instruction:
In this task, you're given a passage that represents a legal contract or clause between multiple parties. Your job is to write questions that ask the basic details corresponding to the legal contracts or clauses. Avoid questions that can be answered correctly without actually understanding the paragraph, and which might have multiple answers. The answer to each question should be unambiguous.
question:
EXHIBIT 10.6

                                  EXHIBIT 10.06

                          WATCHGUARD TECHNOLOGIES, INC.                               DISTRIBUTOR AGREEMENT

This Agreement is made and entered into effective as of November 5, 1997 (the effective Date), by and between WatchGuard Technologies, Inc., a Delaware corporation (WGT), and European Micro (Distributor). WGT and Distributor agree as follows:

Section 1. Definitions

Add-On Software Modules means those computer software programs that (a) provide additional functionality and may be integrated with the existing Hardware and other Software, (b) may be legally exported to the Territory without any export license and (c) WGT elects to include in Exhibit A at a mutually agreed discount percentage.

Distributor Cost means the purchase price payable by Distributor for each Product at the discount from WGT's then current WatchGuard Price List, as such discount is set forth in Exhibit A.

Documentation means any and all manuals, user guides, end-user license agreement, limited hardware warranty, on-line help files, on-line menus and other in program printed text regarding the Product prepared by or for WGT in connection with the Product.

Gross Purchases means the gross purchase price Distributor pays WGT for the Product, excluding any taxes or pass through charges and net of any credits or returns.

Guaranteed Minimum Purchases means the guaranteed minimum purchase amounts set forth in Exhibit A.

Hardware means the hardware identified on Exhibit A, together with any Updates to such hardware. WGT reserves the right to add to or delete hardware from Exhibit A and to modify the hardware during the Term.

Product means the combination of Hardware, Software and Documentation together as part of the same product package (including any Add-On Software Modules and any Updates thereto), in all cases carrying the WatchGuard Trademark.

Quarter means any period of three (3) consecutive calendar months that begins on January 1, April 1, July 1 or October 1, during the Term.

Software means the computer programs identified on Exhibit A, in object code only, together with any Updates to such programs. WGT reserves the right to add or delete Software from Exhibit A and to modify the Software during the Term.

Term means the period of time determined in accordance with Section 5.

Territory means the geographic area described in Exhibit A.

Trademarks means the trademarks and trade names of WGT identified in Exhibit A.

Update means any minor modification, minor upgrade or minor enhancement of the Product (excluding any new version of the Product) that WGT publishes and elects to make available to Distributor via BBS, FTP site or other reasonable means. WGT is not obligated to make or release any update.

Section 2. Relationship of the Parties

2.1  Appointment. Subject to and in accordance with the provisions of this      Agreement, WGT hereby appoints Distributor, and Distributor hereby accepts      WGT's appointment, as a nonexclusive distributor of the Product to      resellers in the Territory during the Term, as long as Distributor makes      the Guaranteed Minimum Purchases pursuant to Section 4.

2.2  License Grant. Subject to the terms and conditions of this Agreement, WGT      grants to Distributor a nontransferable license to do the following in the      Territory during the Term:

(a)  market and distribute the Product to resellers;

(b)  demonstrate the Product to potential resellers;

(c)  use the Product internally for the sole purpose of providing this product      support specified in paragraph 4.1(c);

(d)  use and display the Trademarks in connection with marketing and      distributing the Product in the Territory pursuant to paragraphs (a) and      (b) above.

2.3  No Exclusivity. Distributor's appointment and the rights granted hereunder      are nonexclusive. WGT may, at its sole option, appoint other distributors      of the Product in the Territory at any time during the Term and expressly      reserves the right to license the Product directly or indirectly to





     end-users, third party original equipment manufacturers or other hardware      bundlers, value-added resellers or other resellers for sublicense or resale      in the Territory.

Section 3. Compensation

3.1  Support services. As full compensation for the support services described      in Exhibit C and provided during the Term, Distributor will pay WGT the      Support Fee set forth in Exhibit A. Payment of the Support Fee is due and      payable upon execution of this Agreement by wire transfer of immediately      payable funds to the bank and account set forth in paragraph 3.4, and then      annually by invoice from WGT on the anniversary of the execution of the      Agreement.

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3.2  Price. Distributor will pay WGT for each Product Distributor orders an      amount equal to WGT's then current WatchGuard Price List in effect on the      date of receipt by WGT of Distributor's order, subject to the applicable      discount set forth in Exhibit A. WGT may, from time to time, change its      WatchGuard Price List, provided that any such change will not be effective      under this Agreement unless and until the expiration of forty-five (45)      days after WGT gives Distributor written notices of the change.

3.3  Guaranteed Minimum Purchases. During the Term, Distributor will make Gross      Purchases in an amount at least equal to the cumulative Guaranteed Minimum      Purchase amounts through committed orders placed pursuant to paragraph 3.5      and calling for shipment on or before the dates set forth in Exhibit A.

3.4  Invoices. WGT will issue invoices for the Products ordered by Distributor      and all other amounts payable to WGT under this Agreement. Distributor will      pay WGT the full amount invoiced within thirty (30) days after the date of      WGT's invoice, unless provided otherwise on the applicable invoice, in the      lawful money of the United States of America to WGT by wire transfer of      immediately available funds to WGT's bank account number 1141139, at the      Commerce Bank of Washington, 601 Union Street, Suite 3600, Seattle, WA      98101, ABA routing number 125008013.

3.5  Orders. Distributor will place orders for the Product from WGT by      completing, signing and submitting to WGT a written order for the same, in      a form acceptable to WGT, via facsimile, mail or other means. Distributor      shall submit such order at least thirty (30) days in advance of the      delivery date set forth in each order. All orders will be subject to      acceptance by WGT through written acceptance or shipment of the Product      subject to the order.

Section 4. General Obligations of the Parties.

4.1  Obligations of Distributor. Distributor will use its best efforts      aggressively to develop sales of the Product in the Territory. In      furtherance thereof, Distributor will:

(a)  keep on hand a reasonable inventory of the Product sufficient to allow for      prompt delivery of the Product to resellers;

(b)  establish a program to market the Product, including, but not limited to,      participating regularly in local and regional trade shows, conventions or      like events in the Territory, and conducting regular local promotional and      other marketing efforts for the Product;

(c)  provide quality product support to resellers, including, but not limited      to, providing appropriate installation and application advice and prompt      follow-up service and advice to resellers of the Product upon request;

 (d) provide a support center to resellers, including, but not limited to, a      hotline service to answer reseller questions and to receive and track      complaints and any reports of claimed errors in the Product;

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(e)  provide quality product technical and sales training to resellers;

(f)  respond promptly to sales leads or referrals furnished by WGT or by other      distributors or dealers of WGT;

(g)  have a designated number of employees attend such technical and sales      training programs as set forth in Exhibit C;

(h)  maintain and furnish periodically, as WGT may reasonably request, complete      and accurate records of each sale or other distribution of each Product      sold or distributed by Distributor (e.g., showing the date of sale, Zip      code of the customer, the Product serial number and the applicable Product      license key(s)) under this Agreement;

(i)  promptly advise WGT of each complaint that Distributor may receive or      becomes aware of concerning the Product or any portion thereof (including,      but not limited to, warranty claims). Distributor will promptly investigate      all such complaints and will give immediate attention to and use its best      efforts to promptly, courteously and equitably respond to, adjust and      settle (without incurring any obligation or liability on behalf of WGT) all





     complaints received by Distributor from any customer, potential customer or      anyone else arising out of or in connection with Distributor's sale of any      Product, or the performance of any services. In handling any complaints,      Distributor will use its best efforts to maintain and promote good public      relations for WGT;

(j)  secure and maintain, in the name of WGT, any and all registrations,      permits, licenses, approvals and other governmental actions required to      import, handle, market, sell, demonstrate, use and distribute the Product      in the Territory, provide to WGT quarterly progress reports on such action,      and provide WGT copies of all registrations, permits, licenses, approvals,      certificates, correspondence and other documentation related to such      action;

(k)  hire, train, coordinate and maintain a qualified staff of sufficient size      and with a level and mix of capabilities as are reasonably necessary to      accomplish the goals contemplated under this Agreement;

(l)  avoid deceptive, misleading or unethical conduct which are or might be      detrimental to WGT or its Product, and refrain from making any      representation, warranty or guarantee to any reseller with respect to      specifications, features or capabilities of the Product that is      inconsistent with the literature distributed by WGT or this Agreement;

(m)  conduct its business in a manner under its own control, provided that      Distributor will at all times comply with all applicable laws and      regulations and will not engage in, or permit its employees or agents to      engage in, any activities or practices which could reflect negatively upon      the reputation or prospects of WGT or the Product or expose WGT to any      liability of any nature whatsoever; and

4.2 Obligations of WGT, WGT will:

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(a)  provide Distributor with sixty (60) days advance notice in the event that      it discontinues production of any Product;

(b)  provide Distributor with the training and product support services      described in Exhibit C; and

(c)  furnish Distributor with such demonstration Product, promotional      literature, data, information and other items as WGT deems appropriate for      Distributor's promotion, marketing and sale of the Product. WGT will use      such items only for the purpose of performing its obligations under this      Agreement.

4.3  Forecasts. Distributor's forecast of Product purchases for the Term is set      forth on Exhibit D. At least fifteen (15) days before the beginning of each      Quarter during the Term, Distributor will furnish WGT with a rolling      revised forecast of Product orders for the remainder of the Term.

Section 5. Term and Termination.

5.1  Term. The Term will commence on the Effective Date of this Agreement and      will remain in effect, unless sooner terminated under paragraphs 5.2, 5.3,      or 5.4, until the termination date specified in Exhibit A.

The Term will automatically renew for successive additional periods of one (1) year each, provided that: (a) Distributor has made all Guaranteed Minimum Purchases and has complied with the marketing requirements under paragraph 4.1(b); (b) the parties have agreed in writing upon the Guaranteed Minimum Purchase amounts and Product price discounts for the next subsequent one (1) year renewal period; (c) neither party provided the other party with notice of such party's intention not to renew this Agreement at least thirty (30) days prior to any year's Expiration Date; and (d) neither party provided the other party with such notice as may be required pursuant to paragraphs 5.2, 5.3 or 5.4.

5.2  Termination by WGT. Upon the occurrence of any of the following, WGT may      terminate the Term by giving Distributor written notice of such termination      for:

(a)  any failure of Distributor to comply with the marketing requirements under      paragraph 4.1(b);

(b)  any material change in the general management, ownership or control of      Distributor, including without limitation the sale, transfer or      relinquishment by Distributor of any substantial interest in the ownership      of the business to be carried on by Distributor under this Agreement,      unless such change is approved in advance and in writing by an officer of      WGT;

(c)  any assignment or attempted assignment of this Agreement by Distributor      without the prior written consent of WGT;

(d)  any solicitation by Distributor for the sale of the Product to resellers      located outside the Territory;

                                       5





(e)  the insolvency of Distributor, the filing of a petition in bankruptcy by or      against Distributor, the appointment of a receiver for Distributor or      Distributor's property, the execution of an assignment by Distributor of      all or substantially all of its assets for the benefit of its creditors, or      the conviction of Distributor or any principal or manager of Distributor      for any crime tending to adversely affect the ownership or operation of      Distributor's business;

(f)  any failure by Distributor to perform any of its other obligations under      this Agreement where such failure continues for thirty (30) days after      written notice thereof by WGT to Distributor; or

(g)  WGT giving Distributor ninety (90) days' advance written notice of      termination at any time after the expiration of the Initial Term.

5.3  Failure to Make Guaranteed Minimum Purchases. Upon any failure by      Distributor to make Gross Purchases in sufficient amounts to meet or exceed      the applicable cumulative Guaranteed Minimum Purchases, WGT may, at its      sole option and effective upon notice to Distributor, terminate this      Agreement. Distributor shall pay WGT fifty percent (50%) of the unpaid      balance of cumulative Guaranteed Minimum Purchase amounts as liquidated      damages. The parties acknowledge and agree that it would be difficult or      impossible to calculate WGT's actual damages arising from Distributor's      failure to timely pay all of the Guaranteed Minimum Purchases. Therefore,      the parties have agreed upon the above payment of liquidated damages in      lieu of WGT's claim for actual damages from such breach.

5.4  Termination by Distributor. Upon the occurrence of any of the following,      Distributor may terminate the Term by giving WGT written notice of such      termination;

(a)  the insolvency of WGT, the filing of a petition by or against WGT, the      appointment of a receiver for WGT or WGT's property, or the execution of an      assignment by WGT of all or substantially all of its assets for the benefit      of its creditors;

(b)  any failure by WGT to perform any of its obligations under this Agreement      where such failure continues for thirty (30) days after written notice      thereof by Distributor to WGT; or

(c)  for convenience whether or not extended beyond the Initial Term, provided      Distributor gives WGT thirty (30) days' advance written notice and, within      such thirty (30) day period, Distributor pays to WGT a lump-sum payment      equal to fifty (50%) of the unpaid balance of cumulative Guaranteed Minimum      Purchase amounts.

5.5  Effect of Termination. Any termination pursuant to paragraphs 5.2, 5.3, or      5.4 will be without prejudice to any other right or remedy afforded to      either party under this Agreement or any applicable law (e.g., in the case      of any breach or default by the other party), and will not affect any      rights or obligations which have arisen prior to the date of such      termination. In the event of termination, Distributor will:

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(a)  immediately cease to demonstrate, market, sublicense and distribute the      Product in the Territory;

(b)  cease use of all Trademarks of WGT;

(c)  return to WGT within twenty (20) days following the expiration or      termination of the Term, any and all (i) demonstration Product provided to      Distributor; (ii) Products not already paid for in full by Distributor; and      (iii) promotional literature, data, information and other items received by      Distributor under this Agreement; and

(d)  furnish WGT with such information relating to the marketing, sale or      distribution of the Product in the Territory as WGT may reasonably request      (including, but not limited to, information as to calls or the status of      any negotiations for the sale of the Product, or any sales or service      records).

Upon the expiration or termination of the Term, the license granted under Section 2 of this Agreement will terminate. Any end-user licenses of the Software granted under the terms of this Agreement will survive the end of the Term in accordance with the terms of the applicable end-user license agreement.

5.6  Acknowledgment. Any expiration or termination of the Term will be final and      absolute. Except as expressly set forth in paragraphs 5.3 and 5.5(c),      Distributor waives any right, either express or implied by applicable law      or otherwise, to the renewal of this Agreement or to any damages or      compensation for any expiration or termination of the Term in accordance      with this Section 5. Each of the parties have considered the possibility of      such expiration or termination and the possibility of loss and damage      resulting therefrom in making expenditures pursuant to the performance of      this Agreement. It is the express intent and agreement of the parties that      neither will be liable to the other for damages, except as expressly set      forth in paragraphs 5.3 and 5.5(c), or otherwise by reason of the      expiration or termination of the Term as provided for herein.

6.0  Force Majeure. Neither party will be liable for, or be considered to be in      breach of or default under this Agreement on account of, any delay or





     failure to perform as required by this Agreement (other than for payment      under Section 3), as a result of any cause or condition beyond such party's      reasonable control.

7.0  Entire Agreement. This Agreement is subject to the provisions of WGT's      Standard Distributor Terms attached hereto as Exhibit B and by this      reference incorporated into and as part of this Agreement. This Agreement      is also subject to any additional terms or licenses executed by WGT and      Distributor and attached as Exhibits, including any Special Terms and      Conditions specified in Exhibit A. This Agreement sets forth the entire      agreement, and supersedes any and all prior agreements, among the parties      related to the Product. WGT will not be bound by, and specifically objects      to, any term, condition, or other provision that is different from or in      addition to the provisions of this Agreement (whether or not it would      materially alter this Agreement) and that is proffered by Distributor or      otherwise appears in any order, receipt, acceptance, confirmation,      correspondence, or otherwise, unless WGT specifically agrees to such      provision in a written instrument signed by WGT. No

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     modifications of any of the provisions of this Agreement will be valid      unless set forth in a written instrument signed by both parties. Any remedy      by WGT set forth in this Agreement is in addition to any other remedy      afforded to WGT under any other contract, by law, or otherwise.

IN WITNESS THEREOF, the parties have executed this Agreement as of the date first above written.

Distributor:                               WatchGuard Technologies, Inc.

By: /s/ LAURENCE GILBERT                   By: /s/ WATCHGUARD    -------------------------                  ------------------------------

Title: MANAGING DIRECTOR                   Title: VP/SALES

Date Signed: NOVEMBER 5, 1997              Date Signed: NOVEMBER 3, 1997

Address:  20/24 Church Street              Required Signature:           Altrincham, Cheshire           WA14 4DW, ENGLAND                By:                                                 -------------------------------                                            Title: Executive Vice-President Sales

                                           Date Signed:                                                          ---------------------

                                           Address:  316 Occidental Avenue South                                                      Suite 300                                                      Seattle, Washington  98104

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                    FULL SERVICE MASTER DISTRIBUTOR SCHEDULE                                     EXHIBIT A

PRODUCTS:

Distributor will be entitled to order the following products (which includes hardware and software) at the following discounts of WGT's then current WatchGuard Price List:

- -------------------------------------------------------------------------------                                                        DISCOUNT FROM WGT'S                                  PRODUCT                  THEN CURRENT                                                       WATCHGUARD PRICE LIST - ------------------------------------------------------------------------------- WatchGuard Security System                             40% plus additional                                                        10% on the remaining                                                  undiscounted amount, i.e., 46%

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

EXCHANGE FEE:                                      $10 per CD SUPPORT FEE:                                       $25,000 per year

                                                                  CUMULATIVE                                                                   GUARANTEED                                                                     MINIMUM                                                                    PURCHASES                               DATE OF ORDER                     (U.S. DOLLARS) - -------------------------------------------------- --------------------------- Upon contract signing                              $100,000.00 1st subsequent Quarter-end, Sept. 30, 1997         $100,000.00 2nd subsequent Quarter-end, Dec. 31, 1997          $167,000.00 3rd subsequent Quarter-end, Mar. 31, 1997          $234,000.00 4th subsequent Quarter-end, Jun 30, 1997           $300,000.00





TERMINATION DATE:                                           September 30, 1997 TRADEMARKS:

/bullet/  WatchGuard(TM)

/bullet/  WatchGuard(TM) Technologies

/bullet/  WatchGuard(TM) SchoolMate

/bullet/  Firebox(TM)

TERRITORY:

/bullet/  Europe

SPECIAL TERMS AND CONDITIONS

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These Special Terms and Conditions are part of the Distributor Agreement between WatchGuard Technologies, Inc. (WGT) and Distributor (collectively, the Agreement). Terms that are defined in the Distributor Agreement will have the same meaning when used in these Special Terms and Conditions.

Section A.1 By joint agreement between WGT and Distributor, Distributor may engage in end user sales in the Territory.

If it is agreed that Distributor may engage in end user sales, Distributor may distribute, license and sell up to 20% of the Product purchased from WGT directly to end-users in the Territory. Further, Distributor agrees that high end-users satisfaction is a condition of its continued authorization by WGT. To ensure high end-user satisfaction, Distributor shall: (a) provide quality first level support to its end-user customers; (b) promptly report to WGT all suspected and actual problems with any WGT product; (c) assist WGT in tracing WGT Products to particular end users to distribute critical WGT Product information, locate WGT Products for safety reasons, or to be discover unauthorized marketing or infringing acts; (d) avoid deceptive, misleading or unethical conduct which are or might be detrimental to WGT or its WGT product; and (e) refrain from marking any representation, warranty or guarantee to end users with respect to the specifications, features or capabilities of the WGT Product that is inconsistent with the literature distributed by WGT or this Agreement.

Section A.2 Distributor is legally organized under the jurisdiction of a country belonging to the European Union.

If Distributor is organized under the jurisdiction of the country belonging to the European Union, the following clause is hereby appended to Section 1(c) of the Standard Distributor Terms:

         PROVIDED HOWEVER, the foregoing restriction is not intended to          preclude Distributor from fulfilling, and Distributor may fulfill,          unsolicited orders for Product received from outside the Territory but          within the European Union (and Distributor shall provide WGT written          notice of any such Sales);

Section A.3 As a Full Service Master Distributor, Distributor agrees to sign up a minimum of 10 new WatchGuard resellers in the Territory within the Initial Term of the Agreement.

- -------------------------------------------- --------------------------------- Distributor:                                 WatchGuard Technologies, Inc.:

By:  /s/ LAURENCE GILBERT                    By:  /s/ WATCHGUARD      --------------------------                   ----------------------------- Title: MANAGING DIRECTOR                     Title: SENIOR VICE PRESIDENT/SALES                                                      Date Signed:  NOVEMBER 5, 1997               Date Signed:  NOVEMBER 3, 1997  -------------------------------------------- ---------------------------------

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                           STANDARD DISTRIBUTOR TERMS                                     EXHIBIT B

These Standard Distributor Terms are part of the Distributor Agreement between WatchGuard Technologies, Inc. (WGT) and Distributor (collectively, the Agreement). Terms that are defined in the Distributor Agreement will have the same meaning when used in these Standard Distributor Terms.

 1.  Reservation of Rights. The Software is licensed, not sold, to Distributor.      PARAGRAPH 2.2 LICENSE GRANT of the Distributor Agreement sets forth the      entirety of Distributor's rights to use, market, distribute, demonstrate      and otherwise deal with the Product. All rights in and to the Product not      expressly granted to Distributor under this Agreement are hereby expressly      reserved to WGT without restriction. Without limiting the generality of the      foregoing, Distributor will comply with the following:

(a)  Distributor will distribute the Product to resellers only pursuant to a      reseller agreement that substantially conforms to the term of this





     Agreement;

(b)  Distributor will not market, demonstrate or distribute the Product outside      the Territory and Distributor will not supply the Product to any reseller      that Distributor knows or has reason to know (i) intends to distribute the      Product outside the Territory or (ii) intends to use or install the Product      outside the Territory;

(c)  Distributor will market, sell and distribute the Product only in its      original, unopened package as received from WGT under the terms of the      end-user license agreement and limited hardware warranty, as applicable,      originally included in the Product package;

(d)  Distributor will not modify or make copies of the Product or translate or      port the Software into any other computer or human language;

(e)  Distributor will not disassemble, reverse engineer, decompile or repackage      all or any component of the Product or otherwise attempt to discover any      portion of the source code or trade secrets related to the Product;

(f)  Distributor will not remove, alter, distort, cover or modify any notice of      copyright, trademark or other proprietary right appearing in or on any item      included with the Product or its packaging; and

(g)  Distributor will not register, attempt to register or assist anyone else to      register, directly or indirectly, the Trademarks or any copyright or other      proprietary rights associated with the Product in the Territory or      elsewhere other than in the name of WGT, without WGT's prior written      consent.

