Document:

Mortgage by the Company in favor of JPMorgan Chase Bank, N.A.

 Exhibit 10.4 
 JPMORGAN CHASE BANK, N.A. 
 MORTGAGE 
 THIS MORTGAGE is made as of May 12, 2008, by MATERIAL SCIENCES CORPORATION, a Delaware corporation (“Mortgagor”),
with a mailing address at 2200 East Pratt Boulevard, Elk Grove Village, Illinois, to JPMORGAN CHASE BANK, N.A. (“Lender”), with a mailing address at 10 South Dearborn Street, 22nd Floor, Chicago, Illinois 60603, and pertains
to the real estate described in Exhibit A, which is attached hereto and hereby made a part hereof. 
 I 
 RECITALS 
 1.1 Credit Agreement and
Note. Whereas, Mortgagor is party to a Credit Agreement (the “Credit Agreement”) of even date herewith with Lender pursuant to which Lender has extended a loan (the “Loan”) to Mortgagor, which Loan is memorialized by a
Revolving Loan Note of even date in the original principal amount of $15,000,000.00 (the “Note”), payable to Lender by Mortgagor; 
 1.2 Other Loan Documents. Whereas, as security for the repayment of the Loan, in addition to this Mortgage, certain other loan documents as described in Exhibit B, which is attached hereto and made a part hereof, have been
executed and delivered to Lender (the Note, the Credit Agreement this Mortgage, the other loan documents described in said Exhibit B, and all other documents whether now or hereafter existing, that are executed and delivered as additional
evidence of or security for repayment of the Loan or other loans are hereinafter referred to collectively as the “Loan Documents”); and 
  

					
	Prepared by and after recording return to:	  	Property Common Address:
		
	Kenneth M. Lodge	  	2200-2300 East Pratt Boulevard
	Locke Lord Bissell & Liddell, LLP	  	Elk Grove Village, Illinois
	111 South Wacker Drive, 45th Floor	  	
	Chicago, Illinois 60606	  		  	
			
		  	PIN(s):	  	08-35-403-011
		  		  	08-35-403-012
		  		  	08-35-403-013
		  		  	08-35-403-071

 1.3 This Mortgage. Whereas, as security for the repayment of the Loan and all other obligations or
liabilities now or hereafter due from Mortgagor to Lender pursuant to the Loan Documents as same may be amended from time to time, Mortgagor is required by the Loan Documents to execute and deliver to Lender this Mortgage. 
 II 
 THE GRANT 
 Now, therefore, to secure (i) the payment of the principal amount of the Note and interest thereon and the performance of the agreements contained
hereinbelow, (ii) the payment of any and all other indebtedness, direct or contingent, that may now or hereafter become owing from the Mortgagor to Lender under the Credit Agreement and other Loan Documents, and all renewals, extensions and
amendments thereof, and (iii) the performance of all other obligations under the Loan Documents, and in consideration of the matters recited hereinabove, Mortgagor hereby grants, bargains, sells, conveys, and mortgages to Lender and its
successors and assigns forever the real estate, and all of its estate, right, title, and interest therein, situated in the County of Cook, State of Illinois, as more particularly described in Exhibit A, which is attached hereto and made a
part hereof (the “Premises”), together with the following described property (the Premises and the following described property being hereinafter referred to collectively as the “Mortgaged Property”), all of which
other property is hereby pledged on a parity with the Premises and not secondarily: 
  

	 	(a)	all buildings and other improvements of every kind and description now or hereafter erected or placed thereon and all materials intended for construction, reconstruction,
alteration, and repair of such improvements now or hereafter erected thereon, all of which materials shall be deemed to be included within the Mortgaged Property immediately upon the delivery thereof to the Premises; 

  

	 	(b)	All right, title, and interest of Mortgagor, including any after-acquired title or reversion, in and to the beds of the ways, streets, avenues, sidewalks, and alleys adjoining the
Premises; 

  

	 	(c)	Each and all of the tenements, hereditaments, easements, appurtenances, passages, waters, water courses, riparian rights, other rights, liberties, and privileges of the Premises or
in any way now or hereafter appertaining thereto, including homestead and any other claim at law or in equity, as well as any after-acquired title, franchise, or license and the reversions and remainders thereof; 

  

	 	(d)	all rents, issues, deposits, and profits accruing and to accrue from the Premises and the avails thereof; and 

  

	 	(e)	 all fixtures and personal property now or hereafter owned by Mortgagor and attached to or contained in and used or useful in 

  

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connection with the Premises or the aforesaid improvements thereon, including without limitation any and all air conditioners, antennae, appliances,
apparatus, awnings, basins, bathtubs, boilers, bookcases, cabinets, carpets, coolers, curtains, dehumidifiers, disposals, doors, drapes, dryers, ducts, dynamos, elevators, engines, equipment, escalators, fans, fittings, floor coverings, furnaces,
furnishings, furniture, hardware, heaters, humidifiers, incinerators, lighting, machinery, motors, ovens, pipes, plumbing, pumps, radiators, ranges, recreational facilities, refrigerators, screens, security systems, shades, shelving, sinks,
sprinklers, stokers, stoves, toilets, ventilators, wall coverings, washers, windows, window coverings, wiring, and all renewals or replacements thereof or articles in substitution therefore, whether or not the same be attached to such improvements,
it being intended, agreed, and declared that all such property owned by Mortgagor and placed by it on the Premises or used in connection with the operation or maintenance thereof shall, so far as permitted by law, be deemed for the purpose of this
Mortgage to be part of the real estate constituting and located on the Premises and covered by this Mortgage, and as to any of the aforesaid property that is not part of such real estate or does not constitute a “fixture,” as such term is
defined in the Uniform Commercial Code of the state in which the Premises are located, this Mortgage shall be deemed to be, as well, a security agreement under such Uniform Commercial Code for the purpose of creating hereby a security interest in
such property, which Mortgagor hereby grants to the Lender as “secured party,” as such term is defined in such Code. 

 To have and to hold the same unto Lender and its successors and assigns forever, for the purposes and uses herein set forth. 
 Provided, however, that if and when the Mortgagor has paid the principal amount of the Note and all interest as provided thereunder, has paid any and all other amounts evidenced by or required under the Loan Documents, and has performed all
of the agreements contained in the Loan Documents, then this Mortgage shall be released at the cost of the Mortgagor, but otherwise shall remain in full force and effect and provided further that the aggregate principal indebtedness secured hereby
shall in no event exceed $30,000,000.00. 
 III 
 GENERAL AGREEMENTS 
 3.1 Principal and Interest. The Loan Parties (as defined in the Credit
Agreement) shall pay promptly when due the principal and interest on the indebtedness evidenced by the Note at the times and in the manner provided in the Note, this Mortgage, or any of the other Loan Documents. 
  

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 3.2 Other Payments. At Lender’s request, which will only be made after the occurrence of an
Event of Default, the Mortgagor shall deposit with Lender or a depositary designated by Lender, in addition to the monthly installments required by the Note, monthly until the principal indebtedness evidenced by the Note is paid: 
  

	 	(a)	a sum equal to all real estate taxes and assessments (“taxes”) next due on the Mortgaged Property, all as estimated by Lender, divided by the whole number of months
to elapse before the month prior to the date when such taxes will become due and payable; and 

  

	 	(b)	a sum equal to an installment of the premium or premiums that will become due and payable to renew the insurance as required in Paragraph 3.5 hereof, each installment to be in such
an amount that the payment of approximately equal installments will result in the accumulation of a sufficient sum of money to pay renewal premiums for such insurance at least one (1) month prior to the expiration or renewal date or dates of
the policy or policies to be renewed. 

 All such payments described in this Paragraph 3.2 shall be held by Lender or a
depositary designated by Lender, in trust, without accruing, or without any obligation arising for the payment of, any interest thereon. If the funds so deposited are insufficient to pay, when due, all taxes and premiums as aforesaid, Mortgagor
shall, within ten (10) business days after receipt of demand therefore from Lender or its agent, deposit such additional funds as may be necessary to pay such taxes and premiums. If the funds so deposited exceed the amounts required to
pay such items, the excess shall be applied to a subsequent deposit or deposits. 
 Neither Lender nor any such depositary shall be liable
for any failure to make such payments of insurance premiums or taxes unless Mortgagor, while not in default hereunder, has requested Lender or such depositary, in writing, to make application of such deposits to the payment of particular insurance
premiums or taxes, accompanied by the bills for such insurance premiums or taxes; provided, however, that Lender may, at its option, make or cause such depositary to make any such application of the aforesaid deposits without any direction or
request to do so by Mortgagor. 
 3.3 Property Taxes. Mortgagor shall pay immediately, when first due and owing, all general taxes,
special taxes, special assessments, water charges, sewer charges, and any other charges that may be asserted against the Property or any part thereof or interest therein, and to furnish to Lender duplicate receipts therefore within thirty
(30) days after payment thereof. Provided, however, that unless any waiver by Lender of the monthly deposits required by Paragraph 3.2(a) hereof is then in effect, Lender, at its option, either may make such deposits available to Mortgagor
for the payments required under this Paragraph 3.3 or may make such payments on behalf of Mortgagor. Mortgagor may, in good faith and with reasonable diligence, contest the validity or amount of any such taxes or assessments, provided that:

  

	 	(a)	such contest shall have the effect of preventing the collection of the tax or assessment so contested and the sale or forfeiture of the Mortgaged Property or any part thereof or
interest therein to satisfy the same; 

  

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	 	(b)	Mortgagor has notified Lender in writing of the intention of Mortgagor to contest the same before any tax or assessment has been increased by any interest, penalties, or costs; and

  

	 	(c)	Mortgagor has deposited with Lender, at such place as Lender may from time to time in writing designate, a sum of money or other security acceptable to Lender that, when added to
the monies or other security, if any, deposited with Lender pursuant to Paragraph 3.2 hereof, is sufficient, in Lender’s judgment, to pay in full such contested tax and assessment and all penalties and interest that might become due thereon,
and shall keep on deposit an amount sufficient, in Lender’s judgment, to pay in full such contested tax and assessment, increasing such amount to cover additional penalties and interest whenever, in Lender’s judgment, such increase is
advisable. 

 In the event Mortgagor fails to prosecute such contest with reasonable diligence or fails to maintain sufficient
funds on deposit as hereinabove provided, Lender may, at its option, apply the monies and liquidate any securities deposited with Lender, in payment of, or on account of, such taxes and assessments, or any portion thereof then unpaid, including all
penalties and interest thereon. If the amount of the money and any such security so deposited is insufficient for the payment in full of such taxes and assessments, together with all penalties and interest thereon, Mortgagor shall forthwith, upon
demand, either deposit with Lender a sum that, when added to such funds then on deposit, is sufficient to make such payment in full, or, if Lender has applied funds on deposit on account of such taxes and assessments, restore such deposit to an
amount satisfactory to Lender. Provided that Mortgagor is not then in default hereunder, Lender shall, if so requested in writing by Mortgagor, after final disposition of such contest and upon Mortgagor’s delivery to Lender of an official bill
for such taxes, apply the money so deposited in full payment of such taxes and assessments or that part thereof then unpaid, together with all penalties and interest thereon. 
 3.4 Tax Payments by Lender. Upon prior written notice to Mortgagor, Lender is hereby authorized to make or advance, in the place and stead of
Mortgagor, any payment relating to taxes, assessments, water and sewer charges, and other governmental charges, fines, impositions, or liens that may be asserted against the Property, or any part thereof, and may do so according to any bill,
statement, or estimate procured from the appropriate public office without inquiry into the accuracy thereof or into the validity of any tax, assessment, lien, sale, forfeiture, or title or claim relating thereto. Upon prior written notice to
Mortgagor, Lender is further authorized to make or advance, in the place and stead of Mortgagor, any payment relating to any apparent or threatened adverse title, lien, statement of lien, encumbrance, claim, 

  

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charge, or payment otherwise relating to any other purpose herein and hereby authorized, but not enumerated in this Paragraph 3.4, whenever, in its judgment
and discretion, such advance seems necessary or desirable to protect the full security intended to be created by this Mortgage. Failure by Bank to give prior written notice of its intention to make payment under this Section 3.4 shall not
affect Mortgagor’s obligation to repay such advances. In connection with any such advance, Lender is further authorized, at its option, to obtain a continuation report of title or title insurance policy prepared by a title insurance company of
Lender’s choosing. All such advances and indebtedness authorized by this Paragraph 3.4 shall constitute additional indebtedness secured hereby and shall be repayable by the Mortgagor within ten (10) business days following written demand
with interest if not paid when due at the default rate of interest provided in the Loan Agreement. 
 3.5 Insurance. 
  

	 	(a)	Hazard. Mortgagor shall keep the improvements now existing or hereafter erected on the Mortgaged Property insured under a replacement cost form of insurance policy
(without depreciation and without co-insurance) against loss or damage resulting from fire, windstorm, and other hazards as may be required by Lender, and to pay promptly, when due, any premiums on such insurance. Provided, however, that
unless any waiver by Lender of the monthly deposits required by Paragraph 3.2(b) hereof is then in effect, Lender, at its option, either may make such deposits available to Mortgagor for the payments required under this Paragraph 3.5 or may make
such payments on behalf of Mortgagor. All such insurance shall be in form and of content, and shall be carried in companies, approved by Lender, and all such policies and renewals thereof (or certificates evidencing the same), marked
“paid,” shall be delivered to Lender before the expiration of then existing policies and shall have attached thereto standard non-contributory mortgagee clauses entitling Lender to collect any and all proceeds payable under such insurance,
as well as standard waiver of subrogation endorsements. Mortgagor shall not carry any separate insurance on such improvements concurrent in kind or form with any insurance required hereunder or contributing in the event of loss. In the event of a
change in ownership or occupancy of the Premises, which must have been approved in writing in advance by Lender, immediate notice thereof by mail shall be delivered to all such insurers. In the event of any casualty loss, Mortgagor shall give
immediate notice thereof by mail to Lender. 

  

	 	(b)	 Upon the occurrence of a “Major Casualty” (as hereinafter defined), full power is hereby conferred on Lender: (i) to settle and compromise all
claims under all policies after consultation with mortgagor; (ii) to demand, receive and receipt for all monies becoming due and/or payable under all policies; (iii) to execute, in the name of Mortgagor or in the name of Lender, any proofs
of loss, 

  

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notices or other instruments in connection with all claims under all policies; and (iv) to assign all policies in the event of the foreclosure of this
Mortgage or other transfer of title to the Mortgaged Property. In the event of payment under any of the policies, the proceeds of the policies shall be paid by the insurer to Lender and Lender shall, subject to the next succeeding paragraph:
(i) apply such proceeds, wholly or partially, after deducting all costs of collection, including reasonable attorneys’ fees, either (A) toward the alteration, reconstruction, repair or restoration of the Mortgaged Property or any
portion thereof; or (B) as a payment on account of the Mortgagor’s liabilities under the Note (without affecting the amount or time of subsequent installment payments required to be made by the Mortgagor to Lender under the Note),
whether or not then due or payable; or (ii) deliver the same to Mortgagor. 

 Upon the occurrence of a fire
or other casualty to the Mortgaged Property that does not constitute a Major Casualty, and notwithstanding any provision to the contrary contained in this Mortgage, Mortgagor may insist upon the restoration of the improvements previously located on
the Premises (the “Improvements”), provided that all proceeds for rebuilding or restoring the Improvements shall be deposited by the insurance carrier into an account (the “Escrow”) at a title insurance and escrow
company reasonably acceptable to Lender (the “Title Company”) pursuant to an Escrow Trust Agreement between Mortgagor, and Lender, if applicable; and the Title Company must insure that the insurance proceeds are disbursed only as
work is completed to the Improvements and only after the Title Company has reviewed the condition of title to the Premises to verify that (A) the title policy issued to Lender in connection with the Loan is continued through the date of such
disbursement with certification over mechanic lien claims in the amount of the proceeds disbursed to date and (B) no new exceptions to title have arisen that are asserted to be superior to the lien of this Mortgage or have not previously been
approved in writing by Lender other than taxes not due and payable. In such event, and provided the conditions of this paragraph and the paragraph below have been satisfied, Lender shall make the “Insurance Payment” (as that term is
hereinafter defined) available for the cost of restoration or rebuilding of Improvements. 
 In any instance in which the
Improvements are being restored, the following conditions will govern: 
  

					
		 	(i)	  	The funds deposited into the Escrow shall be sufficient at all times to complete the restoration. If the funds become insufficient during the course of the restoration to complete the
restoration, Mortgagor shall within ten (10) days of notice of the deficiency from the Title Company or Lender, deposit the amount of the deficiency into the Escrow;

  

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		 	(ii)	  	Debt service on all indebtedness secured by mortgage liens on the Mortgaged Property during the reconstruction period shall be fully insured and payable from the proceeds of existing rental
insurance or adequate reserves shall be established to pay such debt service;
			
		 	(iii)	  	The provisions of the Escrow shall require that all costs associated with the Escrow, including, without limitation, examination of title and issuance of title policy endorsements, shall be
paid by Mortgagor;
			
		 	(iv)	  	The restoration of the Improvements shall not materially alter the configuration, design or appearance of the Improvements immediately prior to the casualty; and
			
		 	(v)	  	The reconstruction shall be in compliance with all applicable building codes, environmental regulations and zoning ordinances.

