LICENSE AND COLLABORATION AGREEMENT

Exhibit 10.2

L ICENSE AND C OLLABORATION A GREEMENT

BY AND BETWEEN

Z YMO G ENETICS , I NC .

AND

B AYER S CHERING P HARMA A.G.

E FFECTIVE AS OF J UNE  18, 2007

“[    *     ]” = omitted, confidential material, which material has been separately filed with

the Securities and Exchange Commission pursuant to a request for confidential treatment.

[    *    ] Confidential Treatment Requested

CONTENTS

LIST OF EXHIBITS

L ICENSE AND C OLLABORATION A GREEMENT

T HIS L ICENSE AND C OLLABORATION A GREEMENT is made as of the 18th day of June, 2007 (the “ Effective Date ”) by and between ZymoGenetics, Inc., a corporation organized and existing under the laws of Washington State, U.S.A. (“ ZGEN ”), and Bayer Schering Pharma A.G., a corporation organized and existing under the laws of Germany (“ Bayer ”). ZGEN and Bayer are sometimes referred to herein individually as a “ Party ” and collectively as the “ Parties .”

R ECITALS

A. ZGEN is developing certain products containing Recombinant Thrombin for use in hemostasis.

B. Bayer has significant experience in the development, marketing, promotion and sale of pharmaceutical products and can make significant contributions to the successful Development and Commercialization of one or more Licensed Products outside of the United States.

C. ZGEN and Bayer wish to collaborate in the global development of certain Licensed Products.

D. ZGEN wishes to enable Bayer to Commercialize one or more Licensed Products outside of the United States.

E. Concurrent with the execution of this Agreement, ZGEN and Bayer’s Affiliate, Bayer HealthCare LLC, are entering into a U.S. Co-Promotion Agreement of even date herewith (the “ Co-Promotion Agreement ”), pursuant to which the Parties have agreed to co-promote the Initial Licensed Products in the United States for a limited time period.

A GREEMENT

NOW, THEREFORE, the Parties, intending to be legally bound, agree as follows:

A RTICLE O NE

Definitions and Terminology

Where words and phrases are used herein in the singular, such usage is intended to include the plural forms where appropriate to the context, and vice versa. The words “ including ,” “ includes ” and “ such as ” are used in a non-limiting sense and have the same meaning as “ including without limitation ” and “ including, but not limited to .” References to Articles, Sections, Subsections and paragraphs are to the same with all their subparts as they appear in this Agreement. “ Herein ” means anywhere in this Agreement. “ Hereunder ” and “ hereto ” mean under or pursuant to any provision of this Agreement. The Article and

Section headings contained herein are for reference only and shall not be considered a part of this Agreement, nor shall they in any way affect the interpretation hereof. All references to time are to the time in Seattle, Washington, U.S.A.

In addition to other terms defined elsewhere in this Agreement, words and phrases with initial capitals shall have the following meanings:

1.2.1 “ Adverse Event ” means an adverse event as defined under the applicable Drug Laws.

1.2.2 “ Affiliate ” means, with respect to a Party, an individual, a partnership, a joint venture, a corporation, or any other entity or any combination of the aforementioned entities that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such Party. For purposes of this definition, “control” will mean the possession, direct or indirect, of the power to cause the direction of the management and policies of a Party, whether through ownership of more than fifty percent (50%) of the voting securities of such Party, by contract or otherwise.

1.2.3 “ Agreement ” means this License and Collaboration Agreement, as amended, from time to time, in accordance with its terms.

1.2.4 “ Alliance Manager ” is defined in Section 3.1(b) .

1.2.5 “ Allocated Net Sales of a Combination Product ” means the Net Sales of a Combination Product calculated as described in Exhibit C .

1.2.6 “ Asia/Pacific Region ” means the countries listed on Exhibit E as being within that Region.

1.2.7 “ Bankrupt Party ” is defined in Section 17.5 .

1.2.8 “ Bayer ” is defined in the introduction to this Agreement.

1.2.9 “ Bayer Enabling Technology ” means, other than Project Technology, all of the following Controlled by Bayer or its Affiliates:

(a) any Know-How that at any time during the Term is actually used by or on behalf of Bayer or its Affiliates in the Development or Commercialization of any Initial Licensed Product or Collaboration Product; and

(b) all Patent Rights and other intellectual property rights anywhere in the world covering any of the Know-How described in subparagraph (a) of this Section 1.2.9 , including the Patent Rights described on Exhibit D ;

provided, however, that any of the foregoing technology and rights described in subparagraph (a) and (b)  Controlled by any person or entity that becomes an Affiliate of Bayer as a result of a Change of Control shall not be Bayer Enabling Technology unless (i) such technology or rights had been Controlled by Bayer or its Affiliates that were Affiliates prior to the Change of Control, or (ii) with respect to any of the foregoing technology covered by Patent Rights, at least one named inventor was employed by Bayer or one of its Affiliates that was an Affiliate prior to the Change of Control immediately prior to the public announcement of the transaction giving rise to such Change of Control.

1.2.10 “ Bayer Indemnitees ” is defined in Section 16.1(a) .

1.2.11 “ Bayer Project Technology ” means Project Technology invented, discovered, developed or otherwise generated solely by employees, consultants or agents of Bayer or its Affiliates that is Controlled by Bayer or its Affiliates. Bayer Project Technology shall not include Bayer’s or its Affiliate’s interest in Joint Project Technology.

1.2.12 “ Bayer Technology ” means the Bayer Project Technology, the Bayer Enabling Technology and Bayer’s or its Affiliate’s interest in the Joint Project Technology.

1.2.13 “ Breakpoint ” is defined in Section 10.3(b) .

1.2.14 “ Bayer Territory ” means all countries of the world except for those countries that are in the ZGEN Territory.

1.2.15 “ Bulk Drug Substance ” means any bulk form of Recombinant Thrombin made by or on behalf of ZGEN prior to or during the Term.

1.2.16 “ Bulk Drug Substance Supply Agreement ” is defined in Section 9.1(a) .

1.2.17 “ Bulk Manufacturing ” means the process of producing Bulk Drug Substance.

1.2.18 “ CAC ” means the Commercialization Advisory Committee as that term is defined in Section 3.5 .

1.2.19 “ CAC Team Leader ” is defined in Section 3.6(b) .

1.2.20 “ Canada/Latin America Region ” means the countries listed on Exhibit E as being within that Region.

1.2.21 “ Change of Control ” means, with respect to a Party, the acquisition after the Effective Date, directly or indirectly, by any Third Party of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended) of more than fifty percent (50%) of the combined voting power of such Party’s then outstanding voting securities entitled to vote generally in the election of directors.

1.2.22 “ Clinical Trial ” means any Phase 1 Clinical Trial, Phase 2 Clinical Trial, Phase 3 Clinical Trial or human clinical trials conducted after receipt of Regulatory Approval.

1.2.23 “ CMC ” means the chemistry, manufacturing and control section contained in any Regulatory Filing.

1.2.24 “ Collaboration Product ” means a New Presentation that the Parties have approved in writing pursuant to Article 4 , by Election or Opt-In, for Development and Commercialization in accordance with this Agreement. Each Collaboration Product shall be described in Exhibit G in the same detail as that given for Initial Licensed Products in Exhibit G .

1.2.25 “ Combination Product ” means a product, other than an Initial Licensed Product, containing a combination of Licensed Product and one or more active pharmaceutical ingredient(s) or device(s) (whether combined in a single formulation or package, as applicable, or formulated or packaged separately but sold together for a single price). For the sake of clarity, Initial Licensed Products shall not be deemed Combination Products for purposes of this Agreement.

1.2.26 “ Commercialization ” or “ Commercialize ” means all activities relating to the manufacture, promotion, marketing, advertisement, sale, reimbursement and distribution of Licensed Product, and other pre-launch and post-launch marketing and sale activities for Licensed Product, and, in the case of ZGEN, all activity relating to the manufacture of Bulk Drug Substance. When used as a verb, “ Commercialize ” means to engage in Commercialization.

1.2.27 “ Commercially Reasonable Efforts ” means the level of efforts and resources required to Develop and Commercialize, as applicable, a Licensed Product in a sustained manner consistent with the efforts a similarly situated biopharmaceutical company (in the case of ZGEN) or pharmaceutical company (in the case of Bayer) would reasonably devote to a product of similar market potential at a similar stage in its product life, profit potential or strategic value resulting from its own research efforts, based on conditions then prevailing. Commercially Reasonable Efforts will be determined on a country-by-country (each country including its territories) basis for a particular Licensed Product, and it is anticipated that the level of effort may change over the life of the Licensed Product and the country (including its territories) involved.

1.2.28 “ Competitive Product ” means any product that:

(a) is marketed in a country in the Bayer Territory by one or more person(s) or entity(ies) that is/are not an Affiliate(s) or Sublicensee(s) of Bayer and was not acquired, directly or indirectly, from Bayer or an Affiliate or Sublicensee of Bayer;

(b) contains as an active ingredient a [    *    ] ; and

(c) is [    *    ] and is [    *    ] to a Licensed Product marketed by Bayer or its Affiliates, Distributors or Sublicensees in the country. With regard to the meaning of [    *    ] , products that [    *    ] or that [    *    ] shall be regarded as having a [    *    ] , but products that contain [    *    ] will not be regarded as having a [    *    ] .