2.   Protection Against Unauthorized Use. Distributor will promptly notify WGT      of any unauthorized use of the Product or the Trademarks which comes to      Distributor's attention. In

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     the event of any such unauthorized use by Distributor's employees, agents      or representatives, Distributor will use its best efforts to terminate such      unauthorized use and to retrieve any copy of the Product in the possession      or control of the person or entity engaging in such unauthorized use.      Distributor will immediately notify WGT of any legal proceeding initiated      by Distributor in connection with such unauthorized use. WGT may, at its      option and expense, participate in any proceeding and, in such event,      Distributor will provide such authority, information and assistance related      to such proceeding as WGT may reasonably request to protect WGT's      interests.

3.   Use of Trademarks. WGT reserves all rights in and to the Trademarks and all      other trademarks and trade names used by WGT in connection with the      Products, but WGT grants to Distributor the nonexclusive right to use and      display the Trademarks during the Term to promote and identify the Product      in the Territory in connection with this Agreement. Distributor will comply      with the trademark guidelines and procedures established by WGT in      Distributor's use of the Trademarks including without limitation use of the      trademark and copyright symbols as specified by WGT from time to time. When      using the Trademarks, Distributor will include a statement acknowledging      that the Trademarks are owned by WGT. Distributor hereby acknowledges that      the goodwill associated with its use of the Trademarks inures solely and      exclusively to WGT and that Distributor does not acquire any rights in the      Trademarks as a result of such use. Distributor will not use the Trademarks      or any confusingly similar name, marks, logos, designs or artwork as part      of Distributor's name, trade name, trademark or artwork without WGT's prior      written consent.

 4.  Independent Contractor. Distributor is an independent contractor, not an      employee, agent or franchisee of WGT. Distributor will not represent or      hold itself out as an employee, agent or franchisee of WGT. Distributor      does not have any authority to, and will not, create or assume any license,      warranty or other obligation, express or implied, on behalf of WGT. This      Agreement will not be interpreted or construed as creating or evidencing      any association, joint venture or partnership between the parties or as      imposing any partnership or franchisor obligation or liability on either      party.

 5.  Delivery. WGT will deliver all Products ordered by Distributor F.O.B.      carrier at WGT's shipping location as determined by WGT from time to time,      on or before the delivery date set forth in each accepted order.      Distributor will pay or reimburse WGT for all shipping charges, premiums      for freight insurance, inspection fees, duties, import and export fees,      assessments, transportation and other costs incurred by WGT to transport      the Product to the shipping destination.

 6.  Resale. Distributor represents that all Products acquired under this      Agreement are acquired solely for demonstration, licensing or sale (as      applicable) and distribution to resellers or end-users in the Territory      without intervening use by Distributor. Distributor acknowledges that the      prices set forth in this Agreement have been established in reliance upon      such representation and that different prices may apply to any Products      acquired for any other purpose. Upon WGT's request, Distributor will      furnish WGT evidence of such resale (including but not limited to      satisfactory evidence of exemption from retail sales, use or similar taxes      that may otherwise apply to transactions under this Agreement).





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7.   Software Update Exchange. Once each Quarter during the Term of this      Agreement, Distributor shall have the right to exchange any prior version      of the Software then in Distributor's inventory for an equivalent quantity      of Software containing Updates, subject to Distributor paying WGT an      Exchange Fee set forth in Exhibit A, for each copy of the Software      exchanged hereunder. WGT will invoice Distributor for and Distributor shall      pay all Exchange Fees as provided in Exhibit A. WGT will deliver all such      exchanged Software Updates in accordance with paragraph 5. Distributor      shall return to WGT the copies of the prior versions of the Software      exchanged under this paragraph 7 at Distributor's expense.

8.   Records; Audit. During the Term and for twenty-four (24) months thereafter,      Distributor will keep and maintain accurate accounts and records regarding      the Products sold and Product license keys delivered to resellers and      end-users under this Agreement. Upon WGT's request, Distributor will      provide access to such records for examination, reproduction, and audit by      WGT or its representatives. Any such audit will be conducted at such times      and in such a manner so as not to unreasonably interfere with Distributor's      normal operations. If any such audit discloses that Distributor is      deficient in its compliance with the terms and conditions of this      Agreement, Distributor will immediately pay to WGT any deficiency, plus      interest at the rate of one and one-half percent (1.5%) per month running      from the date originally due until the date paid. Acceptance of any payment      by WGT will be without prejudice to WGT's rights to an audit under this      paragraph 8 or any other rights or remedies afforded to WGT under any other      provision of this Agreement or applicable law.

9.   Taxes. The Guaranteed Minimum Purchases and other amounts specified in this      Agreement do not include sales, use or value added taxes, customs fees,      duties or other governmental taxes or charges. Distributor will pay all      such taxes and charges. In the event Distributor is required under any      applicable law to withhold any taxes or duties from the amounts specified      under this Agreement, payment of the amounts specified under this Agreement      will be net of such withholding taxes or duties. Distributor will pay the      amount of all such withholding taxes and duties and supply WGT with      information concerning the amount and type of tax withheld and any      certificates concerning payments of such withholding taxes.

10.  Interest. Any amount not paid when due will be subject to finance charges      at the rate of one and one-half percent (1.5%) per month or the maximum      rate permitted by applicable law; whichever is less, determined and      compounded on a daily basis from the date due until the date paid. Payment      of such finance charges will not excuse or cure Distributor's breach or      default for late payment. If WGT retains a collection agency, attorney or      other person or entity to collect overdue payments, all collection costs,      including but not limited to reasonable attorney's fees, will be payable by      Distributor.

11.  Confidentiality. Any information received by Distributor in performance of      this Agreement relating to the business affairs, customers, markets,      finances, methods, Product, technology, trade secrets or proprietary rights      of WGT will be treated as confidential and proprietary information of WGT.      Distributor will not disclose such information, unless the information is      in the public domain at the time of disclosure through no fault of      Distributor or WGT consents to the disclosure in writing. Distributor will      disclose such information only to its

                                       13

     employees whose duties justify their need to know such information and who      have agreed to copy with Distributor's confidentiality obligations      hereunder.

12.  Ownership. The Product involves valuable patent, copyright, trade secret,      trade name, trademark and other proprietary rights of WGT. No title to or      ownership of such proprietary rights is transferred to Distributor under      this Agreement or by use of any trademark, copyright or other proprietary      right. WGT reserves all of its copyright, trade secret and other      proprietary rights in the Product. Distributor will not infringe, violate      or contest and will take appropriate steps and precautions for the      protection of, such proprietary rights.

13.  Implementation. Distributor will take at WGT's expense, all action during      or after the Term that is reasonably requested by WGT for the      implementation of the ownership provisions of this Agreement or to      evidence, perfect or protect WGT's ownership of this Product and the      proprietary rights associated with ownership of the Product (including,      without limitation, the execution, acknowledgment and delivery of      instruments of conveyance, patent, copyright, trademark or other      proprietary rights registration applications or other documents.)

14.  Warranty; Returns. WGT will permit Distributor and end-users purchasing      through resellers to return any defective Product in accordance with the      limited warranty contained in the applicable end-user license agreement or      limited hardware warranty, as applicable, provided that the Distributor and      end-user have compiled with the applicable warranty terms and conditions.      In order to receive the remedy provided for hereunder, Distributor shall





     deliver to WGT a sample of the Product which Distributor finds to be      defective in workmanship or materials, or damaged in shipment prior to      Distributor assuming the risk of loss or damage , along with a written      explanation of the alleged defect within thirty (30) days from the later of      Distributor's initial receipt of such Product from WGT or from the delivery      of such Product to an end-user. In the event WGT verifies a defect reported      by Distributor and such defect affects more than one (1) Product, then at      WGT's option, Distributor shall either certify destruction of all defective      Products or return all Products which it alleges are defective to WGT.      Distributor, reseller or the end user will be responsible for      transportation charges for such Product units sent to WGT's facilities for      service. Provided that WGT is able to verify the presence of the reported      defect in such units, transportation charges, via a mode of transportation      chosen by WGT, shall be borne by WGT to return the Product units from WGT's      location to the Distributor, reseller or the end-user's location. Upon      verification of a defect in one or more Products returned in accordance      with the foregoing, or upon Distributor's certification that it has      destroyed any defective Product in compliance with WGT's instructions, WGT      will, at its option, either issue a credit to Distributor in the amount of      the purchase price paid or payable for such Product by Distributor or      replace the defective Product with an identical (non-defective) Product.      Such remedy will be exclusive and in full satisfaction of Distributor's      claims hereunder. WGT does not warrant that the Products are free form all      bugs, errors, defects, design flaws or omissions. The warranties in this      Agreement apply only to the latest version of each Product made available      by WGT to Distributor. Such warranties will not apply to any Product which      WGT determines has been subject to misuse, neglect, improper installation,      repair, alteration or damage by Distributor, reseller or an end-user or any      other individual or entity, or modification by any such individual or      entity except with the prior express authorization of WGT. WGT's      obligations

                                       14

     under this paragraph will not apply to the extent arising out of any use or      combination of the Product with any other products, goods, services or      other items furnished by Distributor or anyone other than WGT, or to any      modification or change of the Product not made by WGT. The foregoing      warranties and rights may be asserted by Distributor only and not by      Distributor's resellers.

15.  Infringement. WGT will defend and indemnify Distributor against any      judicial proceeding based upon infringement of any U.S. patent or US.      copyright by the Product to the extent that such proceeding arises from or      in connection with a component of the Product manufactured or developed by      WGT and not any third party, provided that Distributor notifies WGT of such      proceeding promptly after Distributor receives notice thereof, WGT has      control over the defense and settlement of the proceeding, Distributor      provides such assistance in the defense and settlement of the proceeding as      WGT may reasonably request, and Distributor complies with any settlement or      court order made in connection with such proceeding (e.g., as to the future      use of any infringing Product). WGT's obligations under this paragraph will      not apply to any infringement to the extent arising out of any use or      combination of the Product with any other products, goods, services or      other items furnished by Distributor or anyone other than WGT or to any      modification or change of the Product not made by WGT.

16.  Disclaimer and Release. THE WARRANTIES OF WGT AND THE REMEDIES OF      DISTRIBUTOR SET FORTH IN PARGRAPHS 14 AND 15 ARE EXCLUSIVE AND IN      SUBSTITUTION FOR, AND DISTRIBUTOR HEREBY WAIVES, RELEASES AND DISCLAIMS.      ALL OTHER WARRANTIES, OBLIGATIONS AND LIABILITIES OF WGT AND ALL OTHER      RIGHTS, REMEDIES AND CLAIMS OF DISTRIBUTOR, EXPRESS OR IMPLIED, ARISING BY      LAW OR OTHERWISE, WITH RESPECT TO ANY DEFECT, DEFICIENCY OR NONCONFORMITY      IN ANY PRODUCT OR OTHER ITEM FURNISHED BY OR ON BEHALF OF WGT UNDER THIS      AGREEMENT, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTY OF      MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE; IMPLIED WARRANTY      ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USEAGE OF TRADE;      ANY OBLIGATION, LIABLITY, RIGHT, REMEDY OR CLAIM IN TORT (INCLUDING      NEGLIGENCE, WHETHER ACTIVE, PASSIVE OR IMPUTED), PRODUCT LIABLITY, STRICKT      LIABILITY OR OTHER THEORY; AND CLAIM OF INFRINGEMENT.

17.  Representations. Distributor will be solely responsible for any      representations or warranties Distributor may make to any reseller with      respect to the Product or any products, goods, services or other items      provided by Distributor. Except to the extent inconsistent with paragraph      15, Distributor releases and will defend, indemnify and hold harmless WGT      and its officers, directors, employees, agents and representatives from any      and all claims, losses, damages, liens, liabilities, costs and expenses      (including, but not limited, reasonable attorneys' fees) incurred or      asserted by any reseller or otherwise arising out of or in connection with      (a) any misrepresentation, negligent or tortious act or omission, or breach      of or default under this Agreement by Distributor or by anyone else acting      for or on behalf of Distributor in connection with the promotion,      distribution or other dealings with respect to the Product; (b) any      reseller or end-user's use of the Product or any products or services of

                                       15





     Distributor; or (c) any representations and warranties made by Distributor      that are inconsistent with or in addition to the warranties made in WGT's      end-user license agreement or limited hardware warranty, as applicable,      accompanying each copy of the Product.

18.  Limitations of Liability. EXCEPT AS PROVIDED IN PARAGRAPH 15, WGT'S      LIABILITY(WHETHER IN CONTRACT, WARRANTY, TORT (INCLUDING NEGLIGENCE WHETHER      ACTIVE, PASSIVE, IMPUTED), PRODUCT LIABILITY, STRICT LIABILITY OR OTHER      THEORY) UNDER THIS AGREEMENT OR WITH REGARD TO ANY PRODUCT OR OTHER ITEMS      FURNISHED UNDER THIS AGREEMENT WILL IN NO EVENT EXCEED THE COMPENSATION      PAID TO WGT CONCERNING SUCH PRODUCT UNDER THIS AGREEMENT.

19.  Consequential Damages. IN NO EVENT WILL WGT BE LIABLE, WHETHER IN CONTRACT,      WARRANTY, TORT (INCLUDING NEGLIGENCE (WHETHER ACTIVE, PASSIVE OR IMPUTED),      PRODUCT LIABILITY, STRICT LIABILITY OR OTHER THEORY), TO DISTRIBUTOR OR TO      ANY RESELLER OF DISTRIBUTOR, END-USER OR OTHER PERSON OR ENTITY FOR COST OF      COVER OR FOR ANY INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES      (INCLUDING WITHOUT LIMITATION DAMAGES FOR LOSS OF PROFIT, BUSINESS OR DATA)      ARISING OUT OF ITS PERFORMANCE OR NONPERFORMANCE OF THIS AGREEMENT OR THE      USE OF, INABIILTY TO USE OR RESULTS OF USE OF THE PRODUCT.

20.  Compliance with Laws. In performing this Agreement, Distributor will comply      with all applicable laws, regulations and other requirements, now or      hereafter in effect, of government authorities having jurisdiction.

21.  Export. Without limiting anything else herein, Distributor will not export      or re-export, directly or indirectly, the WGT Product to any country to      which export or re-export of such items is prohibited by the U.S. Export      Administration Act, regulations of the U.S. Department of Commerce and      other export controls of the U.S., as they may be amended without first      obtaining an appropriate written authorization from the U.S. Office of      Export Licensing or its successor. At the time of execution of this      Agreement, Distributor is prohibited from exporting or re-exporting ,      directly or indirectly, the WGT Product to the following countries: Cuba,      Libya, North Korea, Iran, Iraq, Ruwanda, Sudan, Syria and the Federal      Republic of Yugoslavia (Serbia and Montenegro). Notwithstanding the      foregoing list, Distributor is not relieved from its obligations to comply      with the foregoing export control laws, as such laws may be amended from      time to time. Distributor shall also comply with all other foreign or local      governmental export and import control laws, regulations and rules.

22.  Government Approvals. Distributor will obtain at its expense all licenses,      permits and other governmental approvals; will provide all notices; and      will pay all duties, taxes and other charges required for the license,      export, re-export and import of the Product distributed by the Distributor;      the license of the Software distributed by Distributor; and the      implementation of this Agreement.

                                       16

23.  Nonwaiver. The failure of either party to insist upon or enforce strict      performance of any of the provisions of this Agreement or to exercise any      rights or remedies under this Agreement will not be construed as a waiver      or relinquishment to any extent of such party's right to assert or rely      upon any such provisions, rights or remedies in that or any other instance;      rather, the same will be and remain in full force and effect.

24.  Assignment. Distributor will not assign all or any part of this Agreement      or any of its rights under this Agreement without the prior written consent      of WGT. Subject to the foregoing, this Agreement will be fully binding      upon, inure to the benefit of and be enforceable by the parties and their      respective successors and assigns.

25.  Survival. Paragraphs 1, 2, 3, 13 through 23 and all accrued obligations to      pay, together with all other provisions of this Agreement which may      reasonably be interpreted or construed as surviving the expiration or      termination of the Term, will survive the expiration or termination of the      Term.

26.  Notices. Any notice or other communication under this Agreement given by      either party to the other will be in writing and delivered either (a) in      person or by first-class, registered or certified mail or a recognized      overnight delivery service, return receipt requested, postage prepaid or      (b) by facsimile and then acknowledged as received by return facsimile by      the intended recipient. Notices will be deemed received only upon actual      receipt. Notices will be directed to the intended recipient at the address      specified below its signature on the signature page of this Agreement.      Either party may change its address by giving the other party notice of      such change in accordance with this paragraph.

27.  No Conflict. Distributor represents and warrants to WGT that Distributor is      free to enter into and perform this Agreement without thereby being in      breach of or default under the terms of any other contract, commitment or      understanding.

28.  Interpretation. The English language of this Agreement will govern any      interpretation of or dispute regarding the terms of this Agreement.      Paragraph captions are for convenience of reference and do not alter or      limit the terms of this Agreement. The parties hereto have expressly      required that the present Agreement and its Exhibits be drawn up on the      English language. / Les parties aux presentes ont expressement exige que la      presente conventions et se Annexes solent redigees en la langue anglaise.





29.  Governing Law; Venue. This Agreement will be governed by and interpreted in      accordance with the local laws of the State of Washington, U.S.A., without      regard to its conflicts of law provisions and not including the provisions      of the 1980 U.N. Convention in Contracts for the International Sale of      Goods. Distributor irrevocably consents, and submits to the jurisdiction of      the Federal and State courts of and located in King County, in the State of      Washington, U.S.A. Distributor will not commence or prosecute any suit,      claim, or proceeding arising under this Agreement other than in the courts      identified in the preceding sentence. Any remedy of WGT set forth in this      Agreement is in addition to any other remedy afforded to WGT under this      Agreement, any other contract, by law or otherwise.

                                       17

                         SUPPORT SERVICES AND PROCEDURES                                     EXHIBIT C

SUPPORT SERVICES:

WGT will provide the following training and product support programs to Distributor:

A.   Training.

Promptly after execution of this Agreement, WGT will conduct a one day technical and sales training program for three (3) of Distributor's employees. Such training will be held at Distributor's facilities. Distributor will be responsible for all costs and expenses incurred by Distributor's personnel in attending, receiving or securing training provided by WGT.

B.   Product Support Services.

WGT will provide the following product support services to Distributor for the Term of the Agreement:

1.   Telephone Support. Reasonable telephone and electronic mail support for the      Software will be available in response to a request from Distributor during      WGT's normal business hours (6:00 a.m. to 5:00 p.m., Monday through Friday,      Pacific Standard Time), excluding holidays that WGT recognizes. Only      Distributor's designated, approved personnel will communicate with WGT's      customer support specialists.

2.   Submitting a Service Request. To submit a request for service, Distributor      has two service options:

(a)  over the phone, the Distributor will dial WGT's service number as supplied      to Distributor by WGT. When a support specialist answers the phone,      Distributor will be prepared to discuss the problem with the support      specialist.

(b)  via electronic mail as supplied to Distributor by WGT, whereby a service      request can be submitted to WGT's electronic mail system.

In order to submit a service request, either telephonically or electronically, Distributor will employ the following procedures:

(a)  provide a clear description that fully explains what the problem is, and      when the problem occurs;

(b)  provide a diagnostic trace, sample code or file of the failure symptom that      has been recorded on the user's system; and

(c)  describe the steps taken to resolve the problem.

                                       18

3.   Priority. WGT will respond to problems with the Software in accordance with      the following priority schedule:

Priority One (P-1) is reserved for critical and severe Software problems which cause the Software to fail or act in a manner which causes the Software to be unusable.

Priority Two (P-2) is reserved for Software problems which cause a major component of the Software to become unusable but the overall Software continues to function.

Priority Three (P-3) is reserved for Software problems which cause minimal disruption to normal operations of the Software and can be avoided with a simple work-around process.

Priority Four (P-4) is reserved for all other problems of lesser severity.

4.   Response Time: Upon receipt of a service request, a WGT customer support      specialist will contact Distributor's designated, approved personnel within      the following response times to discuss the problem:

P-1 - respond within two (2) hours (subject to WGT's normal business hours) of





receipt of a P-1 problem and use all commercially reasonable and diligent efforts to create a fix or work-around as soon as practicable considering the nature of the problem.

P-2 - respond within four (4) hours (subject to WGT's normal business hours) of receipt of a P-2 problem and use all commercially reasonable and diligent efforts to create a fix or work-around as soon as practicable considering the nature of the problem.

P-3 - respond within twenty-four (24) hours (subject to WGT's normal business hours) of receipt of a P-3 problem and use all commercially reasonable efforts to create a fix or work-around which may be included in the next Update.

P-4 - respond within five (5) business days (subject to WGT's normal business hours) of receipt of a P-4 problem and target a fix in a future Update.

WGT will make any corrections available to Distributor via BBS, FTP site or other reasonable means.

                                       19

                             DISTRIBUTOR'S FORECAST                                     EXHIBIT D

Quarter 1: ____________, 19__ through ____________, 19__      $__________

Quarter 2: ____________, 19__ through ____________, 19__      $__________

Quarter 3: ____________, 19__ through ____________, 19__      $__________

Quarter 4: ____________, 19__ through ____________, 19__      $__________

                                       20
answer:
Highlight the parts (if any) of this contract related to Covenant Not To Sue that should be reviewed by a lawyer. Details: Is a party restricted from contesting the validity of the counterparty’s ownership of intellectual property or otherwise bringing a claim against the counterparty for matters unrelated to the contract?


question:
SPONSORSHIP AGREEMENT

         THIS SPONSORSHIP AGREEMENT (Agreement) is made and entered into as of this 1st day of January, 1997, by and between HYDRON TECHNOLOGIES, INC., a New York corporation with its principal offices located at 1001 Yamato Road, Suite 403, Boca Raton, Florida 33431, (Hydron) and MIAMI DOLPHINS, LTD., a Florida limited partnership with its principal offices located at 7500 Southwest 30th Street, Davie, Florida 33314 (Dolphins).

         WHEREAS, the Dolphins own and operate the Miami Dolphins, a professional football team and member of the National Football League, which presently is scheduled to play its home games at Pro Player Stadium in Miami, Florida (the Stadium); and Hydron desires to be a sponsor of the Miami Dolphins for certain entertainment and promotional purposes in connection with the Miami Dolphins including its home games during the term of this Agreement; and

         NOW THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, Hydron and the Dolphins hereby agree as follows:

         1.       TERM OF AGREEMENT

                  1.1 The term of this Agreement shall commence on the date hereof and terminate upon the conclusion of the week following the conclusion of the Dolphins 2000 regular season or post season, if applicable (the Term or Initial Term). However, this Agreement may be earlier terminated in accordance with the provisions hereof.

