instruction:
In this task, you're given a passage that represents a legal contract or clause between multiple parties, followed by a question that needs to be answered. Based on the paragraph, you must write unambiguous answers to the questions and your answer must refer a specific phrase from the paragraph. If multiple answers seem to exist, write the answer that is the most plausible.
question:
EXHIBIT 4.5

MANUFACTURING OUTSOURCING AGREEMENT

This Manufacturing Outsourcing Agreement (The AGREEMENT) is entered into on January 21st, 2002, by and between Nice Systems Ltd., an Israeli registered corporation no. 52-0036872 having its place of business at 8 Hapnina Street, P.O.B 690, Ra'anana 43107, Israel, (NICE) and Flextronics Israel Ltd., an Israeli registered corporation no. 51-2933045, having its place of business at 1 Hatasiya Str., Ramat Gabriel Industrial Zone, Migdal Haemek 23108, P.O.Box 867, Israel (the CONTRACTOR). NICE and Contractor are collectively referred to as the Parties.

RECITALS

WHEREAS NICE issued a request for information (RFI) version A.2 dated June 17th, 2001 to a number of manufacturers seeking to provide NICE with certain local Manufacturing Outsourcing Services (as defined hereinafter) for the production, testing and delivery in world class quality and capability of NICE' Products, on a turnkey basis, to acquire from NICE inventory related to the operations to be outsourced, and to contract with certain of the contractors performing portions of the remainder of work or to accept assignment of such contracts, all as detailed herein;

WHEREAS the RFI was followed by a request for proposal including a detailed Statement of Work including Exhibits dated 13.8.01 (the RFP);

WHEREAS the Contractor submitted a proposal in response to the RFI and RFP (together the PROPOSAL or the CONTRACTOR'S PROPOSAL);

WHEREAS the bidding process resulted in the selection of Contractor, which represented that it possessed the necessary skills, staffing, experience, resources, and capabilities to provide those certain Manufacturing Outsourcing Services detailed herein in world class quality, capability and manner as set forth herein;

WHEREAS the Parties have completed the pre-contract due diligence, and now wish to contract for the provision of the Manufacturing Outsourcing Services;

NOW THEREFORE, FOR AND IN CONSIDERATION OF THE AGREEMENTS OF THE PARTIES SET FORTH BELOW, NICE AND CONTRACTOR AGREE AS FOLLOWS:

A. DEFINITIONS. The following terms shall have the meanings set forth below:

(i) RFI - shall have the meaning ascribed in the preamble above.

(ii) RFP - shall have the meaning ascribed in the preamble above.

(iii) SOW - Statement of Work document attached to the RFP and forming an integral part thereof including its Exhibits.

(iv) CONTRACTOR'S PROPOSAL or PROPOSAL - shall have the meaning ascribed in the preamble above. It is clarified that for the purpose of Contractor's Proposal in response to the RFI, Contractor hereby declares that such Proposal was valid and correct at the date submitted in all material aspects which are relevant to NICE' decision to choose Contractor as the Manufacturing Outsourcing Services supplier.

(v) PRODUCTS - Digital recording products as defined in APPENDIX A and further detailed in the PDM System, and as shall be amended from time to time by NICE and manufactured by Contractor in accordance herewith.

(vi) MANUFACTURING OUTSOURCING SERVICES - Certain turnkey based purchasing, manufacturing, testing, configuration and delivery services for the Products all as detailed in the Agreement and its Appendices and Exhibits, including but not limited to: purchase of the Product's components which are not supplied by NICE, assembly and production of the Products subject to supervision, control and planning by NICE, execution of Measurements and Procedures, response times, providing infrastructure and resources, allocation of the required manpower, use of the Non Generic Equipment, execution of engineering and integration process, Engineering Changes, integration of NICE Software, implementation of Control and Planning, Engineering Changes and Change Order procedures, packaging requirements, dismantling and disassembly of Products procedure, spare part mechanism, quality control requirements, logistics management including inventory management, adjusting and meeting forecasts, components purchasing procedure, supplies and shipment schedules, issuing orders procedure, preparing export shipments, all of world class quality and capability and as provided herein, on a turnkey basis, and acquisition from NICE of certain inventory related to the operations to be outsourced, and to contract with certain of the contractors supplying components and/or performing portions of the remainder of work or to accept assignment of such contracts, all as detailed herein.

(vii) NICE SOFTWARE - Dedicated software developed by NICE and/or for NICE, in which all Intellectual Property (as defined below) is owned

by NICE.

(viii) PERSONNEL - Contractors' employees, subcontractors, subcontractor's employees and any other person acting on behalf of Contractor.

(ix) AFFILIATE - A corporation, partnership or other business entity which controls, is controlled by, or is under common control of a Party. For the purposes hereof, CONTROL shall mean the holding of more than 50% of the voting rights in the entity in question.

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(x) CUSTOMER/S - NICE distributors, resellers, VAR's (value added resellers), OEM's and similar business partners and/or end-users, which purchase the Products.

(xi) NICE PROPRIETARY INFORMATION - Any and all data and information disclosed by NICE to the Contractor during the term of this Agreement in any form, whether verbally, in writing or in machine readable form or in magnetic media, relating to the business, manufacturing, know-how, Products, NICE Software, any other products, items, components and affairs of NICE including its Affiliates, and including without limitation - documents, prototypes, samples and the NICE' plants and equipment, Products, certain proprietary and confidential information concerning NICE' past, present and future research, development and business activities and the results therefrom, including but not limited to digital recording solutions, applications and services technology. Proprietary Information may also include information disclosed to NICE by third parties. Proprietary Information shall not include data and information which: (i) was or will be, independently of this Agreement, lawfully in the possession of the Contractor without breach of obligation of secrecy of Contractor to NICE, and/or (ii) was or will be, independently of this Agreement, lawfully in the possession of the Contractor without breach of obligation of secrecy of a third party to NICE, or (iii) was in the public domain or was common knowledge at the time of receipt by the Contractor; or (iv) following its disclosure to the Contractor as the receiving Party, has, through no fault on the part of the Contractor, subsequently become part of the public domain or is common knowledge; or (v) is required to be disclosed by the Contractor to comply with applicable laws or governmental regulations, provided that the Contractor provides prior written notice of such disclosure to NICE and takes reasonable and lawful actions, at NICE' expense, to avoid and/or minimize the extent of such disclosure.

CONTRACTOR'S PROPRIETARY INFORMATION - data and information disclosed by Contractor to NICE during the term of this Agreement in any form, whether verbally, in writing or in machine readable form or in magnetic media, relating to the business, manufacturing methods, know-how, systems, price lists, suppliers lists and terms of engagement with suppliers, of Contractor including its Affiliates, and including without limitation documents, and the Contractor's plants and equipment, all information disclosed under audits under this Agreement. Contractor's Proprietary Information may also include information disclosed to Contractor by third parties. Contractor's Proprietary Information shall not include data and information which: (i) was or will be, independently of this Agreement, lawfully in the possession of NICE

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without breach of obligation of secrecy to Contractor, and/or (ii) was or will be, independently of this Agreement, lawfully in the possession of NICE without breach of obligation of secrecy of a third party to Contractor, or (iii) was in the public domain or was common knowledge at the time of receipt by NICE; or (iv) following its disclosure to NICE as the receiving Party, has, through no fault on the part of NICE, subsequently become part of the public domain or is common knowledge; or (v) is required to be disclosed by NICE to comply with applicable laws or governmental regulations, provided that NICE provides prior written notice of such disclosure to Contractor and takes reasonable and lawful actions, at Contractor's expense, to avoid and/or minimize the extent of such disclosure.

(xii) INTELLECTUAL PROPERTY - Trademarks, trade names, logos, domain names, designs, patents, copyrights, inventions, discoveries, technology, know-how, trade secrets, confidential and proprietary information and mask works, all registrations and applications for any and all renewals, reissuances and extensions of, and all goodwill in, the foregoing.

(xiii) PURCHASE ORDER/S or PO/'S- A NICE purchase order ordering manufacture and supply of the Products, issued in accordance herewith.

(xiv) TOTAL LEAD TIME - The Purchase Lead Time, Sub Assembly Lead Time and Production Lead Time together.

(xv) PURCHASE LEAD TIME - The maximum agreed time for purchase of components by Contractor in order to enable production and completion of a Product until the Due Date, being the total of the time required for ordering and delivering all relevant components to Contractor from Contractor's suppliers, subject to the Liability. The initial Purchase Lead Time for each component (including sub-assembly purchased from

suppliers) will be as detailed in APPENDIX C and shall be reviewed and updated as necessary by the parties each Quarter during the duration of this Agreement according to the procedure detailed in this Agreement. The new Purchase Lead Time shall need to be agreed to by both parties, and, once agreed, shall be the binding Purchase Lead Time for the relevant components. The parties will also agree on the Purchase Lead Time regarding each new component to be included in a Product.

(xvi) SUB ASSEMBLY LEAD TIME - The maximum agreed time for completion of sub-assemblies in order to enable production and completion of a Product until the Due Date, beginning at the end of the Purchase Lead Time for all relevant components and ending on successful completion of testing of the relevant sub-assemblies. The initial Sub Assembly Lead Time for each sub-assembly will be as detailed in APPENDIX C and shall be reviewed and updated as necessary by the parties each Quarter during the duration of this Agreement according to the procedure detailed in this Agreement. The new Sub Assembly Lead Time shall need to be agreed to by both parties, and, once agreed, shall be the binding Sub Assembly Lead Time for the relevant Sub Assemblies. The parties will also agree on the Sub Assembly Lead Time regarding each new Sub Assembly to be included in a Product.

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(xvii) PRODUCTION LEAD TIME - The agreed time for completion of a Product until its Due Date, meaning from commencement of assembly (from sub-assemblies if applicable) until successful completion of testing, which shall always be fourteen (14) Days from receipt of the PO.

(xviii) ENGINEERING CHANGES - Engineering change in the Product as detailed in Sections 3.10 and 3.11 to this Agreement.

(xix) ECR - Engineering Change Request issued by NICE or by Contractor.

(xx) ECO - Engineering Change Order issued by NICE at its discretion after an ECR, in accordance with Section 3.11 below.

(xxi) CHANGE ORDERS - Change or changes or amendments in a specific order excluding rescheduling of an order/prices and excluding ECO's, as further detailed in Section 3.5.

(xxii) WARRANTY PERIOD - Thirteen (13) months from the Shipment Date of the Product subject matter of the warranty, unless agreed otherwise by the parties in writing.

(xxiii) BACKUP SITE - Contractor's backup site and/or the third party site, as detailed in APPENDIX G and in Section 2.9 below, designed to be operated in the event of force majeure or other event preventing the performance of the Manufacturing Outsourcing Services at Contractor's plant and to ensure an alternate facility with equivalent standards and availability.

(xxiv) DUE DATE - The date of completion of the Product after completion of all quality and integration tests as detailed for each Product including in APPENDIX J and its classification as finished goods according to the date detailed in the relevant NICE Purchase Order, issued in accordance with this Agreement.

(xxv) SHIPMENT DATE - the date of delivery of Products, properly packed (i.e. in accordance with this Agreement), including all documents required for the export of Products, to the NICE designated freight forwarder at Contractor's Location, which may be any time after the Due Date as determined by NICE, but not to exceed sixty (60) Days from the Due Date.

(xxvi) DAY or DAYS - Calendar days unless specific reference is made to Business Days.

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(xxvii) BUSINESS DAYS - Sunday to Thursday, excluding holidays. Holiday eves shall be regarded as half a business day.

(xxviii) QUARTER - a calendar quarter.

(xxix) EFFECTIVE DATE - January 21st, 2002

(xxx) LIABILITY - components and sub-assemblies for which Contractor has an option of cancellation and/or rescheduling without liability, as detailed in APPENDIX C regarding each component and sub assembly. The cancellation window for VMI (Vendor Management Inventory) Components varies between 0 to 35 Days from ordering by Contractor.

(xxxi) NON GENERIC EQUIPMENT - functional testing equipment and any equipment related thereto.

(xxxii) PDM SYSTEM - NICE' engineering system (PDM) to which Contractor shall be granted access for the purpose of performance of this Agreement and whose contents shall be binding and constitute an integral part of this Agreement, subject to Section 17.1. The contents of the PDM System as at the date hereof which are not governed by Section 17.1 may only be changed further to an ECO issued in accordance herewith.

B. INTERPRETATIONS

As used in this Agreement:

(i) The terms and expressions set out in Section A shall have the meanings ascribed therein.

(ii) The preamble and Appendices and Schedules form an integral part of this Agreement.

(iii) The masculine includes the neuter and the feminine; and the singular includes and plural and vice versa.

(iv) A reference to any statute, enactment, order, regulation or other similar instrument shall be construed as a reference to the statute, enactment, order, regulation or instrument as amended by any subsequent statute, enactment, order, regulation or instrument or as contained in any subsequent re-enactment thereof.

(v) Headings are included in this Agreement for ease of reference only and shall not affect the interpretation or construction of this Agreement.

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(vi) References to Sections, Schedules, Appendices and Exhibits are, unless otherwise provided, references to sections, schedules, appendices and exhibits to this Agreement.

(vii) In the event certain provisions incorporated in the Agreement are contradictory VIS-A-VIS other provisions incorporated in the Appendices and Schedules, the Agreement shall prevail.

(viii) In the event certain provisions incorporated in the Appendices and Schedules are contradictory VIS-A-VIS other provisions incorporated therein, the specific provisions shall take precedence over the general provisions.

