Exhibit 10.32

LICENSE AGREEMENT

THIS LICENSE AGREEMENT, dated June 23, 2006 (the “Effective Date”), is entered
into by and between ASAHI KASEI PHARMA CORPORATION, a corporation organized and
existing under the laws of Japan having its principal place of business at 9-1
Kanda Mitoshirocho, Chiyoda-ku, Tokyo 101-8481, Japan (hereinafter referred to
as “Asahi”), and CoTherix, Inc., a corporation organized and existing under the
laws of Delaware having its principal place of business at 5000 Shoreline Court,
Suite 101, South San Francisco, California 94080, U.S.A. (hereinafter referred
to as “CoTherix”). Asahi and CoTherix are sometimes referred to herein
individually as a “Party” and collectively as the “Parties”.

RECITALS:

WHEREAS, Asahi has developed through its research and development activities
certain intellectual property and clinical data relating to the known compound
fasudil for use in cardiovascular products, and has the right to grant rights
and licenses and sublicenses under the Asahi Intellectual Property Rights
(hereinafter defined); and

WHEREAS, CoTherix has expressed to Asahi its interest in obtaining from Asahi
certain rights and licenses to the Asahi Intellectual Property Rights; and

WHEREAS, Asahi is willing to grant such rights and licenses to CoTherix under
the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the Parties hereto, intending to be legally bound, do hereby
agree as follows:

SECTION 1: DEFINITIONS

1.1 Definitions. As used in this Agreement, the following terms, when
capitalized, shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined, and other
derivative forms of these terms shall be interpreted accordingly):

“Active Drug Substance” means (a) [***](known as fasudil), and (b) any of its
[***] (c) compounds that are [***] (or as does any other form of it referred to
in the foregoing clause (b)), and (d) [***].

“Affiliate” means any person, corporation, partnership, firm, joint venture or
other entity that, directly or indirectly, through one or more intermediaries,
controls, is controlled by or is under common control with, Asahi or CoTherix,
as the case may be. As used in this definition, “control” means (a) the
possession of the power to direct or cause the direction of the management and
policies of an entity, whether through the ownership of the outstanding voting
securities or by contract or otherwise or (b) ownership, directly or indirectly
of more than fifty percent (50%) of the voting securities or other ownership
interest of an entity.

 

* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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“Agreement” means this License Agreement.

“Asahi Allocated Personnel” shall have the meaning set forth in Section 6.1(a).

“Asahi Indemnitees” shall have the meaning set forth in Section 12.1.

“Asahi Intellectual Property Rights” means (a) any and all Asahi Patents and
Asahi Know-How, and (b) any copyrights and regulatory market exclusivity rights,
relating to, embodied in, or associated with a Product or Active Drug Substance,
which copyrights and regulatory market exclusivity rights are Controlled by
Asahi or any of its Affiliates as of the Effective Date, or come within the
Control of Asahi or any of its Affiliates during the term of this Agreement.

“Asahi Know-How” means all Information within the Control of Asahi or any of its
Affiliates as of the Effective Date or that comes within the Control of Asahi or
any of its Affiliates during the term of this Agreement, including (without
limitation) Asahi’s interest in any jointly owned Information.

“Asahi Licensed Indications” means treatment and/or prophylaxis of patients that
have, display or suffer from Stable Angina, Pulmonary Hypertension, and, if
CoTherix exercises the CoTherix Option and Asahi receives the upfront fee as set
forth in paragraph 1 of Exhibit E pursuant to Section 3.2, any other diseases
except for Asahi Option Indications.

“Asahi Option Indications” means treatment and/or prophylaxis of patients that
have, display or suffer from Stroke and ophthalmic diseases.

“Asahi Patent” means a Patent that covers or claims Information (which, for the
avoidance of doubt, includes any Patent that Covers a Product), which Patent is
Controlled (but for this Agreement) by Asahi or any of its Affiliates as of the
Effective Date or comes within the Control of Asahi or any of its Affiliates
during the term of this Agreement. The Asahi Patents include, without
limitation, any Patents listed on Exhibit A attached hereto, together with any
Patents arising therefrom or claiming priority back thereto, or added to such
Exhibit A by written agreement of the Parties, or as otherwise provided for in
this Agreement, during the term of this Agreement. The Asahi Patents include
Asahi’s interest in the Joint Patents and the [***] Patents.

“Asahi Research Agreements” means any material transfer agreement, clinical
trial agreement, agreement with a contract research organization, sponsored
research agreement or similar agreement, in all cases entered into between Asahi
and any Third Party prior to or as of the Effective Date and relating to the
research or Development of a Fasudil Formulation or any Active Drug Substance.
Asahi Research Agreements shall also include any clinical trials initiated by
Third Parties on or before the Effective Date with Fasudil Formulations provided
by Asahi, even in the absence of an agreement between Asahi and such Third
Parties.

 

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* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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“Bankruptcy Event” shall have the meaning set forth in Section 11.2(i).

“Base Net Sales” shall have the meaning set forth in Section 5.6(a)(ii).

“Business Day” means any day that is not a Saturday, a Sunday or other day on
which banks are closed in Tokyo, Japan, or San Francisco, California, U.S.

“Carcinogenicity and Safety Study” shall have the meaning set forth in
Section 2.3(b).

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

“Change of Control of CoTherix” shall have the meaning set forth in
Section 11.2(f).

“Clinical Development” means the conduct of studies of a pharmaceutical product
in humans to assess the dosing, safety and/or efficacy of such pharmaceutical
product, including, but not limited to, Phase 1 Clinical Trials, Phase 2
Clinical Trials and Phase 3 Clinical Trials as well as post-approval clinical
trials of a pharmaceutical product. “Clinical Trials” shall be interpreted
accordingly.

“CMC/Process Development” means the development of a process for the manufacture
of a drug substance and pharmaceutical product for commercial scale, including,
without limitation, the validation of raw material acceptance specifications
(both active and inactive ingredients), validation of the manufacturing process
and the analytical methods, manufacturing directions, batch records, regulatory
methods and controls, product and process specifications, quality control
procedures, stability testing (including both room temperature and accelerated),
assays, reference standards, in-process controls, preliminary and final release
methodology and stability protocols, process development protocols and reports,
for both drug substance and pharmaceutical product.

“Combination Product” means a Product that (a) contains one or more other active
ingredients besides Active Drug Substance that are sold either as a
co-formulated fixed dose or as separate doses in a single package and/or
(b) contains an inhaler or other device for the delivery of such Active Drug
Substance.

“Commercialization” means all activities undertaken relating to manufacture of
commercial quantities, pre-marketing, marketing, promotion, distribution and
sale of a pharmaceutical product on the commercial basis. “Commercialize” shall
be interpreted accordingly.

“Commercially Reasonable Efforts” shall have the meaning given in
Section 2.2(c). “Commercially Reasonable” shall be interpreted accordingly.

“Competitive Company” shall have the meaning set forth in Section 11.2(f).

“Confidential Information” shall have the meaning set forth in Section 8.1.

 

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“Confidentiality Agreements” means, collectively, the Secrecy Agreements, dated
November 11, 2005 and January 26, 2006, by and between Asahi and CoTherix, and
Section 5 of the Exclusive Negotiation Agreement.

“Control” or “Controlled” means, with respect to Patents, know-how or other
intangible rights, (1) the sole ownership or joint ownership in the U.S.
thereof, or (2) the ability (whether by ownership or license, other than
pursuant to this Agreement) to grant a license or sublicense (either (a) without
charge to the Party granting the sublicense or (b) if the grant of a sublicense
would cause the granting Party to owe a Third Party consideration under a
written agreement described by the remainder of this sentence, then if the
sublicensed Party agrees to pay such consideration) as provided for herein
without violating the terms of any written agreement with any Third Party as of
the date such ability to grant a license or sublicense hereunder first exists.

“CoTherix Allocated Personnel” shall have the meaning set forth in
Section 6.1(b).

“CoTherix Indemnitees” shall have the meaning set forth in Section 12.2.

“CoTherix Intellectual Property Rights” means (a) any and all CoTherix Patents
and CoTherix Know-How, and (b) any copyrights and regulatory market exclusivity
rights, relating to, embodied in, or associated with a Product or Active Drug
Substance, which copyrights and regulatory market exclusivity rights are
Controlled by CoTherix or any of its Affiliates or Sublicensees as of the
Effective Date, or come within the Control of CoTherix or any of its Affiliates
or Sublicensees during the term of this Agreement. Notwithstanding anything
herein to the contrary, CoTherix Intellectual Property Rights shall exclude
CoTherix [***] Patents.

“CoTherix Know-How” means all Information within the Control of CoTherix or any
of its Affiliates or Sublicensees as of the Effective Date or that comes within
the Control of CoTherix or any of its Affiliates or Sublicensees during the term
of this Agreement that is conceived, made or otherwise developed in the course
of Development and/or Commercialization of the Active Drug Substance and
Products in exercise of the license granted CoTherix in Section 3.1 (or a
sublicense granted thereunder), including (without limitation) CoTherix’s
interest in any jointly owned Information.

“CoTherix Licensed Fields” means, collectively, the Stable Angina Field, the
Pulmonary Hypertension Field, and, if CoTherix exercises the CoTherix Option and
Asahi receives the upfront fee as set forth in paragraph 1 of Exhibit E pursuant
to Section 3.2, the CoTherix Option Fields.

“CoTherix Option” shall have the meaning set forth in Section 3.2(a).

“CoTherix Option Fields” means the prophylactic and/or therapeutic use of
(a) Inhaled Products in humans with any diseases or conditions other than
Pulmonary Hypertension and Asahi Option Indications; and (b) Oral Products in
humans with any diseases or conditions other than Stable Angina, Pulmonary
Hypertension and Asahi Option Indications.

 

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* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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“CoTherix Option Period” shall have the meaning set forth in Section 3.2(a).

“CoTherix Patent” means a Patent that covers or claims Information (which, for
the avoidance of doubt, includes any Patent that Covers a Product), which Patent
(a) is Controlled (but for this Agreement) by CoTherix or any of its Affiliates
or Sublicensees as of the Effective Date or (b) covers or claims Information
conceived or reduced to practice in the course of practicing the licenses of
Section 3.1 to Develop and/or Commercialize Products or Active Drug Substance
under this Agreement, and thus comes within the Control of CoTherix or any of
its Affiliates or Sublicensees during the term of this Agreement. The CoTherix
Patents include, without limitation, any Patents listed on Exhibit B attached
hereto (but as of the Effective Date, no CoTherix Patent exists) or added
thereto by written agreement of the Parties, or as otherwise provided for in
this Agreement, during the term of this Agreement. Notwithstanding anything
herein to the contrary, the CoTherix Patents include CoTherix’s interest in any
Joint Patents, but exclude the CoTherix [***]Patents.

“CoTherix [***] Patent” means [***] entitled [***] and all Patents arising
therefrom or claiming priority back thereto (excluding new subject matter) owned
by CoTherix.

“Cover” shall have the following meaning: a product or substance is “Covered” by
a claim of a Patent if the research, development, manufacture, having
manufactured, import, use, marketing, offer to sell, sale, distribution or other
disposal thereof would constitute infringement of the claim (as or if issued) of
the Patent, but for a license; and a method or process is “Covered” by a claim
of a Patent if the use or practice of such method or process would constitute
infringement of the claim (as or if issued) of the Patent, but for a license.

“Data” shall have the meaning set forth in Section 9.1(b)(v).

“Development” shall refer to all activities relating to Preclinical Development,
Clinical Development and CMC/Process Development, including manufacture of a
drug substance and pharmaceutical product for Preclinical Development, Clinical
Development or CMC/Process Development.

“Development Plan” shall have the meaning set forth in Section 2.2(a).

“Direct Rho Kinase Inhibitors” means a compound that [***],as known as of the
Effective Date or if discovered thereafter, as of the date such compound is
discovered, which, for example, [***].

“Discussed Patents” means the Patents disclosed to CoTherix by Asahi in writing
as of the Effective Date identified as the “Discussed Patents”, and all
re-examinations, re-issues, renewals and extensions thereof, and all foreign
counterparts of each of the foregoing.

“Drug Approval Application” means an application for Regulatory Approval
required to be approved before legal commercial sale or use of a Product as a
drug in a regulatory jurisdiction, including (without limitation), for purposes
of Regulatory Approval in the U.S., a New Drug

 

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* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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Application and all supplements filed pursuant to the requirements of the FDA
(including all documents, data and other information concerning such Product
that are necessary for, or included in, FDA approval to market such Product)
and, for purposes of Regulatory Approval in Europe, all applications for
Regulatory Approval (including without limitation pricing approval) to EMEA or
any other applicable national regulatory authority.

“Drug Master File” means any drug master file filed with the FDA with respect to
the Active Drug Substance and a Product, and any equivalent filing in other
countries or regulatory authorities.

“Effective Date” means the effective date of this Agreement as set forth in the
preamble to this Agreement.

“EMEA” means the European Medicines Evaluation Agency, or any successor agency
with responsibility for regulating the development, manufacture and sale of
human pharmaceutical products.

“Europe” means all countries listed in Exhibit C, and the territories (including
dependent areas), protectorates, and possessions of each of the foregoing.

“Exclusive Negotiation Agreement” means the Exclusive Negotiation Agreement,
dated February 24, 2006, by and between Asahi and CoTherix.

“Fasudil Formulation” means any pharmaceutical composition containing any Active
Drug Substance, regardless of formulation or dosage form.

“FDA” means the United States Food and Drug Administration of the Department of
Health and Human Services, or any successor agency with responsibility for
regulating the development, manufacture and sale of human pharmaceutical
products.

“First Commercial Sale” means the date on which CoTherix or any of its
Affiliates or Sublicensees first sells commercially, pursuant to a Regulatory
Approval, a Product.

“GAAP” means U.S. generally accepted accounting principles.

“GCP” means the ICH Harmonised Tripartite Guideline for Good Clinical Practice,
and any U.S. regulatory requirements that may impose a higher standard, all as
amended from time to time.

“Generic Product” means a drug product in oral dosage form pharmaceutical or
inhalation dosage form pharmaceutical marketed by or on behalf of a Third Party
(other than a Sublicensee) and that (a) contains or delivers (including without
limitation in the [***]by or on behalf of CoTherix or its Affiliate or
Sublicensee, and that [***] (b) is, within the meaning of applicable generic
drug laws and regulations, [***] by or on behalf of CoTherix (or its Affiliate
or Sublicensee) without the [***].

 

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* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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“GLP” means the Good Laboratory Practices regulations and guidelines promulgated
by (as appropriate) the Regulatory Agencies, as the same may be amended from
time to time.

“GMP” means the Good Manufacturing Practices regulations and guidelines
promulgated by (as appropriate) the Regulatory Agencies, as the same may be
amended from time to time.

“IND” means an Investigational New Drug application filed with FDA pursuant to
21 CFR 312.1 et seq.

“Indemnify” shall have the meaning set forth in Section 12.1.

“IND Equivalent” means an application submitted in a country other than the U.S.
for authorization to conduct Clinical Development of a drug substance or
pharmaceutical product.

“Information” means (a) techniques, data and information relating directly or
indirectly to a Product or the Active Drug Substance or formulation, use
(including, without limitation, its use for particular indications, methods of
delivering it, and sustaining therapeutic plasma levels of it and its
metabolites, as well as other methods), research, development, manufacture,
having manufactured, marketing, offer for sale, sale, distribution, importation
for sale or other disposal thereof, including, but not limited to, inventions,
discoveries, practices, methods, knowledge, know-how, skill, analytical methods,
trade secrets, experience and test data (including non-clinical and clinical
test data); other data, records and information derived from, contained in or
relating to Development, analytical and quality control and manufacturing data
or descriptions; Regulatory Documentation and adverse reactions; and
Commercialization, marketing, pricing, distribution, cost, and sales data or
descriptions; in all of the foregoing cases whether in written, electronic or
any other form, and whether or not confidential, proprietary, patented or
patentable, and (b) compounds, compositions of matter, assays and biological
materials relating to a Product or the Active Drug Substance.

“Inhaled Product” means any inhalation dosage form pharmaceutical that contains
any Active Drug Substance as an active ingredient. For ease of reference,
“Inhaled Product” is sometimes expressed in the singular in this Agreement, but
multiple Inhaled Products may be Developed or Commercialized hereunder, and all
Inhaled Products are licensed under the license of Section 3.1.

“Initial Royalty Term” shall have the meaning set forth in Section 5.4.

“ISS” shall have the meaning set forth in Section 2.6.

“Joint Patents” shall have the meaning set forth in Section 6.2(c).

“Joint Technical Committee” means the committee to be established by the Parties
pursuant to Section 2.5(a).

“Kosei Rodosho” means the Ministry of Health, Labour and Welfare including the
agencies with responsibility for regulating the development, manufacture and
sale of human pharmaceutical products in Japan, and any successor agencies.

 

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“Losses” shall have the meaning set forth in Section 12.1.

“Master Formulae” means the definition of the manufacturing procedure and
composition of the Active Drug Substance and a Product including, without
limitation, the processing operations, the components and composition, equipment
and devices employed and the necessary in-process controls, all as set forth in
the relevant Regulatory Approval.

“Major Markets” means the [***].

“Necessary” shall have the meaning set forth in Section 6.5(a).

“Net Sales” means, for any period, (a) the gross amount invoiced by CoTherix and
its Affiliates and Sublicensees for the sale of a Product to Third Parties in
such period, after deduction or exclusion of:

 

  (a) [***] (including without limitation [***]);

 

  (b) any [***];

 

  (c) costs of [***]; and

 

  (d) in the case of [***], any [***]costs;

expressly subject in all cases (a)-(d) to the same being separately charged on
customer invoices and/or being actually recorded for purposes of CoTherix’s or
the selling entity’s financial reporting purposes.

If any quantity of Product is sold or otherwise transferred to a Third Party
otherwise than in an arm’s length transaction exclusively for money, and other
than (i) for use in connection with [***], (ii) for [***], (iii) as [***],
(iv) [***], or (v) for [***] or (vi) for other similar purpose to any of the
foregoing (if provided, free of charge, to a Third Party) (collectively,
(i) through (vi) being “Excluded Transfers”), then the following shall be
included in the calculation of Net Sales with respect to such quantities: [***].
For purposes of determining Net Sales, a Product shall be deemed to be sold when
invoiced.

Notwithstanding the foregoing, in the event that a Product is sold in
conjunction with another active ingredient or an inhaler or other device for
delivery of its Active Drug Substance so as to be a Combination Product (in the
case of a Product containing multiple active ingredients, whether packaged
together or co-formulated as a single therapeutic formulation), Net Sales shall
be calculated by the following formulae:

[***]

[***]

[***]

[***]

 

8

* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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In the event that no such separate sales are made by CoTherix or its Affiliates
or Sublicensees, Net Sales of the Combination Product shall be calculated in a
manner to be negotiated and agreed upon by the Parties, reasonably and in good
faith, prior to any sale of such Combination Product, including discussion
between the Parties’ respective CEOs if necessary, which shall be based upon the
respective estimated relative commercial values of the active ingredients and
the inhaler or other device of such Combination Product. If even the Parties’
CEOs cannot agree within [***] days after either Party refers the matter for CEO
determination, then either Party may refer the matter to arbitration in
accordance with Section 13.10(b).

CoTherix’s or any of its Affiliates’ or Sublicensees’ transfer of a Product or a
Combination Product amongst the foregoing shall not result in any Net Sales,
unless such Product or Combination Product is consumed by CoTherix or such
Affiliate or Sublicensee in the course of its commercial activities, other than
with respect to Excluded Transfers. CoTherix’s and its Affiliates’ and
Sublicensees’ sales to, and any other revenue in any name received as
consideration for the sale or transfer of a Product (e.g., royalties, commercial
rebates, commissions) from distributors (including without limitation
wholesalers) are included in the calculation of Net Sales, however, the
distributors’ (including without limitation wholesalers’) resales are not.

CoTherix’s Net Sales will be accounted for in accordance with GAAP and/or
international accounting standards, at CoTherix’s option on a country-by-country
basis consistently applied with respect to Net Sales in each country. For items
where actual figures are not gathered or used by CoTherix for its internal
accounting purposes on a timeline that would practicably allow them to be used
to calculate Net Sales and still make required royalty payments on time under
this Agreement, CoTherix is entitled to use an estimate, and then “true up”
based on actual figures in the following accounting period.

“Non-Competing-Development Period” shall have the meaning set forth in
Section 10.1.

“Non-Competing-Sales Period” shall have the meaning set forth in Section 10.1.

“Oral Product” means any oral dosage form pharmaceutical that contains any
Active Drug Substance as an active ingredient. For ease of reference, “Oral
Product” is sometimes expressed in the singular in this Agreement, but multiple
Oral Products may be Developed or Commercialized hereunder, and all Oral
Products are licensed under the license of Section 3.1.

“Patent” means all patent applications and patents, including without limitation
the following kinds: (a) granted patents, re-examinations, reissues, renewals,
extensions, term restorations, divisionals, continuations and
continuations-in-part thereof, and all foreign

 

9

* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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counterparts thereof, (b) pending applications for the foregoing, and
(c) patents issuing from the foregoing applications for patents. “Patent” also
includes a Supplementary Protection Certificate of a member state of the EU and
any other similar protective rights in any other country.

“Phase 1 Clinical Trials” shall have the meaning described in the ICH Harmonised
Tripartite Guideline entitled “General Considerations for Clinical Trials,” as
amended.

“Phase 2 Clinical Trials” shall have the meaning described in the ICH Harmonised
Tripartite Guideline entitled “General Considerations for Clinical Trials,” as
amended.

“Phase 3 Clinical Trials” shall have the meaning described in the ICH Harmonised
Tripartite Guideline entitled “General Considerations for Clinical Trials,” as
amended.

“Preclinical Development” means all activities relating to the planning and
execution of non-human studies (including carcinogenicity studies) conducted in
relevant in vivo animal models or in vitro directed toward obtaining Regulatory
Approval of a pharmaceutical product and/or drug substance.

“Products” means, collectively, Oral Products and Inhaled Products for use in
the CoTherix Licensed Fields (which as of the Effective Date only encompass the
Stable Angina Field and Pulmonary Hypertension Field). “Product” when used in
the singular can mean either of the foregoing Oral Product for use in the Stable
Angina Field, Oral Product for use in the Pulmonary Hypertension Field, and
Inhaled Product for use in the Pulmonary Hypertension Field (and, if applicable,
Oral Product or Inhaled Product in the other CoTherix Licensed Fields). However,
for ease of reference, “Products” is sometimes expressed in the singular in this
Agreement, even where referring to multiple Products and multiple Products may
be Developed or Commercialized hereunder.

“Pulmonary Hypertension” or “PH” means all conditions, diseases and disorders in
which the pressure in the pulmonary artery (the blood vessel that leads from the
heart to the lungs) rises above normal levels. This includes, without
limitation, those conditions, diseases and disorders commonly referred to as
“primary” and those commonly referred to as “secondary,” in each case pulmonary
hypertension or pulmonary arterial hypertension.

“Pulmonary Hypertension Field” and “PH Field” means the prophylactic and/or
therapeutic use of an Oral Product or an Inhaled Product in humans with
Pulmonary Hypertension.

“Regulatory Agency” means FDA, EMEA, Kosei Rodosho and other governmental
authorities that are counterparts thereto or serve a similar regulatory purpose
within any jurisdiction.

“Regulatory Approval” means any approvals, product and/or establishment
licenses, registrations or authorizations of any federal, state or local
regulatory agency, department, bureau or other governmental entity, necessary
for the commercial manufacture, use, storage, import,

 

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export, transport, Commercialization or sale of a Product and/or Active Drug
Substance in a regulatory jurisdiction, including pricing approval, in
jurisdictions where pricing approval is required to sell the Product or is
necessary to obtain reimbursement therefore under a government program.

“Regulatory Documentation” means (a) all applications, registrations, licenses,
authorizations and approvals (including all Regulatory Approvals), all
correspondence submitted to or received from Regulatory Agencies (including
minutes and official contact reports relating to any communications with any
Regulatory Agency) and all supporting documents relating to all Development, and
(b) all data contained in any of the foregoing; including all INDs, IND
Equivalents, Drug Approval Applications, Drug Master Files, regulatory drug
lists, data of Development, adverse event files and complaint files.

