability on the part of the other Party;
(ii) agree to an injunction against the other Party; or (iii) settle any matter
in a manner that separately apportions fault to the other Party.

12.3 Indemnification Procedure. Each Party shall promptly notify the other Party
in writing of any claim, suit, proceeding, demand or assessment it believes is
an Indemnified Claim. Concurrent with the provision of notice pursuant to this
Section 12.3, the Indemnified Party shall provide to the other Party copies of
any complaint, summons, praecipe, subpoena or other court filings related to
such claim. Failure to provide prompt notice shall not relieve any Party of the
duty to defend or indemnify unless such failure materially prejudices the
defense of any matter.

 

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

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Should the Indemnifying Party dispute that any claim or portion of a claim
(“Disputed Claim”) of which it receives notice pursuant to Section 12.3, is an
Indemnified Claim, it shall so notify the Indemnified Party providing written
notice in sufficient time to permit such Indemnified Party to retain counsel and
timely appear, answer and/or move in any such action. In such event, such
Indemnified Party shall defend against such claim until the dispute regarding
whether such claim is an Indemnified Claim has been resolved; provided, however,
that an Indemnified Party shall not settle any claim which it contends is an
Indemnified Claim without providing the Indemnifying Party ten (10) working
days’ notice prior to any such settlement and an opportunity to assume the
defense and indemnification of such claim pursuant to this Agreement. If it is
determined that a Disputed Claim is subject to indemnification, in whole or in
part, the Indemnifying Party will reimburse the reasonable costs and expenses,
including attorneys’ fees, of the Indemnified Party.

12.4 Insurance. Each Party shall maintain, during the term of this Agreement,
Commercial General Liability Insurance, (including Products Liability,
Contractual Liability, Bodily Injury, Property Damage and Personal Injury) to
cover its indemnification obligations under this Article 12. During the term of
this Agreement, each Party shall not permit such insurance to be reduced,
expired or canceled without reasonable prior written notice to the other Party.
Upon request, each Party shall provide certificates of insurance to the other
Party evidencing the coverage specified herein. Except as expressly stated
herein, a Party’s liability to the other is in no way limited to the extent of
the Party’s insurance coverage. In the event of duplicate coverage, the
insurance policy of the Party whose fault causes the need for reimbursement
under an insurance policy shall be primary and the other Party’s excess and
non-contributing.

12.5 Limitation of Liability. EXCEPT FOR ANY WILLFUL BREACH BY EITHER PARTY OF
ITS REPRESENTATIONS, WARRANTIES, COVENANTS OR AGREEMENTS UNDER SECTIONS 11.1 AND
11.2, OR FOR DAMAGES ACTUALLY PAID BY A PARTY TO A THIRD PARTY PURSUANT TO A
THIRD-PARTY CLAIM, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER OR ANY
OF ITS AFFILIATES FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, SPECIAL, PUNITIVE
OR EXEMPLARY DAMAGES (INCLUDING, WITHOUT LIMITATION, LOST PROFITS, BUSINESS OR
GOODWILL) SUFFERED OR INCURRED BY SUCH OTHER PARTY OR ITS AFFILIATES IN
CONNECTION WITH THIS AGREEMENT, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.

 

13. FORCE MAJEURE

Neither Party shall be liable for any delay or default in such Party’s
performance hereunder if such default or delay is caused by events beyond such
Party’s control including, but not limited to, acts of God, war or insurrection,
civil unrest, disease or calamity affecting the raw materials or equipment used
in the production of Licensed Product, earthquake, fire, flood or storm, labor
disturbances or epidemic. An event of Force Majeure shall have no effect on
Licensee’s obligation to pay for Licensed Product already delivered as required
by this Agreement.

 

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

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In the event that either Party is forced to rely on this Section due to an event
of Force Majeure, the Parties agree that, after the event of Force Majeure has
ended, they will meet to discuss any issues with the Agreement resulting from
the Force Majeure and that the Parties will negotiate in good faith to resolve
any such issues. Should an event of Force Majeure continue for more than six
(6) months, the Party not relying on this Section shall have the right to
terminate this Agreement by giving thirty (30) days written notice to the other
Party of its intent to terminate.