 If the contract for reconstruction of Improvements contains a five percent
(5%) retainage clause, the proceeds deposited into the Escrow shall be disbursed pursuant to sworn owner’s and contractor’s statements satisfactory to the Title Company without additional holdbacks. 
 For purposes of this Agreement, a “Major Casualty” shall be deemed to consist of the following: (i) a fire or other
casualty loss to the Mortgaged Property that results or will result in a payment (the “Insurance Payment”) by the carrier insuring the Mortgaged Property of $500,000 or more or (ii) a fire or other casualty loss to the
Mortgaged Property necessitating reconstruction or rebuilding of the Improvements that (A) in the opinion of a licensed architect or engineer reasonably acceptable to Lender cannot be completed within a four (4) month period of the
date of the receipt of the Insurance Payment, or (B) the repair of which will result in a material alteration in the configuration, design or appearance of the Mortgaged Property, or (C) in the opinion of a licensed architect or engineer
reasonably acceptable to the parties hereto, can not be repaired or reconstructed by a date that is two (2) months or more prior to the end of the term of the Note. 
  

	 	(c)	Liability. Mortgagor shall carry and maintain such comprehensive public liability and workmen’s compensation insurance as may be required from time to time by Lender in
form and of content, in amounts, and with companies approved by Lender all in accordance with the provision of the Credit Agreement. 

  

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 3.6 Condemnation and Eminent Domain. Any and all awards heretofore or hereafter made or to be made
to the present, or any subsequent, owner of the Mortgaged Property, by any governmental or other lawful authority for the taking, by condemnation or eminent domain, of all or any part of the Mortgaged Property, any improvement located thereon, or
any easement thereon or appurtenance thereof (including any award from the United States government at any time after the allowance of a claim therefore, the ascertainment of the amount thereto, and the issuance of a warrant for payment thereof),
are hereby assigned by Mortgagor to Lender, which awards Lender is hereby authorized to collect and receive from the condemnation authorities after consultation with Mortgagor, and Lender is hereby authorized to give appropriate receipts and
acquittances therefore. Mortgagor shall give Lender immediate notice of the actual or threatened commencement of any condemnation or eminent domain proceedings affecting all or any part of the Premises, or any easement thereon or appurtenance
thereof (including severance of, consequential damage to, or change in grade of streets), and shall deliver to Lender copies of any and all papers served in connection with any such proceedings. Mortgagor further agrees to make, execute, and
deliver to Lender, at any time upon request, free, clear, and discharged of any encumbrance of any kind whatsoever, any and all further assignments and other instruments deemed necessary by Lender for the purpose of validly and sufficiently
assigning all awards and other compensation heretofore and hereafter made to Mortgagor for any taking, either permanent or temporary, under any such proceeding. At Lender’s option, any such award may be applied to restoring the improvements, in
which event the same shall be paid out in the same manner as is provided with respect to insurance proceeds in Paragraph 3.5(a) hereof. 
 Notwithstanding anything in Section 3.5 and 3.6 to the contrary, in the event of any casualty to or any condemnation of part of the Mortgaged Property, Lender agrees to make available the Insurance Payment or condemnation proceeds to
restoration of the Mortgaged Property if (i) no Default exists, (ii) all Insurance Payments or condemnation proceeds are deposited with Lender, (iii) in Lender’s reasonable judgment, the amount of Insurance Payments or
condemnation proceeds available for restoration of the Mortgaged Property is sufficient to pay the full and complete costs of such restoration, or if not sufficient, Mortgagor has deposited with Lender an amount, which together with the amount of
the Insurance Payment or condemnation proceeds available for restoration of the Mortgaged Property, in Lender’s reasonable judgment, will be sufficient to pay the full and complete costs of such restoration, (iv) in Lender’s
reasonable determination, the Mortgaged Property can be restored to an architecturally viable project in compliance with applicable laws, and (v) in Lender’s reasonable determination, such restoration is likely to be completed not later
than three (3) months prior to the maturity date set forth in the Note. 
 3.7 Maintenance of Property. No building or other
improvement on the Premises shall be materially altered (except in the ordinary course of business), removed, or demolished, nor shall any fixtures, chattels, or articles of personal property on, in, or about the Premises be severed, removed, sold,
or mortgaged (except in the ordinary course of business), without the prior written consent of Lender, and in the event of the demolition or destruction in whole or in part of any of the fixtures, 

  

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chattels, or articles of personal property covered by this Mortgage or by any separate security agreement executed in conjunction herewith, the same shall be
replaced promptly by similar fixtures, chattels, and articles of personal property at least equal in quality and condition to those replaced, free from any other security interest therein, encumbrances thereon, or reservation of title thereto.
Mortgagor shall promptly repair, restore, or rebuild any building or other improvement now or hereafter situated on the Premises that may become damaged or be destroyed. Any such building or other improvement shall be so repaired, restored, or
rebuilt so as to be of at least equal value and of substantially the same character as prior to such damage or destruction. 
 Mortgagor
further agrees to permit, commit, or suffer no waste, impairment, or deterioration of the Mortgaged Property or any part thereof; to keep and maintain the Mortgaged Property and every part thereof in good repair and condition; to effect such repairs
as Lender may reasonably require, and, from time to time, to make all necessary and proper replacements thereof and additions thereto so that the Premises and such buildings, other improvements, fixtures, chattels, and articles of personal property
will, at all times, be in good condition, fit and proper for the respective purposes for which they were originally erected or installed. 
 3.8 Compliance with Laws. Mortgagor shall comply with all statutes, ordinances, regulations, rules, orders, decrees, and other requirements relating to the Mortgaged property or any part thereof by any federal, state, or local
authority; and shall observe and comply with all conditions and requirements necessary to preserve and extend any and all rights, licenses, permits (including without limitation zoning variances, special exceptions, and nonconforming uses),
privileges, franchises, and concessions that are applicable to the Mortgaged Property or that have been granted to or contracted for by Mortgagor in connection with any existing or presently contemplated use of the Property. 
 3.9 Liens and Transfers. Without Lender’s prior written consent, Mortgagor shall not create, suffer, or permit to be created or filed against
the Mortgaged Property or any part thereof hereafter any mortgage lien or other lien (other than for taxes and assessments not yet due and payable) superior or inferior to the lien of this Mortgage, provided that Mortgagor may, within thirty
(30) days after the filing thereof, contest any lien claim arising from any work performed, material furnished, or obligation incurred by Mortgagor (a “Lien Claim”) upon either furnishing Lender security and
indemnification satisfactory to Lender for the final payment and discharge thereof or, in the case of a Lien Claim, delivering to Lender a title insurance policy endorsement acceptable to Lender in the full amount of the Lien Claim insuring Lender
against all loss or damage arising from the Lien Claim. In the event Mortgagor hereafter otherwise suffers or permits any superior or inferior lien (other than for taxes and assessments not yet due and payable) to be attached to the Mortgaged
Property or any part thereof without such consent, Lender shall have the unqualified right, at its option following ten 10 days written notice to Mortgagor, to accelerate the maturity of the Note, causing the entire principal balance thereof and all
interest accrued thereon to be immediately due and payable, upon written notice by Lender to either Mortgagor. 
  

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 If Mortgagor, without Lender’s prior written consent, sells, transfers, conveys, assigns,
hypothecates, or otherwise transfers or attempts to transfer the title to all or any portion of the Mortgaged Property, whether by operation of law, voluntarily, or otherwise, or contracts to do any of the foregoing, Lender shall have the
unqualified right, at its option, to accelerate the maturity of the Note, causing the entire principal balance, accrued interest, and prepayment premium, if any, to be immediately due and payable, without notice to Mortgagor. 
 Any waiver by Lender of the provisions of this Paragraph 3.9 shall not be deemed to be a waiver of the right of Lender in the future to insist upon
strict compliance with the provisions hereof. Without limiting the generality of the foregoing, the terms of any contract or agreement of sale or transfer to which the Lender consents must be acceptable to the Lender in its sole discretion.

 3.10 Subrogation to Prior Lienholder’s Rights. If the proceeds of the Loan secured hereby, any part thereof, or any amount
paid out or advanced by Lender is used directly or indirectly to pay off, discharge, or satisfy, in whole or in part, any prior lien or encumbrance upon the Mortgaged Property or any part thereof, then Lender shall be subrogated to the rights of the
holder thereof in and to such other lien or encumbrance and any additional security held by such holder, and shall have the benefit of the priority of the same. 
 3.11 Lender’s Dealings with Transferee. In the event of the sale or transfer, by operation of law, voluntarily, or otherwise, of all or any part of the Mortgaged Property, Lender shall be authorized and
empowered to deal with the vendee or transferee with regard to the Mortgaged Property, the indebtedness secured hereby, and any of the terms or conditions hereof as fully and to the same extent as it might with Mortgagor, without in any way
releasing or discharging Mortgagor from its covenants hereunder, specifically including those contained in Paragraph 3.9 hereof, and without waiving Lender’s right of acceleration pursuant to Paragraph 3.9 hereof. 
 3.12 Stamp Taxes. If at any time the United States government, or any federal, state, or municipal governmental subdivision, requires Internal
Revenue or other documentary stamps, levies, or any tax on this Mortgage or on the Note, then such indebtedness and all interest accrued thereon shall be and become due and payable, at the election of the Lender, thirty (30) days after
the mailing by Lender of notice of such election to Mortgagor; provided, however, that such election shall be unavailing, and this Mortgage and the Note shall be and remain in effect, if Mortgagor lawfully pays for such stamps or such tax, including
interest and penalties thereon, to or on behalf of Lender and Mortgagor does in fact pay, when payable, for all such stamps or such tax, as the case may be, including interest and any penalties thereon. 
 3.13 Change in Tax Laws. In the event of the enactment, after the date of this Mortgage, of any law of the state in which the premises are located
deducting from the value of the Premises, for the purpose of taxation, the amount of any lien thereon, or imposing upon Lender the payment of all or any part of the taxes, assessments, charges, or liens hereby required to be paid by Mortgagor, or
changing in any way the laws relating to the taxation of mortgages or debts secured by mortgages 

  

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or Mortgagor’s interest in the Mortgaged Property, or the manner of collection of taxes, so as to affect this Mortgage or the indebtedness secured
hereby or the holder thereof, then Mortgagor, upon demand by Lender, shall pay such taxes, assessments, charges, or liens or reimburse Lender therefore. Provided, however, that if, in the opinion of counsel for Lender, it might be unlawful to
require Mortgagor to make such payment or the making of such payment might result in the imposition of interest beyond the maximum amount permitted by law, then Lender may elect, by notice in writing given to Mortgagor, to declare all of the
indebtedness secured hereby to become due and payable within sixty (60) days after the giving of such notice. Provided, further, that nothing contained in this Paragraph 3.13 shall be construed as obligating Lender to pay any portion of
Mortgagor’s federal income tax. 
 3.14 Inspection of Property. Provided no Event of Default has occurred and is continuing, upon
one (1) day’s prior notice (written or oral), Mortgagor shall permit Lender and its representatives and agents to inspect the Mortgaged Property from time to time during normal business hours and as frequently as Lender considers
reasonable. 
 3.15 Inspection of Books and Records. Mortgagor shall keep and maintain full and correct books and records showing in
detail the income and expenses of the Mortgaged Property and, within ten (10) days after demand therefore by Lender, to permit Lender or its agents to examine such books and records and all supporting vouchers and data at any time and from
time to time on request at its offices, at the address hereinabove identified or at such other location as may be mutually agreed upon. 
 3.16 Acknowledgment of Debt. Mortgagor shall furnish from time to time, within fifteen (15) days after Lender’s request, a written statement, duly acknowledged, specifying the amount due under the Note and this
Mortgage and disclosing whether any alleged offsets or defenses exist against the indebtedness secured hereby. 
 3.17 Other Amounts
Secured. At all times, regardless of whether any loan proceeds have been disbursed, this Mortgage secures in addition to any loan proceeds disbursed from time to time, and in addition to any advances pursuant to Paragraphs 3.4 and 3.5 hereof,
litigation and other expenses pursuant to Paragraphs 4.5 and 4.6 hereof, and any other amounts as provided herein, the payment of any and all loan commissions, service charges, penalties, late charges, liquidated damages, expenses, and advances due
to or paid or incurred by Lender in connection with the loan secured hereby, all in accordance with the application and loan commitment issued in connection with this transaction, if any, and the other Loan Documents. 
 3.18 Assignments of Rents and Leases. The terms, covenants, conditions, and other provisions of any Assignment of Rents or Assignment of Leases
described in Exhibit B hereto are hereby expressly incorporated herein by reference and made a part hereof, with the same force and effect as though the same were more particularly set forth herein. 
  

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 3.19 Declaration of Subordination. At the option of Lender, this Mortgage shall become subject and
subordinate, in whole or in part (but not with respect to priority of entitlement to insurance proceeds or any condemnation or eminent domain award) to any and all leases of all or any part of the Mortgaged Property upon the execution by
Lender and recording thereof, at any time hereafter, in the appropriate official records of county wherein the Premises are situated, of a unilateral declaration to that effect. 
 3.20 Security Instruments. Mortgagor shall execute, acknowledge, and deliver to Lender, within ten (10) days after request by Lender,
a security agreement, financing statements, and any other similar security instrument required by Lender, in form and of content reasonably satisfactory to Lender, covering all property of any kind whatsoever owned by Mortgagor that, in the sole
opinion of Lender, is essential to the operation of the Mortgaged Property and concerning which there may be any doubt whether title thereto has been conveyed, or a security interest therein perfected, by this Mortgage under the laws of the state in
which the Premises are located. Mortgagor shall further execute, acknowledge, and deliver any financing statement, affidavit, continuation statement, certificate, or other document as Lender may reasonably request in order to perfect, preserve,
maintain, continue, and extend such security instruments. Mortgagor further agrees to pay to Lender all reasonable costs and expenses incurred by Lender in connection with the preparation, execution, recording, filing, and refiling of any such
document. 
 3.21 Releases. Lender, without notice and without regard to the consideration, if any, paid therefore, and
notwithstanding the existence at that time of any inferior liens thereon, may release from the lien all or any part of the Mortgaged Property, or release from liability any person obligated to repay any indebtedness secured hereby, without in any
way affecting the liability of any party to any of the Note, this Mortgage, or any of the other Loan Documents, including without limitation any guaranty given as additional security for the indebtedness secured hereby, and without in any way
affecting the priority of the lien of this Mortgage, and may agree with any party liable therefore to extend the time for payment of any part or all of such indebtedness. Any such agreement shall not in any way release or impair the lien created by
this Mortgage or reduce or modify the liability of any person or entity obligated personally to repay the indebtedness secured hereby, but shall extend the lien hereof as against the title of all parties having any interest, subject to the
indebtedness secured hereby, in the Mortgaged Property. 
 3.22 Interest Laws. It being the intention of Lender and Mortgagor to
comply with the laws of the State of Illinois, it is agreed that notwithstanding any provision to the contrary in the Note, this Mortgage, or any of the other Loan Documents, no such provision shall require the payment or permit the collection of
any amount (“Excess Interest”) in excess of the maximum amount of interest permitted by law to be charged for the use or detention, or the forbearance in the collection, of all or any portion of the indebtedness evidenced by the
Note. If any Excess Interest is provided for, or is adjudicated to be provided for, in the Note, this Mortgage, or any of the other Loan Documents, then in such event (a) the provisions of this Paragraph 3.22 shall govern and control;
(b) the Mortgagor shall not be obligated to pay any 

  

