Document:

Guarantee Agreement

 EXHIBIT 10.20 
  
 GUARANTEE AGREEMENT 
  
 COMMERCIAL CAPITAL BANCORP, INC. 
  
 Dated as of September 25, 2003 
  

 TABLE OF CONTENTS 
  

	 	  	 	  	Page

	 	  	ARTICLE I	  	 
			
	 	  	DEFINITIONS AND INTERPRETATION	  	 
	 SECTION 1.1
	  	 Definitions and Interpretation.
	  	1
			
	 	  	ARTICLE II	  	 
			
	 	  	POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE	  	 
			
	 SECTION 2.1
	  	 Powers and Duties of the Guarantee Trustee.
	  	4
	 SECTION 2.2
	  	 Certain Rights of the Guarantee Trustee.
	  	6
	 SECTION 2.3
	  	 Not Responsible for Recitals or Issuance of Guarantee.
	  	7
	 SECTION 2.4
	  	 Events of Default; Waiver.
	  	7
	 SECTION 2.5
	  	 Events of Default; Notice.
	  	8
			
	 	  	ARTICLE III	  	 
			
	 	  	THE GUARANTEE TRUSTEE	  	 
			
	 SECTION 3.1
	  	 The Guarantee Trustee; Eligibility.
	  	8
	 SECTION 3.2
	  	 Appointment, Removal and Resignation of the Guarantee Trustee.
	  	9
			
	 	  	ARTICLE IV	  	 
			
	 	  	GUARANTEE	  	 
			
	 SECTION 4.1
	  	 Guarantee.
	  	9
	 SECTION 4.2
	  	 Waiver of Notice and Demand.
	  	10
	 SECTION 4.3
	  	 Obligations Not Affected.
	  	10
	 SECTION 4.4
	  	 Rights of Holders.
	  	11
	 SECTION 4.5
	  	 Guarantee of Payment.
	  	11
	 SECTION 4.6
	  	 Subrogation.
	  	11
	 SECTION 4.7
	  	 Independent Obligations.
	  	12
	 SECTION 4.8
	  	 Enforcement.
	  	12
			
	 	  	ARTICLE V	  	 
			
	 	  	LIMITATION OF TRANSACTIONS; SUBORDINATION	  	 
			
	 SECTION 5.1
	  	 Limitation of Transactions.
	  	12
	 SECTION 5.2
	  	 Ranking.
	  	13

  

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	 	  	 	  	Page

	 	  	ARTICLE VI	  	 
			
	 	  	TERMINATION	  	 
			
	 SECTION 6.1
	  	 Termination.
	  	13
			
	 	  	ARTICLE VII	  	 
			
	 	  	INDEMNIFICATION	  	 
			
	 SECTION 7.1
	  	 Exculpation.
	  	13
	 SECTION 7.2
	  	 Indemnification.
	  	14
	 SECTION 7.3
	  	 Compensation; Reimbursement of Expenses.
	  	15
			
	 	  	ARTICLE VIII	  	 
			
	 	  	MISCELLANEOUS	  	 
			
	 SECTION 8.1
	  	 Successors and Assigns.
	  	15
	 SECTION 8.2
	  	 Amendments.
	  	16
	 SECTION 8.3
	  	 Notices.
	  	16
	 SECTION 8.4
	  	 Benefit.
	  	16
	 SECTION 8.5
	  	 Governing Law.
	  	16
	 SECTION 8.6
	  	 Counterparts.
	  	17

  

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 GUARANTEE AGREEMENT 
  
 This GUARANTEE AGREEMENT (the “Guarantee”), dated as of September 25, 2003, is executed and delivered by
Commercial Capital Bancorp, Inc., a savings and loan holding company incorporated in Nevada (the “Guarantor”), and Wilmington Trust Company, a Delaware banking corporation, as trustee (the “Guarantee Trustee”), for the benefit of
the Holders (as defined herein) from time to time of the Capital Securities (as defined herein) of CCB Capital Trust IV, a Delaware statutory trust (the “Issuer”). 
  
 WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the “Declaration”), dated as of September 25,
2003, among the trustees named therein of the Issuer, Commercial Capital Bancorp, Inc., as sponsor, and the Holders from time to time of undivided beneficial interests in the assets of the Issuer, the Issuer is issuing on the date hereof securities,
having an aggregate liquidation amount of $7,500,000, designated in the Declaration as MMCapSSM (the “Capital
Securities”); and 
  
 WHEREAS, as incentive for the Holders
to purchase the Capital Securities, the Guarantor desires irrevocably and unconditionally to agree, to the extent set forth in this Guarantee, to pay to the Holders of Capital Securities the Guarantee Payments (as defined herein) and to make certain
other payments on the terms and conditions set forth herein. 
  
 NOW, THEREFORE, in consideration of the purchase by each Holder of the Capital Securities, which purchase the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and delivers this Guarantee for the benefit of the
Holders. 
  
 ARTICLE I 
  
 DEFINITIONS AND INTERPRETATION 
  
 SECTION 1.1 Definitions and Interpretation. 
  
 In this Guarantee, unless the context otherwise requires: 
  
 (a) capitalized terms used in this Guarantee but not defined in the preamble
above have the respective meanings assigned to them in this Section 1.1; 
  
 (b) a term defined anywhere in this Guarantee has the same meaning throughout; 
  
 (c) all references to “the Guarantee” or “this Guarantee” are to this Guarantee as modified, supplemented or amended from time to
time; 
  
 (d) all references in this Guarantee to Articles and
Sections are to Articles and Sections of this Guarantee, unless otherwise specified; 
  
 (e) terms defined in the Declaration as of the date of execution of this Guarantee have the same meanings when used in this Guarantee, unless otherwise defined in this Guarantee or unless the context otherwise
requires; and 
  

 (f) a reference to the singular includes the plural and vice versa. 
  
 “Beneficiaries” means any Person to whom the Issuer is or hereafter
becomes indebted or liable. 
  
 “Common Securities” has
the meaning specified in the Declaration. 
  
 “Corporate
Trust Office” means the office of the Guarantee Trustee at which at any particular time its corporate trust business shall be principally administered, which at all times shall be located within the United States and at the time of the
execution of this Guarantee shall be Rodney Square North, 1100 North Market Street, Wilmington, DE 19890-0001. 
  
 “Covered Person” means any Holder of Capital Securities. 
  
 “Debenture Issuer” means Commercial Capital Bancorp, Inc. or any successor entity resulting from any
consolidation, amalgamation, merger or other business combination, in its capacity as issuer of the Debentures. 
  
 “Debentures” means the junior subordinated debentures of the Debenture Issuer that are designated in the Indenture as the “Floating Rate
Junior Subordinated Debt Securities due 2033” and held by the Institutional Trustee (as defined in the Declaration) of the Issuer. 
  
 “Event of Default” has the meaning set forth in Section 2.4. 
  
 “Guarantee Payments” means the following payments or distributions, without duplication, with respect to the
Capital Securities, to the extent not paid or made by the Issuer: (i) any accrued and unpaid Distributions (as defined in the Declaration) which are required to be paid on such Capital Securities to the extent the Issuer has funds available in the
Property Account (as defined in the Declaration) therefor at such time, (ii) the price payable upon the redemption of any Capital Securities to the extent the Issuer has funds available in the Property Account therefor at such time, with respect to
any Capital Securities that are (1) called for redemption by the Issuer or (2) mandatorily redeemed by the Issuer, in each case, in accordance with the terms of such Capital Securities, and (iii) upon a voluntary or involuntary liquidation,
dissolution, winding-up or termination of the Issuer (other than in connection with the distribution of Debentures to the Holders of the Capital Securities in exchange therefor as provided in the Declaration), the lesser of (a) the aggregate of the
liquidation amount of the Capital Securities and all accrued and unpaid Distributions on the Capital Securities to the date of payment, to the extent the Issuer has funds available in the Property Account therefor at such time, and (b) the amount of
assets of the Issuer remaining available for distribution to Holders in liquidation of the Issuer after satisfaction of liabilities to creditors of the Issuer as required by applicable law (in either case, the “Liquidation Distribution”).

  
 “Guarantee Trustee” means Wilmington Trust Company,
until a Successor Guarantee Trustee has been appointed and has accepted such appointment pursuant to the terms of this Guarantee and thereafter means each such Successor Guarantee Trustee. 
  
 “Holder” means any Person in whose name any Capital Securities are
registered on the books and records of the Issuer; provided, however, that, in determining whether the 

  

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holders of the requisite percentage of Capital Securities have given any request, notice, consent or waiver hereunder, “Holder” shall not include
the Guarantor or any Affiliate of the Guarantor. 
  
 “Indemnified Person” means the Guarantee Trustee (including in its individual capacity), any Affiliate of the Guarantee Trustee, or any officers, directors, shareholders, members, partners, employees, representatives, nominees,
custodians or agents of the Guarantee Trustee. 
  
 “Indenture” means the Indenture, dated as of September 25, 2003, between the Debenture Issuer and Wilmington Trust Company, not in its individual capacity but solely as trustee, and any indenture supplemental thereto pursuant to
which the Debentures are to be issued to the Institutional Trustee of the Issuer. 
  
 “Liquidation Distribution” has the meaning set forth in the definition of “Guarantee Payments” herein. 
  
 “Majority in liquidation amount of the Capital Securities” means Holder(s) of outstanding Capital Securities, voting together as a class, but
separately from the holders of Common Securities, of more than 50% of the aggregate liquidation amount (including the amount that would be paid upon the redemption, liquidation or otherwise on the date upon which the voting percentages are
determined, plus unpaid Distributions accrued thereon to such date) of all Capital Securities then outstanding. 
  
 “Obligations” means any costs, expenses or liabilities (but not including liabilities related to taxes) of the Issuer, other than obligations of
the Issuer to pay to holders of any Trust Securities the amounts due such holders pursuant to the terms of the Trust Securities. 
  
 “Officer’s Certificate” means, with respect to any Person, a certificate signed by one Authorized Officer of such Person. Any
Officer’s Certificate delivered with respect to compliance with a condition or covenant provided for in this Guarantee shall include: 
  
 (a) a statement that such officer signing the Officer’s Certificate has read the covenant or condition and the definitions relating thereto;

  
 (b) a brief statement of the nature and scope of the
examination or investigation undertaken by such officer in rendering the Officer’s Certificate; 
  
 (c) a statement that such officer has made such examination or investigation as, in such officer’s opinion, is necessary to enable such officer to
express an informed opinion as to whether or not such covenant or condition has been complied with; and 
  
 (d) a statement as to whether, in the opinion of such officer, such condition or covenant has been complied with. 
  
 “Person” means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock company, limited liability company, trust, 

  

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unincorporated association, or government or any agency or political subdivision thereof, or any other entity of whatever nature. 
  
 “Responsible Officer” means, with respect to the Guarantee Trustee,
any officer within the Corporate Trust Office of the Guarantee Trustee with direct responsibility for the administration of any matters relating to this Guarantee, including any vice president, any assistant vice president, any secretary, any
assistant secretary, the treasurer, any assistant treasurer, any trust officer or other officer of the Corporate Trust Office of the Guarantee Trustee customarily performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of that officer’s knowledge of and familiarity with the particular subject. 
  
 “Successor Guarantee Trustee” means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 3.1. 
  
 “Trust Securities” means the Common Securities and the Capital Securities. 
  
 ARTICLE II 
  
 POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE 
  
 SECTION 2.1 Powers and Duties of the Guarantee Trustee. 
  
 (a) This Guarantee shall be held by the Guarantee Trustee for the benefit of the Holders of the Capital Securities, and the Guarantee Trustee shall not transfer this Guarantee to any Person except a Holder of Capital Securities exercising
his or her rights pursuant to Section 4.4 (b) or to a Successor Guarantee Trustee on acceptance by such Successor Guarantee Trustee of its appointment to act as Successor Guarantee Trustee. The right, title and interest of the Guarantee Trustee
shall automatically vest in any Successor Guarantee Trustee, and such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered pursuant to the appointment of such Successor Guarantee
Trustee. 
  
 (b) If an Event of Default actually known to a
Responsible Officer of the Guarantee Trustee has occurred and is continuing, the Guarantee Trustee shall enforce this Guarantee for the benefit of the Holders of the Capital Securities. 
  
 (c) The Guarantee Trustee, before the occurrence of any Event of Default and after the curing or waiving of all Events of
Default that may have occurred, shall undertake to perform only such duties as are specifically set forth in this Guarantee, and no implied covenants shall be read into this Guarantee against the Guarantee Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.4(b)) and is actually known to a Responsible Officer of the Guarantee Trustee, the Guarantee Trustee shall exercise such of the rights and powers vested in it by this Guarantee, and
use the same degree of care and skill in its exercise thereof, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. 
  

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 (d) No provision of this Guarantee shall be construed to relieve the Guarantee Trustee from liability for
its own negligent action, its own negligent failure to act, or its own willful misconduct or bad faith, except that: 
  
 (i) prior to the occurrence of any Event of Default and after the curing or waiving of all Events of Default that may have occurred:

  
 (A) the duties and obligations of the
Guarantee Trustee shall be determined solely by the express provisions of this Guarantee, and the Guarantee Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Guarantee, and no
implied covenants or obligations shall be read into this Guarantee against the Guarantee Trustee; and 
  
 (B) in the absence of bad faith on the part of the Guarantee Trustee, the Guarantee Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Guarantee Trustee and conforming to the requirements of this Guarantee; but in the case of any such certificates or opinions
furnished to the Guarantee Trustee, the Guarantee Trustee shall be under a duty to examine the same to determine whether or not on their face they conform to the requirements of this Guarantee; 
  
 (ii) the Guarantee Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer of the Guarantee Trustee, unless it shall be proved that such Responsible Officer of the Guarantee Trustee or the Guarantee Trustee was negligent in ascertaining the pertinent facts upon which
such judgment was made; 
  
 (iii) the Guarantee
Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the written direction of the Holders of a Majority in liquidation amount of the Capital Securities relating to the time,
method and place of conducting any proceeding for any remedy available to the Guarantee Trustee, or exercising any trust or power conferred upon the Guarantee Trustee under this Guarantee; and 
  
 (iv) no provision of this Guarantee shall require the
Guarantee Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if the Guarantee Trustee shall have reasonable grounds for
believing that the repayment of such funds is not reasonably assured to it under the terms of this Guarantee, or security and indemnity, reasonably satisfactory to the Guarantee Trustee, against such risk or liability is not reasonably assured to
it. 
  

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 SECTION 2.2 Certain Rights of the Guarantee Trustee. 
  
 (a) Subject to the provisions of Section 2.1: 
  
 (i) The Guarantee Trustee may conclusively rely, and shall
be fully protected in acting or refraining from acting upon, any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed, sent or presented by the proper party or parties. 
  
 (ii) Any direction or act of the Guarantor contemplated by this Guarantee shall be sufficiently evidenced by an Officer’s
Certificate. 
  
 (iii) Whenever, in the
administration of this Guarantee, the Guarantee Trustee shall deem it desirable that a matter be proved or established before taking, suffering or omitting any action hereunder, the Guarantee Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and conclusively rely upon an Officer’s Certificate of the Guarantor which, upon receipt of such request, shall be promptly delivered by the Guarantor. 
  
 (iv) The Guarantee Trustee shall have no duty to see to any
recording, filing or registration of any instrument or other writing (or any rerecording, refiling or reregistration thereof). 
  
 (v) The Guarantee Trustee may consult with counsel of its selection, and the advice or opinion of such counsel with respect to legal
matters shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with such advice or opinion. Such counsel may be counsel to the Guarantor or any of
its Affiliates and may include any of its employees. The Guarantee Trustee shall have the right at any time to seek instructions concerning the administration of this Guarantee from any court of competent jurisdiction. 
  
 (vi) The Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Guarantee at the request or direction of any Holder, unless such Holder shall have provided to the Guarantee Trustee such security and indemnity, reasonably satisfactory to the Guarantee
Trustee, against the costs, expenses (including attorneys’ fees and expenses and the expenses of the Guarantee Trustee’s agents, nominees or custodians) and liabilities that might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested by the Guarantee Trustee; provided, however, that nothing contained in this Section 2.2(a)(vi) shall be taken to relieve the Guarantee Trustee, upon the occurrence of an Event of
Default, of its obligation to exercise the rights and powers vested in it by this Guarantee. 
  
 (vii) The Guarantee Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Guarantee Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit. 
  

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 (viii) The Guarantee Trustee may execute any of the trusts or powers hereunder or perform
any duties hereunder either directly or by or through agents, nominees, custodians or attorneys, and the Guarantee Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it
hereunder. 
  
 (ix) Any action taken by the
Guarantee Trustee or its agents hereunder shall bind the Holders of the Capital Securities, and the signature of the Guarantee Trustee or its agents alone shall be sufficient and effective to perform any such action. No third party shall be required
to inquire as to the authority of the Guarantee Trustee to so act or as to its compliance with any of the terms and provisions of this Guarantee, both of which shall be conclusively evidenced by the Guarantee Trustee’s or its agent’s
taking such action. 
  
 (x) Whenever in the
administration of this Guarantee the Guarantee Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action hereunder, the Guarantee Trustee (A) may request instructions from the
Holders of a Majority in liquidation amount of the Capital Securities, (B) may refrain from enforcing such remedy or right or taking such other action until such instructions are received and (C) shall be protected in conclusively relying on or
acting in accordance with such instructions. 
  
 (xi) The Guarantee Trustee shall not be liable for any action taken, suffered, or omitted to be taken by it in good faith and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this
Guarantee. 
  
 (b) No provision of this Guarantee shall be deemed
to impose any duty or obligation on the Guarantee Trustee to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it, in any jurisdiction in which it shall be illegal or in which the Guarantee Trustee
shall be unqualified or incompetent in accordance with applicable law to perform any such act or acts or to exercise any such right, power, duty or obligation. No permissive power or authority available to the Guarantee Trustee shall be construed to
be a duty. 
  
 SECTION 2.3 Not Responsible for Recitals or
Issuance of Guarantee. 
  
 The recitals contained in this
Guarantee shall be taken as the statements of the Guarantor, and the Guarantee Trustee does not assume any responsibility for their correctness. The Guarantee Trustee makes no representation as to the validity or sufficiency of this Guarantee.

  
 SECTION 2.4 Events of Default; Waiver. 
  
 (a) An “Event of Default” under this Guarantee will occur upon the
failure of the Guarantor to perform any of its payment or other obligations hereunder. 
  
 (b) The Holders of a Majority in liquidation amount of the Capital Securities may, voting or consenting as a class, on behalf of the Holders of all of the Capital Securities, 

  

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waive any past Event of Default and its consequences. Upon such waiver, any such Event of Default shall cease to exist, and shall be deemed to have been
cured, for every purpose of this Guarantee, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. 
  
 SECTION 2.5 Events of Default; Notice. 
  
 (a) The Guarantee Trustee shall, within 90 days after the occurrence of an Event of Default, transmit by mail, first class
postage prepaid, to the Holders of the Capital Securities, notices of all Events of Default actually known to a Responsible Officer of the Guarantee Trustee, unless such defaults have been cured before the giving of such notice, provided, however,
that the Guarantee Trustee shall be protected in withholding such notice if and so long as a Responsible Officer of the Guarantee Trustee in good faith determines that the withholding of such notice is in the interests of the Holders of the Capital
Securities. 
  
 (b) The Guarantee Trustee shall not be charged
with knowledge of any Event of Default unless the Guarantee Trustee shall have received written notice thereof from the Guarantor or a Holder of the Capital Securities, or a Responsible Officer of the Guarantee Trustee charged with the
administration of this Guarantee shall have actual knowledge thereof. 
  
 ARTICLE III 
  
 THE GUARANTEE TRUSTEE 
  
 SECTION 3.1 The Guarantee Trustee; Eligibility. 
  
 (a) There shall at all times be a Guarantee Trustee which shall: 

 
 (i) not be an Affiliate of the Guarantor; and 

 
 (ii) be a corporation or national association organized
and doing business under the laws of the United States of America or any state thereof or of the District of Columbia, or Person authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least 50
million U.S. dollars ($50,000,000), and subject to supervision or examination by federal, state or District of Columbia authority. If such corporation or national association publishes reports of condition at least annually, pursuant to law or to
the requirements of the supervising or examining authority referred to above, then, for the purposes of this Section 3.1(a)(ii), the combined capital and surplus of such corporation or national association shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published. 
  
 (b) If at any time the Guarantee Trustee shall cease to be eligible to so act under Section 3.1(a), the Guarantee Trustee shall immediately resign in the manner and with the effect set forth in Section 3.2(c).

  
 (c) If the Guarantee Trustee has or shall acquire any
“conflicting interest” within the meaning of Section 310(b) of the Trust Indenture Act, the Guarantee Trustee shall 

  

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either eliminate such interest or resign to the extent and in the manner provided by, and subject to, this Guarantee. 
  
 SECTION 3.2 Appointment, Removal and Resignation of the Guarantee
Trustee. 
  
 (a) Subject to Section 3.2(b), the Guarantee
Trustee may be appointed or removed without cause at any time by the Guarantor except during an Event of Default. 
  
 (b) The Guarantee Trustee shall not be removed in accordance with Section 3.2(a) until a Successor Guarantee Trustee has been appointed and has accepted
such appointment by written instrument executed by such Successor Guarantee Trustee and delivered to the Guarantor. 
  
 (c) The Guarantee Trustee appointed to office shall hold office until a Successor Guarantee Trustee shall have been appointed or until its removal or
resignation. The Guarantee Trustee may resign from office (without need for prior or subsequent accounting) by an instrument in writing executed by the Guarantee Trustee and delivered to the Guarantor, which resignation shall not take effect until a
Successor Guarantee Trustee has been appointed and has accepted such appointment by an instrument in writing executed by such Successor Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee Trustee. 
  
 (d) If no Successor Guarantee Trustee shall have been appointed and accepted
appointment as provided in this Section 3.2 within 60 days after delivery of an instrument of removal or resignation, the Guarantee Trustee resigning or being removed may petition any court of competent jurisdiction for appointment of a Successor
Guarantee Trustee. Such court may thereupon, after prescribing such notice, if any, as it may deem proper, appoint a Successor Guarantee Trustee. 
  
 (e) No Guarantee Trustee shall be liable for the acts or omissions to act of any Successor Guarantee Trustee. 
  
 (f) Upon termination of this Guarantee or removal or resignation of the
Guarantee Trustee pursuant to this Section 3.2, the Guarantor shall pay to the Guarantee Trustee all amounts owing to the Guarantee Trustee under Sections 7.2 and 7.3 accrued to the date of such termination, removal or resignation. 
  
 ARTICLE IV 
  
 GUARANTEE 
  
 SECTION 4.1 Guarantee. 
  
 (a) The Guarantor irrevocably and unconditionally agrees to pay in full to the Holders the Guarantee Payments (without duplication of amounts theretofore
paid by the Issuer), as and when due, regardless of any defense (except defense of payment by the Issuer), right of set-off or counterclaim that the Issuer may have or assert. The Guarantor’s obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the Guarantor to the Holders or by causing the Issuer to pay such amounts to the Holders. 
  

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 (b) The Guarantor hereby also agrees to assume any and all Obligations of the Issuer and in the event any
such Obligation is not so assumed, subject to the terms and conditions hereof, the Guarantor hereby irrevocably and unconditionally guarantees to each Beneficiary the full payment, when and as due, of any and all Obligations to such Beneficiaries.
This Guarantee is intended to be for the Beneficiaries who have received notice hereof. 
  
 SECTION 4.2 Waiver of Notice and Demand. 
  
 The Guarantor hereby waives notice of acceptance of this Guarantee and of any liability to which it applies or may apply, presentment, demand for payment, any right to require a proceeding first against the Issuer or
any other Person before proceeding against the Guarantor, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands. 
  
 SECTION 4.3 Obligations Not Affected. 
  
 The obligations, covenants, agreements and duties of the Guarantor under this Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following: 
  
 (a) the release or waiver, by operation of law or otherwise, of the performance or observance by the Issuer of any express or implied agreement, covenant, term or condition relating to the Capital Securities to be
performed or observed by the Issuer; 
  
 (b) the extension of time
for the payment by the Issuer of all or any portion of the Distributions, the price payable upon the redemption of the Capital Securities, the Liquidation Distribution or any other sums payable under the terms of the Capital Securities or the
extension of time for the performance of any other obligation under, arising out of, or in connection with, the Capital Securities (other than an extension of time for the payment of the Distributions, the price payable upon the redemption of the
Capital Securities, the Liquidation Distribution or other sums payable that results from the extension of any interest payment period on the Debentures); 
  
 (c) any failure, omission, delay or lack of diligence on the part of the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Capital Securities, or any action on the part of the Issuer granting indulgence or extension of any kind; 
  

(d) the voluntary or involuntary liquidation, dissolution, sale of any collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the Issuer or any of the assets of the Issuer; 
  
 (e) any invalidity of, or defect or deficiency in, the Capital Securities; 
  
 (f) the settlement or compromise of any obligation guaranteed hereby or
hereby incurred; or 
  

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 (g) any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or
defense of a guarantor, it being the intent of this Section 4.3 that the obligations of the Guarantor hereunder shall be absolute and unconditional under any and all circumstances. 
  
 There shall be no obligation of the Holders to give notice to, or obtain consent of, the Guarantor with respect to the
happening of any of the foregoing. 
  
 SECTION 4.4 Rights of
Holders. 
  
 (a) The Holders of a Majority in liquidation
amount of the Capital Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Guarantee Trustee in respect of this Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under this Guarantee; provided, however, that (subject to Sections 2.1 and 2.2) the Guarantee Trustee shall have the right to decline to follow any such direction if the Guarantee Trustee shall determine that the
actions so directed would be unjustly prejudicial to the Holders not taking part in such direction or if the Guarantee Trustee being advised by legal counsel determines that the action or proceeding so directed may not lawfully be taken or if the
Guarantee Trustee in good faith by its board of directors or trustees, executive committee or a trust committee of directors or trustees and/or Responsible Officers shall determine that the action or proceeding so directed would involve the
Guarantee Trustee in personal liability. 
  
 (b) Any Holder of
Capital Securities may institute a legal proceeding directly against the Guarantor to enforce the Guarantee Trustee’s rights under this Guarantee, without first instituting a legal proceeding against the Issuer, the Guarantee Trustee or any
other Person. The Guarantor waives any right or remedy to require that any such action be brought first against the Issuer, the Guarantee Trustee or any other Person before so proceeding directly against the Guarantor. 
  
 SECTION 4.5 Guarantee of Payment. 
  
 This Guarantee creates a guarantee of payment and not of collection.

  
 SECTION 4.6 Subrogation. 
  
 The Guarantor shall be subrogated to all (if any) rights of the Holders of
Capital Securities against the Issuer in respect of any amounts paid to such Holders by the Guarantor under this Guarantee; provided, however, that the Guarantor shall not (except to the extent required by applicable provisions of law) be entitled
to enforce or exercise any right that it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of payment under this Guarantee, if, after giving effect to any such payment, any amounts are due
and unpaid under this Guarantee. If any amount shall be paid to the Guarantor in violation of the preceding sentence, the Guarantor agrees to hold such amount in trust for the Holders and to pay over such amount to the Holders. 
  

 11 

 SECTION 4.7 Independent Obligations. 
  
 The Guarantor acknowledges that its obligations hereunder are independent of the obligations of the Issuer with respect to
the Capital Securities and that the Guarantor shall be liable as principal and as debtor hereunder to make Guarantee Payments pursuant to the terms of this Guarantee notwithstanding the occurrence of any event referred to in subsections (a) through
(g), inclusive, of Section 4.3 hereof. 
  
 SECTION 4.8
Enforcement. 
  
 A Beneficiary may enforce the Obligations
of the Guarantor contained in Section 4.1(b) directly against the Guarantor, and the Guarantor waives any right or remedy to require that any action be brought against the Issuer or any other person or entity before proceeding against the Guarantor.

  
 The Guarantor shall be subrogated to all rights (if any) of
any Beneficiary against the Issuer in respect of any amounts paid to the Beneficiaries by the Guarantor under this Guarantee; provided, however, that the Guarantor shall not (except to the extent required by applicable provisions of law) be entitled
to enforce or exercise any rights that it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of payment under this Guarantee, if, after giving effect to such payment, any amounts are due
and unpaid under this Guarantee. If any amount shall be paid to the Guarantor in violation of the preceding sentence, the Guarantor agrees to hold such amount in trust for the Beneficiaries and to pay over such amount to the Beneficiaries.

  
 ARTICLE V 
  
 LIMITATION OF TRANSACTIONS; SUBORDINATION 
  
 SECTION 5.1 Limitation of Transactions. 
  
 So long as any Capital Securities remain outstanding, if (a) there shall have
occurred and be continuing an Event of Default or (b) Debenture Issuer shall have selected an Extension Period as provided in the Indenture and such period, or any extension thereof, shall have commenced and be continuing, then the Guarantor may not
(x) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of the Guarantor’s capital stock, (y) make any payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Guarantor that rank in all respects pari passu with or junior in interest to the Debentures or (z) make any payment under any guarantees of the Guarantor that rank in all respects pari
passu with or junior in interest to this Guarantee (other than (i) repurchases, redemptions or other acquisitions of shares of capital stock of the Guarantor (A) in connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of one or more employees, officers, directors, or consultants, (B) in connection with a dividend reinvestment or stockholder stock purchase plan or (C) in connection with the issuance of capital stock of the
Guarantor (or securities convertible into or exercisable for such capital stock), as consideration in an acquisition transaction entered into prior to the occurrence of the Event of Default or the 

  

 12 

 
applicable Extension Period, (ii) as a result of any exchange or conversion of any class or series of the Guarantor’s capital stock (or any capital
stock of a subsidiary of the Guarantor) for any class or series of the Guarantor’s capital stock or of any class or series of the Guarantor’s indebtedness for any class or series of the Guarantor’s capital stock, (iii) the purchase of
fractional interests in shares of the Guarantor’s capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, (iv) any declaration of a dividend in connection with any
stockholder’s rights plan, or the issuance of rights, stock or other property under any stockholder’s rights plan, or the redemption or repurchase of rights pursuant thereto, or (v) any dividend in the form of stock, warrants, options or
other rights where the dividend stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior in interest to such stock).