 

14. SUCCESSORS IN INTEREST

14.1 Neither Party may assign this Agreement or any rights hereunder or delegate
the performance of any duties hereunder without the prior written approval of
the other Party, which approval shall not be unreasonably delayed or withheld;
provided, however, that without such consent either Party may assign this
Agreement to an Affiliate or in connection with the transfer or sale of all or
substantially all of its assets, stock or business, or its merger, consolidation
or combination with or into another entity or acquisition of another entity.
Subject to the foregoing, this Agreement shall be binding upon, inure to the
benefit of and be enforceable by the Parties and their respective successors and
permitted assignees.

14.2 Notwithstanding Section 14.1, in the event that (i) this Agreement is
transferred or sold to, in connection with the transfer or sale of all or
substantially all of Licensee’s assets, stock or business to a third party or
(ii) that Licensee is directly or indirectly acquired by, or merges with and
into, a third party, Licensor shall have the right to terminate this Agreement
as provided herein. Where such acquisition or change of control transaction is
with a Competing Entity (as defined below), Licensor shall have three (3) months
following the announcement of such transaction to give written notice to
Licensee of its intent to terminate the Agreement, such termination to be
effective sixty (60) days after receipt of notice of termination, the provisions
of Section 9.3 shall apply and Licensor shall owe no compensation to Licensee as
a result of such termination. Where such acquisition or change of control
transaction is not with a Competing Entity, Licensor shall have three (3) months
to give written notice to Licensee of its intent to terminate the Agreement,
such termination to be effective sixty (60) days after receipt of notice of
termination, provided that such termination is subject to the payment by
Licensor of the fair market value of the Licensed Products to be reverted to
Licensor in such instance, as agreed in writing between the Parties within such
sixty (60) days period. The Parties shall exchange their proposals regarding
such valuation in writing and in the event the Parties do not agree on such fair
market value within the first forty-five (45) days of such sixty (60) day
period, the matter shall be referred to the final decision of three (3) experts
of international reputation in the field of accounting or merchant banking with
expertise in the pharmaceutical industry, one being appointed by Licensee within
fifteen (15) days following failure of the parties to agree, one by Licensor
within fifteen (15) days following failure of the parties to agree and one by
the two first experts within fifteen (15) days following their appointment. In
the event one Party fails to appoint an expert, the other Party may appoint such
expert. Once appointed, the experts shall provide the Parties with their
decision within one (1) month from the date of the appointment of

 

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

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the third expert and this decision shall be final and binding upon the Parties.
The expert decision shall be one or the other of the latter of the written
proposals exchanged by each Party with a view to agree on such fair market
value. Licensor shall make such payment to Licensee, as agreed by the Parties or
as decided by the experts, within fifteen (15) days following such agreement or
decision. The decision of the expert shall also allocate the cost for this
resolution by the panel of experts among the Parties in a proportion the experts
deem reasonable. For the purpose of this Section, Competing Entity shall mean a
company that, at the time of change of control, markets one or more
pharmaceutical products wherever in the world which are material competitors to
any one of the pharmaceutical products (including but not limited to the
Licensed Product) marketed by Licensor wherever in such region, as of such time.

 

15. DISPUTE RESOLUTION

Any dispute, controversy or claim arising out of or relating to this Agreement,
or the breach or termination thereof, shall be settled as follows:

15.1 Reference to Executives. In the event of a significant controversy, claim,
or dispute arising out of or relating to this Agreement or any significant
breach thereof (hereinafter collectively referred to as a “Dispute”), the
Parties agree that the Dispute shall be described in writing by one or both of
the Parties and copies of the description shall be sent to the General Counsel
of Licensee and to the General Counsel of Licensor. These executives will then
have fifteen (15) days from receipt of such Dispute description to attempt in
good faith to resolve the Dispute. In the event that the Dispute is not resolved
within this fifteen (15) day time period, then either Party can proceed to
arbitration of the Dispute, as described in Section 15.2.

15.2 Arbitration. Only in the event that a Dispute is not resolved through
reference to executives, as provided above, may the Parties submit the Dispute
to arbitration under the Rules of Arbitration of the International Chamber of
Commerce. The Arbitral Tribunal shall consist of three (3) arbitrators. The
place of arbitration shall be New York, New York and the arbitration proceedings
shall be held in English. The award shall be final and judgment upon such an
award may be entered in any competent court or application may be made to any
competent court for juridical acceptance of such an award and order of
enforcement.