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Excess Interest; (c) any Excess Interest that Lender may have received hereunder shall, at the option of Lender, be (i) applied as a credit against
the then unpaid principal balance under the Note, accrued and unpaid interest thereon not to exceed the maximum amount permitted by law, or both, (ii) refunded to the payor thereof, or (iii) any combination of the foregoing; (d) the
“Interest Rate” (as that term is defined in the Note or the Loan Agreement referred to in the Note) shall be subject to automatic reduction to the maximum lawful contract rate allowed under the applicable usury laws of the aforesaid
State, and the Note, this Mortgage, and the other Loan Documents shall be deemed to have been, and shall be, reformed and modified to reflect such reduction in the Interest Rate; and (e) Mortgagor shall not have any action against Lender for
any damages whatsoever arising out of the payment or collection of any Excess Interest. 
 3.23 Hazardous Material. Mortgagor hereby
covenants with and represents to Lender that except as disclosed in the Credit Agreement neither Mortgagor nor, to the best knowledge of Mortgagor, any other person has ever caused or permitted any “Hazardous Material” (as hereinafter
defined) to be placed, held, located or disposed of on, under or at the Mortgaged Property or any part thereof and no part of the Mortgaged Property (except for incidental materials held in retail inventory for sale to consumers by tenants or
used for customary janitorial purposes) has ever been used (whether by Mortgagor or, to the best knowledge of Mortgagor by any other person) as a treatment, storage or disposal (whether permanent or temporary) site for any
Hazardous Material. 
 In the event Mortgagor fails to comply with the requirements of any applicable “Statutes” (as hereinafter
defined), Lender may at its election, but without the obligation so to do, upon prior notice to Mortgagor give such notices or cause such work to be performed at, to or upon the Mortgaged Property or take any and all other actions as Lender
deems necessary, as shall cure said failure or compliance, and any amounts paid by Lender as a direct or indirect result thereof (including, without limitation, court costs and attorneys’ fees) together with interest thereon from the
date of payment at the default rate of interest (as provided in the Loan Agreement) shall be immediately due and payable by Mortgagor to Lender, and until paid shall be added to and become a part of Mortgagor’s liabilities hereunder; or
Lender, by the payment of any assessment, claim or charge, may, if it sees fit, be thereby subrogated to the rights of the federal, state or local governmental entity or agency otherwise entitled to such rights under the applicable Statutes; but no
such advance shall be deemed to relieve Mortgagor from any default hereunder or impair any right or remedy consequent thereon. 
 3.24
Indemnification. Mortgagor hereby indemnifies Lender and agrees to hold Lender harmless from and against any and all losses, liabilities, damages, injuries, costs, expenses and claims of any and every kind whatsoever (including, without
limitation, court costs and reasonable attorneys’ fees) which at any time or from time to time may be paid, incurred or suffered by, or asserted against, Lender for, with respect to, or as a direct or indirect result of, the presence on or
under, or the escape, seepage, leakage, spillage, discharge, emission or release from, the Mortgaged Property into or upon any land, the atmosphere, or any watercourse, body of water or wetland, 
  

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of any Hazardous Materials (including, without limitation, any losses, liabilities, damages, injuries, costs, expenses or claims asserted or arising under
the Statutes) other than losses, liabilities, damages, inquiries, costs, expenses and claims occasioned by or arising out of Lender’s gross negligence, reckless conduct or willful misconduct; and the provisions of and undertakings and
indemnification set out in this sentence shall survive the satisfaction and release of this Mortgage and the payment and satisfaction of the Mortgagors’ liabilities. The provisions of the preceding sentence shall govern and control over any
inconsistent provision of the Note, this Mortgage, and any of the other Loan Documents, including, without limitation, any exculpatory or non-recourse provisions contained herein or any of the foregoing agreements. For purposes of this Mortgage,
“Hazardous Material” means and includes any hazardous substance or any pollutant or contaminant defined as such in (or for purposes of) the Comprehensive Environmental Response, Compensation and Liability Act, any so-called
“Superfund or “Superlien” law, the Toxic Substances Control Act, or any other federal, state or local statute, law, ordinance, code, rule, regulation, order or decree regulating, relating to, or imposing liability or standards of
conduct concerning, any hazardous, toxic or dangerous waste, substance, or material, as now or at any time hereafter in effect (collectively, the “Statutes”), or any other hazardous, toxic or dangerous waste, substance or material.

 IV 
 DEFAULTS AND
REMEDIES 
 4.1 Events Constituting Defaults. Each of the following events shall constitute a default (a
“Default”) under this Mortgage: 
  

	 	(a)	Failure of the Mortgagor to pay any sum secured hereby, including without limitation, any installment of principal thereof or interest thereon when due and payable under the Note,
this Mortgage, or any of the other Loan Documents; 

  

	 	(b)	Failure of Mortgagor to comply with any of the covenants, warranties or other provisions of paragraphs 3.3 and 3.5(a) hereof; 

  

	 	(c)	Failure of Mortgagor to perform or observe any other covenant, warranty, or other provision contained in this Mortgage for a period in excess of fifteen (15) days after
the date on which notice of the nature of such failure is given by Lender to Mortgagor by first class mail or by a national overnight delivery service. 

  

	 	(d)	Untruth or material deceptiveness of any representation or warranty (each as of the date hereof) contained in any of the Note, this Mortgage, the other Loan Documents or any
other document or writing pertaining to the Loan submitted to Lender by or on behalf of Mortgagor; 

  

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	 	(e)	Admission by Mortgagor, in writing, including, without limitation, an answer or other pleading filed in any court, of Mortgagor’s insolvency or its inability to pay its debts
generally as they fall due; 

  

	 	(f)	Institution by Mortgagor of bankruptcy, insolvency, reorganization, or arrangement proceedings of any kind under the Federal Bankruptcy Code, whether as now existing or as hereafter
amended, or any similar debtors’ or creditors’ rights law, federal or state, now or hereafter existing, or the making by Mortgagor, of a general assignment for the benefit of creditors; 

  

	 	(g)	Institution of any proceedings described in paragraph 4.1(f) against Mortgagor, that are consented to by such Mortgagor, or that are not dismissed, vacated, or stayed within sixty
(60) days after the filing thereof; 

  

	 	(h)	Appointment by any court of a receiver, trustee, or liquidator of or for, or assumption by any court of jurisdiction of, all or any part of the Mortgaged Property or all or a major
portion of the property of Mortgagor, if such appointment or assumption is consented to by Mortgagor, or, within forty-five (45) days after such appointment or assumption, such receiver, trustee, or liquidator is not discharged or such
jurisdiction is not relinquished, vacated, or stayed; 

  

	 	(i)	Declaration by any court or governmental agency of the bankruptcy or insolvency of Mortgagor; or 

  

	 	(j)	The occurrence of any Default or Event of Default under any other Loan Documents not cured within any applicable grace or cure period. 

 4.2 Acceleration of Maturity. At any time during the existence of any Default, and at the option of Lender, the entire principal balance then
outstanding under the Note, together with interest accrued thereon and all other sums due from the Mortgagor thereunder or under this Mortgage and under any of the other Loan Documents, shall without notice become immediately due and payable with
interest thereon at the Default Interest Rate. 
 4.3 Foreclosure of Mortgage. Upon the occurrence of any Default, or at any time
thereafter, Lender may, at its option, proceed to foreclose the lien of this Mortgage by judicial proceedings in accordance with the laws of the state of in which the premises are located. Any failure by Lender to exercise such option shall not
constitute a waiver of its right to exercise the same at any other time. 
 4.4 Lender’s Continuing Options. The failure of
Lender to exercise either or both of its options to accelerate the maturity of the indebtedness secured hereby and to foreclose the lien hereof following any Default as aforesaid, or to exercise any other option granted to Lender hereunder in any
one or more instances, 

  

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or the acceptance by Lender of partial payments of such indebtedness, shall neither constitute a waiver of any such Default or of Lender’s options
hereunder nor establish, extend, or affect any grace period for payments due under the Note, but such options shall remain continuously in force. Acceleration of maturity, once claimed hereunder by Lender, may at Lender’s option be rescinded by
written Acknowledgment to that effect by Lender and shall not affect Lender’s right to accelerate maturity upon or after any future Default. 
 4.5 Litigation Expenses. In any proceeding to foreclose the lien of this Mortgage or enforce any other remedy of Lender under any of the Note, this Mortgage, and the other Loan Documents, or in any other proceeding whatsoever in
connection with any of the Loan Documents or any of the Mortgaged Property in which Lender is named as a party, there shall be allowed and included, as additional indebtedness in the judgment or decree resulting therefrom, all reasonable expenses
paid or incurred in connection with such proceeding by or on behalf of Lender, including without limitation, attorney’s fees, appraiser’s fees, outlays for documentary evidence and expert advice, stenographers’ charges, publication
costs, survey costs, and costs (which may be estimated as to items to be expended after entry of such judgment or decree) of procuring all abstracts of title, title searches and examinations, title insurance policies, and any similar data and
assurances with respect to title to the Premises as Lender may deem reasonably necessary either to prosecute or defend in such proceeding or to evidence to bidders at any sale pursuant to such decree the true condition of the title to or value of
the Premises or the Mortgaged Property. All expenses of the foregoing nature, and such expenses as may be incurred in the protection of any of the Mortgaged Property and the maintenance of the lien of this Mortgage thereon, including without
limitation the fees of any attorney employed by Lender in any litigation affecting the Note, this Mortgage, or any of the Mortgaged Property, or in preparation for the commencement or defense of any proceeding or threatened suit or proceeding in
connection therewith, shall be immediately due and payable by the Mortgagor with interest thereon. 
 4.6 Performance by Lender. In
the event of any Default, Lender may, but need not, make any payment or perform any act herein required of Mortgagor in any form and manner deemed expedient by Lender, and Lender may, but need not, make full or partial payments of principal or
interest on prior encumbrances, if any; purchase, discharge, compromise, or settle any tax lien or other prior or junior lien or title or claim thereof; redeem from any tax sale or forfeiture affecting the Mortgaged Property; or contest any tax or
assessment thereon. All monies paid for any of the purposes authorized herein and all expenses paid or incurred in connection therewith, including attorney’s fees, and any other monies advanced by Lender to protect the Property and the lien of
this Mortgage, shall be so much additional indebtedness secured hereby, and shall become due and payable by the Mortgagor to Lender upon 10 days written notice and if not paid when due with interest thereon at the Default Interest Rate. Inaction of
Lender shall never be construed to be a waiver of any right accruing to Lender by reason of any default by any Mortgagor. 
 4.7 Right of
Possession. In any case in which, under the provisions of this Mortgage or the other Loan Documents, Lender has a right to institute foreclosure 

  

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proceedings, whether or not the entire principal sum secured hereby becomes immediately due and payable as aforesaid, or whether before or after the
institution of proceedings to foreclose the lien hereof or before or after sale thereunder, Mortgagor shall, forthwith upon demand of Lender, surrender to Lender, and Lender shall be entitled to take actual possession of, the Mortgaged Property or
any part thereof, personally or by its agent or attorneys, and Lender, in its discretion, may enter upon and take and maintain possession of all or any part of the Mortgaged Property, together with all documents, books, records, papers, and accounts
of Mortgagor or the then owner of the Mortgaged Property relating thereto, and may exclude Mortgagor, such owner, and any agents and servants thereof wholly therefrom and may, as attorney-in-fact or agent of Mortgagor or such owner, or in its own
name as Lender and under the powers herein granted: 
  

	 	(a)	hold, operate, manage, and control all or any part of the Mortgaged Property and conduct the business, if any, thereof, either personally or by its agents, with full power to use
such measures, legal or equitable, as in its discretion may be deemed proper or necessary to enforce the payment or security of the rents, issues, deposits, profits, and avails of the Mortgaged Property, including without limitation actions for
recovery of rent, actions in forcible detainer, and actions in distress for rent, all without notice to any Mortgagor; 

  

	 	(b)	cancel or terminate any lease or sublease of all or any part of the Mortgaged Property for any cause or on any ground that would entitle Mortgagor to cancel the same;

  

	 	(c)	elect to disaffirm any lease or sublease of all or any part of the Mortgaged Property made subsequent to this Mortgage or subordinated to the lien hereof; 

 

	 	(d)	extend or modify any then existing leases and make new leases of all or any part of the Mortgaged Property, which extensions, modifications, and new leases may provide for terms to
expire, or for options to lessees to extend or renew terms to expire, beyond the maturity date of the loan evidenced by the Note and the issuance of a deed or deeds to a purchaser or purchasers at a foreclosure sale, it being understood and agreed
that any such leases, and the options or other such provisions to be contained therein, shall be binding upon Mortgagor, all persons whose interests in the Mortgaged Property are subject to the lien hereof, and the purchaser or purchasers at any
foreclosure sale, notwithstanding any redemption from sale, discharge of the indebtedness secured hereby, satisfaction of any foreclosure decree, or issuance of any certificate of sale or deed to any such purchaser; and 

  

	 	(e)	 make all necessary or proper repairs, decoration, renewals, replacements, alterations, additions, betterments, and improvements in connection with the Mortgaged
Property as may 

  

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seem judicious to Lender, to insure and reinsure the Mortgaged Property and all risks incidental to Lender’s possession, operation, and management
thereof, and to receive all rents, issues, deposits, profits, and avails therefrom. 

 4.8 Priority of Payments. Any
rents, issues, deposits, profits, and avails of the Property received by Lender after taking possession of all or any part of the Mortgaged Property, or pursuant to any assignment thereof to Lender under the provisions of this Mortgage or any of the
other Loan Documents, shall be applied in payment of or on account of the following, in such order as Lender or, in case of a receivership, as the court, may determine: 
  

	 	(a)	operating expenses of the Mortgaged Property (including reasonable compensation to Lender, any receiver of the Mortgaged Property, any agent or agents to whom management of the
Mortgaged Property has been delegated, and also including lease commissions and other compensation for and expenses of seeking and procuring tenants and entering into leases, establishing claims for damages, if any, and paying premiums on insurance
hereinabove authorized); 

  

	 	(b)	taxes, special assessments, and water and sewer charges now due or that may hereafter become due on the Mortgaged Property, or that may become a lien thereon prior to the lien of
this Mortgage; 

  

	 	(c)	any and all repairs, decorating, renewals, replacements, alterations, additions, betterments, and improvements of the Mortgaged Property (including without limitation the cost,
from time to time, of installing or replacing ranges, refrigerators, and other appliances and other personal property therein, and of placing the Mortgaged Property in such condition as will, in the judgment of Lender or any receiver thereof make it
readily rentable or salable); 

  

	 	(d)	any indebtedness secured by this Mortgage (including, but not limited to, indebtedness evidenced by the Note) or any deficiency that may result from any foreclosure sale
pursuant hereto; and 

  

	 	(e)	any remaining funds to Mortgagor or its successors or assigns, as their interests and rights may appear. 

 4.9 Appointment of Receiver. Upon or at any time after the filing of any complaint to foreclose the lien of this Mortgage, the court may, upon
application, appoint a receiver of the Mortgaged Property. Such appointment may be made either before or after foreclosure sale, without notice; without regard to the solvency or insolvency, at the time of application for such receiver, of the
person or persons, if any, liable for the payment of the indebtedness secured hereby; without regard to the value of the Mortgaged Property at such time and whether or not the same is then occupied as a homestead; and without bond being required of
the applicant. Such receiver shall have the power to take possession, control, and care of the Mortgaged 

  

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Property and to collect all rents, issues, deposits, and avails thereof during the pendency of such foreclosure suit and, in the event of a sale and a
deficiency where Mortgagor has not waived its statutory rights of redemption, during the full statutory period of redemption, as well as during any further times when Mortgagor or its devisees, legatees, heirs, executors, administrators, legal
representatives, successors, or assigns, except for the intervention of such receiver, would be entitled to collect such rents, issues, deposits, profits, and avails, and shall have all other powers that may be necessary or useful in such cases for
the protection, possession, control, management, and operation of the Mortgaged Property during the whole of any such period. To the extent permitted by law, such receiver may be authorized by the court to extend or modify any then existing leases
and to make new leases of the Mortgaged Property or any part thereof, which extensions, modifications, and new leases may provide for terms to expire, or for options to lessees to extend or renew terms to expire, beyond the maturity date of the
indebtedness secured hereby, it being understood and agreed that any such leases, and the options or other such provisions to be contained therein, shall be binding upon Mortgagor and all persons whose interests in the Mortgaged Property are subject
to the lien hereof, and upon the purchaser or purchasers at any such foreclosure sale, notwithstanding any redemption from sale, discharge of indebtedness, satisfaction of foreclosure decree, or issuance of certificate of sale or deed to any
purchaser. 
 4.10 Foreclosure Sale. In the event of any foreclosure sale of the Mortgaged Property, the same may be sold in one or
more parcels. Lender may be the purchaser at any foreclosure sale of the Mortgaged Property or any part thereof. 
 4.11 Application of
Proceeds. The proceeds of any foreclosure sale of the Mortgaged Property, or any part thereof, shall be distributed and applied in the following order of priority: (a) on account of all costs and expenses incident to the foreclosure
proceedings, including all such items as are mentioned in Paragraphs 4.5 and 4.6 hereof; (b) all other items that, under the terms of this Mortgage, constitute secured indebtedness additional to that evidenced by the Note, with interest thereon
at the Default Interest Rate set forth in the Credit Agreement; (c) all principal and interest remaining unpaid under the Note and other promissory notes set forth on Exhibit B attached hereto, in the order of priority specified by Lender in
its sole discretion; and (d) the balance to Mortgagor or its successors or assigns, as their interests and rights may appear. 
 4.12
Application of Deposits. In the event of any Default, Lender may, at its option, without being required to do so, apply any monies or securities that constitute deposits made to or held by Lender or any depositary pursuant to any of the
provisions of this Mortgage toward payment of any of the Mortgagor’s obligations under the Note, this Mortgage, or any of the other Loan Documents, in such order and manner as Lender may elect. When the indebtedness secured hereby has been
fully paid, any remaining deposits shall be paid to Mortgagor or to the then owner or owners of the Mortgaged Property. Such deposits are hereby pledged as additional security for the prompt payment of the indebtedness evidenced by the Note and any
other indebtedness secured hereby and shall be held to be applied irrevocably by such depositary for the purposes for which made hereunder and shall not be subject to the direction or control of Mortgagor. 
  