  
 SECTION 5.2 Ranking. 
  
 This Guarantee will constitute an unsecured obligation of the Guarantor and
will rank subordinate and junior in right of payment to all present and future Senior Indebtedness (as defined in the Indenture) of the Guarantor. By their acceptance thereof, each Holder of Capital Securities agrees to the foregoing provisions of
this Guarantee and the other terms set forth herein. 
  
 ARTICLE VI

  
 TERMINATION 
  
 SECTION 6.1 Termination. 
  
 This Guarantee shall terminate as to the Capital Securities (i) upon full
payment of the price payable upon redemption of all Capital Securities then outstanding, (ii) upon the distribution of all of the Debentures to the Holders of all of the Capital Securities or (iii) upon full payment of the amounts payable in
accordance with the Declaration upon dissolution of the Issuer. This Guarantee will continue to be effective or will be reinstated, as the case may be, if at any time any Holder of Capital Securities must restore payment of any sums paid under the
Capital Securities or under this Guarantee. 
  
 ARTICLE VII

  
 INDEMNIFICATION 
  
 SECTION 7.1 Exculpation. 
  
 (a) No Indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Guarantor or any Covered Person for any loss, damage or claim incurred by reason of any act or omission of such Indemnified Person in good faith in accordance with this Guarantee and in a manner that such Indemnified
Person reasonably believed to be within the scope of the authority conferred on such Indemnified Person by this Guarantee or by law, except that an Indemnified Person shall be liable for any such loss, damage or claim 

  

 13 

 
incurred by reason of such Indemnified Person’s negligence, willful misconduct or bad faith with respect to such acts or omissions. 
  
 (b) An Indemnified Person shall be fully protected in relying in good faith
upon the records of the Issuer or the Guarantor and upon such information, opinions, reports or statements presented to the Issuer or the Guarantor by any Person as to matters the Indemnified Person reasonably believes are within such other
Person’s professional or expert competence and who, if selected by such Indemnified Person, has been selected with reasonable care by such Indemnified Person, including information, opinions, reports or statements as to the value and amount of
the assets, liabilities, profits, losses, or any other facts pertinent to the existence and amount of assets from which Distributions to Holders of Capital Securities might properly be paid. 
  
 SECTION 7.2 Indemnification. 
  
 (a) The Guarantor agrees to indemnify each Indemnified Person for, and to
hold each Indemnified Person harmless against, any and all loss, liability, damage, claim or expense incurred without negligence, willful misconduct or bad faith on the part of the Indemnified Person, arising out of or in connection with the
acceptance or administration of the trust or trusts hereunder, including but not limited to the costs and expenses (including reasonable legal fees and expenses) of the Indemnified Person defending itself against, or investigating, any claim or
liability in connection with the exercise or performance of any of the Indemnified Person’s powers or duties hereunder. The obligation to indemnify as set forth in this Section 7.2 shall survive the resignation or removal of the Guarantee
Trustee and the termination of this Guarantee. 
  
 (b) Promptly
after receipt by an Indemnified Person under this Section 7.2 of notice of the commencement of any action, such Indemnified Person will, if a claim in respect thereof is to be made against the Guarantor under this Section 7.2, notify the Guarantor
in writing of the commencement thereof; but the failure so to notify the Guarantor (i) will not relieve the Guarantor from liability under paragraph (a) above unless and to the extent that the Guarantor did not otherwise learn of such action and
such failure results in the forfeiture by the Guarantor of substantial rights and defenses and (ii) will not, in any event, relieve the Guarantor from any obligations to any Indemnified Person other than the indemnification obligation provided in
paragraph (a) above. The Guarantor shall be entitled to appoint counsel of the Guarantor’s choice at the Guarantor’s expense to represent the Indemnified Person in any action for which indemnification is sought (in which case the Guarantor
shall not thereafter be responsible for the fees and expenses of any separate counsel retained by the Indemnified Person or Persons except as set forth below); provided, however, that such counsel shall be satisfactory to the Indemnified Person.
Notwithstanding the Guarantor’s election to appoint counsel to represent the Indemnified Person in any action, the Indemnified Person shall have the right to employ separate counsel (including local counsel), and the Guarantor shall bear the
reasonable fees, costs and expenses of such separate counsel, if (i) the use of counsel chosen by the Guarantor to represent the Indemnified Person would present such counsel with a conflict of interest, (ii) the actual or potential defendants in,
or targets of, any such action include both the Indemnified Person and the Guarantor and the Indemnified Person shall have reasonably concluded that there may be legal defenses available to it and/or other Indemnified Persons 

  

 14 

 
which are different from or additional to those available to the Guarantor, (iii) the Guarantor shall not have employed counsel satisfactory to the
Indemnified Person to represent the Indemnified Person within a reasonable time after notice of the institution of such action or (iv) the Guarantor shall authorize the Indemnified Person to employ separate counsel at the expense of the Guarantor.
The Guarantor will not, without the prior written consent of the Indemnified Persons, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the Indemnified Persons are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each
Indemnified Person from all liability arising out of such claim, action, suit or proceeding. 
  
 SECTION 7.3 Compensation; Reimbursement of Expenses. 
  
 The Guarantor agrees: 
  
 (a) to
pay to the Guarantee Trustee from time to time such compensation for all services rendered by it hereunder as the parties shall agree to from time to time (which compensation shall not be limited by any provision of law in regard to the compensation
of a trustee of an express trust); and 
  
 (b) except as otherwise
expressly provided herein, to reimburse the Guarantee Trustee upon request for all reasonable expenses, disbursements and advances incurred or made by it in accordance with any provision of this Guarantee (including the reasonable compensation and
the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to the negligence, willful misconduct or bad faith of the Guarantee Trustee. 
  
 The provisions of this Section 7.3 shall survive the resignation or removal
of the Guarantee Trustee and the termination of this Guarantee. 
  
 ARTICLE VIII 
  
 MISCELLANEOUS 
  
 SECTION 8.1 Successors and Assigns. 
  
 All guarantees and agreements contained in this Guarantee shall bind the
successors, assigns, receivers, trustees and representatives of the Guarantor and shall inure to the benefit of the Holders of the Capital Securities then outstanding. Except in connection with any merger or consolidation of the Guarantor with or
into another entity or any sale, transfer or lease of the Guarantor’s assets to another entity, in each case to the extent permitted under the Indenture, the Guarantor may not assign its rights or delegate its obligations under this Guarantee
without the prior approval of the Holders of a Majority in liquidation amount of the Capital Securities. 
  

 15 

 SECTION 8.2 Amendments. 
  
 Except with respect to any changes that do not adversely affect the powers, preferences, rights or interests of Holders of
the Capital Securities in any material respect (in which case no approval of Holders will be required), this Guarantee may be amended only with the prior approval of the Holders of a Majority in liquidation amount of the Capital Securities. The
provisions of the Declaration with respect to amendments thereof shall apply equally with respect to amendments of the Guarantee. 
  
 SECTION 8.3 Notices. 
  
 All notices provided for in this Guarantee shall be in writing, duly signed by the party giving such notice, and shall be delivered, telecopied or mailed
by first class mail, as follows: 
  
 (a) if given to the Guarantee
Trustee, at the Guarantee Trustee’s mailing address set forth below (or such other address as the Guarantee Trustee may give notice of to the Holders of the Capital Securities): Wilmington Trust Company, Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19890-0001, Attention: Corporate Trust Administration, Telecopy: 302-651-8882, Telephone: 302-651-1000; 
  
 (b) if given to the Guarantor, at the Guarantor’s mailing address set forth below (or such other address as the Guarantor may give notice of to the
Holders of the Capital Securities and to the Guarantee Trustee): Commercial Capital Bancorp, Inc., One Venture Third Floor, Irvine, CA 92618, Attention: Christopher G. Hagerty, Telecopy: 949-585-0174, Telephone: 949-585-7500; or 
  
 (c) if given to any Holder of the Capital Securities, at the address set
forth on the books and records of the Issuer. 
  
 All such notices
shall be deemed to have been given when received in person, telecopied with receipt confirmed, or mailed by first class mail, postage prepaid, except that if a notice or other document is refused delivery or cannot be delivered because of a changed
address of which no notice was given, such notice or other document shall be deemed to have been delivered on the date of such refusal or inability to deliver. 
  

SECTION 8.4 Benefit. 
  
 This Guarantee is solely for the benefit of the Holders of the Capital Securities and the Beneficiaries and, subject to Section 2.1(a), is not separately
transferable from the Capital Securities. 
  
 SECTION 8.5
Governing Law. 
  
 THIS GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES OF SAID STATE OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW. 
  

 16 

 SECTION 8.6 Counterparts. 
  
 This Guarantee may contain more than one counterpart of the signature page and this Guarantee may be executed by the
affixing of the signature of the Guarantor and the Guarantee Trustee to any of such counterpart signature pages. All of such counterpart signature pages shall be read as though one, and they shall have the same force and effect as though all of the
signers had signed a single signature page. 
  

 17 

 THIS GUARANTEE is executed as of the day and year first above written. 
  

	 COMMERCIAL CAPITAL BANCORP, INC.,
 as Guarantor

		
	 By:
	 	  
 /s/                                    

	 	 	 Name:
 Title:

  

	 WILMINGTON TRUST COMPANY,
 as
Guarantee Trustee

		
	 By:
	 	  
 /s/                                    

	 	 	 Name:
 Title:

  

 18Research and License Agreement dated September 28, 1998

 Exhibit 10.11 
  
 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 24b-2 OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 
  
 RESEARCH AND LICENSE AGREEMENT 
  
 BETWEEN 
  
 KOSAN BIOSCIENCES, INC. 
  
 AND 
  
 ORTHO-MCNEIL
PHARMACEUTICAL CORPORATION 
  
 AND 
  
 THE R.W. JOHNSON PHARMACEUTICAL RESEARCH INSTITUTE 
  
 September 28, 1998 
  

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

 TABLE OF CONTENTS 
  

	 	  	PAGE

		
	 ARTICLE 1   — DEFINITIONS
	  	2
		
	 ARTICLE 2   — RESEARCH
	  	10
		
	 ARTICLE 3   — SCREENING BY LICENSEE
	  	18
		
	 ARTICLE 4   — LICENSES
	  	23
		
	 ARTICLE 5   — DEVELOPMENT AND COMMERCIALIZATION
	  	27
		
	 ARTICLE 6   — LICENSE FEES AND MILESTONE PAYMENTS
	  	30
		
	 ARTICLE 7   — ROYALTIES, RECORDS AND REPORTS
	  	32
		
	 ARTICLE 8   — SUPPLY OF PRODUCTS
	  	36
		
	 ARTICLE 9   — CONFIDENTIALITY
	  	36
		
	 ARTICLE 10 — REGULATORY MATTERS
	  	38
		
	 ARTICLE 11 — PATENT INFRINGEMENT
	  	39
		
	 ARTICLE 12 — INTELLECTUAL PROPERTY
	  	41
		
	 ARTICLE 13 — PUBLICITY
	  	43
		
	 ARTICLE 14 — WARRANTIES AND REPRESENTATIONS
	  	44
		
	 ARTICLE 15 — STANFORD LICENSE
	  	45
		
	 ARTICLE 16 — TRADEMARKS
	  	46
		
	 ARTICLE 17 — INDEMNIFICATION
	  	46
		
	 ARTICLE 18 — BANKRUPTCY
	  	47
		
	 ARTICLE 19 — TERM AND TERMINATION
	  	48
		
	 ARTICLE 20 — ASSIGNMENT
	  	52
		
	 ARTICLE 21 — DISPUTE RESOLUTION
	  	52
		
	 ARTICLE 22 — MISCELLANEOUS
	  	55

  

 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 24b-2 OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 
  

 RESEARCH AND LICENSE AGREEMENT 
  
 This RESEARCH AND LICENSE AGREEMENT
(hereinafter called the “AGREEMENT”), made as of September 28, 1998 by and between KOSAN BIOSCIENCES, INC., a corporation organized under California law having its principal office at
1450 Rollins Road, Burlingame, California 94010 (hereinafter called “KOSAN”); 
  
 ON THE ONE HAND, AND: 
  
 ORTHO-MCNEIL PHARMACEUTICAL, INCORPORATED (hereinafter
called “ORTHO”), a company organized under Delaware law, having its principal office at U.S. Route 202, Raritan, New Jersey 08869; and the R.W. JOHNSON PHARMACEUTICAL RESEARCH
INSTITUTE (hereinafter called “RWJPRI”), a division of Ortho-McNeil Pharmaceutical, Incorporated, having its principal office at U.S. Route 202, Raritan, New Jersey 08869 (ORTHO and RWJPRI hereinafter
collectively called “LICENSEE”) 
  
 ON
THE OTHER HAND, 
  
 WITNESSETH: 
  
 A.
WHEREAS, KOSAN has an on-going RESEARCH PROGRAM in the FIELD (as defined below) and has developed certain technology useful in the FIELD to which it has the right to grant licenses; 
  
 B. WHEREAS, patent
applications have been filed in the name of KOSAN in the United States and other territories for the granting of letters patent relating to certain polyketides which may have activity within the FIELD; 
  
 C. WHEREAS,
LICENSEE has been engaged in research efforts focused on the development of new antibacterials and has certain research, development and commercialization capabilities in the FIELD; 
  
 D. WHEREAS, KOSAN and RWJPRI desire to engage in collaborative
research to conduct a drug discovery program as generally described in the RESEARCH PLAN attached hereto as Exhibit A; 
  
 E. WHEREAS, LICENSEE is prepared to undertake a program for the development, manufacture and
sale of PRODUCTS developed from the collaborative research, provided that LICENSEE is able to obtain a license under the KOSAN PATENT RIGHTS and KOSAN KNOW-HOW (as hereinafter defined) with exclusivity to protect its investment in such program;

  
 F.
WHEREAS, KOSAN recognizes that LICENSEE requires such a license in order to justify the investment in funding and personnel needed to develop and market products developed from the collaborative
research and is willing to grant such rights. 
  

 NOW, THEREFORE, in consideration of the premises and
the performance of the covenants herein contained, IT IS AGREED AS FOLLOWS: 
  
 ARTICLE 1 
  
 DEFINITIONS

  
 For the purposes of this AGREEMENT and solely for such
purposes, the terms hereinafter set forth shall have the following respective meanings: 
  
 1.1 “AFFILIATE” or “AFFILIATES” shall mean any corporation(s) or organization(s) which directly or indirectly CONTROLS, is (are) CONTROLLED by, or is (are) under common CONTROL
with LICENSEE or KOSAN. 
  
 1.2 “ANTIBIOTIC
ACTIVITY” shall mean bactericidal or bacteristatic activity. 
  
 1.3 “ANTI-INFLAMMATORY ACTIVITY” shall mean [**]. 
  
 1.4 “AROMATIC POLYKETIDE” shall mean [**]. 
  
 1.5 “BULK PRODUCT” shall mean the purified active ingredient, or purified intermediate for manufacture of any PRODUCT, as the case
may be, in bulk form. 
  
 1.6 “CLOSE STRUCTURAL
ANALOG” shall mean, with respect to a [**] which is designated a LICENSED COMPOUND pursuant to Section 3.5, another [**], as the case may be, which (i) is claimed in a patent application or patent within the PATENT RIGHTS which claims the
applicable LICENSED COMPOUND, and is in the same chemical genus as the applicable LICENSED COMPOUND and (ii) has activity against the same molecular target as the LICENSED COMPOUND, which activity shall be (x) if activity other than [**], at a level
agreed by the parties at the time the corresponding [**] [**] is designated a LICENSED COMPOUND, or (y) if [**], shall be at the level specified in the RESEARCH PLAN, at the time the corresponding [**] is designated a LICENSED COMPOUND. 

 
 1.7 “COMMITTED FTEs” shall mean, with respect to a
particular PROJECT, those KOSAN FTEs for which LICENSEE will provide RESEARCH FUNDING as set forth in the RESEARCH PLAN to conduct such PROJECT until the applicable DECISION POINT for such PROJECT as set forth in Section 2.6. 
  
 1.8 “CONTINGENT FTEs” shall mean, with respect to a
particular PROJECT, those KOSAN FTEs for which LICENSEE will provide RESEARCH FUNDING as set forth in the RESEARCH PLAN to conduct CONTINGENT WORK for such PROJECT if the LICENSEE makes a GO DECISION at the applicable DECISION POINT(s), or otherwise
elects to proceed with the CONTINGENT WORK for such PROJECT as set forth in Section 2.6. 
  

 2. 
  

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

 1.9 “CONTINGENT WORK” shall mean research conducted by CONTINGENT FTEs.

  
 1.10 “CONTRACT YEAR” shall mean any
twelve (12) consecutive month period beginning with the EFFECTIVE DATE of the AGREEMENT. 
  
 1.11 “CONTROL”, “CONTROL(S)” or “CONTROLLED” shall refer to direct or indirect beneficial ownership of at least fifty percent (50%) of the voting stock of a
corporation or other business entity, or a fifty percent (50%) or greater interest in the income of such corporation or other business entity, or the power to direct or cause the direction of the management or policies of such corporation or other
business entity whether by ownership of voting securities, by contract or otherwise, or such other relationship as, in fact, constitutes actual control. 
  
 1.12 “CPI” shall mean the Consumer Price Index, All Urban Consumers, as published by the U.S. Bureau of Labor Statistics.

  
 1.13 “DECISION POINT(S)” shall mean
with respect to a particular PROJECT, the point at which LICENSEE must elect by notice to KOSAN to provide for funding the CONTINGENT WORK for such PROJECT (a “GO DECISION”), or discontinue the PROJECT and not support further research with
respect to such PROJECT (a “NO-GO DECISION”), subject to Section 2.6.3. 
  
 1.14 “DERIVATIVE” shall mean a compound which (i) results from a chemical synthesis program based on a LICENSED COMPOUND, or (ii) is based on structure-function data derived from one or more
LICENSED COMPOUNDS, which data is not in the public domain as a result of a disclosure (x) by a THIRD PARTY, (y) by KOSAN (solely or jointly with LICENSEE), or (z) in a patent application owned solely by LICENSEE, in each case prior to the time the
applicable compound is synthesized or acquired, or (iii) is synthesized or acquired by LICENSEE using KOSAN KNOW-HOW or KOSAN PATENT RIGHTS or any biological materials provided to LICENSEE by KOSAN or any progeny or derivative thereof, or (iv) is
claimed or contained within a chemical genus, as defined in any issued VALID CLAIM within the PATENT RIGHTS, or in a VALID CLAIM within the PATENT RIGHTS of a pending application for such a patent which application is being prosecuted in good faith,
and as to which one member of such chemical genus is within (i), (ii) or (iii) above. For purposes of determining whether a given composition is a DERIVATIVE, it is understood that a compound which meets one or more of the foregoing criteria and is
discovered, identified, synthesized or acquired on or before the CUTOFF DATE, shall be included as a DERIVATIVE notwithstanding whether the composition was identified by LICENSEE as being active after the end of the RESEARCH PROGRAM. For purposes of
this Section 1.14, the CUTOFF DATE shall mean: (i) if the RESEARCH PROGRAM continues for at least two (2) years, the date two (2) years after the end of the NON-EXCLUSIVE SCREENING PERIOD, (ii) if the EXCLUSIVE SCREENING PERIOD and the NON-EXCLUSIVE
SCREENING PERIOD terminate pursuant to Section 19.1.3, the date two (2) years after the effective date of any such termination, and (iii) if the 

  

 3. 
  

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

 
entire AGREEMENT terminates prior to the second anniversary of the EFFECTIVE DATE, the date two years after the effective date of any such termination.
“DERIVATIVE” shall include any compound synthesized based on, or derived from, another DERIVATIVE, as described in subsections (i) through (iv) above. Notwithstanding the above, DERIVATIVE shall not include any compound which is conceived
and synthesized by or on behalf of LICENSEE after the CUTOFF DATE, unless such compound is within the scope of a patent within the KOSAN PATENT RIGHTS or RWJPRI PATENT RIGHTS which (i) was issued as of the CUTOFF DATE, or (ii) issued from a patent
application pending as of the CUTOFF DATE (or a division or continuation of such an application), and issued after such date. 
  
 1.15 “DESIGNATION NOTICE” shall have the meaning set forth in Section 3.5. 
  
 1.16 “DEVELOPMENT” shall mean all work involved in
STAGES O, I, II, and III for a PRODUCT in any country or territory. 
  
 1.17 “DEVELOPMENT PLAN” shall mean the plan for DEVELOPMENT of a PRODUCT pursuant to Article 5. 
  
 1.18 “EFFECTIVE DATE” shall mean the date at the head of this AGREEMENT. 
  
 1.19 “EXCLUDED TECHNOLOGY” shall mean any
intellectual property owned or controlled by KOSAN or its AFFILIATES relating to the creation, or generation of polyketides or their genes, the practice of combinatorial biosynthesis or cell-free enzymatic synthesis to make polyketides or other
modular enzyme [**] produced compounds. It is understood that EXCLUDED TECHNOLOGY shall not include intellectual property necessary for RWJPRI to make chemical modifications of the MACROLIDE scaffolds prepared by KOSAN or for RWJPRI to otherwise
carry out its activities pursuant to the RESEARCH PLAN during the RESEARCH TERM, to conduct process development and strain selection research with cells provided to RWJPRI by KOSAN for the production of MACROLIDES and/or AROMATIC POLYKETIDES, to
produce LICENSED PRODUCTS for DEVELOPMENT and commercialization purposes, and to characterize, evaluate and test such LICENSED PRODUCTS. 
  
 1.20 “EXCLUSIVE SCREENING PERIOD” shall mean the period commencing on the EFFECTIVE DATE and ending one (1) year after the end of
the RESEARCH PROGRAM. 
  
 1.21 “FDA” shall
mean the United States Food and Drug Administration. 
  
 1.22
“FIELD” shall mean the treatment of bacterial infections for all human and animal pharmaceutical applications. 
  
 1.23 “FINISHED PRODUCT” shall mean the finished pharmaceutical form, in any formulation, of a PRODUCT packaged for sale to a THIRD
PARTY. 
  

 4. 
  

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

 1.24 “FTE” shall mean a full time scientific person with appropriate academic
credentials and training dedicated to the RESEARCH PROGRAM or in the case of less than a full-time dedicated scientific person, a full-time, equivalent scientific person year (based upon a total of fifty-two (52) weeks or two thousand eighty (2080)
hours per year, with the foregoing including all working days and vacations, paid holidays, sick days, etc., consistent with KOSAN’s normal business practices) of scientific work, on or directly related to the RESEARCH, carried out by such a
person. Included are research scientists (Ph.D. or equivalent) and their associates (MS or BS). Excluded are project management personnel, administrative facilities support, general information and computer support, laboratory support and other
internal or external support personnel involved in the RESEARCH PROGRAM. 
  
 1.25 “IND” shall mean an Investigational New Drug Application filed pursuant to the requirements of the FDA as more fully defined in 21 C.F.R. Section 312.3 or its equivalent in any MAJOR
MARKET COUNTRY or in the European Economic Community. 
  
 1.26
“JDAC” shall mean the Joint Development Advisory Committee described in Section 5.1.1 below. 
  
 1.27 “JRC” shall mean the Joint Research Committee described in Section 2.3.1 below. 
  
 1.28 “KNOW-HOW” shall mean all information, not
generally known to the public, including techniques and data, including but not limited to, screens, models, methods, assays, inventions, discoveries, trade secrets, improvements, and technical information, together with all experience, data,
formulas, procedures and results, and including all chemical, pharmacological, toxicological, clinical, analytical and quality control data, in each case, which is necessary or materially useful in the development, manufacturing or use of LICENSED
COMPOUNDS or PRODUCTS. Notwithstanding the foregoing, KNOW-HOW shall not include any biological materials or the subject matter covered by any published patent or patent application. 
  
 1.29 “KOSAN KNOW-HOW” shall mean all KNOW-HOW which (i) KOSAN owns as of the EFFECTIVE DATE, and
which relates to the FIELD, or (ii) is developed by KOSAN in performance of the RESEARCH PROGRAM during the RESEARCH TERM. It is understood and agreed that the KOSAN KNOW-HOW shall not include any EXCLUDED TECHNOLOGY. 
  
 1.30 “KOSAN PATENT RIGHTS” shall mean (i) the patents
and patent applications identified in Exhibit C hereof, and in respect of such letters patent, and patent applications, all corresponding Patent Co-operation Treaty applications, European Patent Convention applications or applications under similar
administrative international conventions and corresponding national patents and patent applications, together with any divisional, continuation, (but not a continuation-in-part except to the extent described in (ii) or (iii) below), substitution,
reissue, extension, supplementary protection certificate or other application based thereon; and (ii) other patents or patent applications to the extent they disclose and claim inventions made by KOSAN in performance of the RESEARCH PROGRAM, and
(iii) any other 

  

 5. 
  

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

 
patents or patent applications containing one or more claims covering the manufacture, use or sale of a PRODUCT to the extent such patents or patent
applications disclose and claim inventions made by KOSAN during the EXCLUSIVE SCREENING PERIOD, in each case, which is necessary or materially useful for the development, manufacture or use of LICENSED COMPOUNDS or PRODUCTS, and which KOSAN has
rights to grant licenses to (e.g., have not been developed in the course of an exclusive collaboration with a THIRD PARTY or exclusively licensed to a THIRD PARTY). It is understood and agreed that the KOSAN PATENT RIGHTS shall not include any
EXCLUDED TECHNOLOGY. 
  
 1.31 “LICENSED
COMPOUND” shall mean a particular MACROLIDE or AROMATIC POLYKETIDE, as the case may be, with respect to which RWJPRI has provided a DESIGNATION NOTICE and acquired an exclusive license pursuant to Section 3.5. For purposes of this
AGREEMENT, each CLOSE STRUCTURAL ANALOG of any such LICENSED COMPOUND shall also be deemed to be a LICENSED COMPOUND. 
  
 1.32 “MACROLIDE(S)” shall mean [**] polyketide [**] polyketide [**], in each case, which are actually utilized in connection with
the RESEARCH PROGRAM that (i) exist in KOSAN’s proprietary compound library as of the EFFECTIVE DATE; or (ii) are synthesized or acquired by or on behalf of KOSAN or LICENSEE in connection with the RESEARCH PROGRAM. 
  
 1.33 “MAJOR MARKET COUNTRY” shall mean each of the
United States, United Kingdom, Germany, France, Italy, Spain or Japan. 
  
 1.34 “MARKETING AUTHORIZATION” shall mean all allowances and approvals (including pricing and reimbursement approvals) granted by the appropriate federal, state and local regulatory agencies, departments, bureaus or
other governmental entities within a country necessary to market and SELL PRODUCT. 
  
 1.35 “MOTILIDE ACTIVITY” shall mean [**]. 
  
 1.36 “NCE” shall mean a MACROLIDE which has ANTIBIOTIC ACTIVITY in accordance with criteria set forth in the RESEARCH PLAN.

  
 1.37 “NDA” shall mean a New Drug
Application and any supplements filed pursuant to the requirements of the FDA, including all documents, data and other information concerning the PRODUCT which are necessary for or included in, FDA approval to market such PRODUCT as more fully
defined in 21 C.F.R. section 314.50 ET SEQ., as well as equivalent submissions to the appropriate health authorities in other countries. 
  
 1.38 “NET SALES” shall mean the revenue billed by ORTHO or an AFFILIATE or SUBLICENSEE from the sale of PRODUCTS to independent
THIRD PARTIES, less the following amounts: (i) discounts, including cash discounts, or rebates, including rebates to governmental agencies such as Medicaid rebates and the like, actually allowed or granted, (ii) 

  

 6. 
  

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

 
credits or allowances actually granted upon claims or returns regardless of the party requesting the return, (iii) freight charges paid for delivery, (iv)
taxes or other governmental charges levied on or measured by the billed amount, when included in billing, as adjusted for rebates and refunds, and (v) provisions for uncollectible amounts determined in accordance with U.S. Generally Accepted
Accounting Practices, consistently applied to all products of the selling party. A “sale” shall include any transfer or other disposition for consideration, and NET SALES shall include the fair market value of all other consideration
received by LICENSEE or its AFFILIATES or SUBLICENSEES in respect of any grant of rights to make, use, sell or otherwise distribute PRODUCTS, whether such consideration is in cash, payment in kind, exchange or another form. In the case of discounts
on “bundles” of products or services which include PRODUCTS, ORTHO may with notice to KOSAN calculate NET SALES by discounting the bona fide list price of a PRODUCT by the average percentage discount of all products of ORTHO and/or its
AFFILIATES or SUBLICENSEES in a particular “bundle”, calculated as follows: 
  

	 Average percentage discount

 on a particular “bundle”
	  	=	  	1 - A/B) x 100

  
 where A equals the total discounted
price of a particular “bundle” of products, and B equals the sum of the undiscounted bona fide list prices of each unit of every product in such “bundle.” ORTHO shall provide KOSAN documentation, reasonably acceptable to KOSAN,
establishing such average discount with respect to each “bundle.” If ORTHO cannot so establish the average discount of a “bundle”, NET SALES shall be based on the undiscounted list price of the PRODUCT in the “bundle.”
If a PRODUCT in a “bundle” is not sold separately and no bona fide list price exists for such PRODUCT, the parties shall negotiate in good faith an imputed list price for such PRODUCT, and NET SALES with respect thereto shall be based on
such imputed list price. 
  