                  1.2 Hydron shall have the right to terminate this Agreement upon written notice to Dolphins at any time between November 1, 1997 and December 15, 1997, in which event this Agreement shall be terminated following the Dolphins last 1997 regular or post-season game, if any. If Hydron does not timely exercise its right to terminate this Agreement, then Hydron agrees that this Agreement shall continue for the entire four (4) year term unless earlier terminated pursuant to Section 8 of this Agreement.

         2.       SPONSORSHIP RIGHTS

                  2.1 For the Term of this Agreement, the Dolphins will provide Hydron with certain advertising and promotional benefits as are set forth in and in accordance with Exhibit A attached hereto and made a part hereof (the Sponsorship Rights).

                  2.2 For the Term of this Agreement, Hydron shall be designated as a sponsor of the Dolphins in the Sunscreen/Skin Care Category (as defined below) and a licensee of the Marks (as defined below) in the Sunscreen/Skin Category by the Dolphins. For purposes of this Agreement, the term Sunscreen/Skin Care Category means the product category consisting of sunscreen, sun protection and similar skin care products.

                  2.3 The Sponsorship Rights granted by the Dolphins to Hydron are subject to

termination in whole or in part at any time upon written notice to Hydron if such Sponsorship Rights conflict with any exclusive advertising rights granted by NFL Properties, Inc. to one of its advertisers or sponsors. In the event of any such termination of exclusivity, the non-terminated Sponsorship Rights granted to Hydron by the Dolphins shall nonetheless continue for the remainder of the Term and the provisions of Section 8.2 shall apply. As of the date hereof, the Dolphins have no knowledge of any claim by NFL Properties that the Sponsorship Rights violate or conflict with exclusive rights granted by NFL Properties.

         3.       CONSIDERATION

                  3.1 In consideration of the Sponsorship Rights granted to Hydron hereunder:

                            (a) Hydron shall pay to the Dolphins an aggregate amount of $96,000 (plus any applicable sales and other taxes) as follows: Hydron shall pay Dolphins the sum of $24,000 (plus any applicable sales and other taxes) on July 1, 1997, July 1, 1998, July 1, 1999 and July 1, 2000.

                  3.2 In the event that the consideration is not paid by Hydron on or before the applicable payment due date, said failure to pay shall be considered a material breach by Hydron, and the Dolphins may elect to charge Hydron a late fee of 1.5% per month of the payment then due and owing until it is paid in full. The Dolphins agree to provide written notice to Hydron of the failure to receive any payment, and Hydron shall have a five (5) business day period following delivery of written notice in which to cure the payment default before the Dolphins may elect to terminate this Agreement and pursue applicable remedies. It is agreed by Hydron that any such election of remedies does not waive any other remedies for breach of contract available to the Dolphins.

                  3.3 Except as otherwise specifically provided in this Agreement, including Exhibit A, each of the parties shall pay its own expenses of performing its obligations under this Agreement.





         4.       USE OF MARKS

                  4.1 Hydron and the Dolphins may use the name, logos, colors, trademarks, service marks, or other identifying features (Marks) of the other, as specifically contemplated in connection with the Sponsorship Rights, subject to any limitations set forth in this Agreement.

                  4.2 All advertising material and any use of the other parties' Marks by a party is subject to the prior written approval of the Mark owner. Either party shall submit all such materials or proposed usage of a Mark to the other party at least two weeks prior to its intended use. The Mark owner shall have the right to inspect and require changes or deletions (including the right to disapprove of such advertisement or use of Marks in their entirety) of advertising and promotional copy or material that the Mark owner may deem to be contrary to its policies or best interests. Such requirements will not be unreasonably imposed, and the foregoing approvals and

                                        2

requirements will be consistently given and imposed on all sponsors or users of the Marks, as the case may be.

                  4.3 Any and all public announcements or press releases by or on behalf of the other party regarding the Sponsorship Rights or the details of this Agreement shall be subject to the consent of the other party, and each party shall have the right to approve in advance the contents and timing thereof. Notwithstanding the foregoing, the Dolphins acknowledge that Hydron, as a publicly held company, has disclosure obligations pursuant to the federal securities laws. Hydron agrees to take the comments of the Dolphins into account in preparing and disseminating such disclosure, but notwithstanding comments from the Dolphins, Hydron shall make such disclosure as may be required by law.

                  4.4 For purposes of this Agreement, the Dolphins and Hydron expressly recognize that the Marks are the unique, valid and exclusive property of the respective owner of the Mark. The Dolphins and Hydron agree that they shall not, either during the term of this Agreement or thereafter, directly or indirectly, contest the validity of the other's Marks or any of the registrations pertaining thereto, in the United States or elsewhere, nor adopt the other's Marks or any term, word, mark or designation which is in any aspect confusingly similar to the other's Marks. The Dolphins and Hydron specifically acknowledges that any use of the Marks pursuant to this Agreement shall not create for the Dolphins or Hydron any right, title or interest in the other's Marks. The Dolphins and Hydron further agree that they will not at any time do or cause to be done any act or thing, directly or indirectly, which contests or in any way impairs or tends to impair any part of the right, title and interest of the other in its Marks; and the Dolphins and Hydron shall not, in any manner, represent that it has any ownership interest in the other's Marks or the registrations therefor. Upon termination of this Agreement, the Dolphins and Hydron shall immediately terminate all use of the other's Marks.

                  4.5 Hydron expressly recognizes that the Dolphins have previously granted the exclusive rights to license and sublicense its Marks to NFL Properties, Inc., and that the grant to Hydron of the right to use the Marks is subject to the prior approval of NFL Properties, Inc. In the event that such approval is not so given by NFL Properties, Inc., then such usage rights of Hydron shall immediately terminate. The Dolphins represent that they will use reasonable efforts to obtain the consent of NFL Properties, Inc. to the execution and performance of this Agreement prior to their execution hereof. In any such event, the provisions of Section 8.2 will apply.

         5.       STADIUM POLICY; GOVERNING LEAGUE POLICIES

                  5.1 Hydron and the Dolphins agree that this Agreement shall be performed in accordance with rules and policies of the Stadium as may be applicable to this Agreement, if any. The Dolphins will advise Hydron of any development of or changes in these rules and policies that might adversely affect the terms of this Agreement.

                  5.2 The parties agree that this Agreement shall automatically be subject to any new or amended National Football League (the NFL) rules or regulations applicable to advertising or promotional benefits provided by NFL member teams to its sponsors effective as

                                        3

of the date such regulation shall take effect and that this Agreement shall incorporate and be subject to the Constitution, By-Laws, rules and regulations, the duly authorized resolutions of the governing body, the decrees and rulings of the commissioner and the terms and conditions of any and all agreements to which the NFL is a party and as to which the NFL has bound its member clubs (collectively all of such regulations, resolutions, decrees and agreements are referred to as the Governing League Policies). The Dolphins shall advise Hydron of any changes therein which may materially and adversely affect the Sponsorship Rights. As of the date hereof, the Dolphins have no knowledge of any claim by the NFL that the Sponsorship Rights violate any Governing League Rules.

                  5.3 Without limiting any other potential uses of the Dolphins' Marks, Hydron agrees that the Dolphins may allow or authorize any League Sponsor (as defined below) to engage in advertising and promotional activities in the Dolphins' local market (including, without limitation, the Stadium), or





otherwise provide benefits to such League Sponsor, if such League Sponsor is entitled to engage in such activities or receive such benefits pursuant to any sponsorship or promotional licensing arrangement now or hereafter entered into between such League Sponsor and the NFL or any of its affiliates (including, without limitation, NFL Properties, Inc., NFL Enterprises, Inc. and NFL Films, Inc.). For purposes of this Agreement the term, League Sponsor shall mean any person or entity which currently is, or at any time becomes a sponsor or promotional licensee of or with respect to any NFL event or program now or hereafter in existence. By way of illustration only and without limiting the generality of the foregoing, League Sponsors may place advertising and promotional materials (including displays) in the Stadium, in connection with a League event, such as the Super Bowl.

                  5.4 If any rule or regulation of the Stadium, or any Governing League Policy as described in Sections 5.1, 5.2 or 5.3 requires the termination or revision of any Sponsorship Right, such Sponsorship Right shall be revised or terminated upon written notice to Hydron and the provisions of Section 8.2 shall apply to such termination or revisions.

         6.       REPRESENTATIONS AND WARRANTIES

                  6.1 Hydron represents and warrants to the Dolphins the following, all of which representations and warranties shall apply during the Term of this Agreement.

                            (a) Hydron is a corporation in good standing under the laws of the state of New York and is duly authorized to transact business in Florida, with full power and authority to enter into and fully perform its obligations under this Agreement. The execution and delivery of this Agreement on behalf of Hydron has been duly authorized by Hydron and this Agreement

constitutes a valid, binding and enforceable obligation of Hydron.

                            (b) Neither this Agreement nor anything required to be done hereunder by Hydron violates or shall violate any corporate charter, contract or other document to which Hydron is a party or by which it is otherwise bound.

                  6.2 The Dolphins represents and warrants to Hydron the following, all of

                                        4

which representations and warranties shall apply during the Term of this Agreement

                            (a) The Dolphins is a Florida limited partnership in good standing under the laws of the State of Florida and the Dolphins is duly authorized to transact business in Florida, with full power and authority to enter into and fully perform its obligations under this Agreement. The execution and delivery of this Agreement on behalf of the Dolphins has been duly authorized by the Dolphins and this Agreement constitutes a valid, binding and enforceable obligation thereof.

                            (b) Neither this Agreement nor anything required to be done hereunder by the Dolphins violates or shall violate any partnership agreement, corporate charter, contract or other document to which the Dolphins is a party or by which it is otherwise bound.

         7.       HOLD HARMLESS AND INDEMNIFICATION

                  7.1 Each of the parties shall indemnify and hold harmless the other, and their respective partners, shareholders, officers, employees, agents and representatives (collectively, the Indemnitees) from and against any and all claims, orders, damages, liabilities, costs and expenses, including reasonable attorney's fees, arising out of the other party's negligent actions or omissions with respect to this Agreement, or such party's wilful misconduct or breach of any representation, warranty or agreement in this Agreement applicable to it. Neither party shall have an obligation to indemnify or hold harmless an Indemnitees from any claim arising from or related to the Indemnitees negligence or misconduct. Each party hereto shall promptly notify the other of any claim or litigation to which the indemnity set forth in this paragraph applies. Each of the parties agree to defend all actions to which such indemnity applies and to conduct the defense thereof at its expense and by qualified counsel, which counsel shall be reasonably satisfactory to the Indemnitees. Each of the parties agree that the foregoing indemnities also apply for the benefit of the NFL (and its affiliates), South Florida Stadium Corporation, the owner and operator of Pro Player Stadium and their respective officials, officers, partners, agents and employees, who shall be deemed third party beneficiaries of this Agreement for the purpose of enforcing these indemnity obligations. These indemnity obligations shall survive the termination or expiration of this Agreement.

                  7.2 Insurance. The Dolphins shall, at its own expense, maintain in effect throughout the term of this Agreement, comprehensive general liability insurance policies with carriers of recognized standing, with limits of liability of at least One Million Dollars ($1,000,000), governing any and all property damage and person injury (including death) arising out of activities covered by this Agreement. Hydron shall, at its own expense, maintain in effect throughout the term of this Agreement, comprehensive general liability insurance policies with carriers of recognized standing, with limits of liability of at least One Million Dollars ($1,000,000), covering any and all property damage and personal injury (including death) arising out of activities covered by this





Agreement and shall obtain and maintain such additional insurance coverage as the Dolphins shall reasonably require with respect to any Sponsored Events or similar activities.

                                       5

         8.       TERMINATION

                  8.1(a) Without prejudice to any other rights, the Dolphins shall have the right to terminate this Agreement upon written notice to Hydron if Hydron fails to perform or comply with any term or condition of this Agreement within five (5) business days following delivery of written notice for a payment default or within thirty (30) days following written notice of any other breach of this Agreement sent to Hydron stating such failure or failures; provided that any such failure remains uncured at the end of such period.

                            (b) Without notice to any rights, Hydron shall have the right to terminate this Agreement upon written notice to Dolphins, if Dolphins fail to perform or comply with any material terms or conditions of this Agreement within thirty (30) days following delivery of written notice to Dolphins stating such failure or failures; provided that any failure remains uncured at the end of such period.

                  8.2 This Agreement may be terminated by the Dolphins or modified to reduce or eliminate certain promotional benefits (such as use of Marks or Sponsorship Rights), as described in Sections 2.3, 4.5 and 5.4 hereof. Upon any such termination or modification, the Dolphins will in good faith attempt to substitute a promotional benefit of equivalent promotional value for any benefits that the Dolphins was forced to eliminate; or, if the Dolphins is unable to substitute a promotional benefit of similar magnitude, then the Dolphins and Hydron shall attempt, in good faith, to agree upon an adjustment in the amount of fees payable by Hydron to the Dolphins under this Agreement. If the Dolphins and Hydron cannot agree upon an adjustment in the amount of fees payable hereunder, then Dolphins and Hydron agree to arbitrate the adjustment in fees and to be bound by the decision of the arbitrators. Any such arbitration shall be conducted in accordance with the rules of the American Arbitration Association.

                  8.3 Upon termination of this Agreement, all rights and privileges granted to Hydron hereunder shall automatically revert to the Dolphins. Upon termination of this Agreement by the Dolphins pursuant to paragraph 8.1(a), any and all payments then or later due to the Dolphins shall

become due and payable in full immediately, and no portion of any prior payments made to the Dolphins shall be refundable.

                  8.4 In the event that Hydron terminates this Agreement pursuant to the provisions of Section 8.1(b), then the fees paid, if any, for the balance of the term of this Agreement shall be immediately refunded to Hydron provided Hydron has not received sponsorship rights or benefits equal to such fees.

         9.       MISCELLANEOUS

                  9.1 The parties hereto agree to maintain in confidence the terms and conditions of this Agreement, except to the extent that a proposed disclosure by a party of any specifications or conditions hereof is authorized in advance by the other party pursuant to Section 4.3 or is otherwise required by law.

                                       6

                  9.2 It is mutually understood and agreed that Hydron and the Dolphins, and their respective partners, officers, employees, representatives and agents are, at all times, herein, acting and performing separately and independently of each other and are in no way or manner to represent themselves as agents or employees of the other party. As such, no party shall incur any expenses or create any liens or encumbrances in another party's name or against another party's interests. This Agreement shall not create a joint venture, partnership, or a relationship of principal and agent, or of employer and employee, between the parties.

                  9.3 All notices required to be given hereunder shall be properly served if in writing and delivered either by (i) personal delivery, (ii) certified or registered mail, postage prepaid, facsimile, or (iii) by recognized overnight courier service which delivers only upon the signed receipt of the addressee, which in any case shall be delivered to the respective addresses set forth at the beginning of this Agreement or such other addresses as may be designated by written notice by such party. Notice shall be deemed given on the date of delivery of such notice to the recipient or the date of refusal to accept delivery of such notice by the addressee or its agent.

                  9.4 In connection with any action arising from or in connection with the enforcement of this Agreement, the prevailing party shall be entitled to an award of its expenses, including reasonable attorneys' fees and disbursements, incurred or paid before and at trial or any other proceeding which may be instituted, at any tribunal level, and whether or not suit or any other proceeding is instituted.

                  9.5 This Agreement shall be governed by and construed in accordance with the laws of the State of Florida. Jurisdiction and venue for any legal proceedings arising out of this Agreement shall exclusively lie in the





state and federal courts situate in Broward County, Florida.

                  9.6 No party may assign any of its rights or obligations

hereunder without the prior written consent of the other party, except that Hydron may assign its rights and obligations under this Agreement to its parent, its successor or to an affiliate (as such term is defined under the rules and regulations promulgated under the federal securities laws of the U.S.) upon the reasonable consent of the Dolphins that such affiliate assignee has the financial means and corporate authority to perform such obligations and Hydron may not withhold its consent to an assignment of this Agreement in the event of a merger or reorganization of the Dolphins, a sale of all or substantially all of the Dolphins' assets or a consolidation of the Dolphins with any of its affiliates or related parties.

                  9.7 In the event that the performance of this Agreement is prevented because of an act of nature or force majeure or if the exhibition of any scheduled home games of the Dolphins is canceled because of strike, lockout, labor dispute or other cause of similar nature beyond the reasonable control of the Dolphins, the same shall not constitute a breach of this Agreement. The Dolphins hereby agree, in good faith, to attempt to reschedule any aspect of the Sponsorship Rights which is prevented from occurring as scheduled, at such date as may be

                                       7

reasonably agreeable to the Dolphins and Hydron. If one or more events or benefits are unable to be rescheduled during the Term of this Agreement, the provisions of Section 8.2 shall apply in the same manner as if such failure to reschedule caused a termination of a Sponsorship Right. Nothing stated in this Agreement grants Hydron any sponsorship, promotional or other rights with respect to any Super Bowl, Pro Bowl or NFL conference championship or play-off games or any other football game(s) which are not part of the preseason or regular season schedule of games to be played at home by the Miami Dolphins.

                  9.8 This Agreement (including Exhibit A) sets forth the entire understanding and agreement of the parties hereto with respect to its subject matter and supersedes all prior under standings or agreements between the parties relating to the same subject matter. Any amendments or modifications to this Agreement shall be in writing, as mutually agreed upon by both parties.

         IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective authorized representatives, effective as of the date first shown above.

                                        HYDRON TECHNOLOGIES, INC.

                                        By: /s/ Harvey Tauman                                            -------------------------------------                                              Harvey Tauman                                              President and Chairman                                              Date:                                                   ------------------------------

                                        MIAMI DOLPHINS, LTD., a  Florida limited                                         partnership

                                        By: SOUTH FLORIDA FOOTBALL                                             CORPORATION, its General Partner

                                        By: /s/ Eddie Jones                                            -------------------------------------                                              Eddie Jones, President                                              Date:                                                   ------------------------------

                                    8

                                    EXHIBIT A

                    MIAMI DOLPHINS/HYDRON TECHNOLOGIES, INC.

                               SPONSORSHIP RIGHTS

Season-Long Merchandising

PRINT ADVERTISING

The Dolphins will provide to Hydron:

o                                     One full page, four (4) color                                       advertisement for Hydron in all ten (10)                                       issues of GameDay Magazine, the official                                       publication of the National Football                                       League and the Miami Dolphins distributed                                       at Pro Player Stadium during each year                                       during the Term.

PROMOTIONAL MEDIA





In connection with this Agreement, Dolphins will provide the following promotional media:

                                   1996 BENEFITS PROVIDED TO HYDRON

o                                     Executive Suite: 320A. Use of the                                       executive suite for the December 8, 1996                                       game vs. the New York Giants. The game                                       will include twelve (12) tickets and two                                       (2) parking passes.

o                                     Stadium Signage: Hydron sign will be in                                       place on the West Scoreboard - Secondary                                       Tri-Vision Panel for the December 8, 1996                                       game vs. the New York Giants and the                                       December 16, 1996 game vs. the Buffalo                                       Bills.

o                                     Product Sampling: Hydron will provide ten                                       thousand (10,000) sunscreen samples which                                       will be distributed to club level patrons                                       prior to and during the December 8, 1996                                       game vs. the New York Giants. The Dolphins                                       will permit Hydron to set up four (4)                                       display booths which will be staffed by                                       Hydron employees to distribute the                                       sunscreen.

                                   1997-2000 BENEFITS TO HYDRON

o        Defensive Play of the Week Promotion: Hydron will be the title          sponsor of the 30-second Jumbtron video Defensive Player of the Week          promotion which will be displayed during each Miami Dolphins home game.

                                       9

o        Product Sampling: The Dolphins will permit Hydron to distribute          sunscreen product samples to fans in attendance at one (1) home game          during each contract year. Hydron will set up four (4) display booths          and will staff them with Hydron employees. The Dolphins will also          permit Hydron to distribute sunscreen product samples during the first          two (2) weeks of training camp at the Dolphins training facility in          Davie during each contract year.

o        Team Affiliation: Hydron will be permitted to advertise itself as a          Proud Sponsor of the Miami Dolphins in the skin care category.

o        Easements: The Miami Dolphins will use reasonable efforts to provide          endorsements of Hydron sunscreen/skin protection products from its          training staff.

                                    10
answer:
Highlight the parts (if any) of this contract related to Third Party Beneficiary that should be reviewed by a lawyer. Details: Is there a non-contracting party who is a beneficiary to some or all of the clauses in the contract and therefore can enforce its rights against a contracting party?


question:
[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.   Exhibit 10.11      COLLABORATION AGREEMENT

BY AND BETWEEN

ASTELLAS PHARMA INC.