1.2.29 “ Confidential Information ” means all tangible and intangible techniques, technology, practices, trade secrets, inventions (whether patentable or not), methods, knowledge, know-how, conclusions, skill, experience, test data and results (including pharmacological, toxicological and clinical test data and results), analytical and quality control data, results or descriptions, software and algorithms received by either Party or its Affiliates from the other Party or its Affiliates pursuant to (1) this Agreement, (2) the Confidentiality Agreement, dated as of January 24, 2006, by and between ZGEN and Bayer Pharmaceuticals Corporation (as amended by Amendment No. 1 to Confidentiality Agreement, dated January 5, 2007), or (3) Confidential Disclosure Agreement, dated April 19, 2006, by and between Bayer HealthCare LLC and ZGEN, other than that portion of such information that:

(a) is publicly disclosed by the disclosing Party, either before or after it becomes known to the receiving Party;

(b) was known to the receiving Party, without obligation to keep it confidential, prior to when it was received from the disclosing Party;

(c) is subsequently disclosed to the receiving Party by a Third Party lawfully in possession thereof without obligation to keep it confidential;

(d) has been publicly disclosed other than by the disclosing Party and without breach of an obligation of confidentiality with respect thereto; or

(e) has been independently developed by the receiving Party without the aid, application or use of Confidential Information, as demonstrated by competent written proof.

1.2.30 “ Control ” or “ Controlled ” means, with respect to any Know-How or intellectual property rights, that a Party:

(a) (i) owns such Know-How or intellectual property rights or (ii) has a license to such Know-How or intellectual property rights; and

(b) has the unencumbered right to grant the other Party access, a license or sublicense, as applicable, in or to such Know-How or intellectual property rights as provided for herein without (assuming the timely payment of all applicable royalties) violating the terms of any agreement or other arrangement with any Third Party. A Party shall be deemed not to Control any Know-How or intellectual property rights it acquires after the Effective Date by in license or otherwise, with right to sublicense, until the other Party executes an agreement pursuant to Section 2.4(a) .

1.2.31 “ Co-Promotion Agreement ” is defined in Recital E.

1.2.32 “ Courts ” is defined in Section 18.5 .

1.2.33 “ Declining Party ” is defined in Section 4.2(a) .

1.2.34 “ Declined Product ” means a New Presentation proposed by a Party pursuant to Section 4.1 as to which the other Party (a) does not make an Election within the time allowed therefore or (b) gives written notice that it will not make an Election prior to the time allowed therefore; provided that a New Presentation that becomes a Declined Product will cease being a Declined Product if the Declining Party Opts-In in accordance with Section 4.3 . Each Declined Product shall be described in Exhibit G in the same detail as that given for Initial Licensed Products in Exhibit G .

1.2.35 “ Declined Product Activities ” is defined in Section 4.2(b) .

1.2.36 “ Development ” or “ Develop ” means, with respect to a Licensed Product, all pre-clinical and clinical activities including all Clinical Trials undertaken to support filing of a Drug Approval Application and to obtain Regulatory Approval. For the avoidance of doubt, these activities will include drug development activities, including animal pharmacology, toxicology, statistical analysis and report writing, CMC activities, manufacturing process development, and the manufacture of non-clinical and clinical supplies, product approval and registration, and regulatory affairs related to the foregoing. When used as a verb, “ Develop ” means to engage in Development.

1.2.37 “ Development Expense ” is defined in Exhibit F .

1.2.38 “ Developing Party ” is defined in Section 4.1 .

1.2.39 “ Discontinued Patent ” is defined in Section 11.3.5 .

1.2.40 “ Distributor ” means a Third Party who acquires a Licensed Product from a Party, its Affiliates or Sublicensees at a fixed price as to which the Third Party does not owe a royalty or any other consideration based on the resale of the Licensed Product.

1.2.41 “ Dollar ” means a United States dollar, and “ $ ” will be interpreted accordingly.

1.2.42 “ Drug Approval Application ” means an application for Regulatory Approval required before commercial sale or use of a Licensed Product as a drug or device or to treat a particular indication in a regulatory jurisdiction, including (a) (i) a Biologics License Application (BLA) pursuant to 21 C.F.R. 601.2, submitted to the FDA, or any successor application or procedure, (ii) a Premarket Approval (PMA) application pursuant to 21 C.F.R. 814, submitted to the FDA, or any successor application or procedure, and (ii) any counterpart of a BLA or PMA in any country in the Bayer Territory; and (b) all supplements and amendments, including supplemental BLAs, PMA supplements (and any foreign counterparts), that may be filed (e.g., to expand the label) with respect to the foregoing.

1.2.43 “ Drug Laws ” means all laws, rules and regulations that are applicable to the research, manufacture, use, sale, registration and promotion of pharmaceutical products for human use in a Party’s portion of the Territory and that materially affect the Party’s performance under this Agreement, including the United States Federal Food, Drug, and Cosmetic Act, the Public Health Service Act, and all rules and regulations promulgated thereunder, and any similar laws, rules or regulations in any country in the Bayer Territory.

1.2.44 “ eCTD ” means an electronic biologics license application (eBLA) and amendments in FDA-compliant electronic common technical document (eCTD) format, based on the ICH version 3.2 and FDA 2.01 document type definitions (dtd) to be transferred pursuant to Section 3.4 .

1.2.45 “ Effective Date ” means the date this Agreement was entered into and is defined in the introduction to this Agreement.

1.2.46 “ Election ” is defined in Section 4.1(b) .

1.2.47 “ EMEA ” means the European Agency for the Evaluation of Medicinal Products.

1.2.48 “ Europe ” means the countries listed in Exhibit E .

1.2.49 “ Expert ” means a mutually acceptable, disinterested, conflict-of-interest-free individual with such scientific, technical, regulatory and commercial experience with respect to the development of haemostatic products or financial accounting as is necessary to resolve a dispute. The Expert shall not be or have been during the preceding [    *    ] ( [    *    ] ) years an Affiliate, employee, consultant, officer or director of either Party or any of their respective Affiliates.

1.2.50 “ Expert Matter ” means a difference of business judgment pertaining only to:

(a) any matter involving the Development of an Initial Licensed Product or Collaboration Product, including the determination of Clinical Trial design;

(b) any audit dispute under this Agreement;

(c) any dispute regarding the determination of [    *    ] under Exhibit C ;

(d) any dispute regarding (i) whether a [    *    ] and (ii) if applicable, the [    *    ] under Exhibit C ;

(e) any dispute regarding the determination of whether (i) a product constitutes a [    *    ] as defined in Section [    *    ] and/or (ii) a [    *    ] has achieved the [    *    ] in a [    *    ] set forth in Section [    *    ] ; or

(f) appropriateness of a Development plan or application of Commercially Reasonable Efforts pursuant to Section 6.1(c) .

For the sake of clarity, Expert Matter shall not include any dispute relating to the determination of validity of a Party’s Patent Rights or other issues relating solely to a Party’s intellectual property and any dispute with respect to the interpretation or potential breach, termination or invalidity of this Agreement, including breach of the representations, warranties and covenants made hereunder.

1.2.51 “ FDA ” means the United States Food and Drug Administration, or any successor agency thereto.

1.2.52 “ Field ” means all [    *    ] in humans except, and expressly excluding, [    *    ] . For the avoidance of doubt, Field includes uses of [    *    ] other than for [    *    ] .

1.2.53 “ First Commercial Sale ” shall mean, in each country in the Bayer Territory, the first sale by Bayer or its Affiliates or Sublicensees of a Licensed Product to a Third Party after obtaining the required Regulatory Approval to sell such Licensed Product in that country. For purposes of the foregoing, a sale shall be deemed to occur on the earlier of (a) the date Licensed Product is shipped or (b) the date of the invoice to the purchaser of Licensed Product.

1.2.54 “ Force Majeure ” means any occurrence beyond the reasonable control of a Party that prevents or substantially interferes with the performance by such Party of any of its obligations hereunder, if such occurs by reason of any act of God, flood, fire, explosion, earthquake, breakdown of plant, shortage of critical equipment, loss or unavailability of manufacturing facilities or material, strike, lockout, labor dispute, casualty or accident, or war, revolution, civil commotion, terrorism and acts of public enemies, blockage or embargo, or any injunction, law, order, proclamation, regulation, ordinance, demand or requirement of any government or of any subdivision, authority or representative of any such government, inability to procure or use materials, labor, equipment, transportation or energy sufficient to meet manufacturing needs without allocation, or any other cause whatsoever, whether similar or dissimilar to those above enumerated, beyond the reasonable control of such Party, if and only if the Party affected will have used reasonable efforts to avoid such occurrence and to remedy it promptly if it will have occurred.

1.2.55 “ FTE ” means the equivalent of one person working full time for one 12-month period in a Development, regulatory or other relevant capacity.

1.2.56 “ FTE Costs ” means the costs of compensation, benefits, and all associated support and overhead; provided that such support and overhead shall not include costs attributable to general corporate activities (e.g., executive management, investor relations, business development, legal affairs and finance).

1.2.57 “ GAAP ” means United States generally accepted accounting principles.

1.2.58 “ GCP ” means current good clinical practices as defined by applicable rules, regulations and guidance in the Territory, including, as applicable, the International Conference of Harmonization (ICH) and FDA rules and regulations.

