Exhibit 10.7

 

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted because it is both (i) not material and (ii) would
likely cause competitive harm to the company if publicly disclosed.

 

LICENSE AGREEMENT

 

This License Agreement (the “Agreement”), effective, subject to Article 22, upon
the Effective Time (as defined in the Agreement and Plan of Merger (the "Merger
Agreement") between Fibrogen, Inc., FGIM Corp, Imigen Systems, Inc. (the "Imigen
Acquisition") ("Effective Date"), is between the Dana-Farber Cancer Institute,
Inc., a Massachusetts non-profit organization having a principal place of
business at 44 Binney Street, Boston, Massachusetts, 02115 (“DFCI”), and
FibroGen, Inc., a Delaware corporation having a principal place of business at
225 Gateway Blvd., South San Francisco, CA 94080 (“LICENSEE”).

 

Background

 

WHEREAS DFCI is the owner of certain Licensed Intellectual Property (as defined
below) developed or discovered by David Morse Livingston, M.D., while he was
employed by DFCI, and William George Kaelin, Jr., M.D., while he was employed by
Howard Hughes Medical Institute, a Delaware non-profit corporation (hereinafter
referred to as “HHMI”), in HHMI laboratories located at DFCI, and HHMI has
assigned its rights in certain patents and patent applications arising from such
discoveries to DFCI, pursuant to an agreement between DFCI and HHMI, and DFCI
has the right to license such Licensed Intellectual Property to third parties,
and

 

WHEREAS on November 11, 2002, DFCI and Imigen entered into a License Agreement
(the “Imigen License”) under which DFCI granted to Imigen a license under
certain patents owned by DFCI, and

 

WHEREAS Imigen has been acquired by LICENSEE through the Imigen Acquisition, and

 

WHEREAS DFCI and LICENSEE now wish to directly enter into a license agreement
regarding certain rights previously licensed under the Imigen License
Agreement,  and

 

WHEREAS DFCI desires to have the Licensed Intellectual Property used to promote
the public interest by granting a license, and

 

WHEREAS LICENSEE has represented to DFCI that it has the capabilities and/or
experience as well as the financial capacity and the strategic commitment to
commercially develop the Licensed Intellectual Property for the public interest,
and

 

WHEREAS LICENSEE desires to obtain a license to DFCI’s rights and DFCI is
willing to grant a license to such rights to LICENSEE upon the terms and
conditions of this Agreement, subject to certain reserved rights (as defined
below),

 

NOW, THEREFORE, for and in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, DFCI and LICENSEE hereto expressly agree as follows:

 

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Article 1 - Definitions

1.1“Agreement” means this License Agreement, including all attached schedules.

1.2“Affiliate” means any company, corporation or other business entity that is
controlled by, controlling, or under common control with LICENSEE.  For this
purpose "control" means direct or indirect beneficial ownership of at least
forty percent (40%) interest in the voting stock (or the equivalent) of the
company, corporation or other business or having the right to direct, appoint or
remove a majority of members of its board of directors (or their equivalents) or
having the power to control the general management of the company, corporation
or other business, by law or contract.

1.3“Biological Materials” means the materials supplied by DFCI to LICENSEE under
this Agreement, as identified in Schedule 1 and Schedule 2 together with any
progeny, or unmodified derivatives of the materials that may be supplied by DFCI
or created by LICENSEE.

1.4“FDA” means the United States Food and Drug Administration.

1.5“Field of Use” means all fields of use including all therapeutic and
diagnostic applications and research laboratory applications directed to
discovery of therapeutic products or processes in humans or animals.

1.6 “Licensed Process” means any process that is covered in whole or in part by
an unexpired issued or granted claim that has not been found to be invalid by a
court of competent jurisdiction or by a pending claim in Patent Rights in a
particular territory or any process which incorporates or uses Biological
Materials in whole or in part.  

1.7“Licensed Product” means any product that is covered in whole or in part by
an unexpired issued or granted claim that has not been found to be invalid by a
court of competent jurisdiction or by a pending claim in the Patent Rights in a
particular territory or any product manufactured according to, or service or
method of use involving, a Licensed Process or any product that incorporates
Biological Materials in whole or in part.

1.8“Licensed Intellectual Property” means Patent Rights or Biological Materials,
individually or collectively.

1.9“Net Sales” means the revenue derived by an entity licensed under this
Agreement from the Sales (as defined in Section 1.11) of Licensed Products less
the following deductions, which may not exceed reasonable and customary amounts
in the country in which the transaction occurs:

 

(a)

Transportation charges or allowances actually paid or granted;

 

 

(b)

Trade, quantity, cash or other discounts and brokers' or agents' commissions, if
any, actually allowed and taken;

 

 

(c)

Credits or allowances made or given on account of rejects, returns or
retroactive price reductions for any amount not collected that are specifically
identifiable to Licensed Products;

 

2

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted because it is both (i) not material and (ii) would
likely cause competitive harm to the company if publicly disclosed.

 

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

 

 

(d)

Any tax or governmental charge (including, but not limited to, sales taxes,
withholding taxes, value added taxes, customs, and duties) applied directly on
sale or transportation, use or delivery of products paid by a licensed entity
and not recovered from the purchaser;

 

 

(e)

Any amount invoiced but for which cash was not actually received by LICENSEE
within [ * ] year of the invoice date (however, such amounts shall be treated as
Sales if received after the [ * ]-year period).

 

Net Sales includes the fair market value of any non-cash consideration from sale
of Licensed Products received by LICENSEE, its Affiliates or Sublicensees.

 

Cash payments related to equity investments, research, and development funding,
and reimbursement of expenses received by LICENSEE shall be excluded from this
definition of “Net Sales”.

 

1.10“Patent Rights” means certain patents and patent applications owned by DFCI
and listed on Schedule 3; any patent applications from which these claim
priority or of which these claim the benefit; any continuing applications
related thereto, including all continuations, divisionals, and
continuations-in-part (“CIPs”), as further defined below, thereof; any
international or foreign counterparts thereof; and any patents issued or granted
therefrom, including any patents resulting from any petition for reissue,
reexamination, or extension thereof, or any patent resulting from any
post-issuance or post-grant proceeding relating thereto.  A “CIP” or “CIP
application” is an application claiming priority to an application included in
the “Patent Rights” in which one or more inventors are added to the application
as the result of the addition of new matter supplied by LICENSEE and said
inventor(s) are under an obligation to assign his or her rights in the CIP
application to LICENSEE.  LICENSEE hereby assigns its rights in any such CIP to
DFCI and LICENSEE agrees to fully cooperate to perfect that title with the
appropriate patent authorities.  In no event will CIP applications be filed
which would result in the addition of inventor(s) who are not under an
obligation to assign to LICENSEE.

Included within "Patent Rights" are new patent applications as described in
Section 6.2 below.  