AND

FIBROGEN, INC.      June 1, 2005





CONFIDENTIAL   EXECUTION COPY   TABLE OF CONTENTS   ARTICLE 1 DEFINITIONS     1

1.1   Actions     1  1.2   Affiliate     1  1.3   Astellas Indemnitees     1  1.4   Astellas Territory     1  1.5   Authorized Designee     1  1.6   Bridging Strategy     1  1.7   Bulk Product     2  1.8   Commercialize     2  1.9   Completion     2  1.10   Confidential Information     2  1.11   Control or Controlled     2  1.12   Controlling Party     2  1.13   Data     2  1.14   Delivery or Delivered     2  1.15   Development Plan     2  1.16   Development Program     2  1.17   Enforcement Action     2  1.18   Event     2  1.19   Expanded Field     2  1.20   Expenses     2  1.21   FDA     2  1.22   FG Acquired Patents     3  1.23   FG Development Program     3  1.24   FG Indemnitees     3  1.25   FG Technology     3  1.26   FG Patents     3  1.27   FG Technical Information     3  1.28   FG Territory     3  1.29   Field     4  1.30   First Commercial Sale     4  1.31   Force Majeure Event     4  1.32   Fully Burdened Costs     4  1.33   Future Third Party Intellectual Property     4  1.34   GMP Guidelines     4  1.35   [ * ]     4  1.36   [ * ] Percentage     5  1.37   HIF     5    -i-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





TABLE OF CONTENTS (continued)           Page   1.38   IND     5  1.39   Indemnitee     5  1.40   Indemnitor     5  1.41   Indications     5  1.42   Initial Development Plan     5  1.43   Initiate or Initiation     5  1.44   Inspected Party and Inspecting Party     5  1.45   Joint Development Committee or JDC     5  1.46   Lead Compound     5  1.47   Listed Price     5  1.48   Litigation Agreement     5  1.49   Major Indication     6  1.50   Marketing Approval     6  1.51   Marketing Approval Application or MAA     6  1.52   Net Sales     6  1.53   Phase I     6  1.54   Phase II     6  1.55   Phase III     6  1.56   Product Specification     7  1.57   Preexisting Third Party Intellectual Property     7  1.58   Proof of Concept     7  1.59   Prosecution and Interference Activities     7  1.60   Protected Field     7  1.61   Reference Materials     7  1.62   Relevant Standards     7  1.63   Sales Price     7  1.64   Standard Materials     7  1.65   Sublicensee     8  1.66   Technical Product Failure     8  1.67   Third Party Agreements     8  1.68   Third Party Licensor     8

ARTICLE 2 JOINT DEVELOPMENT COMMITTEE     8

2.1   Joint Development Committee     8  2.2   Membership     8  2.3   JDC Meetings     8  2.4   Decisions     9

ARTICLE 3 DEVELOPMENT PLANS     9

3.1   General     9  3.2   Annual Review     9  3.3   Periodic Reviews     9

ARTICLE 4 DEVELOPMENT PROGRAM     10

4.1   Development Program for the Astellas Territory     10    -ii-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





TABLE OF CONTENTS (continued)           Page  4.2   Global Harmonization     10  4.3   Selection of Lead Compounds     10  4.4   Regulatory Matters     11

ARTICLE 5 RECORDKEEPING; PUBLICATION     13

5.1   Reports and Records     13  5.2   Review of Publications     14

ARTICLE 6 DEVELOPMENT PROGRAM FUNDING     15

6.1   Payments for Reimbursement; Net Payments     15

ARTICLE 7 USE OF PRECLINICAL AND CLINICAL DATA     17

7.1   Exchange     17  7.2   Disclosure     18  7.3   Regulatory Requirements     18  7.4   Review of Protocols     18

ARTICLE 8 MARKETING RIGHTS     19

8.1   Astellas     19  8.2   FibroGen     19  8.3   Covenants     19

ARTICLE 9 TRANSFER PRICING     20

9.1   Transfer for Non-Commercial Purpose     20  9.2   Transfer for Commercial Purpose     21  9.3   Payment     22  9.4   Reference Materials; Standard Materials     22

ARTICLE 10 ADDITIONAL PAYMENTS; BOOKS AND RECORDS     22

10.1   Quarterly Reports     22  10.2   Payment Method     22  10.3   Currency Conversion     23  10.4   Taxes     23  10.5   Records; Inspections     24

ARTICLE 11 DUE DILIGENCE     24

11.1   Astellas' Due Diligence     24  11.2   FG's Due Diligence     24  11.3   Development Diligence     25

ARTICLE 12 MANUFACTURING RIGHTS     26

12.1   Procedures     26  12.2   FG Right     27  12.3   Manufacture and Supply     27  12.4   Product Specifications     27  12.5   Orders Forecast     27    -iii-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





TABLE OF CONTENTS (continued)           Page   12.6   Shipment     28  12.7   Inspection of Shipment/Right to Reject     28  12.8   Inspection of Facilities     28  12.9   Recall     29  12.10   Warranty     29  12.11   Interruption in Supply     29  12.12   Reference and Standard Materials     29

ARTICLE 13 LICENSE GRANTS     29

13.1   Grant to Astellas     29  13.2   Sublicenses     29  13.3   No Rights Beyond Lead Compounds     30  13.4   Expanded Field Negotiation     30

ARTICLE 14 INTELLECTUAL PROPERTY     30

14.1   Ownership of Inventions     30  14.2   Patent Prosecution     31  14.3   Defense of Third Party Infringement Claims     31  14.4   Enforcement     32  14.5   Third Party Agreements     33

ARTICLE 15 REPRESENTATIONS AND WARRANTIES     34

15.1   FG Warranties     34  15.2   Astellas Warranties     34  15.3   Disclaimer of Warranties     34

ARTICLE 16 CONFIDENTIALITY     35

16.1   Confidential Information     35  16.2   Permitted Disclosures     35  16.3   Clinical Data     36  16.4   Press Releases     36

ARTICLE 17 INSURANCE; INDEMNIFICATION     36

17.1   Insurance     36  17.2   Indemnification of FG     36  17.3   Indemnification of Astellas     37  17.4   Procedure     37

ARTICLE 18 TERM AND TERMINATION     37

18.1   Term     37  18.2   Termination for Cause or Technical Product Failure     37  18.3   Termination in case of Generic Competition     38  18.4   Negative Advice from Authorities     39  18.5   Admission of Invalidity or Unenforceability of FG Patent     39  18.6   Termination upon Notice     39    -iv-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





TABLE OF CONTENTS (continued)           Page   18.7   Effect of Termination     39

ARTICLE 19 DISPUTE RESOLUTION     40

19.1   Disputes     40  19.2   Full Arbitration     40

ARTICLE 20 MISCELLANEOUS     41

20.1   Confidential Terms     41  20.2   Governing Law     41  20.3   Force Majeure     41  20.4   No Implied Waivers; Rights Cumulative     42  20.5   Independent Contractors     42  20.6   Notices     42  20.7   Assignment     43  20.8   Modification     43  20.9   Severability     43  20.10   Counterparts     43  20.11   Headings     43  20.12   Export Laws     43  20.13   Language     43  20.14   Entire Agreement     43

EXHIBIT A LIST OF PATENTS     45

EXHIBIT B INDICATIONS     46

EXHIBIT C INITIAL DEVELOPMENT PLAN     47    -v-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   COLLABORATION AGREEMENT

This COLLABORATION AGREEMENT (Agreement), effective as of June 1, 2005 (the Effective Date), is made by and between FibroGen, Inc., a Delaware corporation having offices at 225 Gateway Boulevard, South San Francisco, California 94080 (FG or FibroGen), and Astellas Pharma Inc., a Japanese corporation having offices at 3-11 Nihonbashi-Honcho, 2-Chome, Chuo-ku, Tokyo, 103-8411 Japan (Astellas).

BACKGROUND

A. FG has a research and development program focused on the development of small molecule prolyl hydroxylase inhibitors which stabilize hypoxia inducible factor (HIF), for the treatment of anemia.

B. Astellas desires to collaborate with FG on the development and commercialization of, and license the rights to use as therapeutics, certain small molecule prolyl hydroxylase inhibitors on the terms and conditions set forth below for use in the Astellas Territory (as defined below).

NOW THEREFORE, for and in consideration of the covenants, conditions, and undertakings hereinafter set forth, it is agreed by and between the parties as follows:

ARTICLE 1 DEFINITIONS

1.1 Actions shall have the meaning as set forth in Section 14.3 below.

1.2 Affiliate shall mean any entity which controls, is controlled by or is under common control with Astellas or FG. For purposes of this definition only, control shall mean beneficial ownership (direct or indirect) of at least fifty percent (50%) of the shares of the subject entity entitled to vote in the election of directors (or, in the case of an entity that is not a corporation, for the election of the corresponding managing authority).

1.3 Astellas Indemnitees shall have the meaning as set forth in Section 17.3 below.

1.4 Astellas Territory shall mean the country of Japan.

1.5 Authorized Designee shall mean an officer of FG or Astellas, as the case may be, designated by the Chief Executive Officer of the respective corporation, that has been granted full authority to resolve a dispute arising between FG and Astellas as required under Section 2.4 or Section 19.1 hereof.

1.6 Bridging Strategy shall mean the decision by Astellas to file an MAA in the Astellas Territory by submitting the data from the Phase III clinical trial of FG or its Affiliate or Sublicensee.   -1-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   1.7 Bulk Product shall mean a Lead Compound supplied by FG to Astellas as a bulk formulated drug (such as in a form, including, but not limited, to a capsule, tablet or caplet formulation) without packaging.

1.8 Commercialize shall mean directly or indirectly develop, manufacture, sell, market or distribute.

1.9 Completion shall be deemed to occur, with respect to a particular clinical trial for a Lead Compound, upon clinical database lock for such trial.

1.10 Confidential Information shall have the meaning as set forth in Section 16.1 below.

1.11 Control or Controlled shall mean possession of the ability to grant a license or sublicense as provided for herein without violating the terms of an agreement with a third party.

1.12 Controlling Party shall have the meaning as set forth in Section 14.3 below.

1.13 Data shall have the meaning as set forth in Section 7.1 below.

1.14 Delivery or Delivered shall mean when Lead Compound is made available by FG to Astellas at the Ex Works location.

1.15 Development Plan shall mean the plan for the Development Program in effect from time to time, as established in accordance with Article 3 below.

1.16 Development Program shall mean all Astellas activities with respect to the development and commercialization of Lead Compounds for applications within the Field in the Astellas Territory, in accordance with the Development Plan in effect at that time.

1.17 Enforcement Action shall have the meaning as set forth in Section 14.4 below.

1.18 Event shall have the meaning as set forth in Article 6 below.

1.19 Expanded Field shall mean the treatment of any indications in which therapeutic utility is derived from [ * ], including, without limitation, [ * ]. The Expanded Field shall not include the Field.

1.20 Expenses shall have the meaning as set forth in Section 14.3 below.

1.21 FDA shall mean the U.S. Food and Drug Administration, or any successor agency.   -2-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   1.22 FG Acquired Patents shall mean those FG Patents that are in-licensed or otherwise acquired by FG.

1.23 FG Development Program shall mean those activities by or on behalf of FG directly related to the development and commercialization of Lead Compounds for applications within the Field in the FG Territory that are directly useful or necessary for Commercialization in the Astellas Territory.

1.24 FG Indemnitees shall have the meaning as set forth in Section 17.2 below.

1.25 FG Technology shall mean FG Patents and FG Technical Information.

1.26 FG Patents shall mean all patents including all reissues, renewals, re-examinations and extensions thereof, and any patent applications therefor, including all divisionals or continuations, in whole or in part, thereof, which claim or otherwise cover the composition, manufacture, sale or use of a Lead Compound and that are Controlled by FG or its Affiliates during the term of this Agreement, subject to Section 14.5.1. For purposes of this definition, a patent or patent application shall be deemed to cover a Lead Compound if the manufacture, use or sale of such Lead Compound would, but for the license granted herein, infringe, contributorily infringe or constitute inducement to infringement of such patent or patent application, if issued or granted as pending. All patents and patent applications listed on Exhibit A, as revised from time to time to remove patents and/or patent applications by mutual agreement or to add patents and/or patent applications by FG, shall be within the scope of definition of the FG Patents, provided, however, that in the event FG designates any additional Lead Compounds, FG shall add to the list on Exhibit A patents and patent applications which claim or otherwise cover the composition, or manufacture, sale or use of the additional Lead Compounds within the Field and the Astellas Territory, and upon the cessation of the designation as any compound as Lead Compound and Astellas' cessation of development of such Lead Compound, FG shall remove at its sole discretion the related patent or patent application from Exhibit A.

1.27 FG Technical Information shall mean confidential information, tangible and intangible, and materials, including, but not limited to: trade secrets and know how, pharmaceutical, chemical, biological and biochemical compositions; and technical and non-technical data and information, and/or the results of tests, assays, methods and processes; and plans, specifications and/or other documents containing said information and data; in each case that is possessed by FG as of the Effective Date or discovered, developed or Controlled by FG or its Affiliates during the term of this Agreement, to the extent such relates to the development, manufacture, sale or use of a Lead Compound subject to Section 14.5.1, and such information related to a candidate for use as a Lead Compound provided by FG to Astellas in connection with the Lead Compound selection decision consultation process described in Section 4.3.

1.28 FG Territory shall mean all areas of the world outside of the Astellas Territory.   -3-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   1.29 Field shall mean the treatment of anemia solely in the Indications, by means of the stabilization of HIF causing the stimulation of erythropoiesis (including an increase in endogenous erythropoietin production) and/or a subsequent increase in hematocrit through modulation of prolyl hydroxylase and/or asparaginyl hydroxylase. For purposes of clarity, FG and Astellas agree and acknowledge that the Field and the Indications exclude [ * ].

1.30 First Commercial Sale shall mean, with respect to each Lead Compound, the first bona fide commercial sale of such Lead Compound to a non-Affiliate third party by or under authority of Astellas or FG, or their Affiliates or Sublicensees, as the case may be, in the FG Territory or the Astellas Territory, respectively.

1.31 Force Majeure Event shall mean the occurrence of any event causing a failure to perform where failure to perform is beyond the reasonable control of the non-performing party, as described in Section 20.3.

1.32 Fully Burdened Costs with respect to a Lead Compound shall mean all costs to produce, package and distribute the product to Astellas or its carrier at the Ex Works location (in compliance with Section 12.6) and any royalties or other consideration (not reimbursed by Astellas) paid to third parties related to the acquisition or sale of product, with costs to produce and package the product to include the direct material, labor and indirect costs that are incurred by FG or its Affiliate(s) associated with the manufacture, filling, packaging, labeling, preparation of product for shipment and/or other preparation of such Lead Compound, as applicable, including, but not limited to taxes, fees, and customs incurred, as applicable. Costs will be determined in accordance with U.S. Generally Accepted Accounting Principles (U.S. GAAP) and will include but not be limited to the costs of facilities, labor, purchasing, depreciation of equipment, materials, payments to third parties for any necessary contract work related to the manufacture or testing of the product, the validation studies, quality assurance, quality control and other testing, storage, shipping (if requested by Astellas), costs related to distribution and a reasonable allocation of general and administrative overhead. Costs related to distribution include the labor, materials and overhead necessary to prepare and package the final product for shipment to the Ex Works location.

1.33 Future Third Party Intellectual Property shall mean any intellectual property rights, including without limitation all patents, trademarks, or copyrights, and any applications therefor, including any applications for registration, issuance, or grant thereof, owned or Controlled by a third party that are necessary for the practice of the license granted hereunder that were not owned or Controlled by FG as of the Effective Date and that do not qualify as Pre-existing Third Party Intellectual Property under Section 1.56.

1.34 GMP Guidelines shall mean then-current applicable Good Manufacturing Practices guidelines and regulations of the FDA.

1.35 [ * ] shall have the meaning as set forth in Section 1.36 below.   -4-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   1.36 [ * ] Percentage shall be determined, for any Lead Compound, (i) by dividing (a) the [ * ], which shall be defined as the difference between (x) the [ * ], and (y) the [ * ], by (b) the [ * ]; and (ii) multiplying the result of (i) above by 100.

1.37 HIF shall mean hypoxia inducible factor.

1.38 IND shall mean an Investigational New Drug application, as defined in the U.S. Federal Food, Drug and Cosmetic Act and the regulations promulgated thereunder, or comparable filing in a foreign jurisdiction, in each case with respect to a Lead Compound for use within the Field.

1.39 Indemnitee shall have the meaning as set forth in Section 17.4 below.

1.40 Indemnitor shall have the meaning as set forth in Section 17.4 below.

1.41 Indications shall mean those indications listed on Exhibit B and any other indications to be agreed upon hereafter between FG and Astellas, each of which shall be referred to as an Indication.

1.42 Initial Development Plan shall mean the Initial Development Plan as described in Section 3.2.1 hereof.

1.43 Initiate or Initiation shall mean with respect to a particular clinical trial for a Lead Compound, the initial dosing of the first patient in such trial in accordance with the protocol therefor.

1.44 Inspected Party and Inspecting Party shall have the meanings as set forth in Section 10.5 below.

1.45 Joint Development Committee or JDC shall have the meaning as set forth in Section 2.1 below.

1.46 Lead Compound shall mean any compound Controlled by FG that is designated by FG as a lead compound for clinical development in an Indication in accordance with Section 4.3 for the duration of such designation. Any Lead Compound which receives a Marketing Approval in the Astellas Territory shall remain a Lead Compound for the duration of such Marketing Approval. As of the Effective Date, FG-2216 shall be deemed to be a Lead Compound.

1.47 Listed Price shall have the meaning as set forth in Section 9.2.

1.48 Litigation Agreement shall have the meaning as set forth in Section 14.4 below.   -5-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   1.49 Major Indication shall have the meaning set forth in Section 11.3.1 below.

1.50 Marketing Approval shall mean, with respect to each Lead Compound, approval in the Astellas Territory by the Japanese Ministry of Health, Labour and Welfare, or in the FG Territory by U.S. or European regulatory authorities, as the case may be, to market such Lead Compound for an indication within the Field. It is understood that pricing or reimbursement approval shall constitute a part of the Marketing Approval. In any event, Marketing Approval shall be deemed to have occurred with respect to a Lead Compound no later than the date of the First Commercial Sale of such Lead Compound in the FG Territory or the Astellas Territory as the case may be, by or under authority of FG or Astellas respectively, or their Affiliate or Sublicensee, as the case may be, whether or not formal approval by the relevant health regulatory authority is required for the First Commercial Sale of such Lead Compound.

1.51 Marketing Approval Application or MAA shall mean, within the FG Territory, a New Drug Application or similar application as required under the U.S. Federal Food, Drug and Cosmetics Act and the regulations promulgated thereunder, or such similar filing in Europe, or a comparable filing for Marketing Approval in the Astellas Territory, in each case with respect to a Lead Compound for use within the Field.

1.52 Net Sales shall mean the gross amount billed or invoiced by Astellas, its Affiliates and its Sublicensees to unaffiliated third parties for the Lead Compound(s) in bona fide arm's length transaction, less the following deductions:

  i) credits or allowances, if any, given or made on account of rejection or return of the Lead Compound(s);

  ii) trade and quantity discounts actually allowed and taken in such amounts as are customary in the trade;

  iii) duties, sales taxes, excise taxes, insurance and transportation charges actually paid; and

  iv) charge back payments or rebates actually paid to wholesalers.

1.53 Phase I shall mean human clinical trials, the principal purpose of which is preliminary determination of safety in healthy individuals or patients as required in 21 C.F.R. §312.21, or similar clinical study in a country other than the United States, and for which there are no primary endpoints relating to efficacy included in the protocol.

1.54 Phase II shall mean human clinical trials, for which the primary endpoints include a determination of dose ranges and/or a preliminary determination of efficacy in patients with the Indication being studied as required in 21 C.F.R. §312.21, or similar clinical study in a country other than the United States.

1.55 Phase III shall mean human clinical trials, the principal purpose of which is to establish safety and efficacy of one or more particular doses in patients with the Indication being studied as required in 21 C.F.R. §312.21, or similar clinical study in a country   -6-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   other than the United States. For purposes of this Section 1.55, and Sections 1.53 and 1.54 above, a particular trial that (i) is intended to overlap two phases of trials, (ii) combines the elements of two phases of trials, or (iii) is treated by the FDA or comparable foreign agency as two phases of trials, such as a Phase I/II trial or a Phase II/III trial, shall be deemed a trial of the later, as well as the earlier, phase (i.e., a Phase II and a Phase III, respectively).

1.56 Product Specification shall mean, with respect to a Bulk Product, the written document describing, the testing procedures and results required to determine compliance with release specifications, including, and quality control testing procedures to be determined, and be amended from time to time, by mutual agreement of both parties. The release specifications of such Product Specifications shall be determined taking into account and shall be designed to meet the shelf life requirements of the Japanese Ministry of Health, Labor and Welfare for the Lead Compound, provided, that the Product Specifications shall not require compliance with such shelf life requirements.

1.57 Preexisting Third Party Intellectual Property shall mean any intellectual property rights, including without limitation all patents, trademarks, copyrights, and any applications therefor, including any applications for registration, issuance, or grant thereof, owned or Controlled by a third party that are necessary for the practice of the license granted hereunder and that the existence of which was discoverable or otherwise could have been known on or prior to the Effective Date and were not owned or Controlled by FG as of the Effective Date.

1.58 Proof of Concept shall mean for any Indication, a demonstration of correction of anemia in relevant patients in a human clinical study.

1.59 Prosecution and Interference Activities shall mean the preparation, filing, prosecution and maintenance of patent applications and patents and any continuing applications thereof, and any re-examinations, reissues, renewals and requests for patent term extensions therefor, and any U.S., international or foreign counterparts of any of the foregoing, together with the conduct of any interference, opposition or other similar proceeding pertaining to patent applications or patents.

1.60 Protected Field shall have the meaning as set forth in Section 14.1.

1.61 Reference Materials shall have the meaning as set forth in Section 12.12 below.

1.62 Relevant Standards shall have the meaning as set forth in Section 12.8 below.

1.63 Sales Price shall mean the price per unit obtained by dividing the Net Sales during the relevant calendar quarter by the number of units sold during the same period.

1.64 Standard Materials shall have the meaning as set forth in Section 12.12 below.   -7-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   1.65 Sublicensee shall mean a third party to whom FG or Astellas has directly or indirectly granted the right in its respective territory to make, use and sell a Lead Compound or a third party to whom FG or Astellas has directly or indirectly granted the right to distribute a Lead Compound supplied by FG or Astellas (respectively). For purposes of this Agreement, FG and Astellas shall not be deemed Sublicensees of the other.

1.66 Technical Product Failure shall mean as a [ * ], which is not attributed to Astellas' failure to fulfill its obligations hereunder.

1.67 Third Party Agreements shall mean collectively those agreements between FG and a third party existing as of the Effective Date, pursuant to which FG obtained rights applicable to the development, manufacture, sale or use of Lead Compounds hereunder (but excluding options or similar agreements to acquire such rights). If, after the Effective Date, FG enters into an agreement to license or acquire rights from a third party with respect to subject matter to be utilized in connection with Lead Compounds in accordance with Section 14.5 below, such agreements shall also be deemed Third Party Agreements for purposes of this Agreement.

1.68 Third Party Licensor shall have the meaning as set forth in Section 14.5.1 below.

ARTICLE 2 JOINT DEVELOPMENT COMMITTEE

2.1 Joint Development Committee. Astellas and FG shall establish a joint development committee to oversee, review and coordinate the research and development of Lead Compounds for applications within the Field pursuant to the Development Program (Joint Development Committee or JDC). From time to time, the JDC may establish subcommittees or project teams to oversee particular projects or activities, and such subcommittees or project teams will be constituted as the JDC agrees (e.g., for oversight of the development or other day-to-day matters).

2.2 Membership. The JDC shall be comprised of an equal number of representatives from each of Astellas and FG, selected by such party. The exact number of such representatives shall be [ * ] for each of Astellas and FG, or such other number as the parties may agree. Subject to the foregoing provisions of this Section 2.2, FG and Astellas may replace its respective JDC representatives at any time, upon prior written notice to the other party.