1.2.59 “ Global Brand ” is defined in Section 3.6(a) .

1.2.60 “ Global Development Plan ” means a program for Development of a Collaboration Product comprising the Joint Activities and the Territory Specific Activities, as prepared by the JDC and reviewed and, as applicable, approved by the JSC in accordance with Article 5 .

1.2.61 “ GLP ” means current good laboratory practices as defined by applicable rules, regulations and guidance in the Territory, including, as applicable, the International Conference of Harmonization and FDA rules and regulations.

1.2.62 “ GMP ” means current good manufacturing practices as defined by applicable rules, regulations and guidance in the Territory, including, as applicable, the International Conference of Harmonization, FDA rules and regulations, and Directive 2003/94 of the Commission of the European Communities, effective as of November 2003, and further elaborated in “The Rules Governing Medicinal Products in the European Community” Volume IV - Guide to Good Manufacturing Practice for Medicinal Products.

1.2.63 “ IAS/IFRS ” shall mean International Accounting Standards/International Financial Reporting Standards of the International Accounting Standards Board.

1.2.64 “ IND ” means an Investigational New Drug application or its equivalent outside the United States.

1.2.65 “ Initial Licensed Product Manufacturing Agreement ” is defined in Section 9.1(a) .

1.2.66 “ Initial Licensed Products ” means the Presentations substantially in the form described in paragraph 1 (a)  through (c)  on Exhibit G .

1.2.67 “ Japan Region ” means the country listed on Exhibit E as being within that Region.

1.2.68 “ JDC ” means the Joint Development Committee as that term is defined in Section 5.2.1(a) .

1.2.69 “ JDC Team Leader ” is defined in Section 5.2.1(b) .

1.2.70 “ Joint Activities ” means those Development activities pertaining to a Collaboration Product that are recommended by the JDC and approved by the JSC and that are part of an integrated development program whose primary goal is to obtain Regulatory Approval of such Collaboration Product in both the United States and one or more Major Countries, and such post-Regulatory Approval activities pertaining to such Collaboration Product as the Parties may agree.

1.2.71 “ Joint Patent Rights ” means the Patent Rights covering Joint Project Technology.

1.2.72 “ Joint Project Technology ” means the Project Technology that is invented, discovered, developed, or otherwise generated by at least one (1) employee, consultant or agent of Bayer or its Affiliates and at least one (1) employee, consultant or agent of ZGEN or its Affiliates.

1.2.73 “ JSC ” means the Joint Steering Committee as that term is defined in Section 5.1.1(a) .

1.2.74 “ Know-How ” means any proprietary inventions, discoveries, know-how, methods, processes, data, information, technology, research tools, reagents, compositions, formulas, trade secrets, test results and Materials (whether or not patentable or otherwise protected by trade secret laws).

1.2.75 “ Knowledge ” means (a) the [    *    ] knowledge of any individual within a group consisting of [    *    ] or above (the “ ZGEN Management ”) and (b) the knowledge that the ZGEN Management [    *    ] based on the [    *    ] knowledge of any ZGEN employee of [    *    ] ; provided that in no event shall ZGEN be required to [    *    ] . In addition, a determination of the knowledge that the ZGEN Management [    *    ] and the information that [    *    ] shall take into consideration that [    *    ] .

1.2.76 “ Licensed Product ” means a Presentation:

(a) the manufacture, use, sale, offer to sell or import of which (or of the Bulk Drug Substance incorporated therein) would infringe one or more Valid Claims under any Patent Rights in or to any ZGEN Technology in the absence of a license granted under this Agreement;

(b) the manufacture, use, sale, offer to sell or import of which (or of the Bulk Drug Substance incorporated therein) would infringe one or more Valid Claims under any Patent Rights in or to any Joint Project Technology in the absence of an ownership interest therein; or

(c) the research, development, formulation, composition or manufacture of which (or of the Bulk Drug Substance incorporated therein) was performed with the use of or incorporates any of the ZGEN Technology, Joint Project Technology or Bayer Project Technology.

1.2.77 “ Licensing Party ” is defined in Section 2.4(a) .

1.2.78 “ Losses ” means liabilities, costs, fees, expenses and/or losses, including reasonable legal costs and expenses and attorneys’ fees for outside counsel.

1.2.79 “ Major Country ” means each of [    *    ] .

1.2.80 “ Manufacturing Agreements ” means, collectively, the Bulk Drug Substance Supply Agreement and the Initial Licensed Product Manufacturing Agreement.

1.2.81 “ Materials ” means biological materials and other materials (including Bulk Drug Substance), screens, assays, animal models and other research tools, cell lines, cells, nucleic acids, peptides, vectors, proteins, antibodies, receptors, reagents and the like.

1.2.82 “ Milestone Payment ” is defined in Section 10.2(c) .

1.2.83 “ Net Sales ” means:

(a) the gross amount invoiced with respect to the sale or other disposition of Licensed Product in the Bayer Territory by Bayer or its Affiliates or Sublicensees to a non-Sublicensee Third Party (including a Distributor) after deducting returns and allowances (actually paid or allowed) including prompt payment and any other discounts (including deductions commonly referred to as “fee for service” if applicable), price reductions, including government reimbursement programs in the Bayer Territory similar to Medicare and Medicaid and similar types of rebates, chargebacks from wholesalers of Licensed Product (whether in cash or trade), and rebates, when included in gross sales, but not including taxes when assessed on income derived from such sales and bad debts; and

(b) all Allocated Net Sales of a Combination Product.

Amounts received by Bayer or its Affiliates for the sale of Licensed Product among Bayer or its Affiliates for resale or for transfer of Licensed Product to a Sublicensee for resale will not be included in the computation of Net Sales hereunder. Any Licensed Product sold or otherwise transferred in other than an arm’s-length transaction or for other property (e.g., barter) shall be deemed invoiced at its fair market price in the country of sale or transfer.

1.2.84 “ New Presentation ” means a Presentation other than the Initial Licensed Products. Each New Presentation shall be described in Exhibit G in the same detail as that given for Initial Licensed Products in Exhibit G .

1.2.85 “ Non-Licensing Party ” is defined in Section 2.4(a) .

1.2.86 “ Opt-In ” is defined in Section 4.3 .

1.2.87 “ Opt-In Notice ” is defined in Section 4.3 .

1.2.88 “ Party ” is defined in the introduction to this Agreement.

1.2.89 “ Patent Contacts ” means the patent practitioners appointed by each party in accordance with Section 11.2 .

1.2.90 “ Patent Prosecution ” means all activities associated with the preparation, filing, prosecution, maintenance, and conduct of opposition, appeal, reexamination, reissue, revocation and interference of patent or patent applications or other administrative proceedings under or with respect to Patent Rights.

1.2.91 “ Patent Prosecution Party ” is defined in Section 11.3.4 .

1.2.92 “ Patent Rights ” means:

(a) a pending application for a patent, including any provisional, converted provisional, continued prosecution application, continuation, divisional or continuation-in-part thereof; or

(b) an issued, unexpired patent (with the term “patent” being deemed to encompass an inventor’s certificate) that has not been held invalid or unenforceable by a court of competent jurisdiction from which no appeal can be taken or has been taken within the required time period, including any substitution, extension, registration, confirmation, reissue, re-examination, renewal, supplemental protection certificate or any like filing thereof.

1.2.93 “ [    *    ] Agreement ” is defined in Section 15.4(a) .

1.2.94 “ Pharmacovigilance Agreement ” is defined in Section 7.4(a) .

1.2.95 “ Phase 1 Clinical Trial(s) ” means those clinical trials conducted in patients or normal volunteers and designed to determine the metabolism and pharmacologic actions of Licensed Product in humans, the side effects associated with Licensed Product, early evidence on effectiveness, structure-activity relationships, or mechanism of action in humans, and that satisfy the requirements of 21 C.F.R. 312.21(a) (or its successor regulation) or the equivalent thereof in any jurisdiction outside the United States.

1.2.96 “ Phase 2 Clinical Trial(s) ” means those clinical trials that are designed to establish the safety and preliminary efficacy of Licensed Product for its intended use, and to define warnings, precautions, and adverse reactions that are associated with the drug in the dosage range to be prescribed and that satisfy the requirements of 21 C.F.R. 312.21(b) (or its successor regulation) or the equivalent thereof in any jurisdiction outside the United States.

1.2.97 “ Phase 3 Clinical Trial(s) ” means those clinical trial(s) that satisfy the provisions of 21 C.F.R. 312.21(c) and any successor regulation, or the equivalent thereof in any jurisdiction outside the United States, and are designed to gather additional evidence of safety and efficacy of Licensed Product to support Regulatory Approval and to evaluate the overall risks and benefits of a Licensed Product.

1.2.98 “ Presentation ” means a particular configuration and dosage, or a particular formulation, of a product in final dosage form that contains Bulk Drug Substance for use in the Field.

1.2.99 “ Product Trademark ” means any Trademarks that are (a) Controlled by either Party and (b) actually applied to or used, or agreed by the Parties to be used, with Licensed Product or any Promotional Materials.