C. APPENDICES AND SCHEDULES

(i) Appendix A - Products;

(ii) Appendix B - The Proposal;

(iii) Appendix C - Prices, Purchase and Sub-Assembly Lead Time, cancellation windows, rescheduling period, minimum order, package quantity, labor costs, disassembly fees, Product prices, cancellation fees, ECR and ECO administrative costs [a new version to be completed within a month of signature of the Agreement and thereafter updated in accordance with this Agreement];

(iv) Appendix D - Insurance Certificate;

(v) Appendix E - Non Disclosure Undertaking;

(vi) Appendix F - NICE Inventory purchased by Contractor for the first Quarter (NICE Inventory purchased by Contractor for the second Quarter will be added as an addition to Appendix F at a later date);

(vii) Appendix G - Back Up Site;

(viii) Appendix H - Safety, Security & IT Requirements;

(ix) Appendix I - Spare Parts / Upgrade;

(x) Appendix J - Quality Assurance Requirements;

(xi) Appendix K - NICE Products release policy;

(xiv) Appendix N - RMA Process.

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1. MANUFACTURING OUTSOURCING SERVICES

1.1. SCOPE OF WORK. During the term of and subject to this Agreement, Contractor shall perform the Manufacturing Outsourcing Services including purchase, assemble, manufacture, configure, test and deliver to NICE' freight forwarder in Contractor's facility, under the terms set forth below, and NICE shall purchase from Contractor, and Contractor shall sell to NICE, such quantities of units of the Products according to NICE' Purchase Orders, from time-to-time as detailed below, at the quoted prices set forth in Appendix C. This Agreement or any provision thereof shall not be interpreted as granting Contractor any exclusive rights in respect of the Manufacturing Outsourcing Services or any similar services outsourced by NICE, and shall not prevent NICE, at its sole discretion, from contracting with any third party for such services, subject to the provisions of this Agreement. Notwithstanding anything to the contrary in the Agreement or elsewhere, including NICE' confidentiality obligations towards Contractor, but without derogating from NICE' obligations hereunder, this Agreement shall in no way be construed as preventing NICE from performing the Manufacturing Outsourcing Services or part thereof by itself and/or through others, whether during the

term of this Agreement or thereafter.

1.2. Contractor's obligations to execute the Manufacturing Outsourcing Services pursuant to this Agreement shall commence on the Effective Date, subject to the following provisions:

1.2.1. OUTSOURCING TRANSITION - NICE intends to outsource part of its manufacturing activities to the Contractor, in 3 phases: (1) Training and Authorization, (2) Relocation and (3) Manufacturing Outsourcing Services, as described in this Agreement.

1.2.2. INFRASTRUCTURE. For the execution of this Agreement and the Manufacturing Outsourcing Services, Contractor will set up and establish specific infrastructure including an exclusive area in its production facility as detailed herein. Contractor shall assemble its own workstations using its generic equipment and the Non Generic Equipment to be provided by NICE in good working order. The maintenance of the Non Generic Equipment and keeping it in good working order, except normal wear and tear, shall be Contractor's responsibility, at Contractor's expense. NICE shall have the right to object on reasonable grounds to any material change of the manufacturing facility for any Product.

1.2.3. RELOCATION- Contractor will complete the Relocation process including preparation of production lines

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that will be able to ensure the production capacity according to NICE' forecasts as detailed herein. The completion of the Relocation stage shall be on time in order to enable compliance with the Forecast submitted to Contractor prior to signature of this Agreement and shall be subject to the Control of NICE, without relieving Contractor from its responsibilities hereunder. Upon NICE' approval that the Relocation stage has been completed to its satisfaction, which approval shall not be unreasonably withheld, the Contractor shall commence the Manufacturing Outsourcing Services.

1.2.4. RESOURCES, PERSONNEL, PROJECT MANAGER. Contractor will be responsible for the required resources in order to comply with its undertakings hereunder and to deliver the Manufacturing Outsourcing Services as detailed hereunder. Contractor will perform the Manufacturing Outsourcing Services using only skilled, qualified and experienced personnel to the extent required for the purpose of performing its undertakings pursuant to this Agreement, to be trained and authorized, according to NICE' requirements. Contractor shall not replace at its initiative key Personnel during the duration of this Agreement, to the extent such replacement shall materially impair its ability to perform in compliance herewith and any such replacement shall take place only after consultation with NICE. It is agreed for the purpose hereof, that frequent replacement of key personnel shall be deemed as materially impairing Contractor's ability to perform hereunder. NICE may reject on reasonable grounds any such key personnel employed by Contractor in the performance of its obligations hereunder, and they shall be replaced by Contractor promptly following NICE' first reasoned request. Such personnel shall abide by all of NICE' security, data protection and safety requirements and policies as indicated from time to time by NICE in writing according to Section 17.1.

TheContractor will appoint a dedicated Project Manager who will coordinate with NICE' representative and serve as a single point of contact for NICE in all aspects pertaining to this Agreement. The project manager will not be replaced at Contractor's initiative during the duration of this Agreement to the extent such replacement shall

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materially impair Contractors ability to perform in compliance herewith and any such replacement shall take place only after consultation with NICE. It is agreed for the purpose hereof, that frequent replacement of Contractor's Project Manager shall be deemed as materially impairing Contractor's ability to perform hereunder. The project manager will meet with NICE' representative on a regular basis.

1.2.5. CONTROL AND PLANNING. Without derogating from the aforesaid, Contractor will provide NICE with control capability of the production. NICE shall be entitled to be involved in the planning and establishment of the working environment for all Product lines at the Contractor's premises. Contractor will provide NICE with reports on a daily/ weekly/ monthly basis, as follows: the reports will present all relevant details regarding the production orders, time between phases, disassembled Products, schedules, logistics reports, etc. The reports provided will

present all said data in a clear manner and will include graphic presentations. The reports will enable NICE to verify that all systems are matched and to verify the improvement that is achieved by Contractor. All said reports shall need to be agreed in advance by both Parties.

1.2.6. SUPERVISION AND MONITORING. NICE shall be entitled but not obligated, to supervise and monitor the execution of this Agreement from time to time as set forth herein. NICE shall be entitled, upon prior coordination, to visit any place where the Manufacturing Outsourcing Services are being performed including Contractor's plant/s and to review samples of components and Products. As a result of such supervision, NICE may propose improvements and increase in efficiency in the Manufacturing Outsourcing Services and the Parties will discuss such proposals and their affect on this Agreement. Without derogating from the generality of the aforementioned, any supervision and monitoring rights granted to NICE hereunder are merely intended to secure performance of this Agreement according to its terms and shall not relieve Contractor from its responsibilities hereunder according to this Agreement or impose any responsibility or liability upon NICE which is not explicitly detailed in this Agreement.

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1.2.7. MEASUREMENTS AND PROCEDURES. Contractor will execute all the production stages required for a Product according to NICE' Production File for the particular Product, included in the PDM System.

1.2.8. QUALITY ASSURANCE REQUIREMENTS. The Manufacturing Outsourcing Services performed by Contractor shall be executed according to and comply with all quality control requirements and specifications described in APPENDIX J. Without derogating from Contractor's responsibility as aforementioned, NICE reserves the right to execute quality assurance inspection on Contractor's premises, all as described in APPENDIX J and according to the terms hereof.

1.2.9. BACK-UP SITE. Contractor will ensure the availability of the Back-up Site according to the terms of this Agreement. Attached as APPENDIX G to this Agreement is the undertaking of Flextronics, Inc., North Carolina for a Back Up Site in North Carolina, USA and a transition plan for its operation.

1.2.10. STEERING COMMITTEE. The Parties will appoint a steering committee which shall monitor the execution of this Agreement, comprised of Contractor's project manager, NICE' representative, and relevant personnel of the Parties.

2. COMPONENTS PURCHASING, NICE COMPONENTS AND INVENTORY.

2.1. COMPONENTS PURCHASING. Upon transition to the third phase - Production, the Contractor will be responsible for all purchasing of components and getting equipped with all the materials necessary for the assembly of the Products (except the Non Generic Equipment). At NICE' request, and without derogating from any other provisions of this Agreement, Contractor shall promptly notify NICE, in writing, who are the suppliers of any specific components and under what agreements purchase is effected.

2.2. CONTRACTOR PURCHASE AGREEMENTS. Without derogating from the aforementioned, NICE may, at its sole discretion, decide to be involved and to actively or inactively, participate in negotiations and purchasing agreements of Contractor for components designated for production hereunder. In such event, Contractor will comply with NICE' requirements and instructions and contract accordingly, without imposing any liability on NICE, provided such instructions

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are in accordance with common purchasing practice and in accordance with this Agreement. NICE may, at its election, instruct Contractor not to purchase a relevant component from a specific supplier, provided an alternative supplier exists. APPENDIX C shall be updated accordingly. At NICE' request, Contractor shall notify any relevant supplier that it is purchasing components for NICE Products and shall further furnish the supplier with information requested by such supplier. In any event, Contractor shall report to NICE on its purchasing negotiations and achievements and shall supply NICE, at NICE' request, with a copy of all relevant existing documentation.

2.3. FLEXTRONICS, INC. GLOBAL PURCHASE AGREEMENTS. Nevertheless, in the event that the purchase agreement is signed by Flextronics, Inc. as a global purchase agreement for the Flextronics group, and not as a local agreement of Contractor or as an agreement applying to NICE required components only, then NICE will not participate in the negotiations and will not be entitled to receive copies of such agreement/s. The details relevant to the components purchased under an agreement as above will be included

in APPENDIX C and Contractor hereby declares and undertakes that the details included in APPENDIX C (as amended from time to time according to the provisions of this Agreement) shall be the accurate details from the Flextronics, Inc. global purchase agreements and components and sub assembly prices in APPENDIX C shall be net purchase prices of Contractor without any overhead or uplift. NICE shall be entitled, at its sole discretion, to object in advance to Contractor using any Flextronics, Inc. global purchase agreement and in such event, Contractor shall purchase the components separately, the provisions of Section 2.2. shall apply and APPENDIX C shall be updated accordingly. Contractor undertakes to comply with NICE' instructions and the manufacturer license terms regarding the use and duplication of Microsoft and other third party software supplied by NICE and not to use such software products for any purpose other than in the assembly of the Products. Contractor will copy from the master CD of those software products only the exact number of licenses designated by NICE in writing and for which a license has been issued by NICE.

2.4. NICE DESIGNATED COMPONENTS. NICE may request Contractor to purchase specific components from specific suppliers, provided that the terms of such suppliers are in accordance with common purchasing practices and APPENDIX C shall be updated accordingly.

When purchasing components for Contractor's other customers, Contractor may not represent itself to the suppliers as a NICE outsourcer for the purposes of such purchase.

2.5. NICE SUPPLIED COMPONENTS. NICE may, at its election, supply to Contractor software licenses and software or the like for which NICE has an existing royalty agreement with a third party (except electrical and mechanical components unless agreed otherwise), in lieu of Contractor purchasing same (NICE COMPONENTS). All

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such components will be delivered to Contractor in a mutually agreed package type, and in an agreed upon time and in agreed upon quantities. The parties will agree on the inventory level required by Contractor for each NICE Component and NICE' sole responsibility shall be to renew the inventory upon request. Contractor shall be responsible for ordering additional NICE Components if required above the inventory level and for ensuring that appropriate physical controls of such components are in place and properly administered. Contractor will not charge NICE any charges or overhead for such NICE Components. In the event Contractor has difficulty in purchasing any components which NICE can obtain and NICE has granted its consent to supply such component to Contractor in lieu of Contractor purchasing same, Contractor will not charge NICE any charges or overhead for such Components.

2.6. INVENTORY MANAGEMENT AND USE OF EXISTING INVENTORY. All purchasing of inventory, use of inventory, and management of inventory shall be performed by Contractor according to this Agreement, and APPENDIX C.

2.7. EXISTING NICE INVENTORY. Furthermore, Contractor will purchase from NICE its existing inventory of components available for use in Products for up to six (6) months on a rolling basis, as detailed in APPENDIX F, all of which will be transferred to Contractor's facility on the purchase date, all as detailed hereunder: On the Effective Date Contractor will purchase the inventory included in part I of APPENDIX F. Regarding the remainder of the inventory included in part II of APPENDIX F the following will apply: at the beginning of the first production Quarter hereunder Contractor will purchase the components required under the Forecast issued by NICE for that Quarter regardless of the Total Lead Time for such components; at the beginning of the second production Quarter hereunder Contractor will purchase the components required under the Forecast issued by NICE for that Quarter regardless of the Total Lead Time for such components; Contractor will purchase any components remaining in APPENDIX F after two Quarters as aforementioned, on a current basis as required under the Forecast issued by NICE for the following Quarters but in compliance with the Total Lead Time for such components. Contractor will use said NICE' inventory for the production of the Products rather than purchase such components from third parties, until full use of all NICE inventory. Contractor shall pay NICE the purchase price of such components, as set forth in APPENDIX C hereto, and under payment terms as set forth in Section 8.4. When sold to NICE as part of aProduct, the component prices paid by NICE to Contractor hereunder will be calculated with a reduced overhead of 2%. NICE will and does hereby provide Contractor with all such warranties with respect to the components sold thereby as is required from Contractor under this Agreement with respect to the same components. Furthermore, without derogating from NICE' undertakings hereunder, Contractor will use its international supply chain in order to assist NICE in selling its dead inventory, which is not included in APPENDIX F, and the proceeds from such sales will be shared as follows: 10% Contractor, 90% NICE. Contractor will report to NICE regularly, on such sales.