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 4.13 Waiver of Statutory Rights. Mortgagor shall not apply for or avail itself of any
appraisement, valuation, redemption, stay, extension, or exemption laws, or any so-called “moratorium laws,” now existing or hereafter enacted, in order to prevent or hinder the enforcement or foreclosure of this Mortgage, but hereby
waives the benefit of such laws. Mortgagor, for itself and all who may claim through or under it, hereby also waives any and all rights to have the Mortgaged Property and estates comprising the Mortgaged Property marshalled upon any foreclosure of
the lien hereof, and agrees that any court having jurisdiction to foreclose such lien may order the Mortgaged Property sold in its entirety. Mortgagor hereby further waives any and all rights of redemption from sale under any order or decree of
foreclosure of the lien hereof pursuant to the rights herein granted, for itself and on behalf of any trust estate of which the Premises are a part, all persons beneficially interested therein, and each and every person acquiring any interest in the
Mortgaged Property or interest in the Premises subsequent to the date of this Mortgage, and on behalf of all other persons, all to the extent permitted by applicable law. 
 V 
 MISCELLANEOUS 
 5.1 Notices. Except as otherwise hereinabove specified, any notice that Lender or Mortgagor may desire or be required to give to the other shall be in writing and shall be sent by facsimile transmission or
mailed or delivered to the intended recipient thereof at its address hereinabove set forth or at such other address as such intended recipient may, from time to time, by notice in writing, designate to the sender pursuant hereto. Any such notice
shall be deemed to have been delivered upon receipt of facsimile transmission confirmation or two (2) business days after mailing by United States registered or certified mail, return receipt requested, or when delivered in person with written
acknowledgment of the receipt thereof. Except as otherwise specifically required, herein, notice of the exercise of any right or option granted to Lender by this Mortgage is not required to be given. 
 5.2 Time of Essence. It is specifically agreed that time is of the essence of this Mortgage. 
 5.3 Covenants Run with Land. All of the covenants of this Mortgage shall run with the land constituting the Premises. 
 5.4 Governing Law. The place of negotiation, execution, and delivery of this Mortgage, the location of the Mortgaged Property, and the place of
payment and performance under the Loan Documents being the State of Illinois, this Mortgage shall be construed and enforced according to the laws of that State. To the extent that this Mortgage may operate as a security agreement under the Uniform
Commercial Code, Lender shall have all rights and remedies conferred therein for the benefit of a secured party, as such term is defined therein. 
  

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 5.5 Rights and Remedies Cumulative. All rights and remedies set forth in this Mortgage are
cumulative, and the holder of the Note and of every other obligation secured hereby may recover judgment hereon, issue execution therefore, and resort to every other right or remedy available at law or in equity, without first exhausting and without
affecting or impairing the security of any right or remedy afforded hereby. 
 5.6 Severability. If any provision of this Mortgage, or
any paragraph, sentence, clause, phrase, or word, or the application thereof, in any circumstance, is held invalid, the validity of the remainder of this Mortgage shall be construed as if such invalid part were never included herein. 
 5.7 Non-Waiver. Unless expressly provided in this Mortgage to the contrary, no consent or waiver, express or implied, by any interested party
referred to herein, to or of any breach or default by any other interested party referred to herein, in the performance by such party of any obligations contained herein shall be deemed a consent to or waiver of the party of any other obligations
contained herein or shall be deemed a consent to or waiver of the performance by such party of any other obligations hereunder or the performance by any other interested party referred to herein of the same, or of any other, obligations hereunder.

 5.8 Headings. The headings of sections and paragraphs in this Mortgage are for convenience or reference only and shall not be
construed in any way to limit or define the content, scope, or intent of the provisions hereof. 
 5.9 Grammar. As used in this
Mortgage, the singular shall include the plural, and masculine, feminine, and neuter pronouns shall be fully interchangeable, where the context so requires. 
 5.10 Deed in Trust. If title to the Mortgaged Property or any part thereof is now or hereafter becomes vested in a trustee, any prohibition or restriction contained herein against the creation of any lien on
the Mortgaged Property shall be construed as a similar prohibition or restriction against the creation of any lien on or security interest in the beneficial interest of such trust. 
 5.11 Successors and Assigns. This Mortgage and all provisions hereof shall be binding upon Mortgagor, its successors, assigns, legal
representatives, and all other persons or entities claiming under or through Mortgagor, and the word “Mortgagor” when used herein, shall each include all such persons and entities and any others liable for the payment of the indebtedness
secured hereby or any part thereof, whether or not they have executed the Note or this Mortgage. The word “Lender,” when used herein, shall include Lender’s successors, assigns, and legal representatives, including all other holders,
from time to time, of the Note. 
 5.12 Loss of Note. Upon receipt of evidence reasonably satisfactory to the Mortgagor of the loss,
theft, destruction or mutilation of the Note, and in the case of any such loss, theft or destruction, upon delivery of an indemnity agreement reasonably satisfactory to the Mortgagor or, in the case of any such mutilation, upon 

  

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surrender and cancellation of the Note, the Mortgagor will execute and deliver to Lender in lieu thereof, a replacement Note, identical in form and substance
to the Note and dated as of the date of the Note and upon such execution and delivery all references in this Mortgage to the Note shall be deemed to refer to such replacement Note. 
 5.13 Revolving Credit Provisions. This Mortgage is given to secure a “Revolving Credit” loan as defined in 815 ILCS 205/4.1 and secures
not only the indebtedness from Mortgagor to the Lender existing on the date hereof, but all future advances, whether such advances are obligatory or are to be made at the option of the Lender, or otherwise, as are made within twenty years from the
date of this Mortgage, to the same extent as if such future advances were made on the date of the execution of this Mortgage, although there may be no advance made at the time of the execution of this Mortgage, and although there may be no
indebtedness outstanding at the time the advance is made. The total amount of the indebtedness secured by the Mortgage may increase or decrease from time to time, but the total unpaid balance so secured any one time shall not exceed a maximum
principal amount of $30,000,000.00 plus interest thereon, and any disbursements made by the Mortgagee for the payment of taxes, special assessments, or insurance on the above real estate, with interest on such disbursements. 
 [SIGNATURE PAGE TO FOLLOW] 
  

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 JPMorgan Chase Bank, N.A. 
 Mortgage 

 IN WITNESS WHEREOF, Mortgagor has caused this Mortgage to be executed as of the date hereinabove
first written. 
  

			
	MORTGAGOR:
	
	 MATERIAL SCIENCES CORPORATION,
 a
Delaware corporation

		
	By:	 	 

	Name:	 	James M. Froisland
	Title:	 	SVP, CFO, CIO, Corp Secretary

  

 JPMorgan Chase Bank, N.A. 
 Mortgage 

							
	 STATE OF ILLINOIS
	  	)	  		  	

		  	            )	  	        SS	  
	 COUNTY OF COOK
	  	)	  		  

 I, the undersigned, a Notary Public, in and for the above County and State, do hereby certify that
James M. Froisland, the SVP, CFO, CIO, Corp. Sec of Material Sciences Corporation, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and
acknowledged before me that (s)he signed and delivered the said instrument as a free and voluntary act, for the uses and purposes therein set forth. 
 GIVEN under my hand and Notarial Seal, this 12th
 day of May. 
 Notary Public 
  

	
	 Challan Pike

  

 JPMorgan Chase Bank, N.A. 
 Mortgage 

 EXHIBIT A 
 LEGAL DESCRIPTION 
 The Land referred to in this Commitment is described as follows: 
 PARCEL 1: 
 THE EAST 580.80 FEET OF THE WEST 1286.60 FEET OF LOT 12 IN CENTEX
INDUSTRIAL PARK UNIT #2 IN SECTION 35, TOWNSHIP 41 NORTH, RANGE 11, EAST OF THE THIRD PRINCIPAL MERIDIAN, IN COOK COUNTY, ILLINOIS. 
 PARCEL 2: 

THE EAST 145.20 FEET OF THE WEST 1431.80 FEET OF LOT 12 IN CENTEX INDUSTRIAL PARK UNIT #2, IN SECTION 35, TOWNSHIP 41 NORTH, RANGE 11, EAST OF THE THIRD PRINCIPAL
MERIDIAN, IN COOK COUNTY, ILLINOIS. 
 PARCEL 3: 
 THE WEST
580.80 FEET OF LOT 12 IN CENTEX INDUSTRIAL PARK, UNIT 2, BEING A SUBDIVISION IN SECTION 35, TOWNSHIP 41 NORTH, RANGE 11, EAST OF THE THIRD PRINCIPAL MERIDIAN, ACCORDING TO THE PLAT THEREOF RECORDED OCTOBER 24, 1958 IN THE RECORDER’S OFFICE OF
COOK COUNTY, ILLINOIS, AND FILED IN THE OFFICE OF THE REGISTRAR OF TITLES AS DOCUMENT 1825316, ALL IN COOK COUNTY, ILLINOIS. 
 PARCEL 4: 
 LOT 1 IN PRATT-NICHOLAS RESUBDIVISION OF LOT 6 (EXCEPT THE WEST 390 FEET THEREOF) IN CENTEX INDUSTRIAL PARK, BEING A SUBDIVISION IN SECTION 35, TOWNSHIP 41 NORTH, RANGE
11, EAST OF THE THIRD PRINCIPAL MERIDIAN; AND OF LOT 8 IN CENTEX INDUSTRIAL PARK UNIT 2, BEING A SUBDIVISION IN SECTION 35, TOWNSHIP 41 NORTH, RANGE 11 EAST OF THE THIRD PRINCIPAL MERIDIAN, SAID PRATT-NICHOLAS RESUBDIVISION RECORDED APRIL 30, 1997
AS DOCUMENT 97301251, IN COOK COUNTY, ILLINOIS. 
 ADDITIONAL PARCEL: 
 THE EAST 125.00 FEET OF THE WEST 705.80 FEET OF LOT 12 IN CENTEX INDUSTRIAL PARK, UNIT 2, BEING A SUBDIVISION IN SECTION 35, TOWNSHIP 41 NORTH, RANGE 11, EAST OF THE THIRD PRINCIPAL MERIDIAN, ACCORDING TO THE PLAT THEREOF RECORDED OCTOBER
24, 1958 IN THE RECORDER’S OFFICE OF COOK COUNTY, ILLINOIS, AND FILED IN THE OFFICE OF THE REGISTRAR OF TITLES AS DOCUMENT 1825316, ALL IN COOK COUNTY, ILLINOIS. 
  

			
	PERMANENT INDEX NUMBER:	  	08-35-403-011
		  	08-35-403-012
		  	08-35-403-013
		  	08-35-403-071
		
	COMMONLY KNOWN AS:	  	2200-2300 East Pratt Boulevard
		  	Elk Grove Village, Illinois

 EXHIBIT B 
 LOAN DOCUMENTS 
 The term “Loan Documents,” as used in this Mortgage, means, without
limitation, the following documents and all other documents previously, now, or hereafter given to evidence, secure, or govern the disbursement of the indebtedness secured by this Mortgage, including any and all extensions, renewals, amendments,
modifications, and supplements thereof or thereto: 
 1. The Revolving Note of even date herewith executed by Mortgagor to the order of Lender
in the original principal amount of $15,000,000.00; 
 2. The following security documents: 
  

	 	(a)	this Mortgage; 

  

	 	(b)	an Assignment of Rents and Leases of even date herewith, assigning to Lender all of the rents, issues, deposits, profits, and awards of, and all leases and other agreements in
connection with, the Premises; 

  

	 	(c)	a Credit Agreement of even date herewith (the “Credit Agreement”), executed by Lender and Mortgagor; 

  

	 	(d)	certain Uniform Commercial Code Financing Statements, pertaining to the personal property and fixtures described in the aforesaid Credit Agreement; 

  

	 	(e)	Pledge and Security Agreement of even date herewith made by the “Loan Parties” identified in the Credit Agreement; and 

  

	 	(f)	Pledge and Security Agreement of even date herewith made by the Borrower.License Agreement

 EXHIBIT 10.18 
 CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “***”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. 
 LICENSE AGREEMENT 
 This LICENSE AGREEMENT (the “Agreement”) is effective as of February 14, 2006 (the
“Effective Date”), by and between * * *, a Delaware corporation with a principal place of business at * * * (formerly known as * * *) (“* * *”), and Phenomix Corporation, a Delaware corporation with a
place of business at 5871 Oberlin Drive, Suite 200, San Diego, CA 92121 (“Phenomix”). 
 WITNESSETH 
 WHEREAS, * * * has licensed the * * * Patent Rights, as defined below, from the * * * and Prosidion Limited (collectively, with any other person or
entity that shall license the * * * Patent Rights to * * * , the “* * * Licensors”) and has been given the right to grant sublicenses; 
 WHEREAS, * * * wishes to sublicense * * *’s interests in such * * * Patent Rights within the Phenomix Licensed Field to Phenomix in accordance with, and subject to, the terms of this Agreement; 
 NOW, THEREFORE, in consideration of the premises and the mutual covenants and understandings contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 
 1. Definitions. In addition to those
defined terms (indicated by initial capitalization) that are defined in context herein, the following terms shall have the following meanings: 
 1.1 “Affiliate” shall mean any legal entity, more than fifty percent (50%) of whose outstanding shares or other interests representing the right to vote for the election of directors or other managing authority
are, or more than fifty percent (50%) of whose equity interest is, now or hereafter, owned or controlled, directly or indirectly by a person or entity, but only during the duration of such ownership or control. 
 1.2 “Approval” shall mean, with respect to a country, all authorizations by the appropriate governmental entity or entities
necessary for the marketing and commercial sale of a Licensed Product in that country. 
  
  
 
* * * Confidential Information, indicated by ***, has been omitted from this filing and filed separately with the Securities and Exchange
Commission. 
  

 - 1 - 

 1.3 “* * * Licensors” shall mean the Three Party Licensors, Prosidion Limited and
any other person or entity that shall license the * * * Patent Rights to * * *. 
 1.4 “* * * Patent Rights” shall
mean any of those patents and patent applications set forth in Schedule I and (i) any divisional, continuation, continuation-in-part (but only to the extent it claims subject matter directed to uses for diabetes or lowering glucose
levels), reissue, re-examination, renewal or extension thereof, or any patent issuing therefrom or (ii) any corresponding patent, patent application, utility model, inventor certificate, registration or the like in any country of the world with
respect to the foregoing. 
 1.5 “Authorized Sublicensee” shall have the meaning ascribed to it in
Section 2.2.1. 
 1.6 “Backup Licensed Product” shall mean any Licensed Product wherein the dipeptidyl
peptidase-IV inhibiting chemical entity is different from that in the First Licensed Product and is either (a) developed in addition to the First Licensed Product or (b) developed as a replacement for the First Licensed Product or a Backup
Licensed Product should such Licensed Product fail to complete successfully clinical studies or fail to obtain an Approval. Phenomix may not initiate development of more than three (3) Backup Licensed Products. 
 1.7 “Calendar Quarter” means, with respect to the first such Calendar Quarter, the period beginning on the Effective Date
and ending on the last day of the calendar quarter within which such Effective Date falls, and thereafter each successive period of three (3) consecutive calendar months ending on March 31, June 30, September 30 or
December 31; except that the last Calendar Quarter shall end upon the expiration or termination of this Agreement. 
 1.8
“Confidential Information” shall mean insofar as Phenomix is concerned, all information provided to Phenomix by or on behalf of * * * and identified as confidential at or about the time of disclosure and all information in or
concerning patent applications included within the * * * Patent Rights and, insofar as * * * is concerned, all information provided to * * * by or on behalf of Phenomix and identified as confidential at or about the time of disclosure, in all cases
with respect to both Phenomix and * * *, other than any information that as of the date of disclosure by one party to the other party: (a) was known to the receiving party as documented in its files; (b) was or thereafter becomes generally
available to the public through no fault of the receiving party; or (c) was received by a party from an unrelated third party without any obligation of confidentiality; or (d) as shown by written records, is independently developed by or
for the receiving party by persons having no access to or knowledge of such information. Information which is Confidential Information as of the date of disclosure by * * * to Phenomix may cease to be Confidential Information as provided in
Section 6.3. 
 1.9 “First Commercial Sale” shall mean, with respect to any country, the first bona fide
arms-length sale of a Licensed Product in any country following receipt, if required, of all regulatory approvals necessary to commence regular, commercial scale sales of the Licensed Product in such country. Any sale prior to receipt of all
approvals necessary to commence commercial sales, such as any so-called “named patient sale” or “compassionate use” sale, shall not be a First Commercial Sale. 
  