 In the event that PRODUCTS are sold in the form of
combination products containing one or more active ingredients other than the PRODUCT, NET SALES for such combination products will be calculated by multiplying actual NET SALES of such combination products by the fraction A/(A+B) where A is the
invoice price of the PRODUCT if sold separately, and B is the total invoice price of any other active component or components in the combination, if sold separately by LICENSEE or an AFFILIATE OR SUBLICENSEE. 
  
 If on a country-by-country basis the other active component or components in the combination
are not sold separately in said country by the LICENSEE or an AFFILIATE or SUBLICENSEE, NET SALES, for the purpose of determining royalties on the combination products shall be calculated by multiplying actual NET SALES of such combination products
by the fraction A/C where A is the invoice price of the PRODUCT if sold separately and C is the invoice price of the combination product. 
  

 7. 
  

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

 If on a country-by-country basis neither the PRODUCT nor the combination product is sold separately in said country by
the LICENSEE or an AFFILIATE or SUBLICENSEE, NET SALES for purposes of determining royalties on the combination products shall be reasonably allocated between the LICENSED PRODUCT and the other active components based on their relative value as
determined by the parties in good faith. 
  
 1.39
“NON-EXCLUSIVE SCREENING PERIOD” shall mean the period commencing on the EFFECTIVE DATE and continuing until three (3) years after the end of the EXCLUSIVE SCREENING PERIOD. 
  
 1.40 “PATENT RIGHTS” shall mean all United States and
foreign patents (including all reissues, extensions, substitutions, confirmations, re-registrations, re-examinations, revalidations and patents of addition) and patent applications (including, without limitation, all continuations,
continuations-in-part and divisions thereof) in each case, claiming an invention which is necessary or useful for the design, development, testing, use, manufacture or sale of LICENSED COMPOUNDS or PRODUCTS. 
  
 1.41 “PHASE I”, “PHASE II”, and
“PHASE III” shall mean Phase I (or Phase I/II), Phase II, and Phase III clinical trials, respectively, in each case as prescribed by the regulations of the applicable government agency or other regulatory entity. 
  
 1.42 “PRODUCT” shall mean any pharmaceutical product
containing a LICENSED COMPOUND or a DERIVATIVE thereof which is selected for DEVELOPMENT and/or marketing by LICENSEE or its AFFILIATES or SUBLICENSEES. 
  
 1.43 “PROJECT” shall mean each of the Fast Track Project and the SAR Project. 
  
 1.44 “RESEARCH FUNDING” shall mean the funding to be
paid by RWJPRI to KOSAN for the conduct of the RESEARCH PROGRAM. 
  
 1.45 “RESEARCH PLAN” shall have the meaning described in Section 2.2 hereof and shall be attached as Exhibit A. 
  
 1.46 “RESEARCH PROGRAM” shall mean all research and development performed in the course of performing the PROJECTS pursuant to the
RESEARCH PLAN during the RESEARCH TERM. 
  
 1.47
“RESEARCH TERM” shall mean the period set forth in Section 2.5 hereunder, unless this AGREEMENT or the RESEARCH TERM is earlier terminated under Article 19 below. 
  
 1.48 “RESERVED COMPOUND” shall mean a MACROLIDE with ANTIBIOTIC ACTIVITY that is designated by
RWJPRI pursuant to Section 3.5.6 below. 
  

 8. 
  

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

 1.49 “RWJPRI KNOW-HOW” shall mean such KNOW-HOW which RWJPRI or ORTHO or its
AFFILIATE discloses to KOSAN under this AGREEMENT. 
  
 1.50
“RWJPRI PATENT RIGHTS” shall mean any patents and patent applications, including all corresponding Patent Co-operation Treaty applications, European Patent Convention applications or applications under similar administrative
international conventions, and corresponding national patents and patent applications, together with any divisional, continuation, continuation-in-part, substitution, reissue, extension, supplementary protection certificate or other application
based thereon, owned or controlled by LICENSEE or its AFFILIATES, and to which LICENSEE or its AFFILIATES has the ability to grant a license or sublicense to without violating the terms of any agreement with any THIRD PARTY. 
  
 1.51 “SELLER” shall mean one who SELLS. 

 
 1.52 “SOLD,” “SALE,” “SALES,”
“SELL,” “SELLING” and “SELLS” shall refer to the act of selling or disposing of for value. 
  
 1.53 “STAGE O” shall mean that portion of the DEVELOPMENT program which starts with the selection of a LICENSED COMPOUND for
development into a PRODUCT under Article 5 hereunder and which generally provides for toxicological and pharmacological studies as well as drug substance and drug product formulation and manufacturing development necessary to obtain the permission
of regulatory authorities to begin and continue human clinical testing. 
  
 1.54 “STAGE I” shall mean that portion of the DEVELOPMENT program which provides for the first introduction into humans of a PRODUCT with the purpose of determining safety, metabolism, absorption, elimination and
other pharmacological action in humans as well as additional development work on animal toxicity, metabolism, drug substance and drug product formulation and manufacturing development to ensure continuation of human clinical testing. 
  
 1.55 “STAGE II” shall mean that portion of the
DEVELOPMENT PROGRAM which provides for the initial trials of PRODUCT on a limited number of patients for the purposes of determining dose and evaluating safety and preliminary efficacy data in the proposed therapeutic indication as well as
additional development work on animal toxicity, metabolism, drug substance and drug product formulation and manufacturing development to ensure continuation of human clinical testing. 
  
 1.56 “STAGE III” shall mean that portion of the DEVELOPMENT PROGRAM which provides for continued
trials of PRODUCT on sufficient numbers of patients to establish the safety and efficacy of a PRODUCT to support MARKETING AUTHORIZATION in the proposed indication. In addition, all other development work on animal toxicity, metabolism, drug
substance and drug product formulation and manufacturing development will be finalized in STAGE III. 
  

 9. 
  

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

 1.57 “STANFORD LICENSE” shall mean that certain License Agreement effective as of
March 11, 1996, as amended March 31, 1996, entered by and between KOSAN and the Board of Trustees of Leland Stanford Jr. University. 
  
 1.58 “SUBLICENSEE” shall mean, with respect to a particular PRODUCT, a THIRD PARTY to whom LICENSEE has granted a licensee or
sublicense to make and sell such PRODUCT. As used in this AGREEMENT, “SUBLICENSEE” shall also include a THIRD PARTY to whom LICENSEE has granted the right to distribute such PRODUCT, provided that such THIRD PARTY is responsible for
marketing or promoting such PRODUCTS within the applicable territory. 
  
 1.59 “THIRD PARTY” shall mean any party other than KOSAN or LICENSEE or AFFILIATES of either of them. 
  
 1.60 “USE,”“USES” and “USED” shall refer to the act of using for any commercial purposes
whatsoever. 
  
 1.61 “VALID CLAIM” shall
mean a claim of an issued, unexpired patent, or a claim being prosecuted in a pending patent application, in each case, which is within the PATENT RIGHTS. A claim of an issued, unexpired patent shall be presumed to be valid unless and until it has
been held to be invalid by a final judgement of a court of competent jurisdiction from which no appeal can be or is taken. For the purposes of royalty determination and payment under Article 6 hereof, any claim being prosecuted in a pending patent
application for a period of up to five (5) years from the filing date of such application shall be deemed to a VALID CLAIM, provided, that each claim in such an application shall again become a VALID CLAIM when and if a patent issues thereon.

  
 ARTICLE 2 
  
 RESEARCH 
  
 2.1 RESEARCH PROGRAM. Subject to the terms and conditions herein, KOSAN hereby agrees to conduct the RESEARCH
PROGRAM in collaboration with RWJPRI with a goal of discovering, identifying and synthesizing LICENSED COMPOUNDS for DEVELOPMENT by RWJPRI into one or more PRODUCTS for commercialization by ORTHO, an AFFILIATE or SUBLICENSEE. 
  
 2.2 RESEARCH PLAN. The RESEARCH PROGRAM shall be conducted in
accordance with the overall RESEARCH PLAN attached hereto as Exhibit A, as may be amended from time to time with the agreement of the parties. 
  

 10. 
  

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

 2.3 MANAGEMENT. 
  
 2.3.1 JRC. The parties shall establish a Joint Research Committee (“JRC”) within thirty (30) days of
the EFFECTIVE DATE to administer the RESEARCH PROGRAM. Each party shall present one consolidated view and have one vote on any issue. All decisions of the JRC must be unanimous. 
  
 2.3.2 MEMBERSHIP. The JRC shall include three (3) representatives of each of LICENSEE and KOSAN, each
Party’s members selected by that party. KOSAN and LICENSEE may each replace its JRC representatives at any time, upon written notice to the other party. From time to time, the JRC may establish subcommittees, to oversee particular projects or
activities, and such subcommittees will be constituted as the JRC agrees. 
  
 2.3.3 MEETINGS; MINUTES. During the EXCLUSIVE SCREENING PERIOD, the JRC shall meet at least quarterly, or more frequently as agreed by the parties, at such locations as the parties agree, and will
otherwise communicate regularly by telephone, electronic mail, facsimile and/or video conference. With the consent of the parties, other representatives of KOSAN or LICENSEE may attend JRC meetings as nonvoting observers. Each party shall be
responsible for all of its own expenses associated with attendance of such meetings. The first meeting of the JRC shall occur within forty-five (45) days after the EFFECTIVE DATE. The JRC shall prepare written minutes of each JRC meeting and a
written record of all JRC decisions, whether made at a JRC meeting or otherwise. A written record shall be provided to each party by the presenting party of all materials presented at meetings of the JRC. 
  
 2.3.4 FUNCTIONS OF THE JRC. The JRC shall be responsible for
managing the RESEARCH PROGRAM. In carrying out this function, the JRC will: 
  
 (i) oversee directed research activities to be undertaken under the RESEARCH PROGRAM in accordance with the RESEARCH PLAN, which will specify the details by which the parties will conduct the Research; 
  
 (ii) review progress of the RESEARCH PROGRAM, revise the
RESEARCH PLAN as it deems appropriate, set priorities for research activities, review results achieved, and provide general guidance to assist the overall program in meeting its objective of fostering successful identification of LICENSED COMPOUNDS
for DEVELOPMENT by RWJPRI; 
  
 (iii) advise
RWJPRI regarding the selection of LICENSED COMPOUNDS for full DEVELOPMENT under Article 5; 
  
 (iv) attempt to settle disputes or disagreements between the parties regarding the performance of the RESEARCH PROGRAM hereunder;

  

 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 24b-2 OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 

 (v) approve any material agreements with THIRD PARTIES to be made by KOSAN related to
performance of the RESEARCH PROGRAM under this AGREEMENT; and 
  
 (vi) perform such other functions as are appropriate to further the purposes of this AGREEMENT as determined by the parties. 
  
 2.3.5 DISPUTE RESOLUTION. If the JRC fails to reach unanimous agreement on any issue being considered by the JRC, and which
after a reasonable amount of discussion between the JRC representatives of RWJPRI and KOSAN cannot be resolved, the issue will be referred to the Chief Executive Officer of KOSAN and the Vice President, Drug Discovery, RWJPRI, for resolution. If
there is no resolution of the issue at that level, and the issue pertains to the RESEARCH PLAN, the status quo as reflected in the last previous approved RESEARCH PLAN shall remain in effect. If the issue pertains to making a Go/No-GO DECISION for a
given PROJECT, RWJPRI shall make the final determination. 
  
 2.3.6 INFORMATION AND ACCESS. KOSAN and RWJPRI shall provide the JRC, its members and authorized representatives with reasonable access during regular business hours to all records and documents relating
to the performance of this AGREEMENT which it reasonably may request in order to perform its obligations hereunder; provided that if such documents are under a bona fide obligation of confidentiality to a THIRD PARTY, KOSAN or RWJPRI, as the case
may be, may withhold access thereto to the extent necessary to satisfy such obligation. 
  
 2.4 RESPONSIBILITIES. 
  
 2.4.1 REASONABLE EFFORTS. RWJPRI and KOSAN shall each use reasonable efforts to conduct the RESEARCH PROGRAM in a professional manner in accordance with the applicable RESEARCH PLAN within the time
schedules contemplated therein. 
  
 2.4.2
RESOURCES. Each party agrees to commit the personnel, facilities, expertise and other resources necessary to perform its obligations under the RESEARCH PLAN; provided, however, that neither party warrants that the RESEARCH PROGRAM shall
achieve any of the research objectives contemplated by them. 
  
 2.4.3 KOSAN RESEARCH EFFORTS. KOSAN agrees to commit to the RESEARCH PROGRAM such efforts as are specified in the RESEARCH PLAN, to maintain and utilize the scientific staff, laboratories, offices and
other facilities consistent with such undertaking, and to reasonably cooperate with RWJPRI in the conduct of the RESEARCH PROGRAM. KOSAN agrees that, on average for each twelve (12) month period during the RESEARCH TERM, KOSAN shall dedicate FTEs to
each phase of each PROJECT and the RESEARCH PROGRAM as specified the RESEARCH PLAN. 
  

 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 24b-2 OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 

 2.4.4 SUBCONTRACTORS. KOSAN may have work performed by THIRD PARTY
collaborators as provided in the RESEARCH PLAN or otherwise approved by the JRC. 
  
 2.4.5 INFORMATION AND REPORTS. 
  
 (a) DISCLOSURES.  
  
 (i) Each party will make available and use all reasonable efforts to disclose to the other party the information necessary to conduct the
other party’s responsibilities under the RESEARCH PLAN and all KNOW-HOW relating to (a) MACROLIDES which are RESERVED COMPOUNDS, and (b) all MACROLIDES and AROMATIC POLYKETIDES that are designated as LICENSED COMPOUNDS, and (c) the activity of
such MACROLIDES and AROMATIC POLYKETIDES, including information regarding compounds synthesized or discovered, initial leads, activities of leads, derivatives, results of IN VITRO and IN VIVO studies, assay techniques and new assays. Significant
discoveries or advances shall be communicated as soon as practical after such KNOW-HOW is obtained or its significance is appreciated. 
  
 (ii) Subject to its obligations to THIRD PARTIES, KOSAN will make available and use all reasonable efforts to disclose to RWJPRI KNOW-HOW
necessary for RWJPRI to make chemical modifications of the MACROLIDE scaffolds provided by KOSAN to RWJPRI in accordance with the RESEARCH PLAN, to conduct process development and strain selection research with respect to LICENSED COMPOUNDS, to make
PRODUCTS for DEVELOPMENT and commercialization purposes, to characterize, evaluate and test such PRODUCTS and to otherwise carry out its activities pursuant to the RESEARCH PLAN and DEVELOPMENT PLAN. 
  
 (iii) RWJPRI will make available and use all reasonable
efforts to disclose to KOSAN such RWJPRI KNOW-HOW necessary or materially useful in evaluating MACROLIDES, AROMATIC POLYKETIDES and DERIVATIVES of the preceding. 
  
 (b) REPORTS. The JRC shall periodically and not less often than semiannually during the RESEARCH
TERM, request and the parties shall have the obligation to prepare and provide to the JRC, written reports summarizing the progress of the research performed by or sponsored by the parties pursuant to the RESEARCH PLAN during the preceding
half-year. In addition, the parties will exchange at least quarterly verbal or written reports presenting a meaningful summary of their activities performed in connection with the RESEARCH PROGRAM. 
  
 (c) PROJECT COORDINATOR. Each party shall designate a
single project coordinator whose duties shall be to oversee matters arising under the provisions of this AGREEMENT and to facilitate the communication of research results. Such project coordinator shall be responsible for day-to-day worldwide
coordination of the RESEARCH PROGRAM and will serve to facilitate communication between the parties relating to the RESEARCH 

  

 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 24b-2 OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 

 
PROGRAM. Each party may change its designated project coordinator upon notice to the other party. 
  
 (d) RECORDS. Personnel working on the RESEARCH
PROGRAM shall use all reasonable efforts to make accurate laboratory notebook records of the RESEARCH PROGRAM in a manner suitable for use in United States patent prosecution and litigation. Each party shall be permitted to review such laboratory
notebooks and records at any reasonable time and to obtain copies thereof for further review by the other party. Each party shall make reasonable effort to safeguard such notes and records against theft and loss by fire, flood or other damage.

  
 (e) ASSIGNMENT AGREEMENTS. To the
extent permitted by applicable law, KOSAN shall require all persons, agents, contractors, and consultants employed or retained by KOSAN to work on the RESEARCH PROGRAM, prior to beginning such employment, to be bound in writing to (i) assign to
KOSAN all rights, title and interest in and to any ideas, discoveries, improvements, inventions, KNOW-HOW, patents, patent applications, and the like which were made or conceived in performing the RESEARCH PROGRAM, and to sign all documents and give
lawful assistance necessary for filing, and defending patents, and patent applications in all countries, whether such filing is by KOSAN, or designees or assignees thereof, and (ii) to be bound in writing to provisions of confidentiality
substantially similar to those of Article 9 hereof. 
  
 2.5
RESEARCH TERM. The RESEARCH PROGRAM shall commence on the EFFECTIVE DATE and continue for two (2) years thereafter (such period and any extension thereof referred to as the “RESEARCH TERM”). The RESEARCH TERM may be extended as
follows: (i) the RESEARCH TERM shall automatically be emended to include any CONTINGENT WORK undertaken by the parties pursuant to Section 2.6.4; (ii) RWJPRI shall have the one-time option, exercisable by written notice to KOSAN not later than
ninety (90) days prior to the expiration of the then-current RESEARCH TERM, to extend the RESEARCH TERM for one additional period of up to six (6) months at the level of funding and FTE rate applicable to the preceding six (6) month period, unless
otherwise agreed by the JRC; and (iii) the RESEARCH PROGRAM may be extended by mutual written agreement of KOSAN and LICENSEE. 
  
 2.6 GO/NO-GO DECISIONS. 
  
 2.6.1 RESEARCH FUNDING. At each DECISION POINT for each PROJECT, RWJPRI shall have the right to elect whether to proceed
with the CONTINGENT WORK for such PROJECT consequent to such DECISION POINT. It is understood and agreed that RWJPRI must provide RESEARCH FUNDING as set forth in the RESEARCH PLAN until at least the second anniversary of the EFFECTIVE DATE subject
to the provisions of Article 19. RWJPRI shall provide RESEARCH FUNDING (i) for the Fast Track PROJECT, until the earlier of (a) identification of a MACROLIDE as an NCE in the Fast Track PROJECT (“N1” in Exhibit A) or (b) twelve (12) months
from the EFFECTIVE DATE, and (ii) for the SAR PROJECT, until 

  

 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 24b-2 OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 

 
the earlier of (x) identification of [**] MACROLIDES as NCEs in the SAR PROJECT (“N2” and “N3” in Exhibit A) or (y) twenty-four (24)
months from the EFFECTIVE DATE. 
  
 2.6.2
DECISION POINTS. The DECISION POINTS for the PROJECTS will be as follows: 
  

	 PROJECT

	  	 DECISION EVENTS

	  	 DECISION TIME

			
	 Fast Track
	  	 Identification of a [**]as an NCE
 (“N1” in Exhibit A)
	  	 15 months from the
 EFFECTIVE DATE

			
	 SAR
	  	 Identification of a [**]as an NCE
 (“N2” in Exhibit A)
	  	 24 months from the
 EFFECTIVE DATE for “N2”

			
	 	  	 Identification of a [**]as an NCE
 (“N3” in Exhibit A)
	  	 36 months from the
 EFFECTIVE DATE for N3

  
 A DECISION POINT for a PROJECT shall
occur upon the earlier of (i) the occurrence of the applicable Decision Event, or (ii) the applicable Decision Time; provided, at any time RWJPRI with notice to KOSAN may elect to proceed with the CONTINGENT WORK for either PROJECT, and in such case
such election shall be deemed a GO DECISION, subject to Sections 2.6.4 and 2.7.4. Upon reaching a DECISION POINT, RWJPRI shall notify KOSAN whether RWJPRI wishes to proceed with the applicable CONTINGENT WORK. 
  
 2.6.3 EXTENSION OF DECISION POINTS. RWJPRI
shall have the right to extend the DECISION POINT of the Fast Track PROJECT for [**]and/or the SAR PROJECT for [**], in each case, with at least [**] advance notice to KOSAN. In any such event, RWJPRI agrees to fund the applicable PROJECT during the
extension period at the FTE level required under the RESEARCH PLAN for the [**] period preceding the applicable DECISION POINT, and any such extension shall constitute an extension of the RESEARCH TERM subject to Section 2.5. The parties may, but
shall have no obligation to, agree on additional extensions of the DECISION POINT(S) for each or both PROJECTS. 
  
 2.6.4 CONSEQUENCE OF A GO DECISION. In the event that a GO DECISION is made with respect to a particular PROJECT, the
parties shall immediately commence the CONTINGENT WORK with respect to such PROJECT, and RWJPRI shall fund the CONTINGENT FTEs therefore for the periods set forth in the RESEARCH PLAN. In the event of a GO DECISION in the Fast Track PROJECT, then
RWJPRI will provide further RESEARCH FUNDING for the Fast Track PROJECT for an [**]. In the event of a GO DECISION with respect to the first NCE (“N2”) and/or second NCE (“N3”) in the SAR PROJECT, then RWJPRI will provide further
RESEARCH FUNDING for the SAR PROJECT for an [**] period for each NCE with respect to which there has been a GO DECISION. 
  
 2.6.5 CONSEQUENCE OF A NO-GO DECISION. In the event that a NO-GO DECISION is made with respect to a particular PROJECT at a
DECISION POINT for that 

  

 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 24b-2 OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 

 
PROJECT, that PROJECT shall terminate and cease to be part of the RESEARCH PROGRAM. In the event of termination of both research PROJECTS, LICENSEE’s
rights and license to the MACROLIDES made in such PROJECTS, and the corresponding intellectual property rights shall terminate concurrently, subject to RWJPRI’s non-exclusive right pursuant to Section 3.2.1 to continue screening the MACROLIDES
[**] MOTILIDE [**] ANTI-INFLAMMATORY ACTIVITIES other than ANTIBIOTIC ACTIVITY. In any such event, at KOSAN’s request, RWJPRI shall grant to KOSAN an exclusive, worldwide, royalty-free license to RWJPRI’s interest in any RWJPRI KNOW-HOW
and RWJPRI PATENT RIGHTS to make, use and sell the MACROLIDES [**] CLOSE STRUCTURAL ANALOGS thereof conceived or reduced to practice in connection with such PROJECTS. Notwithstanding the foregoing, RWJPRI shall retain ownership of the RWJPRI PATENT
RIGHTS and RWJPRI KNOW-HOW, and the right to practice the RWJPRI KNOW-HOW and RWJPRI PATENT RIGHTS to conduct internal research, and, subject to its obligations under this AGREEMENT, to make, use and sell compounds (other than the MACROLIDES [**]
CLOSE STRUCTURAL ANALOGS that were conceived or reduced to practice in connection with the terminated PROJECTS, or their DERIVATIVES). 
  
 2.6.6 PROJECT MANAGEMENT. Each PROJECT shall be managed by the parties independently of the other PROJECT. DECISIONS
impacting the continuation of any individual PROJECT (e.g., Go/No-GO DECISIONS with respect any given PROJECT) will not affect the continuation of the other PROJECT. So long as any one of the PROJECTS is on-going, the RESEARCH PROGRAM shall be
deemed to be in effect. 
  
 2.7 RESEARCH PROGRAM
FUNDING. 
  
 2.7.1 FTE FUNDING.
For the conduct of the RESEARCH PROGRAM by KOSAN, RWJPRI shall pay KOSAN RESEARCH FUNDING on an annualized FTE basis (FTE-years). FTE positions will be paid at an annual rate of $[**] per FTE during the [**] CONTRACT YEARS of the RESEARCH PROGRAM,
and thereafter shall be revised annually to reflect increases in the CPI, using 1998 as the base year, according to the following formula: 
  
 [**] 
  
 Where CPI is a fraction, the numerator of which is the difference between the Consumer Price Index (All Urban Consumers, U.S. City Average for All Items, with 1982-84 = 100) as of the last month of the research year
immediately preceding the research year to be adjusted and the Consumer Price Index as of the last month before the EFFECTIVE DATE, and the denominator of which is the Consumer Price Index as of the last month before the EFFECTIVE DATE. 

 
 2.7.2 TIMING OF PAYMENTS. Research funding
shall be paid in four (4) equal quarterly installments during each Calendar Year, payable in advance on or about January 1, April 1, July 1, and October 1; provided that the first quarterly payment for the first CONTRACT YEAR shall be due ten (10)
days after the EFFECTIVE DATE. Any payment for a portion of a quarter shall be made on a pro rata basis. 
  

 16. 
  

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

 2.7.3 USE OF RESEARCH FUNDS. All funds provided by RWJPRI under this
Section 2.7 shall be used by KOSAN in the conduct of the RESEARCH PROGRAM, except as expressly provided in Section 2.7.4. Subject to the approval of the JRC and minimum FTE commitments for each PROJECT set forth in the RESEARCH PLAN, RWJPRI-funded
KOSAN FTE’s may be used in either of the PROJECTS. RWJPRI shall be under no obligation to provide FTE support to KOSAN beyond the levels stated above except at RWJPRI’s sole discretion. KOSAN shall have no obligation to expend any amount
on the RESEARCH PROGRAM except the amounts paid by RWJPRI. 
  
 2.7.4 EARLY SUCCESS. In the event that an NCE is designated in the Fast Track Project and/or both NCEs are designated in the SAR Project, or RWJPRI elects to initiate the CONTINGENT WORK for either
PROJECT prior to the applicable DECISION POINT, then within [**] RWJPRI shall pay to KOSAN any remaining FTE support allocated in the RESEARCH PLAN for such PROJECT for research which was to be conducted prior to the commencement of the applicable
CONTINGENT WORK for the applicable PROJECT. KOSAN may, but shall have no obligation to, expend such amounts on the RESEARCH PROGRAM. 
  
 2.7.5 SUPPLIES AND EQUIPMENT. The purchase of any item including, but not limited to, equipment, materials and cell lines
reasonably required by KOSAN to carry out the RESEARCH PROGRAM shall be paid for by KOSAN and shall be owned by KOSAN. KOSAN may, but shall not be required to, purchase items including, but not limited to, equipment, materials and cell lines that
would be useful, but are not required by KOSAN to carry out the RESEARCH PROGRAM, and any such items shall be owned by KOSAN. With the approval of the JRC, such items may be purchased with RESEARCH FUNDING. RWJPRI shall inform KOSAN if it has
equipment available which it believes would be useful for the conduct of the RESEARCH PROGRAM, and discuss with KOSAN the possible use of such equipment by KOSAN for such purpose. 
  
 2.7.6 THIRD PARTY LICENSES. In the event that KOSAN or LICENSEE becomes aware that it is
necessary for KOSAN to acquire a license from any THIRD PARTY specifically for the conduct of the RESEARCH PROGRAM, such party shall inform the JRC, and the JRC shall discuss which party will be responsible for acquiring such license and how the
costs of negotiating and preparing such license, as well as any payments thereunder, shall be allocated. Notwithstanding the above, it is understood that KOSAN shall be responsible for [**] due (i) under the STANFORD LICENSE, and (ii) to any THIRD
PARTY for intellectual property rights which are necessary for the practice by KOSAN of the KOSAN PATENT RIGHTS existing as of the EFFECTIVE DATE for the creation or preparation of MACROLIDES or AROMATIC POLYKETIDES, and which are within the scope
of an issued patent or published patent application owned by a THIRD PARTY as of the EFFECTIVE DATE. 
  
 2.8 AUDIT. KOSAN will maintain complete and accurate records which are relevant to its expenditure of Research funding provided to it by
RWJPRI pursuant to Section 2.7 hereof. 

  

 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 24b-2 OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 

 
Such records shall be open during regular business hours for a period of [**] from creation of individual records for examination at RWJPRI’s expense
for the sole purpose of verifying that KOSAN has devoted to the RESEARCH PROGRAM the FTE’s required by Section 2.4.3 above; provided however, that such right may not be exercised more than once in any calendar year. RWJPRI shall be entitled to
a credit against future research payments or a refund in the event such audit reveals that the proper FTE’s were not allocated in accordance with Section 2.4.3 above. 
  
 ARTICLE 3 
  
 SCREENING BY LICENSEE 
  
 3.1 EXCLUSIVE SCREENING. 
  
 3.1.1 ANTIBIOTIC ACTIVITY. During the EXCLUSIVE SCREENING PERIOD, RWJPRI shall have the exclusive right to screen MACROLIDES
provided by KOSAN for ANTIBIOTIC ACTIVITY in accordance with the RESEARCH PLAN. Until the termination of the EXCLUSIVE SCREENING PERIOD, KOSAN agrees that during the EXCLUSIVE SCREENING PERIOD (i) it shall not grant a THIRD PARTY the right to screen
or develop the MACROLIDES or CLOSE STRUCTURAL ANALOGS for ANTIBIOTIC ACTIVITY, and (ii) except in connection with the RESEARCH PROGRAM, shall not itself screen or develop the MACROLIDES or CLOSE STRUCTURAL ANALOGS for ANTIBIOTIC ACTIVITY. Following
the expiration of the EXCLUSIVE SCREENING PERIOD, KOSAN may screen and/or develop and allow others to screen the MACROLIDES for ANTIBIOTIC ACTIVITY; provided, that so long as LICENSEE retains rights hereunder to a particular LICENSED COMPOUND, KOSAN
shall not grant any THIRD PARTY a license to such LICENSED COMPOUND or its CLOSE STRUCTURAL ANALOGS and, if reasonably feasible, will not provide such compounds to THIRD PARTIES for screening. 
  