2.3 JDC Meetings. The JDC shall meet no fewer than [ * ] times each calendar year, or as otherwise agreed by the parties, with the understanding that [ * ] meetings are to be held at mutually agreed locations alternating among Japan, California, Hawaii, or at such other locations as the parties agree, and the other [ * ] meetings are to be held by means of telecommunication, videoconference or correspondence as deemed appropriate. The parties shall conduct team meetings at the same time and location as the JDC meetings. At its meetings, the JDC will, as applicable, (i) formulate and review the Development Program objectives, including approval of all proposed pre-clinical and clinical studies to be performed, (ii) monitor the progress of the Development Program toward those objectives, (iii) review and approve the   -8-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   Development Plan, pursuant to Section 3.3 of this Agreement, including review, approve and monitor the progress of the clinical and regulatory plans, (iv) resolve issues surrounding the marketing of the Lead Compounds, (v) discuss the selection of Lead Compounds, (vi) coordinate manufacturing issues, including the development of standards, scheduling of batch production, and qualification with regulatory requirements for the Astellas Territory, (vii) resolve issues arising out of the Development Program or this Agreement, and (viii) undertake and/or approve such other matters as are specifically provided for the JDC under this Agreement. One meeting each year will be focused specifically on setting Development Program goals and strategy. Other representatives of FG or Astellas may attend JDC or subcommittee meetings as non-voting observers. Astellas' lead representative shall chair the meetings and shall be responsible for preparing the agenda and minutes for such meetings, and shall provide such minutes to FG in English. Such minutes as approved by the JDC shall constitute the official record of the actions of the JDC. The JDC may also convene or be polled or consulted from time to time by means of telecommunications, videoconferences or correspondence, as deemed necessary or appropriate. Each party shall bear its own personnel, travel and lodging expenses relating to JDC meetings.

2.4 Decisions. Decisions of the JDC shall be made by unanimous agreement of the members present in person or by other means (e.g., teleconference) at any meeting; provided that at least two (2) representatives of each party is present at such meeting. In the event that the JDC is unable to reach unanimous agreement on an issue, the issue shall be referred for resolution in accordance with Article 19 hereof.

ARTICLE 3 DEVELOPMENT PLANS

3.1 General. Subject to Section 3.2 below, Astellas shall prepare and propose to the JDC a detailed Development Plan pursuant to which the Development Program will be performed. The Development Plan shall specify the objectives and work plan activities by Astellas with respect to the Development Program.

3.2 Annual Review

3.2.1 Initial Development Plan. The initial Development Plan is attached hereto as Exhibit C (the Initial Development Plan), and shall be fixed for the period from the Effective Date through March 31, 2006, unless otherwise agreed by the JDC.

3.2.2 Other. Beginning upon the date of signing of this Agreement and by December 31 of each year thereafter until expiration or termination of this Agreement, Astellas shall submit to the JDC the proposed plan required under Section 3.1 above for the following fiscal year, including for regulatory activities within the Astellas Territory. The JDC shall review such proposals as soon as possible and shall approve the Development Plan for such following fiscal year, with such changes as the JDC may agree to the plan proposed by Astellas, no later than March 15 of the current fiscal year.

3.3 Periodic Reviews. The JDC shall review the Development Plan on an ongoing basis and may make changes thereto including variances to the Development Plan in effect.   -9-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   ARTICLE 4 DEVELOPMENT PROGRAM

4.1 Development Program for the Astellas Territory. Astellas shall follow FG's development activities for the Lead Compounds, (i.e., Astellas shall develop, and shall have the right and obligation to develop, only those compounds that FG has designated as Lead Compounds, for the duration of such designation and for which FG or its Sublicensee is pursuing clinical development in the FG Territory), for those Indications being developed by FG or its sublicensee, and such Astellas development shall comply with, without limitation the procedures set forth in Section 11.3.1. In fulfillment thereof, Astellas shall conduct, directly or through third parties, the Development Program for the Astellas Territory, all in accordance with the Development Plan then in effect, and shall be responsible for all costs related to the Astellas Territory. Astellas agrees to keep the JDC informed as to the progress of its activities under the Development Program for Lead Compounds hereunder. FG shall, subject to Section 4.2.2, provide reasonable assistance to Astellas regarding Astellas' performance of its development activities within the scope of the Development Program hereunder and provide updates to Astellas as to the FG Development Program. It is understood and agreed that the Development Program for the Astellas Territory shall include all clinical trials and other development activities necessary to obtain Marketing Approvals for Lead Compounds for the Astellas Territory.

4.2 Global Harmonization

4.2.1 Reporting; Redundant Activities. FG shall provide to Astellas regular reports with respect to the FG Development Program with respect to the Lead Compounds. Such reports may be provided at the JDC meetings provided for in Section 2.3. Recognizing that the Lead Compounds may be developed on a global basis and that regulatory and budget efficiencies can be achieved through the worldwide use of appropriate data and files, the parties will seek to design pre-clinical and clinical development activities included in the Development Plan in a manner to maximize global clinical and regulatory harmonization.

4.2.2 Additional Activities. Without limiting the obligations set forth in 4.2.1, the costs of any non-clinical or clinical developmental work, whether performed by Astellas or FG, to support needs specific to the Astellas Territory and not required to be performed for the FG Territory, or at the request of Astellas, shall be borne by Astellas.

4.3 Selection of Lead Compounds. FG shall consult with Astellas with respect to Lead Compound selection, and shall provide to Astellas information as reasonably necessary to evaluate Lead Compound candidates in connection with the Lead Compound selection process, including without limitation the information relating to patent situations in the Astellas Territory. For the avoidance of doubt, such Lead Compound candidates shall potentially include any and all compounds Controlled by FG during the term hereof for use in the Field. Notwithstanding anything contained in this Agreement, FG shall designate, at its sole discretion but in line with the basic policy that the same Lead Compound shall be Commercialized both in Astellas Territory and FG Territory for the same Indication(s), Lead Compound(s) in accordance with the terms of this Section 4.3, and shall notify the JDC of such designations. At any one time, FG may designate up to two (2) Lead Compounds for Commercialization in any Indication; provided, that in the event that FG designates two (2) Lead   -10-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   Compounds for Commercialization in an Indication, it shall designate one (1) as the primary Lead Compound and one (1) as the secondary Lead Compound. In the event FG determines to cease development of a primary Lead Compound in an Indication, FG may designate the secondary Lead Compound as the primary Lead Compound for such Indication. In the event, prior to Marketing Approval in the Astellas Territory, FG determines to stop development of a Lead Compound, FG shall notify the JDC, and upon such notification, such compound shall no longer be considered a Lead Compound; provided, however, that Astellas may complete those development activities on-going at the time of such notification for such Lead Compound for a reasonable period of time, unless such notification is based on safety concerns. In the event FG determines to [ * ], FG shall [ * ] within [ * ] days of such [ * ]. In the event that FG [ * ], Astellas may, subject to the [ * ], [ * ], provided, however, that the [ * ] shall apply upon the [ * ] set forth in such Sections, rather than the [ * ].

4.4 Regulatory Matters

4.4.1 Regulatory Filing. FG shall be responsible, directly or through third parties, for the preparation, filing and maintenance of all regulatory documents in the FG Territory with respect to the Lead Compound(s), which shall be filed in the name of FG or its designee. Astellas shall be responsible for all preparation, filing and maintenance of all regulatory documents in the Astellas Territory with respect to the Lead Compound(s), which shall be filed in the name of Astellas. Astellas shall select and own the trademark(s) to be used to identify any Lead Compound in the Astellas Territory.

4.4.2 Reporting Adverse Experiences

(a) With respect to adverse drug experiences relating to any Lead Compound, the parties shall promptly report such experiences to the appropriate regulatory authorities in the countries in which such Lead Compound is being developed or commercialized, in accordance with the appropriate laws and regulations of the relevant countries and authorities, and each party shall ensure that its Affiliates and Sublicensees comply with such reporting obligations. In addition, in order that each party may be fully informed of these experiences, each party shall report to the other party all adverse events involving such Lead Compound. Serious adverse events for all fatal and life-threatening adverse events shall be reported to the designated safety contact person of the other party by e-mail within five (5) calendar days of a party's and/or its agent's becoming aware of such an event (a reporting party), and all other serious adverse events shall be forwarded to the other party within seven (7) calendar days of the reporting party's and/or its agent's becoming aware of such an event. To the extent legally possible, FG and Astellas shall report to the other all serious adverse events with respect to a Lead Compound in the Field at least twenty-four (24) hours prior to reporting the same to a regulatory authority, and shall report adverse events which may constitute a dose limiting toxicity in a reasonably prompt time after the occurrence of such event. The reporting party shall report all non-serious adverse events on a monthly basis; provided that, non- serious adverse event data arising from a clinical trial will be included in the clinical trial report which   -11-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   shall be prepared and sent to the other party as soon as practicable following completion of the final clinical report.

(b) An adverse event is any negative symptom experienced at the time of or after the taking of a medicinal (investigational) product, whether or not considered a medicinal (investigational) product related, including any side effects, injury, toxicity or sensitivity reaction, or significant failure of expected pharmacological action. Also included are instances of symptomatic overdose, abuse or withdrawal reactions.

(c) A serious adverse event includes any of the following outcomes: death, a life-threatening event; that is, an adverse event that puts the patient at risk of dying, requires hospitalization, prolongs existing hospitalization or results in persistent or significant incapacity or disability, congenital anomaly/birth defect. Other important medical events that may otherwise jeopardize a patient or may require intervention to prevent one of the statuses of patients listed in the preceding sentence shall also be considered serious.

(d) The parties also agree to develop and implement such other procedures as may be necessary or appropriate to ensure that each party remains in compliance with all reporting requirements imposed by any regulatory authority in the Astellas Territory, and in the FG Territory. Upon the Initiation of Phase III, FG shall implement and be responsible for the maintenance of a complete global safety database. FG will be responsible for preparing, with Astellas' cooperation set forth below in this Section 4.4.2(d), Periodic Safety Reports for clinical studies requested by European and U.S. authorities, and Periodic Safety Update Reports (PSURs). FG shall send a draft PSUR for review to Astellas in the beginning of week 5 after database lock point. Astellas has one week for review. FG shall provide copies of the final PSURs to Astellas in the same timing as they are submitted to the authorities. Astellas will provide FG with the data needed for making the PSURs. Maintenance of Company Core Safety Information (CCSI) is under the responsibility of FG who will communicate all revisions to Astellas. FG shall prepare the periodic safety reports for clinical studies requested by European and U.S. authorities and provide Astellas with the copy of such reports at the time of submission to the regulatory authorities in the FG Territory. Astellas will provide FG with the data needed for making such periodic safety reports.

(e) Each party shall immediately inform the other party of measures taken in order not to jeopardize public health or hygiene including but not limited to, discontinuation of manufacture, import and marketing, clinical trial suspension, recall and disposal of the Lead Compound or the product or the prescription product, irrespective of whether it is due to regulatory actions or voluntary actions.   -12-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   (f) Both parties hereby nominate the safety contact persons as follows:

Medical Affairs Department FibroGen, Inc. 225 Gateway Boulevard San Francisco, California 94080 Attn: Vice President, Medical Affairs Tel: 1-650-866-7875 Fax: 1-650-866-7360 E-mail:dyeowell@fibrogen.com

With a copy to: Chief Executive Officer FibroGen, Inc. 225 Gateway Boulevard San Francisco, California 94080 Tel: 1-650-866-7200 Fax: 1-650-866-7201 E-mail:tneff@fibrogen.com Pharmacovigilance Department, QA, RA, and Pharmacovigilance Division Astellas Pharma Inc. [ * ]

The safety contact persons for each party hereto may be updated from time to time as necessary upon notice to the other party.

ARTICLE 5 RECORDKEEPING; PUBLICATION

5.1 Reports and Records. Each of Astellas and FG shall use best efforts to maintain (or cause such records to be maintained) records of the Development Program and FG Development Program, respectively, in sufficient detail and in good scientific manner as will properly reflect all work done and results achieved in the performance of the Development Program or FG Development Program, as the case may be. Upon [ * ] days advance notice or such shorter time period as may be required in order to meet any regulatory requirements, each party shall allow the other party to have access to all records, materials and data generated by or on behalf of such party with respect to each Lead Compound for applications within the Field at reasonable times, in a reasonable manner and, upon request, to the extent required under Article 7 hereof.   -13-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   5.1.1 Retention. Each of Astellas and FG shall retain its records for the minimum period of time required by applicable law in all cases, and for not less than [ * ] following the expiration or termination of this Agreement.

5.1.2 Reports. Not less than [ * ] prior to each JDC meeting under Section 2.3 above, each of Astellas and FG shall provide the JDC with a written report in English; Astellas' report summarizing the progress of the Development Program, including the developmental, clinical and other activities performed by Astellas, its Affiliates and/or Sublicensees with respect to each Lead Compound during the preceding period; and FG's report summarizing the progress of the FG Development Program.

5.1.3 Activities Outside the Field. The parties understand and acknowledge that FG is engaged in other research and development activities directed to prolyl hydroxylase inhibition and/or the stabilization of HIF, and that the focus of this collaboration and the Development Program is directed to the Field. Accordingly, it is understood that, notwithstanding any other provision of this Agreement, the obligations of FG specified herein to make available and disclose to Astellas data, technical information, scientific results and findings and other subject matter is limited in each case to subject matter directed to Lead Compounds within the Field.

5.2 Review of Publications. As soon as is practicable prior to the oral public disclosure, and prior to the submission to any outside person for publication of scientific data resulting from the Development Program, in each case to the extent the contents of the oral disclosure or publication have not been previously disclosed pursuant to this Section 5.2 before such proposed disclosure, FG or Astellas, as the case may be, shall provide to the other party a copy of the publication, or a written summary of any oral disclosure, to be made or submitted, and shall allow the other party at least [ * ], to determine whether such disclosure or publication contains subject matter for which patent protection should be sought prior to publication or which either party believes should be modified to avoid disclosure of Confidential Information or regulatory or other issues. With respect to publications by investigators or other third parties of scientific data resulting from the Development Program, such disclosures and publications shall also be subject to review by the reviewing party under this Section 5.2.

5.2.1 Publication Rights. Subject to the provisions of Articles 7 and 16, after the expiration of [ * ] from the date of receipt of such disclosure or publication, unless the authoring party has received the written notice specified below, the authoring party shall be free to submit such publication or to orally disclose or publish the disclosed research results in any manner consistent with academic standards.

5.2.2 Disapproval of Publication. Prior to the expiration of the [ * ] period specified in Section 5.2.1 above, the reviewing party may notify in writing the submitting party of its determination that such oral presentation or publication contains Confidential Information of the reviewing party or objectionable material or material that consists of patentable subject matter of the reviewing party for which patent protection should be sought. In such event, and unless otherwise mutually agreed, the submitting party shall withhold publication of its disclosure.   -14-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   ARTICLE 6 DEVELOPMENT PROGRAM FUNDING

6.1 Payments for Reimbursement; Net Payments. FG hereby acknowledges receipt of U.S. $[ * ] on February 13, 2004, U.S. $[ * ] on January 28, 2005, and U.S. $[ * ] on March 22, 2005 as initial payments for reimbursement of historical research and development expenditures for the Lead Compounds. Astellas agrees to pay to FG the amounts set forth in Section 6.1.1 below. The parties hereto acknowledge that the Development Program hereunder involves a high degree of risk and uncertainty; accordingly, both parties hereto expressly disclaim any implied warranty as to the results of the Development Program.

6.1.1 Reimbursement Payments. As reimbursement and payment for FG's historical research and development expenditures with respect to pre-clinical and clinical development of Lead Compounds, Astellas agrees to make the following non-refundable, non-creditable (except as set forth in Section 14.3 below) reimbursement payments to FG upon the first occurrence of each event specified below (each, an Event):       EVENT   AMOUNT 1.   Upon [ * ], provided, that U.S. $[ * ] million of such amount shall be paid no later than [ * ] irrespective of whether the [ * ] has occurred.   U.S. $[ * ]

2.  Upon each of [ * ], for a total of U.S. $[ * ]   U.S. $[ * ]

3.   Upon [ * ] or in the event that Astellas chooses to utilize the Bridging Strategy, the payment shall be made concurrent with the payment required in paragraph 4 of this Section 6.1.1 below.   U.S. $[ * ]

4.  Upon the first [ * ].   U.S. $[ * ]

6.1.2 Product Approval Payments. As reimbursement and payment for FG's historical and ongoing research and development expenditures with respect to pre-clinical and clinical development of Lead Compounds and as payment for the successful marketing and sales of Lead Compound(s), Astellas agrees to make the following non-refundable, non-creditable (except as set forth in Section 14.3 below) reimbursement payments to FG upon the first occurrence of each Event (other than paragraph 5 of this Section 6.1.2 below) specified below. Notwithstanding the foregoing, in the event that Astellas decides not to pursue Commercialization in [ * ] set forth in paragraph 3 or 4 of this Section 6.1.2, the milestone payment associated with the [ * ] set forth in paragraph 3   -15-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   shall be due and payable upon the first [ * ] of either [ * ], and the milestone payment associated with the [ * ] set forth in paragraph 4 shall be due and payable upon the second [ * ] for a [ * ]; and in the event Astellas decides to pursue only [ * ] set forth in paragraph 3 or 4 of this Section 6.1.2, and pursues Commercialization of either of the [ * ], the milestone payment for associated with the [ * ] for the [ * ] shall be due and payable upon the first [ * ] for a [ * ]; and in the event that Astellas decides to pursue [ * ] set forth in paragraphs 3 and 4 of this Section 6.1.2 and also does not pursue [ * ], the parties shall a [ * ] for which the milestone payments associated with the [ * ] set forth in paragraph(s) 3 and/or 4 of this Section 6.1.2, as the case may be, shall be due, as negotiated in good faith by the parties hereto.       EVENT   AMOUNT 1.   Upon the first [ * ] for the [ * ]; provided, that in the event Astellas chooses the Bridging Strategy, such payment shall be increased by an additional U.S. $[ * ] for a total of U.S. $[ * ]   U.S. $[ * ]

2.   Upon the first [ * ] in the Astellas Territory for the [ * ]; provided, that in the event Astellas chooses the Bridging Strategy, such payment shall be increased by an additional U.S. $[ * ] for a total of U.S. $[ * ].   U.S. $[ * ]

3.   Upon the first [ * ] in the Astellas Territory for the [ * ]; provided, that in the event Astellas chooses the Bridging Strategy, such payment shall be increased by an additional U.S. $[ * ] for a total of U.S. $[ * ].   U.S. $[ * ]

4.



Upon the first [ * ] in the Astellas Territory for the first indication within [ * ] (see Exhibit B); provided, that in the event Astellas chooses the Bridging Strategy, such payment shall be increased by an additional U.S. $[ * ] for a total of U.S. $[ * ].

U.S. $[ * ]

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[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY

5.   Upon [ * ] in the Astellas Territory for each of up to [ * ] indications listed on Exhibit B, including separate indications within [ * ] up to a total of U.S. $[ * ].   U.S. $[ * ]

6.1.3 Sales Success Payments. As reimbursement and payment for FG's historical and ongoing research and development expenditures with respect to pre-clinical and clinical development of Lead Compounds and as payment for the successful marketing and sales of the Lead Compound(s), Astellas agrees to make the following non-refundable, non-creditable (except as set forth in Section 14.3 below) reimbursement payments to FG upon the first occurrence of the Event specified below.   EVENT   AMOUNT Upon receipt of [ * ] aggregate annual Net Sales achieved for the first time in the Astellas Territory for all indications and Lead Compounds by Astellas and its Affiliates and Sublicensees.   U.S. [ * ]

If at the occurrence of an Event (except for Event 2) as set forth in Section 6.1.1 above with respect to a particular Lead Compound the payment corresponding to the occurrence of any preceding Event (except for Event 2) (i.e., previous as contemplated by the Event number sequence specified above) has not been made, then the corresponding payment(s) for such preceding Event (except for Event 2) shall then be due.

The payments set forth in Sections 6.1.1, 6.1.2 and 6.1.3 hereof shall each be due and payable within [ * ] after occurrence of the corresponding Event. Astellas agrees to promptly notify FG in writing of its achievement of any Event under Sections 6.1.1, 6.1.2 and 6.1.3.

ARTICLE 7 USE OF PRECLINICAL AND CLINICAL DATA

7.1 Exchange. Subject to the provisions of this Article 7 and Article 16 below, the parties shall have access to the underlying preclinical and clinical data (including raw data thereof), analysis, reports, protocols and correspondence (collectively with such filings, Data), at reasonable times, upon fifteen (15) days advance notice or such shorter notice as may be required in order to meet any regulatory requirements and (upon request) in English, (it being understood and agreed that Astellas shall provide in English without cost to FG summaries of all final reports and all documents necessary to comply with regulatory and legal requirements, and   -17-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   shall provide all other documents in English with reasonable costs shared equally between the parties) of the other party in accordance with the following:

(a) FG shall have access to and the right to use for any purpose, any Data developed by or on behalf of Astellas or its Affiliates or Sublicensees in the course of the Development Program with respect to indications within the Field for Lead Compounds. Astellas shall obtain from such Sublicensees access to all Data prepared by or for such Sublicensee with respect to a Lead Compound, with the right to provide such Data and/or access to FG and its Sublicensees, and any sublicense failing to provide such obligation on the part of the Sublicensee shall be voidable at the option of FG.

(b) Astellas shall have access to and the right to use solely for the purpose of this Agreement, any Data developed by or on behalf of FG or its Affiliates or Sublicensees with respect to Lead Compounds in connection with the Field (i) to the extent necessary to support the application to the regulatory authority in the Astellas Territory or to fulfill other Japanese Ministry of Health, Labor and Welfare regulatory requirements, or (ii) if not necessary to support such application or to fulfill such Japanese Ministry of Health, Labor and Welfare regulatory requirements, to the extent FG is permitted subject to FG's third party obligations; provided that FG shall [ * ] negotiate the availability of such Data to Astellas from such Sublicensee, and provided, further, that Astellas agrees not to use or disclose to third parties any such data for purposes outside the Field except as authorized under this Agreement.

7.2 Disclosure. Subject to the provisions of this Section 7.2, FG and Astellas may each provide copies or summaries of Data to its Affiliates and/or its permitted Sublicensees to the extent reasonably necessary for the development and commercialization of Lead Compounds in accordance with this Agreement, or in the case of FG of products other than Lead Compounds. It is understood that the foregoing shall include the right to disclose Data to third parties with whom Astellas or FG are discussing entering into agreements for such permitted purposes, subject to reasonable conditions of confidentiality, provided, that Astellas may not disclose any Data to any third party competitor of FG within the Field worldwide without the prior written consent of FG.

7.3 Regulatory Requirements. Notwithstanding the provisions of Section 7.2, in all agreements with third parties or Affiliates involving the development of Data, FG and Astellas, respectively, shall require that such third parties and Affiliates provide the other party with all such Data, to the extent such Data is required in order for each party to meet its obligations to the other party under Section 4.4.2 above.