 

1.11“Sale” or “Sold” mean an arm’s length transaction, involving the transfer of
ownership of a Licensed Product to any person or entity for cash consideration
by either the LICENSEE, an Affiliate, or Sublicensee.  A Sale shall not include
a transaction between the LICENSEE and an Affiliate or Sublicensee where the
Licensed Product(s) in question will be resold by the Affiliate or Sublicensee
provided that the cash payments received by the Affiliate or Sublicensee from
the resale of the Licensed Product(s) are included in the calculation of Net
Sales.

1.12“Sublicensee” means any natural person or legal entity, which is not an
Affiliate, to which LICENSEE grants a sublicense of some or all of the rights
granted to LICENSEE under this Agreement. This definition of “Sublicensee” shall
include a third party to whom LICENSEE has granted the right to distribute a
Licensed Product(s).

1.13 “Territory” means worldwide.

3

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted because it is both (i) not material and (ii) would
likely cause competitive harm to the company if publicly disclosed.

 

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Article 2 - Grant of Licenses, Reserved Rights and Sublicensing

2.1Exclusive License Grant.  Subject to all of the terms and conditions of this
Agreement and the non-exclusive license granted to the United States government,
DFCI grants to LICENSEE an exclusive license to a) DFCI’s right, title and
interest under Patent Rights and b) Biological Materials listed in Schedule 1,
with the right to grant sublicenses, to make, have made, use, offer to sell,
sell and import Licensed Products and to practice Licensed Processes in the
Territory in the Field of Use for the term of this Agreement.  The license will
continue for the term of this Agreement unless the grant is sooner terminated
according to Article 8.  The foregoing license grant shall be subject to the
following:

 

2.1.1

Prior transfer of Biological Materials to third parties. LICENSEE acknowledges
that the Biological Materials listed on Schedule 1 may have been transferred,
prior to the Effective Date, to non-profit academic or for-profit commercial
entities for the purpose of non-exclusive in-house research only.

2.2DFCI grants to LICENSEE a non-exclusive license to Biological Materials
listed in Schedule 2, to make, have made, use, offer to sell, sell and/or import
Licensed Products and to practice Licensed Processes, in the Territory in Field
of Use for the term of this Agreement, to the extent the  product or process is
covered in whole or in part by an unexpired issued or granted claim that has not
been found to be invalid by a court of competent jurisdiction or by a pending
claim in the Patent Rights in a particular territory.  The License will continue
for the term of this License Agreement unless the grant is sooner terminated
according to Article 8.

 

2.3Restricted Transfer of cre-lox containing Biological Materials.  DFCI has
informed LICENSEE and LICENSEE acknowledges that certain Biological Materials
listed on Schedule 1 and Schedule 2 (the “Cre-Lox Materials”) may be covered by
U.S. Patents 4,736,866, 5,087,571, and 5,925,803, and any corresponding U.S. or
foreign patents and patent applications owned by Bristol-Myers Squibb (“BMS”).

Under terms of the Non-Commercial Research Licenses between DFCI and BMS, dated
October 20th, 1999, DFCI cannot transfer such Cre-Lox Materials to LICENSEE
until DFCI receives written confirmation from BMS that LICENSEE has (i) entered
into a license agreement with BMS which expressly permits LICENSEE to receive
Cre-Lox Materials from third parties and (ii) has paid the applicable fees to
BMS.  LICENSEE is responsible for obtaining from BMS the written confirmation
that DFCI can transfer such Cre-Lox Materials to LICENSEE, and, in the event
such written confirmation is obtained, DFCI is responsible for transferring such
Cre-Lox Materials to LICENSEE or its designated Affiliate or Sublicensee.

 

2.4  Affiliates.  LICENSEE is entitled to extend its licenses under this Article
2 to its Affiliates, consistent with all of the terms and conditions of this
Agreement.  If LICENSEE does extend its license and an Affiliate assumes
obligations under the Agreement, LICENSEE guarantees performance by the
Affiliate.  If DFCI has a claim arising under this Agreement against an
Affiliate, DFCI may seek a remedy directly against LICENSEE and may, but is not
required to, seek a remedy against the Affiliate.  Any termination of the
Agreement under Article 8 as to LICENSEE also constitutes termination as to any
Affiliates.

2.5No Implied Licenses.  This Agreement confers no license or rights by
implication, estoppel, or otherwise under any patent applications or patents
owned in whole or in part by DFCI other than the Patent Rights.

4

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted because it is both (i) not material and (ii) would
likely cause competitive harm to the company if publicly disclosed.

 

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2.6Reserved Rights. The licenses granted by DFCI are subject to the following
reserved rights.

 

2.6.1

The rights of the United States of America, as set forth in Public Laws 96-517
and 98-620, the regulations promulgated thereunder, and the policy of any
funding agencies.  Any rights granted hereunder that are greater than permitted
by Public Laws 96-517 and 98-620 are subject to modification as required to
conform to the provisions of those statutes.

 

2.6.2

DFCI’s right to make and use the Licensed Intellectual Property in the Field of
Use for teaching, education and non-commercial research purposes, both
laboratory and clinical.  It is acknowledged that DFCI reserves the right to use
Biological Materials in Schedule 1 in collaboration with third parties
(non-profit, for-profit, and governmental) provided such use occurs in
laboratories located on DFCI’s premises and such use is limited to teaching,
education and non-commercial research purposes only.  

 

2.6.3

DFCI’s right to supply academic, governmental, or not-for-profit organizations
with Biological Materials listed on Schedule 1 or grant to such organizations
non-exclusive, non-transferable licenses under Patent Rights solely for
non-commercial research purposes in the Field of Use.  Under no circumstances
may DFCI supply those Biological Materials listed in Schedule 1 or grant any
license to the Patent Rights to such organizations for use in human subjects,
clinical trials, or for any diagnostic purposes involving human subjects.

 

2.6.4

DFCI’s right to grant to HHMI a paid-up, non-exclusive, irrevocable license to
use the Licensed Intellectual Property for its research purposes with no right
to sublicense.

 

2.6.5

DFCI’s right to license the use of Biological Materials listed in Schedule 1, to
a third party to the extent that such use is covered by a claim in a patent or
patent application which (i) lists at least one DFCI employee as an inventor and
(ii) is not included under Patent Rights.  

 

2.7Sublicensing.  LICENSEE has the right to grant sublicenses under this
Agreement consistent with the terms and conditions of this Agreement.  LICENSEE
remains responsible for the operations of any Sublicensee under this Agreement,
as if the operations were carried out by LICENSEE.

 

2.7.1

Notice.  LICENSEE shall promptly notify DFCI in writing of the identity of any
prospective Sublicensee at the time that LICENSEE enters into a binding term
sheet or final sublicense with such prospective Sublicensee.  Notwithstanding
the foregoing, such notification shall be no less than ten (10) business days
after the execution of a binding term sheet or final sublicense with such
Sublicensee.

5

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted because it is both (i) not material and (ii) would
likely cause competitive harm to the company if publicly disclosed.

 

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

 

 

2.7.2

Form and Content of Sublicenses.  LICENSEE shall issue any sublicense(s) granted
by it under this Agreement in writing and shall attach a copy of this Agreement
to all sublicenses.  However, LICENSEE, acting reasonably, may redact
information from the copy of this Agreement that it considers confidential and
not necessary for a Sublicensee to understand LICENSEE’s obligations to DFCI
relating to sublicensing.