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2.8. COMPONENT END OF LIFE. Contractor shall take all necessary measures in order to receive immediate updates from its suppliers regarding end of life of any component (i.e types of components which shall no longer be manufactured). Contractor shall notify NICE immediately upon becoming aware of the event of end of life of a component. In such event, NICE shall designate and approve the replacement components to be used instead and the Parties will mutually agree on the required changes in APPENDIX C.

2.9. COMPONENTS FOR NICE INTERNAL REQUIREMENTS. Contractor will occasionally provide services in order to help NICE to obtain components for NICE' internal requirements. Contractor will allow NICE to purchase reasonable quantities from its available inventory at a price agreed in advance, and will help NICE to obtain components from manufacturers/suppliers at the lowest available price (in the case where the components in question are not in the Contractor's inventory).

2.10. It is clarified that nothing in this Agreement shall prevent NICE from contracting directly with Contractor's suppliers and vendors in any agreement, or from purchasing identical components, whether during this Agreement or following its termination or expiration.

3. ORDERING AND OTHER MATTERS

3.1. FORECASTS. NICE shall give Contractor a written forecast of the Products, by type, quantity and expected Due Date (the FORECAST) as follows: A Forecast shall be a rolling forecast for the current Quarter and the two (2) consecutive Quarters, detailed by week. Upon the Effective Date, NICE shall deliver a Forecast for the period commencing on the expected completion of the Relocation Phase for the first Product, for the current Quarter and for the next coming two Quarters and so on thereafter during the term of this Agreement. The Forecast may be updated by NICE on a weekly basis, or more frequently (at NICE' discretion).

A Forecast will not be deemed to constitute a binding purchase order with respect to Products (as opposed to components and sub-assemblies, as set forth in Sections 3.4, 16 and 17.5 of this Agreement). Contractor will manufacture the quantities of Products only according to specific orders and the Production Lead Time. The

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Parties' responsibilities and undertakings arising from NICE' Forecast shall be according to APPENDIX C as amended from time to time according to the provisions of this Agreement. Liability reports will be submitted by Contractor on the 1st of each calendar month and will need to be approved by NICE. It is clarified for the avoidance of doubt, that in any event, any and all purchase obligations of NICE with respect to Products (as opposed to components and sub-assemblies) are limited in any given time during the term of this Agreement, to the PO's only.

Contractor (with NICE' participation) will implement, at its own expense, a full process of Demand Flow Technology, including: (I) Product Synchronization; (II) Sequence of Events; (III) Mix Model; (IV) Demand of Capacity & Take Time; (V) Operations grouping; (VI) Line Design & Balancing. This process will help to determine the Sub Assembly Lead Time and the Production Lead Time. It is clarified that any change in the Production Lead Time detailed in this Agreement shall require NICE' prior written approval; any change in the Sub Assembly Lead Time detailed in this Agreement as a result of which the maximum Sub Assembly Lead Time for the relevant sub-assembly exceeds 30 Days, shall require NICE' prior written approval.

3.2. PURCHASE ORDERS AND ISSUING ORDERS. NICE shall, from time-to-time, issue to Contractor a Purchase Order, according to the Forecast, for Products, by type, quantity and Due Date, as and when it desires to order Products. PO's will be issued at least two (2) weeks prior to the designated Due Date. Each and every order will be entered in NICE' logistic system as a Sales Order. Every Product shall be manufactured according to the Production Lead Time. Commencement of assembly shall be based on Production Lead Times (as per Section A (xvii)) and calculated to meet NICE' delivery requirements. It is clarified that delivery and shipment of Products and NICE' obligation to pay for Products shall only be according to a PO.

Purchase Orders for Products (and Forecasts for Products) may be delivered to Contractor by any reasonable means, including but not limited to e-mail, computerized systems, etc., postal delivery, courier delivery, facsimile transmission, as shall be notified by NICE in writing and in advance of any relevant PO. For the removal of doubt, a PO shall not be binding upon Contractor until Contractor has confirmed in writing receipt of the PO. Contractor shall, within two Business Days of its receipt of a Purchase Order, accept or reject such Purchase Order in writing; provided, however, that Contractor shall be obligated to

accept all Purchase Orders issued in accordance with the terms hereof for Products with respect to which a price per the quantity ordered has been mutually agreed by the parties. Contractor undertakes that in the event of increase in Product requirements VIS-A-VIS the Forecast (i.e. issuance of PO's exceeding

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the relevant Forecast), Contractor's manufacturing capacity can be increased, at any time, by thirty percent (30%) beyond the then current Forecast. In addition, in as much as purchase of components and purchase of sub assemblies are concerned, NICE may order Products, which are not included in the Forecast, and Contractor will make its best reasonable commercial efforts to accommodate such order in accordance with NICE' request. It is clarified that in any event Contractor will accept all PO's exceeding the Forecast, subject to updating the Due Date based upon the Total Lead Time for obtaining the required components, which are not available in Contractor's inventory. The Due Date for such PO's will be determined according to the time of obtaining the components. For components/Products the prices for which are not previously agreed under APPENDIX C, the price will be agreed in writing prior to acceptance of the PO.

3.3. FORECAST REVIEW. The parties shall hold weekly meetings, in person, at NICE' facility or by conference phone call, for the purpose of discussing NICE' existing and contemplated Forecasts and order requirements and updating the Forecast; provided, however, only written Forecasts and Purchase Orders, or written modifications thereto, shall bind NICE and Contractor pursuant to the terms of this Agreement or otherwise. The parties, as business requirements dictate, may mutually agree upon the use of blanket purchase orders for specific sub-assemblies or components (exceeding the requirements under Forecasts), subject to the terms of this Agreement and such sub-assemblies or components purchased shall be deemed Permitted Components.

3.4. PERMITTED COMPONENTS. Contractor may make purchase commitments to suppliers and assemble components to sub-assemblies based upon the Forecasts received from NICE but subject always to the Total Lead Time, Liability and ABC policies of Contractor (which NICE will be entitled to review and comment on in advance of the relevant purchase). Contractor shall maintain inventory of Permitted Components (as defined below) for use during the Production Lead Time. NICE shall only be obligated to Contractor for components and sub-assemblies ordered and assembled by Contractor, in accordance with the Forecast and in compliance always with the Total Lead Time as detailed in APPENDIX C (as amended from time to time according to this Agreement) or otherwise for inventory of components purchased from NICE under Sections 2.7 or 3.4(A), or purchased in accordance with POs, ECO's or Change Orders (PERMITTED Components), as detailed hereunder. It is clarified that any Forecast updated following the purchase of Permitted Components will not affect their definition as Permitted Components, and NICE' obligations with respect thereto, subject to the Liability.

3.4(A) PURCHASE OF INVENTORY BY NICE.

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NICE will purchase from Contractor inventory of Permitted Components not required (in whole or in part) according to the Forecast for the Quarter immediately following the time at which such inventory is reviewed as detailed below (hereinafter: the FIRST QUARTER) as detailed below. The following terms shall have the definitions ascribed thereto:

(i) DEAD INVENTORY - Permitted Components, the entire quantity of which is not required for assembly of Products in accordance with the Forecast.

(ii) SLOW MOVING INVENTORY - Permitted Components, which are required for assembly of Products for the two consecutive Quarters commencing immediately after the First Quarter, in accordance with the Forecast.

(iii) EXCESS INVENTORY - Permitted Components, which are required for assembly of Products only during the third Quarter after the First Quarter or thereafter, in accordance with the Forecast.

Three (3) days before the beginning of every Quarter, Contractor will issue a report of Dead, Slow Moving and Excess Inventory, and shall detail the price of each Permitted Component included in the report as specified in APPENDIX C, which report will need to be verified by NICE within 2-3 days. Inthe event that in any Quarter, the Dead Inventory, Excess Inventory and Slow Moving Inventory together exceed 15% of the Monthly Consideration (as defined below), NICE will purchase such inventory exceeding 15% from Contractor one day before the beginning of the First Quarter, by payment of the price detailed in APPENDIX C

including a surcharge of 4%. In calculating and determining the inventory falling within the said 15% (which shall not be purchased by NICE) the following priority shall apply: first - all Slow Moving Inventory, second (if not all 15% were covered) - all Excess Inventory, third (if not all 15% were covered) - Dead Inventory. The MONTHLY CONSIDERATION for the purpose hereof shall mean the total actual price due to Contractor from NICE hereunder for all Products during the preceding Quarter, divided by three (3).

The foregoing shall apply only as of Q3 2002 - July 1st 2002 (the first report of inventory as above shall be issued at the end of June 2002), and thereafter on a regular basis.

In the event NICE has purchased any Permitted Component from Contractor as detailed above, Contractor is obligated to repurchase such Permitted Component for production of the next Forecast which requires such Permitted Component in accordance with the relevant procedure of Section 2.7 above (Nice Existing Inventory), at the price sold to NICE by Contractor excluding the surcharge of 4%.

No other compensation or components protection will be provided by NICE except as explicitly detailed above or in Sections 16.7, 16.8 and 17.5 of this Agreement. Upon

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payment of the aforementioned compensation for Permitted Components, such items shall become the property of NICE, and will be promptly delivered to NICE' facility in Israel, and, at NICE' election and expense, shall be delivered to another location in Israel identified to Contractor by NICE or, at NICE' direction, disposed of by Contractor (in any manner selected by Contractor). In any event, Contractor will make best reasonable commercial efforts to decrease levels of inventory of Permitted Components, by agreeing with its suppliers to decrease Purchase Lead Times to 1 - 2 weeks at the most.

3.5. CHANGE ORDERS. Throughout all the assembly phases of a Product during the Production Lead Time and any time before the Due Date, NICE may issue Contractor with a Change Order. The issuance of such Change Order and the execution by Contractor of such Change Order, shall be in accordance with the provisions hereunder. Upon issuance of a Change Order, Contractor will immediately execute it and the Product price shall change in accordance with APPENDIX C. The sole implication of a Change Order will be payment for additional direct labor costs as detailed in APPENDIX C. Replaced components and sub-assemblies will be returned to Contractor's inventory at no charge to NICE (without derogating from the specific provisions of this Agreement under which NICE is obligated to purchase Permitted Components). The Product price will be as after the implementation of the Change Order. For Change Orders issued prior to commencement of the Production Lead Time for any Product no charge will be incurred by NICE. Without derogating from the aforementioned, Contractor will not charge NICE for Change Orders during the first three (3) months of production.

3.6. RESCHEDULING OF RELEASED ORDERS. NICE may, at its discretion, reschedule delivery of units of Products for which a PO has already been issued, by shortening the Due Date, without any implication. In this respect, Contractor is aware that by the last three weeks of every calendar Quarter, a high level of flexibility is required to meet NICE' end of Quarter requirements. Contractor will perform its best reasonable commercial efforts to complete such rescheduled Products at the new requested Due Date. All such rescheduling shall be performed by sending Contractor a written request for rescheduling.

3.7. ORDERS ON HOLD. Prior to the Due Date, NICE may, at its discretion, place Products manufactured according to PO's on hold for a period not to exceed thirty (30) Days from the Due Date, without any implications, by giving a written notice to Contractor. Upon termination of such 30 Day period or earlier if requested by NICE in writing, the Products on hold will be deemed as cancelled and the provisions of Section 3.8 below shall apply.

3.8. CANCELLATION OF PURCHASE ORDERS. NICE may at its discretion, at any time, cancel, in whole or in part, PO's of Products issued

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pursuant to this Agreement subject to the delivery of prior written notice, before the respective Due Date. Contractor, upon receipt of such written notice of cancellation, shall stop work on such units of Products if work has already commenced. Without derogating from any liability to pay for Permitted Components as set forth elsewhere in specific provisions this Agreement, NICE shall have no liability for cancellation of a PO prior to the Production Lead Time of the Product. For cancellation of a PO during the Production Lead Time and until the Due Date, NICE' liability for cancellation shall be limited to the following:

3.8.1. Payment of a fixed cancellation charge for all cancelled units of Products as specified in APPENDIX C. The fixed cancellation charge will be recalculated at the end of the first Quarter, based on the actual average time to disassemble a Product, as determined by Contractor and agreed to by NICE;

3.8.2. All the components/sub-assemblies will be returned to Contractor's inventory at no charge to NICE subject to and in accordance with the terms of this Agreement.

3.8.3. NICE shall not be responsible and shall not pay, in whole or in part, for Products manufactured outside the agreed Production Lead Time and/or without a written NICE Purchase Order.

3.9. Contractor shall use its best reasonable commercial efforts to minimize Change Order charges and cancellation charges by returning components for credit (with NICE' approval), canceling components on order and applying components to other Contractor projects (when possible, at the sole discretion of Contractor) and minimizing all work-in-process.

3.10. ENGINEERING CHANGE REQUESTS (ECR'S). NICE shall be entitled, at its sole discretion, from time to time to request any Engineering Change Requests for any Product and Contractor is obligated to propose ECR's to NICE when applicable at Contractor's opinion. Contractor will respond to all Engineering Change Requests initiated by NICE, according to the terms hereof. Contractor will give NICE written notice, within three (3) Business Days of receiving written notice of such ECR, of the date by which, and at what cost, such ECR could be implemented based on the pricing formula in APPENDIX C, and how the ECR effects existing PO's. Contractor will charge NICE for ECR's in accordance with APPENDIX C (an administrative cost of $25 per ECR of whatever size).