7.4 Review of Protocols. Astellas agrees that all final protocol summaries for all clinical trials and GLP toxicology studies to be conducted by or under authority of Astellas will be subject to the review and approval of the JDC, in accordance with the following procedures set forth in this Section 7.4. Astellas shall submit to FG and the JDC the original draft protocol summary in English for any clinical trial or GLP toxicology study it proposes to conduct, and such protocol summary shall be reviewed and approved by the JDC. The protocol summary shall contain all information as may be requested by the JDC. Upon Astellas' completion of the final protocol for the proposed clinical trial or GLP toxicology study, in the   -18-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   event that such protocol deviates from the original protocol summary, Astellas shall resubmit to FG and the JDC for review and approval a revised, final protocol summary that indicates all changes from the original protocol summary. Notwithstanding the foregoing, FG reserves the right to request and Astellas shall provide any portion of full text of the protocols in English for review by the JDC, which portion is at issue. In the event FG requests such a full text protocol, it shall review and provide comments to the JDC as soon as practicable, and within five (5) business days of receipt.

ARTICLE 8 MARKETING RIGHTS

8.1 Astellas. Astellas shall have the exclusive right to market, sell and distribute the Lead Compounds supplied by FG for use in the Astellas Territory within the Field under the license granted in Article 13. Astellas may exercise its rights under this Section 8.1 through one or more Sublicensees; provided, that any such Sublicensee agrees to terms identical in all material respects to those contained in this Agreement, and, provided, further, that any arrangement between Astellas and an Astellas Sublicensee with respect to a Lead Compound shall be subject to the requirements of Section 13.2.

8.2 FibroGen. FG shall have the exclusive right, including the right to authorize others, to market, sell and distribute the Lead Compounds for any use in the FG Territory. Subject to the restrictions contained in Section 8.3.4 hereof, FG retains the exclusive right, including the right to authorize others, to market, sell and distribute worldwide the Lead Compounds for use outside the Field.

8.3 Covenants

8.3.1 General. It is understood that, with respect to any particular Lead Compound, whether or not the use and sale of such Lead Compound by FG and/or Astellas in any country requires a license under intellectual property rights of the other, neither FG nor Astellas shall market, sell or distribute a Lead Compound anywhere in the world except in accordance with this Agreement, including this Article 8.

8.3.2 Independent Activities by Astellas. During the term of this Agreement, in the event Astellas seeks to Commercialize any molecules for the Field or the Expanded Field, except for actions taken within the Field in the course of the exercise of the license granted under Section 13.1 hereof and expressly authorized under this Agreement, Astellas shall notify FG immediately upon the commencement of any such activities, and provided that [ * ] such activities are and will be in the future conducted completely independently of any of FG Technology and/or any other FG materials, confidential information, intellectual property or other related information provided by or on behalf of FG to Astellas under this Agreement or any other agreement between FG and Astellas relating to the subject matter hereof, Astellas may proceed with such Commercialization, subject at all times to the obligations contained in this Agreement with respect to any intellectual property in connection with or related to such activities and FG's right to terminate this Agreement pursuant to Section 18.2.1 hereof.   -19-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   8.3.3 Use of FG Technology by Astellas. Astellas shall use the FG Technology only to exercise the rights granted under Section 13.1 of this Agreement and as expressly authorized under the Development Program, and shall not under any circumstances use or apply any FG Technology, including without limitation any FG know-how and/or any other FG materials, confidential information, intellectual property or other related information provided by FG to Astellas under this Agreement or any other agreement between FG and Astellas relating to the subject matter hereof, for any use outside the Field at any time or within the Field after the expiration or termination of this Agreement.

8.3.4 Activities Outside Field by Astellas. Without limiting the foregoing, Astellas agrees that during the term of this Agreement it will not (and will not authorize any third party, including, without limitation, any Affiliates or Sublicensees, to) (i) Commercialize any Lead Compound within the Field in the Astellas Territory, except a Lead Compound that has been designated a Lead Compound by the JDC and that has received Marketing Approval in the Astellas Territory for use in the Field, (ii) Commercialize any Lead Compound for use outside the Field or outside the Astellas Territory, (iii) provide any supplies of any Lead Compound to any third party, including, without limitation, any Affiliates or Sublicensees, which Astellas knows or has reason to know is being marketed, sold or distributed for use outside the Field or outside the Astellas Territory, (iv) conduct or sponsor, or provide any supplies of any Lead Compound for use in, any clinical trial designed to demonstrate that a Lead Compound can be used outside the Field, or (v) seek regulatory approval of, or use labeling for a Lead Compound stating that such Lead Compound is for use outside the Field.

8.3.5 Activities in Astellas Territory by FG During the term of this Agreement, FG shall not Commercialize by itself or through its Sublicensee any Lead Compound or other compound, whether or not designated as a Lead Compound, within the Field in the Astellas Territory, or any Lead Compound outside the Field in the Astellas Territory, provided, however, that FG may develop a Lead Compound or other compound in the Astellas Territory in those Indications for which Astellas has determined not to pursue Commercialization or for which Astellas has lost the right to pursue Commercialization due to failure to meet diligence obligations hereunder; and provided, further, that FG may Commercialize compounds other than Lead Compounds outside the Field in the Astellas Territory, irrespective of whether such compound has the effect of stabilizing HIF causing the stimulation of erythropoiesis (including an increase in endogenous erythropoietin production) and/or a subsequent increase in hematocrit through modulation of prolyl hydroxylase and/or asparaginyl hydroxylase.

ARTICLE 9 TRANSFER PRICING

9.1 Transfer for Non-Commercial Purpose. In exchange for the transfer of any Lead Compound to Astellas for a non-commercial purpose, Astellas shall pay FG the total amount of the Fully Burdened Costs for such Lead Compound as reasonably determined by FG. Lead Compound transferred to Astellas for a non-commercial purpose shall not be used for a commercial purpose.   -20-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   9.2 Transfer for Commercial Purpose. For any Lead Compound transferred to Astellas to be used for any commercial purpose, in exchange for the transfer of such Lead Compound to Astellas, Astellas shall pay FG the amounts set forth in this Section 9.2. All transfers of Lead Compound for use following Marketing Approval shall be deemed transfers for a commercial purpose, except transfers under Section 9.2(c), and transfers for the purpose of conducting clinical trials, which shall be considered transfers for a non-commercial purpose.

(a) For any quantities of Lead Compound shipped by FG to Astellas prior to the issuance of the national health insurance price as determined by the Japanese Ministry of Health, Labour and Welfare (the Listed Price), Astellas shall pay for such quantities at a price equal to [ * ] of the estimate of the Listed Price as determined in good faith by FG and Astellas, subject to adjustment upon the issuance of the actual Listed Price. Upon the issuance of such Listed Price by the Japanese Ministry of Health, Labour and Welfare, Astellas shall pay to FG, or FG shall reimburse Astellas, as the case may be, the amount of any difference between the payment made for such Lead Compound at the estimated Listed Price and the payment required based upon the actual Listed Price.

(b) For all other transfers of Lead Compound, except as set forth in subparagraphs (c) or (d) below, Astellas shall pay for such quantities at a price equal to [ * ] of the Listed Price. In the event that a new Listed Price has been notified to Astellas by the Japanese Ministry of Health, Labour and Welfare before implementation of the new Listed Price, then such new Listed Price shall be used for calculation of the price of Lead Compound to be shipped on and after the later to occur of (i) [ * ] before implementation of the new Listed Price, and (ii) the date upon which Astellas has amended the price of Lead Compound to wholesalers in response to such notification by the Japanese Ministry of Health, Labour and Welfare, even before implementation of the new Listed Price.

(c) With respect to Lead Compound to be distributed as samples to medical providers and for which Astellas shall not receive any payment or other consideration, Astellas shall pay to FG the sum of its Fully Burdened Costs for amounts of Lead Compound shipped to Astellas; provided, however, that the parties shall mutually agree upon the amount of such samples for distribution without consideration in the Astellas Territory.

(d) Upon the later of (i) the initial retail sale of a generic equivalent (as defined by the Japanese Ministry of Health, Labour and Welfare) of such Lead Compound in the Territory, and (ii) and the expiration of the last to expire of the FG Patents with respect to such Lead Compound effectively precluding third parties from selling said generic equivalent, for any quantities shipped by FG to Astellas, Astellas shall pay FG for such quantities [ * ] of the Sales Price; provided, however, that in the event that the payment of the [ * ] of the Sales Price would result in FG's [ * ] Percentage falling below [ * ], FG shall have the option to initiate a renegotiation of the transfer price upon notice to Astellas, in which case the parties shall use best efforts in good faith to renegotiate reasonable terms for the transfer price; provided, further, that in the event the transfer price is not renegotiated to FG's satisfaction or FG elects not to initiate a renegotiation, FG may elect to terminate its manufacturing obligations by written notice to Astellas, and FG and Astellas shall negotiate reasonable terms for transfer of manufacturing. During such period of renegotiation, FG shall transfer the Lead Compound to Astellas at a price   -21-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   equal to the greater of [ * ] of the Sales Price and the price resulting if FG's [ * ] Percentage for such Lead Compound is equal to [ * ].

9.3 Payment. Any payments to be made with respect to the transfer of any Lead Compound in accordance with Section 9.1 or 9.2 above shall be immediately due to FG upon shipment, which shall be paid by Astellas to FG no later than [ * ] of the date of invoice, which invoice FG shall deliver to Astellas upon Delivery of Lead Compound to Astellas pursuant to Section 9.2(a), (b) or (c), and shall be made in U.S. dollars. For transfer of any Lead Compound in accordance with Section 9.1 or 9.2(c) above, FG shall deliver to Astellas, within ten (10) days of receipt of a firm commitment order from Astellas, an invoice for the estimated Fully Burdened Costs of the Lead Compound to be transferred to Astellas. Within [ * ] after the transfer of the Lead Compound to Astellas, FG shall provide a revised final invoice to Astellas that shall indicate the actual Fully Burdened Costs of the Lead Compound. If the actual Fully Burdened Costs are less than the estimated Fully Burdened Costs, FG shall include a reimbursement payment to Astellas for the difference between the initial estimated Fully Burdened Costs and the actual Fully Burdened Costs. If the actual Fully Burdened Costs are greater than the estimated Fully Burdened Costs, Astellas shall pay such difference within [ * ] of receipt of an invoice from FG for such amounts. For payments for the transfer of Lead Compound under Section 9.2(d) hereof, FG's invoice to Astellas shall be calculated based on the current Listed Price as set by the Japanese Ministry of Health, Labour and Welfare. Upon calculation of the Sales Price, Astellas shall submit, for any amounts actually sold, the Sales Price to FG, and FG shall credit Astellas for the difference between the invoice cost, cost calculated based on the Listed Price and the cost calculated based on the Sales Price.

9.4 Reference Materials; Standard Materials. In exchange for the transfer by FG of any Reference Materials or Standard Materials for the purposes of conducting analytical, release, stability and other studies authorized under the Development Program, Astellas shall pay to FG, FG's Fully Burdened Costs of such materials as reasonably determined by FG.

ARTICLE 10 ADDITIONAL PAYMENTS; BOOKS AND RECORDS

10.1 Quarterly Reports. Astellas shall make quarterly reports to FG within sixty (60) days after the end of each calendar quarter (April 1 though June 30, July 1 through September 30, October 1 though December 31, January 1 through March 31), which reports shall include, (a) the Net Sales, unit shipments and other distributions, including samples, by Astellas, and its Affiliates and Sublicensees, in such calendar quarter and (b) such other information as may be reasonably requested by FG to ensure either proper payment by Astellas of amounts required under this Agreement or to calculate payments with respect to FG's Third Party Agreements. Concurrently with making such report, Astellas shall remit payment to FG for any payments due under this Agreement.

10.2 Payment Method. All payments under this Agreement shall be made by bank wire transfer in immediately available funds to an account designated by the payee. All   -22-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   such payments made by or on behalf of Astellas hereunder shall be made by a Japanese entity. All dollar amounts specified in this Agreement, and, except as specifically authorized under Section 10.3 hereof, all payments made hereunder, are and shall be made in U.S. dollars. Any payments due under this Agreement which are not paid by the date such payments are due under this Agreement shall bear interest to the extent permitted by applicable law at the U.S. prime rate per annum quoted in the Money Rates column of The Wall Street Journal (U.S., Western Edition) on the first business day after such payment is due, plus an additional [ * ], calculated on the number of days such payment is delinquent. This Section 10.2 shall in no way limit any other remedies available to either party.

10.3 Currency Conversion. In the event that the amount of an Astellas payment obligation in U.S. dollars must be determined by the calculation of an underlying amount received by Astellas in Japanese Yen utilizing the U.S. dollar-Japanese Yen exchange rate (i.e., a transfer payment under Section 9.2(a), (b) or (d) hereof), currency conversion from Japanese Yen to U.S. dollars shall be made using the closing exchange rate reported in the Wall Street Journal (U.S. Western Edition) for the date on which the Lead Compound is Delivered to Astellas. If any such payment is not made by the due date, the exchange rate utilized for determination of such payment obligation shall be the exchange rate [ * ] reported in the Wall Street Journal (U.S. Western Edition) during the period from the date of invoice through the due date, not including any additional amounts owed under Section 10.2 hereof.

10.4 Taxes

10.4.1 Generally. Each party shall bear and, except as otherwise expressly provided in this Section 10.4, pay any and all taxes, duties, levies, and other similar charges (and any related interest and penalties), however designated, imposed on that party as a result of the existence or operation of this Agreement. If laws or regulations require that taxes be withheld, the paying party will (i) timely pay the taxes to the proper taxing authority, and (ii) send proof of payment to the other party within [ * ] following that payment.

10.4.2 Certain Payments. Notwithstanding Section 10.4.1, all payments by Astellas required under this Agreement above, including under Section 6.1.1 are expressed as net amounts and shall be made free and clear of, and without reduction for, any withholding taxes, provided, however, that in the event that any withholding taxes are due on the payments Astellas shall make to FG under Sections 6.1.2 and 6.1.3, Astellas shall make such payments directly to the Japanese Tax Authority and shall be entitled to reduce the amount paid to FG by [ * ] of the amount of the withholding taxes paid to Japanese Tax Authority in respect of such payment, unless the amount of such withholding taxes is reduced by a decision of the Japanese tax authority, or is subsequently adjusted downward as result of appeal, in which event the next payment due hereunder, including, without limitation, a transfer payment or a payment upon termination, shall be increased by such amount. Any such taxes which are otherwise imposed on payments to FG shall be the sole responsibility of Astellas. Astellas shall provide FG with official receipts issued by the appropriate taxing authority or such other evidence as is reasonably requested by FG to establish that such taxes have been paid. Astellas and FG shall cooperate to minimize the withholding taxes due on the amounts payable by Astellas to FG hereunder to the extent permissible under law, including, but not limited to,   -23-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   making appropriate application(s) to the tax authorities within the Astellas Territory. If possible, FG shall use its reasonable efforts to apply for the tax refund from U.S. tax authorities for the withholding taxes paid to the Japanese Tax Authority on the payment U.S. $[ * ] payment made by Astellas to FG on January 13, 2004 as set forth in Section 6.1 when such application for the tax refund becomes possible, and if FG has received any such tax refund, FG shall reimburse to Astellas for the amounts corresponding to the withholding taxes paid in Astellas' accounts as set forth above.

10.5 Records; Inspections. Astellas shall keep, and require its Affiliates and Sublicensees to keep, complete, true and accurate books of accounts and records for the purpose of determining payments due pursuant to this Agreement. Such books and records shall be kept for at least [ * ] following the end of the calendar quarter to which they pertain. FG shall keep, and require its Sublicensee(s) to keep, complete, true and accurate books of accounts and records for the purpose of verifying the accuracy of the [ * ] Percentage and Fully Burdened Costs. Such records will be open for inspection at the principal place of business of each party (the Inspected Party) during such [ * ] period by an independent auditor chosen by the other party (the Inspecting Party) and reasonably acceptable to the Inspected Party for the purpose of verifying the amounts payable by Astellas to FG hereunder or the accuracy of the [ * ] Percentage and/or Fully Burdened Costs. Such inspections may be made no more than once each calendar year, at reasonable times and on reasonable notice. Any books of accounts or records shall not be inspected more than once. The independent auditor retained by the Inspecting Party shall be obligated to execute a reasonable confidentiality agreement with the Inspected Party prior to commencing any such inspection, which, among other customary clauses, contains the provisions to the effect that such auditor shall not disclose to the Inspecting Party any information other than as necessary to accomplish the purpose of the inspection. Inspections conducted under this Section 10.5 shall be at the expense of the Inspecting Party. Any underpaid or overcharged amounts that are discovered will be paid by the Inspected Party, and with interest on such underpaid or overcharged amounts at the rate set forth in Section 10.2 above. The parties will endeavor to minimize disruption of the Inspected Party's normal business activities to the extent reasonably practicable.

ARTICLE 11 DUE DILIGENCE

11.1 Astellas' Due Diligence. Astellas shall use its commercially reasonable efforts (i) to conduct any development work undertaken under the Development Program, and any and all clinical trials (including without limitation Phase III) required to obtain, and thereafter to take such other actions as are necessary to obtain, Marketing Approvals for any Lead Compound in the Astellas Territory as soon as practicable, and (ii) to launch each such Lead Compound in the Astellas Territory as soon as practicable after receiving Marketing Approval in the Astellas Territory for such Lead Compound.

11.2 FG's Due Diligence. FG shall use its commercially reasonable efforts to conduct, and to the extent possible taking into account safety and other applicable issues, complete a Phase II clinical trial with FG-2216 or another Lead Compound in the FG Territory.   -24-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   11.3 Development Diligence

11.3.1 Astellas shall pursue development of Indications according to the following terms: (i) Astellas shall pursue Commercialization in Treatment of anemia in patients with chronic kidney disease undergoing dialysis and Treatment of anemia in patients with chronic kidney disease not undergoing dialysis; (ii) Astellas shall notify FG within six (6) months of the execution of this Agreement whether it shall pursue Commercialization in [ * ]; (iii) Astellas shall notify FG within six (6) months of the date FG notifies Astellas that it has demonstrated Proof of Concept whether it will pursue Commercialization in [ * ]; (iv) Astellas shall notify FG within six (6) months of the date FG notifies Astellas that it has demonstrated Proof of Concept whether it will pursue Commercialization in [ * ]; and (v) Astellas shall notify FG, upon Marketing Approval for any Lead Compound in each of the following Indications, whether it will pursue Commercialization of such Indication: [ * ], and any other indications to be added hereafter to the definition of the Indication by mutual agreement; and (vi) if FG is pursuing Commercialization of [ * ], Astellas shall notify FG after Marketing Approval whether it shall pursue Commercialization of such Indication. Should Astellas inform FG that it does not wish to pursue Commercialization of any Indication, or should Astellas fail to meet the due diligence obligations under Section 11.3.2 for any Indication as set forth in Section 11.3.1(iv) or under Section 11.3.3 for any Indication as set forth in Section 11.3.1(v), such Indication shall no longer be considered an Indication for the purposes of this Agreement, and Astellas shall have no right or shall lose any right with respect to such Indication under this Agreement including, without limitation, the licenses granted under Sections 8.1 and 13.1 hereof. Each Indication for which Astellas is obligated to pursue Commercialization under Section 11.3.1(i) or for which it decides to pursue Commercialization under Sections 11.3.1(ii), (iii) or (iv) shall be a Major Indication.

11.3.2 In addition to the obligations set forth in Section 11.1 and 11.3, for each Major Indication, until such time as Astellas obtains Marketing Approval in the Astellas Territory for such Major Indication, with respect to each Lead Compound for each Major Indication, Astellas shall:

(a) If required for development of a Lead Compound in an Indication, Initiate Phase I clinical trials within [ * ] after the later of (i) the Effective Date, for Indications for which FG has commenced clinical trials prior to the execution of this Agreement, and (ii) FG's or its Sublicensees Initiation of a Phase I clinical trial for other such Indications.   -25-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   (b) Initiate Phase II clinical trials within the later of (i) [ * ] after FG's, or its Sublicensee's, Initiation of Phase II, (ii) [ * ] after Astellas' Completion of its Phase I clinical trial(s), (iii) if Astellas' obligations under this Subsection 11.3.2(b) are triggered upon FG's notification of demonstration of Proof of Concept in an Indication, [ * ] after the date Astellas notifies FG that it will pursue Commercialization in such Indication, and (iv) in the event Astellas' obligations under this Section 11.3.2(b) are triggered by the designation of a secondary Lead Compound as a primary Lead Compound, [ * ] after such designation.

(c) Either notify FG of its intent to employ the Bridging Strategy, if applicable, or Initiate Phase III clinical trials within [ * ] of the later of (i) FG's, or its Sublicensee's Initiation of a Phase III clinical trial and (ii) Astellas' Completion of its Phase II clinical trial(s).

11.3.3 For each of the Indications set forth in Section 11.3.1(v), Astellas shall Initiate Phase II clinical studies within [ * ] of its notification to FG that it will pursue Commercialization in such Indication.

11.3.4 Astellas' diligence obligations set forth in Section 11.3.2 shall apply to all Lead Compounds designated by FG, provided, that for each Indication for which such diligence obligations apply, the diligence obligations shall only apply to the primary Lead Compound designated by FG, and for the secondary Lead Compound, Astellas' diligence obligations shall be limited to those set forth in Section 11.3.2(a) until the designation of the secondary Lead Compound as the primary Lead Compound, provided, further, upon such designation, that such diligence obligation shall be expanded to include the requirement that Astellas complete the Phase I clinical studies required to Initiate Phase II clinical studies in the Indication with such secondary Lead Compound.

ARTICLE 12 MANUFACTURING RIGHTS

12.1 Procedures. FG shall have the exclusive right to determine the methods and procedures for the manufacture of all Lead Compounds. If FG intends to make any change in the methods or procedures, including, without limitation, manufacturing process, analyzing process and/or site change for manufacture of the Lead Compounds, FG shall notify Astellas in writing of such intended change; provided, that if in Astellas' reasonable opinion, such change may lead to any amendment to the relevant Marketing Approval or Marketing Approval Application, Astellas shall use best efforts to (i) as soon as possible petition the Japanese Ministry of Health, Labor and Welfare to make the change without an amendment to the Marketing Approval or MAA and shall concurrently prepare an application for amendment to the Marketing Approval or MAA, and (ii) if the Japanese Ministry of Health, Labor and Welfare determines such an amendment is required, shall notify FG and submit the application for amendment immediately following notice of such requirement, and FG shall not make the intended change without a prior written consent from Astellas, such consent not to be unreasonably withheld or delayed, provided, further, that consent shall be deemed granted upon notice that an amendment is not required or approval of an amendment from the Japanese   -26-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   Ministry of Health, Labor and Welfare. FG shall provide Astellas with all the data and information necessary for Astellas to amend the Marketing Approval or MAA in Astellas Territory and shall continue to supply Astellas with the Lead Compound as manufactured with the manufacturing methods and procedures or at the manufacturing site described in Astellas' (or its Affiliate's or Sublicensee's) then current Marketing Approval or MAA until Astellas will have finished the necessary amendment to the relevant Marketing Approval or MAA or received notice that an amendment is not required.