1.2.100 “ Project Technology” means:

(a) any Know-How that is invented, discovered, developed or otherwise generated (whether before or after an Election or Opt-In) by or on behalf of either Party (or their respective Affiliates) individually or both Parties (or their Affiliates) jointly in the course of researching, Developing or Commercializing any Initial Licensed Product or Collaboration Product, including a New Presentation that is or becomes a Collaboration Product as provided in Article 4 ; and

(b) all Patent Rights and other intellectual property rights anywhere in the Territory covering any of the Know-How described in subparagraph (a)  of this Section 1.2.100.

1.2.101 “ Promotional Materials ” means, with respect to a Licensed Product, all sales representative training materials and all written, printed, graphic, electronic, audio or video matter, including journal advertisements and sales visual aids, direct mail, direct-to-consumer advertising, Internet postings, broadcast advertisements and sales reminder aids (e.g., scratch pads, pens and other such items) intended for use or used by a Party in connection with any promotion of such Licensed Product, except for:

(a) the Regulatory Authority-approved full prescribing information for a Licensed Product, including any required patient information; and

(b) all labels and other written, printed or graphic matter upon any container, wrapper or any package insert or outsert utilized with or for a Licensed Product.

1.2.102 “ Recall ” means an event, incident or circumstance that may result in the need for a “recall” or “market withdrawal” (as those terms are defined in United States regulations in 21 C.F.R. 7.3 or other similar national, state or local law or regulations) or field alert or field correction of Licensed Product or any lot thereof.

1.2.103 “ Recombinant Thrombin “means (i) the protein identified in Exhibit L produced through a process claimed in any of the Patent Rights listed on Exhibit H and (ii) all species, fragments and modifications of such protein that are produced through a process claimed in any of the Patent Rights listed on Exhibit H .

1.2.104 “ Region ” means any one of the following three regions: (1) Asia/Pacific; (2) Japan; and (3) Canada/Latin America. The countries comprising such Regions are set forth in Exhibit E .

1.2.105 “ Regulatory Approval ” means any approvals (including supplements, amendments, pre- and post-approvals, reimbursement approvals and price approvals), licenses, registrations or authorizations of any national, supranational, regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity, including the FDA or equivalent foreign Regulatory Authorities, necessary for the marketing and sale of Licensed Product in a regulatory jurisdiction. Regulatory Approval does not include any site license for a Party’s manufacturing facility.

1.2.106 “ Regulatory Authority ” means the FDA or any foreign counterpart of the FDA.

1.2.107 “ Regulatory Filings ” means collectively, Drug Approval Applications, INDs, establishment license applications (ELAs) and drug master files (DMFs), or any other similar filings (including any foreign equivalents and further including any related correspondence and discussions), and all data contained therein, as may be required by the FDA or equivalent foreign Regulatory Authorities for the Development or Commercialization of a Licensed Product.

1.2.108 “ Regulatory Milestone Event ” is defined in Section 10.2(a) .

1.2.109 “ Regulatory Milestone Payment ” is defined in Section 10.2(a) .

1.2.110 “ Royalty ” or “ Royalties ” means those amounts payable as royalties by Bayer to ZGEN pursuant to Section 10.3 .

1.2.111 “ Royalty Period ” means with respect to each Licensed Product in each country in the Bayer Territory the period starting on the date of the First Commercial Sale in such country and ending on the later of:

(a) the [    *    ] ( [    *    ] ) year anniversary date of the First Commercial Sale of such Licensed Product in such country; and

(b) the later of: (i) the date on which the last to expire of any Valid Claim within the ZGEN Technology or Joint Project Technology that would be infringed by the use, sale, manufacture, offer to sell or import of such Licensed Product in such country in the absence of a license granted under this Agreement or an ownership interest therein; and (ii) the expiration of regulatory exclusivity for such Licensed Product in such country as described in Section 7.9 .

1.2.112 “ Safety Issues ” is defined in Section 7.10(b) .

1.2.113 “ Sales Milestone Event ” is defined in Section 10.2(b) .

1.2.114 “ Sales Milestone Payment ” is defined in Section 10.2(b) .

1.2.115 “ Scientific Advice ” means the procedures established by EMEA Regulation (EC) No 726/2004, or any subsequent regulations of the EMEA, providing a mechanism to obtain advice regarding development of new therapies.

1.2.116 “ SEC ” is defined in Section 14.4 .

1.2.117 “ Secondary Manufacturing ” means (a) the process of producing Licensed Product for the Bayer Territory in finished form, including filling and freeze-drying of Bulk Drug Substance or (b) secondary packaging with ancillary supplies and labeling for sale to or use by an end user of Licensed Product in the Bayer Territory or (c) both.

1.2.118 “ Senior Executives ” means one or more executive officers of a Party or its Affiliates (other than members of the JSC, if any) who have direct reporting responsibility to, in the case of ZGEN, the CEO and, in the case of Bayer the Head of the responsible Business Unit within the Pharmaceutical Division of Bayer HealthCare LLC and who are appointed from time to time to conduct one or more of the dispute resolution processes described in Section 18.2 .

1.2.119 “ SOP ” means standard operating procedures.

1.2.120 “ Sublicensee ” means a Third Party to whom Bayer has granted a license or sublicense under Bayer’s rights pursuant to Article 2 to sell, offer for sale or import Licensed Product in one or more countries in the Bayer Territory. For the sake of clarity, “Sublicensee” shall not include a Distributor or any Third Party who receives an implied license to use Licensed Product arising by operation of law as a consequence of the purchase of Licensed Product.

1.2.121 “ Target Labeling ” is defined in Section 5.2.2(f) .

1.2.122 “ Term ” means the term of this Agreement as set forth in Section 17.1(a) .

1.2.123 “ Termination Notice Period ” is defined in Section 17.6 .

1.2.124 “ Territory ” means, collectively, the Bayer Territory and the ZGEN Territory.

1.2.125 “ Territory Specific Activities ” means any Development activities that (a) are conducted or sponsored by a Party as part of a development program whose primary goal is to obtain Regulatory Approval of a Collaboration Product solely in such Party’s portion of the Territory and (b) are not part of the Joint Activities.

1.2.126 “ Third Party ” means any individual or entity other than ZGEN or Bayer or an Affiliate of either of them.

1.2.127 “ Third Party Agreement ” means any agreement entered into with a Third Party by either ZGEN, Bayer or their respective Affiliates, or any amendment thereto, whereby royalties, fees or other payments are to be made to the Third Party based on the exploitation of or right to use Know-How or intellectual property rights Controlled by the Third Party where such Know-How or intellectual property rights are used in the course of the Development or Commercialization of a Licensed Product.

1.2.128 “ Third Party Payment ” means all upfront payments, milestone payments, license fees, royalties or other payments, paid or payable to any Third Party under any Third Party Agreement.

1.2.129 “ Trademark ” means any and all service marks, logos or trademarks and trademark applications (whether or not registered) together with all good will associated therewith, and any renewals, extensions or modifications thereto either filed or used.

1.2.130 “ Transfer Price ” is defined in Section 9.4 .

1.2.131 “ United States ” means the United States of America, together with its territories and possessions.

1.2.132 “ Valid Claim ” means a claim (a) of an issued patent within the Patent Rights that has not been found to be unpatentable, invalid or unenforceable by a court or other authority in the country of the patent, from which no appeal is taken or can be taken; or (b) of an application within the Patent Rights that has not been cancelled, withdrawn or abandoned, or pending for more than [    *    ] ( [    *    ] ) years.

1.2.133 “ ZGEN ” is defined in the introduction to this Agreement.

1.2.134 “ ZGEN Enabling Technology ” means, other than Project Technology, all of the following Controlled by ZGEN or its Affiliates:

(a) any Know-How that (i) as of the Effective Date or any time thereafter during the Term is necessary for the Development or Commercialization of any Initial Licensed Product, or (ii) at any time during the Term is actually used by or on behalf of ZGEN or its Affiliates in the Development or Commercialization of any Initial Licensed Product or Collaboration Product; and

(b) all Patent Rights and other intellectual property rights anywhere in the world covering any of the Know-How described in subparagraph (a) of this Section 1.2.134 including the Patent Rights described on Exhibit H ;

provided, however, that any of the foregoing technology and rights described in subparagraph (a) and (b)  Controlled by any person or entity that becomes an Affiliate of ZGEN as a result of a Change of Control shall not be ZGEN Enabling Technology unless (i) such technology or rights had been Controlled by ZGEN or its Affiliates that were Affiliates prior to the Change of Control, or (ii) with respect to any of the foregoing technology covered by Patent Rights, at least one named inventor was employed by ZGEN or one of its Affiliates that was an Affiliate prior to the Change of Control immediately prior to the public announcement of the transaction giving rise to such Change of Control.

1.2.135 “ ZGEN Indemnitees ” is defined in Section 16.2(a) .

1.2.136 “ ZGEN Project Technology ” means Project Technology invented, discovered, developed or otherwise generated solely by employees, consultants or agents of ZGEN or its Affiliates that is Controlled by ZGEN or its Affiliates. ZGEN Project Technology shall not include ZGEN’s or its Affiliate’s interest in Joint Project Technology.

1.2.137 “ ZGEN Technology ” means the ZGEN Project Technology, the ZGEN Enabling Technology and ZGEN’s or its Affiliate’s interest in the Joint Project Technology.

1.2.138 “ ZGEN Territory ” means the United States and, if applicable, the countries within one or more Region(s) that are removed from the Bayer Territory in accordance with Section 6.1(c) as set forth in an amendment to this Agreement executed by the Parties pursuant to Section 6.1(c) .