3.11. ENGINEERING CHANGE ORDERS (ECO'S). NICE may, at its discretion, issue ECO's based on Contractor's response to the ECR's or based on negotiated changes to Contractor's response. The administrative cost for an ECO shall be $50 per ECO. Engineering Change Orders effective dates (the date for completion of implementation

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of the ECO) shall be as agreed to by the parties and shall effect the relevant Lead Times and dates accordingly, as detailed in the ECO. Contractor shall approve every ECO issued as above within 2 Business Days. An ECO shall become binding on Contractor upon written confirmation of receipt thereby. Contractor shall not make any design changes or any other changes in the Products without the prior written consent of NICE as reflected in an ECO. The new Product price due to an Engineering Change Order, shall be determined in accordance with APPENDIX C. Contractor shall make all reasonable commercial efforts to minimize costs due to ECO's. Notwithstanding the aforementioned in Sections 3.10. and 3.11., NICE shall not be charged for the first $1,000 due to Contractor in any one month for ECR's and ECO's.

3.12. DISASSEMBLY OF PRODUCTS. From time to time, NICE may order Contractor to disassemble Products after the Due Date. Upon such request issued to Contractor, it shall promptly comply with the request. Dismantled components will be consigned to Contractor's inventory and stored in a special warehouse at Contractor's facility, at no charge to NICE (the RETURNED COMPONENTS). NICE will pay Contractor the original Product price and also a fixed fee for dismantling as detailed in APPENDIX C. Thereafter, Contractor will use the Returned Components first in the assembly of any Products until no inventory of Returned Components remains. Contractor will not charge NICE for any surcharge or overhead for use of Returned Components in a Product.

3.13. SPARE PART MECHANISM. In addition to producing Products hereunder, and in addition to Contractor's responsibilities under its warranty obligation hereunder which are included in the Product price as provided herein, Contractor will supply Spare Parts to Customers upon request, as detailed in APPENDIX I according to the applicable Production Lead Time. The price for spare parts shall be in accordance with APPENDIX C and shall be paid by NICE in accordance herewith.

4. SCOPE; NEW PRODUCTS

4.1. The scope of this Agreement refers to the Products currently detailed in APPENDIX A subject to the provisions of APPENDIX K. The Manufacturing Outsourcing Services will be performed by Contractor on a gradual basis as detailed hereinabove, and until full performance of the Manufacturing Outsourcing Services by Contractor for all Products.

4.2. Quotations by Contractor for new Products will be developed by NICE in coordination with Contractor subject to the mutually agreed upon pricing model set forth in APPENDIX C hereto. Other terms applicable to new Products shall be identical to those applicable to the current Products. Each such quotation requested

by NICE shall be provided to NICE on an expeditious basis. Contractor shall develop a mutually agreeable quality program for each new Product. The provisions of APPENDIX K - NICE Systems Products Release Policy will apply to such new Products subject to the terms hereof.

5. DUE DATE

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5.1. Contractor shall target 100% on time delivery in compliance with the Due Date. Contractor's performance regarding the Due Date shall constitute a material obligation, and is an essential element in this Agreement.

5.2. DELAYS. Immediately upon learning of any possible delays, Contractor will notify NICE as to the cause and extent of such delay. Contractor shall at once, exercise its best reasonable commercial measures to minimize the possible delay, at no additional cost to NICE. Such measures may include, inter alia, acceleration of payments to Contractor's vendors if necessary.

5.3. LIQUIDATED DAMAGES. Any delay from the Due Date of a certain Product in a certain Quarter, not due to a specific written request by NICE or otherwise deriving from a breach of NICE' undertakings hereunder and only to the extent deriving from such breach by NICE, or caused by an event of Force Majeure, and subject to the terms hereof, shall be considered a material breach of Contractor's obligations under this Agreement and shall entitle NICE to the following liquidated damages in addition to any remedy available to NICE under this Agreement or by law:

5.3.1. One percent (1%) of the Product Price for a delay of 3 to 5 Days.

5.3.2. Three percent (3%) of the Product Price for a delay of up to 10 Days.

5.3.3. Five percent (5%) of the Product Price for a delay of 11 Days or more.

5.3.4. For the removal of doubt, when determining the liquidated damages due, the applicable sub-section 5.3.1, 5.3.2 OR 5.3.3 will apply. In any event, the total liquidated damages as per this Section shall not exceed 5% of the Product Price.

5.3.5 The PRODUCT PRICE for the purpose of this Section 5.3. shall mean the total consideration which is due to Contractor for the Products being delayed at the relevant time.

5.3.6. In the event that following the delay, Contractor is in compliance with the Due Dates for two immediately consecutive Quarters and there is no delay whatsoever, Contractor will be reimbursed by NICE for liquidated damages already paid for delay in the previous Quarter (before the said 2 Quarters), if paid, without derogating from the previous delay being regarded as a breach hereunder.

5.3.7 NO RESPONSIBILITY FOR DUE DATE. Notwithstanding the aforementioned, Contractor shall be relived from its responsibility for the Due Date of any specific Product if all the following terms are met:

(1) Contractor notifies Nice promptly in writing of the delay and the detailed reasons for the delay;

(2) Contractor proves that such delay was caused by a worldwide event of component allocation or a worldwide event of Force Majeure (as defined in this Agreement) applying to a manufacturer of necessary components required for assembly of the Product and such components can not be purchased from another manufacturer, since the manufacturer with which Contractor has contracted (directly or through suppliers) is a single source manufacturer worldwide or, if there is more than one source - the above applies to all of them;

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(3) Contractor proves, that it has employed all necessary measures, both upon contracting with the supplier (including but not limited to - contracting other suppliers) and after becoming aware of the delay, in order to ensure proper timely delivery by such supplier and in accordance with the agreed Purchase Lead Time in this Agreement;

(4) Contractor takes all required actions in order to minimize the effects of such occurrence and solve it.

6. SHIPMENT DATE, PACKING AND SHIPPING

6.1. PACKING. Contractor shall package each unit of Product according to the standard NICE packing procedure and specifications in accordance with the PDM System, or, if not specified by NICE, according to good commercial standards. Every shipment to a NICE Customer must include a Packing List issued by the Contractor, attached to the packed Product. The Packing List is derived from the Purchase Order and includes all the packed items in the carton and all software licenses associated with the Product.

6.2. PREPARATION OF EXPORT SHIPMENTS. Contractor will be responsible for preparing the shipment of the final Product to the Customer by arranging the pallets and packing them according to NICE' instructions as set forth in the PDM System.

6.3. DELIVERY. Unless agreed otherwise in the future, Contractor will deliver finished Products to NICE' designated freight forwarder, at Contractor's premises.

6.4. SHIPMENT DATES. The following Shipment dates shall apply: Shipment plans that Contractor receives until 13:00, will be ready until the end of the same Day (except that on weekend days prior coordination will be required); Shipment plans that Contractor receives after 13:00, will be ready until the end of the next Day (except that on weekend days prior coordination will be required).

Contractor's performance regarding the Shipment Date shall constitute a material obligation, and is an essential element in this Agreement.

6.5. INSPECTION. Products will be subject to inspection by NICE, or by certified NICE' distributors according to the following provisions, both prior to the Shipment Date while they are in the finished goods warehouse and after the Shipment Date. During the inspection, NICE may open cartons and boxes and unpack the contents for inspection. An inspection will be coordinated if possible. NICE may inform the Contractor if there is any mismatch in Product quantities or if any damage was caused to the shipment prior to delivery to NICE' freight forwarder in Contractor's facility. In case of a quantity mismatch between the quantity recorded on the packing documents and the actual quantity received, NICE will notify Contractor

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of the mismatch, and, subject to verification by Contractor, Contractor will complete the missing quantity. In case where a shipment is found damaged prior to delivery to NICE' freight forwarder at Contractor's facility, the Contractor will replace or repair the Product and deliver it back to such NICE' freight forwarder at Contractor's facility, at Contractor's expense. If there was no mismatch in quantities or no damage to the shipment (as applicable), NICE will bear all risk and costs associated with the delivery of shipment to Contractor and back.

7. [DELETED]

8. PAYMENTS

8.1. Initial prices as proposed in the Proposal are set out in APPENDIX C. Within one month from signature of this Agreement, the parties will amend the initial APPENDIX C according to components purchase prices and supplier agreements obtained by Contractor, but in no event will the relevant data exceed the data included in the initial APPENDIX C, except with respect to components sold to Contractor by NICE according to APPENDIX F and Section 2.7, or further to changes in APPENDIX C made pursuant to NICE' instructions under Sections 2.2, 2.3 or 2.4 of this Agreement. Contractor will use reasonable commercial efforts to improve the particulars in APPENDIX C and, amongst others, shorten Liability. In the event of lack of agreement on the amended APPENDIX C within one month from the signature date, the initial Appendix C shall continue to apply until agreed otherwise. It is clarified that labor prices in APPENDIX C will not be amended as aforementioned regarding components. Contractor hereby declares and undertakes that the details included in APPENDIX C(as amended from time to time according to the provisions of this Agreement) shall be the accurate details from all of the relevant purchase agreements of Contractor with its suppliers and components and sub assembly prices in APPENDIX C shall be net purchase prices by Contractor without any overhead or uplift. Thereafter, prices may be decreased or increased according to the formula and at the timetables detailed herein below.

8.2. COST ADJUSTMENTS. Product pricing shall remain firm for Products for each Quarter, except as follows or as set forth in Sections, 2.2, 2.3, 2.4, 3.5, 3.8, 3.11, 8.1, 8.3, and hereunder in the various subsections of Section 8.2:

8.2.1. The quoted cost of all components and sub-assemblies in each Product subject to this Agreement is or will be set forth in APPENDIX C or an agreed written amendment thereto.

8.2.2. NICE and Contractor shall continually work to introduce

new cost reduction methods.

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Contractor shall make its best reasonable commercial efforts to reduce the cost of manufacturing Products, by methods such as elimination of components, obtaining alternate sources of materials, redefinition of specifications, and improved assembly or test methods, subject to NICE' written approval. Upon implementation of such methods initiated by Contractor, Contractor will enjoy one hundred percent (100%) of the cost reduction during the first Quarter and thereafter will reduce the price accordingly so that NICE will enjoy one hundred percent (100%) of the cost reduction. NICE will immediately enjoy one hundred percent (100%) of the cost reduction upon implementation of such methods initiated by NICE.

8.2.3. In the event there is a decrease in the cost of a component or sub-assembly purchased by Contractor for the purposes hereof, which affects the purchase price of such Product, Contractor shall document such decrease in costs and provide such information to NICE in writing, in reasonable detail, within three (3) Business Days of Contractor becoming aware of such decrease.

8.2.4. In case of a decrease as aforementioned, the purchase prices in APPENDIX C for units of the affected Product shall be adjusted accordingly.

8.2.5. In the event there is an increase in the cost of a Permitted Component purchased/to be purchased by Contractor for the purposes hereof, which affects the purchase price of such Product, Contractor shall provide NICE with copies of letters as elaborated below, together with a request for a price increase within one (1) Business Days of Contractor becoming aware of such increase. Contractor shall not purchase any such component until NICE approves it in writing. NICE shall approve/disapprove on the same Business Day it was notified by Contractor provided notice was received by 12:00. However, NICE may only reject a price increase if it can show that the Permitted Component is available at the a lower price. There are two permitted types of price increases:

(i) TEMPORARY PRICE INCREASE designated to meet the requested Due Date, in the event of receiving a Purchase Order/Forecast for which the Purchase Lead Time is shorter than the normal Purchase Lead Time of the relevant components detailed in APPENDIX C or due to an Engineering Change Order which affects the Due Date. Contractor shall provide NICE with copies of letters of approach to at least 3 suppliers that are known in the market and accepted commonly (if 3 suppliers exist for such component) and their response. In such event, NICE will pay Contractor the difference between the original price and the actual price for those components purchased after the increase.

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(ii) CONSTANT PRICE INCREASE caused by a change in the market trend. Market trend increase requests will be explained by providing NICE with copies of letters of approach to at least 3 suppliers that are known in the market and accepted commonly (if 3 suppliers exist), and their response. NICE will pay Contractor the difference between the original price and the actual price for those components purchased after the increase within the Quarter, and thereafter APPENDIX C shall be updated accordingly.

8.3. COST REVIEW. During each calendar Quarter, no later than the third week of the Quarter, the parties will jointly review the costs, costs reduction, volume performance of Contractor and NICE, respectively, and other performance parameters to be mutually agreed upon by the parties. The pricing and other details referenced in APPENDIX C shall be jointly reviewed by the parties at an agreed upon frequency and may be modified with the mutual written agreement of the parties.

8.4. PAYMENT TERMS.

8.4.1. Payment by NICE is due current thirty (30) Days from the date of receipt of the invoice, on the 2nd or 16th of the month, whichever is following the invoice date and may be made by check or wire transfer. Purchase Orders, invoices and payments will be presented and effected in US dollars.

8.4.2. Dates of issuance of invoices by Contractor: 1. for Products - upon the actual Due Date of Products. 2. for inventory of Permitted Components - one day before the beginning of the First Quarter as defined in Section 3.4(A). 3. for amounts outstanding upon termination according to the

relevant provisions of this Agreement - upon termination. 4. for other amounts - upon the date on which the payment becomes due under this Agreement.

8.4.3. Payment by Contractor is due current thirty (30) Days from the date of receipt of the invoice, except as set forth in Section 8.4.4(2) below, and may be made by check or wire transfer. Invoices and payments will be presented and effected in US dollars.