LICENSEE shall include the equivalent of at least the following provisions in
all sublicenses:

 

(a)

Sublicensee shall use commercially reasonable efforts to bring the subject
matter of the sublicense into commercial use and shall report annually to
LICENSEE on its operations under the sublicense.

 

(b)

Sublicensee shall make payments due LICENSEE in relation to Net Sales of
Licensed Products in a timely manner, so that LICENSEE may comply with its
obligations to make payments to DFCI as set forth in Articles 3 and 4 of this
Agreement.

 

(c)

The terms and conditions of Sections 2.1, 2.5, 2.6, Sections 4.2.1 and 4.2.2,
5.2 – 5.5, and Article 7-10 and 12 of this Agreement are binding on the
Sublicensee.

 

(d)

Sublicensees have the right to grant further sublicenses subject to LICENSEE’s
written approval and notice to DFCI.  Such notice shall be provided by LICENSEE
at least ten (10) days prior to the execution of such sublicenses.

It is expressly understood that LICENSEE and its Sublicensees shall not grant a
sublicense to any company engaged in the sales of tobacco or tobacco-related
products without the written consent of DFCI.

 

2.7.3

Copies of Sublicenses to DFCI.  LICENSEE shall forward to DFCI a copy of any and
all fully executed sublicenses.  Such copy shall be postmarked within thirty
(30) days of the execution of the sublicense.  LICENSEE shall also forward to
DFCI annually a copy of the reports received by LICENSEE from its Sublicensee
during the preceding twelve (12) month period under the sublicenses as shall be
pertinent to (i) its operations under the sublicense and (ii) a royalty
accounting under the sublicense agreement.

 

2.7.4

LICENSEE’s Continuing Obligations.  Nothing in this Section 2.7 (Sublicensing)
may be construed to relieve LICENSEE of its obligations to DFCI under this
Agreement, including but not limited to LICENSEE’s obligations under Article 9 -
Indemnification, Defense, and Insurance.

Article 3 - Consideration - Amounts and Time for Payment

In partial consideration of the rights granted by DFCI to LICENSEE under this
Agreement, LICENSEE shall make the following payments to DFCI according to this
Article 3 and Article 4, on behalf of itself, any Affiliate(s) or
Sublicensee(s):

6

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted because it is both (i) not material and (ii) would
likely cause competitive harm to the company if publicly disclosed.

 

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

 

 

3.1Reimbursements and Other Financial Consideration

 

3.1.1

Past Patent Expenses.   LICENSEE shall reimburse DFCI for expenses incurred in
filing, prosecuting, maintaining, and enforcing Patent Rights prior to the
Effective date of the Agreement (the “Incurred Patent Expenses”).  The Incurred
Patent Expenses shall be paid by LICENSEE to DFCI in two (2) installments as set
forth below:  

 

(a)

Installment I, totaling $[ * ] for Incurred Patent Expenses as of August 31,
2005, Shall be paid by LICENSEE to DFCI within forty-five (45) days of the
Effective Date.

 

(b)

Installment II shall reflect the Incurred Patent Expenses for the period between
September 1, 2005 and the Effective Date.  The total amount for Installment II
shall be invoiced to LICENSEE, presented at one time as a total sum and
accompanied by copies of all original invoices contributing thereto, no later
than sixty (60) days after the Effective Date.  LICENSEE shall pay DFCI
Installment II within forty-five (45) days of receiving such invoice from
DFCI.  

 

 

3.1.2

LICENSEE shall not be liable for any additional amounts relating to any patent
expenses incurred by DFCI and not included in either Installment I or
Installment II.

 

3.1.3

Future Patent Expenses.  LICENSEE shall pay all expenses incurred by LICENSEE
after the Effective Date, for filing, prosecuting, and maintaining Patent
Rights.  

 

3.1.4

Milestone Payments.

 

(a)

LICENSEE shall make milestone payments to DFCI within forty-five (45) days of
the occurrence of the events occurring after the Effective Date hereto by
LICENSEE, Sublicensee, or an Affiliate, as set forth below.  Such payments will
be due only one time for the first indication of each Licensed Product
consisting of a chemical compound with a distinct chemical formula or a biologic
with a distinct biological composition as the case may be.

MILESTONE

PAYMENT

FDA approval of an Investigational New Drug (IND) application in the United
States

$[ * ]

FDA approval of a New Drug Application or Biologic License Application in the
United States

$[ * ]

First marketing approval in the United States, Europe, or Japan

$[ * ]

7

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted because it is both (i) not material and (ii) would
likely cause competitive harm to the company if publicly disclosed.

 

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

 

 

(b)

LICENSEE shall make milestone payments to DFCI within ninety (90) days of the
occurrence of the relevant event, specified in the table below.  Such payments
will be due only one time.

MILESTONE

PAYMENT

The first year in which the cumulative and aggregated Net Sales for all Licensed
Products by LICENSEE, Affiliates, and Sublicensees, on a worldwide basis exceeds
a total of five hundred million dollars ($500,000,000)

$[ * ]

The first year in which the cumulative and aggregated Net Sales for all Licensed
Products by LICENSEE, Affiliates, and Sublicensees, on a worldwide basis exceeds
a total of one billion dollars ($1,000,000,000)

$[ * ]

 

3.1.5

Running Royalties. LICENSEE shall pay DFCI the following running royalties as
set forth below:

 

(a)

LICENSEE, its Affiliates, or its Sublicensees shall pay DFCI a [ * ] royalty on
the Net Sales of Licensed Products or a Licensed Process in the Field of
Use.  Such royalty rate shall not be subject to any form of royalty stacking
reduction.  It is also expressly understood that even if a Licensed Product or
Licensed Process would, but for the license granted under this Agreement,
infringe multiple claims included under Patent Rights, the royalty shall not be
additive and shall not exceed the royalty stated in this Section 3.1.5(a).

 

(b)

For any Licensed Product or Licensed Process covered solely by a claim in a
pending patent application included in the Patent Rights, LICENSEE, its
Affiliates, or its Sublicensees shall have the right to deduct from the royalty
payment due DFCI, as specified above in Section 3.1.5(a), fifty percent (50%) of
such royalty payment.  The unpaid royalty payment balance in each territory
shall be due and payable by LICENSEE to DFCI sixty (60) days after such claim is
issued or granted in such territory.

 

3.1.6

Sublicense Fees. For each sublicense granted by LICENSEE to a Sublicensee in the
Field of Use, LICENSEE shall pay to DFCI the sum of [ * ] for each fully
executed sublicense executed after the Effective Date of this Agreement that
grants rights to one or more Licensed Products in the Field of Use to be paid
thirty (30) days from the date of full execution of that sublicense.