“[***] Agreements” means those certain agreements between Asahi and [***] dated
[***] and [***], respectively.

“[***] Entity” shall have the meaning given in Section 9.1(c).

“[***] Patents” means those patent applications and patents listed in Exhibit D,
together with (a) all divisionals, continuations, continuations-in-part, and
substitutions of and other applications claiming priority to the foregoing
patent applications; and (b) all patents issuing on the foregoing patent
applications and all re-issues, re-examinations, renewals and extensions of the
foregoing patents; and (c) all counterparts in other countries to each of the
foregoing.

“Serious Adverse Drug Experience” shall have the meaning set forth in 21 CFR
§312.32(a) and §314.80(a), as amended. The expression shall also include
“serious adverse events” and “serious adverse drug reactions” as defined in the
ICH Harmonised Tripartite Guideline for Clinical Safety Data Management:
Definitions and Standards for Expedited Reporting, as amended.

“Specifications” mean (i) prior to the obtaining of Regulatory Approval, “the
tests and standards” (including without limitation standards regarding
acceptance criteria, shelf life, stability, identity, strength and purity) of
the Active Drug Substance and a Product to which supply and/or manufacture under
Section 7 of this Agreement must conform; and (ii) following the grant of
Regulatory Approval, “the tests and standards” as set forth in the Regulatory
Approval with which a given starting material or product must comply. The
expression “the tests and standards” as used above is more precisely defined as
a list of tests, references to analytical procedures, and appropriate acceptance
criteria that are numerical limits, ranges, or other criteria for the tests
described or otherwise state the standards for Active Drug Substance and
finished Product shelf life, stability, identity, strength and purity.

“Stable Angina” means pain in the chest caused by inadequate blood flow through
the blood vessels (coronary vessels) of or leading directly to the heart muscle
(myocardium), excluding acute coronary syndrome.

 

11

* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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“Stable Angina Field” means the prophylactic and/or therapeutic use of an Oral
Product in humans with Stable Angina.

“Stroke” means the ischemic brain damage caused by blood coagulation and/or
cardiovascular lesion, including, without limitation, cerebral thrombosis, brain
embolism, intracerebral hemorrhage, subarachnoid hemorrhage and transient
cerebral ischemic attack.

“Sublicensee” means any non-Affiliate sublicensee of CoTherix that is granted a
sublicense by CoTherix as provided in Section 3.1.

“Territory” means the following: U.S., Canada, Mexico and Europe.

“Third Party” means any entity other than Asahi and its Affiliates and other
than CoTherix and its Affiliates.

“Third-Party Claim” shall have the meaning set forth in Section 12.1.

“Third Party Manufacturer” shall have the meaning set forth in Section 7.2(a).

“Trademarks” shall have the meaning set forth in Section 2.7.

“U.S.” or “United States” means the United States of America and its territories
(including dependent areas), possessions and commonwealths, including, without
limitation, the Commonwealth of Puerto Rico.

“Valid Claim” means (a) a claim of any issued and unexpired Patent that has not
been withdrawn, canceled or disclaimed nor held to be invalid or unenforceable
by a court or tribunal of competent jurisdiction in an unappealed or
unappealable decision; or (b) a pending claim of any pending patent application
that has been filed and prosecuted in good faith and that is reasonably likely
to issue as part of an issued patent within a reasonable period of time.

SECTION 2: COTHERIX DEVELOPMENT & COMMERCIALIZATION

2.1 Information Disclosure. Promptly after the Effective Date, Asahi will make
available to CoTherix all physical embodiments of Asahi Intellectual Property
Rights reasonably necessary or useful for Development or obtaining Regulatory
Approval of Products by CoTherix and its Affiliates and Sublicensees, Controlled
by Asahi as of the Effective Date. If any translation is necessary in connection
with such disclosure, and CoTherix requests in writing that Asahi provide a
translation into English, then Asahi shall provide such translation as soon as
practicable [***]. In connection with this making available of Asahi
Intellectual Property Rights to CoTherix, Asahi shall be reasonably available to
CoTherix to provide technical assistance regarding, and to teach CoTherix the
subject matter of, the Asahi Intellectual Property Rights.

 

12

* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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2.2 CoTherix’s Responsibility.

(a) General. With the input of the Joint Technical Committee, as between the
Parties, CoTherix shall have sole responsibility [***] for (i) the Development
of; (ii) preparing, filing and prosecuting Drug Approval Applications of;
(iii) seeking and maintaining Regulatory Approval of; and (iv) Commercialization
of, Oral Product(s) in the Stable Angina Field and Pulmonary Hypertension Field
(whether the same or different Oral Product(s) for these different fields), and
Inhaled Product(s) in the PH Field, in each case in the Territory. For the
activities of (i)-(iii), CoTherix shall perform these activities consistent with
the development plan in the form agreed by the Parties as of the Effective Date
and as it may be updated under Section 2.3 (“Development Plan”). This
Section2.2(a) is a general statement of the scope of what Product-related
activities are allocated to CoTherix. This Section 2.2(a) is not however, a
statement of CoTherix’s diligence requirements, or what level of effort CoTherix
must exert to conduct these activities (i.e. which and how much of these
activities are required). Instead, CoTherix’s diligence obligations and required
efforts level are as stated in Section 2.2(b).

(b) Diligence Obligation. CoTherix shall devote Commercially Reasonable Efforts
to carry out the following activities: (i) Develop one Oral Product for the
Stable Angina Field, one Oral Product for the PH Field (whether the same as or
different from the Oral Product for the Stable Angina Field), and one Inhaled
Product for the PH Field, for each Major Market country within the Territory in
which it is Commercially Reasonable to do so; (ii) as soon as reasonably
(determined under the Commercially Reasonable Efforts standard) practicable
obtain, and thereafter maintain, Regulatory Approval(s) for each such Product
and for its respective field, in each Major Market country within the Territory
in which it is supported by the data and Commercially Reasonable to do so; and
(iii) Commercialize each Product for which it obtains Regulatory Approval
(including, to avoid any confusion, in the case of the European Major Markets,
individual country elements of Regulatory Approval required for launch in the
particular country, beyond the centralized EMEA approval), in each Major Market
country of the Territory in which such Regulatory Approval is obtained and it is
Commercially Reasonable to do so. CoTherix shall do this in a manner that is
consistent with the terms and conditions of this Agreement. CoTherix may do this
directly, by its own activities, or indirectly, by the activities of its
Affiliate(s), Sublicensee(s) or distributors(s). For the avoidance of doubt, and
notwithstanding anything else in this Agreement or in the Development Plan,
CoTherix shall not be obligated to pursue Development, Regulatory Approval or
Commercialization activities with respect to a given Product in a given country
if not Commercially Reasonable to do so.

(c) Commercially Reasonable Efforts Level Definition. “Commercially Reasonable
Efforts” shall mean a commercially reasonable level of efforts, commensurate
with (but in no event required to be greater than) that level of efforts and
resources commonly dedicated in the research-based pharmaceutical industry by
similarly situated companies to development and commercialization, as the case
may be, of an internally developed product of similar commercial potential, at a
similar stage in its lifecycle, and having similar commercial advantages and
disadvantages, taking into account other relevant commercial, technical and
scientific factors that are reasonably and customarily considered in the
industry when planning, implementing, or making decisions regarding development
and commercialization activities, except as provided below. “Commercially
Reasonable Efforts” shall be determined [***].

 

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* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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2.3 Development.

(a) Development Plan Updates. The Development Plan as of the Effective Date
contains (i) an outline and overview of CoTherix’s anticipated Product
Development program for the Territory, (ii) descriptions of each step (or
potential series of steps) and an estimated time-line for each such step
anticipated to be achieved by CoTherix and its Affiliates and Sublicensees with
respect to the Development of, and obtaining Regulatory Approval for, each
Product in the Territory in the upcoming year and (iii) an outline and overview
of each anticipated Clinical Trial in the upcoming year (including, without
limitation, approximate ranges of the total number of subjects, anticipated
control comparative drug(s), approximate ranges of dosage and dose regimen,
general descriptions of anticipated subject diagnosis and main criteria for
inclusion, and anticipated endpoints (primary, secondary)). The initial
Development Plan reflects the Parties’ expectations as of the Effective Date of
the major elements of a Commercially Reasonable program for Development of each
Product within the Territory. However, the Parties recognize and agree that as
greater data is obtained, as CoTherix proceeds with the program, and as outside
factors (such as the intellectual property landscape, the regulatory standards
and framework, and the competitive landscape) evolve, the Development Plan may
come to no longer reflect a practicable, Commercially Reasonable plan, it may
need to be updated. In that case, either Party may propose an update or
amendment to the Development Plan to the Joint Technical Committee. (To be
clear, this possibility to update shall not be used to make the Development Plan
more detailed; instead this possibility to update is intended to be used to
respond to the circumstances and the greater information that has been obtained
since the Effective Date.) The Joint Technical Committee shall promptly discuss
any proposed updates or amendments. It is understood by the Parties that any
amendment or update to the Development Plan shall be done only if the Joint
Technical Committee determines such an amendment or update is desirable or
necessary.

(b) Understanding Regarding Certain Carcinogenicity and Safety Studies. The
Development Plan as of the Effective Date includes CoTherix’s responsibility for
conducting, or arranging for a Third Party to conduct, certain carcinogenicity
studies using Active Drug Substance, and a [***] safety study [***] using Oral
Product (“Carcinogenicity and Safety Studies”) [***] necessary to support filing
of an IND or IND Equivalents of Products, and Drug Approval Applications within
or outside the Territory, as more particularly described in the Development
Plan.

(c) Study Design. It is understood by the Parties that study designs and
protocols for Development of a Product in the Territory shall be implemented by
CoTherix and its Affiliates and Sublicensees in a manner consistent with the
overall Development Plan. One (1) month before a regularly scheduled meeting of
the Joint Technical Committee (or a meeting called for such purpose, if
applicable), CoTherix shall provide the first draft of study designs and
protocols, if any, to Asahi for informational purposes. The Joint Technical
Committee shall discuss the study designs and protocols, and allow Asahi’s
member on the Joint Technical Committee to provide Asahi’s input and suggestions
through these discussions. CoTherix shall update the Joint Technical Committee
of any material changes to the then-current study designs and protocols.
However, it is understood by the Parties that the study designs and protocols do
not require Asahi’s approval nor approval of the Joint Technical Committee.
Further, CoTherix shall provide the final version of study designs and protocols
to Asahi as soon as they are available.

 

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* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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(d) Site Visit / Audit. Asahi shall have the right, if required by Kosei Rodosho
to verify compliance with Japanese regulatory standards and/or in connection
with any bridging studies in order to permit preclinical and clinical data
generated by or on behalf of CoTherix to be used for Asahi’s purposes outside
the Territory, at reasonable frequency and on reasonable advance notice to
CoTherix during or following the conduct of research and Development of a
Product and Active Drug Substance, to visit and/or audit the site or sites
(including the sites of Affiliates and Sublicensees of CoTherix and contract
research organizations) at which the Carcinogenicity and Safety Studies or any
pivotal trials as part of Clinical Development of a Product has been or is being
conducted, subject to the restrictions stated in the remainder of this
subsection (d). Such audits shall be no more frequently than annually, unless
CoTherix consents in writing to more frequent audits. Further, Asahi shall
endeavor to coordinate any such audit with audits scheduled as part of
CoTherix’s normal regulatory compliance program. With respect to audits of
clinical sites, such audits shall occur only after completion of the relevant
clinical trial at such sites. Prior to completion of such trial, if CoTherix
will audit the clinical site, to the full extent permitted by the site, CoTherix
shall permit Asahi to participate in such audit. However, because of the
disruption of auditing a clinical site while a trial is ongoing and the
potential for confusion, Asahi shall not be entitled to independently audit
clinical sites while Product trials are ongoing at such sites. Audits of Third
Parties (including Sublicensees) are subject to the terms and conditions of
CoTherix’s contract with the Third Party (including Sublicensees). CoTherix
shall provide all permissions of CoTherix and its Affiliates for these audits.
CoTherix will assist and seek permission from the Third Parties (including
Sublicensees) to permit Asahi to audit as provided under this Section 2.3(d).
CoTherix will seek to accommodate Asahi’s requested audit dates to audit
CoTherix, however, CoTherix retains the right to schedule the audits on a
timetable that does not interfere with CoTherix’s business and corporate
priorities and may determine a date for any given audit that is up to [***]days
after the date Asahi requests. During such visits and/or audits Asahi shall have
the right to examine all data, documents and records relating to the Product and
Active Drug Substance to determine compliance with applicable laws and
regulations. Recommendations of Asahi shall be given due consideration by
CoTherix and its Affiliates and Sublicensees. Asahi shall be accompanied by an
employee or designee of CoTherix at all times during any visit or audit by Asahi
hereunder. Any data, documents, records and other information acquired during
such visits or audits (and any reports generated for such visits or audits) will
be Confidential Information of CoTherix for the purposes of Section 8. Asahi
shall provide to CoTherix a written report regarding all such visits or audits,
including all activities undertaken, all information collected and all results
or conclusions therefrom. All results and conclusions (including all proposed
corrective actions) resulting from visits and audits by Asahi hereunder shall be
subject to discussion and approval by the Joint Technical Committee. If Asahi
requests the audit or Asahi’s participation in an audit that CoTherix would
otherwise conduct alone (or solely with an Affiliate, Sublicensee and/or
contractor) [***]. For the avoidance of doubt, Asahi shall be responsible for
all of its own expenses incurred in conducting any visits or audits under this
Section (d)2.3(d).

 

15

* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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(e) Retention of Regulatory Documentation and Other Preclinical and Clinical
Development Related Documentation. CoTherix shall, and shall obligate its
Affiliates and Sublicensees, and those contracted research organizations,
hospitals, clinical institutions and other facilities contracted or retained by
CoTherix, its Affiliates and/or Sublicensees to engage in Clinical Development
and/or Preclinical Development of a Product and/or Active Drug Substance in the
Territory to, retain, to the extent required to comply with applicable laws and
regulations within the Territory, all Regulatory Documentation and other
documentation that is (i) related to Clinical Development and/or Preclinical
Development of a Product and/or Active Drug Substance in the Territory, and
(ii) is required to be retained by applicable laws and regulations within the
Territory. If any of CoTherix, its Affiliates and Sublicensees is no longer
obligated to retain any portion of such documentation under the applicable laws
and regulations, and decides to dispose of any portion of such documentation,
CoTherix shall notify Asahi of such intention reasonably in advance of scheduled
date of disposal, and, if requested in writing by Asahi within [***] days of
such notice, at Asahi’s option, either (I) continue to retain, or obligate such
Affiliate or Sublicensee to continue to retain, a part or whole of such
documentation as designated by Asahi, or (II) to the extent permitted by
applicable law, deliver to Asahi copy of a part or whole of such documentation
as designated by Asahi, [***]. With respect to such documentation held at
contracted research organizations, hospitals, clinical institutions and other
facilities contracted or retained by CoTherix, its Affiliates and/or
Sublicensees, CoTherix shall seek to obligate any such entities to make
arrangements consistent with the foregoing sentence and, if not able to do so,
CoTherix will reasonably facilitate efforts to convince such entities to have
such documentation retained for and/or provided to Asahi.

(f) Compliance.

(i) General Case. CoTherix agrees, and shall cause its Affiliates and obligate
its Sublicensees to agree, to perform its obligations set forth in this
Section 2 in compliance with applicable laws, regulations and guidances,
including, without limitation, applicable known and published standards
(including GLP, GCP, or equivalents) of the FDA, the European Commission or the
Regulatory Agencies of the relevant country or countries where Products are
under Development or Commercialization within the Territory. This includes
(without limitation) compliance with applicable ICH standards, but does not
include compliance with regulatory standards from outside the Territory unless
the Parties reach written agreement on a case-by-case basis in a manner
consistent with Section 2.3(e) and Section 2.3(f)(ii).

(ii) Specific Agreed Cases. If, in reviewing a clinical protocol or study
design, Asahi sees that a change or addition to a protocol or study design could
make the data from the trial more useful to Asahi for its purposes outside the
Territory (for example, if additional work could make the trial compliant with
Japanese regulatory requirements that are more stringent than those of the
Territory), then Asahi may propose an addition or change to CoTherix. Asahi may
propose this for discussion at a Joint Technical Committee meeting, or may
propose this by a written notice to CoTherix in between Joint Technical
Committee meetings. The Parties will discuss the matter promptly after Asahi
makes its proposal. CoTherix will reasonably consider Asahi’s proposals in this
area. If Asahi is willing [***] associated with implementing Asahi’s

 

16

* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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proposal [***], and the Parties agree in writing to implement the change (with
neither Party being required to agree; such agreement can only be a voluntary
agreement), then CoTherix shall implement the change in accordance with such
written agreement between the Parties. The written agreement shall state
specifically the change to be implemented, the specific study to which the
changes applies, any additional regulatory standards from outside the Territory
that apply to that study, and [***] for making the change (including without
limitation the applicable [***]. Other than as requested by Asahi under
Section 2.3(e), required under this Section 2.3(f)(ii) of this Agreement or any
such written agreements that the Parties enter into (if any), CoTherix is only
required in its Development of the Active Drug Substance and Products to comply
with regulatory requirements in the Territory, and is not required in its
Development of the Active Drug Substance and Products to comply with any
regulatory requirements of outside the Territory. CoTherix is entitled to [***].

(g) Asahi Assistance. Asahi agrees to communicate with CoTherix regarding and
reasonably considering any necessity to coordinate with CoTherix’s Development,
obtaining Regulatory Approval and Commercialization of Products in implementing
Asahi’s Development and Commercialization for Products, but Asahi shall not be
required to modify such implementation to any greater extent than as would be
provided under similar terms and conditions as are applied in Section 2.3(f)(ii)
– with the Parties switched for such purpose.

2.4 Regulatory.

(a) IND Filing. Asahi hereby transfers to CoTherix the IND [***] and shall
execute and deliver to the FDA a letter in a form approved by CoTherix
transferring ownership to CoTherix of the IND [***], and shall execute any other
instrument necessary to accomplish the foregoing. Until such time as FDA
officially recognizes the transfer of this IND to CoTherix, Asahi shall continue
to maintain such IND in good standing and full force and effect, and in
particular (but without limitation) shall continue to perform any required
adverse event or safety reporting to FDA until such time as FDA will accept such
reporting directly from CoTherix. For the avoidance of doubt, the Parties agree
that after the date on which such letter transferring ownership is delivered to
the FDA, the IND [***] shall become CoTherix Intellectual Property Rights;
provided, however, that even after such transfer of ownership to IND [***], any
and all data and information that is already contained in or attached to the IND
[***]as of the date on which such letter transferring ownership is delivered to
the FDA shall remain Asahi Intellectual Property Rights, notwithstanding
anything to the contrary provided for herein. In addition to the IND [***],
CoTherix shall be responsible for appropriate filing in the name of CoTherix one
or more INDs or IND Equivalents with the appropriate Regulatory Agencies
covering Clinical Development of Products in the Territory. Regulatory
Documentation required for such transfer or filing as described in this
Section 2.4 will be translated in accordance with the provisions of Section 2.8.

(b) Regulatory Approval. All Drug Approval Applications in the Territory shall
be filed in the name of CoTherix, a CoTherix Affiliate, or a Sublicensee, at
CoTherix’s option. CoTherix shall keep Asahi apprised of its progress and the
progress of its Affiliates and

 

17

* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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Sublicensees in obtaining Regulatory Approvals throughout the Territory, and
Asahi shall keep CoTherix apprised of its progress and the progress of its
Affiliates and licensees in obtaining Regulatory Approval inside and outside the
Territory. CoTherix (or, at CoTherix’s option, a CoTherix Affiliate or
Sublicensee) shall be the legal and beneficial owners of all Drug Approval
Applications in the Territory.

(c) Information Use. CoTherix shall have the right to use [***] all Asahi
Intellectual Property Rights made available to CoTherix by Asahi pursuant to
Sections 2.1 and2.8, and/or licensed to CoTherix under Section 3.1, for
supporting the filing of INDs and IND Equivalents with respect to Products in
the Territory, for obtaining or maintaining Regulatory Approval in the
Territory, and for supporting Development and Commercialization of Products in
the Territory. Further, if required or requested by a Regulatory Agency, or
otherwise with Asahi’s prior approval not to be unreasonably withheld, CoTherix
may, and shall have the right to, make reference to Regulatory Documentation
Controlled by Asahi or its Affiliates with respect to Fasudil Formulations other
than Products not addressed by the license to CoTherix under Section 3.1 to the
extent necessary or useful for the Development, obtaining Regulatory Approval or
Commercialization of Products by CoTherix hereunder. Neither Party shall
inaccurately report or misrepresent any clinical data or preclinical data
regarding Products or the Active Drug Substance provided to such Party by the
other Party in any submissions or filings made with any Regulatory Agency.

(d) Regulatory Strategy. Regulatory strategies in the Territory will be subject
to discussion among and consultation with, but not approval by, the Joint
Technical Committee. As between the Parties CoTherix will be the primary
regulatory contact with FDA, EMEA and other Regulatory Agencies in the Territory
for its filings of INDs and IND Equivalents with respect to Products and Drug
Approval Applications. Other than as specifically requested by CoTherix in
writing or permitted under Section 2.4(e), Asahi and its Affiliates shall not
communicate directly or indirectly with Territory Regulatory Agencies regarding
Products.

(e) Asahi’s Assistance and Right. When necessary in connection with all INDs and
IND Equivalents of Products and Drug Approval Applications being prosecuted by
CoTherix under Sections 2.4(a) and (b), Asahi will cooperate with and assist
CoTherix to the extent reasonably requested in writing by CoTherix in the
preparation of each IND, IND Equivalent or Drug Approval Application, in the
prosecution of INDs, IND Equivalents and Drug Approval Applications and in the
maintenance of Regulatory Approvals in the Territory, in all cases solely to the
extent such activities do not unreasonably interfere with other responsibilities
of the relevant personnel. Such assistance shall include, without limitation,
the provision of translated documents in accordance with Section 2.8, answering
questions of Regulatory Agencies, and participation by Asahi’s representatives
in meetings with Regulatory Agencies, in each case as reasonably requested by
CoTherix. Such assistance shall be [***]. Notwithstanding the foregoing,
CoTherix shall permit Asahi’s representatives to participate in the initial
meeting with the FDA regarding the transfer of Asahi’s IND for Product to
CoTherix and in the material meetings, including the initial meeting, with the
FDA regarding the Carcinogenicity and Safety Studies [***]. Thereafter, in
connection with all INDs and IND Equivalents, and Drug Approval

 

18

* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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Applications referred in Sections 2.4(a) and (b), CoTherix shall provide to
Asahi any written minutes of and keep Asahi reasonably informed about CoTherix’s
and its Affiliates’ and Sublicensee’s meetings with Regulatory Agencies (such as
a Pre-IND meeting) regarding Active Drug Substance and/or Product within the
scope of the license to CoTherix. Similarly, Asahi and its Affiliates shall, in
connection with all INDs and all IND Equivalents, and Drug Approval Applications
for Products, provide to CoTherix any written minutes of and keep CoTherix
reasonably informed about Asahi’s and its Affiliates’ and licensees’ meetings
with Regulatory Agencies outside the Territory regarding Products. Upon request,
Asahi shall also keep CoTherix reasonably informed about Asahi and its
Affiliates’ and licensees’ meetings with Regulatory Agencies outside or inside
the Territory regarding Fasudil Formulations that are not Products to the extent
necessary or useful for the Development or obtaining Regulatory Approval of
Products by CoTherix hereunder.