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8.4.4. Dates of issuance of invoices by NICE: 1. for inventory of Permitted Components repurchased - at the end of the month in which such components were repurchased by Contractor. 2. for NICE existing inventory purchased by Contractor according to Section 2.7 - upon commencement of the first production Quarter with respect to inventory to be purchased on such date, upon the commencement of the second production Quarter with respect to inventory to be purchased on such date, and the remainder upon the relevant Purchase Lead Times for each component. The payment of said invoices will be made on a current thirty basis from the date of use of such inventory by Contractor based on the most updated Forecast. 3. For Permitted Components purchased from Contractor according to Section 3.4.(A) - upon the relevant Purchase Lead Times for each component. 4. For other amounts - upon the date on which the payment becomes due under this Agreement.

8.5. TAXES. Each party shall deduct such taxes from the payments due to the other party hereunder as required by law including withholding taxes (unless an exemption is provided), and shall promptly furnish such other party with appropriate tax receipts. Each party will be solely responsible for any and all taxes imposed thereon, including, without limitation, all income taxes, sales taxes, goods and services taxes. Israel value added tax shall be added, if applicable, to all amounts payable hereunder and will be paid against submission of appropriate tax invoices.

8.6. The consideration detailed in the Agreement is the full and entire consideration due to Contractor for the services stipulated hereunder and Contractor shall not be entitled to any other payment or reimbursement of expenses of any kind with respect thereto.

9. REPRESENTATIONS AND WARRANTIES

9.1. Contractor hereby warrants to NICE that it has the full corporate power and authority to enter into this Agreement and to perform its obligations hereunder; that no impediment exists to Contractor entering into this Agreement, and no other agreement has been or will be made with any third party which will have a detrimental effect on Contractor's ability to fulfill its obligations under this Agreement.

9.2. Contractor hereby warrants to NICE that it has ascertained the nature of the Manufacturing Outsourcing Services and its own ability to perform such Manufacturing Outsourcing Services, and that all Manufacturing Outsourcing Services provided by Contractor hereunder will be performed in a professional and workmanlike manner by a sufficient number of individuals with appropriate skills and training for the applicable task using systems and processes which are sufficient to accomplish the Contractor performance

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obligations under this Agreement. In addition, without derogating from any undertaking, warranty or representation of NICE included in the Agreement, Contractor acknowledges and agrees that prior to the entering into this Agreement it has had the ability to perform a due diligence investigation into the manufacturing, production, testing and delivery as performed by NICE up to and including the date hereof, that it has in fact performed such an investigation and that based upon the outcome thereof, it believes that it has the professional and other capabilities to perform the Manufacturing Outsourcing Services as set forth herein in a professional and workmanlike manner.

9.3. Contractor further warrants that it is duly licensed, authorized, or qualified to do business and in good standing in every jurisdiction in which a license, authorization, or qualification is required for the ownership or leasing of its assets, of the transactions of business of the character transacted by it except where the failure to be so licensed, authorized, or qualified would not have a material adverse effect on Contractor's ability to fulfill is obligations under this Agreement.

9.4. PRODUCT WARRANTY. Contractor warrants to NICE that each of the Products manufactured, configured or tested by Contractor will have been manufactured, configured and tested in conformance with the Specifications therefor as provided by NICE and be free from defects in workmanship or material for the Warranty Period. It is

clarified for the avoidance of doubt, that the aforesaid warranty of Contractor for the Products applies to the entire Product, including components and workmanship, except when the defect or malfunction results from the design, NICE Software or the Nice Components supplied by NICE under this Agreement if Contractor cannot obtain warranty service for same from the supplier (and Contractor shall notify NICE accordingly), for which NICE shall be responsible.

9.5. Contractor shall be responsible for procurement of components as set forth herein, inspection of components, and safe handling of the components while in-house at Contractor's premises.

9.6. RMA. Should a Product fail to be in conformity with the above warranties during the Warranty Period, NICE shall deliver the Product to Contractor at its expense, Contractor shall repair or replace the Product at no charge (as set forth in Section 9.7 below), and will cover all shipment and delivery costs of therepaired or replaced Product from Contractor's facility to NICE' Customer location (whether in Israel or abroad). In the case that the determination according to Section 9.9 below, is that Contractor's warranty hereunder does not apply, NICE will bare all shipment and delivery costs of the Product/s and their return, and of any repair/replacement costs if requested by NICE, according to APPENDIX C. Detailed procedures to be executed by Contractor concerning the repair of defective/malfunctioning Products subject to the warranty hereunder are included in APPENDIX N - Return Material Authorization (RMA).

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9.7. WARRANTY SERVICE. Contractor shall replace any such Product with a new Product except when the defect is in the NICE proprietary boards, in which case Contractor may repair the Product. Contractor will deliver the repaired or replacement unit to NICE, within seven (7) Days of Contractor's receipt of such Product or parts thereof. NICE may require a shorter repair and replacement time for up to ten percent (10%) of the returned Products for warranty service, and Contractor shall use its best reasonable commercial efforts to accommodate same.

NICE shall provide Contractor a spares forecast for warranty requirements for the period up and until July 1, 2002. If during such period, the spare parts required for warranty service alone exceed the spares forecast provided by NICE, NICE shall sell Contractor the missing spares at the prices specified in APPENDIX C. Nevertheless, NICE shall have no liability in the event the spares forecast exceeds the actual spares used during that period. As of July 1, 2002 purchasing of spares in order to comply with the warranty obligations shall be the sole responsibility of Contractor and no forecast shall be provided.

On or about July 1, 2002 the parties will review the said 7 days timetable, and any changes in such timetable shall need to be agreed in advance in writing, both Parties acting reasonably and in good faith. Nothing contained in the foregoing shall obligate NICE to change such warranty timetable since its Customer obligations are dependent on it.

The units of Products for which action may be required under this warranty shall be returned to Contractor's manufacturing facility, at NICE' expense, with an accompanying Contractor supplied RMA and correction / replacement time shall commence upon return of the defective Product to Contractor's facility. The RMA will include a packing slip only and will not include an invoice.

9.8. ADVANCED RMA. From time to time, NICE may request that the Contractor supply RMA to NICE Customers prior to receipt by Contractor of the failed Products. In such event, replacement time shall be 7 Days of receipt of the RMA and NICE will be responsible for the return of the failed Product or parts thereof, respectively, to the Contractor within sixty (60) Days from the delivery of the said RMA. If the failed Product is not returned within same period, Contractor shall invoice NICE for the replaced Product supplied.

9.9. DETERMINING DEFECT SOURCE. NICE and Contractor will use their best commercial efforts to determine whether a defect in a unit of Product exists and the reason for such defect. In the event of dispute

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whether the source of a defect is subject to Contractor's warranty as detailed in Section 9.4, the parties will assign a joint MRB (Material Review Board) team to determine the source of defect, whose decisions must be mutually agreed to by both parties. NICE shall perform any investigation/examination reasonably requested by Contractor. In the event that the joint MRB team can not reach a mutually agreed decision, Contractor shall be deemed responsible for the warranty repair or replacement, unless Contractor proves otherwise, and NICE shall supply Contractor with all necessary information to assist in

such determination. It is clarified that in the event of a dispute as aforementioned regarding the source of a defect, Contractor shall, nevertheless, continue its warranty obligations in a timely manner and will not withhold delivery of repaired and replaced Products, but may demand further investigation by the MRB team as above.

9.10. WARRANTIES PROVIDED BY THIRD PARTIES. If and to the extent warranties provided by third parties for components or sub-assemblies (forming an integral part of the defective Product sold to NICE hereunder) that Contractor/anyone on its behalf purchases under this Agreement, exceed the Warranty Period hereunder, Contractor shall ensure that NICE will benefit from such warranties included in agreements with suppliers as detailed in Section 2.2 above and use its best reasonable commercial efforts so that NICE may benefit from such warranties included in agreements with suppliers as detailed in Section 2 above, at Contractors' expense. Contractor will cooperate with NICE in its efforts to exercise its rights under such warranties for their entire duration. The aforementioned shall apply both during and after the term of this Agreement.

9.11 POST-WARRANTY RMA. Contractor shall provide post-Warranty RMA services to NICE in accordance with the procedures in APPENDIX N and the prices in APPENDIX C.

9A. NICE REPRESENTATIONS AND WARRANTIES

9A.1. NICE hereby warrants to Contractor that it has the full corporate power and authority to enter into this Agreement and to perform its obligations hereunder; that no impediment exists to NICE entering into this Agreement, and no other agreement has been or will be made with any third party which will have a detrimental effect on NICE' ability to fulfill its obligations under this Agreement.

9A.2 NICE hereby warrants to Contractor that it has the financial ability to perform its obligations under this Agreement.

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10. AUDIT AND ACCESS

10.1. REPORTS. Contractor shall provide to NICE periodical reports in the format acceptable by NICE and agreed by Contractor, which shall be submitted each week, unless agreed otherwise in writing. In addition, NICE may request other reports pertaining to the Outsourcing Manufacturing Services and Contractor will promptly comply with such requests, to the extent reasonable.

10.2. GENERAL. NICE shall have the rights to conduct audits of the Manufacturing Outsourcing Services and related facilities, systems, and records as set forth in this Section 10 for the purpose of auditing Contractor's compliance with the provisions of this Agreement, all subject to the limitations below. The audits shall include the physical equipment designated for the Manufacturing Outsourcing Services provided hereunder, the facility at Contractors' premises designated for the Manufacturing Outsourcing Services including the finished goods warehouse, the inventory designated for the Manufacturing Outsourcing Services provided hereunder and any records, supporting documentation, equipment and information pertaining solely to NICE and this Agreement, provided that with regard to records pertaining to inventory/components, in addition to the particulars detailed in Sections 2.2 and 2.3, NICE will have access to the ERP system at Contractor's facility only (including for the avoidance of doubt, the modules of the ERP system dealing with invoices and invoicing). No documents or data of any kind, or any copies, may be removed from Contractor's facility and all audits shall be performed within such facility only.

10.3. Such audits are expected to occur frequently given the significant security and business practices concerns inherent in the Manufacturing Outsourcing Services and NICE shall have the sole discretion, not to be unreasonably applied, to determine the frequency. NICE agrees to conduct the audits in a reasonable manner so as not to cause undue disruption to Contractor's provision of the Manufacturing Outsourcing Services and such audits shall be conducted during business hours, and shall be coordinated with Contractor. In the course of such audits Contractor shall provide, and shall cause its Permitted Subcontractors to provide, such auditors any reasonable assistance that they may require. Such reasonable assistance shall be provided as part of the Manufacturing Outsourcing Services.

10.4. If any audit by an auditor designated by NICE results in Contractor being notified that it or its Permitted Subcontractors are not in compliance with any law or regulation, Contractor shall, and shall cause its Permitted Subcontractors to, take actions to comply with such law or regulation, at Contractor's or its Permitted Subcontractor's expense.

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10.5. RESULTS OF AUDITS. If, as a result of an audit, NICE determines that Contractor has undercharged or overcharged NICE, NICE shall notify Contractor in writing of the amount of such undercharge or overcharge,

and shall specify the relevant data and the reasoning for its determination. If Contractor agrees in writing, an appropriate adjustment shall promptly be paid to NICE or Contractor. In the event Contractor believes that it has complied with the relevant law, regulation or this Agreement, and has not overcharged or undercharged NICE, it shall so notify NICE in writing upon receipt of NICE' audit results shall specify the relevant data and the reasoning for its determination and the parties will attempt to determine the issue in mutual consent.

10.6. CONTRACTOR RECORD RETENTION AND ACCESS. As part of the Manufacturing Outsourcing Services, Contractor shall (1) retain records and supporting documentation detailed in Section 10.2 above if and to the extent such record retention is required by tax or similar authorities, and/or exists in the ERP system, and/or is common practice in the industry, including but not limited to - production files for the following periods: 7 years for records required by tax or similar authorities and ERP data, 3 years for production files, otherwise as required by law or as is the common practice, and (2) upon notice of no less than five (5) Days from NICE, provide NICE and its designees with reasonable access to such records and documentation for the purpose of conducting NICE' business and reporting. Such access shall only be provided to audit personnel who have signed towards Contractor a non-disclosure undertaking incorporating terms which are substantially the same as those in APPENDIX E.

10.7 All audits of all kind by NICE shall be subject to the confidentiality obligations of NICE to Contractor detailed in this Agreement.

11. SAFETY AND SECURITY, FACILITIES, NON-GENERIC EQUIPMENT

11.1. SAFETY AND SECURITY. Contractor shall maintain and observe, at its premises, all the safety and security requirements detailed in APPENDIX H and ascribed by law.

11.2. SECURITY SERVICES. Contractor shall institute, maintain, and monitor security services for all Manufacturing Outsourcing Services in accordance with APPENDIX H.

Contractor's security procedures shall be subject to audit as set forth in Section 10.

11.3. FACILITY. Contractor's facility at which the Manufacturing Outsourcing Services will be performed shall comply, at a minimum, with the requirements set forth in APPENDIX H.

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11.4. APPROVAL OF LOCATION. NICE shall have the right to approve or disqualify each location at which Contractor is providing any of its services hereunder. Contractor agrees that the Manufacturing Outsourcing Services will be performed in a dedicated space in Contractor's facility in which no production of competing products will be conducted. Access to the NICE production lines will be limited only to Contractor's employees performing the Manufacturing Outsourcing Services and NICE representatives.

11.5. NON GENERIC EQUIPMENT. During the term of this Agreement, the Non Generic Equipment shall be furnished to Contractor (without charge) and used in Contractor's premises for purposes of performing its various obligations under this Agreement, according to the terms hereof. Such Non Generic Equipment shall:

(1) Be clearly marked and identified as NICE' property.