 

3.1.7

Maintenance Fees.  Upon the achievement of certain events by LICENSEE specified
below, LICENSEE will pay to DFCI; (i) an annual license maintenance fee and (ii)
an equivalent sublicense maintenance fee for each fully executed sublicense in
effect, collectively the “Maintenance Fees”.  Such Maintenance Fees

8

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted because it is both (i) not material and (ii) would
likely cause competitive harm to the company if publicly disclosed.

 

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

 

 

shall be due beginning on the first anniversary date of this Agreement and due
annually thereafter on the anniversary date:

 

EVENT

MAINTENANCE FEE

After the issuance in the United States of the first patent within Patent Rights
claiming subject matter in the Field of Use

$[ * ]

After (i) the issuance in the United States and (ii) grant in an EPO member
state and Japan of the first patent within Patent Rights claiming subject matter
in the Field of Use

$[ * ]

 

Notwithstanding the foregoing, no license maintenance fee will be due after
LICENSEE, an Affiliate, or Sublicensee begins to commercially sell a Licensed
Product.  For the avoidance of doubt, the above fees are triggered by the first
issuance of a patent in the Field of Use and not due for each issuance of a
patent in the Field of Use.

The fees specified in this Section 3.1.7 are not refundable, not creditable, and
not an advance against any fees, royalties, or reimbursement of any costs
incurred hereunder.

3.2Waiver or Deferral. Waiver or deferral by DFCI of any payment owed under any
paragraph under Section 3.1 may not be construed as a waiver or deferral of any
subsequent payment owed by LICENSEE to DFCI.

3.3Combination Packages. If a Licensed Product in the Field of Use is sold in a
combination package or kit containing other active products or processes, then
Net Sales for purposes of determining royalty payments on the combination
package will be calculated using one of the following methods, but the royalties
payable to DFCI may not be reduced to less than [ * ] of that provided for in
Section 3.1.5 (a) of this Agreement:

By multiplying the net selling price of the combination by the fraction A/A+B,
where A is the gross selling price, during the royalty-paying period in
question, of the Licensed Product sold separately, and B is the gross selling
price during the royalty period in question, of the other active products sold
separately; or

If no separate sales are made of the Licensed Product or any of the active
products in such combination package during the royalty-paying period in
question, Net Sales for the purposes of determining royalty payments, must be
calculated by dividing the net selling price of the combination by the number of
functions performed by the combination sold where such combination contains
active agents other than those licensed under this Agreement.

Article 4 - Royalty Reports, Payments and Financial Records

4.1Royalty Reports.  Within sixty (60) days after March 31, June 30, September
30, and December 31, of each year in which this Agreement is in effect, LICENSEE
shall deliver to DFCI full, true and accurate reports of its activities and
those of its Affiliates, if any, relating to this Agreement during the preceding
three (3) month period.  LICENSEE shall deliver reports containing equivalent
information pertaining to its Sublicensee(s) within sixty (60) days of receipt
of a royalty report from such Sublicensee (“Sublicensee
Report”).  Notwithstanding the foregoing,

9

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted because it is both (i) not material and (ii) would
likely cause competitive harm to the company if publicly disclosed.

 

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LICENSEE shall have the option to provide such Sublicensee reports either
individually or as a consolidated report and shall provide such reports no less
frequently than every six (6) months.  All reports must include at least the
following:

 

(a)

Number of Licensed Products manufactured and Sold by LICENSEE, and any
Affiliates or Sublicensees, in each country of the Territory;

 

(b)

Total billings for the Licensed Products Sold; by LICENSEE, and any Affiliates
or Sublicensees, in each country of the Territory;

 

(c)

Total billings for the use of Licensed Process Sold; by LICENSEE, and any
Affiliates or Sublicensees, in each country of the Territory;

 

(d)

Deductions applicable to determining Net Sales;

 

(e)

The nature and amount of Sublicense Revenue received by LICENSEE as set forth in
Section 3.1.5(a) and the amount owed to DFCI;

 

(f)

Identification of any events that fulfill the milestones as set forth in Section
3.1.4 and the amount owed to DFCI;

 

(g)

Total royalties due to DFCI;

 

(h)

Number of sublicenses executed as set forth in Section 2.7 and the amount owed
to DFCI as set forth in Sections  3.1.4, 3.15 and 3.1.6;

 

(i)

An accounting of amounts invoiced but not yet received by FibroGen pursuant to
Section 1.9(e).

With each report, LICENSEE shall pay to DFCI the royalties due and payable.  If
no royalties are due, LICENSEE shall so report.  If multiple Licensed Products
are covered by the license granted under this Agreement, LICENSEE shall
separately identify each Licensed Product in the royalty report and specify
which Licensed Intellectual Property covers that Licensed Product.

Ninety (90) days following any such payment, LICENSEE shall take reasonable
business efforts to make any necessary adjustments (including any necessary
credits, and offsets) to ensure that the amount paid to DFCI is in compliance
with the terms of this Agreement.

4.2Record Keeping.

 

4.2.1

Books and Records.  LICENSEE shall keep, and shall require its Affiliates and
Sublicensees to keep, true books of account containing an accurate record
(together with supporting documentation) of all data necessary for determining
the amounts payable to DFCI.  LICENSEE shall keep its records at its principal
place of business or the principal place of business of the appropriate division
of LICENSEE to which this Agreement relates and shall require its Affiliates and
Sublicenses to keep their books and records in the same manner.

 

4.2.2

Inspections.  In order for DFCI to determine the correctness of any report or
payment made under this Agreement, LICENSEE shall make its records available

10

[ * ] = Certain confidential information contained in this document, marked by
brackets, has been omitted because it is both (i) not material and (ii) would
likely cause competitive harm to the company if publicly disclosed.

 

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

 

 

to DFCI for inspection, for a period of three (3) years following the end of the
calendar year to which they pertain.  LICENSEE shall also require any Affiliates
or Sublicensees to make their records available for inspection by DFCI, in the
same manner as provided in this Section 4.2.2.

DFCI may inspect the records during regular business hours by a certified public
accountant selected by DFCI and reasonably acceptable to the licensed entity
whose records are being inspected.  In conducting inspections under this Section
4.2.2, LICENSEE agrees that DFCI’s accountant may have access to all records
which DFCI reasonably believes to be relevant to calculating royalties owed to
DFCI under Article 3.

DFCI is responsible for the cost of any inspection, unless the examination shows
an underreporting or underpayment by any entity in excess of five percent for
any twelve (12) month period, in which case LICENSEE shall pay the cost of the
inspection as well as any additional sum that would have been payable to DFCI
had the LICENSEE reported correctly, plus interest as set forth in Section 4.5.

4.3Form of Payments and Taxes.  LICENSEE must make all payments to be made to
DFCI in Boston, Massachusetts, or at such other place or in such other way as
DFCI may reasonably designate.  Payments must be paid by check or wire transfer.