2.5 Formation of Committees.

(a) A committee comprised of three (3) named (by CoTherix in its discretion)
representatives of CoTherix and three (3) named (by Asahi in its discretion)
representatives of Asahi (the “Joint Technical Committee”) shall be appointed to
provide a forum for information sharing and to discuss and, if applicable as
expressly provided herein, approve the following matters: Development of the
Active Drug Substance and Products by CoTherix in the Territory, the process of
undertaking and completing the Development Plan, guidance in the resolution of
technical or other issues concerning performance hereunder, resolution of
problems and overcoming impediments relating to obtaining Regulatory Approval,
including, if necessary, amending the Development Plan, and operational matters
during a period from the Effective Date until the date on which Initial Royalty
Term expires with respect to all of the Products in all countries within the
Territory. This committee will take account of and allow the Parties an
opportunity to coordinate, to the extent they both in their discretions desire,
Territory matters regarding Products, with Development and Commercialization of
Products outside the Territory. With respect to Commercialization of Products,
the Joint Technical Committee shall provide a forum to discuss Commercialization
activities, and the function of the forum shall be limited to the exchange of
information, rendering of mutual assistance and as expressly specified in this
Agreement. Regular meetings of the Joint Technical Committee shall be held at
least once a half calendar year at places or in such form as the members of the
Joint Technical Committee shall agree, and may take place in person or by
conference call or video conference. At such regular meetings, members of the
Joint Technical Committee shall exchange progress reports of the Development of
Products by CoTherix and/or Asahi and make any necessary decision relating to
the Development of Products by CoTherix and/or Asahi (if and solely to the
extent empowered to make a decision by another explicit provision of this
Agreement). Each Party may also call a special meeting of the Joint Technical
Committee upon fifteen (15) days prior written notice (to be held by video
conference or teleconference unless the Parties otherwise agree) for the purpose
of addressing any issues that merit discussion and/or approval prior to the next
scheduled regular meeting. Each member of the Joint Technical Committee shall
have the right to have other employees of the same Party or consultants to such
Party (with the advance permission of the other Party not to be unreasonably
withheld and subject to such consultant agreeing to be bound by confidentiality
obligations not less restrictive than those in Section 8 hereof) present at and
participating in any Joint Technical Committee meeting.

 

19

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(b) Without limiting the generality of the foregoing Section 2.5(a), the
authorities of the Joint Technical Committee are anything expressly delegated to
it in this Agreement and:

(i) discussion and approval of proposed amendment or update to the Development
Plans as and to the extent described in Section 2.3(a) (and subject to the
requirements as stated in that Section as to amendments or updates [***],

(ii) discussion of study designs and protocols as described in Section 2.3(c),

(iii) discussion of proposed amendment of study designs and protocols to
accommodate Asahi’s needs as described in Section 2.3(f)(ii); provided that this
does not imply any limitations not explicitly stated in such Section regarding
CoTherix,

(iv) discussion of regulatory strategies to the extent described in
Section 2.4(d),

(v) making the election for patent term restoration for Joint Patents as
described in Section 6.2(d),

(vi) determination on the whether a license is Necessary with respect to a Third
Party Patent as described in Section 6.5(a),

(vii) discussing CMC/Process Development of Products and Active Drug Substance
as described in Section 7.1(b),

(viii) determination on earlier manufacture of Oral Product and/or Active Drug
Substance by CoTherix as described in Sections 7.2(b) and (c),

(ix) approval of Specification of Active Drug Substance and Oral Product as
described in Section 7.3(a),

(x) approval of change of manufacturing sites as described in Section 7.5(c),

(xi) approval of Master Formulae and Specification of the Active Drug Substance
and Products as described in Section 7.5(d), and

(xii) discussion of publication strategy as described in Section 8.5.

(c) The Joint Technical Committee shall form any other sub-committees that the
Parties believe will be necessary or useful to carry out the objectives set
forth in this Agreement.

(d) Notwithstanding the creation of the Joint Technical Committee and any other
sub-committees formed by the Joint Technical Committee, each Party shall retain
the rights, powers and discretion granted to it hereunder, and neither the Joint
Technical Committee nor any

 

20

* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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other sub-committees formed by the Joint Technical Committee shall be delegated
or vested with any such rights, powers or discretion unless such delegation or
vesting is expressly provided for herein or the Parties expressly so agree in
writing, which writing references this Section 2.5 and Section 13.13 of this
Agreement. Neither the Joint Technical Committee nor any sub-committee formed by
the Joint Technical Committee shall have the power to amend, modify, or waive
compliance with this Agreement, which may be amended or modified only as
provided in Section 13.13 and waived only as provided in Section 13.7. The Joint
Technical Committee has only those rights explicitly provided for it in this
Agreement and has no implied rights to approve or delay those matters that it is
empowered to discuss but for which no explicit right to approve or delay is
provided.

(e) Conclusions and decisions of the Joint Technical Committee or any
sub-committees formed by the Joint Technical Committee (within the scope of such
Joint Technical Committee’s or sub-committees’ decision-making or concluding
authority) shall be made by unanimous agreement of the members with each Party’s
representatives. (For this purpose, each Party shall cause all of its
representatives on the Joint Technical Committee to present a single, unified
position.) Should it prove impossible to obtain such unanimous agreement, the
disputed matter will be referred promptly to the Chief Executive Officer (“CEO”)
of each Party (or to a designee of either such CEO with authority to resolve
such disputed matter) for resolution. Any final decision mutually agreed by the
CEOs shall be conclusive and binding on the Parties. If the CEOs are unable to
resolve such matter within sixty (60) days after such matter is first referred
to them, such matter will be finally settled and resolved by arbitration in
accordance with Section 13.10(b).

2.6 Investigator-sponsored Studies in the Territory. If either party or any of
its Affiliates or Sublicensees (licensees) is asked by a Third Party clinical
investigator for cooperation in an Investigator-sponsored study (“ISS”) of a
Fasudil Formulation in any indications in the Territory, the Party shall
promptly notify the other Party for discussion. With regard to the ISS of a
Fasudil Formulation in any indications other than those within the CoTherix
Licensed Fields, Asahi shall determine, and with regard to the ISS of a Fasudil
Formulation in any indications within the CoTherix Licensed Fields, CoTherix
shall determine, at their respective sole discretion, whether the Parties should
cooperate with the Third Party clinical investigator in such ISS, and be solely
responsible for managing such ISS. If reference to the IND [***],or INDs or IND
Equivalents of Products or Drug Approval Application filed by CoTherix or its
Affiliates or Sublicensees in accordance with Section 2.4 is necessary for such
ISS, CoTherix shall agree, or cause its Affiliates and obligate its Sublicensees
to agree, to permit such reference by the Third Party clinical investigator.

2.7 Trademarks and Markings. CoTherix shall be entitled, at its own
responsibility and cost, to register and maintain such trademarks in the
countries within the Territory as CoTherix deems appropriate or desirable for
the Product (collectively, “Trademarks”). CoTherix may also permit a CoTherix
Affiliate or a Sublicensee to do so. As between the Parties, CoTherix shall own
the Trademarks and all good will associated with them. CoTherix shall also be
entitled to decide, in addition to the Trademarks, what corporate names and
logos and patent markings (if any) to include on the Product and promotional
materials, packaging and labeling therefor (or may permit its Affiliate or a
Sublicensee to make the decision).

 

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* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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If the law of any jurisdiction in the Territory requires that Asahi be
identified on any of the foregoing items as the licensor of the Product, Asahi
hereby grants CoTherix the right to use and display Asahi’s corporate name and
logo as and to the extent required by the law.

2.8 Information and Reports during Development and Commercialization. CoTherix
and Asahi will disclose and make available to each other [***] all CMC/Process
Development reports and preclinical, clinical and regulatory information,
including copies of all preclinical and clinical reports resulting from
Preclinical Development and Clinical Development, known by (with a right to
disclose) or developed by or for CoTherix (or its Affiliates or Sublicensees) or
Asahi, directly concerning Active Drug Substance and each Product when and as
such Information becomes available to it at any time during the term of this
Agreement. Each Party shall own and maintain its own database of data
accumulated from all CMC/Process Development of Active Drug Substance and each
Product, preclinical trial data accumulated from all Preclinical Development of
Active Drug Substance and each Product, clinical trial data accumulated from all
Clinical Development of each Product and adverse drug reaction information for
each Product. At the option of the requesting Party, such data shall be provided
in a computer readable format by the providing Party, to the extent available.
Asahi and its Affiliates shall use reasonable efforts to supply CoTherix with
information and data regarding Development and Regulatory Approval of the other
Fasudil Formulations not addressed by the foregoing to the extent necessary or
useful for the Development or Regulatory Approval of Products by CoTherix
hereunder. Without limiting the foregoing, each Party shall supply to the other
the Information required by the other Party and requested by it (either as a
routine practice or as a specific request) for purposes of compliance with
direct regulatory requirements and, if requested by CoTherix, shall be provided
to CoTherix in English. [***]. CoTherix shall not be under any obligation to
translate for Asahi any Information provided by CoTherix.

2.9 Adverse Drug Reactions.

(a) Asahi shall be responsible for initial, follow-up and/or periodic submission
to government agencies of significant information on each Product from
preclinical laboratory, animal toxicology and pharmacology studies and
Preclinical Development until such time as the FDA accepts any required adverse
event or safety reporting directly from CoTherix in accordance with
Section 2.4(a). On and after such date, CoTherix shall be responsible for
initial, follow-up and/or periodic submission, as required by applicable law, to
Regulatory Agencies in the Territory of safety information and adverse drug
experience reports, and Asahi shall submit such information to CoTherix for
submission by CoTherix to such Regulatory Agencies.

(b) Each Party agrees, in connection with investigational Products, to transmit
to the other Party within five (5) Business Days of receipt by a Party’s central
safety department or equivalent of a report of a Serious Adverse Drug
Experience; provided that transmission time limit for a report of any Serious
Adverse Drug Experience other than a “serious adverse drug

 

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* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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reaction” shall be addressed in the pharmacovigilance agreement to be adopted by
the Parties in accordance with subsection (c) below. Each Party agrees, in
connection with other investigational Fasudil Formulations, to transmit to the
other Party as soon as possible (and, in any event, within fifteen (15) Business
Days of receipt by Party’s central safety department or equivalent, or such
earlier time period as may be required for the other Party to comply with
applicable laws and regulations) any report of a Serious Adverse Drug
Experience.

(c) Promptly following the execution of this Agreement, the Parties will adopt a
pharmacovigilance agreement to govern the investigation of and action to be
taken with regard to Fasudil Formulation-related adverse drug experience reports
(from both clinical studies and marketing experience), such that each of the
Parties can comply with its legal obligations worldwide. The pharmacovigilance
agreement will: (i) include arrangements for the exchange of non-serious cases,
Periodic Safety Update Reports, Periodic Reports and answers to safety-related
queries by Regulatory Agencies; and (ii) be promptly amended as changes in legal
obligations require or as otherwise agreed to by the Parties. The Parties will
put this in place within ninety (90) days after the Effective Date. The
pharmacovigilance agreement may provide for faster or more detailed reporting
than stated in Section 2.9(b). A party shall not withhold its agreement to the
other Party’s request for such pharmacovigilance agreement to contain required
reporting of the scope and speed required to permit the requesting Party to
comply with its legal obligation.

SECTION 3: LICENSES

3.1 License Grant to CoTherix. Under the terms and conditions herein set forth,
Asahi (on behalf of itself and its Affiliates) hereby grants to CoTherix and its
Affiliates a sole and exclusive (even as to Asahi and its Affiliates) license
and right, with a right to sublicense (which sublicenses shall be
[***]consistent with the license granted to CoTherix):

(a) under the Asahi Intellectual Property Rights,

(i) to use, research, develop, market, offer to sell, sell, distribute, import
for sale, and otherwise dispose of Products in the Territory, and

(ii) to manufacture, have manufactured and import Products – and Active Drug
Substance solely for the purpose of manufacturing or having manufactured
Products – inside the Territory; and

(b) to make reference to any Regulatory Documentation with respect to any
Product (whether prepared or filed inside or outside the Territory) that are
Controlled by or come within the Control of Asahi or its Affiliates during the
term of this Agreement:

(i) to use, research, develop, market, offer to sell, sell, distribute, import
for sale, and otherwise dispose of Products in the Territory; and

 

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* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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(ii) to manufacture, have manufactured and import Products – and Active Drug
Substance solely for the purpose of manufacturing or having manufactured
Products – inside the Territory.

CoTherix shall be solely responsible for its Affiliates’ performance under this
Agreement. CoTherix shall be responsible for any breach of this Agreement by its
Affiliates, which shall be considered a breach by CoTherix. If CoTherix or its
Affiliates grants a sublicense to a Sublicensee under this Section 3.1, CoTherix
and its Affiliates shall include in its contract granting the sublicense the
requirement that the Sublicensee comply with the applicable terms and conditions
of this Agreement. The grant of any such sublicense shall not relieve CoTherix
and its Affiliates of its obligations under this Agreement, except to the extent
they are satisfactorily performed by such Sublicensee.

3.2 CoTherix Option.

(a) Grant. Under the terms and conditions herein set forth, Asahi hereby grants
CoTherix an option right to add CoTherix Option Fields to CoTherix Licensed
Fields under the financial conditions set forth in Exhibit E attached hereto and
the other terms and conditions of this Agreement, in accordance with
Section 3.2(c) below (“CoTherix Option”). The CoTherix Option is exercisable
only during the one (1) year period from the Effective Date (as may be extended
as provided below, the “CoTherix Option Period”); provided that CoTherix may
extend the CoTherix Option Period for an additional one (1) year period (i.e.,
to the second anniversary of the Effective Date) by giving Asahi a written
notice by at least one (1) month before the expiration of the original CoTherix
Option Period and paying the additional option fee for the second year as set
forth in subsection (b) below. CoTherix Option Period shall be allowed to be
extended only once and shall never be longer than two (2) years from the
Effective Date.

(b) Option Fee. In consideration of the CoTherix Option, CoTherix shall pay to
Asahi an option fee of two hundred and fifty thousand U.S. dollars (USD
$250,000) within [***] from the Effective Date. In addition, CoTherix shall, if
it chooses to initially extend the CoTherix Option Period for one (1) year, pay
to Asahi [***]. The option fees shall be creditable to the upfront fee set forth
in Exhibit E.

(c) Exercise of CoTherix Option. During the CoTherix Option Period, CoTherix may
at any time exercise the CoTherix Option by giving Asahi a written notice
thereof. If CoTherix exercises the CoTherix Option, then effective immediately
as of the date of Asahi’s receipt of the upfront fee as set forth in paragraph 1
of Exhibit E, (i) all of the CoTherix Option Fields shall thereupon
automatically become part of the CoTherix Licensed Fields for all purposes under
this Agreement, (ii) the financial terms set forth in paragraphs 2 through 4 in
Exhibit E hereto shall apply and be incorporated into Section 5 hereof (with the
applicable terms of Section 5 being applied thereto), (iii) the obligation on
CoTherix under Section 2.2 (b)(i) shall be expanded to include an obligation on
CoTherix to devote Commercially Reasonable Efforts to Develop at least one
Product for one (or more to the extent Commercially Reasonable to do so)
indications within the CoTherix Option Fields for each Major Market country
within the Territory in which it is

 

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* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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Commercially Reasonable to do so (and, for the avoidance of doubt, the
provisions of 2.2 (b)(ii) and (iii) shall apply to such Product in accordance
with their terms), and (iv) CoTherix shall prepare and propose to the Joint
Technical Committee a Development Plan pursuant to Section 2.3 (a) consistent
with the foregoing Commercially Reasonable Efforts obligation in (iii) above.

3.3 License Grant to Asahi.

(a) Under the terms and conditions herein set forth, CoTherix (on behalf of
itself and its Affiliates and Sublicensees) hereby grants to Asahi [***] an
exclusive (even to CoTherix and its Affiliates and Sublicensees) license and
right, with a right to sublicense (which shall be [***]consistent with the
license granted to Asahi):

(i) under CoTherix Intellectual Property Rights to use, research, develop,
manufacture, have manufactured, market, offer to sell, sell, distribute, import
for sale, and otherwise dispose of Fasudil Formulations and/or Active Drug
Substance in the Asahi Licensed Indications outside the Territory; and

(ii) to make reference to any Regulatory Documentation of Products and/or Active
Drug Substances (including IND [***]) that are Controlled by or come, through
activities under this Agreement to Develop and Commercialize Product and/or
Active Drug Substance, within Control of CoTherix or any of its Affiliates or
Sublicensees to use, research, develop, manufacture, have manufactured, market,
offer to sell, sell, distribute, import for sale, and otherwise dispose of
Fasudil Formulations in the Asahi Licensed Indications outside the Territory.

(b) Under the terms and conditions herein set forth, CoTherix hereby grants to
Asahi a sole and exclusive license, with a right to sublicense (which shall be
[***] consistent with the license granted to Asahi), for [***] to use, research,
develop, manufacture, have manufactured, market, offer to sell, sell,
distribute, import for sale, and otherwise dispose of Fasudil Formulations
and/or Active Drug Substance in the Asahi Licensed Indications outside the
Territory; provided, however, that [***] with respect to any Fasudil Formulation
sales [***], and, further, that [***] of the relevant Fasudil Formulation, the
manufacture, use or sale of which by Asahi or its Affiliate or sublicensee is
Covered at the time of sale by a Valid Claim of the CoTherix [***] Patents.
Alternatively and at CoTherix’s option, CoTherix may choose to offset such
royalty payments due to CoTherix, against payment due from CoTherix to Asahi
under this Agreement.

If Asahi grants a sublicense to a sublicensee under this Section 3.3, Asahi
shall include in its contract granting the sublicense the requirement that the
sublicensee comply with the applicable terms and conditions of this Agreement.
The grant of any such sublicense shall not relieve Asahi of its obligations
under this Agreement, except to the extent they are satisfactorily performed by
such sublicensee. CoTherix retains all rights under the CoTherix Intellectual
Property Rights and CoTherix [***] Patents that are not granted to or promised
to CoTherix under this Agreement.

 

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* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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3.4 Registration of License. With respect to the licenses under Patents granted
to either Party (the “Licensed Party”) by the other Party (the “Licensing
Party”) under this Section 3, the Licensing Party agrees that the Licensed Party
may, if available, register such licenses with the patent offices of any country
in which the Licensed Party is granted such licenses. The Licensed Party shall
[***] prepare and deliver to the Licensing Party such instruments and other
documents necessary and in proper form for such registration. The Licensing
Party shall execute and return to the Licensed Party such appropriate
instruments and documents within [***] days from the receipt thereof. The [***]
Party shall [***]of any registrations under this Section 3.4. The Licensed Party
shall accommodate all reasonable requests of the Licensing Party to effect such
registrations in a manner that does not disclose the non-public, sensitive terms
of this Agreement.

3.5 Third Party Trial and Research Information and Inventions. In connection
with the Development of Fasudil Formulations, each Party will use reasonable
efforts to require any Third Parties under sponsored research, material
transfer, contract research, clinical trial and similar agreements to grant
sufficient rights (by license, assignment or otherwise) under any intellectual
property, including data and information, generated under such agreements, and
to provide such intellectual property, data and information for use within the
scope CoTherix’s license under Section 3.1 (if the Party is Asahi) and for use
within the scope Asahi’s license under Section 3.3 (if the Party is CoTherix) to
the other Party under this Agreement (subject to the terms hereof).

SECTION 4: ASAHI DEVELOPMENT / EXCEPTIONS TO EXCLUSIVITY / FUTURE COLLABORATIONS

4.1 Asahi’s Development; Retained Rights. CoTherix shall acknowledge that Asahi
retains the right under Asahi Intellectual Property Rights to conduct
Development and Commercialization for a Fasudil Formulation (a) in any fields in
any countries of the world that are outside the Territory and (b) in any fields
except for the CoTherix Licensed Fields inside the Territory. CoTherix agrees to
communicate with Asahi regarding and reasonably considering any necessity to
coordinate with such Asahi’s Development and Commercialization in implementing
CoTherix’s Development and Commercialization for Products under this Agreement,
but CoTherix shall not be required to modify such implementation to any greater
extent than provided for under any agreement between the Parties entered into
under Section 2.3(e) and Section 2.3(f)(ii). Asahi also retains all rights under
the Asahi Intellectual Property Rights that are not granted to or promised to
CoTherix under this Agreement.

4.2 Asahi Covenants Regarding Activities outside CoTherix Licensed Fields.

(a) Notwithstanding the foregoing Section 4.1, Asahi hereby covenants that,
during the CoTherix Option Period, and thereafter during the term of this
Agreement only if the CoTherix Option is exercised pursuant to Section 3.2, it
and its Affiliates shall not, under Asahi Intellectual Property Rights, directly
by their own activities or indirectly by Third Party activities that they
license (including without limitation by granting any license, option, covenant
not to sue or other

 

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* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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similar right) or otherwise support (including without limitation by supplying
Active Drug Substance or Fasudil Formulations), Develop for or in the Territory
or Commercialize in the Territory any Oral Products or Inhaled Products in the
CoTherix Option Fields, subject to Sections 2.6 and 4.5. Without limiting the
foregoing, Asahi shall not, during the period described above, grant any rights
or licenses, or enter into any agreements, that would be inconsistent with, or
restrict or limit, the rights to be provided to CoTherix, its Affiliates and
Sublicensees under the CoTherix Option.

(b) Further notwithstanding the foregoing Section 4.1, Asahi hereby covenants
that, during the Term of this Agreement, without first obtaining CoTherix’s
advance written consent, it and its Affiliates shall not, under Asahi
Intellectual Property Rights, directly by their own activities or indirectly by
Third Party activities that they license (including without limitation by
granting any license, option, covenant not to sue or other similar right) or
otherwise support (including without limitation by supplying Active Drug
Substance or Fasudil Formulations), Develop for or in the Territory or
Commercialize in the Territory any Fasudil Formulations in the Stable Angina and
Pulmonary Hypertension indications, subject to Section 4.5. For the avoidance of
doubt, Asahi’s covenant set forth in this subsection (b) shall never extend to
any indications other than Stable Angina indication and Pulmonary Hypertension
indication regardless of whether the CoTherix Option set forth in Section 3.2 is
exercised or not.

4.3 Information Use; Outside the Territory. Asahi shall have the right to use,
[***] all CoTherix Intellectual Property Rights made available to Asahi by
CoTherix pursuant to Section 2.8, for supporting the filing of IND Equivalents
of a Fasudil Formulation in the Asahi Licensed Indications outside the
Territory, for obtaining or maintaining Regulatory Approvals of such Fasudil
Formulation in the Asahi Licensed Indications outside the Territory, and for
supporting Development and Commercialization of such Fasudil Formulation in the
Asahi Licensed Indications outside the Territory.

4.4 CoTherix Assistance; Outside the Territory. In connection with all IND
Equivalents and Drug Approval Applications of any Fasudil Formulation in the
Asahi Licensed Indications being prosecuted by Asahi under Section 4.3, CoTherix
shall cooperate with and assist Asahi to the extent reasonably requested by
Asahi in the preparation of each such IND Equivalent or Drug Approval
Application, in the prosecution of such IND Equivalents and Drug Approval
Applications and in the maintenance of Regulatory Approvals, in all cases solely
outside the Territory and in all cases solely to the extent such activities do
not unreasonably interfere with other responsibilities of the relevant
personnel. Such assistance shall include, without limitation, answering
questions of regulatory authorities and participation by CoTherix, its
Affiliates and/or its Sublicensees representatives in meetings with Regulatory
Agencies, in each case as reasonably requested by Asahi. Such assistance shall
be [***]. Asahi or its Affiliates, licensees or distributors shall be the legal
and beneficial owner of all Drug Approval Applications outside the Territory.

 

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* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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4.5 Exempted Activities; Activities Within the Territory of the Other Party.