 3.1.2 OTHER ACTIVITIES. On a
MACROLIDE-by-MACROLIDE basis, KOSAN shall not (i) allow THIRD PARTIES to screen MACROLIDES provided to RWJPRI hereunder, or (ii) itself screen such MACROLIDES [**] ANTIBIOTIC ACTIVITY until [**] following the date that KOSAN delivers the applicable
MACROLIDES to RWJPRI. 
  
 3.2 NON-EXCLUSIVE
SCREENING. 
  
 3.2.1
MACROLIDES. During the NON-EXCLUSIVE SCREENING PERIOD, RWJPRI and its AFFILIATES shall have the non-exclusive right to screen the MACROLIDES [**] in any biological test system for any therapeutic indication; provided, however, RWJPRI may
not screen the MACROLIDES for MOTILIDE ACTIVITY and/or ANTI-INFLAMMATORY ACTIVITY until the [**] of the EFFECTIVE DATE and then only subject to the following conditions. If LICENSEE wishes to screen the MACROLIDES for MOTILIDE ACTIVITY and/or
ANTI-INFLAMMATORY ACTIVITY, it shall provide KOSAN notice thereof by the [**] of the EFFECTIVE DATE, and by [**] KOSAN shall notify 

  

 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 24b-2 OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 

 
LICENSEE whether it has entered into an exclusive agreement with a THIRD PARTY for screening for such activities, or initiated research and development in
such regard to such activities on its own behalf. If KOSAN has not entered into an exclusive agreement with a THIRD PARTY for screening for the relevant activity, or initiated research and development tin such regard to such activity on its own
behalf as evidenced by prior written records, then RWJPRI may screen the MACROLIDES for MOTILIDE ACTIVITY and/or ANTI-INFLAMMATORY ACTIVITY, as the case may be, on a non-exclusive basis during the NON-EXCLUSIVE SCREENING PERIOD. To notify RWJPRI of
targets relating to ANTI-INFLAMMATORY ACTIVITY, KOSAN may periodically provide LICENSEE notice of any targets which are reported in the scientific literature to be involved in inflammation. 
  
 3.2.2 AROMATIC POLYKETIDES. During the
NON-EXCLUSIVE SCREENING PERIOD, RWJPRI shall have a non-exclusive right to screen the AROMATIC POLYKETIDES for any biological activity in any biological test system for any therapeutic indication. 
  
 3.3 DELIVERY OF EXTRACTS AND CELLS. 
  
 3.3.1 MACROLIDES. 
  
 (a) During the EXCLUSIVE SCREENING PERIOD, KOSAN will
deliver to RWJPRI agreed quantities of MACROLIDE extracts sufficient to conduct IN VITRO screening for ANTIBIOTIC ACTIVITY, as specified in the RESEARCH PLAN. 
  

(b) During the NON-EXCLUSIVE SCREENING PERIOD, at RWJPRI’s request, KOSAN (or its designee) shall provide RWJPRI with agreed
quantities of extracts of MACROLIDES. For expenses incurred by KOSAN in preparing such MACROLIDES, RWJPRI shall pay to KOSAN a reasonable rate to be agreed to by the parties, provided, however, if the parties are unable to agree on such payments,
KOSAN shall have no obligation to provide any such extracts or cells producing such MACROLIDES to RWJPRI. 
  
 3.3.2 AROMATIC POLYKETIDES. During the NON-EXCLUSIVE SCREENING PERIOD, at RWJPRI’s request, KOSAN (or its designee)
shall provide RWJPRI with agreed quantities of extracts of such AROMATIC POLYKETIDES. For expenses incurred by KOSAN in preparing such AROMATIC POLYKETIDES, RWJPRI shall pay to KOSAN an amount to be agreed upon by the parties; provided, however, if
the parties are unable to agree on such payments, KOSAN shall have no obligation to provide such extracts or cells producing such AROMATIC POLYKETIDES to RWJPRI. KOSAN shall provide to RWJPRI, without charge, a set of plates containing the AROMATIC
POLYKETIDES which KOSAN has in stock as of the EFFECTIVE DATE. Exhibit B describes the estimated numbers and concentrations of the AROMATIC POLYKETIDES in stock as of the EFFECTIVE DATE. 
  
 It is understood that Exhibit B is provided for general identification of the AROMATIC POLYKETIDES KOSAN has in stock as of
the EFFECTIVE DATE, and that KOSAN makes no 

  

 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 24b-2 OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 

 
representations or warranties regarding the accuracy of the information contained in Exhibit B concerning AROMATIC POLYKETIDES [**]. 
  
 3.3.3 NO TRANSFER; LIMITED USE. Except as
expressly provided herein, RWJPRI shall not (i) transfer any of the [**] AROMATIC POLYKETIDES or the MACROLIDES supplied to LICENSEE to any THIRD PARTY other than an AFFILIATE without the express prior written consent of KOSAN, or (ii) use or permit
any other person or entity to use any of the [**] AROMATIC POLYKETIDES or the MACROLIDES supplied to LICENSEE for any purpose other than for screening or development and/or commercialization as expressly permitted in this AGREEMENT. 
  
 3.4 SCREENING RESULTS. LICENSEE shall provide KOSAN with
written quarterly summary reports within thirty (30) days of the end of each calendar quarter with respect to RWJPRI’s non-exclusive screening activities, identifying all assays in which any of the MACROLIDES and/or AROMATIC POLYKETIDES
demonstrated activity and the level of such activity for the MACROLIDES and AROMATIC POLYKETIDES, all assays in which the MACROLIDES and/or AROMATIC POLYKETIDES did not demonstrate activity, and a summary of all other results of RWJPRI’s
non-exclusive screening activities. 
  
 3.5 DESIGNATION
OF RESERVED COMPOUNDS AND LICENSED COMPOUNDS. 
  
 3.5.1 DESIGNATION NOTICE. 
  
 (a) MACROLIDES. Until the end of the NON-EXCLUSIVE SCREENING PERIOD, RWJPRI may notify KOSAN with notice (“DESIGNATION NOTICE”) that RWJPRI wishes to designate [**] MACROLIDE(S) as LICENSED COMPOUNDS by notice to KOSAN identifying
the MACROLIDE(S) and the activity thereof. It is understood that designation of a LICENSED COMPOUND shall be in RWJPRI’s sole discretion. Further, all decisions concerning the selection of a LICENSED COMPOUND for DEVELOPMENT shall be in
RWJPRI’s sole discretion. 
  
 (b) AROMATIC
POLYKETIDES. During the NON-EXCLUSIVE SCREENING PERIOD, RWJPRI may notify KOSAN that RWJPRI wishes to designate one or more AROMATIC POLYKETIDES as LICENSED COMPOUNDS by notice to KOSAN (“DESIGNATION NOTICE”) identifying the AROMATIC
POLYKETIDES and the activity thereof. 
  
 3.5.2 LICENSED COMPOUND STATUS. Within thirty (30) days following receipt of any DESIGNATION NOTICE from LICENSEE pursuant to Section 3.5.1 above, KOSAN shall notify LICENSEE if KOSAN has granted a THIRD PARTY any rights or a
license with respect to the same MACROLIDE or AROMATIC POLYKETIDE [**] CLOSE STRUCTURAL ANALOG thereof, before KOSAN’s receipt of such DESIGNATION NOTICE; provided, KOSAN shall have no obligation to disclose to LICENSEE the identity of the
THIRD 

  

 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 24b-2 OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 

 
PARTY, the structure of such compound or the activity(s) with respect to which such THIRD PARTY identified such activity. Unless KOSAN has previously granted
a THIRD PARTY rights to such a MACROLIDE or AROMATIC POLYKETIDE [**] CLOSE STRUCTURAL ANALOG thereof, or elected to develop such MACROLIDE or AROMATIC POLYKETIDE [**] CLOSE STRUCTURAL ANALOG thereof itself, in each case, as shown by prior written
records, upon KOSAN’s receipt of DESIGNATION NOTICE from RWJPRI, such MACROLIDE or AROMATIC POLYKETIDE shall be deemed to be a LICENSED COMPOUND for all purposes of this AGREEMENT. 
  
 3.5.3 NCE STATUS. It is understood and agreed that each MACROLIDE designated by LICENSEE in a
DESIGNATION NOTICE which becomes a LICENSED COMPOUND shall be deemed to be an NCE for the purposes of Section 6.2.1 hereunder. It is further understood and agreed that a MACROLIDE which meets the criteria for an NCE shall be deemed to be an NCE for
the purposes of Section 6.2.1 hereunder without any further affirmative action on the part of KOSAN or LICENSEE. 
  
 3.5.4 NOTICE TO THIRD PARTIES. Once a MACROLIDE or AROMATIC POLYKETIDE has become a LICENSED COMPOUND pursuant to Section
3.5.2 above, KOSAN shall notify any THIRD PARTIES who attempt to subsequently designate or claim rights to such LICENSED COMPOUND of the existence of LICENSEE’s prior claim with respect to such compound without disclosing LICENSEE’s
identity, the structure of such compound (unless earlier disclosed) or the activity(s) with respect to which LICENSEE has identified such activity. LICENSEE hereby consents to such notice. KOSAN shall promptly inform LICENSEE of such THIRD
PARTY’S designation or claim; provided KOSAN shall have no obligation to disclose to LICENSEE the identity of such THIRD PARTY or the activity(s) with respect to which such THIRD PARTY identified such activity. If the THIRD PARTY desires to
negotiate with LICENSEE, KOSAN shall transmit notice of such intent (including the THIRD PARTY’S identity) to LICENSEE. In addition, once a MACROLIDE or AROMATIC POLYKETIDE has become a LICENSED COMPOUND pursuant to Section 3.5.2 above, if
reasonably feasible, KOSAN shall not provide such LICENSED COMPOUND to THIRD PARTIES for screening. 
  
 3.5.5 CLOSE STRUCTURAL ANALOGS. At the time that each MACROLIDE and/or AROMATIC POLYKETIDE becomes a LICENSED COMPOUND, a
non-binding, written list identifying the compounds which are CLOSE STRUCTURAL ANALOGS of such MACROLIDE and/or AROMATIC POLYKETIDE will be prepared by the parties. Any compounds determined to be CLOSE STRUCTURAL ANALOGS shall remain CLOSE
STRUCTURAL ANALOGS until and unless such compounds have been actually synthesized and tested and found not to have the level of activity specified in the RESEARCH PLAN or agreed by the parties at the time the compound became a LICENSED COMPOUND. In
the event that either party, determines that such compound does not have the required level of activity it shall notify, the other providing the relevant data and unless the other party, disputes the validity of such data, the applicable compound
shall cease to be a CLOSE STRUCTURAL 

  

 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 24b-2 OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 

 
ANALOG thirty (30) days thereafter. In the event of any dispute regarding the status of whether a particular compound should become, is or will remain a
CLOSE STRUCTURAL ANALOG, the matter shall be settled by the dispute resolution procedure set forth in Article 21. 
  
 3.5.6 RESERVED COMPOUNDS.  
  
 (a) DESIGNATION. Subject to Section 3.5.6(b) and (c), until the end of the RESEARCH TERM, RWJPRI may give KOSAN written notice that RWJPRI
wishes to designate as RESERVED COMPOUNDS one or more MACROLIDE(S) which have ANTIBIOTIC ACTIVITY, which notice shall identify, such MACROLIDES. 
  
 (b) LIMITATIONS. Notwithstanding the foregoing, RWJPRI may not designate more than [**] RESERVED COMPOUNDS at any time without the written
consent of KOSAN. RWJPRI may, with notice to KOSAN discontinue the RESERVED COMPOUND status of any MACROLIDE, and thereafter such MACROLIDE shall no longer be a RESERVED COMPOUND. If RWJPRI has designated RESERVED COMPOUNDS such that there exist
more than [**] RESERVED COMPOUNDS at any time, then RWJPRI shall pay to KOSAN, for each RESERVED COMPOUND beyond [**], a fee of [**] dollars ($[**]) per RESERVED COMPOUND, as set forth in Section 6.6. 
  
 (c) EFFECT OF RESERVATION. Until the end of the RESEARCH
TERM, KOSAN shall not grant a license to any THIRD PARTY with respect to any RESERVED COMPOUND except as follows: if KOSAN receives a request from a THIRD PARTY to obtain a LICENSE for any RESERVED COMPOUND, it shall notify RWJPRI and RWJPRI shall
have [**] days to notify. KOSAN whether RWJPRI will designate such RESERVED COMPOUND as a LICENSED COMPOUND and pay concurrently the fee required under Section 6.3. In such event, such RESERVED COMPOUND shall become a LICENSED COMPOUND for all
purposes of this AGREEMENT. If RWJPRI fails to provide such notice to KOSAN during the [**] period, then such COMPOUND shall cease to be a RESERVED COMPOUND and KOSAN shall have the right to grant such THIRD PARTY a license to such MACROLIDE [**]
ANTIBIOTIC ACTIVITY during the EXCLUSIVE SCREENING PERIOD. 
  
 3.6 SELECTION OF LICENSED COMPOUNDS. Following the expiration of the NON-EXCLUSIVE SCREENING PERIOD, all rights to MACROLIDES and AROMATIC POLYKETIDES for which LICENSEE does not have a LICENSED COMPOUND in DEVELOPMENT or
commercialization shall lapse and KOSAN shall have the right to develop, market and commercialize such MACROLIDES and AROMATIC POLYKETIDES independently and all rights and licenses thereto shall revert to KOSAN at the conclusion of such period.

  
 3.7 RESERVED RIGHTS. At all times, KOSAN shall
have the right to use the MACROLIDES for screening of any and all activities other than ANTIBIOTIC ACTIVITY, and for its internal research programs, including without limitation, the preparation and synthesis of 

  

 22. 
  

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

 
POLYKETIDES, as intermediates and otherwise. Nothing in this AGREEMENT shall restrict or limit KOSAN from using all or any portion of any [**] which is used
in connection with the RESEARCH PROGRAM in any research or development not subject to this AGREEMENT. 
  
 3.8 RIGHT OF FIRST NEGOTIATION. Until January 10, 1999, if a THIRD PARTY wishes to enter into an exclusive agreement with KOSAN to screen
the MACROLIDE(S) for MOTILIDE ACTIVITY or develop or commercialize MACROLIDE(S) for MOTILIDE ACTIVITY, before entering into an agreement with such a THIRD PARTY granting a license for such rights, KOSAN shall notify RWJPRI, and for a period of [**]
(or such longer period as the parties may agree) from the date of such notice (the “Negotiation Period”) KOSAN and RWJPRI shall negotiate the terms of such an agreement. In the event that the parties do not agree on terms within the
Negotiation Period, KOSAN may grant any THIRD PARTY rights with respect to screening MACROLIDE(S) for MOTILIDE ACTIVITY and developing and commercializing MACROLIDE(S) for MOTILIDE ACTIVITY; provided, however, prior to January 10, 1999 or the end of
the Negotiation Period, KOSAN shall not enter into an agreement with a THIRD PARTY on terms less favorable to KOSAN, when taken as a whole, than those last offered in writing by RWJPRI to KOSAN. It is understood and agreed that KOSAN shall have the
unrestricted rights itself to screen, develop and/or commercialize MACROLIDE(S) for MOTILIDE ACTIVITY. 
  
 ARTICLE 4 
  
 LICENSES 
  
 4.1 RESEARCH LICENSES.

  
 4.1.1 TO RWJPRI. Subject to the
terms and conditions of this AGREEMENT, KOSAN hereby grants RWJPRI a non-exclusive paid-up license, with no right to grant sublicenses, under KOSAN PATENT RIGHTS and KOSAN KNOW-HOW to make and use methods and materials to carry, out the RESEARCH
PROGRAM during the RESEARCH TERM. 
  
 4.1.2
TO KOSAN. Subject to the terms and conditions of this AGREEMENT, LICENSEE hereby grants KOSAN a non-exclusive paid-up license, with no right to grant sublicenses, under RWJPRI PATENT RIGHTS and RWJPRI KNOW-HOW to make and use methods and
materials to carry out the RESEARCH PROGRAM during the RESEARCH TERM. 
  
 4.2 SCREENING LICENSES. KOSAN hereby grants to RWJPRI the following fully paid, non-transferable licenses, with the right to grant sublicenses to RWJPRI AFFILIATES, under the KOSAN PATENT RIGHTS and KOSAN KNOW-HOW to conduct
screening pursuant to Article 3. 
  

 23. 
  

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

 4.2.1 an exclusive, worldwide license during the EXCLUSIVE SCREENING PERIOD to use
the MACROLIDES [**] ANTIBIOTIC ACTIVITY; 
  
 4.2.2 a non-exclusive, worldwide license during the NON-EXCLUSIVE SCREENING PERIOD: (a) to use the MACROLIDES to conduct screening for ANTIBIOTIC ACTIVITY; (b) to use the AROMATIC POLYKETIDES to conduct screening for [**]; and

  
 4.2.3 Subject to the terms and
conditions of Section 3.2.1, a non-exclusive, worldwide license during the EXCLUSIVE SCREENING PERIOD and NON-EXCLUSIVE SCREENING PERIOD to use the MACROLIDES [**] ANTIBIOTIC ACTIVITY [**] MACROLIDES for MOTILIDE or ANTI-INFLAMMATORY ACTIVITY.

  
 4.3 DEVELOPMENT AND COMMERCIALIZATION LICENSE. 

  
 4.3.1 GRANT. Subject to the
terms and conditions of this AGREEMENT, KOSAN hereby grants to LICENSEE, and LICENSEE hereby accepts from KOSAN, a worldwide, exclusive license, with the right to grant sublicenses, under the KOSAN PATENT RIGHTS and KOSAN KNOW-HOW, to make, use and
develop LICENSED COMPOUNDS, and, to make, have made, USE, import, offer for SALE, SELL and have SOLD PRODUCTS. 
  
 4.3.2 TERM. Unless LICENSEE’s rights are terminated earlier as provided in Section 2.6.5 or Article 19, the foregoing
license in Section 4.3.1 shall remain exclusive on a LICENSED COMPOUND-by-LICENSED COMPOUND and PRODUCT-by-PRODUCT basis (i) as to the applicable KOSAN PATENT RIGHTS, for their respective lives on a country-by-country basis, and (ii) as to the KOSAN
KNOW-HOW, until the termination of LICENSEE’s obligation to make royalty payments under Section 7.1 hereof, at which time the license under the KOSAN KNOW-HOW shall automatically become a fully paid, non-exclusive license. Notwithstanding the
foregoing, however, with respect to any country of the European Union, the license to the KOSAN KNOW-HOW shall remain exclusive until the earlier of (i) the date on which the KOSAN KNOW-HOW becomes published or generally known to the public through
no fault on the part of LICENSEE, its AFFILIATES or SUBLICENSEES or (ii) the tenth (10th) anniversary of the first commercial sale of the first PRODUCT in any country of the European Union, at which time the license under the KOSAN KNOW-HOW shall
automatically become a fully paid, non-exclusive license. 
  
 4.4 DELIVERY OF CELLS; LIMITED USE. For each MACROLIDE or AROMATIC POLYKETIDE designated by LICENSEE in a DESIGNATION NOTICE which becomes a LICENSED COMPOUND pursuant to Section 3.5, and for which LICENSEE pays the amounts
set forth in Section 6.2.1, KOSAN will, if available, deliver to LICENSEE a viable sample of clonal cells which produces such MACROLIDE or AROMATIC POLYKETIDE for use in PRODUCT manufacture. Except as expressly provided herein, LICENSEE shall not
(i) transfer any cells or other biological materials supplied by KOSAN (or any derivatives or progeny thereof) to any THIRD PARTY other than an AFFILIATE or SUBLICENSEE without the express prior written consent of KOSAN, or (ii) use or permit others
to use any of the cells or 

  

 24. 
  

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

 
other biological materials supplied by KOSAN (or any derivatives or progeny thereof) for research use relating to drug discovery or any other purpose, except
the manufacture of LICENSED COMPOUNDS for clinical trials and commercial sale as expressly provided in this AGREEMENT. 
  
 4.5 LIMITATIONS ON LICENSES. Notwithstanding any other provision of this AGREEMENT, it is understood and agreed that nothing in this
AGREEMENT grants LICENSEE the right to practice any aspect of the EXCLUDED TECHNOLOGY. 
  
 4.6 AFFILIATE LICENSES. In the event LICENSEE wishes to manufacture PRODUCT or SELL in a country where its AFFILIATE is unable to pay royalties to ORTHO or where payment of royalties to ORTHO are limited
as to their tax deductibility, KOSAN hereby agrees, at the request of ORTHO, to grant direct licenses containing the same terms, conditions and provisions as this AGREEMENT to any AFFILIATE under KOSAN PATENT RIGHTS and KOSAN KNOW-HOW to make, have
made use and sell PRODUCTS. Any such licensed AFFILIATE shall thereafter report NET SALES directly to KOSAN and the activities of any such AFFILIATE shall not be includable in any reports made by ORTHO to KOSAN. 
  
 4.7 SUBLICENSES. RWJPRI and its AFFILIATES shall have the right
to grant to THIRD PARTIES sublicenses under the licenses granted to LICENSEE in Section 4.3 (or to its AFFILIATES under Section 4.6) with respect to PRODUCTS developed by or on behalf of RWJPRI, but shall have no right to grant sublicenses to THIRD
PARTIES with respect to any technology licensed by KOSAN from Stanford University without the written consent to KOSAN, which consent will not be unreasonably withheld; provided, such sublicense under the STANFORD LICENSE is necessary to develop
and/or commercialize PRODUCTS pursuant to the license granted in Section 4.3 and limited to such activities. 
  
 4.8 STANFORD LICENSE. LICENSEE acknowledges that it has received a sublicense under the STANFORD LICENSE. LICENSEE has received a copy of
the STANFORD LICENSE and, having read and understood the same, agrees to comply with the provisions thereof, including without limitation, Articles 4, 5.3, 8 and 10 thereof. KOSAN agrees that in the event of a termination of the STANFORD LICENSE, in
accordance with the provisions of Section 14.3 of the STANFORD LICENSE, the sublicense granted LICENSEE herein shall be assigned to STANFORD. 
  
 4.9 NO COMPETING RESEARCH. During the RESEARCH TERM, KOSAN shall not knowingly conduct, have conducted or fund any research or development
activity specifically directed at discovery or developing products intended for use in the FIELD derived from expression of the [**], except pursuant to this AGREEMENT. 
  
 4.10 LICENSED COMPOUND EXCLUSIVITY. During the term of this AGREEMENT, KOSAN shall not develop, commercialize
or sublicense to any THIRD PARTY any LICENSED COMPOUND to which LICENSEE retains commercial license rights, without the prior written consent of LICENSEE. 
  

 25. 
  

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

 4.11 MODE OF COMMERCIALIZATION. ORTHO may SELL PRODUCTS through its AFFILIATES,
SUBLICENSEES or agents in any country. ORTHO agrees to be responsible and liable for the performance hereunder by its AFFILIATES, agents and SUBLICENSEES to which the license and rights hereunder shall have been extended. For the purposes of
reporting and making payments of earned royalties under this AGREEMENT, the manufacture, SALE or USE of PRODUCTS by any AFFILIATE, or SUBLICENSEE to which such license rights shall have been extended shall be considered the manufacture, SALE or USE
of such PRODUCT by ORTHO and any such AFFILIATE or SUBLICENSEE may make the pertinent reports and royalty payments specified in Article 7 hereof directly to KOSAN on behalf of ORTHO; otherwise, such reports and payments on account of SALES of
PRODUCTS by each AFFILIATE and SUBLICENSEE shall be made by ORTHO; and, in any event, the SALES of PRODUCT by each such AFFILIATE and SUBLICENSEE shall be separately shown in the reports to KOSAN if such information is readily available to ORTHO.

  
 4.12 THIRD PARTY RIGHTS. 
  
 4.12.1 KOSAN THIRD PARTY ACTIVITIES. It is
understood that KOSAN provides libraries of polyketide compounds to THIRD PARTIES, and that KOSAN will grant such THIRD PARTIES rights after the EFFECTIVE DATE to acquire licenses for compounds derived from such libraries similar to LICENSEE’s
rights under this Article 4, subject to the provisions of Section 3.1. Notwithstanding the licenses granted to LICENSEE under Section 4.3 above, it is possible that a THIRD PARTY may acquire rights from KOSAN with respect to one or more compounds of
which KOSAN is a sole or joint owner, which compounds were made and designed independently of KOSAN’s activities and knowledge gained under the RESEARCH PROGRAM; accordingly, KOSAN’s grant of rights under Section 4.3 is limited to the
extent that (i) a THIRD PARTY (either alone or jointly with KOSAN) has filed a patent application with respect to such a compound prior to the filing by LICENSEE (either alone or jointly with KOSAN) of a patent application with respect to such a
compound, or (ii) KOSAN has previously granted a THIRD PARTY a license or other rights with respect to such a compound, and subject to any such grant of rights to a THIRD PARTY. 
  
 4.12.2 NO LIABILITY. It is understood and agreed that, even if KOSAN complies with its
obligations under this AGREEMENT, compounds provided to THIRD PARTIES in the course of KOSAN’s other business activities may result in THIRD PARTY patent applications and patents, including patent applications and patents owned by such THIRD
PARTIES, or owned jointly by KOSAN and such THIRD PARTIES, which could conflict with patent applications and patents owned by LICENSEE, or jointly owned by LICENSEE and KOSAN hereunder. KOSAN shall use its reasonable efforts to avoid such conflict.
It is understood that, unless LICENSEE is damaged as a proximate result of a material breach by KOSAN of Section 3.1 or 4.3 then KOSAN shall have no liability, under this AGREEMENT with respect to any such conflict. 
  

 26. 
  

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

 4.13 RETAINED RIGHTS. It is understood and agreed that, KOSAN shall retain the exclusive
right to develop (including pre-clinical and clinical development), make, have made, use and sell all products other than PRODUCTS. It is understood and agreed that KOSAN may practice and use the KOSAN PATENT RIGHTS and KOSAN KNOW-HOW to facilitate
the exercise of its rights. 
  
 4.14 NO IMPLIED
RIGHTS. No other, further or different license or right, except as expressly provided in this Article 4 hereof, is hereby granted or implied. 
  
 ARTICLE 5 
  
 DEVELOPMENT AND COMMERCIALIZATION 
  
 5.1 DEVELOPMENT. 
  
 5.1.1 JDAC. Promptly after selection by RWJPRI of a LICENSED COMPOUND or a DERIVATIVE for DEVELOPMENT, the parties shall establish a Joint Development Advisory. Committee (the “JDAC”) to
oversee the DEVELOPMENT of PRODUCTS. 
  
 5.1.2
MEMBERSHIP. The JDAC shall include three (3) representatives from each of KOSAN and RWJPRI, each Party’s members to be selected by that party. KOSAN and LICENSEE may each replace its JDAC representatives at any time, upon written
notice to the other party. One of the RWJPRI members of the JDAC, chosen at the sole discretion of RWJPRI, shall serve as chair of the JDAC. 
  
 5.1.3 MEETINGS; MINUTES. The JDAC shall meet at least quarterly, or more frequently as agreed by the parties, at such
locations as the parties agree, and will otherwise communicate regularly by telephone, electronic mail, facsimile and/or video conference. Meetings of the JDAC shall be held at least quarterly and may be called by either party with not less than ten
(10) working days notice to the other unless such notice is waived, and meetings shall be held at the office of the party not calling the meeting, unless otherwise agreed. The JDAC may be convened, polled or consulted from time to time by means of
telecommunication or correspondence. Each party will disclose to the other proposed agenda items reasonably in advance of each meeting of the JDAC. With the consent of the parties, other representatives of KOSAN or LICENSEE may attend JDAC meetings
as observers. Each party shall be responsible for all of its own expenses associated with attendance of such meetings. The JDAC shall prepare written minutes of each JDAC meeting and a written record of all JDAC recommendations, whether made at a
JDAC meeting or otherwise. A written record shall be provided by the presenting party, to each party of all materials presented at meetings of the JDAC. 
  
 5.1.4 FUNCTIONS OF THE JDAC. The JDAC shall serve in an advisory capacity concerning the management of the DEVELOPMENT of
PRODUCTS as well as related 

  

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

 
pre-market activities performed under the provisions of this AGREEMENT. In carrying out this function, the JDAC will: 
  
 (a) Promptly upon selection of a PRODUCT for DEVELOPMENT,
advise RWJPRI in the preparation of a written DEVELOPMENT PLAN, including appropriate timelines for DEVELOPMENT, for such PRODUCT, which DEVELOPMENT PLAN shall be provided by RWJPRI to the parties; 
  
 (b) review progress of the DEVELOPMENT work at least
quarterly, and advise RWJPRI concerning changes or modifications to the DEVELOPMENT PLAN; 
  
 (c) oversee and direct the transfer of LICENSED COMPOUNDS from KOSAN to LICENSEE; and 
  
 (d) review progress reports as to the performance of the
DEVELOPMENT PLAN, the first such report to be submitted by RWJPRI [**] following selection of such LICENSED COMPOUND for DEVELOPMENT and at [**] intervals thereafter until the SALE of PRODUCT is approved and PRODUCT is being marketed on a regular
commercial basis in the United States and each MAJOR MARKET COUNTRY and such approval and marketing is reported in writing to KOSAN. Minutes of meetings of the JDAC may serve as such. progress reports. The parties agree to maintain information in
such reports in confidence in accordance with the confidentiality, provisions of Article 9 hereof. 
  