LICENSEE shall pay all amounts payable to DFCI under this Agreement in United
States funds.  All taxes levied on payments accruing to DFCI under this
Agreement shall be paid by DFCI from its own account, including taxes levied
thereon as income to DFCI.  Any withholding taxes imposed on any payments made
to DFCI shall be deducted from the payments made to DFCI, paid to the proper
taxing authority, and a receipt of payments of the tax secured and properly
delivered to DFCI.  Each party agrees to assist the other party in claiming
exemption from such deductions or withholding under any double taxation or
similar agreement or treaty from time to time in force.  LICENSEE shall
reasonably inform DFCI of any such taxes actually due on a payment owed to DFCI
if LICENSEE becomes aware that such tax is due.

 

4.4Currency Conversion.  If any currency conversion is required in connection
with any payment owed to DFCI, the conversion will be made at the buying rate
for the foreign currency as quoted by the Wall Street Journal on the last
business day of the month to which such payment pertains.

4.5Interest.  Any payment owed to DFCI under this Agreement that is not made
when due will accrue interest beginning on the first day following the due date
specified in Article 3.  The interest will be calculated at the annual rate of
the sum of (a) [ * ] plus (b), the prime interest rate quoted by Bank of America
on the date the payment is due, the interest being compounded on the last day of
each calendar quarter.  However, the annual rate may not exceed the maximum
legal interest rate in Massachusetts.  The payment of interest as required by
this Section does not foreclose DFCI from exercising any other rights or
remedies it has as a consequence of the lateness of any payment.

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brackets, has been omitted because it is both (i) not material and (ii) would
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Article 5 - Operations under the License

5.1Due Diligence

 

5.1.1

General Obligations.  LICENSEE shall use commercially reasonable efforts to
diligently use Licensed Intellectual Property to develop and commercialize a
diagnostic or therapeutic Licensed Product(s) in the Field of Use.

 

5.1.2

Development and Commercialization Reports.  On or before each anniversary of the
Effective Date, LICENSEE shall provide to DFCI a written report describing the
efforts by LICENSEE, or any Affiliates or Sublicensees, to bring one or more
Licensed Products to the therapeutic or diagnostic marketplace in Field of
Use.   In order to fulfill its obligation under this Section 5.1.2, LICENSEE
shall be permitted to provide DFCI with a copy of letters or reports, and other
information generally provided to shareholders of FibroGen.  

Notwithstanding the foregoing, such reports and letters must be in sufficient
detail to permit DFCI to monitor LICENSEE’s compliance with due diligence
provisions of this Agreement.  At a minimum, LICENSEE shall include in these
reports: (a) a summary of LICENSEE’s progress and (that of any Sublicensee) in
the reporting year, related to exploiting the Licensed Intellectual Property
including an identification of all Licensed Products that LICENSEE intends to
develop, if any; and (b), a summary of all sublicenses that are currently in
force and those that have been terminated, if any, in the reporting year.

 

 

5.1.3

Failure to Perform. LICENSEE’s failure to perform with any due diligence
requirement provided in any paragraph in this Section 5.1 is grounds for DFCI to
terminate this Agreement according to Section 8.2 or to convert this Agreement
to a non-exclusive license agreement, at DFCI’s option.  

5.2U.S. Manufacture. LICENSEE shall manufacture Licensed Products as required by
35 U.S.C. 204 and 37 C.F.R. 401 et. seq., as amended.  LICENSEE shall also
require any Affiliate(s) or Sublicensee(s) to comply with this U.S. manufacture
requirement.

If LICENSEE provides compelling evidence to DFCI that domestic manufacture of a
Licensed Product is not commercially feasible, at LICENSEE’s request, DFCI will
cooperate with LICENSEE to seek a waiver from the United States government with
respect to the United States manufacture requirement.  If a waiver is to be
sought, LICENSEE shall provide DFCI with the required information, prepare the
initial paperwork necessary for applying for or obtaining the waiver and bear
all costs associated with the waiver process.  LICENSEE acknowledges that DFCI
cannot guarantee that a waiver can or will be obtained.

5.3Other Government Laws.  LICENSEE shall comply with, and ensure that its
Affiliates and Sublicensees comply with, all government statutes and regulations
that relate to Licensed Products.  These include but are not limited to FDA
statutes and regulations, the Export Administration Act of 1979, as amended,
codified in 50 App. U.S.C. 2041 et seq. and the regulations promulgated
thereunder or other applicable export statutes or regulations.

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5.4Patent Marking.  LICENSEE shall mark, and shall require its Sublicensees and
Affiliates to mark, all Licensed Products sold in the United States with the
word “Patent” and the number or numbers of Patent Rights applicable to the
Licensed Product.

5.5Publicity – Use of Name.  LICENSEE, its Affiliate and Sublicensees are not
permitted to use the names of DFCI, its related entities or its employees, or
any adaptations thereof, in any advertising, promotional or sales literature, or
in any securities report required by the Securities and Exchange Commission
(except as required by law), without the prior written consent of DFCI in each
case.  However, LICENSEE may (a) refer to publications in the scientific
literature by employees of DFCI; (b) state that a license from DFCI has been
granted as provided in this Agreement, or (c) use the name of DFCI in any other
use required by law.  LICENSEE may request DFCI to agree in advance to certain
standard language for repeated use by LICENSEE in printed materials to avoid
delays in the distribution of such materials due to the need to obtain written
consent from DFCI.  DFCI will, in good faith, consider such request from
LICENSEE.  All requests and inquiries by LICENSEE regarding publicity in
connection with this Section 5.5 should be directed to:

DFCI Communications Department

44 Binney Street

Boston, MA 02115

LICENSEE acknowledges that under HHMI policy, LICENSEE may not use the name of
HHMI or of any HHMI employee (including Dr. Kaelin) in a manner that reasonably
could constitute an endorsement of a commercial product or service; but that use
for other purposes, even if commercially motivated, is permitted provided that
(1) the use is limited to accurately reporting factual events or occurrences,
and (2) any reference to the name of HHMI or any HHMI employees in press
releases or similar materials intended for public release is approved by HHMI in
advance.  Notwithstanding the foregoing, LICENSEE may identify HHMI employees
(by name and affiliation) in its press releases or other corporate
communications (such as shareholder reports, information appearing on web sites,
etc.) as inventors of the technology licensed hereunder or participation on a
scientific advisory board, without obtaining advance approval from HHMI, if no
further information about or quotes from such HHMI employees are included.