A RTICLE T WO

Grant of Licenses and Other Rights

Subject to the terms and conditions of this Agreement (including Section 2.6 ), ZGEN hereby grants to Bayer, and Bayer hereby accepts:

(a) an exclusive (even as to ZGEN and its Affiliates) license under the ZGEN Technology to sell, offer to sell, have sold and import for sale Licensed Product in the Field in the Bayer Territory until expiration of the Royalty Period;

(b) a co-exclusive license under the ZGEN Technology to conduct research and Develop Licensed Products in the Field in the Bayer Territory until expiration of the Royalty Period;

(c) a non-exclusive license under the ZGEN Technology to use Bulk Drug Substance in the manufacture of, and to make and have made, Licensed Product for which Bayer has responsibility for manufacture under this Agreement or the Manufacturing Agreements or any other manufacturing or supply agreement entered into by the Parties; and

(d) a non-exclusive license under the ZGEN Technology to (i) perform Bayer’s tasks under the Global Development Plan in the ZGEN Territory and (ii) use Licensed Product in the ZGEN Territory exclusively for non-commercial research related to potential New Presentations.

Bayer will have the right to grant sublicenses under the foregoing licenses only as set forth in Section 2.5 .

(a) Subject to the terms and conditions of this Agreement, including Article 8 , ZGEN hereby grants to Bayer an exclusive license under ZGEN’s entire right, title and interest in and to the Product Trademarks Controlled by ZGEN, to use and display such Product Trademarks solely in connection with the Commercialization of Licensed Product in the Field in the Bayer Territory until expiration of the Royalty Period. Bayer will have the right to grant sublicenses under the foregoing license only as set forth in Section 2.5 .

(b) Subject to the terms and conditions of this Agreement, including Article 8 , Bayer hereby grants to ZGEN an exclusive license under Bayer’s entire right, title and interest in and to the Product Trademarks Controlled by Bayer, to use and display such Product Trademarks solely in connection with the Commercialization of Licensed Product in the Field in the ZGEN Territory. ZGEN will have the right to grant sublicenses under the foregoing license only as set forth in Section 2.5.1(d) .

Subject to the terms and conditions of this Agreement, Bayer hereby grants to ZGEN, and ZGEN hereby accepts:

(a) an exclusive, fully paid-up, royalty-free, sublicensable license under the Bayer Technology to make, have made, use, sell, offer to sell, have sold and import Bulk Drug Substance and/or Licensed Product in the Field in the ZGEN Territory;

(b) a co-exclusive, fully paid-up, royalty-free, sublicensable license under the Bayer Technology to conduct research and Develop Licensed Products in the Field in the ZGEN Territory; and

(c) a non-exclusive, fully paid-up, royalty-free, sublicensable license under the Bayer Technology to make, have made and import in the Field in the Bayer Territory Licensed Product for which ZGEN has responsibility for manufacture under this Agreement or the Manufacturing Agreements or any other manufacturing or supply agreement entered into by the Parties.

(a) There shall be no license pursuant to Sections 2.1 and 2.3 of any Know-How or intellectual property rights acquired by a Party or its Affiliates (the “ Licensing Party ”) by in-license or otherwise from a Third Party after the Effective Date, and the other Party (the “ Non-Licensing Party ”) shall not be subject to any obligations, financial or otherwise, with respect to such license, unless and until the Non-Licensing Party agrees in writing to:

(i) receive the license, which shall be consistent with all terms and conditions of the relevant Third Party Agreement;

(ii) pay the Licensing Party an appropriate share of costs incurred by the Licensing Party up to and including the date on which the license becomes effective pursuant to this Section 2.4(a) , including the initial acquisition costs; and

(iii) pay the Licensing Party any payments owed in the future to the Third Party resulting from the Non-Licensing Party’s use or exploitation of the Third Party’s Know-How or intellectual property rights (e.g., royalties and milestones).

(b) All Third Party Agreements entered into by ZGEN on or before the Effective Date are listed in Exhibit A hereto. Except as otherwise agreed by the Parties and set forth in Exhibit A , as the same may be amended from time to time, ZGEN shall be solely responsible for all costs and obligations arising under the Third Party Agreement set forth in Exhibit A and Bayer shall have no liability or obligations, financial or otherwise, under such Third Party Agreement.

(c) Following the Effective Date, neither Party may enter a Third Party Agreement relating to any Initial Licensed Product or Collaboration Product that would result in the creation of a financial obligation on the other Party without prior review and approval by the other Party (such review and approval not to be unreasonably withheld or delayed). If a Party wishes to enter into a Third Party Agreement of the kind described in the previous sentence, it shall promptly notify the other Party of such wish and one Party shall be designated the lead Party to negotiate such Third Party Agreement as agreed upon at the time by both Parties; provided, however that unless otherwise agreed by the Parties, ZGEN shall be designated the lead Party to negotiate any Third Party Agreement pertaining to [    *    ] . For the sake of clarity, this Section 2.4(c) shall not apply to a Third Party Agreement relating to the development of a New Presentation prior to the time it becomes a Collaboration Product; provided that the Third Party Agreement is disclosed pursuant to Section 4.1 when the New Presentation is offered to the other Party.

(d) Bayer shall use commercially reasonable efforts to ensure that all Third Party Agreements into which it enters, including any that apply only in the Bayer Territory, may be assigned or sublicensed to ZGEN pursuant to Section 17.7(e) .

2.5.1 Sublicensing

(a) Subject to Section 19.4 and Section 2.5.2 , Bayer may sublicense its rights under this Article 2 to its Affiliates (for so long as they remain its Affiliates) without the consent of ZGEN and without providing ZGEN a copy of the agreement between Bayer and its Affiliates. Bayer may sublicense its rights under Section 2.1(c) to a Third Party manufacturer without the consent of ZGEN and without providing ZGEN a copy of the agreement between Bayer and such Third Party manufacturer; provided that Bayer shall provide to ZGEN the identity of the Third Party and the scope of rights granted together with a copy of the quality agreement entered into by Bayer and such Third Party manufacturer and shall give written notice to ZGEN promptly after sublicensing its rights under Section 2.1(c) .

(b) Bayer will have the right to sublicense any of its rights under Section 2.1(a), (b)  or (d)  to Sublicensees only with the prior written consent of ZGEN, which consent shall not be unreasonably withheld, conditioned or delayed except as follows: [    *    ] . Any such sublicense will require the Sublicensee to comply in all material respects with the obligations of Bayer as contained herein (specifically including obligations under Articles 10 , 12 and Section 19.11 ) and include an obligation of the Sublicensee to account for and report its sales of Licensed Product to Bayer on the same basis as if such sales were Net Sales by Bayer. Any sublicense shall terminate upon termination of this Agreement pursuant to Article 17 . Bayer will forward to ZGEN a copy of each fully executed sublicense agreement with Sublicensees under this Section 2.5.1(b) or modification thereof within [    *    ] of the execution thereof. Bayer shall provide an English translation of any such sublicense agreement or modification thereof if written in a language other than English within the foregoing [    *    ] period.

(c) Bayer will guarantee the full and complete performance of all of Bayer’s obligations and duties under this Agreement, whether the obligations and duties are performed by Bayer or by any of its Sublicensees. For the avoidance of doubt, Bayer will forward to ZGEN, and Bayer acknowledges that ZGEN will be entitled to receive, Royalties on Net Sales of Licensed Product sold by its Affiliates and Sublicensees hereunder and that Bayer will be responsible to ZGEN for paying Royalties due on Net Sales of Licensed Product sold by its Affiliates and Sublicensees.

(d) Except for a sublicense to an Affiliate or a Distributor, ZGEN shall have no right to sublicense the rights licensed pursuant to Section 2.2(b) . Any sublicense by ZGEN of its rights under Sections 2.2(b) or 2.3 will require ZGEN’s sublicensee to comply in all material respects with the obligations of ZGEN as contained herein. ZGEN will guarantee the full and complete performance of all of ZGEN’s obligations and duties under this Agreement, whether the obligations and duties are performed by ZGEN or by any of its sublicensees.

2.5.2 Performance by Affiliates

Each of ZGEN and Bayer acknowledges that obligations under this Agreement may be performed by Affiliates of ZGEN and Bayer for so long as they remain Affiliates. Each of ZGEN and Bayer guarantees performance of this Agreement by its Affiliates, notwithstanding any delegation to Affiliates. Wherever in this Agreement the Parties delegate responsibility to Affiliates, the Parties agree that the Affiliates may not make decisions inconsistent with this Agreement, or amend the terms of this Agreement or act contrary to its terms in any way. In case any Affiliate of a Party materially breaches this Agreement, the non-breaching Party will promptly notify the other Party of the breach, including a description of the breach and the identity of the Affiliate, and thereafter the non-breaching Party will have the rights under Section 17.3 directly against the other Party.