 5.1.5 DEVELOPMENT PROGRAM. RWJPRI shall be solely responsible for and have the exclusive right, at its discretion but in
consultation with the JDAC, to select LICENSED COMPOUNDS which shall then be designated PRODUCTS for further DEVELOPMENT by RWJPRI and marketing by ORTHO and its AFFILIATES. RWJPRI shall provide KOSAN with written notice of its decision to select a
LICENSED COMPOUND for DEVELOPMENT. Once a PRODUCT has been selected for further DEVELOPMENT, RWJPRI, with the advice of the JDAC, shall have the exclusive right to develop the PRODUCT through STAGES O, I, II and III and shall have the exclusive
right to prepare and file, and shall be the owner of, all applications for MARKETING AUTHORIZATION throughout the world. During such DEVELOPMENT efforts, KOSAN will assist RWJPRI as may be mutually agreed, at RWJPRI’s expense, in chemical
development, formulation development, production of labeled material and production of sufficient quantities of material for STAGE O and initial STAGE I studies. RWJPRI shall exercise diligent efforts, commensurate with the efforts it would normally
exercise for products with similar potential sales volume and consistent with its overall business strategy, in developing such PRODUCT in accordance with the DEVELOPMENT PLAN established by RWJPRI. In the course of such efforts RWJPRI shall, either
directly or through an AFFILIATE or SUBLICENSEE to which the license shall have been extended, take appropriate steps including the following: 
  
 (i) in consultation with the JDAC, select certain LICENSED COMPOUNDS for STAGE O DEVELOPMENT; and 
  

 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 24b-2 OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 

 (ii) establish and maintain a program reasonably designed, funded and resourced to
obtain information adequate to enable the preparation and filing with an appropriate and properly empowered national regulatory authority all necessary documentation, data and other evidence required for IND non-rejection to commence and conduct
human clinical trials of such PRODUCT; 
  
 (iii)
proceed following IND non-rejection to commence PHASE I, II, and III clinical trials, associated studies and such other work which RWJPRI reasonably deems to be required for subsequent inclusion in filings for MARKETING AUTHORIZATION; 
  
 (iv) after such submissions are filed prosecute such
submissions and file all reasonably necessary, reports and respond to all reasonable requests from the pertinent regulatory, authorities for information, data, samples, tests and the like. 
  
 5.2 DELIVERY. For each MACROLIDE in DEVELOPMENT, if available,
KOSAN will provide to RWJPRI the clone producing the LICENSED COMPOUND or an intermediate therefor, and all information related to fermentation conditions, process development, scale-up, etc. 
  
 5.3 MARKETING AUTHORIZATION. MARKETING AUTHORIZATION
applications shall be compiled by ORTHO based on information generated during the DEVELOPMENT program. Subject to Section 19.3.4, ORTHO shall own such MARKETING AUTHORIZATIONS. KOSAN shall prepare supporting documentation requested by ORTHO. At
ORTHO’s request and expense, KOSAN shall further assist ORTHO with the preparation of supporting data to apply for and pursue MARKETING AUTHORIZATIONS. 
  
 5.4 COMMERCIALIZATION STATUS. If LICENSEE is developing a LICENSED COMPOUND, or any PRODUCT, during the period from the end of the RESEARCH
TERM to the first commercial sale of such PRODUCT, LICENSEE shall keep KOSAN informed of its development activities with respect to such LICENSED COMPOUND and PRODUCT, including without limitation, the achievement of the milestones set forth in
Section 6.4 and the commercialization of such LICENSED COMPOUND and PRODUCT, by [**] providing KOSAN with a written report stating the status of development of each such LICENSED COMPOUND and PRODUCT. It is understood that the report provided to the
JDAC under Section 5.1.4(d) may serve to fulfill LICENSEE’s obligation to KOSAN hereunder. 
  
 5.5 COMMERCIALIZATION. Once a PRODUCT has been approved for marketing, ORTHO shall exercise reasonable efforts, commensurate with the
efforts it would normally exercise for products with similar potential sales volume and consistent with its overall business strategy, in promoting, advertising and SELLING such PRODUCT under this AGREEMENT. 
  

 29. 
  

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

 5.6 PERFORMANCE OBLIGATIONS. 
  
 5.6.1 LACK OF DILIGENCE. Non-performance of this Article 5, or any subparagraph thereof by
LICENSEE, shall be a breach of this AGREEMENT, subject to -31- KOSAN’s right to terminate this AGREEMENT pursuant to Section 19.2. In such event, KOSAN agrees that (except in the case of a breach of Section 5.7) subject to the terms of Section
19.3, such termination shall be KOSAN’s sole and complete remedy for such a breach. 
  
 5.6.2 ACKNOWLEDGMENT. Notwithstanding any other provision hereunder, LICENSEE makes no representation or warranty, that
development and marketing of PRODUCT shall be the exclusive means by which LICENSEE will participate in the FIELD. Furthermore, all business decisions concerning the DEVELOPMENT, marketing and SALES of PRODUCT(S) including, without limitation, the
design, sale, price and promotion of PRODUCTS covered under this AGREEMENT shall be within the sole discretion of LICENSEE. KOSAN realizes that LICENSEE already sells products for the treatment of [**], and acknowledges that LICENSEE may now or in
the future develop or acquire other products for the treatment and prevention of such conditions. 
  
 5.7 NO OTHER PRODUCTS OTHER THAN PRODUCTS. Except as otherwise agreed in writing or specifically provided in the terms of
this AGREEMENT, neither LICENSEE nor its SUBLICENSEES shall commercialize any LICENSED COMPOUND or DERIVATIVE thereof; other than as a PRODUCT in accordance with this AGREEMENT. 
  
 ARTICLE 6 
  
 LICENSE FEES AND MILESTONE PAYMENTS 
  
 6.1 INITIAL FEE. In consideration of the rights and licenses granted to LICENSEE under this AGREEMENT on EFFECTIVE DATE, ORTHO shall pay
KOSAN an initial fee of one million dollars ($1,000,000) to reimburse KOSAN for past research and development. Such fee shall not be refundable nor creditable against other amounts due KOSAN under this AGREEMENT. 
  
 6.2 RESEARCH MILESTONE PAYMENTS.  
  
 6.2.1 NCE IDENTIFICATION. RWJPRI shall pay the
following amounts to KOSAN within [**] following accomplishment of the following Research Milestones in connection with the Research PROJECTS: 
  

	 $[**]
	  	Identification of a [**] in the FAST TRACK PROJECT
	 $[**]
	  	Identification of each [**] in the SAR PROJECT

  
 6.2.2 DELIVERY OF FIRST MACROLIDES. LICENSEE shall pay to KOSAN a one-time fee of one million dollars ($1,000,000) thirty (30) days following the 

  

 30. 
  

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

 
delivery to RWJPRI of [**] MACROLIDES from the Fast Track PROJECT, provided that any such payment shall not be made prior to [**]. 
  
 6.3 LICENSED COMPOUND FEE. Within [**] after any compound
becomes a LICENSED COMPOUND, RWJPRI shall pay two hundred and fifty thousand dollars ($250,000) for each such LICENSED COMPOUND (other than the [**] for which RWJPRI has already paid the $[**] set forth in Section 6.2.1). 
  

 31. 
  

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

 6.4 DEVELOPMENT MILESTONE PAYMENTS. Within [**] following the occurrence of the relevant events
specified below with respect to the each PRODUCT, LICENSEE shall pay to KOSAN the following amounts: 
  

	 DEVELOPMENT
MILESTONE

	  	 PAYMENT

	 [**]
	  	$[**]

  
 6.5 BACKUP
PRODUCTS. In the event one or more of the aforesaid milestone payments have been paid in respect of a given PRODUCT for which DEVELOPMENT or commercialization is subsequently discontinued, LICENSEE shall receive a credit for such milestone
payments against milestone payments due for the next PRODUCT to meet such milestone. It is understood that in no event shall LICENSEE be obligated to make the payment due on any milestone event more than once with respect to the same PRODUCT,
regardless of the number of indications for which such PRODUCT is developed. If at the time a milestone is achieved by a PRODUCT any prior milestones have not been achieved for such PRODUCT, the payments for such prior milestones for such PRODUCT
shall then be due. 
  
 6.6 RESERVED COMPOUND FEE. If
RWJPRI has designated more than [**] MACROLIDES as RESERVED COMPOUNDS at any time, for each such RESERVED COMPOUND in excess of [**], RWJPRI shall pay [**] dollars ($[**]) within [**] after the date of the designation of the applicable RESERVED
COMPOUND. 
  
 6.7 NO WITHHOLDING. All amounts paid
to KOSAN pursuant to this Article 6 shall be made without withholding for taxes or any other charge. 
  
 ARTICLE 7 
  
 ROYALTIES, RECORDS AND REPORTS 
  
 7.1
EARNED ROYALTIES; ROYALTY TERM. For the rights and privileges granted under this AGREEMENT, subject to Article 19, ORTHO shall pay to KOSAN, on a country-by-country and PRODUCT-by-PRODUCT basis, earned royalties on NET SALES as follows:

  
 7.1.1 where the manufacture, USE or
SALE of the PRODUCT falls within the scope of a VALID CLAIM which is (i) owned sorely by KOSAN, (ii) owned jointly by KOSAN and LICENSEE, or (iii) filed during the RESEARCH TERM or claims priority to a patent application filed during the RESEARCH
TERM and in connection with the RESEARCH PROGRAM which is owned solely by LICENSEE or its AFFILIATES or SUBLICENSEES, ORTHO shall pay to KOSAN a royalty on the NET SALES of all such PRODUCTS that are SOLD by or for ORTHO or AFFILIATES or
SUBLICENSEES under this AGREEMENT until 

  

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

 
the expiration of the last to expire of such patents in the PATENT RIGHTS in such country., as follows: 
  

	 Annual Cumulative NET
SALES/PRODUCT

	  	 ROYALTY RATE

	 [**]
	  	[**]%

  
 7.1.2 where the manufacture, USE or SALE of the applicable PRODUCT is not within the scope of a VALID CLAIM subject to Section 7.1.1, ORTHO shall pay to KOSAN a royalty on NET SALES equal to [**] the royalties in (a) above with
respect to such PRODUCTS that are SOLD by or for ORTHO or AFFILIATES or SUBLICENSEES under this AGREEMENT in such country, for a period of the longer of (i) ten (10) years from the date of first commercial sale of such PRODUCT in such country, or
(ii) so long as there is a VALID CLAIM in such country. 
  
 7.1.3 It is understood and agreed that the increased royalty rates due pursuant to Sections 7.1.1 and 7.1.2 on higher levels of NET SALES shall only be due on the incremental NTT SALES over the lower tier.

  
 7.1.4 It is understood and agreed that
regardless of any credits or offsets to which LICENSEE is entitled under the terms of this AGREEMENT, the royalty, payments due KOSAN under Article 7 shall not be less than [**] of the royalties due pursuant to Sections 7.1.1 or 7.1.2 as applicable,
on NET SALES of any PRODUCT in the applicable quarter. Any such royalty credits or offsets may be carried forward until applied. 
  
 7.2 ROYALTY ON NET SALES TO THIRD PARTIES. Earned royalties shall be paid pursuant to Section 7.1 hereof on all PRODUCTS SOLD under this
AGREEMENT and the earned royalty payable on a given PRODUCT made hereunder shall not become due and owing until such PRODUCT is SOLD. Except where LICENSEE or its AFFILIATES or SUBLICENSEE is an end-user of a PRODUCT, the earned royalty for any
particular PRODUCT shall be due upon the first bona fide arm’s length SALE to a THIRD PARTY other than an AFFILIATE or SUBLICENSEE thereof and any subsequent SALE of such PRODUCT by a THIRD PARTY that is not an AFFILIATE or SUBLICENSEE shall be
royalty-free. 
  
 7.3 THIRD-PARTY ROYALTIES. KOSAN
shall be responsible for paying [**] royalties due Stanford University on PRODUCTS pursuant to the STANFORD LICENSE and for [**] THIRD PARTY royalties for which KOSAN is responsible pursuant to Section 2.7.6. Except as provided in the preceding
sentence, LICENSEE shall be responsible for procuring such licenses as it deems, in its sole discretion, appropriate for the manufacture, use, marketing, sale or distribution of PRODUCTS by LICENSEE and its AFFILIATES and SUBLICENSEES, and for the
payment of any amounts due THIRD PARTIES under such licenses; provided that with regard to licenses entered by RWJPRI with THIRD PARTIES for intellectual property 

  

 33. 
  

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

 
rights which are necessary, for the practice of the KOSAN PATENT RIGHTS existing as of the EFFECTIVE DATE for the creation or preparation of MACROLIDES
and/or AROMATIC POLYKETIDES, which licenses have been approved by the JRC, LICENSEE may offset against the royalties owed to KOSAN up to [**] percent ([**]%) of royalties owed such THIRD PARTY, up to a maximum of [**] percent ([**]%) of the royalty
owed to KOSAN in any quarter with respect to the applicable PRODUCT. Any such amounts which are uncredited in a quarter may be carried forward until expended. 
  

7.4 ONE ROYALTY. Notwithstanding the provisions of Section 7.2 hereof, in the case of transfers or SALES of any PRODUCT among ORTHO,
AFFILIATES and SUBLICENSEE or between AFFILIATES for re-sale to THIRD PARTIES, one and only one royalty shall be payable thereon and such royalty, shall become payable upon the SALE thereof to a THIRD PARTY. 
  
 7.5 AUDIT RIGHTS. ORTHO shall keep, and shall cause its
AFFILIATES and SUBLICENSEES to keep, full, true and accurate books of account containing all particulars in accordance with ORTHO’s normal accounting procedures then in effect for the purpose of showing the amount payable to KOSAN by way of
royalty as aforesaid or by way of any other provision hereunder. Said books of account shall be kept at ORTHO’s (or if sales by a SUBLICENSEE, at the SUBLICENSEE’s) principal place of business. Said books and the supporting data shall be
maintained and kept open during reasonable business hours, for [**] following the end of the calendar year to which they pertain (and access shall not be denied thereafter, if reasonably available), to the inspection of an independent certified
public accountant retained by KOSAN and reasonably acceptable to ORTHO or such SUBLICENSEE for the purpose of verifying ORTHO’s royalty statements, or ORTHO’s compliance in other respects with this AGREEMENT, but this right to inspect may
not be exercised more than once in any year and once a calendar period is audited, it may not be re-audited unless a payment discrepancy is identified. Said accountant shall disclose to KOSAN only information relating to the accuracy of the royalty
reports and the royalties paid under this AGREEMENT. Names of customers and other confidential information shall not be disclosed to KOSAN by such independent accountant. Such accountant shall be retained at KOSAN’s sole expense.
Notwithstanding the foregoing, inspections of the records of SUBLICENSEES shall be limited to the extent that ORTHO has the right to authorize KOSAN to make such inspection; provided that if ORTHO does not have the right to authorize KOSAN to make
such an inspection, upon KOSAN’s request, ORTHO, at its expense, using an independent certified accountant reasonably acceptable to KOSAN, shall inspect the SUBLICENSEE’s records and shall provide to KOSAN the results of such inspection.
In any audit, if an underpayment of more than five percent (5%) is established for a quarter, LICENSEE shall pay the costs of the audit of such period and shall promptly pay to KOSAN any amounts due together with interest as provided in Section 7.7.

  
 7.6 ROYALTY REPORTS. ORTHO within [**] of each
year (the “Reporting Date”) shall deliver to KOSAN a true and accurate report, giving such particulars of the PRODUCTS SOLD by ORTHO, AFFILIATES, and SUBLICENSEES and the NET SALES due 

  

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

 
during the [**] preceding the Reporting Date (“Accounting Period”) under this AGREEMENT as are pertinent to an accounting for royalty under this
AGREEMENT. Each such report shall state, separately for LICENSEE and each AFFILIATE and SUBLICENSEE, the number, description, and aggregate NET SALES, by country, of each PRODUCT sold during the calendar quarter upon which a royalty is payable under
this AGREEMENT. Simultaneously with the delivery of each such report, ORTHO shall pay to KOSAN the royalty due under this AGREEMENT for the period covered by such report. If no royalties are due, it shall be so reported. 
  
 7.7 PAYMENT METHOD; LATE PAYMENTS. All amounts due KOSAN
hereunder shall be paid in U.S. dollars by wire transfer in immediately available funds to a bank account designated by KOSAN. Any payments or portions thereof due hereunder which are not paid on the date such payments are due under this AGREEMENT
shall bear interest at a rate equal to the lesser of [**], or the maximum rate permitted by law, calculated on the number of days such payment is delinquent, compounded monthly. This Section 7.7 shall in no way limit any other remedies available to
KOSAN. 
  
 7.8 CURRENCY CONVERSION. All royalty,
payments by ORTHO to KOSAN shall be converted into U.S. Dollars in accordance with ORTHO’s current customary and usual procedures for calculating same which are the following: the rate of currency conversion shall be calculated using a [**], or
if such rate is not available, the [**]. ORTHO shall give KOSAN prompt written notice of any changes to ORTHO’s customary and usual procedures for currency conversion, which shall only apply after such notice has been delivered and provided
that such changes continue to maintain a set methodology for currency conversion. If the transfer or the conversion into U.S. Dollars in any such instance is not lawful or possible, the payment of each pan of the royalties due as is necessary, shall
be made by the deposit thereof, in whatever currency is allowable, to the credit and account of KOSAN in any commercial bank or trust company of KOSAN’s choice located in that country. Prompt notice of said deposit shall be given by ORTHO to
KOSAN and ORTHO shall use reasonable efforts to assist KOSAN in securing the payment of such funds to KOSAN’s U.S. bank account. 
  
 7.9 TAXES. Any tax required to be withheld on royalties payable to KOSAN under the laws of any foreign country shall be promptly paid by
ORTHO for and on behalf of KOSAN to the appropriate governmental authority, and ORTHO shall furnish KOSAN with proof of payment of such tax together with official documents issued by the appropriate governmental authority and other appropriate
evidence sufficient to enable KOSAN to support a claim for a tax credit in respect of any sum so withheld, and at KOSAN’s request, provide reasonable assistance to KOSAN in recovering such amounts, if possible. 
  
 7.10 LEGAL LIMIT ON ROYALTIES. In any country where the rate of
royalty is limited by applicable law, the royalty payment shall be made to KOSAN at the highest rate permitted by law in that country for licenses of the type herein granted, provided that such rate is equal to or less than the rate specified in
this AGREEMENT. 
  

 35. 
  

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

 7.11 RESTRICTIONS ON PAYMENTS. The obligation to pay royalties to KOSAN under this
AGREEMENT shall be waived and excused to the extent that applicable statutes, laws, codes or government regulations in a particular country prevent such royalty payments; provided, however, in such event, if legally permissible, LICENSEE shall pay
the royalties owed to KOSAN by depositing such amounts, to the credit and account of KOSAN or its nominee in any commercial bank or trust company of KOSAN’s choice located in that country, prompt notice of which shall be given by ORTHO to
KOSAN. 
  
 ARTICLE 8 
  
 SUPPLY OF PRODUCTS 
  
 8.1 ORTHO RESPONSIBILITY. ORTHO shall be solely responsible for making
or having made PRODUCTS for DEVELOPMENT and commercialization. During DEVELOPMENT or commercialization of the PRODUCTS, the parties may agree that KOSAN shall manufacture and supply to ORTHO quantities of certain compounds. 
  
 8.2 CONSIDERATION OF KOSAN. If KOSAN wishes to be responsible
for production of and purification of MACROLIDE and/or AROMATIC POLYKETIDES for preclinical and clinical testing and manufacture of bulk PRODUCTS for commercial sale it may notify LICENSEE and demonstrate that KOSAN (or its designee) is able to
manufacture PRODUCTS meeting the relevant LICENSEE specifications with respect to cost and quality in a timely manner, then, subject to the approval of LICENSEE, KOSAN may conduct such manufacturing. In such event, the parties shall enter into a
separate supply agreement on terms to be mutually agreed by the parties. 
  
 8.3 TECHNOLOGY TRANSFER. Upon LICENSEE’s request, KOSAN shall provide reasonable technical assistance, and, to the extent that KOSAN has a right to do so without incurring additional expense,
licenses, as may reasonably be requested by LICENSEE to transfer such technology as needed for LICENSEE or its designee to commence or continue manufacturing under Section 8.1. All such technical assistance shall be provided at LICENSEE’s
expense. 
  
 ARTICLE 9 
  
 CONFIDENTIALITY 
  
 9.1 CONFIDENTIAL INFORMATION. Except as expressly provided
herein, the parties agree that, for the term of this AGREEMENT and for [**] thereafter, the receiving party, shall keep completely confidential and shall not publish or otherwise disclose and shall not use for any purpose except for the purposes
contemplated by this AGREEMENT, any confidential information of the other party, or any data, samples, technical and economic information (including the economic terms hereof), commercialization, clinical and research strategies and KNOW-HOW and
other information provided by the other party (the “Disclosing Party”) during 

  

 36. 
  

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

 
the TERM of this AGREEMENT or during the negotiation of this AGREEMENT, or in connection with the transactions contemplated thereby, or any RESEARCH PROGRAM
Technology and all other data, results and information developed pursuant to the RESEARCH PROGRAM and solely owned by the Disclosing Party (collectively, the “Confidential Information”) furnished to it by the Disclosing Party hereto
pursuant to this AGREEMENT or the transactions contemplated thereby. Notwithstanding the above, Confidential Information shall not include information that: 
  
 (i) is or hereafter becomes generally available to the public other than by reason of any default with respect to a confidentiality,
obligation under this AGREEMENT; or 
  
 (ii) was
already known to the recipient as evidenced by prior written documents in its possession; or 
  
 (iii) is disclosed to the recipient by a THIRD PARTY who is not in default of any confidentiality, obligation to the disclosing party
hereunder; or 
  
 (iv) is developed by or on
behalf of the receiving party, without reliance on Confidential Information received from the other party hereunder; or 
  
 (v) is used with the consent of the Disclosing Party (which consent shall not be unreasonably withheld) in applications for patents or
copyrights under the terms of this AGREEMENT; or 
  
 (vi) has been approved in writing for publication by the Disclosing Party; or 
  
 (vii) is PRODUCT-related information which is reasonably required to be disclosed in connection with marketing of PRODUCT covered by this
AGREEMENT. 
  
 Confidential Information shall be safeguarded by the recipient,
shall not be disclosed to THIRD PARTIES and shall be made available only to recipient’s employees or independent contractors who agree in writing to equivalent conditions and who have a need to know the information for the purposes specified
under this AGREEMENT; however, the recipient may disclose Confidential Information to the extent such disclosure is required in compliance with applicable laws or regulations in connection with the manufacture or sale of products covered by this
AGREEMENT, or is otherwise required to be disclosed in compliance with applicable laws or regulations or order by a court or other regulatory body having competent jurisdiction, provided that in the event such disclosure is required, the recipient
(i) shall, unless prohibited by law, give reasonable advance notice of such disclosure to the other party and (ii) shall use reasonable efforts to secure confidential treatment of such information (whether by protective order or otherwise).
Notwithstanding the foregoing, Confidential Information may be provided to THIRD 

  

 37. 
  

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

 
PARTIES under appropriate terms and conditions including confidentiality provisions equivalent to those in this AGREEMENT for consulting, manufacturing
development, manufacturing, external testing and marketing trials with respect to the products covered by this AGREEMENT. 
  
 9.2 PUBLICATION. The parties shall cooperate in appropriate publication of the results of research and development work performed pursuant
to this AGREEMENT, but subject to the predominating interest to obtain patent protection for any patentable subject matter. To this end, it is agreed that prior to any public disclosure of such results, the party proposing disclosure shall send the
other party a copy of the information to be disclosed, and shall allow the other party thirty (30) days from the date of receipt in which to determine whether the information to be disclosed contains subject matter for which patent protection should
be sought prior to disclosure, or otherwise contains Confidential Information of the reviewing party which such party desires to maintain as a trade secret. Each party shall designate a representative for receipt of proposed publications from the
other party. Confidential Information of the reviewing party which such party desires to maintain as a trade secret shall not be published if the reviewing party objects in writing within such thirty (30) day period. If notification is not received
during the thirty (30) day period, the party proposing disclosure shall be free to proceed with the disclosure. If due to a valid business reason or a reasonable belief by the non-disclosing party that the disclosure contains subject matter for
which a patentable invention should be sought, then prior to the expiration of the thirty (30) day period, the non-disclosing party shall so notify the Disclosing Party, who shall then delay public disclosure of the information for an additional
period of up to ninety (90) days to permit the preparation and filing of a patent application on the subject matter to be disclosed or other action to be taken. The party proposing disclosure shall thereafter be free to publish or disclose the
information. Notwithstanding the foregoing, if the publication discloses a LICENSED COMPOUND, either party may delay publication until such time as the applicable patent application disclosing the LICENSED COMPOUND is published in the normal course
of events. The determination of authorship for any paper shall be in accordance with accepted scientific practice. 
  
 9.3 ACQUISITION. In the event a party hereto is acquired, such party shall take reasonable efforts to ensure that the Confidential
information of the other party hereto is used only for the purposes of this AGREEMENT, and is not disclosed to the acquiror. 
  
 ARTICLE 10 
  
 REGULATORY MATTERS 
  
 10.1 ADVERSE EVENT REPORTING. Each party shall promptly inform the other in writing within twenty-four (24) hours of its receipt of any information which it receives regarding or related to any serious,
unexpected adverse reaction in humans to PRODUCT. Each party shall comply with each Adverse Drug Experience reporting requirement of it in the United States Federal Food Drug and Cosmetic Act, as amended (21 U.S.C. Section 301 ET SEQ.) and the
similar requirements of international regulatory authorities. In addition, on an on-going basis, 

  

 38. 
  

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

 
each party agrees to make a good faith effort to promptly provide the other party with any additional information in its possession which indicates adverse
effects in humans associated with PRODUCT. The obligations of this article shall survive termination of this AGREEMENT as to PRODUCT continued to be sold by ORTHO, or its AFFILIATES or SUBLICENSEES. 
  
 10.2 REGULATORY AND OTHER INQUIRIES. In the event KOSAN is
manufacturing pursuant to Article 8 hereof, then upon being contacted by the FDA or any drug regulatory Agency for any regulatory purpose pertaining to this AGREEMENT or to a PRODUCT, KOSAN and LICENSEE shall promptly (within two (2) business days)
notify and consult with one another and LICENSEE shall provide a response as it deems appropriate. LICENSEE shall have sole responsibility for responding to all inquiries to LICENSEE or KOSAN regarding the benefits, side effects and other
characteristics of PRODUCTS. The party which is responsible for manufacturing the BULK PRODUCT form of the pertinent PRODUCT shall have the sole responsibility for responding to all inquiries regarding the manufacture of such BULK PRODUCT after
consultation with the other party. 
  
 10.3 PRODUCT
RECALL. In the event that LICENSEE or KOSAN determines that an event, incident or circumstance has occurred which may result in the need for a recall or other removal of any PRODUCT, or any lot or lots thereof, from the market, it shall advise
and consult with the other party with respect thereto. LICENSEE shall make the final determination to recall or otherwise remove the PRODUCT or any lot or lots thereof from the market. KOSAN shall be responsible for the costs of any recall due to
defects in BULK PRODUCTS manufactured by KOSAN, and LICENSEE shall be responsible for the costs of other recalls. 
  
 ARTICLE 11 
  
 PATENT INFRINGEMENT 
  
 11.1
NOTICE. In the event that there is infringement on a commercial scale by a THIRD PARTY of any patent licensed to LICENSEE hereunder that covers the manufacture, USE or SALE of a PRODUCT. LICENSEE shall notify KOSAN in writing to that
effect, including with said written notice evidence establishing a prima facie case of infringement by such THIRD PARTY. 
  
 11.2 SOLELY OWNED INVENTIONS. 
  
 11.2.1 KOSAN ACTION. With respect to patents solely owned by KOSAN, KOSAN shall after any such notification, at its option,
take action to obtain a discontinuance of such infringement or bring suit against the THIRD PARTY infringer. KOSAN shall bear all the expenses of any suit brought by it. In the event damages or other monies are awarded or received in settlement of
such suit, KOSAN shall be entitled to deduct an amount to cover its out-of-pocket expenses, including attorneys’ and professional fees, and including a reasonable allocation for in-house attorney’s time, incurred for such suit. The balance
of any recoveries shall then be shared by the parties with KOSAN receiving [**] percent ([**]%) and [**] percent 

  

 39. 
  

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

 
([**]%). LICENSEE and its AFFILIATES will cooperate with KOSAN in any such suit and shall have the right to consult with KOSAN and be represented by its own
counsel at its own expense. KOSAN shall incur no liability to LICENSEE and its AFFILIATES as a consequence of such litigation or any unfavorable decision resulting therefrom, including any decision holding KOSAN’s patent invalid or
unenforceable. 
  