(2) Be safely stored, adequately maintained and insured against loss or damage under Contractor's existing policies detailed in APPENDIX D. In the event such Non Generic Equipment is damaged, lost or destroyed, Contractor shall be liable towards NICE to repair or replace such equipment (at Contractor's choice).

(3) Remain the sole property of NICE, and therefore shall be kept free of liens and encumbrances imposed on Contractor's property.

(4) Be returned to NICE upon request, or upon termination of this Agreement, at the same condition as originally furnished to Contractor except for normal wear and tear. Notwithstanding anything to contrary, if NICE requests to have the Non Generic Equipment returned thereto prior to the termination of the relevant services hereunder, Contractor shall have no liability or obligation for the performance of any obligations hereunder for which such Non Generic Equipment is reasonably required. Contractor shall notify NICE in writing in detail of the aforementioned, promptly upon NICE' request to receive the Non Generic Equipment.

(5) Be used according to NICE' written instructions and information concerning such Non Generic Equipment.

(6) Shall not be used by Contractor for any other purpose except for NICE' needs and shall be dedicated for performance of this Agreement.

(7) Nevertheless, NICE may request Contractor to purchase some Non Generic Equipment by itself and in such event Contractor shall

invoice NICE for the purchase price. Such equipment shall be deemed for all purposes as part of the Non Generic Equipment and shall be sold to NICE upon termination of this Agreement for any reason, at a total sale price of 1$.

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12. CONFIDENTIAL INFORMATION, INTELLECTUAL PROPERTY AND INTELLECTUAL PROPERTY INDEMNIFICATION, PUBLICITY

12.1 OWNERSHIP AND LICENSE RIGHTS. NICE or its customers, partners, suppliers, and contractors shall be the sole owner of all NICE Proprietary Information and NICEIntellectual Property (as defined below) to which Contractor has access in the performance of the Manufacturing Outsourcing Services including but not limited to - in connection with the Products. Except for the licenses granted herein, Contractor or anyone on its behalf shall not acquire any right, title, or interest to the NICE Proprietary Information and/or NICE Intellectual Property. Especially, but without limitation, NICE shall remain the owner of all NICE Proprietary Information and NICE Intellectual Property in connection with the design of the Products and the NICE Software. For the purposes hereof, NICE INTELLECTUAL PROPERTY shall mean Intellectual Property conceived, created, reduced to practice or developed by NICE and/or for NICE by a third party, and/or for NICE by Contractor (including anyone on its behalf) in accordance with this Agreement, for the purpose of performing the Manufacturing Outsourcing Services.

12.2. CONFIDENTIALITY BY CONTRACTOR. Contractor will provide the Manufacturing Outsourcing Services in a manner that complies with the Confidentiality requirements of APPENDIX E. Contractor shall not: transfer to others, copy or duplicate, sub-license, sell, publish, display or otherwise make available in any form or disclose, the NICE Proprietary Information and/or the NICE Software and/or the NICE Intellectual Property, to any third party, except to suppliers/manufacturers of components and/or sub assemblies that require specifications for their supply, in which case they shall be required by Contractor to execute a Confidentiality Agreement in the form of APPENDIX E VIS-A-VIS NICE. Contractor shall use the same degree of care with respect to NICE Proprietary Information as it uses in protecting its own proprietary information and trade secrets.

Without derogating from the aforementioned, Contractor shall not, in any way or manner, directly or indirectly, engineer, reverse engineer, compile, decompile or reverse assemble the NICE Software, or analyze or otherwise examine the NICE Software for the purpose of reverse engineering.

12.3. In addition, Contractor shall not disclose the NICE Proprietary Information to any Personnel, except on a need to know basis as required in order to implement this Agreement. Contractor undertakes to procure that its Personnel and Permitted Subcontractors engaged in performance of this Agreement (except subcontractor's employees who do not have access to the NICE production lines at Contractor's premises), and reasonably designated by NICE in advance in writing, have signed a non-disclosure agreement in the form of APPENDIX E, prior to receipt of any NICE Proprietary Information.

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12.3A Notwithstanding anything to the contrary, Contractor shall have no liability with respect to disclosure of NICE Proprietary Information if such information came into the possession of the Contractor independently of this Agreement, through a breach of obligation of secrecy of a third party to NICE, of which Contractor was not aware and should not have been aware if Contractor had exercised due care.

12.4. CONFIDENTIALITY BY NICE. NICE shall not: transfer to others, copy or duplicate, sub-license sell, publish, display or otherwise make available in any form or disclose, the Contractor's Proprietary Information, to any third party, except for the purpose of performing this Agreement. NICE shall use the same degree of care with respect to such Contractor's Proprietary Information as it uses in protecting its own proprietary information and trade secrets. All rights in Contractor's Proprietary Information, shall remain solely with Contractor. Notwithstanding the aforesaid, it is agreed that any manufacturing methods applied by Contractor, which are Contractor's Proprietary Information, may be used by NICE itself (including its Affiliates) (but may not be transferred/disclosed to any third party) and by signing this Agreement Contractor hereby grants NICE a personal, non exclusive, non transferable, perpetual license to use such manufacturing methods.

12.4A Notwithstanding anything to the contrary, NICE shall have no liability with respect to disclosure of Contractor Proprietary Information if such information came into the possession of NICE independently of this Agreement, through a breach of obligation of secrecy of a third party to Contractor, of which NICE was not aware and should not have been aware if NICE had exercised due care.

12.5. LEGAL OBLIGATION TO DISCLOSE. In the event a party is required to disclose Proprietary Information of the other party, by applicable law

or by any government in the exercise of its lawful authority, the party so required shall (i) promptly notify the other party in writing, and, at the other party's expense: (ii) use reasonable and lawful efforts to resist making any disclosure of Proprietary Information not approved by the other party, (iii) use reasonable and lawful efforts to limit the amount of Proprietary Information to be disclosed pursuant to any such disclosure, and (iv) cooperate with the other party to obtain a protective order or other appropriate relief to minimize the further dissemination of any Proprietary Information to be disclosed pursuant to any such disclosure.

12.6. INTELLECTUAL PROPERTY INDEMNIFICATION BY CONTRACTOR. Contractor shall indemnify, hold harmless and defend NICE from and against any and all damages (including all damages awarded to a third party and payable by NICE), costs, losses, and expenses (including settlement awards and reasonable attorney's fees) arising from any claim or suit made against NICE or a third party which NICE is obligated to indemnify, by a third party based on the allegation that the Products infringe or violate any Intellectual Property right due to the components and/or sub assemblies supplied by Contractor hereunder and/or the manufacturing processes and methods as performed by Contractor hereunder. Contractor shall include in all its agreements with suppliers/ manufacturers provisions regarding Intellectual Property indemnification substantially similar to those included in this Agreement, providing inter alia that they are freely assignable to NICE without any modification or consent.

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Nevertheless, in the event NICE designates specific components to be purchased by Contractor hereunder and the manufacturer/supplier of such NICE designated components refuses to grant Contractor indemnification for infringement of Intellectual Property rights, despite Contractor performing its best reasonable commercial efforts to obtain such indemnification (which Contractor shall prove to NICE by submission of copies of its correspondence with the manufacturer including the manufacturer's response), then if NICE approves purchase of such components, Contractor shall not be responsible for Intellectual Property indemnification due to those specific components.

For the removal of doubt, Contractor shall not be liable for any infringement of an Intellectual Property right due to any NICE Proprietary Information, NICE Intellectual Property, NICE Software, Non Generic Equipment (if used in accordance with the instructions provided by NICE), and due to performance as is of NICE written instructions including specifications and design.

Contractor's indemnification as provided under this Section shall apply only if: Contractor is notified promptly in writing of any notice of a claim or of a threatened or actual suit; and is given control of the defense thereof and all related settlement negotiations; and, NICE provides, at Contractor's request and expense, all reasonable cooperation and assistance for the defense and negotiations of the claim. Nevertheless, in the event the claim or suit is based on the allegation that the Products infringe or violate any Intellectual Property right due to the components and/or sub assemblies supplied by Contractor hereunder which were designated by Nice as aforementioned, and the supplier / manufacturer of the infringing component has an indemnity undertaking as above towards Contractor; (i) which is assignable to NICE and Contractor promptly assigns to NICE such indemnification undertaking from its supplier / manufacturer; (ii) which is unassignable to NICE but Contractor notifies NICE promptly in writing of any notice of the claim or of a threatened or actual suit; and gives NICE on behalf of Contractor and NICE' chosen counsel control of the defense thereof and all related settlement negotiations; then in both such instances Contractor shall not be responsible for Intellectual Property indemnification with respect thereto. In all other events, Contractor shall conduct the litigation as aforementioned.

12.7. Following establishment of infringement of Intellectual Property by a competent authority including at interlocutory proceedings, whether Contractor is responsible therefor or not, NICE may issue an ECR and Contractor will handle such ECR and the corresponding ECO promptly in accordance with Sections 3.10, 3.11.

12.8. INTELLECTUAL PROPERTY INDEMNIFICATION BY NICE. NICE shall indemnify,

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hold harmless and defend Contractor from and against any and all damages (including all damages awarded to a third party and payable by Contractor), costs, losses, and expenses (including settlement awards and reasonable attorney's fees) arising from or in connection with any claim or suit made against Contractor or a third party which Contractor is obligated to indemnify, by a third party based on an allegation that the Products and/or the NICE Software infringe or violate any Intellectual Property right, including due to the use of any NICE Proprietary Information, NICE Intellectual Property, NICE Software, Non Generic Equipment (if used in accordance with the instructions provided by NICE), or due to performance as is of any NICE written instructions including specifications and design, but

excluding any allegation that the Products infringe or violate any Intellectual Property right due to the components and/or sub assemblies supplied by Contractor hereunder and/or the manufacturing processes and methods as performed by Contractor hereunder for which Contractor is liable as per Section 12.6. above.

NICE' indemnification as provided under this Agreement shall apply only if: NICE is notified promptly in writing of any notice of a claim or of a threatened or actual suit; and is given control of the defense thereof and all related settlement negotiations; and, Contractor provides, at NICE' request and expense, all reasonable cooperation and assistance for the defense and negotiations of the claim.

12.9. EMPLOYEE AND CONTRACTOR INDEMNIFICATION. Each of the parties agrees that it will indemnify the other party against any and all claims hereafter brought or asserted by any person against the other party relating to any alleged or actual action or omission to act by the indemnifying party arising from, or in connection with, such person's status as an employee or independent Contractor of the indemnifying person or the termination of such status.

12.10. PUBLICITY. Except with the express written consent of NICE, Contractor shall not make any press announcement or publicize this Agreement or any matters relating to any of the transactions contemplated hereby or use NICE' name or trademark in any way whatsoever, except to the extent required to comply with applicable laws or governmental regulations, provided that Contractor acts according to Section 12.5.

13. INSURANCE

13.1. Contractor shall be liable for the total or partial loss of or damage to the components and/or the Products in so far as such loss or damage has occurred while in Contractor's possession and until delivery of the Products to NICE' freight forwarder at Contractor's facility.

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13.2. Without limiting any of the obligations or liabilities of Contractor, whether under this Agreement or by law, subject to any limitations hereunder, Contractor shall maintain, and shall cause any subcontractors engaged by Contractor to provide services under this Agreement to maintain, at Contractor's own expense, as long as this Agreement is in effect, insurance policies of the kind and limits as set forth in APPENDIX D to this Agreement. The expense of such insurance shall be borne by Contractor. The Contractor shall keep in force the policies specified in sections 1 and 3 to the Insurance Certificate valid as long as Contractor's legal liability EXISTS IN CONNECTION WITH OPERATIONS ACCORDING TO THE AGREEMENT.

It is Contractor's responsibility to ensure that the insurance requirements set forth in APPENDIX D to this Agreement remain in effect for the term of this Agreement.

13.3. Within ten (10) Days of the execution of this Agreement, Contractor shall furnish to NICE certificates of insurance evidencing full compliance with the insurance requirements as set forth in APPENDIX D to this Agreement. Certificates of Insurance shall be kept current throughout the entire term of this Agreement.

13.4. The carrying of any insurance required hereunder shall not be interpreted as relieving Contractor of any responsibility and/or undertaking to NICE according to the provisions of this Agreement or by law. Contractor shall give prompt notice of all losses or claims of which Contractor has knowledge which may be in any way related to this Agreement and Contractor shall assist and cooperate with any insurance company in the adjustment or litigation of all claims arising under this Agreement or by law and indemnifiable by Contractor under this Agreement or by law.

13.5. NICE shall include in its property policies a waiver of subrogation clause against the Contractor, its directors and any one on its behalf, provided that such waiver will not be valid towards a person which caused malicious damage.

14. [Deleted]

15. FUNDAMENTAL BREACH AND REMEDIES

15.1. Except as provided in Sections 15.2 and 15.3, any breach by any Party of this Agreement which was not remedied within forty-five (45) Days from the date of notice, shall be regarded as a fundamental breach.

15.2. Notwithstanding the aforementioned in Section 15.1, any delay in the Due Date and/or Shipment Date, which was not remedied within thirty (30) Days from the date of notice for the first delay, and any subsequent delay upon notice (i.e. any second delay, even if the first one was less then 30 days) shall be regarded as a fundamental breach.