(a) Manufacture within the Territory of the Other Party. Notwithstanding
anything to the contrary set forth herein, Asahi may, under Asahi Intellectual
Property Rights and CoTherix Intellectual Property Rights, manufacture or have
manufactured, any Fasudil Formulations and Active Drug Substance inside the
Territory for the sole purpose of supplying them for use or sale outside the
Territory (with respect to CoTherix Intellectual Property Rights, solely within
the Asahi Licensed Indications and with respect to Asahi Intellectual Property
Rights, in any indications), and CoTherix may, under Asahi Intellectual Property
Rights and CoTherix Intellectual Property Rights, manufacture or have
manufactured, any Products—or any Active Drug Substance solely for the purpose
of manufacture or having manufactured any Products—outside the Territory, for
the sole purpose of supplying them for use or sale inside the Territory (with
respect to Asahi Intellectual Property Rights, solely within the CoTherix
Licensed Fields and with respect to CoTherix Intellectual Property Rights, in
any fields).

(b) Development within the Territory of the Other Party. Notwithstanding
anything to the contrary set forth herein, Asahi may: (i) conduct Development of
any Fasudil Formulations under Asahi Intellectual Property Rights, and make
reference to any Regulatory Documentation that are Controlled by or come within
Control of Asahi or any of its Affiliates or licensees inside the Territory for
the sole purpose of supporting Development and Commercialization of such Fasudil
Formulations outside the Territory; and (ii) conduct Development of any Fasudil
Formulations in the Asahi Licensed Indications under CoTherix Intellectual
Property Rights, and make reference to any Regulatory Documentation of Products
and/or Active Drug Substance that are Controlled by or come within Control of
CoTherix or any of its Affiliates or Sublicensees in the Asahi Licensed
Indications inside the Territory for the purpose mentioned in the foregoing
subsection (i); provided, however, that if the intended Development of the
Fasudil Formulations is in the Asahi Licensed Indications (or in the CoTherix
Option Fields, only to the extent that Asahi conducts such Development before
the CoTherix Option Period expires without the CoTherix Option being exercised)
excluding in any case the Development of Fasudil Formulations other than Oral
Product or Inhaled Product in the indications other than Pulmonary Hypertension
indication and Stable Angina indication, Asahi shall first obtain CoTherix’s
prior written approval. Asahi’s obligation to first obtain CoTherix approval
under the foregoing sentence shall [***]. Prior to initiating each set of
Development activities for a given Fasudil Formulation within the Territory,
Asahi shall first provide prior notice to CoTherix and provide CoTherix with a
reasonable opportunity to identify and discuss with Asahi any concerns with
respect thereto (without any requirement or right of approval by CoTherix,
except as expressly provided for in this Agreement). CoTherix will not conduct
Development of any Product outside the Territory for any purpose.

4.6 Asahi’s Option Right. If, during the term of this Agreement, Asahi wishes to
be granted an exclusive license and right, with or without a right to
sublicense, under CoTherix Intellectual Property Rights, and/or to make
reference to any Regulatory Documentation (including IND [***]) of Products
and/or Active Drug Substance that are Controlled by or come within Control of
CoTherix or any of its Affiliates or Sublicensees during the term of this

 

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agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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Agreement; in each case to use, research, develop, manufacture, have
manufactured, market, offer to sell, sell, distribute, import for sale, and
otherwise dispose of a Fasudil Formulation in Asahi Option Indications or, if
the CoTherix Option Period expires without the CoTherix Option being exercised,
in any indications other than Pulmonary Hypertension and Stable Angina and Asahi
Option Indications, inside (for the avoidance of doubt, subject to
Section 4.2(b)) or outside the Territory, Asahi shall so notify CoTherix in
writing, and CoTherix shall submit to Asahi a written proposal outlining the
substantive business terms and conditions of such license and right within [***]
from receipt of Asahi’s proposal. Both Parties agree to negotiate in good faith
and exercise fair dealing towards a final agreement within [***]from the date
Asahi receives the first CoTherix’s proposal. In the event the Parties fail to
enter into such an agreement within such [***] period, CoTherix shall have the
right to negotiate or enter into such an agreement or any other agreement with
respect to or for any of the foregoing licenses and/or rights of reference with
any other party.

SECTION 5: PAYMENTS

5.1 Upfront fee. In consideration of the rights and licenses granted to CoTherix
by Asahi under this Agreement, CoTherix shall pay to Asahi an upfront fee of
eight and one-half million U.S. dollars (USD $8,500,000) within five
(5) Business Days from the Effective Date; provided that the payment of five
hundred thousand U.S. dollars (USD $500,000), which CoTherix paid to Asahi upon
the execution of the Exclusive Negotiation Agreement, shall be credited toward
the upfront fee, and the upfront fee due within [***] after the signing of this
Agreement shall be eight million U.S. dollars (USD $8,000,000).

5.2 Milestone Payments. In further consideration of the rights and licenses
granted to CoTherix by Asahi under this Agreement, CoTherix shall make the
following one-time milestone payments to Asahi upon solely the first achievement
of each of the milestones set forth below, such payments to be due on the timing
after such achievement as stated below.

(a) Development Commencement, Drug Approval Application and Regulatory Approval
Milestones. CoTherix shall make the following milestone payments to Asahi within
[***] after the date upon which the applicable milestone has been first achieved
by or on behalf of CoTherix, any Affiliate of CoTherix or any Sublicensee:

(i) The sum of [***] upon the first dosing of a patient properly enrolled in a
Phase 3 Clinical Trial of a Product conducted by CoTherix or its Affiliates or
Sublicensees either in the Stable Angina Field or the PH Field in the Territory,
whichever comes first.

(ii) The sum of [***] upon the first acceptance by the FDA of a Drug Approval
Application for Regulatory Approval to legally sell Product as a pharmaceutical
(i.e., an NDA, not any application for a site or manufacturing license) filed by
CoTherix or its Affiliates or Sublicensees in the U.S. for an Oral Product in
the Stable Angina Field.

 

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agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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(iii) The sum of [***]upon the first acceptance by the FDA of a Drug Approval
Application for Regulatory Approval to legally sell Product as a pharmaceutical
(i.e., an NDA, not any application for a site or manufacturing license) filed by
CoTherix or its Affiliates or Sublicensees in the U.S. for the first of either
an Oral Product or an Inhaled Product in the PH Field.

(iv) The sum of [***] upon the first NDA grant by the FDA in the U.S. of an Oral
Product in the Stable Angina Field.

(v) The sum of [***] upon the first NDA grant by the FDA in the U.S. of an Oral
Product in the PH Field.

(vi) The sum of [***] upon the first NDA grant by the FDA in the U.S. of an
Inhaled Product in the PH Field.

(b) Revenue Milestones. CoTherix shall make the following milestone payments to
Asahi within [***] after the date upon which the applicable milestone has been
achieved:

(i) The sum of [***] upon the end of the first calendar year in which annual Net
Sales of Oral Products and Inhaled Products combined in the PH Field first
exceeds [***] within the Territory.

(ii) The sum of [***] upon the end of the first calendar year in which annual
Net Sales of Oral Products in the Stable Angina Field first exceeds [***] within
the Territory.

(iii) The sum of [***] upon the end of the first calendar year in which annual
Net Sales of Oral Products and Inhaled Products combined in the PH Field first
exceeds [***] within the Territory.

(iv) The sum of [***] upon the end of the first calendar year in which annual
Net Sales of Oral Products in the Stable Angina Field first exceeds [***] within
the Territory.

(v) The sum of [***] upon the end of the first calendar year in which annual Net
Sales of Oral Products and Inhaled Products combined in the PH Field first
exceeds [***] within the Territory.

(vi) The sum of [***] upon the end of the first calendar year in which annual
Net Sales of Oral Products in the Stable Angina Field first exceeds [***] within
the Territory.

(vii) The sum of [***]upon the end of the first calendar year in which annual
Net Sales of Oral Products and Inhaled Products combined in the PH Field first
exceeds [***] within the Territory.

Allocation of Net Sales to the Stable Angina Field and PH Field shall be made by
reference to IMS data (or if IMS no longer exists by reference to an
at-least-as-reliable data source).

 

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agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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5.3 Royalties. In further consideration of the rights and licenses granted to
CoTherix by Asahi under this Agreement, CoTherix shall pay to Asahi royalties of
[***] (the “Royalty Percentage”) on total Net Sales of Products in the
Territory, subject to reduction and offset as provided in the remainder of this
Section 5 (including without limitation by reference to the royalty of offset of
Section 6.5). The Royalty Percentage and corresponding royalty shall not apply
multiple times to the same Net Sales, regardless of the number of Valid Claims
of Asahi Patents (beyond one) that Cover the Product.

5.4 Initial Royalty Term. All royalties payable by CoTherix to Asahi pursuant to
Sections 5.3 shall be paid, on a country-by-country and a Product-by-Product
basis, during a period from the date of the First Commercial Sale by CoTherix or
its Affiliates or Sublicensees of such Product in a particular country until the
latest of (a) [***] from the First Commercial Sale of such Product in such
country, (b) the last to expire of any (or the earliest date on which there
exists no) Valid Claim of Asahi Patents (excluding Joint Patents and [***]
Patents) that Covers such Product in such country, or (c) the loss of (or the
earliest date on which there exists no) regulatory market exclusivity for such
Product in such country (including orphan drug status or its foreign equivalent;
but, for the avoidance of doubt, excluding merely holding the only Regulatory
Approval in such country when Third Parties are eligible to apply for and obtain
a Regulatory Approval for such Product) (“Initial Royalty Term”).

5.5 Subsequent Royalties.

(a) If, in a particular country and with respect to a given Product, subsequent
to the Initial Royalty Term, there exists at least one Valid Claim of a Joint
Patent that Covers such Product in such country, CoTherix shall pay to Asahi
royalties of [***] on Net Sales of any such Product that is Covered at the time
of sale by a Valid Claim of a Joint Patent in the country of sale, subject to
reduction as provided in Sections 5.6, 5.7 and 6.5 (but in any event subject to
[***] as set forth in the last sentence of Section 5.6(c)). All royalties
payable by CoTherix to Asahi pursuant to this Section 5.5(a) shall be paid, on a
country-by-county and a Product-by-Product basis, during period following the
Initial Royalty Term with respect to the relevant Product in the relevant
country until the last to expire of any Valid Claim of Joint Patent that Covers
such Product in such country.

(b) If, in a particular country and with respect to a given Product, subsequent
to the Initial Royalty Term, there exists at least one Valid Claim of a [***]
Patent, but no Valid Claim of the Joint Patents, that Covers such Product in
such country, CoTherix shall pay to Asahi royalties of [***] on Net Sales of any
such Product that is Covered at the time of sale by a Valid Claim of a [***]
Patent in the country of sale, subject to reduction as provided in Sections 5.6,
5.7 and 6.5 [***]. All royalties payable by CoTherix to Asahi pursuant to this
Section 5.5(b) shall be paid, on a country-by-county and a Product-by-Product
basis, during period following the Initial Royalty Term, and, if any, following
the royalty payment period pursuant to Section 5.5 (a) with respect to the
relevant Product in the relevant country until the last to expire of any Valid
Claim of [***] Patent that Covers such Product in such country.

 

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agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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5.6 Competitive Products/Royalty Reduction.

(a) If, during the Initial Royalty Term set forth in Section 5.4, there is a
Product in a country in the Territory to which the following conditions are met,
then for such Product in such country the Royalty Percentage set forth in
Section 5.3 shall be reduced [***] (such royalty reduction shall be applied on a
country-by-country and a Product-by-Product basis):

(i) there are sales by a Third Party (other than Sublicensees) of a Generic
Product in the relevant country that have not been excluded by the presence of
any Asahi Patents in such country (if any exist in such country; without
implying any obligation to assert them; and with the reduction remaining
available even if no such Patents exist in such country); and

(ii) CoTherix’s Net Sales of such Product in the same category of dosage form
pharmaceutical (i.e., oral or inhaled, as the case may be) as the Third Party’s
Generic Product in such country are [***]. The “Base Net Sales” for calculating
the said reduction will be the [***]. Furthermore, the reduction in royalty will
be effective [***].

(b) If, during the Initial Royalty Term set forth in Section 5.4, there is a
Product in a country in the Territory to which the following conditions are met,
then for such Product in such country the Royalty Percentage set forth in
Section 5.3 shall be reduced [***] (such royalty reduction shall be applied on a
country-by-country and a Product-by-Product basis):

(i) there are sales by a Third Party (other than Sublicensees) of a Generic
Product that have not been excluded by the presence of any Asahi Patents in such
country (if any exist in such country; without implying any obligation to assert
them; and with the reduction remaining available even if no such Patents exist
in such country); and

(ii) CoTherix’s Net Sales of such Product in the same category of dosage form
pharmaceutical (i.e., oral or inhaled, as the case may be) as the Third Party’s
Generic Product in such country are [***]. The reduction in royalty will be
effective [***].

(c) If, during the royalties payment periods set forth in Section 5.5, there is
a Product in a country in the Territory to which the conditions set forth in
Sections 5.6(a) or (b) are met (except, for such purpose, the references to
[***] therein shall refer to [***] for such product in such country the [***]
(such royalty reduction shall be applied on a country-by-country and a
Product-by-Product basis). [***] (except, for such purpose, the references to
[***] therein shall refer to the [***] with respect to the [***] with respect to
the [***].

5.7 Royalty Step Down. Upon expiration of the Initial Royalty Term and, if
applicable, the expiration of the royalty payment periods set forth in
Sections 5.5(a) and (b), with respect to a Product in a country within the
Territory, CoTherix shall pay [***] of the applicable Product in such country in
consideration of the license of Asahi Intellectual Property Rights

 

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agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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(excluding Asahi Patents). In such event, the right of CoTherix to deduct from
the royalties under Section 6.5(c) shall no longer apply to the Product in such
country, and CoTherix shall retain responsibility for, and indemnify Asahi from,
the payment of all applicable royalties owed to a Third Party on account of the
manufacture, use or sale of the Product in such country solely as and to the
extent set forth in Section 12.

5.8 Royalty Reports and Payments. CoTherix shall make royalty payments to Asahi
within [***] after the end of each calendar quarter in which Net Sales occurred.
A report summarizing the Net Sales of each Product during the relevant quarter
on a country-by-country basis (including, without limitation, calculation bases
for the Net Sales of a Product if sold in conjunction with another active
ingredient or an inhaler or other device as to be a Combination Product, and
reconciliation amounts recorded as deductions or exclusions from Net Sales with
respect to sales made in previous periods) shall be delivered to Asahi within
[***] following the end of each calendar quarter for which royalties are due.

5.9 Payments; Interest. Any payments due under this Agreement shall be due on
such date as specified in this Agreement and, in the event such date is not a
Business Day, then the next succeeding Business Day. Any failure by either Party
to make a payment due to the other Party hereunder within [***] after the date
when due shall obligate such paying Party to pay computed interest to the other
Party, the interest period commencing on [***] after the date written notice of
non payment is received by the paying Party from the other Party and ending on
the payment date, at a rate per annum equal to the prime rate for one month
quoted on the due date by the Wall Street Journal [***]. The interest rate shall
be adjusted monthly and interest shall be compounded monthly in arrear. In
addition, interest shall be computed on the basis of a 365 day year actual days
elapsed, and shall be due and payable on the tender of the underlying principal
payment.

5.10 Taxes. The royalties, milestones and other amounts payable by CoTherix to
Asahi pursuant to this Agreement shall not be reduced on account of any taxes
unless required by applicable laws or regulations. If laws or regulations
require that taxes be withheld, CoTherix will (a) deduct those taxes from the
remittable royalty, (b) timely pay the taxes to the proper taxing authority, and
(c) send proof of payment to Asahi within [***] of receipt of confirmation of
payment from the relevant taxing authority. CoTherix agrees to make all lawful
and reasonable efforts to minimize such withholding taxes to Asahi provided that
such efforts do not have tax consequences for and are not otherwise to the
detriment of CoTherix.

5.11 Payment Currency. Payments by CoTherix under this Agreement shall be paid
to Asahi in U.S. dollars, by wire transfer of immediately available funds to an
account at a commercial bank designated by Asahi, which designation is to be
made at least ten (10) Business Days before payment is due. Where payments are
based on Net Sales in countries other than the member states of the U.S. dollar,
the amount of such payments expressed in the currency of each country shall be
converted into U.S. dollar at the average exchange rate of the applicable
calendar quarter (calculated based on [***](or, if a published rate is not
available on any such day, the next day on which such published rate is
available)), applied to the Net Sales of such calendar quarter. The applicable
exchange rate shall equal [***] as set forth in the Wall Street Journal. If not
available, the Parties shall agree upon another reference rate.

 

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agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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5.12 Records of Revenues and Expenses. CoTherix shall maintain complete and
accurate records that are relevant to the Net Sales on a country-by-country and
a Product-by-Product basis under this Agreement. Such records shall be retained
and be available during reasonable business hours for a period of three
(3) years from creation of individual records for examination with not less than
thirty (30) days’ prior written notice and at Asahi’s sole expense and not more
often than once each year by an independent certified public accountant selected
by Asahi and reasonably acceptable to CoTherix, for the sole purpose of
verifying for Asahi the correctness of calculations and classifications of such
revenues under this Agreement, which auditor has agreed to be bound by a
confidentiality agreement with CoTherix. The auditor shall report to Asahi only
whether there was any overpayment or underpayment and the amount thereof. Asahi
shall bear its own costs related to such audit; provided, that for any
underpayments greater than [***] by CoTherix, CoTherix shall pay Asahi the
amount of underpayment, interest as provided for in Section 5.9 from the time
the amount was due and Asahi’s out-of-pocket expenses incurred in conducting
such audit. For any underpayments less than [***] by CoTherix found under this
Section 5.12, CoTherix shall pay Asahi the amount of such underpayment. Any
overpayments by CoTherix will be credited against future royalties, without
incurring any interest, or refunded to CoTherix if requested in writing by
CoTherix. Any records or accounting information received from CoTherix shall be
Confidential Information for purposes of Section 8. Results of any such audit
shall be Confidential Information for purposes of Section 8.

5.13 No Refund. All milestone payments, upfront fee and royalties already paid
by CoTherix to Asahi pursuant to this Section 5 shall not be refundable except
to the extent provided in Section 5.12 for overpayments.

5.14 Reciprocal Provisions re: Asahi Royalties. All provisions relating in any
way to mechanics, timing and other matters in connection with royalty payments
(including without limitation Sections 5.8 through 5.13) shall apply mutatis
mutandis to govern the royalty payable from Asahi to CoTherix in accordance with
Section 3.3(b), and all related matters.

5.15 Auditing of Reimbursable Expenses. Each Party shall maintain complete and
accurate records that are sufficient to establish the amount of any costs or
expenses incurred by such Party (the “Audited Party”) that are to be paid or
reimbursed by the other Party (the “Auditing Party”) under this Agreement. Such
records shall be retained and be available during reasonable business hours for
a period of three (3) years from creation of individual records for examination
with not less than thirty (30) days’ prior written notice from the Auditing
Party at such Auditing Party’s sole expense and not more often than once each
year by an independent certified public accountant selected by such Auditing
Party and reasonably acceptable to the Audited Party maintaining such records,
for the sole purpose of verifying the correctness of calculations of costs and
expenses to be paid or reimbursed by such Auditing Party under this Agreement,
which auditor has agreed to be bound by a confidentiality agreement with the
Audited

 

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asterisks and has been filed separately with the Securities and Exchange
Commission.

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Party. The auditor shall report to the Auditing Party only whether there was any
overpayment or underpayment and the amount thereof (and any overpayment shall be
refunded to the Auditing Party promptly following the audit). The Auditing Party
shall bear its own costs related to such audit; provided, that for any
overpayment greater than [***], the Audited Party shall pay the Auditing Party
the Auditing Party’s out-of-pocket expenses incurred in conducting such audit.
Any records or accounting information received from the Audited Party shall be
Confidential Information for purposes of Section 8. Results of any such audit
shall be Confidential Information for purposes of Section 8.

SECTION 6: INTELLECTUAL PROPERTY AND PATENT RIGHTS

6.1 Ownership of Intellectual Property. Subject to the licenses and rights of
reference granted in Sections 3.1 and 3.3, as between the Parties, all right,
title and interest in and to any and all Information that is conceived,
discovered, developed, invented or otherwise made, by or on behalf of such
Party, its Affiliates, its Sublicensees, its licensees or its sublicensees under
or in connection with this Agreement, and any and all Patents and intellectual
property rights with respect thereto, shall be owned by:

(a) Asahi, if personnel of Asahi and/or any of its Affiliates, licensees (other
than CoTherix, its Affiliates and Sublicensees), sublicensees (other than
CoTherix, its Affiliates and Sublicensees) or contractors (including any
employees, officers, directors, and natural people who are the agents and/or
consultants of any of the foregoing entities) (collectively, the “Asahi
Allocated Personnel”) alone conceives, discovers, invents or otherwise makes
such Information;

(b) Jointly Asahi and CoTherix, if such Information is conceived, discovered,
invented or otherwise made by both Asahi Allocated Personnel and personnel of
CoTherix and/or any of its Affiliates, Sublicensees, distributors or contractors
(including any employees, officers, directors and natural people who are the
agents and/or consultants of any of the foregoing entities) (collectively, the
“CoTherix Allocated Personnel”); and notwithstanding the foregoing, it being
understood between the Parties that any Information contained in or created
under the Carcinogenicity and Safety Studies to be conducted under
Section 2.3(b) shall be jointly owned by Asahi and CoTherix; and

(c) CoTherix, if CoTherix Allocated Personnel alone conceives, discovers,
invents or otherwise makes such Information.

Ownership of patentable inventions and Patents under this Section 6.1 shall be
determined solely by inventorship thereof (i.e., by reference to whether any
Asahi Allocated Personnel and/or CoTherix Allocated Personnel are the inventors
thereof), except if invented under the Carcinogenicity and Safety Studies to be
conducted under Section 2.3(b) (for which joint ownership shall apply,
regardless of inventorship). Inventorship for purposes of this Agreement and the
Parties’ rights hereunder shall be determined in accordance with the U.S. patent
law of inventorship, regardless of where the invention occurred. The Parties’
rights as joint owners of the Joint Patents shall be equivalent to the undivided
joint ownership rights afforded co-inventors of U.S. patents.

 

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agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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If for some reason the law of any country would provide for different ownership
than stated in (a)—(c) so that the Parties’ intention as stated there would not
be carried out without an assignment, then in that case each Party hereby
assigns to the other Party its interest in the foregoing Information and
associated rights solely to the extent to achieve the rights of ownership as
stated in the foregoing (a) - (c).

6.2 Maintenance and Prosecution of Patents.

(a) Asahi Patents. Subject to Section 6.2(d), through patent attorneys or agents
of its choice [***],Asahi shall (i) be responsible for obtaining, prosecuting
and maintaining the Asahi Patents (excluding Joint Patents and [***] Patents)
within the Territory and (ii) have the sole right to obtain, prosecute and
maintain the Asahi Patents (excluding Joint Patents and [***] Patents) outside
the Territory. Without limiting Section 6.2(d), Asahi shall provide CoTherix
with any material prosecution correspondence to or from any patent office in the
Territory. In the case of material correspondence (including, without
limitation, Patent application filings) to a patent office in the Territory,
Asahi shall provide CoTherix with a copy of a draft of such correspondence, a
reasonable time in advance of sending it to such patent office so that CoTherix
has the opportunity to review and provide comments to Asahi, and CoTherix shall
submit to Asahi comments thereon, if any, within [***] so that Asahi can send
such correspondence to the patent office in time. In the case of material
correspondence from such a patent office, Asahi shall provide a copy to CoTherix
in the original language as soon as Asahi receives such correspondence, and
CoTherix shall submit to Asahi comments thereon, if any, within [***] after
CoTherix receives it. In each case, Asahi shall reasonably consider CoTherix’s
comments thereon. If Asahi elects to abandon any Patent or an application for
any Patent (or preparation thereof) with regard to any Patents described in this
subsection (a)(i) or (a)(ii) above, or permit a Patent issuing therefrom to
lapse in a country, Asahi shall first notify CoTherix reasonably in advance of
the deadline for any required payments or actions for prosecution of maintenance
thereof and permit CoTherix to continue the prosecution of such application or
pay any required fees in the name of CoTherix, [***]through patent attorneys of
its choice. In such event, CoTherix shall become an assignee of the application
for Patent or Patent as a result of its continuing the prosecution of the
application for Patent [***] according to this Section 6.2(a), subject to any
licenses granted to Asahi hereunder, and Asahi shall promptly make the
corresponding assignment to CoTherix.