 11.2.2 ORTHO
ACTION. If, after the expiration of one hundred eighty (180) days from the date of a request by ORTHO to do so, KOSAN has not overcome the prima facie case of infringement, obtained a discontinuance of such infringement, or brought suit against
the THIRD PARTY infringer, then after such one hundred eighty (180) days notice period, ORTHO shall have the right, but not the obligation, to bring suit against such infringer and join KOSAN as a party plaintiff with respect to infringements
relating to patents claiming compositions of matter which are LICENSED COMPOUNDS and/or the method of commercial manufacture thereof used by ORTHO (but not with respect to patents relating to the creation or production of polyketides more
generally), provided that ORTHO shall bear all the expenses of such suit. In the event ORTHO brings such suit, and damages or other monies are awarded or received in settlement of such suit. ORTHO shall be entitled to deduct an amount to cover its
out-of-pocket expenses, including attorneys’ and professional fees, and including a reasonable allocation for in-house attorney’s time. incurred for such suit. The balance of any recoveries shall be shared by the parties with ORTHO
receiving [**] percent ([**]%) and [**] percent ([**]%). KOSAN will cooperate with ORTHO in any suit for infringement of a licensed patent brought by ORTHO against a THIRD PARTY, and shall have the right to consult with ORTHO and to participate in
and be represented by independent counsel in such litigation at its own expense. ORTHO shall incur no liability to KOSAN as a consequence of such litigation or any unfavorable decision resulting therefrom, including any decision holding KOSAN’s
patent invalid or unenforceable; provided, ORTHO shall not enter into any settlement which (i) makes any admission of wrongdoing on the part of KOSAN, or (ii) admits that any of KOSAN PATENT RIGHTS are invalid, unenforceable or not infringed,
without the prior written consent of KOSAN. 
  
 11.3
JOINT INVENTIONS. In the event KOSAN or LICENSEE becomes aware of any actual or threatened infringement of any PATENT RIGHT which claims a Joint Invention that party shall promptly notify the other and the parties shall promptly discuss
how to proceed in connection with such actual or threatened infringement. In the event only one party wishes to participate in such proceeding, it shall have the right to proceed alone, at its expense, and may retain any recovery; provided, at the
request and expense of the participating party, the other party agrees to cooperate and join in any proceedings in the event that a THIRD PARTY asserts that the co-owner of such Joint Invention is necessary or indispensable to such proceedings.

  
 11.4 COOPERATION. In the event either party
hereto shall initiate or carry on legal proceedings to enforce the PATENT RIGHTS against an alleged infringer, as provided herein, the other party hereto shall fully co-operate with the party initiating or carrying on such proceedings. 

 

 40. 
  

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

 ARTICLE 12 
  

INTELLECTUAL PROPERTY 
 12.1
OWNERSHIP. 
  
 12.1.1
OWNERSHIP OF INVENTIONS. KOSAN will own any inventions, and patents claiming such inventions, conceived or reduced to practice by KOSAN personnel in connection with the performance of the RESEARCH PROGRAM, subject to the licenses granted
in Article 4 above. RWJPRI will own any inventions, and patents claiming such inventions, conceived and reduced to practice solely by RWJPRI personnel in connection with the RESEARCH PROGRAM. The parties will jointly own any inventions, and patent
claiming such inventions, conceived and reduced to practice jointly by RWJPRI and KOSAN personnel in connection with the RESEARCH PROGRAM (“Joint Inventions”); provided, KOSAN shall have sole ownership of all MACROLIDES and AROMATIC
POLYKETIDES transferred to LICENSEE hereunder and all EXCLUDED TECHNOLOGY and intellectual property relating thereto, and LICENSEE shall and hereby assigns to KOSAN any interest that LICENSEE may have in or to the foregoing. 
  
 12.1.2 U.S. LAW. Inventorship and rights of
ownership shall be determined in accordance with U.S. patent law. The laws of the United States with respect to joint ownership of inventions shall apply in all jurisdictions, and each party hereby waives any right (other than as set forth in this
AGREEMENT) to obtain an accounting of profits or approve any license or exploitation thereof. 
  
 12.2 PATENT PROSECUTION. 
  
 12.2.1 KOSAN shall file, maintain and prosecute the patent applications within the KOSAN PATENT RIGHTS to obtain patents thereon in such countries it deems appropriate, at its own expense. KOSAN does not
represent or warrant that any such patent will be obtained, and KOSAN shall, in its sole discretion, be responsible for determining whether to abandon any or all of said patent applications or any portions thereof. 
  
 12.2.2 KOSAN shall promptly notify LICENSEE in the
event KOSAN decides not to file, or decides to abandon or discontinue prosecution or maintenance of any one or more patents or patent applications included in the KOSAN PATENT RIGHTS. Such notification will be given as early as possible which in no
event will be less than sixty (60) days prior to the date on which said application(s) will become abandoned. LICENSEE shall have the option, exercisable upon written notification to KOSAN, to assume full responsibility for the filing, prosecution
or maintenance of the affected patents or patent application(s), in LICENSEE’s name, at its expense. Royalty obligations with respect to such affected patents or patent applications shall be governed by, and at the royalty rate, set forth in
Section 7.1.2 hereinabove for the life of such patent. 
  

 41. 
  

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

 12.2.3 LICENSEE shall file, maintain and prosecute the patent applications within
the PATENT RIGHTS solely owned by LICENSEE to obtain patents thereon in such countries it deems appropriate, at its own expense. LICENSEE does not represent or warrant that any such patent will be obtained, and LICENSEE shall, in its sole discretion
be responsible for determining whether to abandon any or all of said patent applications or any portions thereof. 
  
 12.3 CONSULTATION. LICENSEE shall have the right to consult with KOSAN regarding the content of said patent applications, prior art searches
and correspondence, and to comment thereon. KOSAN shall consider all such comments offered by LICENSEE, it being agreed, however, that all final decisions respecting conduct of the prosecution of said patent applications shall rest solely in the
discretion of KOSAN. KOSAN agrees to promptly provide LICENSEE with copies of: 
  
 12.3.1 All patent applications included in KOSAN PATENT RIGHTS which claim LICENSED COMPOUNDS; 
  
 12.3.2 All prior art searches conducted on behalf of
KOSAN related to said patent applications and the subject matter of this AGREEMENT; and 
  
 12.3.3 All correspondence to and from the United States Patent and Trademark Office related to said patent applications as well as
all requested correspondence relating to corresponding national and international patent applications. 
  
 12.4 JOINT INVENTIONS. 
  
 12.4.1 The parties will cooperate to file, prosecute and maintain patent applications covering the Joint Invention(s) within the
RESEARCH PROGRAM in the United States, Japan and the European Union (in Europe through a European Patent Convention application) (collectively, the “Core Countries”) and other countries agreed by the parties. The parties will share equally
all expenses and fees associated with the filing, prosecution, issuance and maintenance of any patent application and resulting patent for a Joint Invention in the Core Countries and other agreed countries. Subject to Section 12.4.3 below, it is
understood that, after the termination of the RESEARCH PROGRAM, the parties shall share equally the expenses and fees associated with the filing, prosecution, issuance and maintenance of any patent application and resulting patent for a Joint
Invention in the Core Countries and other agreed countries. 
  
 12.4.2 In the event that either party wishes to seek patent protection with respect to any Joint Invention outside the Core Countries, it shall notify the other party hereto. If both parties wish to seek patent
protection with respect to such Joint Invention in such country or countries, activities shall be subject to Section 12.4.1 above. If only one party wishes to seek patent protection with respect to such Joint Invention in such country or countries,
it may file, prosecute and maintain patent applications and patents with respect thereto, at its own expense. Whenever possible, the parties shall cooperate to obtain the benefit of international treaties, conventions and/or agreements (e.g., the
Patent Cooperation Treaty.) in order to obtain the 

  

 42. 
  

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

 
benefits afforded thereby. In any such case, the party declining to participate in such activities shall not grant any THIRD PARTY a license under its
interest in the applicable joint invention in the applicable country or countries without the prior written consent of the other party, which shall not be unreasonably withheld. KOSAN agrees to provide its written consent, if necessary, for LICENSEE
to sublicense any joint invention in any country pursuant to the terms of this AGREEMENT. 
  
 12.5 PATENT TERM EXTENSIONS. LICENSEE shall cooperate with KOSAN, and unless KOSAN has previously applied for such an extension on its own behalf or on behalf of a THIRD PARTY with respect to the
applicable patent, KOSAN agrees to diligently seek any extension under the U.S. Drug Price Competition and Patent Term Restoration Act of 1984, the Supplementary Certificate of Protection of the Member States of the European Community or other
similar measure in any other country that is available or that becomes available in respect of the term of any patent within the KOSAN PATENT RIGHTS including any patent that may issue on a patent application within the KOSAN PATENT RIGHTS. LICENSEE
shall diligently advise KOSAN in a timely manner of approval by the Food and Drug Administration of the United States of America to USE, SELL or market PRODUCTS or any other governmental approval obtained by or on behalf of LICENSEE or an AFFILIATE
that is pertinent to any such extension and LICENSEE shall supply KOSAN with any pertinent information and data in its possession or control or that is in the possession or control of any AFFILIATE or SUBLICENSEE and shall cooperate fully in
assisting KOSAN to obtain any such extension that it may seek and LICENSEE shall supply KOSAN in a timely manner with any information and data and any supporting affidavits or documents required to comply with 35 U.S.C. Section 156 Extension of
Patent Term (and any successor legislation) and any administrative rules or regulation thereunder or required to comply with any corresponding laws and regulations that are or shall be in effect in any country within the KOSAN PATENT RIGHTS, all
without further consideration. ORTHO shall require its AFFILIATES to comply with this Section 12.5. 
  
 ARTICLE 13 
  
 PUBLICITY 
  
 Neither party shall originate any
publicity, news release or public announcement, written or oral, whether to the public or press, stockholders or otherwise, relating to this AGREEMENT, including its existence, the subject matter to which it relates, performance under it or any of
its terms, to any amendment hereto or performances hereunder without the written consent of the other party save only (i) such announcements as in the opinion of counsel for the party making such announcement is required by applicable law to be
made, or (ii) announcements to KOSAN’s private advisors, present investors, and bona fide prospective investors so long as such disclosure is made under a binder of confidentiality wherein such advisor or investor agrees not to disclose the
information contained in the announcement to any THIRD PARTY or to use the information for any purpose other than to evaluate its investment or prospective investment in KOSAN. Such announcements shall be factual and as brief as reasonable. If a
party decides to 

  

 43. 
  

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

 
make an announcement required by law or otherwise permitted under this AGREEMENT, it will give the other party ten (10) days’ advance written notice of
the text of the announcement so that the other party will have an opportunity to comment upon the announcement. Upon request by a party for approval of any other disclosures, such approval or disapproval shall be given in writing within fifteen (15)
days of its receipt. Upon request by either party, the parties agree to prepare a mutually agreed press release and related Question and Answer document with respect to this AGREEMENT. Once information has been approved for disclosure, no further
consent or approval shall be required under this Article with respect to such information. 
  
 ARTICLE 14 
  
 WARRANTIES
AND REPRESENTATIONS 
  
 14.1 KOSAN warrants that as of
the EFFECTIVE DATE it owns or exclusively controls by agreement, assignment or license right, title and interest in the KOSAN PATENT RIGHTS and KOSAN KNOW-HOW and that it has full power and authority to execute, deliver and perform this AGREEMENT
and the obligations hereunder. 
  
 14.2 KOSAN expressly
warrants and represents that it has no outstanding encumbrances or agreements, either written, oral, or implied, in connection herewith that are inconsistent with the rights granted herein, and that it has not granted and will not grant during the
term of this AGREEMENT or any renewal hereof, any rights, license, consent or privilege that conflict with the rights granted herein. 
  
 14.3 LICENSEE expressly warrants and represents that it has no outstanding encumbrances or agreements, either written, oral, or implied, in
connection herewith that are inconsistent with the obligations undertaken by LICENSEE herein, and that it has not entered into, and during the term of this AGREEMENT or any renewal hereof will not enter into, any agreements, either written, oral, or
implied, that conflict with the rights granted, and obligations undertaken, by LICENSEE herein. 
  
 14.4 Each party expressly represents and warrants that it has the full power and authority to enter into this AGREEMENT and to carry out the
transactions contemplated hereby. 
  
 14.5 Each party
hereby warrants that the execution, delivery and performance of this AGREEMENT has been duly approved and authorized by all necessary corporate or partnership actions of both parties: do not require any shareholder or partnership approval which has
not been obtained or the approval and consent of any trustee or the holders of any indebtedness of either party; do not contravene any law, regulation, rules or order binding on either party, and do not contravene the provisions of or constitute a
default under any indenture, mortgage, contract or other agreement or instrument to which either party is a signatory. 
  
 14.6 Each party hereby represents and warrants that to the extent the United States government has any interest in the KOSAN PATENT RIGHTS as a
result of government funded 

  

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

 
research, that it will continue to make good faith efforts to comply in all respects with the applicable provisions of any applicable law, regulation, or
requirement by the U.S. Government relating to the KOSAN PATENT RIGHTS and shall make reasonable efforts to ensure that such laws, regulations and requirements are fulfilled with respect to the KOSAN PATENT RIGHTS including without limitation the
provisions of 35 U.S.C. Section 202. Each party agrees that it will make good faith efforts to ensure that all necessary steps are taken to comply with the requirements of 35 U.S.C. Section 202 ET SEQ. and 37 C.F.R. Section 401.1 ET SEQ. to retain
the maximum rights under the KOSAN PATENT RIGHTS allowable by law. LICENSEE and KOSAN agree that it will provide the necessary reports and information required to comply with 35 U.S.C. Sec. 202 et seq. and 37 C.F.R. Section 401.1 et seq., including
periodic reports on utilization or efforts at utilization of the inventions covered by the KOSAN PATENT RIGHTS. 
  
 14.7 KOSAN and LICENSEE each specifically disclaim that the RESEARCH PROGRAM or the DEVELOPMENT will be successful, in whole or part or that any
clinical or other studies undertaken by it will be successful. KOSAN AND LICENSEE EXPRESSLY DISCLAIM ANY WARRANTIES OR CONDITIONS, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, WITH RESPECT TO THE CONFIDENTIAL INFORMATION, OR KOSAN PATENT RIGHTS OR
KNOW-HOW, LICENSED COMPOUNDS, RESERVED COMPOUNDS, NCEs OR PRODUCTS, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE, VALIDITY OF ANY INTELLECTUAL PROPERTY, PATENTED OR UNPATENTED, OR
NON-INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES. 
  
 ARTICLE 15 
  
 STANFORD LICENSE 

 
 15.1 KOSAN represents that as of the EFFECTIVE DATE the STANFORD
LICENSE is in full force and effect. KOSAN shall use its reasonable efforts to not cause the termination and shall not seek to terminate the STANFORD LICENSE during the term of this AGREEMENT without the express written consent of LICENSEE.

  
 15.2 KOSAN shall use its reasonable efforts to perform
all duties and obligations required under the STANFORD LICENSE. KOSAN shall notify LICENSEE within five (5) days of its receipt of any termination notices from STANFORD of the STANFORD LICENSE and at LICENSEE’s option shall seek to avoid said
termination or shall subrogate LICENSEE to KOSAN’s rights under the STANFORD LICENSE to enable LICENSEE to seek to avoid such termination. 
  
 15.3 KOSAN shall inform LICENSEE of any renegotiation of the STANFORD LICENSE, and shall not modify any terms or provisions of the STANFORD
License, if such renegotiation or modification will adversely affect LICENSEE’s rights under this 

  

 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 24b-2 OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 

 
AGREEMENT, without LICENSEE’s written consent. KOSAN shall promptly provide LICENSEE with a copy of such renegotiated or modified STANFORD LICENSE.

  
 15.4 In order to provide adequate protection of
LICENSEE’s interest in avoiding the termination of the STANFORD LICENSE, KOSAN agrees that should KOSAN default or receive a notice from STANFORD of default under the STANFORD LICENSE for failure to timely pay royalties which KOSAN does not
intend to cure within the applicable period provided by the STANFORD LICENSE, KOSAN shall notify LICENSEE within ten (10) business days of its receipt of such notice and, LICENSEE may cure any such default on KOSAN’s behalf, including paying
any delinquencies. LICENSEE may credit any such payments made to STANFORD to cure KOSAN’s delinquency against future payments due to KOSAN hereunder. 
  
 ARTICLE 16 
  
 TRADEMARKS 
  
 16.1 ORTHO TRADEMARKS. ORTHO, at its expense, shall be responsible for the selection, registration and maintenance of all trademarks which it employs in connection with PRODUCTS and shall own and control such trademarks. KOSAN
recognizes the exclusive ownership by ORTHO of any proprietary ORTHO name, logotype or trademark furnished by ORTHO (including ORTHO’s AFFILIATES) for use in connection with the PRODUCT. KOSAN shall not, either while this AGREEMENT is in effect
or at any time thereafter, register, use or attempt to obtain any right in or to any such name. logotype or trademark or in and to any name, logotype or trademark confusingly similar thereto. 
  
 ARTICLE 17 
  
 INDEMNIFICATION 
  
 17.1 BY ORTHO. ORTHO agrees to indemnity and hold harmless,
KOSAN, its AFFILIATES and their respective officers, directors, employees and agents, and The Leland Stanford Jr. University, Stanford Health Services, Brown University, Brown University Research Foundation, and their respective, trustees, officers,
employees, students and agents (each a “KOSAN Indemnitee”) from and against any and all liability, damages, losses, claims, suits, proceedings, demands, recoveries or expenses, including reasonable attorney’s fees and expenses,
incurred or rendered against such KOSAN Indemnitees which arise out of or result from the use, testing, manufacture, processing, packaging, labeling, sale or distribution of PRODUCTS by ORTHO or its AFFILIATES or SUBLICENSEE; except to the extent
such liability, damages, losses, claims, suits, proceedings, demands, recoveries or expenses, incurred by or rendered against KOSAN are based upon the gross negligence or wilful misconduct by KOSAN or its AFFILIATES. 
  
 17.2 BY KOSAN. KOSAN agrees to indemnify and hold harmless,
LICENSEE, its AFFILIATES, and SUBLICENSEES and their respective officers, directors, employees and 

  

 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 24b-2 OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 

 
agents (each a “LICENSEE Indemnitee”) from and against any and all THIRD PARTY liability, damages, losses, claims, suits, proceedings, demands,
recoveries or expenses, including reasonable attorney’s fees and expenses, incurred or rendered against such LICENSEE Indemnitee(s) which arise out of or result from (i) the negligence or wilful misconduct by KOSAN or its AFFILIATES in carrying
out the RESEARCH PROGRAM under this AGREEMENT, or (ii) personal injury to KOSAN’s employees or agents or damage to KOSAN’s property resulting from acts performed by, under the direction of, or at the request of LICENSEE in carrying out
activities contemplated by this AGREEMENT; except to the extent such liability, damages, losses, claims, suits, proceedings, demands, recoveries or expenses, incurred by or rendered against LICENSEE are based upon the gross negligence or wilful
misconduct of a LICENSEE Indemnitee. 
  
 17.3
CONTROL. A party or person (the “Indemnitee”) that intends to claim indemnification under this Article 17 shall promptly notify the other party (the “Indemnitor”) in writing of any loss, claim, damage, liability, or
action in respect of which the Indemnitee or any of its AFFILIATES, SUBLICENSEES or their directors, officers, employees, agents or counsel intend to claim such indemnification, and the Indemnitor shall have the right to participate in, and, to the
extent the Indemnitor so desires, to assume the defense thereof with counsel chosen by Indemnitor, with consent of Indemnitee, which consent shall not be unreasonably withheld. The Indemnitee shall not enter into negotiations or enter into any
agreement with respect to the settlement of any claim without the prior written approval of the Indemnitor, and the indemnity agreement in this Article 17 shall not apply to amounts paid in settlement of any loss, claim, damage, liability, or action
if such settlement is made without the consent of the Indemnitor, which consent shall not be withheld unreasonably. 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. At the Indemnitor’s request, the Indemnitee under this Article 17, and its employees and agents, shall
cooperate fully with the Indemnitor and its legal representatives in the investigation and defense of any action, claim or liability covered by this indemnification and provide full information with respect thereto. 
  
 ARTICLE 18 
  
 BANKRUPTCY 
  
 All rights and licenses granted under or pursuant to this AGREEMENT by each
party are, and shall otherwise be deemed to be, for purposes of Section 365(n) of Title 11, United States Code (the “Bankruptcy Code”), licenses of rights to “intellectual property” as defined under Section 101(60) of the
Bankruptcy Code. The parties agree that LICENSEE shall retain and may fully exercise all of its rights and elections under the Bankruptcy Code. 
  

 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 24b-2 OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 

 ARTICLE 19 
  

TERM AND TERMINATION 
  
 19.1 TERM. 
  
 19.1.1 TERM OF AGREEMENT. This AGREEMENT shall commence upon the EFFECTIVE DATE and shall, unless sooner terminated pursuant
to any other provision of this AGREEMENT, continue in full force and effect until the latest of (i) the end of the RESEARCH TERM, or (ii) the date upon which LICENSEE ceases to have one or more PRODUCTS in active DEVELOPMENT or commercialization, or
(iii) for as long as royalties are payable according to the provisions of Article 7 herein. The licenses granted herein to LICENSEE shall expire on a country-by-country and PRODUCT-by-PRODUCT basis, once ORTHO has paid royalties for the full period
under which such royalty payments are due under Section 7.1 hereunder, and ORTHO and its AFFILIATES shall thereafter have a fully paid-up, irrevocable, non-exclusive license under the KOSAN KNOW-HOW to make, have made, USE, SELL and HAVE SOLD
PRODUCTS. 
  
 19.1.2 TERM AND
TERMINATION OF RESEARCH PROGRAM. 
  
 (a)
TERM. Unless earlier terminated as set forth in Section 19.1.2(b), the term of the RESEARCH PROGRAM shall be as set forth in Section 2.5, above. 
  
 (b) PERMISSIVE TERMINATION. With six (6) months’ prior written notice to KOSAN, LICENSEE may terminate the RESEARCH PROGRAM;
provided, however, that no such termination shall be effective prior to the date twenty-four (24) months following the EFFECTIVE DATE. 
  
 (c) WIND-DOWN PAYMENT. At the end of the RESEARCH TERM, ORTHO shall pay to KOSAN a “wind-down” payment equal to fifty percent
(50%) of the amount of RESEARCH FUNDING paid to KOSAN by LICENSEE in the twelve (12) months prior to the expiration of the RESEARCH TERM; provided, however, that if LICENSEE gave KOSAN prior written notice that the RESEARCH PROGRAM would not be
extended (by exercise of the option in Section 2.5(ii) or otherwise), then the amount of the “wind-down” payment shall be reduced as follows: (i) if such prior notice was given at least six (6) full months prior to the end of the RESEARCH
TERM, then ORTHO shall not owe any “wind-down” payment, and (ii) if such notice was given less than six (6) full months prior to the end of the RESEARCH PROGRAM, then the wind-down payment shall be reduced by one-sixth (1/6) for each full
month between the date KOSAN receives such written notice and the expiration or termination of the RESEARCH TERM. Notwithstanding the above, it is understood that if the Fast Track PROJECT is not extended beyond the first anniversary of the
AGREEMENT, then payments made by RWJPRI for the Fast Track Project shall not be included in the calculation of the “wind-down” payment. It is further understood and agreed that no “wind-down” payment 

  

 48. 
  

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

 
shall be due if the RESEARCH TERM remains in effect until the fourth anniversary of the EFFECTIVE DATE. 
  
 19.1.3 TERMINATION OF SCREENING. With sixty
(60) days prior written notice to KOSAN, RWJPRI may terminate the EXCLUSIVE SCREENING PERIOD and/or the NON-EXCLUSIVE SCREENING PERIOD. In the former case, RWJPRI’s right to exclusively screen the MACROLIDES for ANTIBIOTIC ACTIVITY shall
terminate as of the effective date of such notice, and in the latter case RWJPRI’s right to screen the MACROLIDES and AROMATIC POLYKETIDES for any activity shall terminate as of the effective date of such notice. 
  
 19.2 TERMINATION OF THE AGREEMENT. 
  
 19.2.1 PERMISSIVE TERMINATION FOLLOWING RESEARCH
TERM. After the end of the RESEARCH TERM, LICENSEE may (i) terminate this AGREEMENT in its entirety or (ii) terminate this AGREEMENT as to any PRODUCT, upon three (3) months written notice to KOSAN. At its sole discretion, KOSAN may on receipt
of such notice from LICENSEE immediately accelerate such termination of this AGREEMENT or PRODUCT, as the case may be, at any time within such three (3) month period. 
  
 19.2.2 FAILURE TO DESIGNATE MACROLIDE. In the event that LICENSEE has not designated at least
one MACROLIDE as a LICENSED COMPOUND prior to the end of the NON-EXCLUSIVE SCREENING PERIOD, then the AGREEMENT shall automatically terminate concurrently with the end of the NON-EXCLUSIVE SCREENING PERIOD. 
  
 19.2.3 MATERIAL BREACH. Notwithstanding any
other provisions of this AGREEMENT either party, at its option, may terminate this AGREEMENT on ninety (90) days prior written notice served by one party should the other party fail to comply with or perform its obligations hereunder, unless such
failure or non-performance is corrected within the ninety (90) day period following notification, or such extended period as may be agreed between the parties. In the event that KOSAN fails to comply with or perform its obligations hereunder during
the RESEARCH TERM, LICENSEE may, at its option, terminate the RESEARCH PROGRAM, and not the AGREEMENT, on ninety (90) days prior written notice, unless such failure or non-performance is corrected within the ninety (90) day period following
notification or such extended period as may be agreed by the parties. Failure to terminate this AGREEMENT following breach or failure to comply with this AGREEMENT shall not constitute a waiver of a party’s defenses, rights or causes of action
arising from such or any future breach or noncompliance. 
  
 19.2.4 BANKRUPTCY. If either party should be adjudicated bankrupt, file a voluntary petition in bankruptcy, have filed against it a petition for bankruptcy or reorganization unless such petition is
dismissed within sixty (60) days of filing, make a general assignment for the benefit of creditors, enter into a procedure of winding up to dissolution, or should a Trustee 

  

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

 
or Receiver be appointed for its business assets or operations, the other party shall be entitled to terminate this AGREEMENT forthwith by giving written
notice to the first party. 
  
 19.3 EFFECT OF
TERMINATION. 
  
 19.3.1 ACCRUED
RIGHTS AND OBLIGATIONS. Termination of this AGREEMENT for any reason shall not release any 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 any rights and remedies it may have hereunder or at law or in equity which accrued or are based upon any event occurring prior to such termination. 
  
 19.3.2 RETURN OF CONFIDENTIAL INFORMATION.
Upon any termination of this AGREEMENT, LICENSEE and KOSAN shall promptly return to the other party all Confidential Information received from the other party (except one copy of which may be retained by legal counsel solely for purposes of
monitoring compliance with the provisions of Article 9 and archival purposes). 
  
 19.3.3 LICENSES. 
  
 (a) In the event that the AGREEMENT terminates for any reason prior to the end of the RESEARCH PROGRAM other than pursuant to Section
19.1.2(b), the AGREEMENT and the licenses granted to LICENSEE in Sections 4.1 and 4.3 (and any license to its AFFILIATES under Section 4.6) shall terminate concurrently. 
  
 (b) In the event of any termination pursuant to Section 19.1.2(b), 19.1.3 or 19.2.2, the licenses granted to
LICENSEE in Sections 4.1 and 4.2.1 shall terminate concurrently, and the license granted to LICENSEE in Section 4.3 (and any license to its AFFILIATES under Section 4.6) shall terminate concurrently with respect to all MACROLIDES and AROMATIC
POLYKETIDES other than those designated as LICENSED COMPOUNDS pursuant to Section 3.5 prior to the effective date of such termination. In the event of any termination of this AGREEMENT pursuant to Section 19.2.1(ii) only with respect to one or more
PRODUCTS, the licenses granted to LICENSEE shall terminate only with respect to such PRODUCT and the LICENSED COMPOUNDS and/or DERIVATIVES contained in such PRODUCTS. 
  
 (c) In the event of any termination of this AGREEMENT in its entirety by LICENSEE pursuant to Section
19.2.1(i), 19.2.3 or 19.2.4, the licenses granted in Article 4 shall terminate concurrently. 
  
 (d) In the event of any termination of this AGREEMENT by KOSAN pursuant to Section 19.2.3 or 19.2.4, the licenses granted to LICENSEE (and
to its AFFILIATES) under this AGREEMENT shall terminate concurrently. 
  

 50. 
  

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

 (e) It is understood that, except as provided in Section 19.3.3(a), (c) and (d) above,
the licenses granted in Section 4.2.2 and 4.2.3 shall survive until the end of the NON-EXCLUSIVE SCREENING PERIOD. 
  
 (f) In the event of any termination of the RESEARCH PROGRAM (but not the AGREEMENT) by LICENSEE pursuant to Section 19.2.3 due to uncured
material breach by KOSAN, or a termination pursuant to Section 19.1.3, any licenses then in effect with respect to LICENSED COMPOUNDS designated as LICENSED COMPOUNDS pursuant to section 3.5.1, or identified as CLOSE STRUCTURAL ANALOGS pursuant to
Section 3.5.5, before the date of such termination shall remain in effect pursuant to the terms and conditions of this AGREEMENT, but RWJPRI shall not receive any further licenses under this AGREEMENT. 
  