Article 6 - Patent Preparation, Filing, Prosecution, and Maintenance

6.1Responsibility.  Upon request of LICENSEE and at LICENSEE’s expense, DFCI
shall provide (or shall instruct DFCI’s outside counsel to provide) to LICENSEE
(or to an outside patent counsel of LICENSEE’s choice) copies of all
correspondence and documentation related to the Patent Rights, including copies
of all original files, and all official and internal correspondence related
thereto, and any associated documents.  LICENSEE, in its sole discretion, is
responsible for preparing, filing, prosecuting, and maintaining all patent
applications and patents covered by the Patent Rights, and is solely responsible
for making strategic decisions regarding such Patent Rights and for paying all
costs.  DFCI shall not file any application that claims priority to, or benefit
of, an application included in Patent Rights without LICENSEE’S prior written
consent.  DFCI will request that the law firms currently responsible for
prosecution of the Patent Rights, transfer all file histories to LICENSEEE at
the address provided in Section 6.3 below (attention Intellectual Property
Department) within thirty (30) days of the Effective Date of this
Agreement.  DFCI shall execute Revocation Of Power Of Attorney With New Power Of
Attorney And Change Of Correspondence Address documents for filing with the
USPTO, in a timely manner not to exceed thirty (30) days, upon receipt of a
request from FibroGen or its designated counsel. For purposes

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of this Agreement, "prosecuting" or "prosecution" include all prosecution and
any interference, reissue, or reexamination proceeding or opposition or other
post-issuance or post-grant proceeding.  LICENSEE shall provide DFCI with
sufficient notification of LICENSEE’s intention to file U.S. CIP applications
and/or foreign equivalent patent applications claiming priority to an
application included in the Patent Rights.  LICENSEE shall provide, or cause its
agent to provide, copies of all correspondence between LICENSEE and/or
LICENSEE’s counsel and the United States Patent and Trademark Office or the
various foreign patent offices and shall give DFCI reasonable opportunity to
advise LICENSEE or LICENSEE’s counsel on such matters.  

6.2LICENSEE shall have the right to elect not to financially support the
preparation, filing, prosecution, and maintenance of any patent application or
patent included within Patent Rights.  In such case, LICENSEE shall relinquish
its rights to those patent applications or patents included within Patent Rights
as provided in Section 6.5 below.  Notwithstanding the foregoing, a strategic
decision to discontinue the pursuit of a non-provisional patent application
contained in the Patent Rights, shall not be construed as LICENSEE relinquishing
its rights to the subject matter described therein if DFCI agrees in writing
with such decision. LICENSEE’s strategic decision to discontinue the pursuit of
a provisional patent application contained in the Patent Rights in favor of
filing a new patent application (NPA) claiming the subject matter described in
such provisional application shall not be construed as LICENSEE relinquishing
its rights to the subject matter described therein if DFCI agrees in writing
with such decision. If one or more inventors are added to the NPA as the result
of the addition of new matter supplied by LICENSEE and said added inventor(s)
are under an obligation to assign his or her rights in the NPA to LICENSEE,
LICENSEE hereby assigns its rights in the NPA to DFCI and LICENSEE agrees to
fully cooperate to perfect that title with the appropriate patent
authorities.  In no event will NPAs be filed which would result in the addition
of inventor(s) who are not under an obligation to assign to LICENSEE.

6.3DFCI designates the following individual or department, or any designee
thereof, to be available to consult with LICENSEE and to coordinate any
reasonable response to a request from LICENSEE (see Section 6.4, infra), and to
receive any patent-related correspondence:

DFCI Patent Counsel

Office of Patent Counsel

Dana-Farber Cancer Institute

44 Binney Street

Boston, MA 02115

 

Upon DFCI’s reasonable request, LICENSEE shall be available to consult with DFCI
on matters relating to preparing, filing, prosecuting, or maintaining any of the
applications or patents within Patent Rights, which matters may be of particular
interest to DFCI.  LICENSEE, acting reasonably, shall consider the legitimate
interests of DFCI in performing its responsibility under Section 6.1.  LICENSEE
designates the following individual or department, or any designee thereof, to
be available to consult with DFCI and to receive any patent-related
correspondence:

Vice President, Intellectual Property

Intellectual Property Department

FibroGen, Inc.

225 Gateway Blvd.

South San Francisco, CA  94080

 

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6.4Cooperation.  DFCI shall cooperate with LICENSEE in preparing, filing,
prosecuting, and maintaining the patent applications and patents within Patent
Rights.  This cooperation  is limited to making any DFCI personnel (including
any named DFCI inventors or any other involved parties who are employed in the
laboratories of Dr. Kaelin and\or Dr. Livingston) available to answer questions,
providing copies of any reasonably requested documents, including copies of
pages in laboratory notebooks, manuscripts, etc., as may be necessary to provide
required support and documentation for preparing, filing, prosecuting, and
maintaining all patent applications and patents or for use in any post-issuance
or post-grant procedure; and obtaining necessary signatures on documents,
including, for example, any power of attorney, declaration, or assignment
papers.  DFCI will also direct any outside counsel involved in drafting, filing,
prosecution, or maintenance of the patents and patent applications listed in
Schedule 3 to cooperate fully with LICENSEE.  LICENSEE will pay all associated
costs, if any, incurred as a result of LICENSEE's requests for
cooperation.  DFCI shall provide prompt notice to LICENSEE of any matter that
comes to its attention that may affect the patentability, validity, or
enforceability of any patent application or patent within Patent Rights.

6.5Relinquishing Rights.  If LICENSEE elects not to prepare, prosecute, and/or
maintain a patent or patent application within Patent Rights in any country of
the licensed Territory, LICENSEE shall give ninety (90) days advance written
notice to DFCI; relinquish responsibility for prosecution of such patent or
patent application; and surrender its license under such patent or patent
application.  However, if LICENSEE relinquishes rights to any patent or
application within Patent Rights to which an interference proceeding or
opposition has been declared or filed, the notice period is one hundred and
eighty (180) days.  If LICENSEE so relinquishes its rights, it will remain
responsible for all patent-related expenses incurred by DFCI during the
applicable notice period.  Thereafter, LICENSEE will have no further obligation
to pay any patent expenses for the patents or patent applications that it
relinquished.

6.6Prosecution by DFCI.  If LICENSEE relinquishes its rights within Patent
Rights as described in Section 6.5, DFCI shall thereafter have the right, but
not any obligation, to prosecute, obtain issuance of, and/or maintain such
Patent Rights relinquished by LICENSEE in such country(ies) or region(s) at its
own cost, and any such applications and resultant patents shall not be subject
to this Agreement.

Article 7 - Patent Infringement and Enforcement

7.1Substantial Infringement.  For the purposes of this Agreement, "Substantial
Infringement" shall mean any infringement, of any of the Patent Rights, that
LICENSEE deems material to its business.  If at any time during the term of this
Agreement, LICENSEE becomes aware of an apparent Substantial Infringement,
LICENSEE will promptly notify DFCI of such infringement.  In the event that
LICENSEE chooses to take any action with respect to the Substantial
Infringement, LICENSEE shall, upon the request of DFCI, provide DFCI with an
explanation of LICENSEE's reasoning in choosing to take such action.

7.2Action by LICENSEE.

 

7.2.1

Procedure. LICENSEE shall have the first right, but not the obligation, to
enforce the Patent Rights and to prosecute apparent Substantial Infringers, at
its expense and in its own name, when it believes such action may be reasonably
necessary and justified.  Before LICENSEE files a lawsuit in a court of law with
respect to the infringement, LICENSEE shall consider in good faith the views of
DFCI,

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brackets, has been omitted because it is both (i) not material and (ii) would
likely cause competitive harm to the company if publicly disclosed.

 

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particularly as they relate to the potential effects on the public
interest.  LICENSEE shall join DFCI as a party-plaintiff if such joinder is
required by law (including, but not limited to, joinder of DFCI if deemed to be
an indispensable party), at LICENSEE's expense.  LICENSEE shall have the right
to join Affiliates and Sublicensees into any such legal proceeding.