12.2 FG Right. FG shall have the worldwide exclusive right (itself or through third party vendors) to manufacture (or have manufactured) Lead Compounds. Astellas and its Affiliates and Sublicensees shall not directly or indirectly make, produce or manufacture any Lead Compounds.

12.3 Manufacture and Supply. FG shall have the exclusive right and obligation to supply the Lead Compounds to Astellas and its Affiliates and Sublicensees for all development and commercial purposes, and Astellas and its Affiliates and Sublicensees shall purchase such Lead Compounds exclusively from FG. It is understood that FG may engage subcontractors with respect to the manufacture of such Lead Compounds to fulfill its supply obligations to Astellas hereunder. In all cases, supply by FG of Lead Compounds hereunder shall be Ex Works (Incoterms 2000) the manufacturing facility. Subject to Section 8.3.5 hereof, nothing herein is intended to preclude FG from granting rights to supply or supplying (a) any Lead Compound outside of the Astellas Territory to any third party for use within or outside the Field, or (b) any compound Controlled by FG within the Astellas Territory except for a Lead Compound for the duration of its designation in compliance with the terms and conditions of this Agreement.

12.4 Product Specifications. The Lead Compounds to be supplied by FG hereunder shall meet the Product Specifications. In addition to, but not in limitation of, the foregoing, FG and Astellas agree that upon Marketing Approval for any Lead Compound, FG's obligation to supply Astellas with Lead Compound shall be limited to, and all payment obligations set forth in Section 9.2 shall be based on, the supply of Bulk Product, unless otherwise agreed by the parties. The packaging for the Lead Compound to be distributed commercially by Astellas shall contain a clearly visible acknowledgment that the Lead Compound was manufactured by FG, and shall contain a registered trademark of the FG logo or other trademark approved by FG.

12.5 Orders Forecast

12.5.1 Orders for Non-Commercial Use. In connection with the supply of any Lead Compound for non-commercial use in the Territory, Astellas shall provide FG with a firm purchase order as early as possible prior to its requirements, and in no event less than [ * ] prior to the shipment or other release date(s) requested by Astellas for such Lead Compound. FG shall provide such Lead Compound to Astellas as soon as practicable within such time period, subject, prior to Marketing Approval, to the reasonable lead time requirements of third party contract manufacturers. All forecasts shall be prepared in good faith in order to facilitate FG's manufacture and shipment of the Lead Compound in compliance with this Agreement.   -27-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   12.5.2 Forecast and Order for Commercial Use. In connection with the supply of any Lead Compound for commercial use in the Astellas Territory upon FG's request, Astellas and FG shall negotiate in good faith appropriate forecasting and firm purchase order lead times, taking into consideration the reasonable notice requirements of FG and its third party manufacturers. All forecasts shall be prepared in good faith in order to facilitate FG's manufacture and shipment of the Lead Compound in compliance with this Agreement.

12.6 Shipment. Astellas, or FG at Astellas' request if specified in a purchase order by Astellas, shall arrange for shipment of the Lead Compound as specified in each purchase order by Astellas, Ex Works (Incoterms 2000) the manufacturing facility. For purposes of this Agreement, and notwithstanding anything to the contrary contained within the term Ex Works, it is hereby acknowledged and agreed that title and risk of loss shall transfer to Astellas from receipt by Astellas at the manufacturing facility. Astellas shall bear the costs of such carrier, including the costs of insurance of the shipment, and all customs, duties, sales taxes and other governmental charges related to the importation and sales of the Lead Compound.

12.7 Inspection of Shipment/Right to Reject. Each shipment of Lead Compound from FG to Astellas shall contain such laboratory and quality control certificate as are necessary to show that the Lead Compound is in conformity with the Product Specifications. Astellas shall promptly inspect each shipment. In the event that any portion of the shipment fails to conform to the Product Specifications, Astellas shall notify FG within [ * ] of Astellas' receipt of such shipment. Such notice shall specify the manner in which the Lead Compound fails to meet the Product Specifications. In the absence of such notification, Astellas shall be deemed to have accepted the shipment. FG and Astellas agree to consult with each other to resolve any discrepancy between each other's determinations regarding any possible nonconformity of the Lead Compound. If such consultation does not resolve the discrepancy, the parties agree to nominate a reputable independent laboratory or other independent third party, in each case acceptable to both parties, to carry out tests on representative samples taken from such shipment, and the results of such tests shall be binding on both parties. If the results of such tests demonstrate that the Lead Compound does not meet the Product Specifications, then FG shall pay the costs of such tests; otherwise, Astellas shall pay for the costs of such tests. FG shall, at its expense, promptly replace any Lead Compound to the extent that, in accordance with this Section 12.7, it is determined that it does not conform to the Product Specifications. Unless otherwise instructed by FG, all non-conforming Lead Compound shall be returned to FG at the place of manufacture at FG's direction and at FG's expense. If Astellas detects at any time any defect in the Lead Compound which has not been found through Astellas' inspection, it shall notify FG to that effect within [ * ] of the discovery of such defect, and the procedures set forth above in this Section 12.7 shall be applied to such defective Lead Compound, provided, that FG shall only be responsible to pay for costs of defects that are the result of FG's gross negligence or willful misconduct.

12.8 Inspection of Facilities. Astellas shall have the right, upon reasonable advance notice and during regular business hours, to inspect and audit, either by itself or through its Affiliates or consultants, the facilities (including any facilities of sub-contractors) being used by FG for production of the Lead Compound to assure compliance with applicable laws, rules and regulations, including, without limitation, Japanese regulatory standards and FG quality control procedures (Relevant Standards). FG shall also reasonably comply with inspection   -28-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   requests of the Japanese Ministry of Health, Labor & Welfare. Such inspection and audit shall be conducted at Astellas' sole cost and expense in a manner so as to minimize disruption of FG's, or its subcontractor's or Sublicensee's, business operations. FG shall, within [ * ] after FG's receipt of written notice from Astellas detailing any deficiencies which may be noted in any such audit which relate to the Relevant Standards use good faith efforts to remedy such deficiencies, and submit a plan to the Astellas outlining steps proposed to be taken.

12.9 Recall. In the event that Astellas deems it necessary to recall any Lead Compound from the market, it may do so in its sole discretion, after notification to the FG. The costs and expenses for such recall shall be borne by Astellas unless caused by a failure for which FG is required to indemnify Astellas pursuant to Section 17.3, or by FG's gross negligence or willful misconduct, in which event it shall be borne by FG.

12.10 Warranty. FG represents and warrants that the Lead Compounds to be supplied to Astellas under this Agreement shall conform to the Product Specifications and shall, as appropriate, be manufactured in compliance with GMP Guidelines. Subject to Sections 12.9 and 17.3 hereof, FG's sole obligation and Astellas' sole remedy with respect to Lead Compound which does not meet the warranty contained herein is limited to replacement of such Lead Compound and reimbursement of Astellas' out of pocket expenses for shipping to FG at the address designated by FG.

12.11 Interruption in Supply. For any particular Lead Compound, in order to minimize any interruptions in supply hereunder, FG and Astellas agree that within [ * ], FG shall maintain two separate, validated manufacturing sites (which may either be its own manufacturing facilities or facilities of a contract manufacturer) for such Lead Compound.

12.12 Reference and Standard Materials. For any Lead Compound provided to Astellas hereunder, upon Astellas' request and pursuant to Section 9.4 hereof, FG shall provide to Astellas reasonable quantities of reference materials, including analogs, metabolites, impurities, degradates and radio-labeled compounds (Reference Materials) and standard materials, i.e. defined, highly purified Lead Compound (Standard Materials) for such Lead Compound for the purposes of conducting analytical, release, stability and other studies as may be authorized by the JDC under the Development Program.

ARTICLE 13 LICENSE GRANTS

13.1 Grant to Astellas. Subject to the terms and conditions of this Agreement including Article 12 above, FG hereby grants to Astellas an exclusive license under the FG Technology to: use, package, sell, have sold, import, market and otherwise distribute the Lead Compounds for use solely in the Field in the Astellas Territory

13.2 Sublicenses. The licenses granted under Section 13.1 above include the right to grant and authorize sublicenses, subject to the requirements of this Agreement and Section 7.2. Notwithstanding the foregoing, Astellas shall not have the right to authorize a Sublicensee to market, sell or distribute Lead Compounds without FG's prior written consent   -29-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   (which consent shall not be unreasonably withheld). For the purposes of the foregoing, and without limitation, it shall be deemed reasonable for FG to withhold consent for competitive concerns.

13.3 No Rights Beyond Lead Compounds. Except as expressly provided herein, nothing in this Agreement shall be deemed to grant to Astellas rights in FG Technology other than the rights granted hereunder to the Lead Compounds, or for applications outside the Field or outside the Astellas Territory, or to manufacture Lead Compounds; nor shall any provision of this Agreement be deemed to restrict FG's right to exploit any FG Technology and/or the Lead Compounds outside the Astellas Territory.

13.4 Expanded Field Negotiation. Following the signing of this Agreement, FG agrees to negotiate in good faith with Astellas for a license to develop compounds for the Expanded Field in the Astellas Territory, exclusively for a period of [ * ] following such date, and non- exclusively thereafter until the execution of a license agreement with a third party to develop compounds for the Expanded Field. FG and Astellas hereby agree that FG's obligation to negotiate non-exclusively for the Expanded Field shall not constitute a right of first offer, right of first refusal, right of first negotiation or any obligation to enter into any agreement with Astellas at any time, and the failure of such negotiations to result in an agreement between FG and Astellas with respect to the Expanded Field shall not constitute a breach of this Agreement.

ARTICLE 14 INTELLECTUAL PROPERTY

14.1 Ownership of Inventions. Subject to Section 14.1.1, title to all inventions and other intellectual property made related to (i) the Development Program, (ii) the Lead Compounds, (iii) FG Technology or FG Confidential Information, (iv) the Field, or (v) the Expanded Field (subsections 14.1(i)-(v), collectively, the Protected Field) shall be owned by or is hereby assigned to FG; provided, however that Astellas shall own inventions of general applicability relating solely to drug delivery systems created exclusively by Astellas under subsection 14.1(i), excluding inventions related to or based on subsections 14.1(ii), (iii), (iv), or (v), and provided, further, that Astellas hereby grants to FG a worldwide, fully paid non-exclusive license with the right to sublicense to practice such inventions with respect to the FG Technology. Astellas agrees to execute any and all assignments and other documents necessary to effectuate the foregoing.

14.1.1 Notwithstanding Section 14.1, in the event that Astellas develops, completely independently from any FG Technology and/or any other FG materials, confidential information, intellectual property or other related information provided by or on behalf of FG to Astellas under this Agreement or any other agreement between FG and Astellas relating to the subject matter hereof, any inventions or intellectual property rights related to the Field or the Expanded Field, [ * ], Astellas shall own such intellectual property and hereby grants to FG and its Sublicensees a non-exclusive, royalty-free, irrevocable license to such intellectual property for the FG Territory. Astellas agrees to execute any and all assignments and other documents necessary to effectuate the foregoing.   -30-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   14.2 Patent Prosecution

14.2.1 FG Inventions. FG shall control all Prosecution and Interference Activities pertaining to FG Patents and patent applications and patents related to its, its Affiliate's or its Sublicensee's inventions in the Protected Field worldwide using counsel of its choice and shall bear the costs of such Prosecution and Interference Activities, provided, however, that; and Astellas shall reimburse to FG, within [ * ] of receipt by Astellas of invoice therefor, any such costs to the extent incurred in connection with or reasonably allocable to the FG Patents registered and/or to be registered in the Astellas Territory and related to the Field and the Lead Compounds, provided, further, that, with respect to patents or patent applications excluding those covering composition of matter claims and all patents listed on Exhibit A hereto as of the Effective Date, Astellas may postpone such reimbursement until the respective FG Patent will have been registered in the Astellas Territory if [ * ], on condition that once the respective FG Patent has been registered in the Astellas Territory, Astellas shall pay to FG such costs, plus interest to the extent permitted by applicable law at the U.S. prime rate per annum quoted in the Money Rates column of The Wall Street Journal (U.S., Western Edition), calculated in each case from the date such costs were incurred, plus an additional [ * ] thereof.

14.2.2 Astellas Inventions. Astellas shall not file for or otherwise seek to obtain (directly or indirectly) patent or other intellectual property protection for inventions that are related to the Protected Field, without the prior written consent of FG, which may be withheld at FG's sole discretion, subject to Section 14.1.1, and provided also that Astellas may file for or otherwise seek to obtain patent protection for inventions related to drug delivery systems as described in Section 14.1. To the extent that FG consents to the filing of any patent application or other intellectual property protection related to the foregoing, such patent application or other intellectual property protection shall be subject to Section 14.1, unless otherwise agreed in writing.

14.2.3 Cooperation. Astellas shall cooperate with and assist FG in connection with Prosecution and Interference Activities and shall use best efforts to consult with FG regarding the prosecution and maintenance of the FG Patents for the FG Territory and the Astellas Territory for those FG Patents for which Astellas or its Affiliates, Sublicensees or investigators are inventors, except solely for inventions (i) of general applicability relating solely to drug delivery systems created by Astellas under subsection 14.1(i), or (ii) created in compliance with Section 14.1.1 as determined solely by FG in good faith.

14.3 Defense of Third Party Infringement Claims. If the development, manufacture, sale or use of any Lead Compound pursuant to this Agreement results in a claim, suit or proceeding (collectively, Actions) alleging patent infringement against FG or Astellas (or their respective Affiliates or Sublicensees), such party shall promptly notify the other party hereto in writing. The party subject to such Action (for purposes of this Section 14.3, the Controlling Party) shall have the exclusive right to defend and control the defense of any such Action using counsel of its own choice; provided, however, that if such Action is directed to the subject matter of a patent of the other party (i.e., for Astellas, a FG Patent), such other party may participate in the defense and/or settlement thereof at its own expense with counsel of its choice.   -31-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   Except as agreed in writing by Astellas and FG, Astellas shall not enter into any settlement relating to a Lead Compound, if such settlement admits the invalidity or unenforceability, or limits any claim, of any patent within the FG Technology. The Controlling Party agrees to keep the other party hereto reasonably informed of all material developments in connection with any such Action. Any cost, liability or expense associated with such action (including amounts paid in settlement) (together, Expenses) shall be borne by the Controlling Party; provided, that if Astellas is the Controlling Party, and the Action is related to Future Third Party Intellectual Property, with respect to Expenses related solely to such Future Third Party Intellectual Property, it shall be entitled to deduct up to [ * ] of the Expenses incurred on an annual basis from [ * ] in such year under this Agreement, provided, however, that (i) the total amount deducted shall not exceed [ * ] thereunder, and (ii) notwithstanding (i) above, Astellas' right to deduct Expenses incurred shall be further limited such that in no event shall the sum of (a) the Expenses deducted by Astellas under this Section 14.3, and (b) the consideration FG contributes for the acquisition of intellectual property from Third Party Licensors for the Astellas Territory as set forth in Section 14.5, exceed [ * ] hereunder, and, provided further, that if FG is the Controlling Party, it shall be entitled to reimbursement by Astellas of [ * ] of such Expenses, as incurred. Notwithstanding the foregoing, Astellas shall be solely responsible (without right of deduction) for all Expenses related to any Action relating to Preexisting Third Party Intellectual Property.

14.4 Enforcement. Subject to the provisions of this Section 14.4, in the event that FG or Astellas reasonably believes that any FG Technology necessary for the development, manufacture, use or sale of a Lead Compound is infringed or misappropriated by a third party or is subject to a declaratory judgment action arising from such infringement, in each case with respect to the development, manufacture, sale or use of a product within the Field and within the Astellas Territory, Astellas or FG (respectively) shall promptly notify the other party hereto. Promptly after such notice the parties shall meet to discuss the course of action to be taken with respect to an Enforcement Action (as defined below) with respect to such infringement or misappropriation, including the control thereof and sharing of costs and expenses related thereto, for the purposes of entering into a litigation agreement setting forth the same (Litigation Agreement). If the parties do not enter such Litigation Agreement, FG shall have the initial right (but not the obligation) to enforce the intellectual property rights with respect to the FG Technology, or defend any declaratory judgment action with respect thereto (such action, for purposes of this Section 14.4, an Enforcement Action).

14.4.1 Information. Absent a Litigation Agreement, the party initiating or defending any such Enforcement Action within the Field shall keep the other party hereto reasonably informed of the progress of any such Enforcement Action, and such other party shall have the right to participate with counsel of its own choice at its own expense.

14.4.2 Enforcement Costs; Recoveries. Absent a Litigation Agreement, FG shall have the initial right to initiate such an Enforcement Action, and shall notify Astellas within a reasonable time whether it elects to exercise such right. In the event that FG elects to initiate or defend such Enforcement Action, FG shall be responsible for [ * ] of the costs and expenses while Astellas shall be responsible for [ * ] of the costs and expenses, and all amounts recovered shall first be applied to reimbursement of each   -32-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   party's costs and expenses with the remainder to be allocated to FG and Astellas at the ratio of [ * ] and [ * ]. In the event that FG elects not to initiate or defend such Enforcement Action, Astellas shall have the right to initiate or defend such Enforcement Action in its own name, and to the extent permitted under Third Party Agreements, in the name of FG or in the names of both FG and Astellas, in which case, Astellas shall be responsible for [ * ] of the costs and expenses while FG shall be responsible for [ * ] of the costs and expenses, and all amounts recovered shall first be applied to reimbursement of each party's costs and expenses with the remainder to be allocated to Astellas and FG at the ratio of [ * ] and [ * ].

14.4.3 Cooperation in Enforcement Action. Absent a Litigation Agreement, at the request of the party which has the right to initiate or defend an Enforcement Action, the other party shall reasonably cooperate in the Enforcement Action, such cooperation to include, without limitation, furnishing records, information and testimony, and attending conferences, discovery proceedings, hearings, trials and appeals; provided, that the requesting party shall reimburse to the cooperating party for the out-of-pocket expenses incurred for such cooperation pursuant to the reimbursement regime set forth in Section 14.4.2.

14.5 Third Party Agreements

14.5.1 Future Agreements. It is understood that FG may find it necessary to utilize in connection with a Lead Compound intellectual property that is controlled by a non-Affiliate third party (such party, a Third Party Licensor), in addition to or in lieu of the FG Technology existing as of the Effective Date. FG shall have the right to obtain (by purchase, license, or otherwise) rights to such intellectual property with the right to sublicense to Astellas. In the event that FG determines that it must obtain such rights, it shall provide notice and submit a description of such rights to Astellas, and shall discuss with Astellas the need to obtain such rights. Astellas shall inform FG within [ * ] of receipt of such notice whether it believes it is necessary to obtain such rights for the Astellas Territory and wishes to obtain such rights. In the event Astellas determines to obtain such rights, FG shall obtain a worldwide license for the rights under such terms and conditions as are [ * ], and such intellectual property of the Third Party Licensor shall be deemed to be the part of FG Technology, provided, however, that, notwithstanding anything contained in this Agreement (i) for Preexisting Third Party Intellectual Property, [ * ] shall pay [ * ] of all consideration due in connection with the acquisition of such rights for the Astellas Territory, and (ii) for Future Third Party Intellectual Property, [ * ] shall [ * ] pay [ * ] of all consideration due in connection with the acquisition of such rights for the Astellas Territory, provided, however, notwithstanding FG's obligation to contribute to the consideration due for Future Third Party Intellectual Property under (ii) above, FG's obligation to contribute shall be limited such that in no event shall the sum of (a) the consideration FG contributes for the acquisition of intellectual property from Third Party Licensors for the Astellas Territory, and (b) the Expenses for which Astellas has the right to deduct under Section 14.3 exceed [ * ] hereunder, and Astellas shall be responsible for all consideration related to the acquisition of rights from Third Party Licensors in excess of such amount. In the event Astellas determines not to obtain such rights for the Astellas Territory, FG shall obtain a license for the FG Territory but not the Astellas Territory, and Astellas shall be solely responsible for the defense of any infringement   -33-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   Action, for all Expenses related to any such Action, and any right of Astellas to deduct Expenses under this Agreement against payments required to be made to FG hereunder shall not apply to any action brought with respect to such rights.

14.5.2 Payment; Reports. If FG is obligated to pay amounts to a Third Party Licensor, FG shall notify Astellas [ * ] in advance of the due date of such payment obligation (or such later date as FG may determine), and Astellas shall reimburse its share of such payments within [ * ] after receipt of notice therefor.

14.5.3 Limitation. To the extent that FG Patents includes any intellectual property licensed under FG's License Agreement with Imigen, Inc. relating to HIF stabilization technology dated as of October 30, 2003, and amended as from time to time of which a redacted copy shall have been provided to Astellas prior to the Effective Date, Astellas shall be considered a sublicensee and be subject to the applicable requirements thereunder.

14.5.4 Compliance with Third Party Agreements. Notwithstanding anything to the contrary contained herein, Astellas agrees to comply with the requirements (upon sublicensees or otherwise) of FG's License Agreement with Imigen, Inc. relating to HIF stabilization technology dated as of October 30, 2003. In addition, Astellas agrees to comply with the requirements (upon sublicensees or otherwise) of any future Third Party Agreements for which Astellas obtains rights through an FG license pursuant to Section 14.5.1 hereof.

ARTICLE 15 REPRESENTATIONS AND WARRANTIES

15.1 FG Warranties. FG warrants and represents to Astellas, as of the execution of this Agreement, that (i) it is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware; (ii) the execution, delivery and performance of this Agreement have been duly authorized by all necessary corporate action on the part of FG; (iii) there is no pending litigation which alleges or any communication alleging that Commercialization of any Lead Compound or any compound Controlled by FG for use in the Field has infringed or misappropriated the intellectual property rights of any Third Party or has been obtained by misappropriating any Third Party's intellectual property right; and (iv) subject to the terms and conditions of the agreements for the FG Acquired Patents, FG has complete title to and ownership of the FG Patents, free and clear from any mortgages, pledges, liens, security interests, conditional and installment sale agreements, encumbrances, charges or claims of any kind.

15.2 Astellas Warranties. Astellas warrants and represents to FG, as of the execution of this Agreement, that (i) it is a corporation duly organized, validly existing and in good standing under the laws of Japan; and (ii) the execution, delivery and performance of this Agreement have been duly authorized by all necessary corporate action on the part of Astellas.

15.3 Disclaimer of Warranties. EXCEPT AS OTHERWISE SET FORTH HEREIN, FG AND ASTELLAS EXPRESSLY DISCLAIM ANY WARRANTIES OR CONDITIONS, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, WITH RESPECT TO   -34-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   THE DEVELOPMENT PROGRAM, OR THE FG TECHNOLOGY OR LEAD COMPOUNDS, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE, VALIDITY OF FG TECHNOLOGY, PATENTED OR UNPATENTED, AND NONINFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.