With respect to the licenses granted under this Article 2 , ZGEN reserves for itself and its Affiliates:

(a) the exclusive right to make and have made Bulk Drug Substance under ZGEN Technology in the Bayer Territory for the purpose of supplying:

(i) the requirements for Licensed Product of ZGEN and any ZGEN licensee for use in the ZGEN Territory; and

(ii) Bayer’s requirements for Licensed Product pursuant to this Agreement;

(b) a co-exclusive (with Bayer and its Affiliates), sublicensable right to conduct research and Develop Licensed Products in the Field in the Bayer Territory;

(c) a co-exclusive (with Bayer and its Affiliates), sublicensable right to use Licensed Product in the Bayer Territory exclusively for non-commercial research related to potential New Presentations;

(d) a non-exclusive, sublicensable right to make and have made Licensed Product under ZGEN Technology in the Bayer Territory for use by or on behalf of ZGEN in the ZGEN Territory; and

(e) a co-exclusive (with Bayer and its Affiliates), sublicensable right to perform ZGEN’s tasks under the Global Development Plan in the Bayer Territory.

ZGEN retains all rights in ZGEN Technology and Bayer retains all rights in Bayer Technology not expressly licensed hereunder, including the right to make, have made, use, sell, lease, offer to sell, have sold, import, export or otherwise exploit products other than Licensed Product (including any product outside the Field), for any purpose in any field anywhere in the Territory. Except as expressly provided in this Article 2 or elsewhere in this Agreement, neither Party will be deemed by this Agreement to have been granted any license or other rights to the other Party’s Patent Rights, Know-How or intellectual property rights either expressly or by implication, estoppel or otherwise.

A RTICLE T HREE

Initial Coordination of the Relationship

(a) The Parties acknowledge that given the development and regulatory status of the Initial Licensed Products, their Development and Commercialization will require limited collaborative effort and, consequently, limited need for management architecture; provided that the Parties shall (i) transfer certain technology pursuant to Sections 3.4 and 3.5 and (ii) explore the pursuit of a Global Brand pursuant to Section 3.6 .

(b) Until the Parties designate a New Presentation as a Collaboration Product pursuant to Article 4 , the Parties will establish such procedures (e.g., regular meetings) as they deem appropriate to coordinate the Development and Commercialization of the Initial Licensed Products; provided, however, that each Party shall designate a single contact within such Party’s organization (the “ Alliance Manager ”) who shall act as liaison and serve as the principal point of communication with the other Party with respect to the Parties’ activities under this Agreement pertaining to the Development and Commercialization of the Initial Licensed Products. Each Party may replace the Alliance Manager upon [ * ] prior written notice to the other Party and the Alliance Manager may appoint a project manager to form and lead a technology transfer team or any other group necessary or desirable to facilitate the Parties’ activities under this Agreement pertaining to the Development and Commercialization of the Initial Licensed Products, including the transfer of technology pursuant to Sections 3.4 and 3.5 . Following the designation of the first New Presentation as a Collaboration Product and the formation of the JSC, the Parties may delegate to the JSC such aspects of the management of the Initial Licensed Products as they deem appropriate.

Notwithstanding any other provision in this Agreement to the contrary, unless the Parties agree otherwise, Bayer shall not conduct a [    *    ] Clinical Trial with respect to the Initial Licensed Products. If the Parties cannot agree relating to such a proposed [    *    ] Clinical Trial, such matter shall be resolved in accordance with Sections 18.2 and 18.3 .

(a) Subject to Section 3.3(c) , Bayer shall have sole responsibility for, and the rights to make decisions relating to, any matter that relates to:

(i) its Development of a Licensed Product in the Bayer Territory (except with respect to a [    *    ] Clinical Trial, as to which Section 3.2 shall apply); and

(ii) Commercialization of Licensed Product in the Bayer Territory (except with respect to any issue pertaining to a Global Brand, as to which Section 3.6(c) shall apply).

(b) Subject to Section 3.3(c) , ZGEN shall have sole responsibility for, and the rights to make decisions relating to, any matter that relates to:

(i) the manufacture of Bulk Drug Substance (subject to change management provisions set forth in the Manufacturing Agreement or any other manufacturing and supply agreement entered into by the Parties);

(ii) its Development of a Licensed Product in the ZGEN Territory; and

(iii) Commercialization of Licensed Product in the ZGEN Territory (except with respect to any issue pertaining to a Global Brand, as to which Section 3.6(c) shall apply).

(c) If either Party (the “ First Party ”) reasonably believes that the final decision of the Party with responsibility and decision-making authority for a matter would [    *    ] on the First Party’s [    *    ] of a Licensed Product or otherwise [    *    ] of a Licensed Product’s [    *    ] in the First Party’s portion of the Territory, then the First Party shall have the right to refer such matter for resolution in accordance with Article 18 . Until a dispute is resolved in accordance with Article 18 , the Parties shall refrain from taking action on the matter; provided, however, that if the disputed matter pertains to any activity, including any Clinical Trial (other than a [    *    ] Clinical Trial), that is required by applicable law, rule or regulation or by a Regulatory Authority, the affected Party shall be entitled to conduct such activity as so required.

Promptly following the Effective Date, ZGEN shall provide to Bayer, at ZGEN’s expense, the eCTD for the Initial Licensed Product described in paragraph 1(a) of Exhibit G . In addition, through the Parties’ Alliance Managers or their project managers or other designees, ZGEN will, for a period of [    *    ] following the Effective Date, provide such further assistance to Bayer, including transfer of ZGEN Enabling Technology and other data or results relating to the Initial Licensed Products, in support of Bayer’s Regulatory Filings and communications with Regulatory Authorities in the Bayer Territory relating to the Initial Licensed Products as Bayer may reasonably request, including, if applicable, in seeking to obtain Scientific Advice. At Bayer’s request, ZGEN will provide a budget and timeline for providing such further assistance to Bayer.

The Parties agree that product supply is of critical importance to the successful Commercialization in the Bayer Territory and that the transfer of Secondary Manufacturing responsibilities to Bayer is potentially beneficial. Consequently, the Parties will facilitate through the Alliance Managers or their project managers or other designees the transfer to Bayer or its Sublicensee of Secondary Manufacturing responsibility for the Initial Licensed Products for sale in the Bayer Territory. Each Party will use commercially reasonable efforts to transfer to Bayer or its Sublicensee within the applicable time period set forth in Section 9.3 (i.e., no longer than [    *    ] from the Effective Date) Secondary Manufacturing responsibility for the Initial Licensed Products for sale in the Bayer Territory.

(a) The Parties may mutually agree that a single brand should be used for Commercialization of one or more Initial Licensed Products and/or Collaboration Products throughout the United States and Major Countries (“ Global Brand ”).

(b) If the Parties agree to use a Global Brand or if the Parties wish to establish a committee to prepare guidelines for Promotional Materials or to otherwise communicate on matters pertaining to Commercialization of Initial Licensed Products and/or Collaboration Products throughout the Territory, the Parties may establish a Commercialization Advisory Committee (the “ CAC ”). The CAC shall be comprised of at least one (1) member and up to three (3) members representing each Party. Each Party shall designate one of its representatives on the CAC as its initial project leader to coordinate communication regarding Commercialization of the Initial Licensed Products and/or Collaboration Products (each a “ CAC Team Leader ”). The CAC may adopt procedural rules comparable to those for the JSC or establish its own procedural rules for its operation, including frequency of meetings, and for determining when to disband the CAC.

(c) If the Parties cannot reach consensus on whether to use a Global Brand or on the associated process, architecture or development of a Global Brand, each Party will use a separate brand for the Commercialization of Collaboration Products in such Party’s portion of the Territory.

(a) Bayer shall be responsible for one hundred percent (100%) of all costs attributable to:

(i) obtaining Regulatory Approval of each Initial Licensed Product in the Bayer Territory, including any costs incurred by ZGEN after the Effective Date in providing support to Bayer at Bayer’s request; and

(ii) subject to Section 3.7(c) , transferring manufacturing responsibility under Section 3.5 , including any costs incurred by ZGEN after the Effective Date in providing support to Bayer at Bayer’s request.

For the purpose of reimbursement, ZGEN’s costs shall be calculated on the same basis as Development Expenses. At Bayer’s request, ZGEN will provide a budget and timeline for providing the foregoing support to Bayer.

(b) ZGEN shall be responsible for one hundred percent (100%) of all costs attributable to obtaining Regulatory Approval in the ZGEN Territory of the Initial Licensed Products.

(c) Notwithstanding the foregoing, expenses incurred by ZGEN after the Effective Date in [    *    ] the [    *    ] for the Initial Licensed Products will be funded [    *    ] of such expenses. In addition, the Parties agree to [    *    ] the expenses incurred by ZGEN after the Effective Date in [    *    ] described in Section 1.2.117(a) for the Initial Licensed Products to the extent that such [    *    ] relates to the [    *    ] by which Bayer will be supplied Initial Licensed Products. The Parties will agree upon a work plan and budget relating to the [    *    ] activities within [    *    ] after the [    *    ] Agreement [    *    ] contained therein. A draft work plan and budget is set forth on Exhibit M .