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15.3. Notwithstanding the aforementioned in Section 15.1, unjust delay in payment by NICE exceeding sixty (60) Days from the date of notice for the first delay, exceeding seven (7) Days from the date of notice for

the second delay (i.e. any second delay, even if the first one was less then 60 days) and exceeding the date of notice for any subsequent delay (i.e. any subsequent delay, even if the second one was less then 7 days) , shall be regarded as a fundamental breach. Notwithstanding, any delay in any payment by NICE shall bear a default interest, as of the first Day of delay, to be compounded daily, at the rate applicable at Bank Hapoalim B.M. at the relevant time for unauthorized overdrawn current accounts.

15.4. Notwithstanding anything to the contrary contained herein or otherwise, Contractor's liability to NICE for any indirect, special, incidental, exemplary or consequential damages as a result of any claim arising under this Agreement or in connection therewith, regardless of whether Contractor has been advised of the possibility of such damages, shall not exceed five million US dollars ($5,000,000) in the aggregate for all claims, except for infringement of Intellectual Property rights for which Contractor is liable under Section 12.6. This Section shall not be construed or used in the construction of this Agreement as imposing on Contractor any liability for which it is not otherwise liable. Further, this Section shall not be construed as derogating from any applicable law which cannot be changed or waived by contract.

15.5. Notwithstanding anything to the contrary contained herein, NICE' liability to Contractor for any indirect, special, incidental, exemplary or consequential damages as a result of any claim arising under this Agreement or in connection therewith, regardless of whether NICE has been advised of the possibility of such damages, shall not exceed five million US dollars ($5,000,000) in the aggregate for all claims, except for infringement of Intellectual Property rights for which NICE is liable under Section 12.8. This Section shall not be construed or used in the construction of this Agreement as imposing on NICE any liability for which it is not otherwise liable. Further, this Section shall not be construed as derogating from any applicable law which cannot be changed or waived by contract.

16. TERM AND TERMINATION

16.1. TERM AND TERMINATION. The initial term of this Agreement shall commence on the Effective Date and extend for three (3) years thereafter (INITIAL TERM), with an automatic renewal for an indefinite period of time (EXTENDED TERM), unless terminated by the parties according to Sections 16.2. or 16.3. herein.

16.2. Notwithstanding the aforesaid in Section 16.1. and any possible implication to the contrary herein or as a result of the course of conduct of the parties, NICEshall be entitled, at its sole discretion, to terminate this Agreement, in whole or in part, at any time during the Initial Term or the Extended Term, with or without cause, upon a prior written notice of termination to Contractor of not less than forty-five (45) Days.

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16.3. Notwithstanding the aforesaid in Section 16.1. and any possible implication to the contrary herein or as a result of the course of conduct of the parties, Contractor shall be entitled, at its sole discretion, to terminate this Agreement only during the Extended Term, with or without cause, upon a prior written notice of termination to NICE of not less than six (6) months.

16.4. Either party shall be entitled to terminate this Agreement, following a fundamental breach of this Agreement by the other party.

16.5. Either party shall be entitled to terminate this Agreement upon the other party seeking an order for relief under the bankruptcy laws of the State of Israel or similar laws of any other jurisdiction, a composition with or assignment for the benefit of creditors, or dissolution or liquidation. NICE shall be entitled to terminate this Agreement upon the merger or acquisition of all or substantially all the business or assets of Contractor (except if within the Flextronix's group and provided Contractor remains an Israeli entity).

16.6. EFFECT OF TERMINATION.

16.6.1. Upon notice of termination of this Agreement for any reason whatsoever, the parties shall execute rapidly and efficiently the procedure for termination of the Manufacturing Outsourcing Services by Contractor and the transfer of production to NICE as set forth hereunder and agreed between the parties, provided that Contractor will not be required to incur additional costs for the purpose of assisting NICE in the case of termination. During the notice period, Contractor will continue performance of the Manufacturing Outsourcing Services regarding all PO's received according to the Forecast and will, simultaneously, assist NICE and cooperate with it in the transfer of the Manufacturing Outsourcing Services to NICE or anyone designated by NICE and NICE will continue in performing all its obligations hereunder.

16.6.2. Upon termination of this Agreement for any reason whatsoever, without derogating from the generality of the aforesaid, NICE shall be entitled to receive from Contractor, at no charge, subject to the confidentiality obligations hereunder and Contractor's Proprietary Information, all information, know-how, samples, documentation and data, in any form or medium, in

connection with the Manufacturing Outsourcing Services, whether prepared by NICE or by Contractor, and all NICE Proprietary Information which is in the possession of Contractor or anyone on its behalf, including its Permitted Subcontractors. Upon termination of this Agreement, Contractor shall return any such information to NICE notwithstanding the provisions of Section 10.6. above.

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16.6.3. Upon termination of this Agreement for any reason whatsoever, all Non Generic Equipment and NICE Returned Components as detailed in Section 3.12. above, will be immediately returned to NICE.

16.6.4. It is clarified that upon termination, for any reason whatsoever, Contractor shall still be obligated to supply warranty services according to this Agreement to all Products supplied, this for the duration of the Warranty Period for each Product and the relevant provisions of this Agreement applying to warranty shall survive termination.

16.7. EFFECT OF TERMINATION. Upon termination of this Agreement, except in the event of termination by NICE due to breach by Contractor, NICE shall pay Contractor as follows: (i) 100% of the contract price for all finished Products in Contractor's possession or which have been delivered/being delivered to NICE, which are subject to a Purchase Order in accordance with the terms of this Agreement; (ii) 104% of the cost in APPENDIX C of all inventory of Permitted Components in Contractor's possession, which are not returnable to the vendor / supplier according to APPENDIX C or usable for other customers (as determined by Contractor in its sole discretion), whether in raw form or work in process; (iii) 104% of the cost in APPENDIX C of all inventory and inventory on order of Permitted Components which is not cancelable according to APPENDIX C; (iv) any vendor cancellation charges incurred with respect to inventory of Permitted Components accepted for cancellation or return by the vendor, and (v) disassembly charges and payments as per Section 3.8 (Cancellation of PO) resulting from the cancellation of PO's due to termination, and (vi) 100% of any other costs and payments payable by NICE hereunder at the time of termination under the specific provisions of this Agreement. Contractor will use reasonable commercial efforts to return unused inventory and to cancel pending orders for such inventory, and to otherwise mitigate the amounts payable by NICE hereunder.

16.8. Upon termination of this Agreement by NICE due to breach by Contractor, NICE shall be obligated to pay Contractor as follows: (i) 100% of the contract price for all finished Products in Contractor's possession for which the Due Date has occurred and which have been supplied to NICE' freight forwarder, which are subject to a Purchase Order in accordance with the terms of this Agreement; (ii) 100% of the cost in APPENDIX C of all inventory of Permitted Components in Contractor's possession, which are not returnable to the vendor / supplier according to APPENDIX C or usable for other customers (as determined by Contractor in its sole discretion); provided however that in the event Contractor fails to supply the Products and/or Permitted Components to NICE, for any reason whatsoever, within 14 days after receipt of NICE' request, NICE shall be released from the obligation to pay for the Products and /or Permitted Components as provided for above. (iii) 100% of the cost in Appendix C of all inventory and inventory on order of Permitted Components, which is not cancelable according to Appendix C. Contractor will use reasonable commercial efforts to return unused inventory and to cancel pending orders for such inventory, and to otherwise mitigate the amounts payable by NICE hereunder.

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16.9. Neither party shall have any other liability, including payment obligations, resulting from the termination for convenience of this Agreement.

17. MISCELLANEOUS.

17.1. ENTIRE AGREEMENT. This Agreement, Schedules, Exhibits and Appendices constitute the entire agreement between the parties in connection with its subject matter and supersede all prior communications and agreements between the parties relating to its subject matter. Notwithstanding anything to the contrary, no documents, procedures, methods or policies shall bind the Parties unless they are in writing and signed by both parties, except that all the technical documentation included in the PDM System may be changed as provided in Section A (xxxii). Any change in NICE' procedures or policies, shall bind Contractor after it is notified of same, unless the change is material, in which case Contractor can object to the change on reasonable grounds detailed in writing.

17.2. AMENDMENT. This Agreement may only be amended, varied or modified by the prior agreement in writing of NICE and Contractor. Any such amendment, variation or modification shall be binding upon the parties and upon their successors and assigns. Work procedures and technical documents may be signed by any representative on behalf of each of the parties and need not be signed by authorized signatories of the parties.

17.3. ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns. Neither party shall in any way sell, transfer, assign, sub-contract or otherwise dispose of any of the rights, privileges, duties and obligations granted or imposed upon it under this Agreement. However, NICE may, at its discretion, transfer and/or assign any of its rights, privileges, duties and obligations granted or imposed upon it under this Agreement to any NICE Affiliate, provided that NICE remains responsible towards Contractor, jointly and severally with the Affiliate, for all of its obligations hereunder so assigned, and provided further that the assignee signs this Agreement.

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It is further clarified that NICE may choose, by written notice to Contractor, to enable any NICE Affiliate to act on NICE' behalf and in its name under this Agreement directly VIS-A-VIS Contractor, without relieving NICE as the sole contractual party from responsibility for performance of the Agreement. Notwithstanding the foregoing, Upon NICE' prior written approval and upon the terms and limitations of such approval, Contractor may sub-contract some of its obligations (PERMITTED SUBCONTRACTORS), provided, however, that Contractor shall remain obligated under this Agreement. Contractor shall provide to NICE material qualifications and identification details of such Permitted Subcontractors. Contractor shall at all times remain fully responsible for the performance of all obligations of Contractor hereunder, jointly and severally with the Permitted Subcontractors. In selecting subcontractors to assist Contractor in the performance of this Agreement, Contractor shall comply with all reasonable NICE vendor screening requirements which are provided to it, and Contractor shall also comply with its own vendor screening requirements.

17.4. SEVERABILITY. If any provision of this Agreement is held invalid, illegal or unenforceable for any reason by any court of competent jurisdiction, such provision shall be separable from the remainder of the provisions hereof which shall continue in full force and effect as if this Agreement had been executed with the invalid provisions eliminated.

17.5. FORCE MAJEURE.

17.5.1. Neither party shall be liable to the other for any delay in performance or failure to perform, in whole or in part, due to war or act of war (whether an actual declaration is made or not), riot, civil commotion, act of public enemy, fire, flood, or other act of God, act of any governmental authority, or similar causes beyond the reasonable control of such party which could not have been foreseen or prevented. If any event of force majeure occurs, the Party affected by such event shall promptly notify the other Party of such event in writing and take all reasonable actions to avoid the effect of such event.

17.5.2. Nevertheless, if any event of force majeure occurs for a consecutive period of fourteen (14) Days preventing Contractor from performing the Manufacturing Outsourcing Services, and Contractor has not managed to set up the Manufacturing Outsourcing Services at the Backup Site, NICE may, at its discretion, elect to perform the Manufacturing Outsourcing Services or any part thereof by itself and/or through others, without derogating from its other rights and remedies, if applicable. In such event: (a) Contractor shall assist NICE by putting at its use, at NICE' request, Contractor Personnel who are involved in the performance of this Agreement, to the extent possible, at a charge to be agreed based on the labor rates in APPENDIX C; (b) without derogating from any other obligations of NICE hereunder as at such date to purchase Permitted Components, NICE shall purchase from Contractor the additional Permitted Components in Contractor's inventory, which are required, at NICE' discretion, for manufacturing during the force majeure period. The price and payment terms for purchase of such Permitted Components shall be according to the provisions of Section 3.4(A) above, which shall apply mutatis mutandis.

42

17.5.3. If the event of force majeure exists for more than 90 days, each party shall have the right to terminate this Agreement and the provisions of Sections 16.2. and 16.3. regarding the notice period required shall apply mutatis mutandis, and thereafter Section 16 regarding effects of termination shall apply.

17.6. RELATIONSHIP. NICE and Contractor acknowledge and agree that this Agreement shall not constitute, create or give effect to a joint venture, pooling arrangement, principal/agency relationship, partnership relationship or formal business organization of any kind and neither Contractor and/or NICE shall have the right to bind the other without the other's express prior written consent. Contractor will render the Manufacturing Outsourcing Services as an independent contractor and no employee - employer relationship shall exist between Contractor and/or the Personnel and/or anyone on its behalf and NICE.

17.7. MANAGEMENT CHANGES. Contractor shall notify NICE immediately upon the occurrence of any material change in the conduct of business of Contractor or in the composition of its management, which has a

material adverse affect on Contractor's ability to perform this Agreement.

17.8. WAIVER. The failure of either party to insist upon strict performance of any provision of this Agreement, or the failure of either party to exercise any right or remedy to which it is entitled hereunder, shall not constitute a waiver thereof and shall not cause a diminution of the obligations established by this Agreement. A waiver of any default shall not constitute a waiver of any subsequent default. No waiver of any of the provisions of this Agreement shall be effective unless it is expressly stated to be a waiver and communicated to the other party in writing in accordance with the provisions of this Agreement.

17.9. DISPUTE RESOLUTION. Any dispute arising out of or relating to this Agreement or the breach, termination or validity thereof shall be settled in accordance with one of the following procedures. Contractor and NICE shall use the procedures in the following order of priority.

43

17.9.1. In the event of any dispute, controversy or claim of any kind or nature arising under or in connection with this Agreement (including but not limited to disputes as to the creation, validity, interpretation, breach or termination of this Agreement) (a DISPUTE), then upon the written notice of either Party, the Dispute will be submitted to the project manager on behalf of each party to be escalated, in case the parties are unable to resolve such Dispute, to the parties C.E.O.'s

17.9.2. Any dispute that the parties are unable to resolve pursuant to Section 17.9.1. within 30 Days, will be submitted exclusively to the competent courts in the Tel-Aviv-Jaffa District in Israel.