 19.3.4 REVERSION. In the event that the
licenses to LICENSEE (and its AFFILIATES) terminate as described in Section 19.3.3 above, then LICENSEE undertakes the following: 
  
 (a) to deliver to KOSAN any KOSAN KNOW-HOW in its possession; 
  
 (b) not to use the KOSAN KNOW-HOW as long as it has to be kept confidential pursuant to Article 9 hereunder;

  
 (c) at KOSAN’s request, to transfer (and
grant the right to access, cross-reference and use, without charge) all RWJPRI KNOW-HOW, MARKETING AUTHORIZATIONS. pre-clinical and clinical data, and regulatory filings relating to LICENSED COMPOUNDS and PRODUCTS (including clinical studies and
other supporting information, and any written communications to and with the FDA and other comparable agencies), and any data relating to reportable adverse events in respect of PRODUCTS for use in connection with developing and commercializing, and
submitting regulatory filings for, PRODUCTS for which LICENSEE does not retain rights under this AGREEMENT and other products; 
  
 (d) to the extent requested by KOSAN, to transfer to KOSAN responsibility for and control of ongoing DEVELOPMENT work, including contracts
with THIRD PARTIES for such work, in an expeditious and orderly manner with the costs for such work assumed by KOSAN as of the date such contracts are transferred; and 
  
 (e) to grant to KOSAN an irrevocable, exclusive, worldwide paid-up license under RWJPRI PATENT RIGHTS and
RWJPRI KNOW-HOW owned or controlled by LICENSEE, with the right to grant and authorize sublicenses, to make, have made, USE, SELL and HAVE SOLD LICENSED COMPOUNDS and PRODUCTS, and provide KOSAN with all reasonable assistance to transfer the RWJPRI
KNOW-HOW and enable KOSAN to continue 

  

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

 
DEVELOPMENT and to make, have made, USE, SELL and HAVE SOLD LICENSED COMPOUNDS and PRODUCTS. 
  
 (f) It is understood that, in the event of a termination of licenses pursuant to Sections 19.3.3(b) or (f)
wherein LICENSEE retains certain licenses, the foregoing provisions of Section 19.3.4 shall apply only to the terminated rights and licenses. 
  
 19.4 SURVIVAL. Sections 2.4.5(d), 2.6.5, 2.8, 3.3.3, 3.4, 3.5.5, 3.7, 4.5, 4.12, 4.13, 4.14, 7.1, 7.5, 7.6, 7.7, 7.9, 7.10,
7.11, 10.1, 11.3, 11.4, 12.1, 12.4, 14.7, 18, 19.3 and 19.4 and the last sentence of Section 4.4, and Articles 9, 13, 17, 21 and 22 shall survive the expiration and any termination of the AGREEMENT for any reason. 
  
 ARTICLE 20 
  
 ASSIGNMENT 
  
 20.1 PERMITTED ASSIGNMENTS. This AGREEMENT or any interest
herein shall not be assigned or transferred, in whole or in part, by either party hereto without the prior written consent of the other party hereto. However, without securing such prior written consent, either party may assign this AGREEMENT to an
AFFILIATE or a successor of all or substantially all of its business to which this AGREEMENT relates provided, that no such assignment shall be binding and valid until and unless the assignee shall have assumed in a writing, delivered to the
non-assigning party, all of the duties and obligations of the assignor, and, provided, further, that the assignor shall remain liable and responsible to the non-assigning party hereto for the performance and observance of all such duties and
obligations. 
  
 20.2 BINDING EFFECT. This AGREEMENT
shall be binding upon, and inure to, the benefit of the parties hereto, and to the benefit of any permitted assignee or successor. LICENSEE shall also have the right, whether or not it elects to terminate this AGREEMENT, to require that all
reasonable steps it may reasonably specify be taken to prevent disclosure of its confidential information to an acquiror or assignee of KOSAN in any way reasonably adverse to its interests. 
  
 ARTICLE 21 
  
 DISPUTE RESOLUTION 
  
 21.1 DISCUSSION. The parties shall attempt in good faith to
resolve any dispute arising out of or relating to this AGREEMENT promptly by negotiations between the Chief Executive Officer of KOSAN and LICENSEE (who shall be the Chairman of RWJPRI for issues relating primarily to research and development, and
the President of ORTHO for issues relating to PRODUCT commercialization), who each have authority to settle the controversy and who are at a higher level of management than the persons with direct responsibility for administration of this AGREEMENT.
Any party may give the other party written notice of any dispute not 

  

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

 
resolved in the normal course of business. Within five (5) business days after receipt of the notice, the receiving party shall submit to the other a written
response. The notice and the response shall include a detailed statement of each party’s position and a summary of arguments supporting that position. Within five (5) days after delivery of the response, Chief Executive Officer of KOSAN and
LICENSEE (who shall be the Chairman of RWJPRI for issues relating primarily to research and development and the President of ORTHO for issues relating to PRODUCT commercialization) shall meet at a mutually acceptable time and place, and thereafter
as often as they reasonably deem necessary, to attempt to resolve the dispute. All reasonable requests for information made by one party to the other will be honored. All negotiations pursuant to this clause will be confidential and shall be treated
as compromise and settlement negotiations for the purposes of the Federal Rules of Evidence and all other evidentiary purposes. 
  
 21.2 MEDIATION. If the matter has not been resolved within twenty (20) days of the disputing party’s notice, or if the Chief Executive
Officer of KOSAN and LICENSEE (who shall be the Chairman of RWJPRI for issues relating primarily to research and development and the President of ORTHO for issues relating to PRODUCT commercialization) fail to meet within the time frame set forth in
Section 21.1, either party may initiate mediation of the dispute as set forth in Section 21.2 of this AGREEMENT. 
  
 (a) Any dispute, controversy or claim arising out of or related to this AGREEMENT, or the interpretation, application, breach, termination
or validity thereof, including any claim of inducement by fraud or otherwise, shall, before submission to arbitration, first be mediated through non-binding mediation in accordance with the Model Procedures for the Mediation of Business Disputes
promulgated by the Center for Public Resources (“CPR”) then in effect, except where those rules conflict with these provisions, in which case these provisions control. The mediation shall be conducted in New York, New York and shall be
attended by a senior executive with authority, to resolve the dispute from each of the operating companies that are parties. 
  
 (b) The mediator shall be an attorney specializing in business litigation who has at least fifteen (15) years of experience as a lawyer
with a law firm of over twenty-five (25) lawyers or was a judge of a court of general jurisdiction and who shall be appointed from the list of neutrals maintained by CPR. 
  
 (c) The parties shall promptly confer in an effort to select a mediator by mutual agreement. In the absence
of such an agreement, the mediator shall be selected from a list generated by CPR with each party, having the right to exercise challenges for cause and two peremptory challenges within three business days of receiving the CPR list. 
  
 (d) The mediator shall confer with the putties to design
procedures to conclude the mediation within no more than forty-five (45) days after initiation. Unless agreed upon by the parties in writing, under no circumstances shall the commencement of arbitration 

  

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

 
under Section 21.3 be delayed more than forty-five (45) days by the mediation process specified herein. 
  
 (e) Each party, agrees to toll all applicable statutes of
limitation during the mediation process and not to use the period or pendency of the mediation to disadvantage the other party procedurally or otherwise. All negotiations pursuant to this clause will be confidential and shall be treated as
compromise and settlement negotiations for the purposes of the Federal Rules of Evidence and all other evidentiary purposes. 
  
 21.3 ARBITRATION. 
  
 (a) Following the mediation procedures set forth in Section 21.2, Any dispute, claim or controversy arising from or related in any way to
this AGREEMENT or the interpretation, application, breach, termination or validity, thereof, including any claim of inducement of this AGREEMENT by fraud or otherwise, will be submitted for resolution to arbitration pursuant to the commercial
arbitration rules then pertaining of the Center for Public Resources (“CPR”), except where those rules conflict with these provisions, in which case these provisions control. The arbitration will be held in San Francisco, California.

  
 (b) The panel shall consist of three (3)
arbitrators chosen from the CPR Panels of Distinguished Neutrals each of whom (i) is a lawyer specializing in business litigation, with experience in litigation relating to development and commercialization of pharmaceutical products and whom has
never represented any party hereto or any of its Affiliates and whom has at least fifteen (15) years experience with a law from of over twenty-five (25) lawyers, or (ii) was a judge of a court of general jurisdiction and who has never represented
either party hereto or any of its Affiliates. 
  
 (c) The parties agree to cooperate (l) to obtain selection of the arbitrators within thirty (30) days of initiation of the arbitration, (2) to meet with the arbitrators within thirty (30) days of selection and (3) to agree at that meeting
or before upon procedures for discovery and as to the conduct of the hearing which will result in the hearing being concluded within no more than nine (9) months after selection of the arbitrators and in the award being rendered within sixty (60)
days of the conclusion of the hearings, or of any post-hearing briefing, which briefing will be completed by both parties within twenty (20) days after the conclusion of the hearings. In the event no such agreement is reached, the CPR will select
arbitrators, allowing appropriate strikes for reasons of conflict or other cause and three (3) peremptory challenges for each side. The arbitrators shall set a date for the hearing, commit to the rendering of the award within sixty (60) days of the
conclusion of the evidence at the hearing, or of any post-hearing briefing (which briefing will be completed by both sides in no more than twenty (20) days after the conclusion of the hearings), and provide for discovery according to these time
limits, giving recognition to the understanding of the parties hereto that they contemplate reasonable discovery, including document demands and depositions, but that such discovery be limited so that the time limits specified herein may be met
without undue difficulty. In no event will the arbitrators allow either side to obtain more than a total of forty (40) hours of deposition testimony from all 

  

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

 
witnesses, including both fact and expert witnesses. In the event multiple hearing days are required, they will be scheduled consecutively to the greatest
extent possible. 
  
 (d) The arbitrators shall
render their award following the substantive law of California, without reference to principles of conflicts of law. The arbitrators shall render an opinion setting forth findings of fact and conclusions of law with the reasons therefor stated. A
transcript of the evidence adduced at the hearing shall be made and shall, upon request, be made available to either party. 
  
 (e) To the extent possible, the arbitration hearings and award will be maintained in confidence. 
  
 (f) Any United States District Court having jurisdiction of
the matter may enter judgment upon any award. In the event the panel’s award exceeds Five Million Dollars ($5,000,000) in monetary, damages or includes or consists of equitable relief, then the court shall vacate, modify or correct any award
where the arbitrators’ findings of fact are clearly erroneous, and/or where the arbitrators’ conclusions of law are erroneous; in other words, it will undertake the same review as if it were a federal appellate court reviewing a district
court’s findings of fact and conclusions of law rendered after a bench trial. An award for less than Five Million Dollars ($5,000,000) in damages and not including equitable relief may be vacated, modified or corrected only upon the grounds
specified in the Federal Arbitration Act. The parties consent to the jurisdiction of the District Court for the enforcement of these provisions, the entry of judgment on any award, and the vacatur, modification and correction of any award as above
specified. 
  
 (g) Each party has the right
before or during the arbitration to seek and obtain from the appropriate court provisional remedies such as attachment, preliminary injunction, replevin, etc. to avoid irreparable harm, maintain the status quo, or preserve the subject matter of the
arbitration. 
  
 (h) EACH PARTY HERETO WAIVES ITS
RIGHT TO TRIAL OF ANY ISSUE BY JURY. 
  
 (i)
SUBJECT TO THE PROVISIONS OF ARTICLE 17, EACH PARTY HERETO WAIVES ANY CLAIM TO PUNITIVE, EXEMPLARY AND CONSEQUENTIAL DAMAGES FROM THE OTHER. 
  
 ARTICLE 22 
  
 MISCELLANEOUS 
  
 22.1 ENTIRE AGREEMENT. Before signing this AGREEMENT the parties have had numerous conversations, including preliminary discussions, formal negotiations and informal conversations at meals and social
occasions, and have generated correspondence and 

  

 55. 
  

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

 
other writings, in which the parties discussed the transaction which is the subject of this AGREEMENT and their aspirations for its success. In such
conversations and writings, individuals representing the parties may have expressed their judgments and beliefs concerning the intentions, capabilities, and practices of the parties, and may have forecasted future events. The parties recognize that
such conversations and writings often involve an effort by both sides to be positive and optimistic about the prospects for the transaction. It is also recognized, however, that all business transactions contain an element of risk, as does the
transaction contemplated by this AGREEMENT and that it is normal business practice to limit the legal obligations of contracting parties to only those promises and representations which are essential to their transaction so as to provide certainty
as to their respective future rights and remedies. Accordingly, it is agreed that this AGREEMENT constitutes the entire agreement and understanding between the parties as to the legal undertakings hereunder. All prior negotiations, representations,
agreements, contracts, offers and earlier understandings of whatsoever kind, whether written or oral between KOSAN and LICENSEE in respect of this AGREEMENT, are superseded by, merged into, extinguished by and completely expressed by this AGREEMENT.
No aspect, part or wording of this AGREEMENT may be modified except by mutual agreement between the KOSAN and LICENSEE taking the form of an instrument in writing signed and dated by duly authorized representatives of both KOSAN and LICENSEE.

  
 22.2 NOTICES. All communications, reports,
payments and notices required by this AGREEMENT by one party to the other shall be addressed to the parties at their respective addresses set forth below or to such other address as requested by either party by notice in writing to the other.

  
 If to KOSAN: 
  
 KOSAN BIOSCIENCES, INC. 
 1450 Rollins Road 
 Burlingame, California 94010 
 Attn: President 
 Telefax No.: (650) 343-2931 
  
 With a copy to: 
  
 Wilson Sonsini Goodrich & Rosati, P.C. 
 650 Page Mill Road 
 Palo Alto, California 94304 
 Arm: Michael S. Rabson 
 Telefax No.: (415) 496-4006 
  

 56. 
  

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

 If to RWJPRI, ORTHO or LICENSEE: 
  
 ORTHO-MCNEIL PHARMACEUTICAL CORPORATION 
 1000 U.S. Route 202, 
 Raritan. New Jersey 08869 
 Attention: President 
 Telefax No.: (908) 218-1416 
  
 With a copy to: 
  
 Chief Patent Counsel 
 Johnson & Johnson 
 One Johnson & Johnson Plaza 
 New Brunswick, New Jersey 08903 
 Telefax No.: (908) 524-2808 
  
 AND 
  
 R.W.
JOHNSON PHARMACEUTICAL RESEARCH INSTITUTE 
 920 U.S. Route 202 
 Raritan. New Jersey 08869 
 Attention: Chairman 
 Telefax No.: (908) 704-9486 
  
 All such notices, reports, payments and communications shall be made in writing by telefax to
the numbers set forth above or by First Class mail, postage prepaid, and shall be considered made as of the date of deposit with the United States Post Office or when received by telefax. 
  
 22.3 GOVERNING LAW. All matters affecting the interpretation, validity, and performance of this AGREEMENT,
including any arbitration proceeding conducted pursuant to Article 21, shall be governed by the internal laws of the State of California without regard to its conflict of law principles, except as to any issue which by California law depends upon
the validity, scope or enforceability of any patent within the PATENT RIGHTS, which issue shall be determined in accordance with the applicable patent laws of the country of such patent. 
  
 22.4 SEVERABILITY. Should any part or provision of this AGREEMENT be held unenforceable or in conflict with
the law of any jurisdiction, the validity of the remaining part or provisions shall not be affected by such holdings; provided that the parties shall use their best efforts to negotiate an enforceable provision that most nearly reflects the parties
original intentions. 
  
 22.5 WAIVER. The waiver by
either party, whether express or implied, of any provisions of this AGREEMENT, or of any breach or default of either party, shall not be construed to be a continuing waiver of such provision, or of any succeeding breach or default or of a waiver of
any other provisions of this AGREEMENT. 
  

 57. 
  

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

 22.6 NO REPRESENTATIONS. Notwithstanding anything to the contrary, in this AGREEMENT,
nothing herein contained shall be construed as a representation by KOSAN that the PATENT RIGHTS can be or will be used to prevent the importation by a THIRD PARTY hereto of a product into or the SALE or USE by a THIRD PARTY hereto of a product in
any country within the PATENT RIGHTS where such product shall have been placed in commerce under circumstances which preclude the use of the PATENT RIGHTS to prevent such importation or SALE or USE by reason of any applicable law or treaty.

  
 22.7 FORCE MAJEURE. Notwithstanding any other
provisions of this AGREEMENT, neither of the parties hereto shall be liable in damages or have the right to terminate this AGREEMENT for any delay or default in performing hereunder if such delay or default is caused by conditions beyond its control
including, but not limited to acts of God, governmental restrictions, wars, or insurrections, strikes, floods, earthquakes, work stoppages and/or lack of materials, and any time for performance hereunder shall be extended for the actual time of
delay caused by such occurrence; provided, however, that the party suffering such delay or default shall notify the other party in writing of the reasons for the delay or default and shall diligently seek to correct such conditions, if such reasons
for delay or default continuously exist for twelve (12) months, this AGREEMENT may be terminated by either party. 
  
 22.8 INDEPENDENT CONTRACTORS. It is understood that both parties hereto are independent contractors and are engaged in the operation of
their own respective businesses, and neither hereto is to be considered the agent or partner of the other for any purpose whatsoever. Neither party has any authority to enter into any contracts or assume any obligations for the other party or make
any warranties or representations on behalf of the other party. 
  
 22.9 ADVICE OF COUNSEL. KOSAN and LICENSEE have each consulted counsel of their choice regarding this AGREEMENT, and each acknowledges and agrees that this AGREEMENT shall not be deemed to have been drafted by one party or
another and will be construed accordingly. 
  
 22.10
PATENT MARKING. LICENSEE agrees to mark and have its AFFILIATES and SUBLICENSEES mark all PRODUCTS they sell or distribute pursuant to this AGREEMENT in accordance with the applicable statute or regulations in the country, or countries of
manufacture and sale thereof. 
  
 22.11 COMPLIANCE WITH
LAWS. Each party, shall furnish to the other party any information requested or required by that party during the term of this AGREEMENT or any extensions hereof to enable that party, to comply with the requirements of any U.S. or foreign
federal, state and/or government agency. Each party shall comply with all applicable U.S., foreign, state, regional and local laws, rules and regulations relating to its activities to be performed pursuant to this AGREEMENT, including without
limitation, the United States Foreign Corrupt Practices Act, United States export regulations and such other United States and foreign laws and regulations as may be applicable, and to obtaining all necessary approvals, 

  

 58. 
  

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

 
consents and permits required by the applicable agencies of the government of the United States and foreign jurisdictions. 
  
 22.12 FURTHER ASSURANCES. At any time or from time to time on
and after the date of this AGREEMENT, each party shall at the request of the other party (i) deliver to such party such records, data or other documents consistent with the provisions of this AGREEMENT, (ii) execute, and deliver or cause to be
delivered, all such consents, documents or further instruments of transfer or license, and (iii) take or cause to be taken all such actions, as the requesting party may reasonably deem necessary or desirable in order for the requesting party to
obtain the full benefits of this AGREEMENT and the transactions contemplated hereby. 
  
 22.13 JOINT AND SEVERAL LIABILITY: PERFORMANCE WARRANTY. Notwithstanding any other provision of this AGREEMENT, it is understood and agreed that ORTHO and RWJPRI shall be jointly and severally liable for
the obligations of ORTHO and RWJPRI under this AGREEMENT. LICENSEE hereby warrants and guarantees the performance of any and all rights and obligations of this AGREEMENT by its AFFILIATE(S) and SUBLICENSEE(S) including, without limitation,
performance under any license granted pursuant to Section 4.3, 4.5, or 4.6 above. 
  
 22.14 USE OF SINGULAR. As used in this AGREEMENT, singular includes the plural and plural includes the singular, wherever so required by the context. 
  
 22.15 HEADINGS. The captions to the several Sections and
Articles hereof are not a part of this AGREEMENT, but are included merely for convenience of reference only and shall not affect its meaning or interpretation. 
  

22.16 COUNTERPARTS. This AGREEMENT may be executed in two counterparts, each of which shall be deemed an original and which together
shall constitute one immanent. 
  
 IN
WITNESS WHEREOF, the parties hereto have hereunto set their hands and duly executed this AGREEMENT on the date(s) indicated below, to be effective the day and year first above written. 
  
 For and on Behalf of KOSAN BIOSCIENCES, INC. 
  

	For and on Behalf of KOSAN BIOSCIENCES, INC.
		
	By:	 	 /s/ Daniel V. Santi

	 	

	 Name:
	 	 Daniel Santi

	 Title:
	 	 Chairman

	 Date:
	 	 Sept 28-98

  

 59. 
  

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

 For and on Behalf of ORTHO-MCNEIL PHARMACEUTICAL INC. 
  

		
	By:	 	 /s/ Robert G. Savage

	 	

	 	 	 Robert G. Savage, President

	 Date:
	 	 9-29-98

  
 For and on Behalf of THE R.W. JOHNSON
PHARMACEUTICALS RESEARCH INSTITUTE 
  

		
	By:	 	 /s/ William A.M. Duncan

	 	

	 	 	 William A.M. Duncan, Chairman

	 Date:
	 	 9-29-28

  

 60. 
  

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

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

 EXHIBIT A 
  
 RESEARCH PLAN 
  
 PART I. FAST -TRACK PROJECT 
  
 OBJECTIVES AND SPECIFIC AIMS 
  
 [**] 
  
 REFERENCES 
  
 Jacobsen, J.R., Hutchinson, C.R., Cane, D.E., &
Khosla, C. (1997) “Precursor-directed biosynthesis of erythromycin analogs by an engineered polyketide synthase,” SCIENCE 277: 367-369. 
  
 Zotchev, S.B., & Hutchinson, C.R. (1995) “Cloning and heterologous expression of the genes encoding nonspecific electron transport components for a cytochrome
P450 system of SACCHAROPOLYSPORA ERYTHRAEA involved in erythromycin production,” GENE 156: 101-106. 
  

 PART II. SAR PROJECT 
  
 OBJECTIVE AND SPECIFIC AIMS 
  
 [**] 
  
 [**] 
  
 REFERENCES 
  
 Andersen, J.F., Tatsuta, K., Gunji, H., Ishiyama, T., & Hutchinson, C.R. (1993)
“Substrate specificity of 6-deoxyerythronolide B hydroxylase, a bacterial cytochrome P450 of erythromycin A biosynthesis,” BIOCHEMISTRY 32:1905-1913. 
  

Bright, G.M., Nagel, A.A., Bordner, J., ET AL. (1988) “Synthesis, IN VITRO and IN VIVO activity of novel 9-deoxo-9a-aza-9a-homoerythromycin A derivatives; a new
class of macrolide antibiotics, the azalides,” J. ANTIBIOTICS 41: 1029-1047. 
  
 Griesgraber, G., Or Y.S., Chu, D.T.W., Nilius, A.M., Johnson, P.M., Flamm, R.K., Henry, R.F., & Plattner, J.J. (1996) “3-keto-11,12 carbazate derivatives of 6-O-methyl erythromycin A: synthesis and IN VITRO activity,” J.
ANTIBIOTICS 49(5): 465-477. 
  
 Jacobsen, J.R., Hutchinson, C.R., Cane, D.E.,
& Khosla, C. (1997) “Precursor-directed biosynthesis of erythromycin analogs by an engineered polyketide synthase,” SCIENCE 277: 367-369. 
  
 Kao, C.M., Luo, G., Katz, L., Cane, D.E., & Khosla, C. (1995) “Manipulation of macrolide ring size by directed mutagenesis of a modular polyketide
synthase,” J. AM. CHEM. SOC. 117: 9105-9106. 
  
 Kealey, J.T., Liu, L.,
Santi, D.V., Betlach, M.C., & Barr, P.J. (1997) “Production of a polyketide natural product in non-polyketide producing prokaryotic and eukaryotic hosts,” PROC. NATL. ACAD. SCI. USA, in press. 
  
 Liu, L., Thamchaipenet, A., Fu, H., Betlach, M., & Ashley, G. (1997) “Biosynthesis
of 2-nor-6-deoxyerythronolide B by rationally designed domain substitution,” J. AM. CHEM. SOC. 119: 10553-10554. 
  
 McDaniel, R., Kao, C.M., Fu, H., Hevezi, P., Gustafsson, C., Betlach, M., Ashley, G., Cane, D.E., & Khosla, C. (1997) “Gain-of-function mutagenesis of a modular
polyketide synthase,” J. AM. CHEM. SOC. 119: 4309-4310. 
  

 2. 
  

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

 Morimoto, S., Takahashi, Y., Watanabe, Y., & Omura, S. (1984) “Chemical modification of erythromycins. I.
Synthesis and antibacterial activity of 6-O-methylerythromycins A,” J., ANTIBIOTICS 37:187-189. 
  
 Ruan, X., Pereda, A., Stassi, D., Zeidner, D., Summers, R.G., Jackson, M., Shivakumar, A., Kakavas, S., Staver, M.J., Donadio, S., & Katz, L. (1997) “Acyltransferase Domain substitutions in erythromycin
polyketide synthase yield novel erythromycin derivatives, “J. BACTERIOLOGY 179:6416-6425. 
  
 Zotchev, S.B., & Hutchinson, C.R. (1995) “Cloning and heterologous expression of the genes encoding nonspecific electron transport components for a cytochrome P450 system of SACCHAROPOLYSPORA ERYTHRAEA
involved in erythromycin production,” GENE 156: 101-106. 
  

 3. 
  

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

 PART III.CRITERIA FOR NCES 
  
 [**] 
  

 4. 
  

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

 PART IV.FTE TABLES AND TIMELINES 
  
 The table below shows the number and cost of Kosan FTEs to be applied in the Fast-Track and
SAR Projects though the course of the Research Program. 
  
 [**] 
  
 [**] 
  

 

 5. 
  

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

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

 EXHIBIT B 
  
 AROMATIC POLYKETIDES 
  
 [**] 
  
 KOS002 CONCENTRATION DATA 
  

	WELL

	 	EXTRACT

	 	PEAK RT

	 	COMPOUND

	 	MW

	 	CONC(mM)

	 A2
	 	KE-001	 	7.55	 	KA-058	 	302	 	0.8
	 A2
	 	KE-001	 	11.41	 	KA-060	 	302	 	0.1
	 A2
	 	KE-001	 	11.81	 	KA-061	 	302	 	1.1
	 A2
	 	KE-001	 	14.65	 	KA-042	 	284	 	0.8
	 A3
	 	KE-007	 	10.60	 	KA-100	 	368	 	0.2
	 A3
	 	KE-007	 	11.90	 	KA-118	 	386	 	0.3
	 A3
	 	KE-007	 	15.25	 	KA-119	 	386	 	2.4
	 A3
	 	KE-007	 	15.44	 	KA-120	 	386	 	0.6
	 A3
	 	KE-007	 	19.17	 	KA-075	 	324	 	0.2
	 A4
	 	KE-014	 	6.31	 	KA-068	 	318	 	2.3
	 A4
	 	KE-014	 	7.52	 	KA-069	 	318	 	2.5
	 A4
	 	KE-014	 	10.28	 	KA-056	 	300	 	0.2
	 A4
	 	KE-014	 	10.93	 	KA-057	 	300	 	0.1
	 A4
	 	KE-014	 	21.75	 	KA-031	 	270	 	0.1
	 A5
	 	KE-023	 	6.37	 	KA-068	 	318	 	1.0
	 A5
	 	KE-023	 	7.57	 	KA-069	 	318	 	1.0
	 A5
	 	KE-023	 	10.33	 	KA-056	 	300	 	0.1
	 A6
	 	KE-030	 	15.32	 	KA-119	 	386	 	1.3
	 A7
	 	KE-038	 	10.47	 	KA-100	 	368	 	0.3
	 A7
	 	KE-038	 	11.95	 	KA-118	 	386	 	0.2
	 A7
	 	KE-038	 	15.28	 	KA-119	 	386	 	4.0
	 A7
	 	KE-038	 	15.76	 	KA-120	 	386	 	0.9
	 A7
	 	KE-038	 	25.08	 	KA-074	 	322	 	0.8
	 A8
	 	KE-045	 	10.58	 	KA-100	 	368	 	0.1
	 A8
	 	KE-045	 	12.93	 	KA-102	 	368	 	1.1
	 A8
	 	KE-045	 	15.35	 	KA-119	 	386	 	4.6
	 A8
	 	KE-045	 	15.83	 	KA-120	 	386	 	1.0
	 A8
	 	KE-045	 	19.25	 	KA-075	 	324	 	0.1
	 A8
	 	KE-045	 	23.01	 	KA-121	 	386	 	0.5
	 A8
	 	KE-045	 	23.66	 	KA-122	 	386	 	0.7
	 A8
	 	KE-045	 	25.06	 	KA-108	 	372	 	3.1
	 A9
	 	KE-073	 	11.43	 	KA-101	 	368	 	1.1
	 A9
	 	KE-073	 	13.38	 	KA-005	 	182	 	1.4
	 A9
	 	KE-073	 	13.88	 	KA-150	 	453	 	0.4
	 A9
	 	KE-073	 	14.78	 	KA-151	 	453	 	0.5

  

	WELL

	 	EXTRACT

	 	PEAK RT

	 	COMPOUND

	 	MW

	 	CONC(mM)

	 A9
	 	KE-073	 	15.03	 	KA-127	 	392	 	0.9
	 A9
	 	KE-073	 	15.60	 	KA-125	 	390	 	0.4
	 A9
	 	KE-073	 	16.18	 	KA-128	 	392	 	0.7
	 A9
	 	KE-073	 	16.71	 	KA-018	 	236	 	0.4
	 A9
	 	KE-073	 	18.18	 	KA-138	 	413	 	1.0
	 A9
	 	KE-073	 	18.70	 	KA-136	 	411	 	0.9
	 A9
	 	KE-073	 	19.76	 	KA-142	 	427	 	0.2
	 A9
	 	KE-073	 	20.31	 	KA-139	 	413	 	0.3
	 A9
	 	KE-073	 	20.75	 	KA-140	 	413	 	0.2
	 A9
	 	KE-073	 	21.25	 	KA-129	 	392	 	2.0
	 A9
	 	KE-073	 	22.24	 	KA-126	 	390	 	1.7
	 A9
	 	KE-073	 	23.65	 	KA-137	 	411	 	0.2
	 A9
	 	KE-073	 	25.00	 	KA-109	 	374	 	0.7
	 A9
	 	KE-073	 	26.58	 	KA-088	 	348	 	1.0
	 A10
	 	K005-83	 	26.73	 	KA-025	 	254	 	1.0
	 A11
	 	K005-92D	 	 	 	[**]	 	390	 	1.0
	 B2
	 	KE-002	 	7.82	 	KA-058	 	302	 	1.9
	 B2
	 	KE-002	 	11.30	 	KA-059	 	302	 	0.6
	 B2
	 	KE-002	 	12.05	 	KA-061	 	302	 	4.0
	 B2
	 	KE-002	 	14.87	 	KA-042	 	284	 	0.9
	 B2
	 	KE-002	 	19.57	 	KA-052	 	298	 	1.1
	 B2
	 	KE-002	 	21.13	 	KA-053	 	298	 	0.8
	 B2
	 	KE-002	 	21.30	 	KA-054	 	298	 	0.4
	 B2
	 	KE-002	 	21.98	 	KA-064	 	312	 	8.3
	 B2
	 	KE-002	 	22.96	 	KA-044	 	286	 	2.2
	 B2
	 	KE-002	 	23.75	 	KA-038	 	283	 	3.1
	 B2
	 	KE-002	 	24.53	 	KA-055	 	298	 	0.4
	 B2
	 	KE-002	 	25.40	 	KA-040	 	283	 	5.9
	 B2
	 	KE-002	 	26.76	 	KA-025	 	254	 	9.1
	 B2
	 	KE-002	 	27.10	 	KA-050	 	297	 	2.2
	 B2
	 	KE-002	 	28.05	 	KA-022	 	240	 	3.1
	 B2
	 	KE-002	 	29.21	 	KA-023	 	240	 	2.4
	 B3
	 	KE-060	 	10.27	 	KA-100	 	368	 	0.1
	 B3
	 	KE-060	 	13.71	 	KA-150	 	453	 	0.3
	 B3
	 	KE-060	 	14.64	 	KA-046	 	290	 	0.7
	 B3
	 	KE-060	 	15.19	 	KA-119	 	386	 	1.8
	 B3
	 	KE-060	 	15.71	 	KA-120	 	386	 	0.5
	 B3
	 	KE-060	 	16.55	 	KA-135	 	411	 	0.2
	 B3
	 	KE-060	 	18.58	 	KA-136	 	411	 	0.4
	 B3
	 	KE-060	 	26.28	 	KA-114	 	382	 	0.9

  

 2. 
  