  
 * * * Confidential Information, indicated by ***, has been omitted from this filing and filed separately with the
Securities and Exchange Commission. 
  

 - 2 - 

 1.10 “First Licensed Product” shall mean the first Licensed Product that Phenomix
develops and commercializes under the Agreement. 
 1.11 “Follow-on Licensed Product” shall mean any Licensed Product
which is the same chemical entity as the First Licensed Product and that is developed as a replacement to the First Licensed Product or as a second generation of the First Licensed Product. For purposes of the Milestone Payments under
Section 3.1.2 each Follow-on Licensed Product shall be treated as identical to the First Licensed Product to which it relates, without an obligation to make Milestone Payments previously paid with respect to the First Licensed Product or other
Follow-on Licensed Products which relate to the First Licensed Product. 
 1.12 “Licensed Product” shall mean any
product within the Phenomix Licensed Field in a jurisdiction where the making, using, offering for sale or selling of which (were it not for the Patent License) would constitute an infringement of at least one Valid Patent Claim. 
 1.13 “NDA” means a New Drug Application, as defined in the United States Federal Food, Drug and Cosmetic Act (21 U. S. C.
§352(d)), or Biologics License Application submitted to the Food and Drug Administration, or any successor application or procedure required for Approval to commence sale of a Licensed Product in the United States. 
 1.14 “Net Sales” shall mean the gross invoice price for Licensed Products, as applicable, sold by Phenomix, its Affiliates or its
Authorized Sublicensee to a third party customer less the reasonable and customary accrual-basis deductions from such gross amounts for: (i) normal and customary trade, quantity, cash and other discounts, allowances and credits actually allowed
and taken directly with respect to sales of such Products; (ii) credits or allowances actually granted for damaged goods, returns, rejections, recalls, retroactive price reductions of such Products or billing corrections; (iii) sales or
similar taxes (including customs or other duties or other governmental charges levied on, absorbed or otherwise imposed directly on the sales of such Products including, without limitation, value added taxes or other governmental charges otherwise
measured by the billing amount, which are included in billing amount) surcharges, and other governmental charges incurred in connection with the production, sale, transportation, delivery, use, exportation or importation of Licensed Products that
are incurred at the time of, and are directly related to, sale; (iv) charge back payments and rebates granted to managed health care organizations or to federal, state and local governments, their agencies, and purchasers and reimbursers or to
trade customers, including but not limited to, wholesalers and chain and pharmacy buying groups; (v) invoiced freight, postage, shipping and insurance, handling and other transportation costs actually incurred; and (vi) rebates (or
equivalents thereof) that are granted to or charged by national, state, provincial or local governmental authorities in countries other than the United States. The transfer of Licensed Product by Phenomix or one of its Affiliates to another
Affiliate of Phenomix shall not be considered a sale; in such cases, Net Sales shall be determined based on the invoiced sales price by the Affiliate to its third party customer, less the deductions allowed under this Section. Every other commercial
use or disposition of Licensed Products by Phenomix or any of its Affiliates in barter or similar transactions shall be considered a sale of such Products at the weighted average Net Sales price for such Products during the preceding quarter.

  

 - 3 - 

 Net Sales shall include and be deemed to have been made with respect to any Licensed Product that is (a) sold or
transferred by Phenomix or an Authorized Sublicensee to any person for commercial purposes or commercially used by Phenomix or an Authorized Sublicensee without being transferred or (b) sold or transferred other than in an arms-length
transaction, and Net Sales in each such case shall be deemed to have been made at and shall include a price equal to the weighted average of the prices at which such Licensed Product sold in arms-length transactions during the applicable semi-annual
period. With respect to the transfer of any Licensed Product between Phenomix, its Affiliates and any Authorized Sublicensee for resale, the royalties owing hereunder shall be paid solely on the Net Sales of the transferee and not on the initial
transfer to such transferee. 
 The foregoing notwithstanding, Net Sales shall not include, nor shall they be deemed to have been made with respect to any
Licensed Product (i) given as a sample to a physician or other person in accordance with applicable FDA regulations; or (ii) transferred to any person for use in bona fide research studies, including without limitation, in vitro testing,
animal studies and human studies to determine safety and efficacy. 
 If a Licensed Product is sold in bulk (as distinguished from packaged in pharmaceutical
form) to a party other than an Affiliate or Authorized Sublicensee for resale in packaged or finished form (and is subsequently repurchased by Phenomix, an Affiliate or Authorized Sublicensee), Net Sales shall be calculated by determining the
quantity of such Product in packaged pharmaceutical form that would reasonably be produced from the bulk quantity of such Product so sold, and by multiplying such quantity by the average price for such Product in packaged pharmaceutical form during
the applicable royalty reporting period. 
 1.15 “Patent License” shall have the meaning ascribed to it in
Section 2.1. 
 1.16 “Phase II Study” means, as to a particular Licensed Product, a clinical trial in patients
in any country having a treatment phase with a duration of at least thirty (30) days conducted to evaluate further the efficacy and safety of a Licensed Product for an indication or indications of use in the patient population with the disease
or condition under study, in conformance with the requirements of 21 C.F.R. 312.21(b) (or any successor or substitute provision) or similar foreign requirements. 
 1.17 “Phase III Study” means, as to a particular Licensed Product, a clinical trial in patients in any country conducted to evaluate further the efficacy and safety of a Licensed Product in
order to assess the overall benefit-risk relationship of the Licensed Product and to provide an adequate basis for physician labeling, in conformance with the requirements of 21 C.F.R. 312.21(b) (or any successor or substitute provision) or similar
foreign requirements. 
 1.18 “Phenomix Intellectual Property” shall mean any intellectual property owned or
controlled by Phenomix that covers a Licensed Product. 
  

 - 4 - 

 1.19 “Phenomix Licensed Field” shall mean all compositions for use in diabetes or
lowering glucose levels wherein the dipeptidyl peptidase-IV inhibiting chemical entity is described by the following general formula: * * * 
 wherein R represents a * * *, and which * * *. The general formula above includes the * * * version of the chemical entity, where the chemical entity is * * * and * * *. The compositions may be pharmaceutical formulations or salts of the
chemical entity described by the general formula above. 
 1.20 “Royalty Period” shall mean the period commencing
with the First Commercial Sale and ending (unless sooner terminated) upon the expiration of the last to expire Valid Claim on a country-by-country basis. 
 1.21 “Start” shall mean, in reference to a clinical study, the earlier of the approval by an Institutional Review Board or equivalent thereof in any country or the commencement of patient
enrollment. 
 1.22 “Territory” shall mean throughout the world. 
 1.23 “Three Party Licensors” shall mean the * * *. 
 1.24 “Valid Patent Claim” shall mean either (a) a claim of an issued and unexpired patent included within the * * * Patent Rights, which claim has not been held permanently revoked or
declared unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction which is unappealable or unappealed within the time allowed for appeal and which has not been admitted to be invalid or unenforceable
through reissue or disclaimer or otherwise, or (b) a claim of a pending patent application included within the * * * Patent Rights, which claim was filed in good faith and has not been abandoned or finally disallowed without the possibility of
appeal or the refiling of said application. 
 2. License Grants; Restrictions; Release. 
 2.1 Patent License. Subject to the terms of this Agreement, * * * hereby grants to Phenomix, during the Term (as defined in
Section 11.1) only, a royalty-bearing, non-exclusive sublicense under the * * * Patent Rights, to make, have made, use, offer for sale, sell and import Licensed Products in the Phenomix Licensed Field in the Territory (the “Patent
License”). 
 2.2 Limited Right to Grant Sublicenses. Subject to the terms of this Agreement, Phenomix shall have the
right, during the Term only, to grant the following sublicense only: 
 2.2.1 Sublicense to parties which simultaneously take a license to the
Phenomix Intellectual Property to make, have made, use, offer for sale or sell, during the Term only, Licensed Products in the Phenomix Licensed Field in the Territory, provided, however, that (a) the sublicense is in writing and (b) the
terms and provisions of Exhibit A hereto shall apply to 
  
  
 
* * * Confidential Information, indicated by ***, has been omitted from this filing and filed separately with the Securities and Exchange
Commission. 
  

 - 5 - 

 
any sublicense by Phenomix of any of the rights granted to it hereunder and Phenomix shall comply with such Exhibit A in connection therewith (such
party after full compliance with clauses (a) and (b) of this Section 2.2.1 shall be termed an “Authorized Sublicensee”). 
 2.3 No Other Rights. Phenomix acknowledges and agrees that Phenomix acquires and has no rights in or to the * * * Patent Rights or any other intellectual property right of * * * or the * * * Licensors,
by implication, estoppel or otherwise, other than the licenses and rights expressly granted in Sections 2.1 and 2.2. 
 3. Payments; Reports; Audit
Rights. 
 3.1 License Payments. In consideration of the licenses and rights granted to Phenomix under Article 2, Phenomix
shall pay to * * * the following amounts (collectively, the “License Payments”): 
 3.1.1 Initial Payment.
Phenomix shall pay an Initial Payment of Two Million Five Hundred Thousand Dollars (US$2,500,000) to * * * on or before the Effective Date. 
 3.1.2 Milestone Payments. 
 (a) Except for the First Milestone listed in the table below, which shall be paid
no later than December 31, 2006, Phenomix shall pay the following amounts to * * * within thirty (30) days after a milestone listed in the table below (collectively, the “Milestones”) has been achieved during the Term for
the First Licensed Product: 
  

			
	 Milestone
	  	 Payment

	At the earlier of the Start of a Phase II Study in any country or December 31, 2006 (the “First Milestone”)	  	Two Million Five Hundred Thousand Dollars (US$2,500,000).
	At the Start of a Phase III Study in any country (the “Second Milestone”)	  	Two Million Five Hundred Thousand Dollars (US$2,500,000).
	Upon * * * (the “Third Milestone”)	  	* * * Dollars (US$* * *).
	At the earlier of * * * (the “Fourth Milestone”)	  	* * * Dollars (US$* * *).

 (b) Phenomix shall pay fifty percent (50%) of each of the amounts listed in
the foregoing table to * * * within thirty (30) days after a Milestone listed in foregoing table has been achieved during the Term for any Backup Licensed Product that has been developed in addition to the First Licensed Product. A payment of
fifty percent (50%) of the Initial Payment for each such additional Backup Licensed Product shall be due within thirty (30) days upon initiation of development of such Backup Licensed Product. Phenomix may not initiate development of more
than three (3) Backup Licensed Products. 
  
  

* * *
Confidential Information, indicated by ***, has been omitted from this filing and filed separately with the Securities and Exchange Commission. 
  

 - 6 - 

 (c) Phenomix shall make payments with respect to any Backup Licensed Product that is
developed as a replacement to the First Licensed Product, should such Licensed Product fail to complete successfully clinical studies or fail to obtain an Approval, with respect to all Milestones for such Backup Licensed Product that have not been
previously achieved and paid for by for the Licensed Product that such Backup Licensed Product replaces. Milestone payments that would have been due on the Licensed Product replaced by such Backup Licensed Product are to be paid thirty
(30) days after a Milestone listed in the table above has been achieved. Phenomix may not initiate development of more than three (3) Backup Licensed Products. 
 (d) Phenomix shall at all times keep * * * informed of development activities and provide quarterly updates so that * * * can
determine when a Milestone has been achieved. In addition to such updates, Phenomix shall inform * * * promptly when a Milestone has been achieved. 
 3.1.3 Royalty Payments. 
 (a) Single Agent Product. Phenomix shall pay to * * * a royalty of * * *
percent (* * *%) of the Net Sales of Licensed Products by Phenomix, its Affiliates and its Authorized Sublicensees during each Calendar Quarter during the Term within sixty (60) days of the end of the applicable Calendar Quarter. 
 (b) Combination Product. If any Licensed Product shall be sold in any combination which, by virtue of being a combination, would
infringe any Valid Claim of the * * * Patent Rights, then the gross invoice price for purposes of computing Net Sales attributable to the sale of such combination shall be the entire gross invoice price of the combination. 
 If any Licensed Product shall be sold by Phenomix or any of its Affiliates or Authorized Sublicensees in a combination which, by virtue of being a
combination, would not infringe any Valid Claim of the * * * Patent Rights, then the gross invoice price for purposes of computing Net Sales shall be determined as follows: 
 1. If there are Licensed Products or other products comprising branded prescription dipeptidyl peptidase-IV inhibitors being sold as single agent
products for type II diabetes or glucose lowering, then the gross invoice price shall be deemed to be the weighted average wholesaler acquisition cost of all branded prescription dipeptidyl peptidase-IV inhibitors being sold as single agent products
for type II diabetes or glucose lowering as shown in First Data Bank or any other nationally recognized third party pricing database as of the midpoint of the relevant quarter. The weighted average calculation will be based on total 
  
  
 * * *
Confidential Information, indicated by ***, has been omitted from this filing and filed separately with the Securities and Exchange Commission. 
  

 - 7 - 

 
prescriptions (“TRx”) of all strengths and products within the relevant quarter as reported by IMS or any other nationally recognized third
party prescription reporting database. If either or both third party databases (prescription and pricing) are no longer available, then all relevant parties agree to determine an appropriate method for calculation of the portion of the gross invoice
eligible for the royalty. 
 2. If there are no Licensed Products or other products comprising branded prescription dipeptidyl peptidase-IV
inhibitors being sold as single agent products for type II diabetes or glucose lowering, then the gross invoice price in connection with such combination sale shall be deemed to represent * * * percent (* * *%) of the gross invoice price of the
combination in the relevant sale. 
 The gross invoice price for non-U.S. sales of Licensed Products sold in a combination which, by virtue of
being a combination, would not infringe any Valid Claim of the * * * Patent Rights will be determined using the methodology above, with the third party databases appropriate for the country of sale to be reasonably determined by the parties.

 3.2 No Stacking Royalties. Phenomix, its Affiliates and its Authorized Sublicensee shall not reduce the royalties owing to *
* * on Net Sales of any Licensed Product in any country by the amount of any royalty paid to a third party. 
 3.3 Payment
Terms. All License Payments shall be paid in United States dollars by wire transfer of immediately available funds to such account as * * * may specify in writing to Phenomix from time to time in accordance with the provisions of
Section 13.4, without request or invoice therefor. All License Payments due hereunder shall be deemed received when funds are credited to * * *’s account at a bank designated by * * *, provided that * * * has so designated a receiving bank
no less than ten (10) days prior to the date a payment is due. Each License Payment shall be accompanied by a written report summarizing the basis for calculating the License Payment, including, without limitation, the Net Sales of all Licensed
Products, showing unit prices and quantities of each sold or deemed to be sold by Phenomix and its Authorized Sublicensee worldwide during the applicable Calendar Quarter. Each such written report shall be certified by the Chief Financial Officer
(or his designated agent) of Phenomix as being true, correct and complete. The conversion of any foreign currency into United States dollars shall be made based upon the applicable exchange rate therefor published in The Wall Street Journal on the
first business day following the conclusion of the applicable Calendar Quarter. 
 3.4 Business Records; Audit Rights. Phenomix
shall make and maintain such commercially reasonable business records, including, without limitation, customer invoices and other sales documentation, as may be necessary to calculate the royalties due and owing for each 
  
  
 * * *
Confidential Information, indicated by ***, has been omitted from this filing and filed separately with the Securities and Exchange Commission. 
  

 - 8 - 

 
applicable calendar year under this Agreement for a period expiring on the third anniversary of the end of each the calendar year to which such records
relate. During the Term and for a period of one (1) year thereafter, * * * and the * * * Licensors each shall have the right to designate an independent auditor reasonably acceptable to Phenomix, which auditor shall have the right, not more
frequently than once per calendar year, on at least ten (10) business days’ prior written notice, to inspect, copy and audit such business records of Phenomix, during regular business hours at Phenomix’s principal place of business,
in order to verify the amount of royalties due under this Agreement. Nothing in this Agreement shall be interpreted to allow for more than a total of one audit per year, regardless of which of * * * or the * * * Licensors initiates the audit. * * *
and the * * * Licensors agree that any information disclosed or provided to * * * or the * * * Licensors by the auditor relating to Net Sales of Licensed Products by Phenomix shall be deemed to be confidential information of Phenomix and shall be
treated and maintained by * * * and the * * * Licensors in the same manner that Phenomix is obligated to treat and maintain Confidential Information of * * * and the * * * Licensors pursuant to Section 6 of this Agreement. In the event that any
such audit reveals an underpayment of any License Payment, then Phenomix shall pay * * * the amount owed, together with interest thereon in accordance with Section 3.5, within ten (10) business days of Phenomix’s receipt of a written
notice identifying such underpayment. In the event that any such underpayment is greater than * * * percent (* * *%) of the License Payments owed to * * * during the period covered by the audit, then Phenomix shall pay all reasonable costs
of the audit, including reasonable fees of the auditor, within ten (10) business days of Phenomix’s receipt of an invoice from * * * or the * * * Licensors therefor. No period shall be subject to audit under this Section 3.4 more than
once, regardless of which of * * * or the * * * Licensors initiates the audit. 
 3.5 Net Sales True-Up Payment. Within one
hundred eighty (180) days following the end of each calendar year during the Term, Phenomix shall determine the actual cash paid, allowances or credits issued and write-offs taken related to its recorded gross sales in the Territory to third
parties that occurred during such calendar year. In the event that the amount of such actual deductions is less than the amount of the deductions Phenomix accrued in accordance with its accounting practices, then Phenomix shall pay * * * percent (*
* *%) of the difference between the actual deductions and the accrued deductions to * * * within thirty (30) days. In the event that the amount of such actual deductions is greater than the amount of the deductions Phenomix accrued in
accordance with its accounting practices, then * * * shall refund * * * percent (* * *%) of the difference between the accrued deductions and the actual deductions to Phenomix within thirty (30) days. 
 3.6 Late Payments; No Refunds. Phenomix shall pay interest on any late payments at a rate equal to the lesser of (a) * * * percent (*
* *%) per month and (b) the maximum rate of interest allowable under applicable law. All License Payments shall be non-refundable and shall be made without set-off, deduction or counterclaim. If a Licensed Product fails to complete successfully
clinical studies or to obtain an Approval, or should Phenomix initiate development of a Backup or Follow-on Licensed Product, no License Payments on such failed Licensed Product, or any other previous Licensed Product, shall be refunded to Phenomix.