15.3 Governing Law. In the event that a Dispute is not resolved though
mediation, as provided above, the laws of New York shall apply to any
arbitration or litigation initiated under this Agreement (regardless of its or
any other jurisdiction’s choice of law principles).

15.4 Restraining Order. The dispute resolution procedures set forth herein shall
not limit a court from granting a temporary restraining order or a preliminary
injunction in order to preserve the status quo of the parties pending
arbitration or to protect a Party’s trademark or confidential or proprietary
information. Further, the arbitrator shall have power to enter such orders by
way of interim award, and such orders shall be enforceable in court.

 

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

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16. NOTICE

Any notice required or permitted to be given hereunder shall be deemed
sufficient if sent by facsimile letter or overnight courier, or delivered by
hand to Licensor or Licensee at the respective addresses set forth below or at
such other address as either Party hereto may designate. If sent by facsimile
letter, notice shall be deemed given when the transmission is completed if the
sender has a confirmed transmission report. If a confirmed transmission report
does not exist, then the notice will be deemed given when the notice is actually
received by the person to whom it is sent. If delivered by overnight courier,
notice shall be deemed given when it has been signed for. If delivered by hand,
notice shall be deemed given when received.

All notices to Licensor shall be addressed as follows:

Tercica, Inc.

2000 Sierra Point Parkway, Suite 400

Brisbane, California 94005

USA

Attention: General Counsel

With a copy, which shall not serve as notice, to:

Cooley Godward, LLP

Five Palo Alto Square

3000 El Camino Real

Palo Alto, CA 94306

USA

Attention: Barbara A. Kosacz, Esq.

All notices to Licensee shall be addressed as follows:

Beaufour Ipsen Pharma

24 rue Erlanger, F

75016 Paris

France

Attention: President

With a copy to:

Ipsen

Attention: General Counsel

24 rue Erlanger, F

75016 Paris

France

 

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

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17. SURVIVAL

17.1 The provisions of Section 2.5.2 (but only with respect to the first
sentence of 2.5.2 as it pertains to warranty), the last paragraph of Section 5.6
(promotional materials), and Sections 8.3 (Joint IP Rights), 9.1.2 (Term;
expiration), 9.3 (Resulting Obligations), 9.4 (Survival of Rights), and of
Articles 10 (Confidentiality), 11 (Representations and Warranties), 12
(Indemnification), 15 (Dispute Resolution) and this Article 17 shall survive
expiration or termination of this Agreement.

17.2 Without prejudice to the above:

(a) any amounts payable by a Party under this Agreement prior to termination or
expiration of the Agreement shall survive such termination or expiration; and

(b) in relation only to any outstanding sales at the date of expiration or
termination that have not yet been accounted for, Section 5.5 (Sales Reports and
Records) shall survive termination or expiration of this Agreement

(c) in relation only to ongoing sales for a six month period following
termination pursuant to Section 9.3.1(a), Section 6.11 (Regulatory Compliance)
and Section 8.1.1 (Licensed Trade Mark) shall survive termination of this
Agreement for the six month period only.

 

18. ADDITIONAL TERMS

18.1 Entire Agreement. This Agreement, together with the Schedules attached
hereto, constitutes the entire understanding between the Parties with respect to
the Licensed Product, and supersedes and replaces all previous negotiations,
understandings, representations, writings, and contract provisions and rights
relating to the subject matter hereof. The Parties agree that all supply and
distribution of the Licensed Product hereunder shall be subject to and governed
by the terms and provisions set forth herein, and none of the terms and
conditions contained on any purchase or order form, invoice, or other writing,
shall change the provisions of this Agreement unless it is signed and delivered
by both Parties and it clearly indicates that the Parties intend to vary the
terms hereof.

18.2 Amendments; No Waiver. No provision of this Agreement may be amended,
revoked or waived except by writing signed and delivered by an authorized
officer of each Party. Any waiver on the part of either Party of any breach or
any right or interest hereunder shall not imply the waiver of any subsequent
breach or waiver of any other right or interest.

18.3 Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, each of which shall remain in full force and effect.