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

	WELL

	 	EXTRACT

	 	PEAK RT

	 	COMPOUND

	 	MW

	 	CONC(mM)

	 B4
	 	KE-016	 	12.78	 	KA-102	 	368	 	9.3
	 B4
	 	KE-016	 	15.97	 	KA-105	 	370	 	2.5
	 B4
	 	KE-016	 	16.73	 	KA-106	 	370	 	0.4
	 B4
	 	KE-016	 	21.43	 	KA-089	 	350	 	0.5
	 B5
	 	KE-064	 	6.38	 	KA-068	 	318	 	1.1
	 B5
	 	KE-064	 	7.59	 	KA-069	 	318	 	0.5
	 B5
	 	KE-064	 	10.15	 	KA-065	 	315	 	2.2
	 B5
	 	KE-064	 	10.33	 	KA-056	 	300	 	 
	 B5
	 	KE-064	 	11.90	 	KA-001	 	166	 	0.3
	 B5
	 	KE-064	 	12.26	 	KA-002	 	166	 	0.1
	 B5
	 	KE-064	 	16.58	 	KA-030	 	260	 	0.4
	 B6
	 	KE-031	 	9.83	 	KA-116	 	384	 	0.7
	 B6
	 	KE-031	 	11.86	 	KA-098	 	366	 	0.3
	 B7
	 	KE-039	 	8.00	 	KA-058	 	302	 	4.7
	 B7
	 	KE-039	 	11.81	 	 	 	302	 	0.3
	 B7
	 	KE-039	 	12.23	 	KA-061	 	302	 	4.8
	 B7
	 	KE-039	 	14.97	 	KA-042	 	284	 	3.0
	 B8
	 	KE-046	 	10.00	 	KA-115	 	384	 	2.8
	 B9
	 	KE-075	 	14.93	 	KA-148	 	450	 	1.0
	 B9
	 	KE-075	 	15.96	 	KA-153	 	464	 	0.4
	 B9
	 	KE-075	 	16.65	 	KA-146	 	448	 	0.1
	 B9
	 	KE-075	 	17.56	 	KA-154	 	464	 	0.2
	 B10
	 	K005-80	 	19.30	 	KA-052	 	298	 	1.0
	 B11
	 	K005-92E	 	 	 	[**]	 	924	 	1.0
	 C2
	 	KE-058	 	13.13	 	KA-083	 	342	 	1.3
	 C2
	 	KE-058	 	13.68	 	KA-051	 	298	 	0.7
	 C2
	 	KE-058	 	14.38	 	KA-093	 	356	 	0.4
	 C2
	 	KE-058	 	15.08	 	KA-095	 	360	 	0.1
	 C2
	 	KE-058	 	16.30	 	KA-009	 	196	 	0.5
	 C2
	 	KE-058	 	16.51	 	KA-010	 	196	 	0.9
	 C2
	 	KE-058	 	16.96	 	KA-079	 	332	 	0.2
	 C2
	 	KE-058	 	17.55	 	KA-080	 	332	 	0.2
	 C2
	 	KE-058	 	18.98	 	KA-086	 	346	 	0.3
	 C2
	 	KE-058	 	19.41	 	KA-087	 	346	 	0.2
	 C3
	 	KE-062	 	6.15	 	KA-026	 	258	 	0.7
	 C3
	 	KE-062	 	7.86	 	KA-058	 	302	 	0.8
	 C3
	 	KE-062	 	11.40	 	KA-059	 	302	 	0.7
	 C3
	 	KE-062	 	12.07	 	KA-061	 	302	 	3.8
	 C3
	 	KE-062	 	14.88	 	KA-042	 	284	 	2.6
	 C3
	 	KE-062	 	16.51	 	KA-013	 	220	 	0.5

  

 3. 
  

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

	WELL

	 	EXTRACT

	 	PEAK RT

	 	COMPOUND

	 	MW

	 	CONC(mM)

	 C3
	 	KE-062	 	19.08	 	KA-052	 	298	 	6.7
	 C3
	 	KE-062	 	19.51	 	KA-036	 	283	 	4.4
	 C3
	 	KE-062	 	21.30	 	KA-037	 	283	 	2.0
	 C3
	 	KE-062	 	22.85	 	KA-121	 	386	 	0.5
	 C3
	 	KE-062	 	23.78	 	KA-038	 	283	 	1.1
	 C3
	 	KE-062	 	25.00	 	KA-039	 	283	 	0.9
	 C3
	 	KE-062	 	26.76	 	KA-025	 	254	 	1.5
	 C4
	 	KE-017	 	9.68	 	KA-115	 	384	 	0.8
	 C5
	 	KE-063	 	6.48	 	KA-068	 	318	 	6.8
	 C5
	 	KE-063	 	7.78	 	KA-069	 	318	 	3.2
	 C5
	 	KE-063	 	10.42	 	KA-065	 	314	 	0.3
	 C5
	 	KE-063	 	14.83	 	KA-151	 	453	 	0.9
	 C6
	 	KE-032	 	10.08	 	KA-024	 	242	 	0.2
	 C6
	 	KE-032	 	15.10	 	KA-119	 	386	 	1.5
	 C6
	 	KE-032	 	15.58	 	KA-120	 	386	 	0.3
	 C7
	 	KE-068	 	10.28	 	KA-056	 	300	 	1.5
	 C7
	 	KE-068	 	10.96	 	KA-057	 	300	 	1.4
	 C8
	 	KE-047	 	8.12	 	KA-058	 	302	 	0.4
	 C8
	 	KE-047	 	11.48	 	KA-059	 	302	 	1.1
	 C8
	 	KE-047	 	12.25	 	KA-061	 	302	 	2.0
	 C8
	 	KE-047	 	14.62	 	KA-041	 	284	 	1.4
	 C8
	 	KE-047	 	15.01	 	KA-042	 	284	 	0.2
	 C9
	 	KE-053	 	5.35	 	KA-067	 	318	 	0.7
	 C9
	 	KE-053	 	10.95	 	KA-152	 	462	 	0.5
	 C9
	 	KE-053	 	14.03	 	KA-148	 	450	 	0.4
	 C9
	 	KE-053	 	15.73	 	KA-153	 	464	 	0.7
	 C9
	 	KE-053	 	16.00	 	KA-146	 	448	 	0.7
	 C10
	 	K005-88	 	 	 	KA-092	 	354	 	 
	 C11
	 	K005-92F	 	 	 	erythromycin	 	734	 	1.0
	 D2
	 	KE-057	 	5.28	 	KA-067	 	318	 	0.3
	 D2
	 	KE-057	 	5.76	 	KA-032	 	276	 	0.3
	 D2
	 	KE-057	 	6.18	 	KA-070	 	319	 	0.9
	 D2
	 	KE-057	 	7.43	 	KA-071	 	319	 	0.2
	 D2
	 	KE-057	 	12.60	 	KA-141	 	421	 	0.3
	 D2
	 	KE-057	 	13.13	 	KA-083	 	342	 	1.1
	 D2
	 	KE-057	 	13.73	 	KA-150	 	453	 	0.3
	 D2
	 	KE-057	 	14.41	 	KA-132	 	407	 	0.2
	 D2
	 	KE-057	 	14.80	 	KA-133	 	409	 	0.2
	 D2
	 	KE-057	 	18.58	 	KA-136	 	411	 	0.4
	 D3
	 	KE-009	 	5.73	 	KA-016	 	234	 	0.2

  

 4. 
  

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

	WELL

	 	EXTRACT

	 	PEAK RT

	 	COMPOUND

	 	MW

	 	CONC(mM)

	 D3
	 	KE-009	 	7.62	 	KA-058	 	302	 	1.3
	 D3
	 	KE-009	 	8.68	 	KA-165	 	302	 	0.4
	 D3
	 	KE-009	 	11.20	 	KA-059	 	302	 	1.3
	 D3
	 	KE-009	 	11.90	 	KA-061	 	302	 	1.5
	 D3
	 	KE-009	 	12.46	 	KA-072	 	322	 	1.2
	 D3
	 	KE-009	 	14.76	 	KA-041	 	284	 	0.8
	 D3
	 	KE-009	 	17.15	 	KA-020	 	304	 	0.6
	 D3
	 	KE-009	 	19.20	 	KA-052	 	298	 	0.5
	 D3
	 	KE-009	 	19.65	 	KA-164	 	620	 	0.1
	 D3
	 	KE-009	 	21.31	 	KA-163	 	618	 	0.1
	 D3
	 	KE-009	 	26.70	 	KA-025	 	254	 	0.7
	 D4
	 	KE-018	 	7.95	 	KA-058	 	302	 	1.6
	 D4
	 	KE-018	 	11.75	 	KA-060	 	302	 	0.1
	 D4
	 	KE-018	 	12.12	 	KA-061	 	302	 	2.3
	 D4
	 	KE-018	 	14.93	 	KA-042	 	284	 	1.6
	 D5
	 	KE-025	 	10.05	 	KA-115	 	384	 	4.5
	 D5
	 	KE-025	 	15.05	 	KA-017	 	234	 	0.6
	 D5
	 	KE-025	 	17.85	 	KA-111	 	380	 	0.4
	 D6
	 	KE-033	 	5.75	 	KA-012	 	210	 	0.2
	 D6
	 	KE-033	 	9.82	 	KA-115	 	384	 	0.9
	 D6
	 	KE-033	 	11.93	 	KA-098	 	366	 	0.8
	 D7
	 	KE-042	 	6.25	 	KA-026	 	258	 	0.9
	 D7
	 	KE-042	 	19.12	 	KA-052	 	298	 	5.0
	 D7
	 	KE-042	 	19.45	 	KA-036	 	283	 	5.4
	 D7
	 	KE-042	 	21.25	 	KA-037	 	283	 	1.6
	 D7
	 	KE-042	 	23.73	 	KA-038	 	283	 	2.6
	 D7
	 	KE-042	 	25.25	 	KA-040	 	283	 	3.2
	 D7
	 	KE-042	 	26.88	 	KA-025	 	254	 	5.2
	 D7
	 	KE-042	 	28.09	 	KA-022	 	240	 	4.2
	 D7
	 	KE-042	 	29.20	 	KA-023	 	240	 	3.6
	 D7
	 	KE-042	 	32.00	 	KA-158	 	508	 	0.1
	 D8
	 	KE-048	 	12.03	 	KA-077	 	326	 	1.4
	 D8
	 	KE-048	 	14.63	 	KA-041	 	284	 	0.4
	 D9
	 	KE-074	 	14.91	 	KA-148	 	450	 	1.2
	 D9
	 	KE-074	 	15.96	 	KA-153	 	464	 	0.2
	 D10
	 	K003-89	 	 	 	KA-064	 	312	 	1.0
	 D11
	 	K005-92G	 	 	 	[**]	 	 	 	1.0
	 E2
	 	KE-004	 	11.96	 	KA-061	 	302	 	0.3
	 E2
	 	KE-004	 	18.56	 	KA-094	 	358	 	0.2
	 E2
	 	KE-004	 	19.21	 	KA-052	 	298	 	1.3

  

 5. 
  

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

	WELL

	 	EXTRACT

	 	PEAK RT

	 	COMPOUND

	 	MW

	 	CONC(mM)

	 E2
	 	KE-004	 	23.75	 	KA-043	 	284	 	0.4
	 E2
	 	KE-004	 	24.85	 	KA-035	 	282	 	0.8
	 E2
	 	KE-004	 	25.84	 	KA-021	 	240	 	0.4
	 E2
	 	KE-004	 	26.78	 	KA-025	 	254	 	2.2
	 E2
	 	KE-004	 	28.06	 	KA-022	 	240	 	0.3
	 E2
	 	KE-004	 	29.23	 	KA-023	 	240	 	0.2
	 E3
	 	KE-061	 	7.86	 	KA-058	 	302	 	0.6
	 E3
	 	KE-061	 	12.11	 	KA-061	 	302	 	1.7
	 E3
	 	KE-061	 	14.68	 	KA-049	 	291	 	0.7
	 E3
	 	KE-061	 	14.90	 	KA-097	 	365	 	1.1
	 E3
	 	KE-061	 	18.60	 	KA-136	 	411	 	0.3
	 E3
	 	KE-061	 	19.13	 	KA-052	 	298	 	5.7
	 E3
	 	KE-061	 	19.43	 	KA-036	 	283	 	7.3
	 E3
	 	KE-061	 	21.25	 	KA-037	 	283	 	4.8
	 E3
	 	KE-061	 	23.77	 	KA-038	 	283	 	4.8
	 E3
	 	KE-061	 	24.90	 	KA-078	 	330	 	1.3
	 E3
	 	KE-061	 	25.41	 	KA-040	 	283	 	3.5
	 E3
	 	KE-061	 	26.80	 	KA-025	 	254	 	2.1
	 E3
	 	KE-061	 	28.00	 	KA-022	 	240	 	1.7
	 E3
	 	KE-061	 	29.00	 	KA-023	 	240	 	1.3
	 E4
	 	KE-019	 	7.91	 	KA-058	 	302	 	2.0
	 E4
	 	KE-019	 	11.80	 	KA-060	 	302	 	0.1
	 E4
	 	KE-019	 	12.19	 	KA-061	 	302	 	1.6
	 E4
	 	KE-019	 	14.96	 	KA-042	 	284	 	1.6
	 E5
	 	KE-026	 	9.80	 	KA-116	 	384	 	1.2
	 E5
	 	KE-026	 	11.85	 	KA-098	 	366	 	2.8
	 E5
	 	KE-026	 	12.16	 	KA-061	 	302	 	0.4
	 E5
	 	KE-026	 	12.73	 	KA-117	 	384	 	2.3
	 E5
	 	KE-026	 	13.23	 	KA-066	 	314	 	1.4
	 E6
	 	KE-035	 	9.93	 	KA-115	 	384	 	4.0
	 E7
	 	KE-043	 	22.45	 	KA-082	 	340	 	2.2
	 E7
	 	KE-043	 	26.83	 	KA-025	 	254	 	0.5
	 E8
	 	KE-049	 	12.92	 	KA-102	 	368	 	14.0
	 E8
	 	KE-049	 	16.08	 	KA-105	 	370	 	2.6
	 E8
	 	KE-049	 	16.83	 	KA-106	 	370	 	0.5
	 E8
	 	KE-049	 	21.50	 	KA-089	 	350	 	0.8
	 E9
	 	KE-077	 	14.85	 	KA-148	 	450	 	1.0
	 E9
	 	KE-077	 	16.23	 	KA-153	 	464	 	0.7
	 E10
	 	K005-82	 	9.80	 	[**]	 	457	 	0.9
	 E11
	 	K005-92H	 	 	 	[**]	 	 	 	1.0

  

 6. 
  

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

	WELL

	 	EXTRACT

	 	PEAK RT

	 	COMPOUND

	 	MW

	 	CONC(mM)

	 F2
	 	KE-005	 	7.88	 	KA-058	 	302	 	0.8
	 F2
	 	KE-005	 	11.38	 	KA-059	 	302	 	0.7
	 F2
	 	KE-005	 	12.1	 	KA-061	 	302	 	2.0
	 F2
	 	KE-005	 	14.9	 	KA-042	 	284	 	0.3
	 F2
	 	KE-005	 	19.2	 	KA-052	 	298	 	3.9
	 F2
	 	KE-005	 	19.55	 	KA-036	 	283	 	2.8
	 F2
	 	KE-005	 	21.35	 	KA-037	 	283	 	1.8
	 F2
	 	KE-005	 	22.85	 	KA-121	 	386	 	0.2
	 F2
	 	KE-005	 	23.75	 	KA-038	 	283	 	2.8
	 F2
	 	KE-005	 	25.43	 	KA-040	 	283	 	2.7
	 F2
	 	KE-005	 	26.73	 	KA-025	 	254	 	6.0
	 F2
	 	KE-005	 	28.06	 	KA-022	 	240	 	1.9
	 F2
	 	KE-005	 	29.23	 	KA-023	 	240	 	1.4
	 F3
	 	KE-010	 	17.08	 	KA-159	 	512	 	0.3
	 F3
	 	KE-010	 	19.22	 	KA-048	 	290	 	0.7
	 F3
	 	KE-010	 	21.00	 	KA-062	 	304	 	0.4
	 F3
	 	KE-010	 	22.40	 	KA-082	 	340	 	1.4
	 F3
	 	KE-010	 	23.05	 	KA-157	 	500	 	0.7
	 F3
	 	KE-010	 	24.60	 	KA-035	 	282	 	0.4
	 F3
	 	KE-010	 	26.76	 	KA-162	 	531	 	0.3
	 F4
	 	KE-020	 	7.94	 	KA-058	 	302	 	5.1
	 F4
	 	KE-020	 	11.75	 	KA-060	 	302	 	0.4
	 F4
	 	KE-020	 	12.15	 	KA-061	 	302	 	5.4
	 F4
	 	KE-020	 	14.96	 	KA-042	 	284	 	3.6
	 F5
	 	KE-027	 	9.93	 	KA-116	 	384	 	0.3
	 F5
	 	KE-027	 	11.90	 	KA-098	 	366	 	0.8
	 F5
	 	KE-027	 	12.83	 	KA-117	 	384	 	1.5
	 F5
	 	KE-027	 	13.31	 	KA-073	 	322	 	0.3
	 F6
	 	KE-036	 	9.83	 	KA-115	 	384	 	1.4
	 F6
	 	KE-036	 	17.70	 	KA-111	 	380	 	0.1
	 F7
	 	KE-044	 	7.26	 	KA-034	 	280	 	0.7
	 F7
	 	KE-044	 	9.18	 	KA-028	 	260	 	0.2
	 F7
	 	KE-044	 	12.91	 	KA-085	 	346	 	0.6
	 F7
	 	KE-044	 	16.50	 	KA-063	 	310	 	0.2
	 F7
	 	KE-044	 	18.68	 	KA-094	 	358	 	0.2
	 F7
	 	KE-044	 	20.15	 	KA-045	 	288	 	2.0
	 F7
	 	KE-044	 	21.10	 	KA-062	 	304	 	0.4
	 F7
	 	KE-044	 	22.45	 	KA-082	 	340	 	1.7
	 F8
	 	KE-070	 	10.05	 	KA-115	 	384	 	0.2
	 F8
	 	KE-070	 	12.95	 	KA-102	 	368	 	9.0

  

 7. 
  

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

	WELL

	 	EXTRACT

	 	PEAK RT

	 	COMPOUND

	 	MW

	 	CONC(mM)

	 F8
	 	KE-070	 	13.38	 	KA-103	 	368	 	0.6
	 F8
	 	KE-070	 	16.06	 	KA-105	 	370	 	1.6
	 F8
	 	KE-070	 	16.83	 	KA-106	 	370	 	0.3
	 F8
	 	KE-070	 	26.36	 	KA-114	 	382	 	1.5
	 F9
	 	KE-055	 	 	 	none	 	 	 	0.0
	 F10
	 	K005-92A	 	14.80	 	[**]	 	527	 	1.0
	 F11
	 	K005-92J	 	 	 	[**]	 	 	 	1.0
	 G2
	 	KE-006	 	5.95	 	KA-016	 	234	 	0.5
	 G2
	 	KE-006	 	6.95	 	KA-084	 	344	 	0.4
	 G2
	 	KE-006	 	12.08	 	KA-090	 	352	 	0.1
	 G2
	 	KE-006	 	18.60	 	KA-047	 	290	 	0.3
	 G2
	 	KE-006	 	19.33	 	KA-052	 	298	 	0.7
	 G2
	 	KE-006	 	21.01	 	KA-062	 	304	 	0.3
	 G2
	 	KE-006	 	22.36	 	KA-082	 	340	 	0.8
	 G2
	 	KE-006	 	26.76	 	KA-025	 	254	 	1.3
	 G3
	 	KE-012	 	19.30	 	KA-052	 	298	 	0.2
	 G3
	 	KE-012	 	22.43	 	KA-082	 	340	 	1.0
	 G3
	 	KE-012	 	24.58	 	KA-076	 	325	 	0.1
	 G3
	 	KE-012	 	25.03	 	KA-110	 	378	 	0.1
	 G3
	 	KE-012	 	26.78	 	KA-025	 	254	 	0.3
	 G4
	 	KE-021	 	10.38	 	KA-100	 	368	 	0.2
	 G4
	 	KE-021	 	15.23	 	KA-119	 	386	 	3.5
	 G4
	 	KE-021	 	15.78	 	KA-120	 	386	 	0.9
	 G4
	 	KE-021	 	23.58	 	KA-014	 	222	 	1.1
	 G4
	 	KE-021	 	25.01	 	KA-074	 	322	 	3.3
	 G5
	 	KE-065	 	3.18	 	KA-006	 	194	 	2.9
	 G5
	 	KE-065	 	9.96	 	KA-116	 	384	 	1.1
	 G5
	 	KE-065	 	11.20	 	KA-098	 	366	 	0.1
	 G5
	 	KE-065	 	12.86	 	KA-117	 	384	 	2.4
	 G5
	 	KE-065	 	13.36	 	KA-066	 	314	 	0.6
	 G5
	 	KE-065	 	14.76	 	KA-046	 	290	 	1.2
	 G5
	 	KE-065	 	25.00	 	KA-107	 	370	 	1.2
	 G6
	 	KE-037	 	15.26	 	KA-119	 	386	 	1.9
	 G6
	 	KE-037	 	15.76	 	KA-120	 	386	 	0.4
	 G6
	 	KE-037	 	25.06	 	KA-107	 	370	 	1.3
	 G7
	 	KE-069	 	28.28	 	KA-092	 	354	 	0.8
	 G8
	 	KE-071	 	6.01	 	KA-032	 	276	 	0.4
	 G8
	 	KE-071	 	10.20	 	KA-124	 	388	 	0.4
	 G8
	 	KE-071	 	12.76	 	KA-027	 	258	 	1.4
	 G8
	 	KE-071	 	14.80	 	KA-046	 	290	 	1.8

  

 8. 
  

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

	WELL

	 	EXTRACT

	 	PEAK RT

	 	COMPOUND

	 	MW

	 	CONC(mM)

	 G8
	 	KE-071	 	18.66	 	KA-136	 	411	 	0.7
	 G8
	 	KE-071	 	21.63	 	KA-155	 	464	 	1.3
	 G9
	 	KE-072	 	7.05	 	KA-011	 	207	 	0.1
	 G9
	 	KE-072	 	9.31	 	KA-130	 	398	 	0.2
	 G9
	 	KE-072	 	10.23	 	KA-015	 	232	 	0.1
	 G9
	 	KE-072	 	12.76	 	KA-156	 	486	 	0.2
	 G9
	 	KE-072	 	16.16	 	KA-008	 	196	 	0.3
	 G9
	 	KE-072	 	17.90	 	KA-147	 	448	 	0.1
	 G9
	 	KE-072	 	21.56	 	KA-144	 	446	 	0.2
	 G9
	 	KE-072	 	22.51	 	KA-033	 	276	 	0.3
	 G9
	 	KE-072	 	23.45	 	KA-KA-145	 	446	 	0.2
	 G9
	 	KE-072	 	25.00	 	KA-123	 	386	 	0.1
	 G10
	 	K0005-92B	 	24.15	 	[**]	 	1183	 	1.0
	 G11
	 	K005-92K	 	 	 	[**]	 	848	 	1.0
	 H2
	 	KE-059	 	5.87	 	KA-096	 	362	 	2.0
	 H2
	 	KE-059	 	6.85	 	KA-084	 	344	 	2.8
	 H2
	 	KE-059	 	14.53	 	KA-019	 	240	 	0.4
	 H2
	 	KE-059	 	19.28	 	KA-048	 	290	 	0.4
	 H2
	 	KE-059	 	23.12	 	KA-043	 	284	 	0.6
	 H2
	 	KE-059	 	28.20	 	KA-091	 	354	 	1.1
	 H3
	 	KE-013	 	12.83	 	KA-102	 	368	 	5.5
	 H3
	 	KE-013	 	22.95	 	KA-113	 	382	 	1.4
	 H4
	 	KE-022	 	10.40	 	KA-100	 	368	 	0.7
	 H4
	 	KE-022	 	11.95	 	KA-118	 	386	 	0.7
	 H4
	 	KE-022	 	13.03	 	KA-102	 	368	 	1.1
	 H4
	 	KE-022	 	15.21	 	KA-119	 	386	 	4.0
	 H4
	 	KE-022	 	15.78	 	KA-120	 	386	 	2.0
	 H4
	 	KE-022	 	16.90	 	KA-104	 	368	 	1.0
	 H4
	 	KE-022	 	18.73	 	KA-094	 	358	 	1.1
	 H4
	 	KE-022	 	19.21	 	KA-099	 	366	 	1.1
	 H5
	 	KE-028	 	5.28	 	KA-067	 	318	 	0.2
	 H5
	 	KE-028	 	9.56	 	KA-003	 	168	 	0.5
	 H5
	 	KE-028	 	11.63	 	KA-098	 	366	 	2.6
	 H5
	 	KE-028	 	12.56	 	KA-117	 	384	 	1.1
	 H5
	 	KE-028	 	18.56	 	KA-094	 	358	 	0.1
	 H6
	 	KE-066	 	9.77	 	KA-115	 	384	 	6.8
	 H6
	 	KE-066	 	14.75	 	KA-046	 	290	 	0.4
	 H6
	 	KE-066	 	17.73	 	KA-111	 	380	 	0.4
	 H6
	 	KE-066	 	19.38	 	KA-112	 	380	 	0.3
	 H6
	 	KE-066	 	26.30	 	KA-114	 	382	 	0.2

  

 9. 
  

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

	WELL

	 	EXTRACT

	 	PEAK RT

	 	COMPOUND

	 	MW

	 	CONC(mM)

	 H7
	 	KE-106	 	16.53	 	KA-063	 	310	 	0.2
	 H7
	 	KE-106	 	19.43	 	KA-081	 	340	 	0.3
	 H7
	 	KE-106	 	23.24	 	KA-043	 	284	 	2.6
	 H7
	 	KE-106	 	24.22	 	 	 	1183	 	1.9
	 H7
	 	KE-106	 	27.50	 	KA-007	 	194	 	0.7
	 H7
	 	KE-106	 	29.75	 	KA-131	 	398	 	1.2
	 H8
	 	KE-050	 	9.25	 	KA-134	 	410	 	0.3
	 H8
	 	KE-050	 	11.43	 	KA-101	 	368	 	0.3
	 H8
	 	KE-050	 	13.36	 	KA-029	 	260	 	0.3
	 H8
	 	KE-050	 	16.18	 	KA-008	 	196	 	0.9
	 H8
	 	KE-050	 	18.16	 	KA-149	 	452	 	0.1
	 H8
	 	KE-050	 	21.23	 	KA-129	 	392	 	0.3
	 H8
	 	KE-050	 	23.65	 	KA-004	 	176	 	0.6
	 H8
	 	KE-050	 	25.05	 	KA-109	 	374	 	1.3
	 H8
	 	KE-050	 	26.56	 	KA-088	 	348	 	0.8
	 H9
	 	KE-054	 	15.20	 	[**]	 	444	 	1.6
	 H9
	 	KE-054	 	18.96	 	unknown	 	444	 	0.2
	 H10
	 	K005-92C	 	 	 	[**]	 	 	 	1.0
	 H11
	 	K005-92L	 	 	 	[**]	 	318	 	1.0

  
  

 10. 
  

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

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

 EXHIBIT C 
  
 KOSAN PATENT RIGHTS 
  
 [**] 
  
 [**]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00058-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00058-of-00352.parquet"}]]