A RTICLE F OUR

Designation of Collaboration Products

(a) During the Term, each Party (the “ Developing Party ”) shall notify the other Party of each New Presentation for which it Controls the rights necessary for Commercialization in the other Party’s portion of the Territory and shall provide such factual information relating to the New Presentation as is likely to be material to the other Party’s decision whether to Develop and Commercialize the New Presentation in accordance with this Agreement, including, at least, the items listed on Exhibit K . Each New Presentation notice shall describe the New Presentation with a level of detail that is comparable to the level of detail set forth in Exhibit G with respect to the Initial Licensed Products. In addition to the information set forth in Exhibit K , if the

Developing Party considers the New Presentation to be a Combination Product, the Developing Party will inform the other Party of the applicable allocation formula set forth in Exhibit C proposed to be applied in calculating the Net Sales of such New Presentation and the invoice price(s), if known, or the [    *    ] , proposed to be applied in performing such calculation. If the Developing Party proposes to apply [    *    ] , rather than invoice prices, in the calculation of Net Sales pursuant to Exhibit C for such New Presentation and if the other Party disagrees with the [    *    ] proposed by the Developing Party, the matter shall be resolved [    *    ] . If the Developing Party, in providing information pertaining to a New Presentation, does or does not characterize the New Presentation as a Combination Product and if the other Party disagrees, such matter (in addition to a determination of [    *    ] , if applicable) shall be resolved [    *    ] . The determination [    *    ] and shall apply whether such New Presentation becomes a Collaboration Product or a Declined Product; provided that if the allocation of Net Sales of a Combination Product is based on [    *    ] and invoice prices become available, the invoice prices shall be used to allocate Net Sales in accordance with Exhibit C starting with the next calendar quarter.

(b) The Developing Party may notify the other Party of a New Presentation under subparagraph (a)  of this Section 4.1 at any time; provided that it does so no later than [    *    ] before [    *    ] for the New Presentation in the [    *    ] . Within [    *    ] after receipt of the Developing Party’s notice or, if later, final determination of status as a [    *    ] and, if applicable, [    *    ] pursuant to [    *    ] , the other Party may elect to Develop and Commercialize the New Presentation pursuant to this Agreement by providing the Developing Party with a written notice and paying fifty percent (50%) of the costs described in paragraph (c)  of Exhibit K (an “ Election ”). A New Presentation for which a Party makes an Election shall be deemed a Collaboration Product. Following the designation of the first Collaboration Product under this Section 4.1 , the Parties shall form a JSC pursuant to Section 5.1 . If appropriate, the non-Developing Party’s Election shall include an agreement regarding one or more Third Party Agreements as contemplated by Section 2.4(a) . For the sake of clarity, all of a Party’s Project Technology related to a New Presentation that becomes a Collaboration Product as provided herein and that was invented, discovered, developed or otherwise generated prior to the Election is included as part of the Developing Party’s Project Technology for purposes of this Agreement effective on the date on which the non-Developing Party makes an Election with respect to such New Presentation.

(c) If a Developing Party does not Control the rights necessary for Commercialization of a New Presentation in the other Party’s portion of the Territory, it shall, [    *    ] for the New Presentation in the [    *    ] , notify the other Party of the New Presentation and provide a description of the New Presentation in a level of detail that is comparable to the level of detail set forth in Exhibit G with respect to the Initial Licensed Products, including the first three items listed in paragraph (a)  on Exhibit K ; provided that, if Bayer is the Developing Party, the Parties shall agree whether or not the New Presentation is a Combination Product and, if it is a Combination Product, the applicable allocation formula, including, if required, the fair market value of the components in accordance with the procedure set forth in Section 4.1(a) .

(a) If the non-Developing Party (the “ Declining Party ”) does not make an Election within the time allowed, the relevant New Presentation shall be a Declined Product. A Declined Product with respect to which a Party is the Developing Party is a Licensed Product of such Developing Party for purposes of this Agreement, including for purposes of the licenses set forth in Article 2 . Sales by Bayer in the Bayer Territory of a Declined Product with respect to which Bayer is the Developing Party shall be subject to Royalties and Milestone Payments. Unless the Declining Party elects to Opt-In in accordance with Section 4.3 , the Declining Party shall have no right to Know-How and intellectual property rights of the Developing Party relating to the Declined Product anywhere in the Territory. For the sake of clarity, a Developing Party shall have no right to sell or offer to sell a Declined Product in the Declining Party’s portion of the Territory.

(b) Subject to Section 4.3 , the Developing Party shall be solely responsible for all costs and expenses incurred in connection with the Development and Commercialization of a Declined Product (the “ Declined Product Activities ”), and the Declining Party shall have no financial obligation to support or otherwise fund, and no obligation, responsibility or authority regarding, any efforts in respect of such Declined Product Activities.

(c) The Developing Party shall submit to the Declining Party a written report in June and December of each year during the Term that covers the then current Development status, the results achieved, the problems being encountered, costs incurred and other pertinent material information relating to the Development of each Declined Product being Developed by the Developing Party, including the [    *    ] for the Declined Product in the [    *    ] . In addition, the Developing Party shall notify the Declining Party upon the Developing Party’s [    *    ] for a Declined Product in the [    *    ] .

The Declining Party shall have the right to opt-in with respect to any Declined Product Activities (“ Opt-In ”) as described in this Section 4.3 , and thereafter shall have the right to Develop and Commercialize such Declined Product in accordance with this Agreement. To preserve its rights to Opt-In, the Declining Party must, no later than [    *    ] after receiving notice from the Developing Party of the Developing Party’s [    *    ] for the Declined Product in the [    *    ] , submit a written request to the Developing Party for additional information relating to the Declined Product. Within [    *    ] after receipt of such written request from the Declining Party, the Developing Party shall provide to the Declining Party a written statement of Development Expenses incurred by the Developing Party in connection with such Declined Product Activities to date. Within [    *    ] after receipt of such statement (subject to, following an Opt-In, the Declining Party’s audit rights in accordance with Section 12.2 ), the Declining Party shall have the right to Opt-In by providing written notice thereof to the Developing Party together with a payment equal to fifty percent (50%) of the total amount of the Developing Party’s Development Expenses incurred in connection with such Declined Product Activities to date (including the costs described in paragraph (c)  of Exhibit K ), as though such costs and expenses were Development Expenses shared in accordance with Section 6.5 , plus a risk

premium equal to [    *    ] percent ( [    *    ] %) of the Declining Party’s share of such Development Expenses (an “ Opt-In Notice ”). From and after the Developing Party’s receipt of such payment for the Declining Party’s share of such Development Expenses, such Declined Product shall be deemed a Collaboration Product, the Declined Product Activities shall cease to be Declined Product Activities and shall be deemed Joint Activities, and the Parties shall share all such Development Expenses in accordance with Section 6.5 . For the sake of clarity, all of a Party’s Project Technology related to a Declined Product that becomes a Collaboration Product as provided herein and that was invented, discovered, developed or otherwise generated prior to the Opt-In Notice is included as part of that Party’s Project Technology for purposes of this Agreement effective on the date on which the other Party gives its Opt-In Notice with respect to such Declined Product.

The Parties shall, from time to time, revise Exhibit G to accurately list the Collaboration Products, Declined Products and, after notice pursuant to Section 4.1(c) , New Presentations for which the Developing Party does not Control the rights necessary for Commercialization in the other Party’s portion of the Territory. Each Collaboration Product, Declined Product and New Presentation listed on Exhibit G shall be described with a level of detail that is comparable to the level of detail set forth in Exhibit G with respect to the Initial Licensed Products.

A RTICLE F IVE

Management Following Addition of Collaboration Products

5.1.1 Formation

(a) Within [    *    ] following the first Election or Opt-In Notice, as the case may be, the Parties will establish a Joint Steering Committee (the “ JSC ”), with such subcommittees as the JSC may establish from time to time as it deems appropriate, to oversee and coordinate the worldwide Development of Collaboration Products and such responsibilities relating to the Initial Licensed Products as the Parties may delegate, if any.

(b) The JSC may at any time agree to reduce the frequency of meetings of the JSC and/or any of the subcommittees. In addition, the JSC may elect to disband itself and its subcommittees at any time that the JSC determines that the Parties are not engaged in Joint Activities. Neither Party shall have a deciding vote with respect to a decision to disband the JSC or its subcommittees and if the JSC cannot reach consensus on whether to disband a committee, such committee shall not be disbanded at such time and the matter shall be resolved in accordance with Section 5.1.5 .

(c) The JSC shall operate by consensus. The representatives from each Party on the JSC shall have collectively one (1) vote on behalf of that Party. If the JSC cannot reach consensus on a matter, such matter may, subject to Section 5.1.5 , be settled by casting deciding votes as set forth in Section 5.1.1(d) . Notwithstanding the foregoing, neither Party shall have the

deciding vote regarding the designation of any Development activities as Joint Activities or the budget for Development Expenses associated with Joint Activities and, if the JSC cannot reach consensus on such matters, such matters shall be resolved in accordance with Section 5.1.5 .

(d) If the Parties cannot reach consensus on a matter, such matter may, subject to Section 5.1.5 , be settled by casting the following deciding votes:

(i) Bayer shall have the deciding vote with respect to any matter that relates entirely or substantially to any Territory Specific Activities in the Bayer Territory, including the inclusion of Territory Specific Activities in the Global Development Plan and the design, approval or performance of a Clinical Trial required to support Regulatory Approval solely in the Bayer Territory; and

(ii) ZGEN shall have the deciding vote with respect to any matter that relates entirely or substantially to any Territory Specific Activities in the ZGEN Territory, including the inclusion of Territory Specific Activities in the Global Development Plan and the design, approval or performance of a Clinical Trial required to support Regulatory Approval solely in the ZGEN Territory.