18.4 Headings. The descriptive headings are inserted for convenience of
reference only and are not intended to be part of or to affect the meaning of or
interpretation of this Agreement.

 

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

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18.5 Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original, but both of which together shall constitute one and
the same instrument.

 

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

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed and
delivered by their duly authorized representatives on the dates set forth below
to be effective as of the Effective Date.

 

Tercica, Inc.     Beaufour Ipsen Pharma By:   /s/ John A. Scarlett, M.D.     By:
  /s/ Claire Giraut Date:          Date:     

 

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

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Schedule 1

Licensed Patent Rights

(Section 1.51) [*]

 

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

1

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Schedule 2

Specification for Initial Product

(Sections 1.41 and 1.82)

Increlex Drug Product Specifications

[*]

 

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

2

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Schedule 3

(TRADEMARKS)

 

TRADEMARK

  

COUNTRY

  

APPLICATION/

REGISTRATION

NO.

  

CLASS/GOODS/

SERVICES

  

CURRENT STATUS

INCRELEX    Australia   

Application No. 1030597

 

Registration No. 1030597

   Class 5: pharmaceutical, veterinary, therapeutic and sanitary preparations;
pharmaceutical goods and preparations for medical purposes    Filed 11/19/04
Registered 03/22/05 INCRELEX    Brazil    Application No. 827079346    Class 5:
pharmaceutical, veterinary, therapeutic and sanitary preparations;
pharmaceutical goods and preparations for medical purposes    Filed 11/19/04
Published 12/14/04 INCRELEX    China    Application No. 4374645    Class 5:
pharmaceutical, veterinary, therapeutic and sanitary preparations;
pharmaceutical goods and preparations for medical purposes    Filed 11/22/04
INCRELEX    European Union (ECTM)   

Application No. 4,124,467

 

Registration No. 4,124,467

  

Class 5: pharmaceutical, veterinary, therapeutic and sanitary preparations;
pharmaceutical goods and preparations for medical purposes

 

Class 10: medical products, devices and apparatus; scientific and laboratory
products, devices and apparatus

 

Class 42: medical research; product research; research and development for new
products for others; scientific research; chemical research; biological
research; genetic research

   Filed 11/18/04 Registered 01/26/06 INCRELEX    India    Application No.
1321206    Class 5: pharmaceutical, veterinary, therapeutic and sanitary
preparations; pharmaceutical goods and preparations for medical purposes   
Filed 11/19/04 INCRELEX    Korea   

Application No.

40-2004-0052422

 

Publication No.

40-2005-0051978

 

Registration No.

0638792

   Class 5: pharmaceutical preparations for use in treatment of disorders of the
endocrine, cardiovascular, renal, skeletal, statural, neural, visual, auditory,
immune and metabolic systems; veterinary preparations for use in treatment of
disorders of the endocrine, cardiovascular, renal, skeletal, statural, neural,
visual, auditory, immune and metabolic systems; therapeutic preparations for
treating symptoms of disorders of the endocrine, cardiovascular, renal,
skeletal, statural, neural, visual, auditory, immune and metabolic systems;
pharmaceutical preparations for use as diagnostic reagents for medical
laboratory and clinical use    Filed 11/19/04 Registered 11/11/05

 

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

3

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TRADEMARK

  

COUNTRY

  

APPLICATION/

REGISTRATION

NO.

  

CLASS/GOODS/

SERVICES

  

CURRENT STATUS

INCRELEX    New Zealand   

Application

No. 721719

 

Registration

No. 721719

   Class 5: pharmaceutical, veterinary, therapeutic and sanitary preparations;
pharmaceutical goods and preparations for medical purposes    Filed 11/19/04
Published 12/24/04 Registered 05/19/05 INCRELEX    Norway   

Application No.

2004 11585

 

Registration No.

229224

   Class 5: pharmaceutical, veterinary, therapeutic and sanitary preparations;
pharmaceutical goods and preparations for medical purposes    Filed 11/19/04
Registered 11/10/05 INCRELEX    Russia   

Application No. 2004726887

 

Registration No.

303966

   Class 5: pharmaceutical, veterinary, therapeutic and sanitary preparations;
pharmaceutical goods and preparations for medical purposes    Filed 11/19/04
Registered 03/30/06 INCRELEX    Switzerland   

Application No.