  
  
 * * *
Confidential Information, indicated by ***, has been omitted from this filing and filed separately with the Securities and Exchange Commission. 
  

 - 9 - 

 3.7 Taxes. Phenomix shall be responsible for, and shall pay and reimburse * * * for, all
applicable state, local, federal and governmental taxes, duties or charges or any kind that may be levied upon * * * in connection with this Agreement, including, without limitation, excise, sales, use, property, license, value-added, withholding or
similar taxes, customs or other import duties and other taxes, tariffs and duties, except for taxes imposed on * * *’s net income or right to do business. If any payments to * * * are subject to deduction or withholding for any taxes or charges
imposed by any government taxing authority (other than in respect of * * *’s net income or right to do business), such payments shall be grossed-up to provide * * * the same amount after such deduction or withholding as it would have received
without the imposition of such tax or charge. * * * agrees to co-operate with Phenomix to recover any such deductions or withholdings. 
 4.
Representations and Warranties; Disclaimers. 
 4.1 Representations and Warranties of * * *. * * * represents, warrants and
covenants to Phenomix as follows: 
 4.1.1 * * * is a corporation duly organized, validly existing and in good standing under the laws of the
state of Delaware with corporate power and authority adequate for executing, delivering, and performing its obligations under this Agreement; 
 4.1.2 The execution, delivery and performance of this Agreement have been duly authorized by all necessary corporate action on the part of * * *; 
 4.1.3 * * * has entered into licenses with the * * * Licensors and is authorized to grant further licenses thereunder, including, with the consent of the Three Party Licensors, which has been obtained, the license
granted to Phenomix herein; 
 4.1.4 * * * has not received written notice of any pending or threatened litigation that alleges that the * *
* Patent Rights are invalid or unenforceable; 
 4.1.5 This Agreement has been duly executed and delivered by * * * and is a legal, valid and
binding obligation of * * *, enforceable against * * * in accordance with its terms; 
 4.1.6 The execution, delivery and performance of this
Agreement do not and will not conflict with or contravene any provision of the charter document or by-laws of * * * or any agreement, document, instrument, indenture or other obligation of * * * and, to the best knowledge of * * *, do not conflict
with any rights of third parties. 
 4.2 Representations and Warranties of Phenomix. Phenomix represents, warrants and
covenants to * * * as follows: 
 4.2.1 Phenomix has the full right and power to enter into this Agreement, the execution, delivery and
performance of this Agreement by Phenomix has been duly authorized by all necessary corporate action, and this Agreement evidences legal, valid and binding obligations of Phenomix, enforceable against Phenomix in accordance with its terms;

  
  
 * * *
Confidential Information, indicated by ***, has been omitted from this filing and filed separately with the Securities and Exchange Commission. 
  

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 4.2.2 Development of the First Licensed Product is currently underway, and Phenomix has no reason to
believe that clinical development of the First Licensed Product will terminate prior to the commencement of a Phase II Study. 
 4.3
Disclaimer of Warranties By * * *. EXCEPT AS EXPRESSLY SET FORTH IN SECTION 4.1, * * * AND THE * * * LICENSORS MAKE NO REPRESENTATIONS, EXTEND NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED (INCLUDING, WITHOUT LIMITATION, ANY
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR PURPOSE), AND ASSUME NO RESPONSIBILITIES WHATSOEVER, WITH RESPECT TO THE * * * PATENT RIGHTS OR THE USE THEREOF, OR THE MANUFACTURE, POSSESSION, USE, MARKETING, SALE, OR OTHER DISPOSITION BY PHENOMIX, OR
OF LICENSED PRODUCT(S) OR ANY OTHER PRODUCTS OR SERVICES, EXCEPT ONLY AS EXPRESSLY STATED BELOW IN THIS ARTICLE. Without limitation of the foregoing generality, nothing contained herein or in any disclosure of the * * * Patent Rights made by or on
behalf of * * * shall be construed as extending any representation or warranty with respect to the * * * Patent Rights or Licensed Products or the results to be obtained by the use of the * * * Patent Rights or any Licensed Products or that anything
made, used, or sold by use of the * * * Patent Rights or any part thereof, alone or in combination, will be free from infringement of patents or other rights of third parties. EXCEPT AS SET FORTH IN THE NEXT SENTENCE, NONE OF * * *, PHENOMIX AND THE
* * * LICENSORS SHALL BE LIABLE TO EACH OTHER, THEIR RESPECTIVE AFFILIATES, OR ANY OTHER PARTY, REGARDLESS OF THE FORM OR THEORY OF ACTION (WHETHER CONTRACT, TORT, INCLUDING NEGLIGENCE, STRICT LIABILITY OR OTHERWISE), FOR ANY SPECIAL, INCIDENTAL,
CONSEQUENTIAL, PUNITIVE, OR OTHER EXTRAORDINARY DAMAGES ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE * * * PATENT RIGHTS, THE LICENSED PRODUCTS, OR ANY PRODUCTS OR SERVICES FURNISHED OR NOT FURNISHED BY ANY SUCH PARTY, EVEN IF ADVISED OF THE
POSSIBILITY THEREOF. For the avoidance of doubt, the foregoing limitation on liability for special, incidental, consequential, punitive, or other extraordinary damages shall not be construed to limit the liability of Phenomix under Section 9.1
or of either Phenomix or * * * under Section 6.1. 
 Phenomix agrees that all warranties, if any, in connection with the use, sale or
other disposition of any Licensed Products by Phenomix or its Affiliates will be made by them and will not directly or impliedly obligate * * * and the * * * Licensors. 
 5. Patent Prosecution. 
 5.1 Patent Prosecution of * * * Patent Rights. Phenomix
acknowledges and agrees that Phenomix shall have no control over any part of the preparation, filing, prosecution or maintenance of any of the * * * Patent Rights; that the * * * Licensors have sole and unfettered 
  
  
 * * *
Confidential Information, indicated by ***, has been omitted from this filing and filed separately with the Securities and Exchange Commission. 
  

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control over the preparation, filing, prosecution and maintenance of the * * * Patent Rights; and that all determinations regarding the preparation, filing,
prosecution and maintenance of the * * * Patent Rights shall be made only by the * * * Licensors, in their sole judgment, subject to the obligations of the * * * Licensors to * * *, including, without limitation, the obligation to cooperate with * *
*, and keep * * * informed, with respect to such prosecution and maintenance. 
 6. Confidentiality. 
 6.1 Limitations on Use and Disclosure. Each party agrees to treat all Confidential Information disclosed to it by the other as confidential,
and to use and disclose the same only for the purposes of exercising its rights and performing its responsibilities pursuant to this Agreement. Each of Phenomix and * * * agrees that it will exercise every reasonable precaution to prevent the
disclosure of the other’s Confidential Information by any of its directors, officers, employees or agents to other parties, other than to Affiliates. Any Confidential Information disclosed to Affiliates shall be disclosed on the basis of and
subject to the confidentiality provisions of this Agreement. The parties agree to limit the disclosure of each other’s Confidential Information to individuals who have a need to know for purposes of this Agreement and who have been instructed
on the terms of this Agreement and have agreed to comply with those terms both on behalf of their employers and as individuals. Each party agrees to be responsible for all such compliance and failures thereof by persons to whom it has disclosed the
other party’s Confidential Information. 
 6.2 Press Releases. It is understood that one or both of * * * and Phenomix may
desire to issue a press release announcing the signing of this Agreement or Phenomix’s proposed activities hereunder. Prior to publication of any such press release by * * * or Phenomix, the releasing party shall provide a copy of such release
to the non-releasing party, and provide such party 3 days in which to give comments. Neither * * * nor Phenomix may issue a press release containing the names of the parties and/or the financial terms of this Agreement without the written consent of
the non-releasing party after its review and approval of the text and timing of such press release. 
 6.3 Cessation. Any
information which is Confidential Information at the date of disclosure thereof shall cease to be Confidential Information, and Phenomix and * * * and their respective Affiliates shall be released from the provisions of Section 6.1 as to such
information on the date that (a) through no act or omission on the part of the receiving party or its Affiliates, such information was or thereafter becomes generally available to the public, (b) the same information is received by the
receiving party from an unrelated third party who has no obligation of confidentiality to the disclosing party, or (c) the same information is independently developed by persons having no access to or knowledge of the Confidential Information.
The royalties due to * * * hereunder with respect to Net Sales shall not in any way be reduced or otherwise adversely affected by reason of any information ceasing to be Confidential Information or failing to have the characteristics of Confidential
Information as defined herein. 
  
  
 * * *
Confidential Information, indicated by ***, has been omitted from this filing and filed separately with the Securities and Exchange Commission. 
  

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 6.4 Effectiveness; Time Limit. The provisions of this Article 6 shall continue to apply to
any information which is Confidential Information for so long as it shall remain such, notwithstanding any termination of this Agreement or the Patent License or the Term, provided, however, that the obligations of confidentiality under this Article
shall in any event expire and cease to exist five (5) years after the date hereof. 
 7. Non-Use of Names. 
 7.1 Names of the Parties. Phenomix agrees that it will not use the name of * * *, the * * * Licensors or of any other owner or licensee of
any of the * * * Patent Rights (collectively a “Protected Person” hereunder) or any variant of a Protected Person’s name, or use any insignia of any Protected Person, or identify a Protected Person as a party to this Agreement,
or as a participant in inventing the inventions within the * * * Patent Rights in any form of publicity or disclosure, including, without limitation, in any advertising or promotional sales literature, without the prior express written consent of
such Protected Person, which consent may be withheld or withdrawn by such Protected Person in its complete and uncontrolled discretion for any reason whatsoever and at any time or times. However, notwithstanding the foregoing, no Protected Person
shall make any objection to Phenomix’s making such other disclosures as in the reasonable opinion of legal counsel to Phenomix are required as a matter of law, regulation or practice and such general descriptions of this Agreement as may be
desired by Phenomix for purposes of obtaining financing (including grants from governmental authorities) or as may be reasonably determined by Phenomix to be necessary for the conduct of its business (other than in connection with advertising or
sales promotion). Phenomix shall impose and enforce the requirements of this Article on its Affiliates. 
 8. Compliance with Laws. 
 8.1 Export Controls. Phenomix shall comply, and shall cause its Authorized Sublicensee to comply, with all applicable United States laws and
regulations relating to the export of certain commodities and technical data with regard to the * * * Patent Rights and Licensed Products. 
 8.2 Other Laws. Phenomix shall comply with, and shall use reasonable efforts to ensure that its Authorized Sublicensee comply with, all applicable patent marking laws, rules, and regulations and all other laws, rules, and
regulations of governmental authorities applicable to any of their respective activities contemplated by this Agreement, and all desirable industry practices, in connection therewith, including, without limitation, any appropriate products labeling
and safety recommendations of trade associations or governmental authorities. 
 9. Indemnification; Infringement Actions. 
 9.1 Phenomix shall defend, indemnify and hold harmless * * *, the * * * Licensors and any director, trustee, officer, employee, agent or Affiliate
of * * * or the * * * Licensors (each, an “Indemnified Person”) from and against any and all liabilities, losses, obligations, damages, costs and expenses (including reasonable attorney’s fees) of any kind incurred by any such

  
  
 * * *
Confidential Information, indicated by ***, has been omitted from this filing and filed separately with the Securities and Exchange Commission. 
  

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Indemnified Person (“Losses”), which arise out of or in connection with or are for the purpose of avoiding or settling any and all third
party claims, demands, actions, causes of actions, suits, appeals or proceedings (“Claims”) based on any actual or alleged injuries, damages or liabilities of any kind whatsoever — excluding with respect only to * * *, the * *
* Licensors and their respective officers, directors, employees, agents and Affiliates, Claims based on allegations of infringement of third party property rights by the * * * Patent Rights — arising, directly or indirectly, out of (i) the
design, manufacture, sale or other disposition of any Licensed Products by Phenomix, its Affiliates or sublicensees or out of the use thereof or out of the presence of Phenomix’s employees or agents on the premises of any Indemnified Person;
(ii) any negligent or willful act or omission of Phenomix, its directors, officers, employees, agents or any of its Affiliates, sublicensees, or any third party acting under the direction or control of Phenomix, (iii) the breach of any
provision, term, covenant, warranty or representation made by Phenomix in this Agreement; or (iv) any violation of applicable law, rule or regulation by Phenomix, its directors, officers, employees, agents or any of its Affiliates,
sublicensees, or any third party acting under the direction or control of Phenomix. 
 9.2 Indemnification Provisions. An
Indemnified Person shall promptly after receipt of notice of any Claim notify indemnifying party in writing of said Claim and provide to such indemnifying party copies of all papers served on the Indemnified Person, provided, however,
that an Indemnified Person’s failure to so notify the indemnifying party shall not relieve such party of its obligations to the Indemnified Party pursuant to Section 9.1, except to the extent that such delay materially compromises such
party’s ability to adequately defend such Claim. The indemnifying party shall have the right to retain counsel of its choosing (reasonably acceptable to the Indemnified Person) and shall control the defense and settlement of any Claim,
provided, however, that the indemnifying party shall not have the right to make any settlement or take any other action which would be deemed to confess wrongdoing by any Indemnified Person, could reasonably be expected to have a
negative effect on the reputation of any Indemnified Person, or provides for injunctive or other non-monetary relief adverse to the continuing interest of any Indemnified Person, without the prior written consent of the Indemnified Person involved.
An Indemnified Person shall cooperate fully in the defense of any Claim and may participate in the defense with counsel of such Indemnified Person’s choosing, such separate counsel to be at the Indemnified Person’s expense unless an
ethical conflict of interest exists between Phenomix and the Indemnified Person with respect to the defense, in which case separate counsel for the Indemnified Person shall be at the indemnifying party’s expense. 
 9.3 Infringement Actions. 
 9.3.1 Phenomix shall inform * * * promptly in writing of any alleged infringement of the * * *
Patent Rights by a third party, including all details then available. * * * shall have the sole right, in its exclusive and unfettered discretion, but shall not be obligated, to prosecute at its own expense any such infringement. * * * may join
Phenomix as a plaintiff in any such infringement suit at * * *’s expense. Phenomix shall cooperate in all reasonable respects, including, to
the extent possible, obtaining the testimony of its employees and making available physical evidence in the possession of that party. 
  
  
 
* * * Confidential Information, indicated by ***, has been omitted from this filing and filed separately with the Securities and Exchange
Commission. 
  

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 9.3.2 If any declaratory judgment or other legal action alleging invalidity or non-infringement of any of
the * * * Patent Rights shall be brought against Phenomix (solely or together with * * *), * * *, in its exclusive and unfettered discretion, may assume the sole defense of the action at its expense. Phenomix shall cooperate in all reasonable
respects, including, to the extent possible, obtaining the testimony of its employees and making available physical evidence in the possession of that party, but shall have no obligation to otherwise defend any such action or to pay any of the costs
related thereto. 
 9.3.3 Proceeds in any legal action shall belong exclusively to * * * and the * * * Licensors. 
 9.3.4 Phenomix, its Affiliates and its Authorized Sublicensees shall place appropriate * * * Patent Rights patent and/or patent pending markings on the
Licensed Product, or the packaging or labeling therefor. The content, form, size, location and language of such markings shall be in accordance with the laws and practices of the country in which the applicable units of Licensed Product are
distributed. 
 9.3.5 Phenomix, its Affiliates and its Authorized Sublicensee shall not list any of the * * * Patent Rights for any Licensed
Product in the Orange Book or foreign equivalent thereof. 
 10. Diligence Obligations of Phenomix. 
 10.1 Phenomix covenants and agrees to use commercially reasonable efforts to develop the Licensed Products and to effect the introduction of
Licensed Products into the commercial market in the Territory as soon as reasonably practical, consistent with sound and reasonable business practices and judgments. 
 11. Term and Termination. 
 11.1 Term of Agreement. This Agreement shall be effective as
of the Effective Date and shall continue in full force and effect until the expiration of the last to expire of any Valid Patent Claim, or until it is terminated by Phenomix upon thirty (30) days written notice, subject to the further rights of
termination hereinafter set forth. 
 11.2 Events. The Patent License granted hereunder may be terminated by * * * pursuant to
one of the following subsections: 
 11.2.1 Payment Default. If Phenomix shall fail after thirty (30) days written notice from *
* * to pay to * * * any royalties or other payments due and payable hereunder, * * * may terminate the Patent License and * * *’s obligations hereunder by written notice to Phenomix. 
  