(b) CoTherix Patents and CoTherix [***] Patent. Subject to Section 6.2(d),
CoTherix, through patent attorneys or agents of its choice [***], shall have the
sole right to obtain, prosecute and maintain throughout the world the CoTherix
Patents (excluding Joint Patents) and CoTherix [***] Patent. If CoTherix elects
to abandon an application for any such Patent (or preparation thereof) or permit
a Patent issuing therefrom to lapse in a country, CoTherix shall first notify
Asahi reasonably in advance of the deadline for any required payments or actions
for prosecution of maintenance thereof and permit Asahi to continue the
preparation, filing, prosecution and maintenance of such application or pay any
required fees in the name of

 

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asterisks and has been filed separately with the Securities and Exchange
Commission.

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Asahi, [***] through patent attorneys or agents of its choice. In such event,
Asahi shall become an assignee of the application for Patent or Patent as a
result of its continuing the prosecution of the application for Patent [***]
according to this Section 6.2(b), subject to any licenses granted to CoTherix
hereunder, and CoTherix shall promptly make the corresponding assignment to
Asahi.

(c) Joint Patent. Any patent application disclosing Information jointly owned by
the Parties in accordance with Section 6.1(b) shall be provided by one Party to
the other reasonably in advance of the intended date for submission of such
application to a governmental patent authority. Subject to Section 6.2(d),
CoTherix, through patent attorneys or agents of its choice, shall have the sole
right to obtain, prosecute and maintain in the Territory the Patents with
respect to such Information (“Joint Patents”). In countries outside the
Territory, Asahi shall have such rights. Unless one Party obtains the full
ownership of Joint Patents pursuant to the provisions set forth below, the
Parties shall [***] related to the filing, prosecuting and maintaining of Joint
Patents worldwide. If a Party elects not to file, prosecute, or maintain a Joint
Patent in a country, the Party shall give the other Party notice thereof within
a reasonable period prior to allowing such Joint Patent to lapse, become
abandoned, or become unenforceable. The other Party, at its sole discretion
[***], may file, prosecute, or maintain such Patent in its own name, in which
case the Party shall transfer [***] its ownership right in such jointly owned
Information and Joint Patent with respect thereto to the other Party.

(d) Cooperation. Each Party shall assist and cooperate with the other Party as
such other Party may reasonably request from time to time in connection with its
activities set forth in Sections 6.2(a), (b) and (c). Each Party shall use
reasonable efforts to keep the other Party currently informed of all steps to be
taken in the preparation and prosecution of all applications filed by it
according to this Section 6.2 and shall furnish such other Party with copies of
such applications for Patents, amendments thereto and other related
correspondence to and from patent offices and, to the extent reasonably
practicable, permit such other Party an opportunity to offer its comments
thereon before making a submission to a patent office which could materially
affect the scope or validity of the patent coverage that may result. Such other
Party shall offer its comments, if any, promptly. The Parties shall cooperate
with each other in obtaining any patent term restoration or supplemental
protection certificates or their equivalent for the Asahi Patents, the CoTherix
Patents, the CoTherix [***]Patent and the Joint Patents. In the event that
elections with respect to patent term restoration are to be made for any Asahi
Patent (except for Joint Patents), [***]; for any CoTherix Patent (except for
Joint Patents) and CoTherix [***] Patent, [***]; and for any Joint Patent,
[***].

6.3 Enforcement of Patents.

(a) Rights and Procedures. In the event that either Party reasonably believes
that a Third Party may be infringing any of the Asahi Intellectual Property
Rights, the CoTherix Intellectual Property Rights or the CoTherix [***] Patent,
such Party shall promptly notify the other Party in writing, identifying the
alleged infringer and the alleged infringement complained of and furnishing the
information upon which such determination is based. With respect to alleged
infringement of the Asahi Intellectual Property Rights, the CoTherix
Intellectual Property

 

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asterisks and has been filed separately with the Securities and Exchange
Commission.

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Rights or the CoTherix [***] Patent by any Third Party inside the Territory,
CoTherix shall have the first right, but not the obligation, through counsel of
its choosing, to take any measures it deems appropriate to stop such infringing
activities by such Third Party. With respect to alleged infringement of the
Asahi Intellectual Property Rights, the CoTherix Intellectual Property Rights or
the CoTherix [***] Patent by any Third Party outside the Territory, Asahi shall
have the first right, but not the obligation, through counsel of its choosing,
to take any measures it deems appropriate to stop such infringing activities by
such Third Party. Upon reasonable request by the enforcing Party, the other
Party shall give the enforcing Party all reasonable information and assistance,
including allowing the enforcing Party access to the other Party’s files and
documents and to the other Party’s personnel who may have possession of relevant
information and, if necessary for the enforcing Party to prosecute any legal
action (including, without limitation, any legal action in which the other Party
defends against any patent invalidity claim of such Third Party in response to
the infringement action brought by the enforcing Party), joining in the legal
action as a party [***] ; provided that the other Party retains a right to
[***]. In the event the Party holding such first right to enforce fails within
[***] following notice of such infringement, or earlier notifies the other Party
in writing of its intent not, to take commercially appropriate steps to remove
any infringement in the Territory, in the case of CoTherix, or outside the
Territory, in case of Asahi, that is likely to have a material adverse effect on
the sale of a Product in the relevant market, then, unless such Party provides
the other Party with a commercially reasonable basis in writing for not taking
such steps, the other Party shall have the right, but not the obligation, to do
so [***]; provided, however, that if the first Party has commenced negotiations
with an alleged infringer for discontinuance of such infringement within such
[***] period, such Party shall have an additional [***]to conclude its
negotiations before the other Party may bring suit for such infringement. Upon
reasonable request by the other Party, the first Party shall give the other
Party all reasonable information and assistance in connection with such suit for
infringement. Notwithstanding any of the foregoing to the contrary, this
Section 6.3(a) shall not restrict either Party from enforcing its own Patents
(nor grant the other Party the right to enforce such Patents) anywhere in the
world with respect to infringement that is unrelated to Products or any
compounds or products that are competitive therewith.

(b) [***].

6.4 Potential Third Party Rights.

(a) [***].

(b) Third Party Litigation. In the event of any actual or threatened suit
against CoTherix or its Affiliates, Sublicensees, distributors or customers
alleging that the Development, Regulatory Approval, manufacture, marketing,
sale, use or other Commercialization of a Product in the Territory infringes the
Patent or intellectual property rights of any Third Party, CoTherix shall [***]
assume direction and control of the defense of claims arising therefrom
(including the right to settle such claims); provided, however, that CoTherix
shall obtain the written consent of Asahi prior to making any admission as to
the scope, validity, or enforceability of any Asahi Intellectual Property Rights
(including any Joint Patent), such consent not to be unreasonably withheld or
delayed.

 

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asterisks and has been filed separately with the Securities and Exchange
Commission.

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(c) Cooperation. In the event that a Third Party institutes a Patent, trade
secret or other infringement suit against Asahi, CoTherix or their respective
Affiliates or, in the case of CoTherix, Sublicensees, during the term of this
Agreement, each Party shall [***] use all reasonable efforts to provide the
other Party with any information needed to assist and cooperate with the other
Party in connection with the defense of such suit.

6.5 Licenses under Third Party Patents.

(a) Determination. Upon mutual agreement by the Parties that it is “Necessary”
(defined below) to obtain a license or right under one or more Third Party
Patents Covering (i) the current Oral Product (in existence as of the Effective
Date) or its manufacture, use or sale, or (ii) other formulations of the Active
Drug Substance to the extent specific to the Active Drug Substance and not
generally applicable technology, or the manufacture, use or sale thereof, in
each case based on advice from patent counsel of the respective Party (provided
that, if the Parties cannot agree, the matter shall be referred to an
independent Third Party counsel for final determination of “Necessary” by the
procedure of subsection (d)), CoTherix may, if it chooses to seek to obtain a
license or right under such Third Party Patents, reduce the royalties to Asahi
hereunder as provided in Section 6.5(c). A license under any Third Party Patents
shall be deemed “Necessary” if the license is reasonably necessary to avoid
claims of infringement arising from the manufacture, use or sale of Products in
the Territory that are reasonably likely not to be dismissed on summary
judgment. [***].

(b) Licensing. In the event that the Parties agree to seek to obtain a license
or right under any Third Party Patents, CoTherix will make reasonable efforts to
obtain such license or right.

(c) Royalties. Any royalties to be paid to the Third Party in consideration of
the license or right under the Third Party Patents with respect to any Product
sold by CoTherix or its Affiliates or Sublicensees shall be [***].
Notwithstanding the foregoing sentence and Section 9.2 below, for Necessary
licenses, (i) in the case of [***] or (ii) in the case of [***] provided,
however, that in no event shall [***].

(d) Resolution by Independent Patent Expert. If the Parties through a period of
up to one month of Joint Technical Committee discussions cannot agree as to
whether any license is Necessary, they will submit the disagreement to an
experienced patent attorney mutually acceptable to the Parties — and who does
not otherwise perform work for either Party or any of its Affiliates and is not
affiliated with them — (a “Patent Expert”) for resolution. They shall engage
such Patent Expert within thirty (30) days after either Party notifies the other
of a disagreement as to whether a license is Necessary. If the Parties cannot
agree as to who such Patent Expert shall be within such time period, then the
total of two nominees of the Parties (one from each Party) shall select a third
Patent Expert who shall be the attorney to resolve the dispute. If such two (2)

 

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asterisks and has been filed separately with the Securities and Exchange
Commission.

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people cannot agree on the third person, then the arbitral body referred to in
Section 13.10 shall select the Patent Expert who shall be the attorney to
resolve the dispute. The Parties shall share equally the expenses incurred for
the services of such Patent Expert and arbitral body. Within thirty (30) days
after engaging the Patent Expert, the Parties shall each submit up to twenty
(20) pages of documentation to the Patent Expert. Within five (5) Business Days
thereafter, the Parties shall convene a discussion with the Patent Expert during
which each Party may orally present its position as to whether a license is
Necessary for no more than two (2) hours. The Parties shall require the Patent
Expert to render his or her guidance as to whether a license is Necessary within
five (5) Business Days after the oral presentations. Neither Party shall engage
in any ex parte communications with the Patent Expert. The Parties shall accept
the Patent Expert’s decision on whether each license is Necessary absent any
fraud. The Parties shall provide for all discussions of Necessary licenses
hereunder to be conducted under circumstances that best preserve the privileged
nature of such discussions. This shall include without limitation, entering into
an appropriate joint defense/common interest agreement and conducting such
discussions through counsel or at the very least with counsel present. With
respect to resolving disputes over the [***], the foregoing procedures shall be
applied in a substantially similar fashion to such dispute, except that instead
of a Patent Expert, the parties shall select [***]to resolve such dispute.

SECTION 7: MANUFACTURING / QUALITY CONTROL / LOGISTICS

7.1 CMC/Process Development.

(a) Scale-Up Process Development. CoTherix and Asahi shall, themselves and
through directing and working with a Third Party Manufacturer retained by Asahi
and reasonably acceptable to CoTherix (and under an agreement whose financial
terms, statement of work and associated timelines have been reasonably approved
by CoTherix), conduct on a co-development basis such CMC/Process Development for
the existing Oral Product (extended release form), including formulation,
optimization and commercial scale-up of the manufacturing process for such Oral
Product, as is required for Phase 3 Clinical Trials and commercial production of
such Oral Product in a reasonably economic manner and in a manner that is
reasonably likely to be sufficient for Regulatory Approval in the Territory of
such Oral Product. The Parties shall use Commercially Reasonably Efforts to
complete such CMC/Process Development [***]. In connection with the foregoing,
Asahi shall (i) contribute, among other things, technical expertise for
CMC/Process Development as applied to the Oral Product (including, without
limitation, the services of appropriate scientists and engineers who worked on
the existing manufacturing processes for the Oral Product), and (ii) be
responsible for managing and overseeing the work of the Third Party
Manufacturer; and CoTherix shall contribute, among other things, expertise
regarding FDA and related regulatory requirements (including GMP) for such
CMC/Process Development and the services of at least one person with technical
expertise in CMC/Process Development applicable to oral formulations. Both
Parties shall dedicate resources sufficient to complete such CMC/Process
Development under this Section 7.1(a) within the timeline described above. Each
Party shall consult with the other Party with respect to the activities under
this Section 7.1(a), and Asahi shall provide monthly written reports to CoTherix
and the Joint

 

40

* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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Technical Committee reasonably detailing its progress on such CMC/Process
Development, including without limitation manufacturing process, components and
composition and specifications and test methods, for the Oral Product.

(b) CoTherix Process Development. Except with respect to the foregoing in
Section 7.1(a), CoTherix shall [***] be responsible for conducting such
CMC/Process Development as may be necessary for the Products; provided, however,
that CoTherix shall consult with and provide periodic written reports to the
Joint Technical Committee or the sub-committee mentioned in Section 2.5(c)
reasonably detailing its progress on such CMC/Process Development, including
without limitation manufacturing process, components and composition and
specifications and test methods, for Inhaled Products from the planning phase.
CoTherix’s efforts under this Section 7.1(b) shall be initiated only after
discussion by the Joint Technical Committee; provided, that, for the avoidance
of doubt, no approval by Asahi or the Joint Technical Committee shall be
required with respect to such efforts.

(c) [***]

(d) Cooperation. Upon reasonable request, each Party shall reasonably cooperate
with and assist the other Party in connection with such other Party’s process
development activities under this Section 7.1.

7.2 Asahi’s Assistance and Supply Obligations.

(a) Technology Transfer. In addition to the Asahi Intellectual Property Rights
disclosure under Sections 2.1 and 2.8, Asahi shall, at the reasonable request of
CoTherix, provide CoTherix with whatever Asahi Know-How and technical support,
including visits by Asahi’s personnel and contractors, necessary to assist
CoTherix to transfer manufacturing operations (including, without limitation,
any manufacturing process existing as of the Effective Date or developed by
Asahi under Section 7.1(a)) to a manufacturing site of CoTherix or its Third
Party manufacturer(s) under toll (or contract/subcontract) manufacturing
agreement(s) (“Third Party Manufacturer”) or as required for the exercise of the
licenses granted to CoTherix by Asahi under Sections 3.1[***].

(b) Supply of Oral Product. Asahi shall supply CoTherix, subject to
Section 7.2(d), and CoTherix shall exclusively purchase from Asahi, all its
clinical requirements of extended release type of Oral Product (in finished
form) for initial Preclinical Development activities (including, without
limitation PK studies), any initial Phase I Clinical Trials and all of the
initial Phase 2 Clinical Trials in both Stable Angina Field and PH Field, as
described in the initial Development Plan (“initial” meaning the first of each
such type of activities or trials to be conducted after the Effective Date and
therefore excluding subsequent Preclinical Development activities, subsequent
Phase I Clinical Trials, etc.). Unless otherwise agreed, the foregoing supply
shall be provided directly by Asahi from internal manufacturing efforts and/or
through a mutually agreed Third Party Manufacturer (under an agreement whose
financial terms have been reasonably approved by CoTherix). The delivery terms
and conditions for the supply of such

 

41

* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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Oral Product shall be FCA (Incoterms 2000) Asahi’s or its Third Party
Manufacturer’s manufacturing facility and shall be shipped to the location
designated in writing by CoTherix or as otherwise directed in the purchase order
covering such shipment pursuant to Section 7.2(d). Title and risk of loss shall
pass to CoTherix upon delivery of the Oral Product to the carrier. The price of
supply of such Oral Product for initial Phase 1 Clinical Trials shall be [***]
the total of which prices include the entire finished Oral Product (including
any Active Drug Substance therein). The price of supply of such Oral Product for
initial Phase 2 Clinical Trials and initial Preclinical Development activities
shall be [***]. The Joint Technical Committee may, however, reasonably determine
that, for the purposes of obtaining Regulatory Approval for an Oral Product,
CoTherix should manufacture, or arrange for a Third Party Manufacturer to
manufacture, Oral Product for any portion of the Phase 1 Clinical Trials or
initial Phase 2 Clinical Trials by CoTherix under this Agreement.

(c) Supply of Active Drug Substance. If CoTherix requires any Active Drug
Substance for Preclinical Development and CMC/Process Development to be
conducted prior to the completion of the first Phase 2 Clinical Trial of any
Product (excluding, for the avoidance of doubt, Active Drug Substance provided
within Oral Products under Section 7.2 (b) above), before CoTherix establishes
its own manufacturing capacity (either by itself or through a Third Party
Manufacturer), Asahi shall supply CoTherix, subject to Section 7.2(d), and
CoTherix shall exclusively purchase from Asahi, such Active Drug Substance.
Unless otherwise agreed, the foregoing supply shall be provided directly by
Asahi from internal manufacturing efforts and/or through a mutually agreed Third
Party Manufacturer (under an agreement whose financial terms have been
reasonably approved by CoTherix). The delivery terms and conditions for the
supply of such Active Drug Substance shall be FCA (Incoterms 2000) Asahi’s or
its Third Party Manufacturer’s manufacturing facility and shall be shipped to
the location designated in writing by CoTherix or as otherwise directed in the
purchase order covering such shipment pursuant to Section 7.2(d). Title and risk
of loss shall pass to CoTherix upon delivery of the Active Drug Substance to the
carrier. The price of supply of such Active Drug Substance shall be [***]. The
Joint Technical Committee may, however, reasonably determine that, for the
purposes of obtaining Regulatory Approval for a Product, CoTherix should
manufacture, or arrange for a Third Party Manufacturer to manufacture, Active
Drug Substance for Preclinical Development and/or CMC/Process Development.

(d) Firm Purchase Order; Shipping Documentation. CoTherix shall furnish Asahi
with its written firm purchase order for Oral Product and/or Active Drug
Substance to be supplied in accordance with Sections 7.2(b) and (c), which order
shall include desired quantities of Oral Product and/or Active Drug Substance,
shipping date and location for delivery, at least [***] prior to the expected
delivery date, unless otherwise agreed by the Parties. Asahi shall acknowledge
in writing each purchase order submitted to it pursuant to this Section 7.2
(d) within [***] of receipt, confirming in such acknowledgement the date that
Asahi will deliver the ordered Active Drug Substance and/or Oral Product, and
the quantities thereof, consistent with CoTherix’s purchase order therefor.
Asahi may reject such purchase order within such time period but only if such
purchase order exceeds [***] of the projected requirements of CoTherix as of the
Effective Date or the manufacturing capacity of Asahi and its Third Party
Manufacturers or is otherwise not in

 

42

* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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accordance with the terms of this Agreement. Asahi shall ship all product under
this Section 7.2 with certificates of analysis confirming testing and
conformance as per Section 7.3 and any other documents required to comply with
applicable laws and regulations. CoTherix may cancel any purchase order
furnished to Asahi hereunder by written notice prior to delivery, and, in such
case, (a) Asahi shall, and shall obligate any relevant Third Party Manufacturer
to, promptly terminate any ongoing manufacturing activities with respect to the
cancelled order and reasonably mitigate any further costs associated therewith,
and (b) CoTherix shall pay to Asahi the amount of any costs incurred or not
cancellable as of the date of such cancellation by CoTherix to the extent
allocable to the cancelled purchase order, but in any event not to exceed, in
the aggregate, the purchase price therefor as described above.

(e) Payment Terms. CoTherix shall pay Asahi for supplies of Oral Product and
Active Drug Substance provided under this Section 7.2 within [***]. Payments
shall be made in United States dollars.

(f) Release from Sole Supply of Oral Product and/or Active Drug Substance. In
the event that Asahi fails to supply CoTherix with its requirements of Oral
Product and/or Active Drug Substance as set forth under Section 7.2(b) or (c),
and without limiting Asahi’s obligations or CoTherix’s rights and remedies
hereunder, CoTherix shall have the right to manufacture or have manufactured for
it such amounts of Oral Product and/or Active Drug Substance rather than
purchasing such supplies from Asahi and, if applicable, Asahi shall reasonably
assist CoTherix in working with any existing Third Party Manufacturer to
accommodate such arrangement. For the avoidance of doubt the supply and purchase
obligations in Sections 7.2(b) and 7.2(c) shall apply only with respect to the
initial Preclinical Development and initial Phase 1 Clinical Trials and initial
Phase 2 Clinical Trials and any subsequent Preclinical Development or
early-stage Clinical Development for Products shall not be subject to such
supply and purchase obligations.

(g) Compliance with Applicable Laws. Asahi shall comply with all applicable
laws, regulations and guidelines in connection with its manufacture and supply
of Active Drug Substance and Oral Product hereunder including GMP and those
relating to employee safety and health and environmental protection.

7.3 QC Testing, Acceptance and Rejection.

(a) Testing; Specifications. Asahi shall perform testing of Oral Product and
Active Drug Substance to be supplied to CoTherix under Section 7.2 to confirm
conformance and compliance of such Active Drug Substance and Oral Product with
the Specifications therefor, GMP and other applicable regulatory requirements.
Asahi shall not ship any Active Drug Substance or Oral Product that does not
meet the foregoing conformance and compliance standards. The initial
Specifications have been finalized by the Parties in writing as of the Effective
Date. Future Specifications, or future changes to any then-existing
Specifications shall be as submitted by either Asahi or CoTherix to the Joint
Technical Committee for review and approval (not to be unreasonably withheld)
within sixty (60) days after such submission.

 

43

* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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(b) Warranty. Asahi warrants that the Active Drug Substance and Oral Product
supplied by Asahi (including by any Third Party Manufacturer on Asahi’s behalf)
to CoTherix hereunder shall: (i) comply with the Specifications therefor, as
finalized in writing by the Parties as of the Effective Date, when delivered by
Asahi to the carrier at the point of shipment, and shall continue to so comply
until the expiry date (provided that the failure of the Active Drug Substance
and/or Oral Product not so to comply is not due to any fault of CoTherix or its
Affiliates or Sublicensees or any Third Party following delivery to the said
carrier), (ii) be manufactured in accordance with GMP, and (iii) be manufactured
in accordance with other applicable legal and regulatory requirements therefor
in the United States or any other country or countries within the Territory
noticed by CoTherix to Asahi as a country where Clinical Trials will take place
therewith. For the avoidance of doubt, to the extent Asahi utilizes any Third
Party Manufacturer in accordance with this Section 7, Asahi shall be responsible
for such Third Party Manufacturer’s compliance with the applicable obligations
in this Section 7 performed on Asahi’s behalf by such Third Party Manufacturer.

(c) Acceptance and Rejection. In the event that CoTherix has found that any
quantity of Active Drug Substance or Oral Product supplied by Asahi to CoTherix
hereunder does not comply with the Specifications, GMP or other applicable legal
and regulatory requirements, CoTherix shall provide Asahi with written notice of
such non-compliance [***]after receipt of such quantity of Active Drug Substance
or Oral Product in the case of defects obvious on visual inspection, or
otherwise as soon as possible after becoming aware of the defect, but in any
case [***] after receipt of such quantity of Active Drug Substance or Oral
Product. Unless CoTherix has so rejected the Active Drug Substance or Oral
Product before [***] after receipt, such Active Drug Substance or Oral Product
shall be deemed accepted (without limiting CoTherix’s rights or Asahi’s
obligations hereunder with respect to defects discovered after such period).

(d) Replacement. Asahi shall, [***] after receipt of such notice of
non-compliance, test retained samples (as required by Section 7.3(e)) of the
shipped Active Drug Substance or Oral Product to confirm such non-compliance. If
Asahi has not performed such testing within such time period or has confirmed
the defectiveness of such quantity of Active Drug Substance or Oral Product,
CoTherix shall have the right to request, and if so requested, Asahi shall have
the obligation to provide, the immediate replacement thereof by the quantity of
Active Drug Substance or Oral Product of the quality complying with the
Specifications, GMP and other applicable legal and regulatory requirements
therefor (and the provisions of Sections 7.3 shall apply equally to such
replacements) and CoTherix shall return to Asahi such defective quantity of
Active Drug Substance or Oral Product [***]. It is agreed and understood that
Asahi’s responsibility for the failure of Active Drug Substance or Oral Product
supplied to CoTherix hereunder to comply with the warranty in Section 7.3
(b) [***].