 

7.2.2

Timing.  If LICENSEE notifies DFCI that it intends to prosecute the alleged
Substantial Infringer, then LICENSEE has [ * ] months from the date of its
notice to DFCI to either (a) cause the infringement to terminate or (b) file a
lawsuit in a court of law against the infringer.  If any such lawsuit is brought
by LICENSEE in its own name it will be at LICENSEE’s expense and on its own
behalf.  LICENSEE has the right to join DFCI as a party-plaintiff if required by
law, at LICENSEE’s expense.

 

7.2.3

Action at Request of DFCI.  DFCI may request LICENSEE to take steps to protect
the Patent Rights from an apparent Substantial Infringement.  LICENSEE shall
notify DFCI, within [ * ] months of receiving a written request from DFCI, of
action it intends to take, if any, to compel termination of the alleged
infringing action or to file a lawsuit in a court of law against the alleged
infringer.

 

7.2.4

DFCI’s Right to Join.  DFCI independently has the right to join any lawsuit
brought by LICENSEE under this Section 7.2 and shall, in such case, fund a pro
rata share of the cost of the legal proceeding from the date of joining.  If
DFCI elects to join as a party plaintiff pursuant to this Section 7.2.4, DFCI
may jointly participate in the action with LICENSEE, but LICENSEE will have the
right to designate lead counsel.

 

7.2.5

Settlement.  In any legal proceeding initiated by LICENSEE, LICENSEE shall not
enter into any settlement, consent judgment, or other voluntary final
disposition in which a license to Patent Rights (or covenant not to sue with
respect to such Patent Rights) would be granted to the third party defendant
pursuant to which DFCI’s future financial compensation would be significantly
affected (such as future royalties as would be owed under a sublicense granted
hereunder) or patent rights would be forfeited, without the consent of DFCI
(which shall not be unreasonably withheld).

 

7.2.6

Reduction of Royalties.  If LICENSEE initiates legal proceedings under this
Section 7.2 in any country and DFCI does not independently join the proceeding,
LICENSEE may deduct up to [ * ] of LICENSEE's documented costs, including
reasonable attorney fees, from running royalties payable to DFCI from sales of
Licensed Products covered by the patent(s)-in suit.  However, LICENSEE may not
reduce DFCI's royalty payments by more than [ * ] of the amount otherwise due
under Section 3.1.5.  If [ * ] of LICENSEE's costs and expenses exceeds the
amount of royalties deducted by LICENSEE for any calendar year, LICENSEE may, to
that extent, reduce the royalties due to DFCI in succeeding calendar quarters
for so long as LICENSEE as the Substantial Infringement continues.  However,
LICENSEE may not reduce total royalties due to DFCI in a given calendar quarter
by more than [ * ]. LICENSEE's right to reduce royalty payments to DFCI under
this Section 7.2.6 applies only for so long as the Substantial Infringement
continues.

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7.3Action by DFCI

 

7.3.1

Procedure.  If LICENSEE notifies DFCI that it does not intend to prosecute a
Substantial Infringement, or if LICENSEE fails to cause the Substantial
Infringement to terminate, or fails to file a lawsuit in a court of law to
compel termination within [ * ] months of the date of its notice to DFCI
pursuant to Section 7.1 or Section 7.2.3, above, then DFCI may initiate legal
proceedings against the alleged infringer, at DFCI’s expense and on its own
behalf according to the terms of this Section 7.3.  Before DFCI commences any
legal proceeding with respect to the infringement, DFCI shall consider in good
faith the views of LICENSEE.  DFCI has the right to join LICENSEE as a
party-plaintiff, if required by law, at DFCI’s expense.

 

7.3.2

LICENSEE’s Right To Join.  LICENSEE independently has the right to join any
legal proceeding brought by DFCI under this Section 7.3 and shall, in such case,
fund a pro rata share of the cost of the legal proceeding from the date of
joining.  If LICENSEE elects to join as a party plaintiff pursuant to this
Section 7.3.2 or, LICENSEE may jointly participate in the action with DFCI, but
DFCI will have the right to designate lead counsel.

 

7.3.3

Settlement.  Regardless of whether LICENSEE is joined or joins any legal
proceeding initiated by DFCI (as described in Section 7.3.2), no settlement,
consent judgment, or other voluntary final disposition of such legal proceeding
may be entered into without the consent of DFCI.

7.4Cooperation.  If one party files a lawsuit in a court of law or brings any
other action related to enforcement of the Patent Rights or otherwise related to
the Patent Rights against a third party pursuant to this Article 7 or is
prevented from filing such a lawsuit or bringing such an action against the
third party due to lack of standing to sue, the other party (and any Affiliates
or Sublicensee of that party) shall cooperate with and supply all assistance
reasonably requested by the party initiating the proceedings, at the initiating
party's request and expense.

7.5Distribution of Amounts Paid by Third Parties.  In any legal proceeding
brought by DFCI under Section 7.3 and funded solely by DFCI, any damages or
other amounts recovered as a result of the proceeding will be retained by
DFCI.  In any other legal proceeding, any damages or other amounts will be
distributed as follows:  The damages or other amounts will first be used to
reimburse LICENSEE, it’s Affiliates or Sublicensees, and DFCI for litigation
costs not paid from royalties and then to reimburse DFCI a sum equivalent to the
total amount of royalties and minimum royalties deducted by LICENSEE under
Section 7.2.6.  The balance, if any, will be divided pro rata based on the
relative contributions of the parties.  It is expressly understood that any
party not contributing to the funding of a proceeding will not share in any
amounts recovered as a result of the proceeding.

7.6Declaratory Judgment Actions.  In the event that any third party initiates a
declaratory judgment action alleging the invalidity or unenforceability of the
Patent Rights, or if any third party brings an infringement action against
LICENSEE or its Affiliates or Sublicensees because of the exercise of the rights
granted LICENSEE under this Agreement, then LICENSEE shall have the right to
defend such action under its own control and at its own expense; provided,
however, that DFCI shall (a) have option of joining as co-defendant if it
chooses to do so; or (b) join as co-defendant if required by law; and (c)
cooperate as necessary with LICENSEE in LICENSEE’s

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defense.    LICENSEE shall NOT enter into any settlement, consent judgment or
other voluntary final disposition of any action under this Section 7.6 without
the consent of DFCI, which consent shall not be unreasonably withheld unless the
settlement includes any express or implied admission of liability or wrongdoing
on DFCI's part, in which case DFCI's right to grant or deny consent is absolute
and at its sole discretion.  Any recovery shall be first applied to reimburse
each party pro rata for any out-of pocket expenses it may have incurred with
respect to defense of such action and the remainder shall be distributed as
described in Section 7.5.

Article 8 - Term and Termination

8.1Term.  Unless terminated earlier under the provisions of this Agreement, this
Agreement will terminate on a country by country basis on the expiration date of
the last to expire of patent within Patent Rights.  If a Licensed Product or
Licensed Process is not covered in whole or in part by an unexpired issued or
granted claim, or by a pending claim in the Patent Rights and incorporates
Biological Materials then this Agreement with respect to that Licensed Product
shall terminate twenty (20) years from the Effective Date.