5.1.2 Membership of JSC

The JSC will be comprised of at least three (3) members representing each Party, all of whom shall have appropriate expertise and seniority to enable them to make decisions on behalf of the Parties with respect to the issues falling within the jurisdiction of the JSC. Either Party, in its sole discretion, may substitute members of the JSC from time to time upon written notice to the other Party; provided, however that, without limiting the generality of the foregoing, a key objective with respect to membership in the JSC shall be preserving continuity. The JSC shall be chaired at each meeting by a representative of the Party hosting that meeting, as described in Section 5.1.4 . The Parties’ respective JDC Team Leaders may, at the discretion of the JSC, take part in all meetings of the JSC.

5.1.3 Responsibilities of JSC

The JSC shall have responsibility for overseeing the global Development of Collaboration Products, including specifically:

(a) coordinating a global strategy for the Development of Collaboration Products, and overseeing the implementation of such strategy worldwide;

(b) reviewing the Global Development Plan prepared by the JDC and approving the Joint Activities (with amendment as appropriate) together with the annual budget for Development Expenses associated with the Joint Activities as set forth in the Global Development Plan;

(c) coordinating the exchange of Bayer Technology and ZGEN Technology relating to Collaboration Products pursuant to this Agreement;

(d) assigning manufacturing responsibility to a Party with respect to any Collaboration Product;

(e) subject to Section 13.1 , approving a strategy with respect to publishing and presenting the results of all Clinical Trials;

(f) reviewing and approving Target Labeling proposed by the JDC;

(g) resolving disputes of the JDC and any other subcommittees established by the JSC; and

(h) performing such other functions as are set forth herein or as the Parties may mutually agree upon in writing, including functions relating to the Initial Licensed Products.

5.1.4 Administration of JSC

(a) The JSC will establish its own procedural rules for its operation, consistent with the terms of this Article 5 . The chairperson of the JSC will be responsible for calling regular meetings of the JSC and for leading the meetings. The chairperson of each JSC meeting will alternate between the Parties. Regular meetings of the JSC will be held either by phone, videoconference or in person at least once per calendar quarter, unless the JSC chooses to reduce the frequency of such meetings as provided in Section 5.1.1(b) . The JSC also shall meet as necessary, either by phone or in person, to timely address all matters it is called upon to resolve by the JDC. A JSC member of the Party hosting the JSC meeting will serve as secretary of that meeting. Promptly following each meeting, the secretary of the meeting will prepare and distribute to all members of the JSC the written minutes of the meeting. The minutes will provide a reasonably detailed description of the meeting discussions and a list of any actions, decisions or determinations approved by the JSC. The minutes of each JSC meeting will be approved or disapproved by each Party (on behalf of such Party’s JSC members) promptly following receipt, and revised as necessary, for approval at the next meeting. Final minutes of each meeting will be distributed to the members of the JSC and the Parties’ respective JDC Team Leaders by the chairperson prior to commencement of the next meeting. Each Party shall bear its own costs associated with its participation on the JSC, including all travel and living expenses.

(b) If a Party’s representative is unable to attend a meeting, that Party may designate an alternate representative with decision-making authority for that Party to attend the meeting. Any decision made by that attendee will be considered to be a decision made by the absent representative. In addition, each Party may, at its discretion (and with the consent of the other Party), invite additional employees, consultants or scientific advisors to attend any JSC meeting, provided that any individual so invited will not have any voting power at such JSC meeting and is subject to obligations of confidentiality comparable to Article 14 . A quorum for each JSC meeting will consist of at least two (2) members from each Party.

5.1.5 Recourse to Dispute Resolution Procedure

If:

(a) the JSC are unable to reach consensus on any matter and one Party is not expressly authorized to cast the deciding vote over the matter as set forth in this Agreement; or

(b) either Party (the “ First Party ”) reasonably believes that the final decision of the Party authorized to cast the deciding vote on a matter would [    *    ] on the First Party’s [    *    ] of an Initial Licensed Product or a Collaboration Product or otherwise [    *    ] of an Initial Licensed Product’s or a Collaboration Product’s [    *    ] in the First Party’s portion of the Territory,

then the First Party shall have the right to refer such matter for resolution in accordance with Article 18 . Until a dispute is resolved in accordance with Article 18 , the Parties shall refrain from taking action on the matter; provided, however, that if the disputed matter pertains to any activity, including any Clinical Trial (other than a [    *    ] Clinical Trial), that is required by applicable law, rule or regulation or by a Regulatory Authority, the affected Party shall be entitled to conduct such activity as so required.

5.2.1 Formation

(a) Within [    *    ] following the first Election or Opt-In Notice, as the case may be, the Parties will establish a Joint Development Committee (the “ JDC ”) as the standing subcommittee of the JSC for Development. The JDC shall be comprised of at least three (3) members representing each Party, all of whom shall have appropriate expertise and seniority to enable them to make decisions on behalf of the Parties with respect to the issues falling within the jurisdiction of the JDC. The JDC will follow the organizational and meeting procedures set forth in Section 5.2.3 .

(b) Each Party shall designate one of its representatives on the JDC as its initial project leader to coordinate Development of each Collaboration Product (each a “ JDC Team Leader ”) and shall promptly thereafter notify the other Party of such appointment. If at any time a vacancy occurs for any reason, the Party that appointed the prior incumbent shall as soon as reasonably practicable appoint a successor. Each Party shall promptly notify the other Party of any substitution of another person as its JDC Team Leader.

(c) The JDC Team Leaders shall coordinate the Parties’ respective Development activities. Each Party’s JDC Team Leader will be reasonably available to answer questions from the other Party’s JDC Team Leader.

5.2.2 JDC Responsibilities

The JDC will be responsible for developing a plan for the overall worldwide Development of each Collaboration Product, including specifically:

(a) Preparing and submitting to the JSC for review, and, in the discretion of the JSC, approval of, on at least an annual basis, the Global Development Plan, including any changes to the Global Development Plan that the JDC considers appropriate in response to interactions with Regulatory Authorities, to manage clinical drug supply of Collaboration Product or for any other reason. In proposing Development activities for inclusion in the Global Development Plan, the JDC shall designate them as either Joint Activities or Territory Specific Activities.

(b) Preparing and submitting to the JSC for approval on at least an annual basis, as part of the Global Development Plan, a detailed annual budget and a [ * ] projection for Development Expenses associated with the Joint Activities (but not Territory Specific Activities) for each Collaboration Product beginning with the calendar year in which the applicable Election is made or Opt-In Notice is given, as the case may be; provided, however, that such responsibility may be delegated to the Parties’ controllers or other individuals within the Parties’ finance groups or to a joint finance committee if established as a subcommittee of the JSC.

(c) Establishing and recommending to the JSC forecasts for non-clinical and clinical supply of Collaboration Product; provided, however, that such responsibility may be delegated to a joint supply or manufacturing committee if established as a subcommittee of the JSC.

(d) Facilitating the exchange of Bayer Enabling Technology, ZGEN Enabling Technology, Project Technology and all other data or results relating to Collaboration Products pursuant to this Agreement.

(e) Subject to Section 13.1 , developing and recommending to the JSC a strategy with respect to publishing and presenting the results of all Clinical Trials.

(f) Developing and recommending to the JSC proposed labeling for each Collaboration Product (“ Target Labeling ”) that each Party would seek to use with each such Collaboration Product in such Party’s portion of the Territory.

(g) Performing such other functions as appropriate to further Development of each Collaboration Product in the Territory according to the applicable Global Development Plan or as assigned by the JSC.

5.2.3 Decision Making; Administrative Matters

(a) The JDC will operate by consensus. The representatives from each Party will have collectively one (1) vote on behalf of that Party. If the members of the JDC cannot reach consensus on a matter, the matter will be referred to the JSC for resolution and a special meeting of the JSC may be called for such purpose.

(b) The JDC will establish its own procedural rules for its operation, consistent with the terms of this Article 5 . The chairperson of each meeting of the JDC will alternate between the Parties. The chairperson will be responsible for calling regular meetings of the JDC and for leading the meetings. Regular meetings of the JDC will be held either by phone, videoconference or in person at least once per calendar quarter, unless the JSC chooses to reduce the frequency of such meetings as provided in Section 5.1.1(b) . A JDC member of the Party hosting the JDC meeting will serve as secretary of that meeting. Promptly following each meeting, the secretary of the meeting will prepare and distribute to all members of the JDC the written minutes of the meeting. The minutes will provide a reasonably detailed description of the meeting discussions and a list of any actions, decisions or determinations approved by the JDC. The minutes of each JDC meeting will be approved or disapproved by each Party (on behalf of such Party’s JDC members) promptly following receipt, and revised as necessary, for approval at the next meeting. Final minutes of each meeting will be distributed to the members of the JDC and JSC by the chairperson prior to commencement of the next meeting. Each Party shall bear its own costs associated with its participation on the JDC, including all travel and living expenses.

(c) If a Party’s representative is unable to attend a meeting, that Party may designate an alternate representative with decision-making authority for that Party to attend the meeting. Any decision made by that attendee will be considered to be a decision made by the absent representative. In addition, each Party may, at its discretion (and with the consent of the other Party), invite additional employees, consultants or scientific advisors to attend any JDC meeting, provided that any individual so invited will not have any voting power at such JDC meeting and is subject to obligations of confidentiality comparable to Article 14 . A quorum for each JDC meeting will consist of at least two (2) members from each Party.

A RTICLE S IX

Development