(e) Retention of Samples. Asahi shall retain samples of Active Drug Substance
and Oral Product manufactured by Asahi in connection with Section 7.2 for five
(5) years following the later to occur of (i) discontinuation of Development of
the relevant Product or (ii) Regulatory Approval of the relevant Product (or
such longer period as may be required to comply with applicable laws and
regulatory requirements). The amount of samples to be retained shall be four

 

44

* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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(4) times the quantity required to carry out all of the tests required to
determine if the material meets Specifications and is in compliance with GMP and
other applicable legal and regulatory requirements, with the exception of
sterility and pyrogen testing. CoTherix shall be granted access to half of the
retained samples, which shall be transferred to CoTherix on request.

(f) Records. Asahi shall keep and maintain manufacturing and quality control
records – and other records required by applicable legal and regulatory
requirements — for each batch of Active Drug Substance and Oral Product
manufactured by Asahi in connection with Section 7.2 for five (5) years
following the later to occur of (i) discontinuation of Development of the
relevant Product or (ii) Regulatory Approval of the relevant Product (or such
longer period as may be required to comply with applicable laws and regulatory
requirements). All records maintained by Asahi shall be in Japanese, or in other
language as they are originally prepared, except to the extent applicable laws
or regulations require otherwise.

(g) Inspections. Upon reasonable notice, Asahi shall, and shall obligate each
Third Party Manufacturer to, accept any inspection required by Regulatory
Agencies, during normal working hours, of premises and facilities where Asahi
and/or its Third Party Manufacturers manufactures and/or analyses (for
manufacturing purposes) or has manufactured and/or analyzed (for manufacturing
purposes) Active Drug Substance and/or Oral Products supplied to CoTherix under
Section 7.2, or its or their intermediates, and/or, to the extent required by
applicable laws, premises where Asahi or any such Third Party Manufacturer
stores (i) raw materials, auxiliary materials, intermediates, and packing
materials for such Active Drug Substance and Oral Products, (ii) Active Drug
Substance and/or Oral Products, and/or (iii) manufacturing records pertaining to
production of such Active Drug Substances and Oral Products, by Regulatory
Agencies, if called for by such Regulatory Agencies. In addition, upon
reasonable notice and during normal business hours, CoTherix (itself or by and
through its representatives) shall be entitled to inspect and audit such
premises and facilities of Asahi and its Third Party Manufacturers to confirm
compliance with GMP and other applicable regulations concerning the
manufacturing of Oral Product and Active Drug Substances hereunder. CoTherix
shall provide Asahi with a written report of the results of any such inspection.

7.4 DMF. For a period agreed by Asahi and CoTherix, Asahi shall maintain a Drug
Master File for the Active Drug Substance necessary for initial Phase 2 Clinical
Trials of Products, and, in accordance with Section 3.1(b), CoTherix and its
Affiliates and Sublicensees have the right to make reference to such Drug Master
File.

7.5 Manufacturing by CoTherix.

(a) Product. Except for Asahi’s supply obligations pursuant to Section 7.2,
CoTherix shall have sole responsibility for manufacture of Products for
Development and Commercialization at its or its Third Party Manufacturer’s
manufacturing site. If CoTherix elects to employ a Third Party Manufacturer, all
payment obligations to such Third Party Manufacturer shall be the sole
responsibility of CoTherix. CoTherix shall also have sole responsibility for
supervising any manufacturing activities conducted pursuant to the contract with
any such Third Party Manufacturer.

 

45

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(b) Active Drug Substance. Except for Asahi’s supply obligations pursuant to
Section 7.2., CoTherix shall be responsible for manufacture of Active Drug
Substance for Development and Commercialization at its or its Third Party
Manufacturer’s manufacturing site. If CoTherix elects to employ a Third Party
Manufacturer, all payment obligations to such Third Party Manufacturer shall be
the sole responsibility of CoTherix. CoTherix shall also have sole
responsibility for supervising any manufacturing activities conducted pursuant
to such Third Party manufacturing contract.

(c) Change of Manufacturing Site. CoTherix shall, and shall obligate its Third
Party Manufacturers and Sublicensees to, manufacture Active Drug Substance and
Products only at manufacturing sites previously disclosed to and approved by the
Joint Technical Committee. Change of manufacturing sites shall be subject to
prior disclosure to and approval by the Joint Technical Committee.

(d) Changes to Master Formulae and Specifications. CoTherix shall disclose the
Master Formulae and Specifications for Products to be manufactured by or for it
or its Affiliates or Sublicensees to the Joint Technical Committee for its
approval. Should CoTherix or its Affiliates or Sublicensees desire to make any
changes in the Master Formulae or Specifications of Products or Active Drug
Substance, then CoTherix shall first disclose the same to the Joint Technical
Committee for its approval.

(e) DMF. The Parties shall discuss if CoTherix or its Third Party Manufacturers
and/or Sublicensees, will undertake to file and maintain Drug Master Files for
Active Drug Substance and/or Products for Development and Commercialization in
the Territory, and where such filings are required by Regulatory Agencies. Asahi
and its Affiliates and sublicensees have the right to make reference to any such
Drug Master File maintained by CoTherix or its Third Party Manufacturers and/or
Sublicensees in accordance with Section 3.3 or Section 4.5.

(f) Inspections. CoTherix shall, and shall obligate each Third Party
Manufacturer and, if applicable, its Affiliates and Sublicensee to, accept any
inspection, during normal working hours, of premises and facilities where
CoTherix, Third Party Manufacturers or its Affiliates or Sublicensees
manufactures and/or analyses (for manufacturing purposes) or has manufactured
and/or analyzed (for manufacturing purposes) Active Drug Substance and/or
Products and its intermediates, and or, to the extent required by applicable
laws, premises where it stores (i) raw materials, auxiliary materials,
intermediates, and packing materials for Active Drug Substance and Products,
(ii) Active Drug Substance and/or Products, and (iii)manufacturing records
pertaining to production of Active Drug Substance and/or Products, by Regulatory
Agencies or by Asahi (subject to the restrictions below), if called for by these
Regulatory Agencies or by Asahi. Any such inspection by Asahi shall be subject
to the same terms and conditions as are in Section 2.3.

 

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7.6 Cooperation.

(a) Contract Manufacturer. If either Party wishes to contract manufacture of
Active Drug Substance and/or Products to the other Party’s Third Party
Manufacturer in the Territory, the other Party shall, [***],reasonably cooperate
with and assist such requesting Party, to the extent reasonably requested in
arranging such Third Party Manufacturer to manufacture the Active Drug Substance
and/or the Product for the requesting Party, provided that such efforts and
contract do not interfere with the supply of Active Drug Substance and/or
Products to the other Party.

(b) Technical Transfer. At the reasonable request of Asahi, CoTherix shall, and
shall obligate each Third Party Manufacturer and its Sublicensee to, provide
Asahi with CoTherix Know-How and technical support, including visits by
CoTherix’s and its Sublicensees’ personnel and contractors, necessary to assist
Asahi to transfer manufacturing operations, which may be developed during the
course of the Agreement, to Asahi’s manufacturing site (or its designated Third
Party’s manufacturing site) as required for the exercise of the license granted
by CoTherix to Asahi pursuant to Section 3.3 or Asahi’s right in Section 4.5
[***].

SECTION 8: CONFIDENTIALITY

8.1 Confidentiality Obligations. At all times during the term of this Agreement,
each Party shall, and shall cause its officers, directors, employees and agents
to, keep completely confidential and not publish or otherwise disclose and not
use, directly or indirectly, for any purpose other than the purpose of this
Agreement, any Information that (a) is furnished or otherwise made known to it,
directly or indirectly, by the other Party pursuant to this Agreement, or (b) is
developed during the course of performance of this Agreement, or (c) consists of
the terms of this Agreement or (d) discloses the scientific, regulatory or
business affairs or other activities of the other Party (“Confidential
Information”), except to the extent such disclosure or use is expressly
permitted by the terms of this Agreement. Notwithstanding the foregoing,
Confidential Information shall not include any information that:

(a) is or hereafter becomes part of the public domain by public use,
publication, general knowledge or the like through no wrongful act, fault or
negligence on the part of receiving Party;

(b) can be demonstrated by documentation or other competent proof to have been
in the receiving Party’s possession prior to disclosure by the disclosing Party
without any obligation of confidentiality with respect to said information;

(c) is subsequently received by the receiving Party from a Third Party who is
not bound by any obligation of confidentiality with respect to said information;
or

(d) can be demonstrated by documentation or other competent evidence to have
been independently developed by or for the receiving Party without use of or
reference to the disclosing Party’s Confidential Information.

 

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* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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Specific aspects or details of Confidential Information shall not be deemed to
be within the public domain or in the possession of the receiving Party merely
because the Confidential Information is embraced by more general information in
the public domain or in the possession of the receiving Party. Further, any
combination of Confidential Information shall not be considered in the public
domain or in the possession of the receiving Party merely because individual
elements of such Confidential Information are in the public domain or in the
possession of the receiving Party unless the combination and its principles are
in the public domain or in the possession of the receiving Party.

8.2 Permitted Disclosures. Each Party may disclose Confidential Information to
the extent that such disclosure is:

(a) Made in response to a valid order of a court of competent jurisdiction or
other supra-national, federal, national, regional, state, provincial or local
governmental or regulatory body of competent jurisdiction or, if in the
reasonable opinion of the Party’s legal counsel, such disclosure is otherwise
required by law; provided, however, that the Party shall first have given notice
to the other Party and given the other Party a reasonable opportunity to quash
such order and to obtain a protective order requiring that the Confidential
Information and documents that are the subject of such order be held in
confidence by such court or agency or, if disclosed, be used only for the
purposes for which the order was issued; and provided further that if a
disclosure order is not quashed or a protective order is not obtained, the
Confidential Information disclosed in response to such court or governmental
order shall be limited to that information that is legally required to be
disclosed in response to such court or governmental order;

(b) Made by the Party to the Regulatory Agencies as required in connection with
any filing, application or request for Regulatory Approval of Products or
Fasudil Formulations; provided, however, that reasonable measures shall be taken
to assure confidential treatment of such information; or

(c) Made by the Party to its Affiliates, Sublicensees or sublicensees (or
licensees in case of Asahi) or Third Parties as may be necessary or useful in
connection with the Development, Regulatory Approval or Commercialization of the
Active Drug Substance, the Products, or otherwise in connection with the
performance of its obligations or exercise of its rights as contemplated by this
Agreement, including (without limitation) subcontracting and sublicensing
transactions in connection therewith; provided, however, that such disclosure
may only be made to such persons or other entities as are subject to written
obligations of confidentiality and non-use with respect to such Confidential
Information substantially similar to the obligations of confidentiality and
non-use of the Party set forth in this Section 8.

(d) Made by the Party to a patent office in connection with, and solely as
required for, the filing or prosecution of Patents in accordance with this
Agreement.

(e) Made by the Party to potential investors and counterparties in potential
merger and acquisition transactions; provided, however, that such disclosure may
only be made to such

 

48

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persons or other entities as are subject to written obligations of
confidentiality and non-use with respect to such Confidential Information
substantially similar to the obligations of confidentiality and non-use of the
Party set forth in this Section 8.

8.3 Use of Name. Neither Party shall mention or otherwise use the name,
insignia, symbol, trademark, trade name or logotype of the other Party (or any
abbreviation or adaptation thereof) in any publication, press release,
promotional material or other form of publicity without the prior written
approval of such other Party in each instance. The restrictions imposed by this
Section 8.3 shall not prohibit either Party from making any disclosure
identifying the other Party that is required by applicable laws and regulations
or any disclosure regarding the existence of this Agreement or the existence of
the relationship between the Parties.

8.4 Press Releases. Press releases or other similar public communications by
either Party announcing the execution or termination (in whole or in part) of
this Agreement or any sublicense agreement with a Sublicensee, or disclosing
clinical trial, safety or efficacy information with respect to Products, shall
be subject to a right of reasonable prior review and approval by the other
Party, which approval shall not be unreasonably withheld and shall be given to
the announcing Party within five (5) Business Days after receipt of a manuscript
of such press release or other such public communication (if not responded
within such five (5) Business Days, it shall be deemed to have been approved by
the other Party); provided, however, that such right shall not apply to
communications required by applicable laws and regulations, disclosures of
information for which consent has previously been obtained, or information that
has been previously disclosed publicly.

8.5 Publications. The Joint Technical Committee shall discuss the overall
strategy for, and coordinate, but have no right to approve or control
publication and presentation of results of studies of Products or other data
generated by CoTherix or its Affiliates or Sublicensees under this Agreement in
support of Products worldwide, with the aim of obtaining Regulatory Approvals
and optimizing Commercialization of the Products worldwide. Each Party
recognizes that the publication of papers regarding results of and other
information regarding activities under this Agreement, including oral
presentations and abstracts, may be beneficial to both Parties, provided such
publications are subject to reasonable controls to protect Confidential
Information. In particular, it is the intent of the Parties to maintain the
confidentiality of any Confidential Information that may be included in any
patent application until such Patent application has been filed. Accordingly,
each Party shall have the right to review and approve any paper proposed for
publication by the other Party, including any oral presentation or abstract,
which pertains to results of Development, post approval studies or other studies
with respect to Products or includes other data generated under this Agreement
or which includes Confidential Information of the other Party. Before any such
paper is submitted for publication or an oral presentation is made, the
publishing or presenting Party shall deliver a complete copy of the paper or
materials for oral presentation to the other Party at least thirty (30) days
prior to submitting the paper to a publisher or making the presentation. The
other Party shall review any such paper and give its comments to the publishing
Party within fifteen (15) days of the delivery of such paper to the other Party.
With respect to oral presentation materials and abstracts, the other Party shall
make reasonable

 

49

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efforts to expedite review of such materials and abstracts, and shall return
such items as soon as practicable to the publishing or presenting Party with
appropriate comments, if any, but no event later than fifteen (15) days from the
date of delivery to the other Party. Failure to respond within such fifteen
(15) days shall be deemed approval to publish or present. The publishing or
presenting Party shall comply with the other Party’s request to delete
references to such other Party’s Confidential Information in any such paper and
will withhold publication of any such paper or any presentation of same for an
additional sixty (60) days in order to permit the Parties to obtain patent
protection if either Party deems it necessary. Any publication shall include
recognition of the contributions of the other Party according to standard
practice for assigning scientific credit, either through authorship or
acknowledgement, as may be appropriate. Each Party shall use commercially
reasonable efforts to cause investigators and institutions participating in
Development and post approval studies for the Products with which it contracts
to agree to terms substantially similar to those set forth in this Section 8,
which efforts shall satisfy such Party’s obligations under this Section 8 with
respect to such investigators and institutions. With respect to oral
presentations, both Parties recognize the need to move quickly in special cases
and under exigent circumstances. Therefore, in special circumstances such as
late-breaking conference presentation opportunities the Parties shall cooperate
so as to allow the Party who has the opportunity to make such presentation move
quickly and not miss the opportunity. If either Party wishes for a draft
publication or communication under this Section 8.5 to be translated into any
language other than the original language, such Party shall be responsible to
manage and pay for such translation.

8.6 Termination of the Confidentiality Agreements. Both Parties agree that the
Confidentiality Agreements are hereby terminated upon the Effective Date, and
any disclosures made under the Confidentiality Agreements shall be deemed to
have been made under, and be governed solely by the terms of this Agreement. The
Confidentiality Agreements are superseded by this Section 8.

SECTION 9: REPRESENTATIONS, COVENANTS AND WARRANTIES

9.1 Representations, Covenants and Warranties.

(a) Each of the Parties hereby represents, covenants and warrants to the other
Party as follows:

(i) This Agreement is a legal and valid obligation binding upon such Party and
enforceable in accordance with its terms.

(ii) The execution, delivery and performance of this Agreement by such Party
does not conflict with any agreement, instrument or understanding, either oral
or written, to which it is a party or by which it is bound, nor does this
Agreement violate any law or regulation of any court, governmental body or
administrative or other agency having jurisdiction over it.

 

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(b) Asahi hereby represents, covenants and warrants, on behalf of itself and its
Affiliates, to CoTherix as follows:

(i) as of the Effective Date Asahi and its Affiliates have not granted and
during the term of this Agreement Asahi and its Affiliates will not grant, any
right to any Third Party relating to the Asahi Intellectual Property Rights and
the right of reference that would conflict with or diminish the rights granted
to CoTherix hereunder. Each of Asahi and its Affiliates have maintained and
shall maintain and keep in full force and effect all agreements necessary to
perform its obligations and grant the licenses it has granted hereunder. As of
the Effective Date, Asahi and its Affiliates have not granted any license for,
and are not granted any license to, intellectual property rights owned by a
Third Party relating to a Product or Active Drug Substance except for the [***]
Patents. As of the Effective Date, neither Asahi nor its Affiliates has a
license or other rights to intellectual property that would meet the definition
of Asahi Intellectual Property Rights but for the fact that Asahi or its
Affiliates does not possess the ability to license or sublicense such
intellectual property to CoTherix hereunder without violating the terms of any
Third Party agreement.

(ii) Asahi and its Affiliates are not obligated under any agreement as of the
Effective Date to pay any Third Party royalties with respect to any Product.

(iii) Asahi has given CoTherix reasonable access to all of its pre-clinical and
clinical records and data regarding Active Drug Substance and Products and to
all information known to Asahi relating to the safety or efficacy of any Product
that were requested by CoTherix during the due diligence investigation by
CoTherix prior to the Effective Date. Asahi further represents that, as of the
Effective Date, it and its Affiliates are not in possession of any information,
other than that which has been disclosed to CoTherix, which indicates that
Serious Adverse Drug Experiences are associated with the Active Drug Substance,
or any Fasudil Formulation.

(iv) as of the Effective Date, Asahi has not received any notice of infringement
or any written or oral communication relating in any way to the possible
infringement of any Third Party Patent by the activities of Asahi prior to the
Effective Date with regard to the Active Drug Substance or any Product or by the
activities of Asahi or CoTherix contemplated by this Agreement.

(v) as of the Effective Date, Asahi is the sole and lawful owner of the entire
right, title, and interest in and to (a) the Asahi Patents listed in Exhibit A
as of the Effective Date (excluding [***]Patents) and any Patents claiming
priority back thereto; (b) within the scope of activities included in CoTherix’s
license in Section 3.1, all material data from all Preclinical and Clinical
Development of any Product (and, to the extent provided to CoTherix, any other
Fasudil Formulation) by or on behalf of or under contract with Asahi on or
before the Effective Date (the “Data”); provided that some Data generated by
Third Parties for or under contract with Asahi is not owned by Asahi but Asahi
has the full right and ability to provide such Data to CoTherix hereunder and
CoTherix has, and for the term of this Agreement continue to have, the right to
use such Data within the full scope of its license under Section 3.1;

 

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* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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(vi) as of the Effective Date, there are no outstanding liens, security
interests, pledges, charges, mortgages, restrictions, interests and/or
encumbrances of any kind in or burdening any of the Asahi Patents listed in
Exhibit A (excluding [***] Patents) or the Data, or to Asahi’s knowledge, the
[***] Patents;

(vii) as of the Effective Date, the only Patents Controlled by Asahi or any of
its Affiliates that claim, cover or relate to any Active Drug Substance or
Product are listed in Exhibit A, other than the [***] Patents;

(viii) as of the Effective Date, Asahi has not granted, expressly or otherwise,
any assignment, license or other extension of rights, covenant not to sue, or
other similar interest or benefit, exclusive or otherwise, to, under or in the
Asahi Patents listed in Exhibit A, or any Patents claiming priority back
thereto, or any of the [***] Patents, or any Data, which grant right is with
respect to the Territory and remains in effect or in force as of the Effective
Date, nor has any of Asahi’s Affiliates done any of the foregoing;

(ix) as of the Effective Date, Asahi, after diligent investigation, is not aware
of any Patents owned or controlled by a Third Party that would be infringed by
the manufacture, use, sale, offer for sale, importation or development of Active
Drug Substance or Product within the CoTherix Licensed Fields (including the
Oral Product Developed by or on behalf of Asahi on or before the Effective
Date); [***]

(x) as of the Effective Date there are no interferences or oppositions pending,
declared or threatened regarding the Asahi Patents listed in Exhibit A (or, to
Asahi’s knowledge, the [***] Patents);

(xi) as of the Effective Date, the safety- and efficacy-related data and
information (including without limitation non-clinical and clinical data)
regarding the Active Drug Substance and Fasudil Formulations provided by Asahi
to CoTherix on or before the Effective Date are true and accurate in all
material respects. Asahi has not omitted to disclose to CoTherix any data or
information (including without limitation non-clinical and clinical data, and
other information with respect to Active Drug Substance and Fasudil
Formulations) that is or reasonably could be expected to be material to
CoTherix’s (or any reasonable prospective licensee’s) decision to enter into the
transaction contemplated in this Agreement;

(xii) Asahi and its Affiliates do not as of the Effective Date have in
Preclinical Development, IND-enabling work or Clinical Development any Fasudil
Formulation or Active Drug Substance in the Territory, nor does any of them
market any Product in each case themselves or through contract(s) with any Third
Party(ies) in the Territory;

(xiii) Asahi and its Affiliates are not, and are not aware of any Third Party,
Developing any Fasudil Formulations in any indications other than Asahi Option
Indication for

 

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* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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anywhere in the Territory [***]. Asahi and its Affiliates have not, and are not
aware of any Third Party that has, filed an IND or IND Equivalent for any
Fasudil Formulation anywhere in the Territory. Asahi and its Affiliates have
not, and are not aware of any Third Party that has, submitted a Drug Approval
Application for any Fasudil Formulation to any Regulatory Agency of the
Territory; and

(xiv) as of the Effective Date, to the best of Asahi’s knowledge, there exist no
Patents or patentable inventions generated or created under any of the Asahi
Research Agreements.

(c) Asahi has disclosed to CoTherix’s outside counsel a true and (except for
economic terms that been redacted) complete copy of each of the [***]
Agreements, and all amendments and notices related thereto, including, without
limitation, the termination notice. The [***] Agreements are the only written
agreement between Asahi (and/or any of its Affiliates) and [***] (and/or any of
its “affiliates”—determined analogously to the definition of “Affiliate”
hereunder, applied mutatis mutandis to [***]; all of them together with [***],
and the successors and assigns of each of the foregoing, individually and
collectively, the “[***] Entity”) with respect to any Active Drug Substance
and/or Product(s). There are no other agreements, understandings or arrangements
among Asahi (and/or any of its Affiliates) on the one hand and any [***] Entity
on the other hand, with respect to or relating in any way to any Active Drug
Substance and/or Products, other than the contract research organization
agreements assigned by [***] to Asahi that have been disclosed to CoTherix
during the due diligence investigation by CoTherix. The [***] Agreements have
been terminated with no [***] from Asahi to [***] nor outstanding sublicenses by
[***] of any intellectual property rights of Asahi. To the best of Asahi’s
knowledge as of the Effective Date, the [***] Patents are the only Patents owned
by, licensed to or otherwise Controlled by any [***] Entity that Cover any
Active Drug Substance or Product within the CoTherix Licensed Fields [***]. To
the best of Asahi’s knowledge, [***].

(d) CoTherix hereby represents, covenants and warrants to Asahi as follows:

(i) as of the Effective Date CoTherix has not granted and during the term of
this Agreement CoTherix and its Affiliates will not grant, any right to any
Third Party relating to the CoTherix Intellectual Property Rights, CoTherix
[***] Patent and the right of reference that would conflict with or diminish the
rights granted to Asahi hereunder.

(ii) As of the Effective Date, CoTherix employed (or contracted with) and will
in the future employ (or contract with) individuals of appropriate knowledge and
experience to conduct, direct and supervise Development and Commercialization of
Products within the CoTherix Licensed Fields in a Commercially Reasonable manner
in the Territory, consistent with its obligations under this Agreement.