  
 * * * Confidential Information, indicated by ***, has been omitted from this filing and filed separately with the
Securities and Exchange Commission. 
  

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 11.2.2 Material Default. If Phenomix shall fail in any material way to perform any other agreement
required to be performed by Phenomix under this Agreement, or if any Affiliate shall be in material breach of any conditions or obligations affecting * * * and compliance with which Phenomix is responsible for hereunder, or if any representation or
warranty of Phenomix contained in this Agreement shall prove to have been inaccurate or misleading in any material way when made (referred to collectively and individually as a “material default”), and Phenomix has not cured such material
default within sixty (60) days after * * * has given it written notice thereof then, without limitation of and in addition to any and all other rights and remedies available to * * * with respect to such material default, * * * may terminate
the Patent License and * * *’s obligations hereunder by written notice to Phenomix. If Phenomix can demonstrate to * * *’s reasonable satisfaction that any such material default is not curable within such sixty (60) day period, * * *
shall grant Phenomix a reasonable extension to the cure period, provided that Phenomix demonstrates diligent efforts to cure any such material default. 
 11.3 Effects. Upon termination of the Patent License for any reason, nothing herein shall be construed to release Phenomix from any obligations hereunder, but all rights of Phenomix, its Affiliates and
its Authorized Sublicensees to make, use, or sell, and to have made, used or sold, Licensed Products, or to practice and use the * * * Patent Rights shall cease immediately, except that Phenomix its Affiliates and its Authorized Sublicensees may,
after the effective date of such termination, sell all Licensed Products that they may have on hand at the date of termination, and may complete manufacture of Licensed Products then in the process of manufacture and sell them, provided that they
pay all royalties due thereon with respect to Net Sales, as provided in this Agreement. 
 11.4 Survival. In addition to those
provisions which by their very nature are intended to survive any expiration or termination of this Agreement, the following provisions shall survive any expiration or termination of this Agreement: Sections 3, 4.3, 6, 7, 9, 12, 13 and this
Section 11. 
 11.5 * * * Licensors. In the event that one or more of the * * * Licensors terminate their agreements with
* * * that granted rights sublicensed to Phenomix under this Agreement, * * * shall use reasonable commercial efforts to assist Phenomix in entering into direct licenses with such * * * Licensors. 
 12. Dispute Resolution 
 12.1
Negotiation. In the event of any dispute or disagreement between * * * and Phenomix as to the interpretation of any provision of this Agreement or the performance of any obligations hereunder, the matter, upon written request of either
party, shall be referred to a senior executive officer of each party (the “Senior Officers”). The Senior Officers shall promptly meet in a good faith effort to resolve the dispute. If the Senior Officers do not agree upon a decision
within thirty (30) calendar days of the date the matter was referred to them, each of * * * and Phenomix shall be free to exercise the remedies available to it under Section 12.2 below. 
  
  
 * * *
Confidential Information, indicated by ***, has been omitted from this filing and filed separately with the Securities and Exchange Commission. 
  

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 12.2 Submission to Arbitration. If * * * and Phenomix are unable to resolve a dispute
pursuant to Section 12.1, the dispute shall be submitted to binding arbitration to be conducted in the vicinity of the defending party before either (if applicable under Section 12.2.1) one (1) arbitrator or a panel of three
(3) arbitrators (each, an “Arbitrator”) in accordance with the Commercial Arbitration Rules of the American Arbitration Association (the “AAA”) then in effect and the further procedures set forth in this
Article 12. Each Arbitrator shall have at least fifteen (15) years of experience in the field of biochemistry. 
 12.2.1 Efforts to
Choose Single Arbitrator. The parties shall use commercially reasonable efforts to agree upon and appoint, in accordance with the Commercial Arbitration Rules of the AAA, a single arbitrator who is acceptable to both parties in order to resolve
conclusively the dispute. 
 12.2.2 Applicable Rules. In the event of any conflict between the Commercial Arbitration Rules in effect
from time to time and the provisions of this Agreement, the provisions of this Agreement shall prevail and be controlling. 
 12.2.3
Commencement of Arbitration. Either * * * or Phenomix may commence an arbitration by filing a written submission with the Boston office or the San Diego office of the AAA, as the case may be, in accordance with Rule 4 (or any successor
provision) of the Commercial Arbitration Rules and the other shall respond in accordance with said Rule 4 (or any successor provision). If the parties are unable to agree upon a single Arbitrator (as provided in Section 12.2.1), each of * * *
and Phenomix shall select one Arbitrator from the list of persons knowledgeable in patent and biochemistry matters provided by the AAA consistent with Rule 11(a) (or any successor provision) and the two (2) Arbitrators so chosen (or the AAA)
shall jointly select a third person knowledgeable in patent and biochemistry matters in accordance with Rule 13 (or any successor provision). The Arbitrators shall be familiar with and experienced in matters relating to patents and the field of
biochemistry. 
 12.3 Applicable Law. The substantive law to be applied in the arbitration shall be (a) with respect to
disputes involving matters other than patent rights, the internal laws of the State of Massachusetts and (b) with respect to disputes involving patent rights in any jurisdiction, the patent laws of the applicable jurisdiction. Any award
rendered by the Arbitrators shall be final, conclusive and binding upon the parties, and judgment thereon may be entered and enforced in any state or federal court of competent jurisdiction. 
 12.4 Limitations on Authority of Arbitrators. The Arbitrators shall have no power or authority, under the Commercial Arbitration Rules or
otherwise, to (a) modify or disregard any provision of this Agreement, (b) address or resolve any issue not submitted by the parties, or (c) award any damages other than compensatory damages, and the Arbitrators are specifically
precluded from awarding consequential, punitive or exemplary damages other than expressly permitted by this Agreement. 
  
  
 
* * * Confidential Information, indicated by ***, has been omitted from this filing and filed separately with the Securities and Exchange
Commission. 
  

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 12.5 Costs and Expenses. In
connection with any arbitration proceeding pursuant to this Agreement, unless the Arbitrators shall determine otherwise, each party shall bear its own costs and expenses. Notwithstanding the foregoing, each of * * * and Phenomix shall be responsible
for one half ( 1/2) of the fees and costs of the AAA and the Arbitrators, the costs and expenses of obtaining the facility
where the arbitration hearing is held, and such other costs and expenses as the Arbitrators may determine to be directly related to the conduct of the arbitration and appropriately borne jointly by the parties. 
 12.6 Interim Relief; Recourse to Courts. Notwithstanding the applicability of the AAA’s Emergency Interim Relief Procedures or any
successor procedures thereto, a party may initiate an action in a court of competent jurisdiction located in New York and may seek interim measures (including, without limitation, a temporary restraining order or preliminary injunction) necessary to
protect the interests of such party pending the outcome of the arbitration. In such case, the court shall be free to act on all requests for interim measures from time to time, but shall stay the action in all other respects pending the arbitration
(which the court may compel). If any such action is still pending at the time of the Arbitrators’ Award, either party may apply to such court for entry of judgment on, and enforcement of, the Arbitrators’ Award, including, without
limitation, any equitable relief awarded by the Arbitrators. 
 12.7 Arbitration Remedy Exclusive. Except as provided in
Section 12.6 (with respect to interim relief), the parties acknowledge and agree that arbitration pursuant to Section 12.2 is the exclusive remedy available to the parties with respect to any dispute, disagreement, claim or controversy
arising out of or relating to this Agreement that cannot be resolved through negotiation among the parties. 
 12.8 Submission to
Courts. 
 12.8.1 Recourse to courts is limited as expressly provided in Sections 12.6 and 12.7. The provisions of Section 12.8.2
shall apply with respect to such access to courts as is consistent with Sections 12.6 and 12.7. 
 12.8.2 Each of * * * and Phenomix hereby
irrevocably and unconditionally (a) consents to submit to the exclusive jurisdiction of courts located in New York for any actions, suits or proceedings arising out of or relating to this Agreement (and covenants and agrees not to commence any
such action, suit or proceeding except in such courts), (b) waives any objection to the laying of venue of any action, suit or proceeding arising out of or relating to this Agreement in any court located in New York, (c) stipulates to the
convenience, efficiency and fairness of proceeding in such courts, and (d) covenants not to assert any objection to proceeding in such courts based on any alleged lack of jurisdiction or any alleged inconvenience, inefficiency or unfairness of
such courts. 
  
  
 * * *
Confidential Information, indicated by ***, has been omitted from this filing and filed separately with the Securities and Exchange Commission. 
  

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 13. General. 
 13.1 Third Party Beneficiary; Enforceability of License Agreements with * * * Licensors. Phenomix and * * * mutually agree that the * * * Licensors are and shall be a third party beneficiaries of Phenomix’s obligations
and * * *’s rights under this Agreement for purposes of Sections 3.4, 3.5, 4.3, 6, 7, 8, 9, 10 and this Section 11 and shall have the right to enforce, and to institute any action to enforce and/or to seek legal and equitable remedies in
the event of any actual or threatened breach of, any of the provisions thereof as though and to the same extent as if the * * * Licensors were a party hereto. 
 13.2 Entire Agreement; Amendment; Waiver. This Agreement contains the entire understanding of the parties with respect to the subject matter hereof and supersedes all prior agreements relating thereto,
whether written or oral, between the parties. Any amendment to or modification of this Agreement must be in writing signed by a duly authorized officer of each party. No provision of this Agreement may be waived except in a writing signed by an
authorized representative of the party against whom the waiver is sought to be enforced. A waiver by a party hereto of any provision of this Agreement shall not be construed to be a waiver of any succeeding breach thereof or of any other provision
hereof. 
 13.3 Governing Law; Forum. This Agreement shall be governed by the laws of The Commonwealth of Massachusetts,
without regard to its conflicts of laws principles. 
 13.4 Notices. Any notice or report required or permitted to be given to
a party under this Agreement shall be deemed to have been sufficiently given for all purposes if personally delivered, or sent by reputable international courier with established tracking capability and marked for delivery within two
(2) business days, as follows: 
 In the case of Phenomix to: 
 Phenomix Corporation 
 5871 Oberlin Drive, Suite 200 
 San Diego, CA 92121 
 Attention: Chief Business Officer 
 with a copy to: 
 Heller Ehrman LLP 
 4350 La Jolla Village Drive 
 7th Floor 
 San Diego, CA 92122 
 Attention: Richard A. Kaufman, Esq. 
  
  
 
* * * Confidential Information, indicated by ***, has been omitted from this filing and filed separately with the Securities and Exchange
Commission. 
  

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 In the case of * * * to: 
 * * * 
 * * *

 Attn: * * * 
 With a copy to: 
 Peter M. Rosenblum, Esq. 
 Foley Hoag LLP 
 Seaport World Trade Center West 
 155 Seaport Blvd. 
 Boston, MA 02210 
 Either party may change
the person or address to which any notice is to be given by providing written notice to the other party of such change in accordance with this Section 13.4. 
 13.5 Assignment. Except as expressly provided herein, Phenomix may not delegate, assign, sublicense or otherwise transfer the benefit of this Agreement, or any of its rights or obligations hereunder, to
any third party without * * *’s prior written consent, provided, however, that Phenomix may assign this Agreement, together with all of its rights and obligations hereunder, without the prior written consent of * * * to any
acquirer of all or substantially all of the stock, assets or business of Phenomix to which this Agreement relates in any merger, consolidation, sale of all or substantially all of Phenomix’s assets or other similar business combination,
provided that such acquirer agrees in a writing delivered to * * * to be bound by all of the obligations of the assigning party set forth in this Agreement. Any attempted assignment in violation of this Section 13.5 shall be null and void.
Subject to this Section 13.5, the rights and liabilities of the parties under this Agreement shall inure to the benefit of and bind the parties’ respective successors and permitted assigns. 
 13.6 Force Majeure. Neither party shall be liable for any delay in performing or failure to perform, in whole or in part, its obligations
under this Agreement (other than a delay in or failure to make a payment thereunder) due to factors beyond such party’s reasonable control, including, without limitation, strike, labor disputes, act of war, civil commotion, act of public enemy,
fire, flood or act of God, provided, however, that such party makes diligent efforts to overcome any such factor and that the delay is no longer than that caused by such factor. 
 13.7 Severability. If any provision of this Agreement is determined to be invalid, illegal or otherwise unenforceable, then such provision
shall instead be construed to give effect to its intent to the maximum extent possible, and the validity, legality and enforceability of the other provisions of this Agreement shall not be affected thereby. If, after application of the immediately
preceding sentence, any provision of this Agreement is determined to be invalid, illegal or unenforceable. 
  
  
 
* * * Confidential Information, indicated by ***, has been omitted from this filing and filed separately with the Securities and Exchange
Commission. 
  

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 13.8 Counterparts. This Agreement may be executed in multiple counterparts, each of which
shall be deemed an original and all of which taken together shall be deemed to be one instrument. Each party to this Agreement may rely on a facsimile signature on any counterpart to this Agreement, and each party shall, if any other party so
requests, provide an originally signed copy of any counterpart to this Agreement to such other party. Section headings used herein are provided for convenience and are not to be used in construing this Agreement. 
 IN WITNESS WHEREOF, the parties have caused this License Agreement to be executed by their duly authorized representatives as of the date(s) indicated
below. 
  

									
	 * * *
	 		 	PHENOMIX CORPORATION
					
	 By:
	 	 * * *
	 		 	By:	 	 /s/ Chris Burnley

	 Name:
	 	* * *	 		 	Name:	 	Chris Burnley
	 Title:
	 	President and CEO	 		 	Title:	 	EVP & Chief Business Officer
	 Date:
	 	 Feb. 14, 2006
	 		 	Date:	 	 2-14-06

  
  
 * * *
Confidential Information, indicated by ***, has been omitted from this filing and filed separately with the Securities and Exchange Commission. 
  

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 Exhibit A 
 PHENOMIX SUBLICENSES 
 Sublicenses related to the * * * Patent Rights granted to third parties by
Phenomix shall include inter alia the following provisions which are provided as guidelines. It is understood that these provisions, their terms, time periods and related specifics represent goals which Phenomix shall use commercially reasonable
efforts to impose on its sublicensee to meet or potentially exceed, but that these provisions may be subject to reasonable modification during negotiation in order to enable Phenomix to secure a sublicensee on commercially reasonable terms.

 ROYALTY RELATED PROVISIONS. 
 “Net Sales” shall mean, the gross invoice price for Licensed Products sold by Licensee or its Affiliates to a third party customer less the reasonable and customary accrual-basis deductions from such gross amounts for:
(i) normal and customary trade, cash and other discounts, allowances and credits actually allowed and taken directly with respect to sales of such Products; (ii) credits or allowances actually granted for damaged goods, returns or
rejections of such Products; (iii) sales or similar taxes (including duties or other governmental charges levied on, absorbed or otherwise imposed directly on the sales of such Products including, without limitation, value added taxes or other
governmental charges otherwise measured by the billing amount, which are included in billing amount); (iv) charge back payments and rebates granted to managed health care organizations or to federal, state and local governments, their agencies,
and purchasers and reimbursers or to trade customers, including but not limited to, wholesalers and chain and pharmacy buying groups; and (v) rebates (or equivalents thereof) that are granted to or charged by national, state, provincial or
local governmental authorities in countries other than the United States; provided, however, that the aggregate of the foregoing deductions shall not exceed * * * percent (* * *%) of the gross invoice price to which such deductions relate. The
transfer of Licensed Products by Licensee or one of its Affiliates to another Affiliate of Licensee shall not be considered a sale; in such cases, Net Sales shall be determined based on the invoiced sales price by the Affiliate to its third party
customer, less the deductions allowed under this Section. Every other commercial use or disposition of Licensed Products by Licensee or its Affiliates in barter or similar transactions, not including samples, shall be considered a sale of such
Products at the weighted average Net Sales price for such Products during the preceding quarter. 
 If a Licensed Product is sold in bulk (as
distinguished from packaged in pharmaceutical form) to a party other than a sublicensee for resale in packaged or finished form, Net Sales shall be calculated by determining the quantity of such Product in packaged pharmaceutical form that would
reasonably be produced from the bulk quantity of such Product so sold, and by multiplying such quantity by the average price for such Product in packaged pharmaceutical form during the applicable royalty reporting period. 
 Within one hundred eighty (180) days following the end of each calendar year during the Term, Licensee shall determine the actual cash paid,
allowances or credits issued and write-offs 
  
  

* * *
Confidential Information, indicated by ***, has been omitted from this filing and filed separately with the Securities and Exchange Commission. 
  