ARTICLE 16 CONFIDENTIALITY

16.1 Confidential Information. Except as expressly provided herein, the parties agree that the receiving party shall not publish or otherwise disclose and shall not use for any purpose other than this Agreement any information furnished to it by the other party hereto pursuant to this Agreement which if disclosed in tangible form is marked Confidential or with other similar designation to indicate its confidential or proprietary nature or if disclosed orally is indicated orally to be confidential or proprietary by the party disclosing such information at the time of such disclosure and is confirmed in writing as confidential or proprietary by the disclosing party within a reasonable time after such disclosure (collectively, Confidential Information). Notwithstanding the foregoing, Confidential Information shall not include information that, in each case is demonstrated by written documentation:

(a) was already known to the receiving party, other than under an obligation of confidentiality directly or indirectly to the disclosing party at the time of disclosure hereunder;

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

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

(d) was subsequently lawfully disclosed to the receiving party by any third party without any confidentiality obligation directly or indirectly to the disclosing party or developed by the receiving party without reference to any information or materials disclosed by the disclosing party.

It is agreed and understood that all matters discussed and presented at the meetings of the JDC shall be considered Confidential Information hereunder, subject to the terms and conditions of this Agreement.

16.2 Permitted Disclosures. Notwithstanding the provisions of Section 16.1 above, each party hereto may disclose the other party's Confidential Information to the extent such disclosure is reasonably necessary to exercise the rights granted to it, or reserved by it, under this Agreement (including, without limitation, entering into and/or performing business or scientific relationships with respect to products outside the Field as permitted hereunder), in filing or prosecuting patent applications, prosecuting or defending litigation, complying with applicable governmental regulations, submitting information to tax or other governmental   -35-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   authorities (including regulatory authorities), or conducting clinical trials hereunder with respect to Lead Compounds, provided that if a party is required by law to make any such disclosure of the other party's Confidential Information, to the extent it may legally do so, it will give reasonable advance notice to the latter party of such disclosure and, save to the extent inappropriate in the case of patent applications or otherwise, will use its reasonable efforts to secure confidential treatment of such Confidential Information prior to its disclosure (whether through protective orders or otherwise).

16.3 Clinical Data. Except as expressly permitted under Sections 7.2 and 16.2, and for publications or disclosures in accordance with Section 5.2, neither party shall disclose to third parties pre-clinical data, clinical data or regulatory filings, comprising Confidential Information of the other party.

16.4 Press Releases. Except as may already be, or is agreed to be, publicly disclosed, in the event that either party proposes to release a press release with respect to this Agreement or the Development Program, such party shall obtain the prior written consent of the other party, which shall not be unreasonably withheld.

ARTICLE 17 INSURANCE; INDEMNIFICATION

17.1 Insurance. Each party shall secure and maintain in effect during the term of this Agreement and for a period of five (5) years thereafter insurance policy(ies) underwritten by a reputable insurance company and in a form and having limits standard and customary for entities in the biopharmaceutical industry for exposures related to the Lead Compounds. Such insurance shall include general liability, clinical trial liability and products liability coverage with respect to such party's performance of the Development Program and commercialization of Lead Compounds hereunder. Upon request by the other party hereto, certificates of insurance evidencing the coverage required above shall be provided to the other party.

17.2 Indemnification of FG. Astellas shall indemnify each of FG and its Affiliates and the directors, officers, and employees of FG and such Affiliates and the successors and assigns of any of the foregoing (the FG Indemnitees), and hold each FG Indemnitee harmless from and against any and all liabilities, damages, settlements, claims, actions, suits, penalties, fines, costs or expenses (including, without limitation, reasonable attorneys' fees and other expenses of litigation) incurred by any FG Indemnitee to the extent not otherwise covered by insurance, arising from or occurring as a result of any claim, action, suit, or other proceeding brought by third parties against a FG Indemnitee arising from or occurring as a result of any development, testing, manufacture, importation, use, offer for sale, sale or other distribution of any Lead Compound by or for the benefit of Astellas or its Affiliates or Sublicensees, distributors or agents (including, without limitation, product liability and infringement claims) except to the extent caused by failure of the Lead Compound supplied by FG to meet the Product Specifications in effect at the time of manufacture, or material deviation by FG or its sub-contractor from GMP Guidelines in manufacturing the Lead Compound, or FG's breach of this Agreement or willful misconduct.   -36-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   17.3 Indemnification of Astellas. FG shall indemnify each of Astellas and its Affiliates and the directors, officers, and employees of Astellas and such Affiliates and the successors and assigns of any of the foregoing (the Astellas Indemnitees), and hold each Astellas Indemnitee harmless from and against any and all liabilities, damages, settlements, claims, actions, suits, penalties, fines, costs or expenses (including, without limitation, reasonable attorneys' fees and other expenses of litigation) incurred by any Astellas Indemnitee to the extent not otherwise covered by insurance, arising from or occurring as a result of any claim, action, suit, or other proceeding brought by third parties against an Astellas Indemnitee to the extent caused by failure of the Lead Compound supplied by FG to meet the Product Specifications in effect at the time of manufacture, or material deviation by FG or its sub-contractor from GMP Guidelines in manufacturing the Lead Compound, except in each case in this Section 17.3 to the extent caused by Astellas' breach of this Agreement or willful misconduct.

17.4 Procedure. A party (for purposes of this Section 17.4, the Indemnitee) that intends to claim indemnification under any provision of this Agreement shall promptly notify the indemnifying party (the Indemnitor) in writing of any claim, action, suit, or other proceeding brought by third parties in respect of which the Indemnitee or any of its Affiliates, or their directors, officers, employees, successors or assigns intend to claim such indemnification hereunder. As between the parties hereto the Indemnitor shall have the right to control the defense and settlement of such claim, action, suit, or other proceeding; provided, that the Indemnitee shall have the right to participate in such defense or settlement with counsel of its own choosing at its expense. The Indemnitee shall not make any settlement of any loss, claim, damage, liability or action without the consent of the Indemnitor, to the extent such consent is not withheld unreasonably or delayed. The failure to deliver written notice to the Indemnitor within a reasonable time after the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such Indemnitor of any liability to the Indemnitee under this Article 17 but the omission so to deliver written notice to the Indemnitor shall not relieve the Indemnitor of any liability that it may have to any Indemnitee otherwise than under this Article 17. Without limiting the foregoing, the Indemnitee shall keep the Indemnitor fully informed of the progress of any claim, action, suit, or other proceeding for which it intends to claim indemnification under this Article 17.

ARTICLE 18 TERM AND TERMINATION

18.1 Term. This Agreement shall become effective as of the Effective Date and, shall continue in full force and effect until terminated pursuant to this Article 18.

18.2 Termination for Cause or Technical Product Failure

18.2.1 Material Breaches. FG may forthwith terminate this Agreement in the event Astellas fails to make any payment due under Articles 6, 9 or 14, within [ * ] following receipt of written notice of such default, or materially breaches its obligations under Articles 8 or 14, and fails to cure such breach within [ * ] following receipt of written notice of such default. Astellas may forthwith terminate this Agreement in the   -37-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   event FG materially breaches its obligations under Article 7 or Article 12, and fails to cure such breach within [ * ] following receipt of written notice of such default. Any termination shall become effective at the end of such [ * ] or [ * ] period unless the defaulting or breaching party (or any other party on its behalf) has cured any such default prior to the expiration of the [ * ] or [ * ] period, as the case may be.

18.2.2 Independent Activities. Notwithstanding anything contained in Section 8.3.2 or Section 14.1.1, in the event that Astellas Commercializes any molecules for the Field or the Expanded Field, except for actions taken within the Field in the course of the exercise of the licenses granted under Sections 8.1 and 13.1 hereof and expressly authorized under this Agreement, even if FG determines that Astellas' activities are completely independent of any FG Technology and/or any other FG materials, confidential information, intellectual property or other related information provided by FG to Astellas under this Agreement or any other agreement between FG and Astellas relating to the subject matter hereof, FG shall have the right at its sole discretion to terminate this Agreement upon [ * ] notice to Astellas.

18.2.3 Technical Product Failure. Astellas may terminate this Agreement upon [ * ] notice to FG upon Technical Product Failure.

18.2.4 Development Diligence Failure. FG may terminate this Agreement upon thirty (30) days notice to Astellas in the event Astellas fails to meet any of its development diligence requirements as set forth in Article 11 hereof, provided, however, that with respect to the development diligence obligations set forth in Section 11.3.2, such termination right on behalf of FG shall be triggered only upon Astellas' failure to meet such development diligence obligations for a Major Indication (except those Major Indications set forth in Section 11.3.1(iv)), and Astellas may terminate this Agreement upon thirty (30) days notice to FG in the event FG fails to meet the development diligence requirement as set forth in Section 11.2 hereof.

18.2.5 Other Material Non-Performance/Misrepresentation. Other than a breach giving rise to a termination right as set forth in Sections 18.2.1 or 18.2.4, or a termination pursuant to a Technical Product Failure as set forth in Section 18.2.3 in the event of (i) a party's breach or default in any other material respect in the performance or observance of any other material term, covenant or provision of this Agreement, or (ii) if any representation by a party contained in this Agreement shall prove to have been incorrect in any material respect when made, resulting in material adverse consequences for the other party, (any such default or material incorrect representation a Material Non-Performance), such Material Non-Performance shall be remedied only as provided in Section 18.7.4 below.

18.3 Termination in case of Generic Competition. In the event generic equivalents has captured the [ * ] of the quantity of Lead Compound sold by Astellas during the [ * ] preceding such termination calculated on a annual basis; or in the event, after the entry into the market of generic equivalents, that Astellas' annual sales fall below $[ * ] for all Lead Compounds, Astellas may terminate this Agreement upon [ * ] written notice to FG; provided, that Astellas does not Commercialize any Lead Compound after such termination until the expiration of the last to expire FG Patents applicable to such Lead Compound.   -38-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   18.4 Negative Advice from Authorities. Astellas may terminate this Agreement upon [ * ] notice to FG in the event Astellas has commenced Phase III clinical studies in those of the following Indications that FG is developing: Treatment of anemia in patients with chronic kidney disease undergoing dialysis, Treatment of anemia in patients with chronic kidney disease not undergoing dialysis and [ * ], and the Japanese Ministry of Health, Labor & Welfare has provided written notification that it will not approve the Lead Compounds in such Indications or the JDC determines, after the submission by Astellas of Marketing Approval Applications for such Indications, and the receipt of a response or request of the Japanese Ministry of Health, Labor & Welfare that contains development demands that are so onerous that it is not reasonable to continue with Development of the Lead Compounds in such Indications.

18.5 Admission of Invalidity or Unenforceability of FG Patent. Astellas may terminate this Agreement upon [ * ] notice to FG in the event that FG enters into a settlement under Section 14.3 that admits the invalidity or unenforceability of all patents within the FG Technology, including patents covering Lead Compounds.

18.6 Termination upon Notice. Subject to Section 18.7.2, Astellas may terminate this Agreement upon six (6) months notice to FG for any reason or no reason.

18.7 Effect of Termination

18.7.1 Accrued Obligations. Termination of this Agreement for any reason shall not release either party hereto from any liability which, at the time of such termination, has already accrued to the other party or which is attributable to a period prior to such termination nor 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.

18.7.2 Termination. In the event of (a) a termination by Astellas under Section 18.6 during the period from the execution of this Agreement until the last to expire of the FG Patents, or (b) by FG under Section 18.2.1, 18.2.2, 18.2.4 or 18.2.5 hereof, Astellas shall, upon the effective date of such termination, pay to FG (i) a termination fee of $[ * ] U.S. dollars and (ii) any payments to which FG is otherwise entitled to receive hereunder in the period from the date of such termination notice until the [ * ].

18.7.3 Survival. Articles 1, 5, 14, 16, 17, 18, 19 and 20, and Sections 8.3.3 and 10.5, shall survive any termination of this Agreement, along with FG's rights and Astellas' obligations (but not Astellas' rights or FG's obligations, except to the extent required by the Japanese Ministry of Health, Labor and Welfare) under Section 5.1.1 and Article 7. In addition, the following provisions shall survive termination of this Agreement for any reason: Astellas shall assign or cause to be assigned to FG (or if not so assignable, Astellas shall take all reasonable actions to make available to FG) all regulatory filings and registrations (including MAAs and Marketing Approvals) with respect to the Lead Compounds that have been filed or made by or under authority of Astellas, and the rights in trademark with respect to each Lead Compound as provided for in Section 4.4.1, in each case such assignment (or availability)   -39-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   shall be made within [ * ] after the notice of termination. From and after the date of a notice of termination, FG shall have no further obligations under this Agreement beyond those obligations that survive termination in such events as specified in this Section 18.7.3.

18.7.4 Material Non-Performance. In the event of any Material Non-Performance by a party, the other party shall, without reasonable delay following discovery of such Material Non-Performance notify the defaulting party in writing, and the parties shall consult with each other in good faith to endeavor to agree upon the most effective means to cure such Material Non-Performance and, if necessary, to effect a remedy in favor of the non-defaulting party for the consequences of such Material Non-Performance by the defaulting party (collectively, the Resolution). In the event (i) the parties are unable to agree upon Resolution, or (ii) the defaulting party, in the exercise of reasonable diligence shall have been unable to remedy such Material Non-Performance, then in either such event the remedy of the non-defaulting party with respect to the Material Non-Performance by the defaulting party shall be determined by arbitration pursuant to Section 19.2 hereof, and the arbitrators shall be authorized to fashion such remedy, including equitable relief, which may include termination of this Agreement in whole or in part, as the arbitrators shall determine appropriate, except that termination of this Agreement in whole shall only be the remedy of last resort.

18.7.5 License Upon Termination. In the event of a termination of this Agreement, FG shall have an irrevocable, exclusive, license, with the right to grant and authorize sublicenses, to any trademarks used by Astellas in association with the Lead Compounds hereunder to make, use, sell, import and otherwise exploit products within the Field in the Astellas Territory. Such license shall be royalty-free, provided, however, if such trademark is not a global trademark (i.e. materially different from the trademark used in the FG Territory) and either (i) if Astellas terminates this Agreement under Section 18.2.1 or 18.2.4, or (ii) if this Agreement is terminated in accordance with the procedure as provided for in Section 18.2.5 as a result of FG's Material Non-Performance, in which event FG and Astellas shall negotiate in good faith a reasonable fee for such license.

ARTICLE 19 DISPUTE RESOLUTION

19.1 Disputes. If the parties are unable to resolve any dispute between them regarding the breach, interpretation or enforcement of this Agreement, either party may, by written notice to the other, have such dispute referred to their Authorized Designees, provided that such individuals are not directly involved in the dispute (i.e., the dispute occurs at the JDC, such individuals shall not be members of the JDC), for good faith negotiations. If after [ * ] such executives are unable to resolve the issue, each of Astellas and FG shall have the right to refer the matter to mediation upon notice to the other party, and the parties shall choose a mediator within [ * ] of the receipt of such notice, and shall negotiate in good faith to resolve such matter through the mediator within [ * ] thereafter.

19.2 Full Arbitration. Any dispute, controversy or claim arising out of or relating to the breach, interpretation or enforcement of this Agreement, including disputes relating to termination of this Agreement, shall be settled by binding arbitration in the manner   -40-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   described in this Section 19.2. The arbitration shall be conducted pursuant to the rules of Arbitration of the International Chamber of Commerce then in effect. Notwithstanding those rules, the following provisions shall apply to the arbitration hereunder:

19.2.1 Arbitrators. The arbitration shall be conducted by a panel of three (3) arbitrators, with one (1) arbitrator chosen by each of FG and Astellas and the third appointed by the other two (2) arbitrators. If the parties are unable to agree upon a single arbitrator, or the third arbitrator in case of a panel of three (3), such third arbitrator (as the case may be) shall be appointed in accordance with the rules of the Arbitration of the International Chamber of Commerce.

19.2.2 Proceedings. Except as otherwise provided herein, the parties shall use their best efforts to complete the arbitration within [ * ] after the appointment of the Panel under Section 19.2.1 above, unless a party can demonstrate to the Panel that the complexity of the issues or other reasons warrant the extension of one or more of the time tables. In such case, the Panel may extend such time table as reasonably required. The Panel shall, in rendering its decision, apply the substantive law of the State of California, without regard to its conflicts of laws provisions, except that the interpretation of and enforcement of this Article 19 shall be governed by the U.S. Federal Arbitration Act. The proceeding shall be conducted in English and shall take place in the city of Vancouver, British Columbia, Canada. The judgment of the Panel shall be binding upon the parties and enforceable in any court of competent jurisdiction.

19.2.3 Interim Relief. Notwithstanding anything in this Article 19 to the contrary, FG and Astellas shall each have the right to apply to any court of competent jurisdiction for a temporary restraining order, preliminary injunction, or other similar interim or conservatory relief, as necessary, pending resolution under the above described arbitration procedures. Nothing in the preceding sentence shall be interpreted as limiting the powers of the arbitrators with respect to any dispute subject to arbitration under this Agreement.

ARTICLE 20 MISCELLANEOUS

20.1 Confidential Terms. Except as expressly provided herein, each party agrees not to disclose any terms of this Agreement to any third party without the consent of the other party, except (i) as required by securities or other applicable laws or (ii) to prospective and other investors and such party's accountants, attorneys and other professional advisors, or (iii) to others under reasonable conditions of confidentiality.

20.2 Governing Law. This Agreement and any dispute arising from the performance or breach hereof shall be governed by and construed and enforced in accordance with, the laws of the State of California, without reference to conflicts of laws principles.

20.3 Force Majeure. Nonperformance of any party (except for payment of amounts due hereunder) shall be excused to the extent that performance is rendered impossible by strike, fire, earthquake, flood, governmental acts or orders or restrictions, failure of suppliers, or any other reason where failure to perform is beyond the reasonable control of the non-   -41-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   performing party. In such event FG or Astellas, as the case may be, shall promptly notify the other party of such inability and of the period for which such inability is anticipated to continue. Without limiting the foregoing, the party subject to such inability shall use reasonable efforts to minimize the duration of any force majeure event.

20.4 No Implied Waivers; Rights Cumulative. No failure on the part of FG or Astellas to exercise and no delay in exercising any right under this Agreement, or provided by statute or at law or in equity or otherwise, shall impair, prejudice or constitute a waiver of any such right, nor shall any partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right.

20.5 Independent Contractors. Nothing contained in this Agreement is intended implicitly, or is to be construed, to constitute FG or Astellas as partners in the legal sense. No party hereto shall have any express or implied right or authority to assume or create any obligations on behalf of or in the name of any other party or to bind any other party to any contract, agreement or undertaking with any third party.

20.6 Notices. All notices, requests and other communications hereunder shall be in writing and shall be personally delivered or sent by registered or certified mail, return receipt requested, postage prepaid; facsimile transmission (receipt verified); or express courier service (signature required), in each case to the respective address specified below, or such other address or fax number as may be specified in writing to the other party hereto:   Astellas:   Astellas Pharma Inc.   Attn: Director of Legal Department   [ * ]

with copy to:   Astellas Pharma Inc.   Attn: Licensing, Corporate Strategy   [ * ]

FG:   FibroGen, Inc.   Attn: Chief Executive Officer   225 Gateway Boulevard   San Francisco, California 94080   Fax: 1-650-866-7202

with a copy to:   FibroGen, Inc.

  Attn: Legal Department   225 Gateway Boulevard   San Francisco, California 94080   Fax: 1-650-866-7343   -42-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   20.7 Assignment. This Agreement shall not be assignable by either party to any third party without the written consent of the other party hereto; except that either party may assign this Agreement without the other party's consent to an entity that acquires substantially all of the business or assets of the assigning party within the Field, in each case whether by merger, transfer of assets, or otherwise. Upon a permitted assignment of this Agreement, all references herein to the assigning party shall be deemed references to the party to whom the Agreement is so assigned.

20.8 Modification. No amendment or modification of any provision of this Agreement shall be effective unless in writing signed by all parties hereto. No provision of this Agreement shall be varied, contradicted or explained by any oral agreement, course of dealing or performance or any other matter not set forth in an agreement in writing and signed by all parties.

20.9 Severability. If any provision hereof should be held invalid, illegal or unenforceable in any jurisdiction, the parties shall negotiate in good faith a valid, legal and enforceable substitute provision that most nearly reflects the original intent of the parties and all other provisions hereof shall remain in full force and effect in such jurisdiction and shall be liberally construed in order to carry out the intentions of the parties hereto as nearly as may be possible. Such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of such provision in any other jurisdiction.

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

20.11 Headings. Headings used herein are for convenience only and shall not in any way affect the construction of or be taken into consideration in interpreting this Agreement.

20.12 Export Laws. Notwithstanding anything to the contrary contained herein, all obligations of FG and Astellas are subject to prior compliance with United States and foreign export regulations and such other United States and foreign laws and regulations as may be applicable, and to obtaining all necessary approvals required by the applicable agencies of the governments of the United States and foreign jurisdictions. FG and Astellas shall cooperate with each other and shall provide assistance to the other as reasonably necessary to obtain any required approvals.

20.13 Language. This Agreement is in the English language only, which language shall be controlling in all respects, and all versions hereof in any other language shall not be binding on the parties hereto. All communications and notices to be made or given pursuant to this Agreement shall be in the English language.

20.14 Entire Agreement. This Agreement (including the Exhibits hereto) constitutes the entire agreement, both written or oral, with respect to the subject matter hereof, and supersedes all prior or contemporaneous understandings or agreements, including the Binding Term Sheet, dated as of February 9, 2004 by and between FG and Astellas, as amended   -43-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   on January 25, 2005, whether written or oral, between FG and Astellas with respect to such subject matter.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered in duplicate originals as of the date first above written.   ASTELLAS PHARMA INC.   FIBROGEN, INC.

By:   /s/ Toichi Takenaka   By:   /s/ Thomas B. Neff

  Toichi Takenaka President and Chief Executive Officer     Thomas Neff President and Chief Executive Officer

Date:   1.September.05   Date:   23 August 05   -44-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   EXHIBIT A  LIST OF PATENTS

[ * ]   -45-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   EXHIBIT B  INDICATIONS

Included indications:

  •   Treatment of anemia in patients with chronic kidney disease undergoing dialysis

  •   Treatment of anemia in patients with chronic kidney disease not undergoing dialysis

  •   [ * ]    -46-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.





CONFIDENTIAL   EXECUTION COPY   EXHIBIT C  INITIAL DEVELOPMENT PLAN

[ * ]    -47-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
answer:

Highlight the parts (if any) of this contract related to Insurance that should be reviewed by a lawyer. Details: Is there a requirement for insurance that must be maintained by one party for the benefit of the counterparty?