(iii) as of the Effective Date, CoTherix is the sole and lawful owner of the
entire right, title, and interest in and to the CoTherix [***] Patents;

 

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* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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(iv) as of the Effective Date, there are no outstanding liens, security
interests, pledges, charges, mortgages, restrictions, interests and/or
encumbrances of any kind in or burdening any of the CoTherix [***] Patents;

(v) as of the Effective Date there are no interferences or oppositions pending,
declared or threatened regarding the CoTherix [***] Patents;

9.2 Disclaimer. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, EACH PARTY’S
TECHNOLOGY LICENSED HEREUNDER IS PROVIDED “AS IS”, AND THE LICENSING PARTY
EXPRESSLY DISCLAIMS ANY AND ALL OTHER WARRANTIES OF ANY KIND, EXPRESS OR
IMPLIED, INCLUDING WITHOUT LIMITATION THE WARRANTIES OF DESIGN, MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, VALIDITY OR ENFORCEABILITY OF THE PATENT, OR
NON-INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF A THIRD PARTY.

SECTION 10: NON-COMPETITION; MERGER

10.1 Non-Competition. For a period from the Effective Date until the earlier to
occur of (a) the First Commercial Sale of the first Product, or (b) three
(3) years after the Effective Date (the “Non-Competing-Development Period”),
CoTherix, its Affiliates and Sublicensees shall not perform Clinical Development
or Commercialization of Direct Rho Kinase Inhibitors (other than Products
hereunder) in the Stable Angina indication or PH indication; and for a period
from the Effective Date until the earlier to occur of (i) six (6) years after
the Effective Date or (ii) three (3) years after the First Commercial Sale of
the first Product (the “Non-Competing-Sales Period”), CoTherix, its Affiliates
and Sublicensees shall not Commercialize Direct Rho Kinase Inhibitors (other
than Products hereunder) that have received Regulatory Approval for use in the
Stable Angina indication or PH indication. In the event CoTherix acquires
control, construed in the manner such term is defined in the Affiliate
definition hereunder (through asset acquisition, stock acquisition, merger or
otherwise), of a Third Party company performing Preclinical Development,
Clinical Development or Commercialization of a Direct Rho Kinase Inhibitor
(other than a Product if such Third Party is a Sublicensee) in the Stable Angina
indication or PH indication, in order to comply with such restriction, CoTherix
shall either (A) sell or otherwise divest such Direct Rho Kinase Inhibitor
reasonably promptly following such acquisition, or (B) conduct an orderly wind
down to suspend for the Non-Competing-Development Period and/or
Non-Competing-Sales Period, as applicable, any ongoing activities (consistent
with any contractual obligations or applicable laws and regulations) that are
subject to the non-compete above. In the event a Third Party company performing
Preclinical Development, Clinical Development or Commercialization of a Direct
Rho Kinase Inhibitor (other than a Product if such Third Party is a Sublicensee)
in the Stable Angina indication or PH indication acquires control (through asset
acquisition, stock acquisition, merger or otherwise) of CoTherix, the
non-compete above (i.e., the terms of this Section 10.1) shall terminate upon
such acquisition.

 

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* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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10.2 Asahi’s Direct Rho Kinase Inhibitors. In the event Asahi initiated
substantive business terms and conditions negotiations with any Third Party
company relating to a Direct Rho Kinase Inhibitor (other than the Active Drug
Substance) discovered by Asahi for Development or Commercialization of such
Direct Rho Kinase Inhibitor in the Stable Angina indication or Pulmonary
Hypertension indication, Asahi shall notify CoTherix of the opportunity to
license and/or collaborate with respect to such Direct Rho Kinase Inhibitor and
negotiate with CoTherix in good faith in parallel with the Third Party company
[***] Asahi will not conclude any binding agreement (or grant any license,
option, right of first refusal or the like) with the Third Party company with
respect to such Direct Rho Kinase Inhibitor. It is understood by both Parties
that Asahi’s obligation and CoTherix’s right in this Section 10.2 shall be only
effective until termination of the Non-Competing- Development Period or, if
earlier, acquisition of CoTherix by a Third Party company performing Preclinical
Development, Clinical Development or Commercialization of a Direct Rho Kinase
Inhibitor (other than a Product if such Third Party is a Sublicensee) in the
Stable Angina indication or PH indication.

SECTION 11: TERM AND TERMINATION

11.1 Term. This Agreement shall become effective as of the Effective Date and,
unless sooner terminated as provided herein, shall continue in effect for
indefinite period of time.

11.2 Termination.

(a) Delayed Commencement; Oral Product. Notwithstanding any other provision
herein (but subject to Section 11.2(e)), Asahi may terminate this Agreement with
respect to Oral Products if CoTherix (or an Affiliate or Sublicensee) does not
commence the Clinical Development of an Oral Product in at least one country
within six (6) months after the Effective Date, which time period shall be
extended for a period of time commensurate with (i) any delays attributable to
the delay in delivery of, or unavailability of, finished Oral Product supplies
suitable for use in such Clinical Development, (ii) any delays attributable to
regulatory or institutional causes (e.g., delays imposed by actions or inactions
of Regulatory Agencies or delays in obtaining necessary Internal Review Board
approvals), and (iii) any delays due to force majeure events in accordance with
Section 13.3. The term “commence” or “commencement” in the foregoing sentence
and in the Section 11.2(b) shall mean the first dosing of a patient properly
enrolled in a Phase 1 Clinical Trial, Phase 2 Clinical Trial or Phase 3 Clinical
Trial.

(b) Delayed Commencement; Inhaled Product. Notwithstanding any other provision
herein (but subject to Section 11.2(e)), Asahi may terminate this Agreement with
respect to Inhaled Products if CoTherix (or an Affiliate or Sublicensee) does
not commence the Clinical Development of an Inhaled Product in at least one
country within eighteen (18) months after the Effective Date, which time period
shall be extended for a period of time commensurate with (i) any delays
attributable to the delay in delivery of, or unavailability of, finished Inhaled
Product supplies suitable for use in such Clinical Development, (ii) any delays
resulting from the results of toxicology testing of such Inhaled Product,
(iii) any delays attributable to regulatory or institutional causes (e.g.,
delays imposed by actions or inactions of Regulatory Agencies or delays in
obtaining necessary Internal Review Board approvals), and (iv) any delays due to
force majeure events in accordance with Section 13.3.

 

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* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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(c) Delayed Development. Notwithstanding any other provision herein (but subject
to Section 11.2(e)), Asahi may terminate this Agreement on a Product-by-Product
basis if CoTherix (and all Affiliates and Sublicensees) completely abandon all
efforts towards the Clinical Development of a Product in all the countries in
the Territory before the First Commercial Sale in the U.S. or Europe. Upon First
Commercial Sale of a Product in the U.S. or any country of Europe this
Section 11.2(c) shall expire and be of no further force or effect as to all
Products. The term “abandon” in the foregoing sentence shall mean that CoTherix
(and its Affiliates and Sublicensees) have completely abandoned all efforts
towards the Clinical Development of the Product and at least [***] have elapsed
since the last Clinical Development-related activity undertaken by or on behalf
of CoTherix (or an Affiliate or Sublicensee) without amending the Development
Plan by the approval of the Joint Technical Committee; provided that, for the
avoidance of doubt, suspension of all Clinical Trials or the absence of Clinical
Trials at a given time shall not constitute “abandonment” (i.e., will not mean
CoTherix “abandons” Clinical Development hereunder) so long as CoTherix (or an
Affiliate or Sublicensee) is using Commercially Reasonable Efforts to move
Development efforts forward or obtain Regulatory Approval. For so long as at
least one Product remains in Development (i.e. not in a state of abandonment
hereunder), no other Product shall be deemed to be in a state of abandonment
under this Section 11.2(c) if CoTherix is satisfying its diligence obligations
with respect to such other Product under Section 2.2. In the event of Change of
Control of CoTherix pursuant to Section 11.2(f), [***] in the term “abandon”
shall be [***].

(d) Delayed First Commercial Sale. Notwithstanding any other provision herein
(but subject to Section 11.2(e)), Asahi may terminate this Agreement on a
Product-by-Product and a country-by-country basis if CoTherix (or an Affiliate
or Sublicensee) has not made a First Commercial Sale of a Product in a Major
Market country within one (1) year following the first Regulatory Approval of
such Product in the corresponding Major Market country. Notwithstanding the
foregoing, any failure to make a First Commercial Sale due to issue(s) involving
pricing, reimbursement, and/or restrictive or unfavorable label (or due to
similar economic consideration and risks of comparable effect to the commercial
viability of the Product and other reasonable issues presented to the Joint
Technical Committee, which Asahi shall reasonably consider) which justify
delaying or foregoing such First Commercial Sale, shall not give rise to the
right of Asahi to terminate under this subsection (d). Furthermore, the right of
Asahi to terminate under this subsection (d) shall expire (and be of no further
force and effect as to all Products and all countries) upon the First Commercial
Sale of the first Product in each of the Major Market countries.

(e) If any of the termination rights are triggered in accordance with
Section 11.2(a), (b), (c) or (d), Asahi shall be able to terminate this
Agreement by sixty (60) day prior written notice to CoTherix, and the
termination shall become effective if CoTherix fails to cure within such sixty
(60) day period (but such termination shall not be effective if CoTherix has
cured within such time period); provided, however, that if CoTherix notifies
Asahi of the occurrence of

 

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* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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such a termination trigger, Asahi shall exercise its right to terminate within
sixty (60) days of such CoTherix’s notice, after which time Asahi’s right to
terminate with respect to such trigger shall expire.

(f) Change of Control. In the event of any act or transaction, including, but
not limited to, sale or exchange of stock, merger, dissolution, and sale of
assets, which results in a Change of Control of CoTherix (defined below) such
that it is controlled by a Competitive Company, whether durably or temporarily,
and the Competitive Company acquiror fails to Develop and Commercialize Products
as required by this Agreement, Asahi shall be entitled to terminate this
Agreement as described below in this subsection (f). For purposes of this
subsection (f), the term “Change of Control of CoTherix” shall mean any of the
following events: (i) any Third Party (or group of Third Parties acting in
concert) that conduct Development or Commercialization of a Pulmonary
Hypertension drug or a Stable Angina drug (other than a Product if such Third
Party is a Sublicensee) (“Competitive Company”) becomes the beneficial owner,
directly or indirectly, of more than fifty percent (50%) of the total voting
power of the stock then outstanding of CoTherix normally entitled to vote in
elections of directors; (ii) CoTherix consolidates with or merges into another
Competitive Company, or any Competitive Company consolidates with or merges into
CoTherix, in either event pursuant to a transaction in which more than fifty
percent (50%) of the total voting power of the stock outstanding of the
surviving entity normally entitled to vote in elections of directors is not held
by the parties holding at least fifty percent (50%) of the outstanding shares of
CoTherix preceding such consolidation or merger; or (iii) CoTherix conveys,
transfers or leases all or substantially all of its assets to a Competitive
Company. In this case, the Competitive Company must either assume in writing
CoTherix’s obligations under this Agreement to Develop and Commercialize
Products in accordance with this Agreement or confirm and commit in writing that
it will not interfere with CoTherix continuing to do so (if CoTherix remains a
separate entity), and the [***]in the term “abandon” in Section 11.2(c) shall be
[***]. The Competitive Company must provide Asahi with such written assumption,
or confirmation and commitment, at least thirty (30) days before the closing
date of the Change of Control of CoTherix transaction; provided that Asahi
agrees to maintain such disclosure in confidence until after the public
announcement of the closing of the Change of Control of CoTherix transaction. If
(A) such Competitive Company does not assume these obligations in writing or (if
CoTherix remains a separate entity) confirm and commit in writing that such
Competitive Company will not interfere with CoTherix’s performance of these
obligations to Develop and Commercialize Products as required by this Agreement,
or (B) such Competitive Company and CoTherix fail to comply with such
obligations to Develop and Commercialize Products as required by this Agreement,
then Asahi may provide a notice of material breach under Section 11.2(h). If the
Competitive Company and CoTherix fail to cure in accordance with the first and
second sentences in Section 11.2(h), then Asahi may terminate this Agreement by
providing a second notice; provided, however, that the cure period for any
failure of subsection (A) in the foregoing sentence shall be shortened to thirty
(30) days. To be clear, a failure described in subsection (A) of two
(2) sentences before this one, will be considered a material breach of this
Agreement for which, if not timely cured, Asahi is entitled to terminate. If
Asahi terminates this Agreement after a Change of Control of CoTherix (as
described above), then the Competitive Company must and shall comply with all of
the transition assistance, technology licensing, payment and other obligations
stated in Section 11.3(b).

 

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agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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(g) Validity Challenge. In the event CoTherix or its Affiliate disputes, or
directly or indirectly causes or knowingly assists a Third Party to dispute, the
validity of any Asahi Patent in any country; applies or otherwise seeks, or
directly or indirectly causes or knowingly assists a Third Party to apply or
otherwise seek, to revoke any Asahi Patent in any country; or opposes, or
directly or indirectly causes or knowingly assists a Third Party to oppose, the
grant of any Asahi Patent in any country, Asahi may terminate this Agreement.

If Asahi or its Affiliate disputes, or directly or indirectly causes or
knowingly assists a Third Party to Dispute, the validity of any CoTherix Patent
or CoTherix [***] Patent in any country; applies or otherwise seeks, or directly
or indirectly causes or knowingly assists a Third Party to apply or otherwise
seek, to revoke any CoTherix Patent or CoTherix [***] Patent in any country; or
opposes, or directly or indirectly causes or knowingly assists a Third Party to
oppose, the grant of any CoTherix Patent or CoTherix [***]Patent in any country,
CoTherix may terminate this Agreement.

(h) Material Breach. If CoTherix or Asahi materially breaches this Agreement,
this shall entitle the other Party to give the Party in default notice requiring
it to cure such default. If such default is not cured within one hundred twenty
(120) days after receipt of such notice the notifying Party shall be entitled
(without prejudice to any of its other rights conferred on it by this Agreement)
to terminate this Agreement. Notwithstanding the foregoing, in the event of a
non-monetary default, if the default is not reasonably capable of being cured
within the one hundred twenty (120) day cure period by the defaulting Party and
such defaulting Party is making a good faith effort to cure such default, the
notifying Party may not terminate this Agreement; provided, however, that the
notifying Party may terminate this Agreement if such default is not cured within
two hundred forty (240) days of such original notice of default. The right of
either Party to terminate this Agreement as hereinabove provided shall not be
affected in any way by its waiver of, or failure to take action with respect to,
any previous default.

Any notice of material breach under this subsection (h) shall only be effective
if it explicitly states that it is a notice of material breach under this
Section 11.2(h), and describes with reasonable specificity and detail the
alleged breach, and what Section of this Agreement is alleged to be breached.

(i) Insolvency. In the event that one of the Parties hereto shall go into
liquidation, or a receiver or a trustee be appointed for the property or estate
of that Party and said receiver or trustee is not removed within ninety
(90) days, or such Party makes an assignment for the benefit of creditors
(collectively, a “Bankruptcy Event”), whether or not any of the aforesaid
Bankruptcy Events be the outcome of the voluntary act of that Party, the other
Party shall be entitled to terminate this Agreement.

 

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* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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(j) Rights in Bankruptcy. All rights and licenses granted under or pursuant to
this Agreement by CoTherix or Asahi are, and shall otherwise be deemed to be,
for purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of right to
“intellectual property” as defined under Section 101 of the U.S. Bankruptcy
Code. The Parties agree that the Parties, as licensees of such rights under this
Agreement, shall retain and may fully exercise all of their rights and elections
under the U.S. Bankruptcy Code. The Parties further agree that, in the event of
the commencement of a bankruptcy proceeding by or against either Party under the
U.S. Bankruptcy Code, the Party hereto that is not a Party to such proceeding
shall be entitled to a complete duplicate of (or complete access to, as
appropriate) any such intellectual property and all embodiments of such
intellectual property, which, if not already in the non-subject Party’s
possession, shall be promptly delivered to it (a) upon any such commencement of
a bankruptcy proceeding upon the non-subject Party’s written request therefor,
unless the Party subject to such proceeding elects to continue to perform all of
its obligations under this Agreement, or (b) if not delivered under (a) above,
following the rejection of this Agreement by or on behalf of the Party subject
to such proceeding upon written request therefor by the non-subject party.

(k) Pending Disputes, etc. If CoTherix disputes a breach or that termination by
Asahi hereunder is appropriate, then CoTherix’s license shall remain in effect
until the dispute is resolved by arbitration (and thereafter if such resolution
determines that Asahi may not or has not terminated this Agreement or the
applicable rights hereunder). Furthermore, in any dispute resolution under
Section 13.10, either Party may request that, in the event of a determination
that the other Party otherwise has the right to terminate hereunder, a remedy in
lieu of termination be imposed and, if the Party shows good cause therefor
(including the adequacy of such remedy in lieu of termination and subject to any
rebuttal arguments of the other Party), the arbitrator(s) shall have the
authority, but not the obligation, to impose such alternative remedy in lieu of
termination if the arbitrator(s) so choose(s).

11.3 Consequences of Termination by Asahi.

(a) In the event that this Agreement is terminated by Asahi for one or more
Products in one or more countries in accordance with Sections 11.2(a) through
(e) hereof, CoTherix shall, and shall cause its Affiliates and obligate its
Sublicensees to, solely with respect to each Product in each country, for which
the termination applies:

(i) relinquish its rights to Asahi Intellectual Property Rights granted
hereunder;

(ii) grant to Asahi as of the effective date of such termination: (A) a sole and
exclusive license under CoTherix Intellectual Property Rights and non-exclusive
license under CoTherix [***] Patents, with a right to sublicense (which [***]
shall be consistent with the license granted to Asahi) [***] to use, research,
develop, manufacture, have manufacture, market, offer to sell, sell, distribute,
import for sale and otherwise dispose of the relevant Product in the relevant
country within the Territory (which Product and country are the subject of
termination); and (B) a sole and exclusive right, with a right to sublicense
(which shall not be subject to the Parties’ mutual agreement for any such
sublicense, but shall be consistent with the license granted

 

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* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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to Asahi) [***] to make reference to the Regulatory Documentation of the
terminated Product and/or (to the extent necessary or useful) Active Drug
Substance Controlled by or comes within Control of CoTherix or its Affiliates or
Sublicensees during the term of this Agreement for the purposes mentioned in the
foregoing subsection (a)(ii)(A);

(iii) confirm that the rights, licenses and options granted under Section 3.3
and Section 4.6 shall remain in effect in accordance with their terms (including
the obligation of Asahi to pay any royalties or other payments expressly
provided for thereunder);

(iv) make all payments accrued, under this Agreement with respect to such
terminated Product and country, prior to the effective termination date;

(v) in connection with any and all assignments expressly provided for under this
Section 11.3, execute and deliver such instruments and take such actions as may
be necessary or desirable to effect such transfer [***];

(vi) transfer to Asahi all Regulatory Documentation and, in the event the
relevant country is the U.S., all Orphan Drug Act petitions, designations and
exclusivity, in each case solely related to the applicable terminated Product in
such country (it being understood that any such Regulatory Documentation,
petitions, designations or exclusivity that relate, in whole or in party, to
products of CoTherix (or an Affiliate or Sublicensee) other than the terminated
Product, including any Products for which CoTherix retains rights hereunder,
shall remain with CoTherix, subject to the rights of reference granted in
subsection (ii) above), upon Asahi’s written request for the same, take any
necessary action to transfer such Regulatory Documentation, submit study reports
to FDA as required to facilitate the transition of the terminated Product, and
render assistance in responding to any inquiry from FDA in relation to studies
conducted by CoTherix or its Affiliates or Sublicensees with respect to the
terminated Product before the transfer, [***];

(vii) transfer to Asahi responsibility for and control of ongoing work of
CoTherix related solely to the applicable terminated Product in an expeditious
and orderly manner as of the date of such termination (and facilitate the
sharing, extension or replacement of the benefits of any such work relating both
to the terminated Product and to any other products of CoTherix), [***] in
particular: (1) provide Asahi with such reasonable assistance as is necessary to
effectuate a smooth and orderly transition of any Development and
Commercialization of the terminated Product, including any ongoing Clinical
Development thereof to Asahi or its designee so as to minimize any disruption of
such activities, including the assignment of any such contracts (which CoTherix
has the right to assign to Asahi) and the transfer of any such material, in each
case which are related solely to the terminated Product (and not otherwise used
in relation to other products of CoTherix), and cooperate with Asahi to effect
such transfers and assignments in an orderly fashion (and reasonably assist
Asahi with any discussions with Third Parties regarding any relevant contracts
of CoTherix that are not assignable in accordance with the foregoing) and
provide to Asahi or its designee any copies of relevant documents (within the
possession and Control of CoTherix) and rights or reference or access necessary
to allow Asahi to Develop and Commercialize the terminated Product; (2) prepare
information catalogue listing all material

 

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* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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Information and database in CoTherix’s possession and Control arising out of the
Development or Commercialization work of the applicable terminated Product;
(3) continue to comply with Section 2.3(e) regarding applicable Regulatory
Documentation and other applicable documentation in respect of the terminated
Product; (4) make necessary arrangement to grant Asahi reasonable direct access
(without undue burden on operations or unreasonable interruption of business) to
employees of CoTherix, its Affiliates and Sublicensees, and use reasonable
efforts to facilitate similar access to such employees of contract research
organizations, institutions and clinical investigators, in all such cases who
are involved in Development or Commercialization of the terminated Product;
(5) relieve Asahi from retaining samples and records in accordance with Sections
7.3(e) and (f) and from conducting stability testings of the applicable
terminated Product and the Active Drug Substance used for manufacture of the
terminated Product (in all such cases solely to the extent solely related to the
terminated Product (and not to any Product for which CoTherix retains rights
hereunder)), except where it is required by applicable laws and regulations;
(6) keep and maintain all GMP documents and samples in compliance with
applicable laws and regulations that are applicable immediately prior to such
termination and grant Asahi access to such GMP documents and samples; (7) use
reasonable efforts to obligate Third Party Manufacturers to transfer all
material Information obtained by such Third Party Manufacturers in relation to
the applicable terminated Product (except to the extent such Information is also
used in relation to other products (including Products) of CoTherix, in which
case the Parties shall mutually agree upon a reasonable plan for mutual access
and use of the relevant Information; and (8) if requested by Asahi, assign an
agreement in relation to an ISS in applicable country to the extent CoTherix has
a right to assign such agreement and to the extent such agreement relates solely
to the terminated Product [***];

(viii) provide such reasonable assistance and information (in CoTherix’s
possession and Control) as may be necessary for Asahi to effect the transfer of
manufacturing activities, including the same assistance and information
described in Section 7.6 as soon as reasonably practicable [***]; and

(ix) sell to Asahi, at any time within ninety (90) days of such termination, at
Asahi’s election, all or any portion of the inventory of the applicable
terminated Product owned by CoTherix or its Affiliates or Sublicensees that are
intended for sale in such country [***]. Such election shall be made by Asahi in
writing and within thirty (30) days of such termination. If Asahi elects to
receive such CoTherix inventory, then CoTherix shall, and shall cause its
Affiliates and obligate its Sublicensees to, ship [***] such inventory to Asahi.

(b) In the event that this Agreement is terminated by Asahi in its entirety in
accordance with Sections 11.2(a) through (i) hereof, in addition to CoTherix’s
obligations under Section 11.3(a)(i) through (ix) with respect to all Products
in all countries of the Territory, CoTherix shall, and shall cause its
Affiliates and obligate its Sublicensees to,:

(i) grant to Asahi as of the effective date of such termination: (A) a sole and
exclusive license under CoTherix Intellectual Property Rights and non-exclusive
license under CoTherix [***] Patent, with a right to sublicense (which shall be
[***] consistent with the license

 

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* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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granted to Asahi) [***] to use, research, develop, manufacture, have
manufactured, market, offer to sell, sell, distribute, import for sale and
otherwise dispose of Fasudil Formulations in any indications within the
Territory; and (B) a sole and exclusive right, with a right to sublicense (which
shall be no longer subject to the Parties’ mutual agreement for any such
sublicense, but shall be consistent with the license granted to Asahi) [***]to
make reference to the Regulatory Documentation of Products and/or Active Drug
Substance Controlled by or comes within Control of CoTherix or its Affiliates or
Sublicensees during the term of this Agreement for the purposes mentioned in the
foregoing subsection (b)(i)(A); and

(ii) provide for the license granted to Asahi under Section 3.3 to remain in
effect following such termination in accordance with its terms (including the
obligation of Asahi to pay any royalties expressly provided for thereunder with
respect to the CoTherix [***] Patents; except that such license shall be
expanded to include any indications outside the Territory and CoTherix’s
agreement shall no longer be required for Asahi to sublicense).