 - 22 - 

 
taken related to its recorded gross sales in the Territory to third parties that occurred during such calendar year. In the event that the amount of such
actual deductions is less than the amount of the deductions Licensee accrued in accordance with its accounting practices, then Licensee shall pay * * * percent (* * *%) of the difference between the actual deductions and the accrued deductions to
Licensor within ten (10) days. In the event that the amount of such actual deductions is greater than the amount of the deductions Licensee accrued in accordance with its accounting practices, then Licensor shall refund * * * percent (* * *%)
of the difference between the accrued deductions and the actual deductions to Licensee within ten (10) days. 
 If any Licensed Product
shall be sold in any combination which, as a combination, would infringe any Valid Claim of the * * * Patent Rights, then the gross invoice price for purposes of computing Net Sales attributable to the sale of such combination shall be the entire
gross invoice price of the combination. 
 If any Licensed Product shall be sold in a combination which, as a combination, would not infringe
any Valid Claim of the * * * Patent Rights, then the gross invoice price for purposes of computing Net Sales shall be determined as follows: 
 1. If the Licensed Product is also sold by Licensee as a monotherapy, the gross invoice price in any such combination sale shall be deemed to be the peak wholesaler acquisition cost (“WAC”) unit price per strength (if
applicable) of such Licensed Product billed by Licensee for such monotherapy as published in First Data Bank or any other nationally recognized third party pricing database. In absence of any available third party pricing databases, Licensee agrees
to produce to Licensor its commercial pricing history. 
 2. If Licensee has not sold such Licensed Product as monotherapy, then the gross
invoice price in such combination sale shall be the weighted average WAC price of all dipeptidyl peptidase-IV inhibitors used in monotherapies for type II diabetes or glucose lowering as shown in First Data Bank or any other nationally recognized
third party pricing database as of the midpoint of the relevant quarter. The weighted average calculation will be based on total prescriptions (“TRx”) of all strengths and products within the relevant quarter as reported by IMS or
any other nationally recognized third party prescription reporting database. If either or both third party databases (prescription and pricing) are no longer available, then all relevant parties agree to determine an appropriate method for
calculation the portion of the gross invoice eligible for the royalty. 
 3. If there are no Licensed Products or other products being sold
for any of the foregoing monotherapies, then the gross invoice price in connection with such combination sale shall be deemed to represent * * * percent (* * *%) of the gross invoice price of the combination in the relevant sale. 
 The gross invoice price for non-U.S. sales of Licensed Products sold in a combination which, as a combination, would not infringe any Valid Claim of the
* * * Patent Rights will be determined using the methodology above, with the third party databases appropriate for the country of sale to be determined by the Licensor. 
  

  
 * * * Confidential Information, indicated by ***, has been omitted from this filing and filed separately with the
Securities and Exchange Commission. 
  

 - 23 - 

 “Royalty Period” shall mean the period commencing with the First Commercial Sale and
ending (unless sooner terminated) upon the expiration of the last to expire Valid Claim on a country-by-country basis. 
 Statements;
Payments. Licensee shall, within three (3) months after each calendar quarter during the Royalty Period, and within three (3) months after the end of the Royalty Period, provide Licensor with a statement accounting for the Net Sales of
Licensed Products by Licensee, its Affiliates for the immediately preceding calendar quarter or portion thereof, accompanied by payment of the full amount of royalties and other payments due under this Article XX for that period or portion thereof.
Each such statement shall be certified by the Chief Financial Officer (or his designated agent) of Licensee as being true, correct and complete. All payments due hereunder shall be deemed received when funds are credited to Licensor’s account
at a bank designated by Licensor for the purpose and shall be paid by check or wire transfer in the funds of a major industrialized country. Except as otherwise provided with Licensor’s approval in a sublicense agreement, the rate of exchange
of local currencies to U.S. Dollars shall be at the rate of exchange prevailing at the Bank of America, N.A. (or such other bank in Boston, Massachusetts or New York, New York as Licensor may designate from time to time), for currencies of the
amounts involved, as such rate is stated for the first business day after the end of the period with respect to which the fees and royalties are due. 
 Records; Audits. Licensee shall keep (and cause to be kept) and maintain complete and accurate records of the Net Sales by Licensee and its Affiliates in accordance with generally accepted accounting
principles. Such records shall be accessible to independent certified public accountants, selected by Licensor and reasonably acceptable to Licensee, for audits conducted not more than once a year during the Royalty Period and for one year after the
termination thereof, on reasonable notice and at any reasonable times during business hours, for the purpose of verifying Net Sales and any royalties or other payments due thereon. Such accountants shall disclose to Licensor only information
relating to the accuracy of the records kept and the payments made, and shall be under a duty to keep confidential any other information obtained from such records. Licensee and its Affiliates shall not be required to retain such records for more
than three (3) years after the close of any calendar quarter-year. No period shall be subject to audit under this Section more than once as to any entity being audited. 
 Substantial Underpayment. If any such audit reveals that the aggregate of fees and royalties paid during any calendar year was more than * * *
percent (* * *%) less than the amount that should have been paid, then the reasonable expenses of the audit shall be borne by Licensee, which shall pay those expenses within thirty (30) days after demand therefor by Licensor accompanied by the
accountants’ statement therefor. 
 Taxes. If any payments to Licensor are subject to deduction or withholding for any taxes or
charges imposed by any government taxing authority, such payments shall be grossed-up to 
  
  
 
* * * Confidential Information, indicated by ***, has been omitted from this filing and filed separately with the Securities and Exchange
Commission. 
  

 - 24 - 

 
provide Licensor the same amount after such deduction or withholding as it would have received without the imposition of such tax or charge. Licensor agrees
to co-operate with Licensee to recover any such deductions or withholdings. 
 CONFIDENTIALITY PROVISIONS. 
 1. Limitations on Use, Disclosure. Licensee agrees to treat all Confidential Information disclosed to it by Licensor as confidential, and to use
and disclose the same only for the purposes of making, having made, using, offering to sell and selling Licensed Products. Licensee agrees that it will exercise every reasonable precaution to prevent the disclosure of Confidential Information by any
of its directors, officers, employees or agents to other parties, other than to Affiliates. Any Confidential Information disclosed to Affiliates shall be disclosed on the basis of and subject to the confidentiality provisions of this Agreement.
Licensee agrees to limit the disclosure of the Confidential Information to individuals who have a need to know for the purpose of making or using Licensed Products and who have been instructed by Licensee on the terms of this Agreement and have
agreed to comply with those terms both on behalf of their employers and as individuals. Licensee agrees to be responsible for all such compliance and failures thereof. 
 2. Cessation. Any information which is Confidential Information at the date of disclosure thereof to Licensee shall cease to be Confidential Information, and Licensee and its Affiliates shall be released from
the provisions of Section 1 as to such information on the date that (a) through no act or omission on the part of Licensee or its Affiliates, such information was or thereafter becomes generally available to the public, (b) the same
information is received by Licensee from an unrelated third party who has no obligation of confidentiality to Licensor, or (c) the same information is independently developed for Licensee by persons having no access to or knowledge of the
Confidential Information. The royalties due to Licensor hereunder with respect to Net Sales shall not in any way be reduced or otherwise adversely affected by reason of any information ceasing to be Confidential Information or failing to have the
characteristics of Confidential Information as defined herein. 
 3. Time Limit. The provisions of this Article shall continue to
apply to any information which is Confidential Information for so long as it shall remain such, notwithstanding any termination of this Agreement or the License or expiration of the License Period, provided, however, that the obligations of
confidentiality under this Article shall in any event expire and cease to exist five (5) years after the date hereof. 
 WARRANTY DISCLAIMERS.

 Licensor Disclaimer. LICENSOR, ITS LICENSORS AND THE OWNER OF THE LICENSED PATENTS MAKE NO REPRESENTATIONS, EXTEND NO WARRANTIES OF
ANY KIND, EITHER EXPRESS OR IMPLIED (INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR PURPOSE), AND ASSUME NO RESPONSIBILITIES WHATSOEVER, WITH RESPECT TO THE LICENSED PATENT RIGHTS OR THE USE THEREOF, OR THE
MANUFACTURE, POSSESSION, USE, MARKETING, SALE, OR OTHER DISPOSITION BY LICENSOR, LICENSEE, OR ANYONE ELSE INCLUDING ANY LICENSED PATENT OWNER, OF LICENSED 

  

 - 25 - 

 
PRODUCT(S) OR ANY OTHER PRODUCTS OR SERVICES (INCLUDING, WITHOUT LIMITATION, PRODUCTS MADE BY LICENSOR, AND SERVICES RENDERED BY LICENSOR, THAT ARE OR WERE
FURNISHED TO LICENSEE AT ANY TIME BEFORE, ON, OR AFTER THE DATE HEREOF), EXCEPT ONLY AS EXPRESSLY STATED BELOW IN THIS ARTICLE. Without limitation of the foregoing generality, nothing contained herein or in any disclosure of the Licensed Patent
Rights made by or on behalf of Licensor shall be construed as extending any representation or warranty with respect to the Licensed Patent Rights or Licensed Products or the results to be obtained by the use of the Licensed Patent Rights or any
Licensed Products or that anything made, used, or sold by use of the Licensed Patent Rights or any part thereof, alone or in combination, will be free from infringement of patents or other rights of third parties. LICENSOR, ITS LICENSORS AND THE
OWNERS OF THE LICENSED PATENTS SHALL NOT BE LIABLE TO LICENSEE, ITS AFFILIATES, OR ANY OTHER PARTY, REGARDLESS OF THE FORM OR THEORY OF ACTION (WHETHER CONTRACT, TORT, INCLUDING NEGLIGENCE, STRICT LIABILITY OR OTHERWISE), FOR ANY SPECIAL,
INCIDENTAL, CONSEQUENTIAL, PUNITIVE, OR OTHER EXTRAORDINARY DAMAGES ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE LICENSED PATENT RIGHTS, THE LICENSED PRODUCTS, OR ANY PRODUCTS OR SERVICES FURNISHED OR NOT FURNISHED BY LICENSOR, ANY OF ITS
LICENSORS AND ANY OWNER OF A LICENSED PATENT, EVEN IF LICENSOR, ANY SUCH LICENSOR AND SUCH PATENT OWNER HAS BEEN ADVISED OF THE POSSIBILITY THEREOF. 
 Licensee agrees that all warranties, if any, in connection with the use, sale or other disposition of any Licensed Products (or any products made by Licensor or any other Licensed Patent owner and furnished at any
time to Licensee) by Licensee or its Affiliates will be made by them and will not directly or impliedly obligate Licensor or any other owner of any Licensed Patent. 
 TERMINATION: 
 1. Termination by Licensee. Licensee may terminate the entire License granted
hereunder or may terminate with respect to any patent or patent application in Licensed Patent Rights by giving Licensor ninety (90) days written notice thereof. Upon termination, Licensee shall provide Licensor with a final written report and
any royalties incurred as of the termination date shall become immediately due. 
 2. Events. The License granted hereunder may be
terminated by Licensor pursuant to one of the following subsections: 
 (a) Payment Default. If Licensee shall fail after thirty
(30) days written notice from Licensor to pay to Licensor any royalties or other payments due and payable hereunder, Licensor may terminate the License and Licensor’s obligations hereunder by written notice to Licensee. 
 (b) Material Default. If Licensee shall fail in any material way to perform any other agreement required to be performed by Licensee under this
Agreement, or if any Affiliate shall be in material breach of any conditions or obligations affecting Licensor and compliance 

  

 - 26 - 

 
with which Licensee is responsible for hereunder, or if any representation or warranty of Licensee contained in this Agreement shall prove to have been
inaccurate or misleading in any material way when made (referred to collectively and individually as a “material default”), and Licensee has not cured such material default within sixty (60) days after Licensor has given it written
notice thereof then, without limitation of and in addition to any and all other rights and remedies available to Licensor with respect to such material default, Licensor may terminate the License and Licensor’s obligations hereunder by written
notice to Licensee. 
 If Licensee can demonstrate to Licensor’s reasonable satisfaction that any such material default is not curable
within such sixty (60) day period, Licensor shall grant Licensee a reasonable extension to the cure period, provided that Licensee demonstrates diligent efforts to cure any such material default. 
 3. Effects. Upon termination of the License for any reason, nothing herein shall be construed to release Licensee from any obligations hereunder,
but all rights of Licensee and its Affiliates to make, use, or sell, and to have made, used or sold, Licensed Products, or to practice and use the Licensed Patent Rights shall cease immediately, except that Licensee and its Affiliates may after the
effective date of such termination sell all Licensed Products that they may have on hand at the date of termination, and may complete manufacture of Licensed Products then in the process of manufacture and sell them, provided that they pay all
royalties due thereon with respect to Net Sales, as provided in this Agreement. 
 NON-USE OF NAMES. 
 Licensee agrees that it will not use the name of Licensor or of any other owner or licensor of any Licensed Patent (collectively a “Protected
Person” hereunder) or any variant of a Protected Person’s name, or use any insignia of any Protected Person, or identify a Protected Person as a party to this Agreement, or as a participant in inventing the inventions within the Licensed
Patent Rights in any form of publicity or disclosure, including, without limitation, in any advertising or promotional sales literature, without the prior express written consent of such Protected Person, which consent may be withheld or withdrawn
by such Protected Person in its complete and uncontrolled discretion for any reason whatsoever and at any time or times. However, notwithstanding the foregoing, no Protected Person shall make any objection to Licensee’s making such other
disclosures as in the reasonable opinion of legal counsel to Licensee are required as a matter of law, regulation or practice and such general descriptions of this Agreement as may be desired by Licensee for purposes of obtaining financing
(including grants from governmental authorities) or as may be reasonably determined by Licensee to be necessary for the conduct of its business (other than in connection with advertising or sales promotion). Licensee shall impose and enforce the
requirements of this Article on its Affiliates. 
  

 - 27 - 

 SCHEDULE I 
 * * * 
  

									
	Patent/Application	 	Territory	 	Status	 	Grant Date	 	Expiry Date
	 ***
	 	***	 	***	 	***	 	April 24, 2017
	 ***
	 	***	 	***	 	***	 	April 24, 2017
	 ***
	 	***	 	***	 	***	 	April 24, 2017
	 ***
	 	***	 	***	 	***	 	April 24, 2017
	 ***
	 	***	 	***	 	***	 	April 24, 2017
	 ***
	 	***	 	***	 	***	 	April 24, 2017
	 ***
	 	***	 	***	 	***	 	April 24, 2017
	 ***
	 	***	 	***	 	***	 	April 24, 2017
	 ***
	 	***	 	***	 	***	 	April 24, 2016
	 ***
	 	***	 	***	 	***	 	April 24, 2017
	 ***
	 	***	 	***	 	***	 	April 24, 2017
	 ***
	 	***	 	***	 	***	 	April 24, 2017
	 ***
	 	***	 	***	 	***	 	April 24, 2017
	 ***
	 	***	 	***	 	***	 	April 24, 2017
	 ***
	 	***	 	***	 	***	 	April 24, 2017
	 ***
	 	***	 	***	 	***	 	April 24, 2017
	 ***
	 	***	 	***	 	***	 	April 24, 2017
	 ***
	 	***	 	***	 	***	 	April 24, 2017
	 ***
	 	***	 	***	 	***	 	April 24, 2017
	 ***
	 	***	 	***	 	***	 	April 24, 2017
	 ***
	 	***	 	***	 	***	 	April 24, 2017
	 ***
	 	***	 	***	 	***	 	April 24, 2017
	 ***
	 	***	 	***	 	***	 	April 24, 2017
	 ***
	 	***	 	***	 	***	 	April 24, 2017
	 ***
	 	***	 	***	 	***	 	April 24, 2017
	 ***
	 	***	 	***	 	***	 	April 24, 2017
	 ***
	 	***	 	***	 	***	 	April 24, 2017
	 ***
	 	***	 	***	 	***	 	April 24, 2017
	 ***
	 	***	 	***	 	***	 	April 24, 2017
	 ***
	 	***	 	***	 	***	 	April 24, 2017
	 ***
	 	***	 	***	 	***	 	April 24, 2017
	 ***
	 	***	 	***	 	***	 	April 24, 2017
	 ***
	 	***	 	***	 	***	 	April 24, 2017
	 ***
	 	***	 	***	 	***	 	April 24, 2017
	 ***
	 	***	 	***	 	***	 	 Filing Date:
 April 24, 1997

  
  

	* * *	Confidential Information, indicated by ***, has been omitted from this filing and filed separately with the Securities and Exchange Commission. A total of five out of seven pages
have been redacted in Schedule 1. 

  

 - 28 -

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