03901/2004

 

Registration No.

529.662

   Class 5: pharmaceutical, veterinary, therapeutic and sanitary preparations;
pharmaceutical goods and preparations for medical purposes    Filed 11/19/04
Registered 01/17/05 INCRELEX    Taiwan   

Application No.

93053935

 

Registration No.

1168388

   Class 5: pharmaceutical preparations, namely preparations for use
with animals, the human body and environment hygiene; pharmaceutical goods and
preparations for medical purposes    Filed 11/19/04 Registered 08/16/05 STAVERSA
   European Union (ECTM)   

Application No.

4,126,504

 

Registration No.

4,126,504

  

Class 5: pharmaceutical, veterinary, therapeutic and sanitary preparations;
pharmaceutical goods and preparations for medical purposes

 

Class 10: medical products, devices and apparatus; scientific and laboratory
products, devices and apparatus

 

Class 42: medical research; product research; research and development for new
products for others; scientific research; chemical research; biological
research; genetic research

   Filed 11/19/04 Registered 01/26/06

 

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

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Schedule 4

Target Label

(Section 1.86)

Increlex Target Label and Target Population

[*]

 

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

5

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Schedule 5

Third Party Countries (and distribution agreements)

(Section 2.4)

Distribution and Quality Agreement by and between Tercica, Inc. and Biologix FZ
Co., dated May 26, 2006 (covering Kingdom of Saudi Arabia, United Arab Emirates,
Oman, Kuwait, Syria, Jordan, Lebanon, Iran, Iraq, Morocco, Algeria, Tunisia,
Libya, Egypt, Bahrain, Qatar, Yemen.

Distribution and Quality Agreement by and between Tercica, Inc. and Giddi Pharma
Co., Ltd., dated May 7, 2006 (covering Taiwan)

Negotiations are ongoing as of the Execution Date by and between Tercica, Inc.
and Medison Pharma Ltd., for a Distribution and Quality Agreement for Israel.

 

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

6

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

Schedule 6

Guidelines for Initial Development Plan

(Section 4.3.1)

Weekly formulation of IGF-1 : to be detailed in the Initial Development Plan

Combination Product : IGF-1 together with Recombinant Human Growth Hormone

 

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

7

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

Schedule 7

Monthly Sales Report Template

(Section 5.5.1)

Increlex

Sales Report as of : mm/dd/yy

 

     

This Year

  

Last Year

     

Current Month

  

Year to date

  

Current Month

  

Year to date

Countries

  

Volume
(units sold)

  

Value
(in Euros)

  

Volume
(units sold)

  

Value
(in Euros)

  

Volume
(units sold)

  

Value
(in Euros)

  

Volume
(units sold)

   Value
(in Euros) Country A                         Country B                        
Country C                         Country D                         …..         
                                                                                
      Total for Territory.                        

Note: One template per type of product sold

 

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

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

Schedule 8

Supply Price

(Section 6.5)

EUR [*]/vial

 

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

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

Schedule 9

Minimum Quantities per order for Licensed Product

(Section 6.6)

Minimum Quantities per order for Licensed Product: [*] units total per Quarter
(Trilingual or English label) or as detailed in the Initial Development Plan
and/or Commercialization Plan

 

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

2

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

Schedule 10

Form of the 18 Month Rolling Order Forecast

(Section 6.7.1)

 

Country

  

Product

Name

  

SKU
Number

  

Monthly Sales Forecast over 18 months

        

Month

1

  

Month

2

  

Month
3

  

Month
4

  

Month
5

  

Month
6

  

Month
7

  

Month
8

  

Month
9

  

Month
10

  

Month
11

  

Month
12

  

Month
13

  

Month
14

  

Month
15

  

Month
16

  

Month
17

  

Month
18

                                                                                
                                      

+ Once per year: Annual Forecast over a 4 year horizon

 

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

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

Schedule 11

Licensor On-going Development

(Section 1.58)

[*]

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

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

Schedule 12

JSC – Initial Representatives

(Section 3.1.1)

From Ipsen

[*]

From Tercica

[*]

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

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

Schedule 13

Joint Patent Committee Members

(Section 8.3)

Tercica:

[*]

Ipsen:

[*]

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