11.4 Consequences of Termination by CoTherix; CoTherix Termination at Will.

(a) For Asahi’s Breach or Bankruptcy. If CoTherix terminates this Agreement
under Section 11.2(g) (Validity Challenge), Section 11.2(h) (Material Breach) or
Section 11.2(i) (Insolvency), then all licenses and rights of reference granted
by Asahi to CoTherix hereunder shall survive and become perpetual and
irrevocable (provided that CoTherix continues to pay the royalties owed in
accordance with the terms hereof); Asahi’s consent shall no longer be required
for CoTherix to sublicense or for any other matter stated in this Agreement; all
licenses and rights of reference granted by CoTherix to Asahi hereunder shall
immediately terminate (and, for the avoidance of doubt, no licenses provided for
under Section 11.3 shall be granted); Joint Technical Committee and Asahi
consent shall no longer be required for any matter (and shall be deemed to have
been granted in any case); CoTherix’s obligations under Sections 2-4 and 6-10
shall terminate; CoTherix shall have the right (but not the obligation) to
prosecute and maintain the Asahi Patents within the Territory; and CoTherix
shall have the sole right to enforce the Asahi Patents and the Joint Patents in
the Territory within the scope of the licenses to CoTherix hereunder, with full
cooperation from Asahi, with CoTherix retaining all recoveries.

(b) Voluntary Termination. In addition to CoTherix’s rights to terminate under
Section 11.2(g) (Validity Challenge), Section 11.2(h) (Material Breach) or
Section 11.2(i) (Insolvency), upon the earliest of (i) delivery of reports on
the open-label extension portion of the initial Phase 2 Clinical Trial of
Products to Asahi, (ii) delivery of reports on the randomized, double-blind,
placebo-controlled portion of the initial Phase 2 Clinical Trials of Products to
Asahi in the event that safety issues make it commercially unreasonable to
commence the open-label extension portion of the initial Phase 2 Clinical
Trials, or (iii) three (3) years after the Effective Date, CoTherix shall have
the right to terminate this Agreement in its entirety with or without cause on
six (6) months prior notice to Asahi. In this case, the effects of the
termination will be as in Section 11.3(b), as if Asahi had terminated, and
CoTherix will assist Asahi and provide reasonable transition assistance to Asahi
as provided for in Section 11.3.

 

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* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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11.5 Other Surviving Rights. The rights and obligations set forth in this
Agreement shall extend beyond the term or termination of this Agreement only to
the extent expressly provided for herein. Except where expressly provided for
otherwise in this Agreement, termination or expiration of this Agreement shall
not relieve the Parties hereto of any liability, including any obligation to
make payments hereunder, that has accrued hereunder prior to the effective date
of such termination nor shall it preclude either Party from pursuing all rights
and remedies it may have hereunder or at law or in equity with respect to any
breach of this Agreement nor shall it prejudice any Party’s right to obtain
performance of any obligation. Without limiting the foregoing, Sections 2.3(d)
(Site Visit/Audit), 2.3(e) (Retention of Regulatory Documentation and Other
Documentation), 2.9 (Adverse Drug Reactions), 5.8 (Royalty Reports and
Payments), 5.9 (Payments; Interest), 5.10 (Taxes), 5.11 (Payment Currency), 5.12
(Records of Revenues and Expenses), 6.1 (Ownership of Intellectual Property),
6.2(a) and (b) (Maintenance and Prosecution of Asahi Patents, and CoTherix
Patents and CoTherix [***]Patent) solely related to procedures, rights and
obligations if either Party elects to abandon any Asahi Patent or CoTherix
Patent directed to the Active Drug Substance or any Fasudil Formulation (i.e.
not with respect to Patents that are primarily directed to a generally
applicable technology), 6.2(c) and (d) (Maintenance and Prosecution of Joint
Patents, and Cooperation) but solely with respect to Joint Patents in the case
of Section 6.2(d), 7.3(e) (Retention of Samples) and (f) (Records) but solely to
the extent required to comply with applicable laws and regulatory requirements,
7.6 (Cooperation) but solely in connection with a transition under Section 11.3
and solely for the period of such transition, 8 (CONFIDENTIALITY), 9.2
(Disclaimer), 11.2(j) (Rights in Bankruptcy), 11.3 (Consequences of Termination
by Asahi), 11.4(a) (Consequences of Termination by CoTherix), this Section 11.5
(Surviving Rights), Sections 12 (INDEMNIFICATION), 13.1 (Assignment), 13.6
(Notices), 13.10 (Governing Law and Dispute Resolution) and 13.16 (Independent
Contractors) shall survive the termination or expiration of this Agreement for
any reason.

SECTION 12: INDEMNIFICATION

12.1 Indemnification by CoTherix. CoTherix hereby agrees to defend, hold
harmless and indemnify (collectively “Indemnify”) Asahi and its Affiliates, and
its and their agents, directors, officers and employees (the “Asahi
Indemnitees”) from and against any and all liabilities, expenses, damages and/or
losses (including without limitation reasonable legal expenses and attorneys’
fees) (collectively “Losses”) resulting from suits, claims, actions and demands,
in each case brought by a Third Party (each, a “Third-Party Claim”) arising
directly or indirectly out of (i) a breach of any of CoTherix’s representations
and warranties or covenants pursuant to Section 9; and/or (ii) the development,
manufacture, having manufactured, storage, handling, use, sale, offer for sale
or importation of Products by or on behalf of CoTherix, its Affiliates,
Sublicensees or distributors in the Territory; and/or (iii) the manufacture,
having manufactured or importation of Products or Active Drug Substance by or on
behalf of CoTherix, its Affiliates, Sublicensees or Third Party Manufacturers
outside the Territory in accordance with Section 4.5. CoTherix’s obligation to
Indemnify the Asahi Indemnitees pursuant to this Section 12.1 shall not apply to
the extent that any such Losses (A) arise from the negligence or intentional
misconduct of any Asahi Indemnitee; (B) arise from any breach by Asahi of this
Agreement; or (C) are Losses for which Asahi is obligated to Indemnify CoTherix
Indemnitees pursuant to Section 12.2.

 

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* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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12.2 Indemnification by Asahi. Asahi hereby agrees to Indemnify CoTherix and its
Affiliates, and its and their agents, directors, officers and employees (the
“CoTherix Indemnitees”) from and against any and all Losses resulting from
Third-Party Claims arising directly or indirectly out of (i) a breach of any of
Asahi’s representations and warranties or covenants pursuant to Section 9 or
Section 7.3 (b); and/or (ii) the development, manufacture, having manufactured,
storage, handling, use, sale, offer for sale or importation of Fasudil
Formulations by or on behalf of Asahi and its Affiliates, their licensees or
distributors outside the Territory; and/or (iii) the development, manufacture,
having manufactured or importation of Fasudil Formulations or Active Drug
Substance by or on behalf of Asahi and its Affiliates, or their licensees or
Third Party toll manufacturing contractors inside the Territory in accordance
with Section 4.5 and/or (iv) a claim that any of the CoTherix Indemnities,
acting within the scope of the license granted under Section 3.1 herein, has
infringed any Patent generated under any of the Asahi Research Agreements or has
misappropriated any trade secret or confidential information with respect to
Information obtained by Asahi under any of the Asahi Research Agreement and
provided by Asahi or any of its Affiliates to a CoTherix Indemnitee hereunder.
Asahi’s obligation to Indemnify CoTherix Indemnitees pursuant to the foregoing
sentence shall not apply to the extent that any such Losses (A) arise from the
negligence or intentional misconduct of any CoTherix Indemnitee; (B) arise from
any breach by CoTherix of this Agreement; or (C) are Losses for which CoTherix
is obligated to Indemnify the Asahi Indemnitees pursuant to Section 12.1.

12.3 Procedures. Each indemnified Party agrees to give the indemnifying Party a
prompt written notice of any Third-Party Claim and associated Loss upon which
such indemnified Party intends to base a request for indemnification under
Sections 12.1 or 12.2, promptly after learning of it. Each Party shall furnish
promptly to the other copies of all papers and official documents received in
respect of any Loss. To be eligible to be Indemnified hereunder, the Asahi
Indemnitee or CoTherix Indemnitee must tender defense hereunder to the other
Party. With respect to any Third-Party Claim and associated Loss relating solely
to the payment of money damages and that will not result in the indemnified
Party becoming subject to injunctive or other equitable relief or otherwise
adversely affecting the business of the indemnified Party in any manner, and as
to which the indemnifying Party shall have acknowledged in writing the
obligation to indemnify the indemnified Party hereunder, the indemnifying Party
shall have the sole right to choose whether and how to defend, settle or
otherwise dispose of such Third-Party Claim and associated Loss on such terms as
the indemnifying Party, in its sole discretion, shall deem appropriate. The
indemnifying Party shall obtain the written consent of the indemnified Party,
which shall not be unreasonably withheld or delayed, prior to ceasing to defend,
settling or otherwise disposing of any Third-Party Claim and associated Loss if,
as a result thereof, the indemnified Party would become subject to injunctive or
other equitable relief or any remedy other than the payment of money, which
payment would be the responsibility of the indemnifying Party. The indemnifying
Party shall not be liable for any settlement or other disposition of a
Third-Party Claim and associated Loss by the indemnified Party that is reached
without the

 

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written consent of the indemnifying Party. The reasonable costs and expenses,
including reasonable fees and disbursements of counsel incurred by any
indemnified Party in connection with any Third-Party Claim and associated Loss,
shall be reimbursed on a quarterly basis by the indemnifying Party, without
prejudice to the indemnifying Party’s right to contest the indemnified Party’s
right to indemnification and subject to refund in the event the indemnifying
Party is ultimately held not to be obligated to indemnify the indemnified Party.

If the Parties cannot agree as to the application of Sections 12.1 and 12.2 as
to any particular Third-Party Claim and associated Losses, then each Party may
conduct its own defense of such Third-Party Claim and reserves the right to
claim indemnity from the other Party upon resolution of the underlying
Third-Party Claim.

12.4 Limitation of Liability. EXCEPT TO THE EXTENT SUCH PARTY MAY BE REQUIRED TO
INDEMNIFY THE OTHER PARTY UNDER THIS SECTION 12 OR IN RESPECT OF A BREACH OF
SECTION 8 (CONFIDENTIALITY AND NON-USE OBLIGATIONS), NEITHER PARTY NOR ITS
RESPECTIVE AFFILIATES SHALL BE LIABLE FOR SPECIAL, EXEMPLARY, CONSEQUENTIAL OR
PUNITIVE DAMAGES, WHETHER IN CONTRACT, WARRANTY, TORT, STRICT LIABILITY OR
OTHERWISE.

SECTION 13: MISCELLANEOUS

13.1 Assignment.

(a) Each Party may assign this Agreement or any of its rights or obligations
under this Agreement to any of its Affiliates; provided, however, that such
assignment shall not relieve the Party of its responsibilities for performance
of its obligations under this Agreement. Either Party shall, subject to
Section 11.2(f) in case of Change of Control of CoTherix, be entitled to assign
this Agreement or any of this rights or obligations under this Agreement to any
entity with which it may merge or consolidate, or to which it may transfer all
or substantially all of its assets of its pharmaceutical business, provided,
however, that such assignment shall not relieve the Party of its
responsibilities for performance of its obligation under this Agreement.

(b) Except as provided in Section 13.1(a), neither Party to this Agreement shall
have the right to assign this Agreement or its rights or obligations under this
Agreement, without the other Party’s prior written consent.

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

13.2 Retained Rights. Nothing in this Agreement shall limit in any respect the
right of either Party to conduct research and development and to market products
using such Party’s technology other than as herein expressly provided.

13.3 Force Majeure. Neither Party shall lose any rights hereunder or be liable
to the other Party for damages or losses on account of failure of performance by
the defaulting Party if

 

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the failure is occasioned by government action, war, terrorism, security, fire,
explosion, earthquake, flood, strike, lockout, embargo, act of God or any other
cause beyond the control of the defaulting Party; provided, that the Party
claiming force majeure has extended all reasonable efforts to avoid or remedy
such force majeure, continues to employ such efforts and promptly notifies the
other Party of such force majeure event.

13.4 Further Actions. Each Party agrees to execute, acknowledge and deliver such
further instruments, and to do all such other acts, as may be necessary or
appropriate in order to carry out the purposes and intent of this Agreement upon
the reasonable request of the other Party; provided, that the requesting Party
fully reimburses such Party for all costs and expenses (including internal and
out-of-pocket costs) incurred by such Party in delivering such instruments and
doing such acts (except for minor or routine administrative matters).

13.5 No Trademark Rights. Except as otherwise provided herein, no right, express
or implied, is granted by this Agreement to use in any manner the names
“CoTherix” or “Asahi” or any other trade name or trademark of the other Party or
its Affiliates in connection with the performance of this Agreement.

13.6 Notices. All notices hereunder shall be in writing, effective upon receipt,
and shall be delivered personally, mailed by registered or certified mail
(return receipt requested, postage prepaid), or sent by internationally
recognized express courier service, to the other Party at the following
addresses (or at such other address for a Party as shall be specified by like
notice):

 

  (a) If to Asahi:

Asahi Kasei Pharma Corporation

9-1 Kanda Mitoshirocho

Chiyoda-ku, Tokyo 101-8481, Japan

Attention: Licensing and Business Development

Facsimile: +81-3-3259-5714

 

  (b) If to CoTherix:

CoTherix, Inc.

5000 Shoreline Court, Suite 101

South San Francisco, California 94080, U.S.

Attention:   Robert S. Michitarian,

                    Vice President and General Counsel

Facsimile:   (650) 808-6898

With a required copy to the same address to “Attention: Chief Executive Officer”

And another required copy to:

Morrison and Foerster LLP

425 Market Street

San Francisco, CA 94105

Attention:   Jonathan S. Dickstein

Facsimile:   (415) 268-7522

 

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Facsimile notice to the above facsimile notices, with confirmation of receipt,
shall also be effective notice and shall be followed with a copy delivered as
provided in the first sentence of this Section 13.6. To avoid any doubt, emails
do not and shall not under any circumstances constitute effective notice under
this Agreement.

13.7 Waiver. Except as specifically provided herein, the waiver from time to
time by either of the Parties of any of their rights or their failure to
exercise any right or remedy shall not operate or be construed as a continuing
waiver of same or of any other of such Party’s rights or remedies provided in
this Agreement. The provisions of this Agreement may only be waived by a writing
that is explicit that it is waiving the performance of a provision of this
Agreement and is executed by an officer of the waiving Party.

13.8 Severability. Each Party hereby agrees that it does not intend, by its
execution hereof, to violate any public policies, statutory or common laws,
rules, regulations, treaties or decisions of any government agency or executive
body thereof of any country or community or association of countries. Should one
or more provisions of this Agreement be or become invalid, the Parties hereto
shall substitute, by mutual consent, valid provisions for such invalid
provisions, which valid provisions in their economic and other effects are
sufficiently similar to the invalid provisions that it can be reasonably assumed
that the Parties would have entered into this Agreement with such valid
provisions. In case such valid provisions cannot be agreed upon, the invalidity
of one or several provisions of this Agreement shall not affect the validity of
this Agreement as a whole or the validity of any portions hereof, unless the
invalid provisions are of such essential importance to this Agreement that it is
to be reasonably assumed that the Parties would not have entered into this
Agreement without the invalid provision.

13.9 Ambiguities. The Parties acknowledge and agree that: (a) each Party (and
its internal counsel and, if any, external counsel) reviewed and negotiated the
terms and provisions of this Agreement and have contributed to its revision;
(b) the rule of construction to the effect that any ambiguities are resolved
against the drafting Party shall not be employed in the interpretation of this
Agreement; and (c) the terms and provisions of this Agreement shall be construed
fairly as to all Parties hereto and not in favor of or against any Party,
regardless of which Party was generally responsible for the preparation of this
Agreement.

13.10 Governing Law and Dispute Resolution.

(a) This Agreement shall be governed by and construed in accordance with the
internal laws of Japan, without giving effect to its conflict of laws
provisions.

(b) The following provisions apply except where procedures for dispute
resolution are otherwise expressly provided in this Agreement. If a dispute
should arise between the Parties out of or relating to this Agreement or to a
breach thereof, including as to the interpretation,

 

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performance or termination of this Agreement, the Parties shall initially seek
to resolve such dispute amicably by submitting the dispute to the CEO of each
Party in an effort to effect a mutually acceptable resolution thereof. If the
Parties fail to resolve the matter by good faith negotiation within a period of
sixty (60) days of the submission, then either Party may institute binding
arbitration of the dispute. The arbitration shall be conducted in English, in
the San Francisco, California, U.S. if initiated by Asahi, or in Tokyo, Japan if
initiated by CoTherix, under the Rules of Arbitration of the International
Chamber of Commerce by one or more arbitrators appointed in accordance with the
said Rules. Judgment on the award rendered by the arbitrator(s) shall be final
and may be entered in any court having jurisdiction hereof. Notwithstanding the
foregoing, nothing in this Section 13.10 shall be construed as limiting in any
way the right of a Party to seek injunctive relief with respect to any actual or
threatened breach of this Agreement, which breach would cause irreparable harm
to the Party seeking such relief, from a court of competent jurisdiction.

13.11 Headings. The section and paragraph headings contained herein are for the
purposes of convenience only and are not intended to define or limit the
contents of said sections or paragraphs.

13.12 Counterparts. This Agreement may be executed by the Parties in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. Such counterparts may be
exchanged by facsimile (provided that each executed counterpart is transmitted
in one complete transmission). Where there is an exchange of executed
counterparts, each Party shall be bound by this Agreement notwithstanding that
original copies of this Agreement may not be exchanged immediately. The Parties
shall cooperate after execution of this Agreement and exchange by facsimile to
ensure that each Party obtains an original executed copy of this Agreement.

13.13 Entire Agreement; Amendments. This Agreement, including all Exhibits
attached hereto, all documents and things incorporated herein by reference and
all of the documents delivered concurrently herewith set forth all the
covenants, promises, agreements, warranties, representations, conditions and
understandings between the Parties hereto relating to the subject matter hereof
and supersede and terminate all prior agreements and understandings between the
Parties, including without limitation the Confidentiality Agreements. There are
no covenants, promises, agreements, warranties, representations, conditions or
understandings, either oral or written, between the Parties other than as set
forth herein and therein. No subsequent alteration, amendment, change or
addition to this Agreement shall be binding upon the Parties hereto unless
reduced to writing and signed by the respective authorized officers of the
Parties. This Agreement, including, without limitation, all Exhibits attached
hereto, is intended to define the full extent of the legally enforceable
undertakings of the Parties hereto, and no promise or representation, either
written or oral, that is not set forth explicitly is intended by either Party to
be legally binding. Each Party acknowledges that, in deciding to enter into this
Agreement and to conclude the transactions contemplated herein, it has not
relied upon any statements or representations, either written or oral, other
than those explicitly set forth herein.

 

68

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13.14 Expenses. Except as otherwise specified in this Agreement, all costs and
expenses, including, without limitation, fees and disbursements of counsel,
financial advisors and accountants, incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the Party incurring
such costs and expenses.

13.15 Language. This Agreement has been prepared in the English language,
American usage, which shall govern its meaning and interpretation for all
purposes. No translation of this Agreement into any other language shall be
given any force or effect.

13.16 Independent Contractors. The status of the Parties under this Agreement
shall be that of independent contractors. Neither Party shall have the right to
enter into any agreements on behalf of the other Party, nor shall it represent
to any person that it has any such right or authority. Nothing in this Agreement
shall be construed as establishing a partnership or joint venture relationship
between the Parties.

13.17 No Partnership. This Agreement does not create a partnership for U.S.
federal income tax purposes (as defined in Section 761 of the U.S. Internal
Revenue Code of 1986, as amended) for any federal, state or local jurisdiction
or for any country outside the U.S. Therefore, there is no requirement to file
Form 1065, U.S. Partnership Return of Income, any similar U.S. state or local
income tax return or any similar document with tax authorities in any country
other than the U.S.

[Signature page follows]

 

69

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IN WITNESS WHEREOF, Asahi and CoTherix have caused this Agreement to be executed
as of the Effective Date by their respective duly authorized representatives.

 

Asahi Kasei Pharma Corporation     CoTherix, Inc. By:  

/s/ Kei Oe

    By:  

/s/ Donald J. Santel

Name:   Kei Oe     Name:   Donald J. Santel Title:   President     Title:  
Chief Executive Officer

 

70

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EXHIBIT A

ASAHI PATENTS

 

       [***]         [***]    US   Issued   [***]   5,942,505    [***]          
[***]         [***]    US   Issued   [***]   6,699,508    [***]           [***]
       

 

71

* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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

EXHIBIT B

COTHERIX PATENTS

[***]

 

72

* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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

EXHIBIT C

COUNTRIES OF EUROPE

 

•      Albania

  

•      Latvia

•      Andorra

  

•      Liechtenstein

•      Austria

  

•      Lithuania

•      Belgium

  

•      Luxembourg

•      Bosnia & Herzegovina

  

•      Macedonia

•      Bulgaria

  

•      Malta

•      Commonwealth of Independent States

(Armenia, Azerbaijan, Belarus,

Georgia, Kazakhstan, Kyrgyzstan,

Moldova, Russia, Tajikistan,

Turkmenistan, Ukraine, Uzbekistan)

  

•      Monaco

 

•      Netherlands

 

•      Norway

 

•      Poland

•      Croatia

  

•      Portugal

•      Cyprus

  

•      Romania

•      Czech Republic

  

•      San Marino

•      Denmark

  

•      Serbia and Montenegro (Yugoslavia)

•      Estonia

  

•      Slovakia

•      Finland

  

•      Slovenia

•      France

  

•      Spain

•      Germany

  

•      Sweden

•      Greece

  

•      Switzerland

•      Hungary

  

•      Turkey

•      Iceland

  

•      United Kingdom

•      Ireland

  

•      Vatican City

•      Italy

  

•      All other countries that are or become members of the European Union, now
or in the future.

 

73

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EXHIBIT D

[***]PATENTS

[***]

 

74

* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.

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

EXHIBIT E

COTHERIX OPTION

1. Upfront Fee.

[***] one-time fee, less the amount of fees paid by CoTherix to Asahi under
Section 3.2(b), payable within [***]of the CoTherix’s notice of exercise of the
CoTherix Option.

2. Development Commencement, NDA Filing and FDA Approval Milestones Payments.

CoTherix shall make the following one-time milestone payments to Asahi upon
solely the first achievement of each of the milestones set forth below, such
payments to be due within [***] after achievement of the applicable milestone.

(a) [***] upon the first dosing of a patient properly enrolled in a Phase 3
Clinical Trial of a Product in the CoTherix Option Field.

(b) [***] upon the first acceptance by the FDA of a Drug Approval Application
for Regulatory Approval in the U.S. of a Product in the CoTherix Option Field.

(c) [***] upon the first NDA grant by the FDA in the U.S. for a Product in the
CoTherix Option Field.

3. Revenue Milestones Payments.

(a) [***] upon the first year in which annual Net Sales of Products in the
CoTherix Option Field first exceeds [***] within the Territory.

(b) [***] upon the first year in which annual Net Sales of Products in the
CoTherix Option Field first exceeds [***] within the Territory.

(c) [***] upon the first year in which annual Net Sales of Products in the
CoTherix Option Field first exceeds [***] within the Territory.

Royalties.

[***].

 

75

* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by
asterisks and has been filed separately with the Securities and Exchange
Commission.