17.9.3. Without derogating from rights of termination as detailed in this Agreement, it is clarified that Contractor will continue to provide the Manufacturing Outsourcing Services and NICE shall continue to perform its obligations hereunder during any litigation, mediation or legal proceedings commenced pursuant to this Section 17.9. above and the existence of a Dispute shall not enable Contractor to stop work or services or otherwise not timely perform its obligations or enable NICE to stop payments or otherwise not timely perform its obligations.

17.9.4. The foregoing shall not affect the right of the parties to seek injunctions before the competent Court.

17.10. Wherever in this Agreement it is provided that the Parties agree to negotiate/review/change any term hereof (including prices), the parties will usetheir best commercial efforts and negotiate in good faith in order to reach such agreement. If the parties fail to agree, no change will be made to the last agreed terms and they shall continue to apply, except as otherwise specifically and explicitly provided herein, and except that the provisions of Section 8.2. and all its subsections will apply with regard to details included in APPENDIX C.

17.11. LAW AND JURISDICTION. This Agreement shall be governed by and construed in accordance with the laws of the state of Israel, without giving effect to choice of law rules.

44

17.12. SCHEDULES AND APPENDICES. Each Schedule and Appendix hereto is incorporated herein by this reference. The parties may amend any Schedule and Appendix from time-to-time by entering into a separate written agreement, referencing such Schedule and Appendix and specifying the amendment thereto, signed by an authorized representative of each of the parties.

17.13. SET-OFF. NICE shall only be entitled to setoff any amount due to Contractor against any amount due from Contractor to NICE, if the setoff amount is: (i) due according to this Agreement and is subject to an invoice lawfully issued hereunder; or (ii) liquidated damages according to this Agreement. In the event of setoff, Contractor shall receive, at the same time, a written notice signed by vice president operations of NICE detailing the setoff. Contractor shall not be entitled to setoff any amount due to NICE from Contractor hereunder against any amount due from NICE to Contractor according to this Agreement. The setoff provisions in this Agreement are in lieu of any setoff rights under any applicable law but shall not be construed as derogating from any other right or remedy.

17.14. LIEN. Each party hereby waives any right of lien it may have under applicable law.

17.15. COMMUNICATION AND NOTICES. Except as otherwise expressly provided in this Agreement, no communication from one party to the other shall have any validity under this Agreement unless made in writing by or on behalf of an authorized official of Contractor or, as the case may be, by or on behalf of an authorized official of NICE. Each party shall, from time to time, provide the other with a list of personnel designated as authorized officials for the purposes of this Section 17.15. Any notice or other communication which either party hereto is required or authorized by this Agreement to give or make to the other

shall be given or made either by registered mail, or by courier or by facsimile transmission confirmed by electronic confirmation, addressed to the other party to the address referred to in the preamble. Notices shall be deemed delivered within seven (7) Days of dispatch of the notice by registered mail, or upon delivery by courier, or one Business Day after sent if sent by facsimile transmission.

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written:

/s/ /s/ ------------------------ ------------------------ NICE SYSTEMS LTD. FLEXTRONICS ISRAEL LTD.

45

NICE SYSTEMS LTD. FLEXTRONICS ISRAEL LTD.

(Nice-Nice Flex Master Manufacturing Outsourcing Agreement Final)

46
Question: Highlight the parts (if any) of this contract related to Insurance that should be reviewed by a lawyer. Details: Is there a requirement for insurance that must be maintained by one party for the benefit of the counterparty?
answer:
Without limiting any of the obligations or liabilities of Contractor, whether under this Agreement or by law, subject to any limitations hereunder, Contractor shall maintain, and shall cause any subcontractors engaged by Contractor to provide services under this Agreement to maintain, at Contractor's own expense, as long as this Agreement is in effect, insurance policies of the kind and limits as set forth in APPENDIX D to this Agreement. The expense of such insurance shall be borne by Contractor. The Contractor shall keep in force the policies specified in sections 1 and 3 to the Insurance Certificate valid as long as Contractor's legal liability EXISTS IN CONNECTION WITH OPERATIONS ACCORDING TO THE AGREEMENT.

question:
[LOGO]

SECOND AMENDMENT TO CO-BRANDING AGREEMENT

THIS SECOND AMENDMENT TO CO-BRANDING AGREEMENT (this Amendment) is made and entered into, effective for all purposes and in all respects as of the 23rd day of February, 1998, by and between PC QUOTE, INC., with its principal place of business at 300 South Wacker Drive, Chicago, Illinois 60605 (PCQ) and A.B. Watley, Inc., with its principal place of business at 33 West 17th Street, New York, New York 10011 (ABW).

WHEREAS, PCQ and ABW have executed that certain Co-Branding Agreement dated October 11, 1996, as amended on December 10, 1996 (as so amended, the Agreement);

WHEREAS, the parties hereto desire to further amend the Agreement to modify the provisions of the Agreement regarding [***] of the term thereof; and

WHEREAS, the parties hereto desire to set forth herein the terms and conditions of their agreements and understandings with respect to the foregoing.

NOW, THEREFORE, in consideration of the foregoing, of the mutual promises for the parties contained herein and of other good valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending legally to be bound, hereby covenant and agree as follows:

1. The preamble hereto is incorporated herein and, by this reference, is made a substantive part hereof.

2. The text of Section 2. A. and B. of the Agreement is hereby deleted in its entirety and the following language is inserted in its stead:

[***]

3. To the extent, if any, that provision of this Agreement conflicts with or differs from any provision of the Agreement, such provision of this Second Amendment shall prevail and govern for all purposes and in all respects.

4. Except as modified hereby, the Agreement and its terms and provisions are hereby ratified and confirmed for all purposes and in all respects.

5. This Second Amendment may be executed in several counterparts, each of which shall be deemed an original but all of which collectively shall constitute the same instrument.

Source: PCQUOTE COM INC, S-1/A, 7/21/1999

IN WITNESS WHEREOF, the undersigned parties have hereunto affixed their signatures and seals as of the day and year first above written.

PC QUOTE, INC.

By: /s/ Scott Clyde ------------------------ Name: Scott Clyde ---------------------- Title: VP --------------------

A. B. WATLEY, INC.

By: /s/ Robert Malin ------------------------ Name: Robert Malin ---------------------- Title: President --------------------

-2-

Source: PCQUOTE COM INC, S-1/A, 7/21/1999
Question: Highlight the parts (if any) of this contract related to Effective Date that should be reviewed by a lawyer. Details: The date when the contract is effective
answer:
23rd day of February, 1998

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

BY AND BETWEEN

ASTELLAS PHARMA INC.

AND

FIBROGEN, INC. June 1, 2005

CONFIDENTIAL EXECUTION COPY TABLE OF CONTENTS ARTICLE 1 DEFINITIONS 1

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

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

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

ARTICLE 2 JOINT DEVELOPMENT COMMITTEE 8

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

ARTICLE 3 DEVELOPMENT PLANS 9

3.1 General 9 3.2 Annual Review 9 3.3 Periodic Reviews 9

ARTICLE 4 DEVELOPMENT PROGRAM 10

4.1 Development Program for the Astellas Territory 10 -ii-

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

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

ARTICLE 5 RECORDKEEPING; PUBLICATION 13

5.1 Reports and Records 13 5.2 Review of Publications 14

ARTICLE 6 DEVELOPMENT PROGRAM FUNDING 15

6.1 Payments for Reimbursement; Net Payments 15

ARTICLE 7 USE OF PRECLINICAL AND CLINICAL DATA 17

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

ARTICLE 8 MARKETING RIGHTS 19

8.1 Astellas 19 8.2 FibroGen 19 8.3 Covenants 19

ARTICLE 9 TRANSFER PRICING 20

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

ARTICLE 10 ADDITIONAL PAYMENTS; BOOKS AND RECORDS 22

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

ARTICLE 11 DUE DILIGENCE 24

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

ARTICLE 12 MANUFACTURING RIGHTS 26

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

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

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

ARTICLE 13 LICENSE GRANTS 29

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

ARTICLE 14 INTELLECTUAL PROPERTY 30

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

ARTICLE 15 REPRESENTATIONS AND WARRANTIES 34

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

ARTICLE 16 CONFIDENTIALITY 35

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

ARTICLE 17 INSURANCE; INDEMNIFICATION 36

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

ARTICLE 18 TERM AND TERMINATION 37

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

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

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

ARTICLE 19 DISPUTE RESOLUTION 40

19.1 Disputes 40 19.2 Full Arbitration 40

ARTICLE 20 MISCELLANEOUS 41

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

EXHIBIT A LIST OF PATENTS 45

EXHIBIT B INDICATIONS 46

EXHIBIT C INITIAL DEVELOPMENT PLAN 47 -v-

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

CONFIDENTIAL EXECUTION COPY COLLABORATION AGREEMENT

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

BACKGROUND

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

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

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

ARTICLE 1 DEFINITIONS

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

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

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

1.4 Astellas Territory shall mean the country of Japan.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

1.37 HIF shall mean hypoxia inducible factor.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ARTICLE 2 JOINT DEVELOPMENT COMMITTEE

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

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

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

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

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

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

ARTICLE 3 DEVELOPMENT PLANS

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

3.2 Annual Review

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

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

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

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

CONFIDENTIAL EXECUTION COPY ARTICLE 4 DEVELOPMENT PROGRAM

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

4.2 Global Harmonization

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

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

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

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

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

4.4 Regulatory Matters

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

4.4.2 Reporting Adverse Experiences

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

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

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

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

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

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

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

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

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

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

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

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

ARTICLE 5 RECORDKEEPING; PUBLICATION

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

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

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

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

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

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

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

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

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

CONFIDENTIAL EXECUTION COPY ARTICLE 6 DEVELOPMENT PROGRAM FUNDING

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

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

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

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

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

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

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

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

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

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

4.

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

U.S. $[ * ]

-16-

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

CONFIDENTIAL EXECUTION COPY

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

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

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

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

ARTICLE 7 USE OF PRECLINICAL AND CLINICAL DATA

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

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

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

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

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

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

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

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

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

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

ARTICLE 8 MARKETING RIGHTS

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

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

8.3 Covenants

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

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

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

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

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

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

ARTICLE 9 TRANSFER PRICING

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

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

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

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

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

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

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

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

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

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

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

ARTICLE 10 ADDITIONAL PAYMENTS; BOOKS AND RECORDS

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

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

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

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

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

10.4 Taxes

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

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

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

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

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

ARTICLE 11 DUE DILIGENCE

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

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

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

CONFIDENTIAL EXECUTION COPY 11.3 Development Diligence

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

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

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

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

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

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

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

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

ARTICLE 12 MANUFACTURING RIGHTS

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

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

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

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

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

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

12.5 Orders Forecast

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

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

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

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

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

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

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

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

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

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

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

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

ARTICLE 13 LICENSE GRANTS

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

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

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

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

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

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

ARTICLE 14 INTELLECTUAL PROPERTY

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

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

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

CONFIDENTIAL EXECUTION COPY 14.2 Patent Prosecution

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

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

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

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

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

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

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

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

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

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

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

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

14.5 Third Party Agreements

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

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

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

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

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

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

ARTICLE 15 REPRESENTATIONS AND WARRANTIES

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

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

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

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

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

ARTICLE 16 CONFIDENTIALITY

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

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

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

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

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

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

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

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

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

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

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

ARTICLE 17 INSURANCE; INDEMNIFICATION

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

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

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

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

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

ARTICLE 18 TERM AND TERMINATION

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

18.2 Termination for Cause or Technical Product Failure

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

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

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

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

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

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

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

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

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

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

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

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

18.7 Effect of Termination

18.7.1 Accrued Obligations. Termination of this Agreement for any reason shall not release either party hereto from any liability which, at the time of such termination, has already accrued to the other party or which is attributable to a period prior to such termination nor preclude either party from pursuing all rights and remedies it may have hereunder or at law or in equity with respect to any breach of this Agreement.

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

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

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

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

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

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

ARTICLE 19 DISPUTE RESOLUTION

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

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

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

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

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

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

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

ARTICLE 20 MISCELLANEOUS

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

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

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

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

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

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

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

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

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

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

with a copy to: FibroGen, Inc.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

CONFIDENTIAL EXECUTION COPY EXHIBIT A LIST OF PATENTS

[ * ] -45-

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

CONFIDENTIAL EXECUTION COPY EXHIBIT B INDICATIONS

Included indications:

Treatment of anemia in patients with chronic kidney disease undergoing dialysis

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

[ * ] -46-

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

CONFIDENTIAL EXECUTION COPY EXHIBIT C INITIAL DEVELOPMENT PLAN

[ * ] -47-

[ * ] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
Question: Highlight the parts (if any) of this contract related to Insurance that should be reviewed by a lawyer. Details: Is there a requirement for insurance that must be maintained by one party for the benefit of the counterparty?
answer:
Each party shall secure and maintain in effect during the term of this Agreement and for a period of five (5) years thereafter insurance policy(ies) underwritten by a reputable insurance company and in a form and having limits standard and customary for entities in the biopharmaceutical industry for exposures related to the Lead Compounds. Such insurance shall include general liability, clinical trial liability and products liability coverage with respect to such party's performance of the Development Program and commercialization of Lead Compounds hereunder. Upon request by the other party hereto, certificates of insurance evidencing the coverage required above shall be provided to the other party.