8.2Termination by DFCI.  If LICENSEE materially breaches any provision of this
Agreement, then DFCI will provide LICENSEE with written notice of default
specifying the nature of the breach.  LICENSEE will have a period of sixty (60)
days to cure such breach.  Should LICENSEE fail to cure the breach within the
sixty (60) day period, then DFCI shall have the right to terminate this
Agreement immediately upon LICENSEE’S receipt of a notice of termination from
DFCI.  Unless otherwise indicated below, it is expressly understood that this
Agreement and all licenses hereunder shall remain in effect for any Field of Use
for which LICENSEE has not defaulted.  DFCI has the right to immediately
terminate this Agreement and all licenses granted hereunder by providing
LICENSEE with written notice of termination, upon the occurrence of any of the
following events:

 

(a)

LICENSEE ceases to carry on its business and development activities with respect
all Licensed Products in the Field of Use.

 

 

(b)

LICENSEE fails to pay on schedule any royalty or other payment that has become
due and is payable under Articles 3 or 4 of this Agreement and has not cured the
default by making the required payment, together with interest due, pursuant to
Section 4.5, herein, within thirty (30) days of receiving a written notice of
default from DFCI requesting such payment.

 

 

(c)

LICENSEE fails to comply with any due diligence obligation provided for in
Section 5.1 unless LICENSEE has cured the default by meeting the obligation
within sixty (60) days of receiving written notice of default from DFCI.

 

 

(d)

LICENSEE defaults in its obligations to procure and maintain insurance under
Sections 9.6 - 9.9.  

 

 

(e)

LICENSEE has been convicted of a felony relating to the manufacture, use, sale
or importation of Licensed Products.    

 

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(f)

LICENSEE materially breaches any other provision of this Agreement, unless
LICENSEE has cured the breach within ninety (90) days of receiving written
notice from DFCI specifying the nature of the breach.

 

8.3Termination by LICENSEE.  LICENSEE has the right to terminate this Agreement
without cause by giving DFCI ninety (90) days prior written notice.

8.4Effect of Termination.

 

8.4.1

No Release. Upon termination of this Agreement for any reason, nothing in this
Agreement may be construed to release either party from any obligation that
matured prior to the effective date of the termination.

 

8.4.2

Survival.  The provisions of Section 3.1.2 and 3.1.3 (Patent Expenses) Article 4
(Royalty Reports, Payments and Financial Records), Section 5.5 (Publicity – Use
of Names), Section 8.4.3 (Inventory), Sections 9.1 – 9.5 (Indemnification and
Defense), Sections 9.7 – 9.9 (Insurance), Article 10 (Warranty Disclaimers) and
Article 12 (Dispute Resolution) survive termination of this Agreement.

 

8.4.3

Inventory.  LICENSEE, any Affiliate(s) and any Sublicensees whose sublicenses
are not converted as provided in Section 8.4.5, may, after the effective date of
termination, sell all Licensed Products that are in inventory as of the date of
written notice of termination, and complete and sell Licensed Products which the
Affiliates or Sublicensees can clearly demonstrate were in the process of
manufacture as of the date of written notice of termination, provided that
LICENSEE shall pay to DFCI the royalties thereon as required by Article 3 and
shall submit the reports required by Article 4 on the sales of Licensed
Products.

 

8.4.4

Use of Biological Materials. LICENSEE, any Affiliate(s) and any Sublicensees
whose sublicenses are not converted as provided in Section 8.4.5, shall cease to
use the Biological Materials and shall certify their proper and humane
disposition.

 

8.4.5

Sublicenses.  Any sublicenses will terminate contemporaneously with this
Agreement.  However, any Sublicensee not in default under its sublicense may
request conversion of the sublicense to a license directly between DFCI and
Sublicensee.  DFCI shall not unreasonably withhold its acceptance of such
conversion under substantially the same financial terms and as those contained
the sublicense, however, as a condition of DFCI’s acceptance, the Sublicensee
must first agree to be bound by all of the non-financial provisions of this
Agreement.

Article 9 - Indemnification, Defense and Insurance

9.1LICENSEE shall indemnify, defend and hold harmless DFCI and its trustees,
officers, medical and professional staff, employees, and agents and their
respective successors, heirs and assigns collectively, (the “DFCI Indemnitees”),
against any claim, liability, damage, deficiency, obligation, cost, loss or
expense (including reasonable attorneys' fees and expenses of litigation)
incurred by or imposed upon the DFCI Indemnitees, or any one of them, in
connection with any claims, suits, actions, demands or judgments (a) arising out
of the design, production, manufacture, sale, use in commerce, lease, or
promotion by LICENSEE or by a Sublicensee, Affiliate, or agent of LICENSEE, of
any product, process or service relating to, or developed pursuant to, this

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brackets, has been omitted because it is both (i) not material and (ii) would
likely cause competitive harm to the company if publicly disclosed.

 

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Agreement or (b) arising out of any other activities to be carried out pursuant
to this Agreement.  LICENSEE shall indemnify, defend by counsel reasonably
acceptable to HHMI, and hold harmless HHMI and its trustees, officers,
employees, and agents (collectively, “HHMI Indemnitees”) from and against any
claim, liability, cost, expense, damage, deficiency, loss, or obligation, of any
kind or nature (including, without limitation, reasonable attorneys’ fees and
other costs and expenses of defense) (collectively, “Claims”), based upon,
arising out of, or otherwise relating to this Agreement, including without
limitation any cause of action relating to product liability.  DFCI Indemnitees
and HHMI Indemnitees may be referred to in this Agreement collectively as the
“Indemnitees”).  This Section will not apply to any Claim that is determined
with finality by a court of competent jurisdiction to result solely from the
gross negligence or willful misconduct of an Indemnitee.

9.2LICENSEE shall, at its own expense, provide attorneys reasonably acceptable
to DFCI to defend against any actions brought or filed against any party
indemnified hereunder with respect to the subject of indemnity contained herein,
whether or not such actions are rightfully brought.

9.3If any such action is commenced or claim made or threatened against DFCI or
other Indemnitees as to which LICENSEE is obligated to indemnify it (them) or
hold it (them) harmless, DFCI or the other Indemnitees shall promptly notify
LICENSEE of such event.  In the case of any HHMI Indemnitee, notice shall be
given reasonably promptly following actual receipt of written notice of the
action or claim by an officer or attorney of HHMI.  LICENSEE shall assume the
defense of, and may settle, that part of any such claim or action commenced or
made against DFCI (or other Indemnitees) which relates to LICENSEE’s
indemnification and LICENSEE may take such other steps as may be necessary to
protect it.  LICENSEE will not be liable to DFCI or other Indemnitees on account
of any settlement of any such claim or litigation affected without LICENSEE’s
consent.  The right of LICENSEE to assume the defense of any action is limited
to that part of the action commenced against DFCI and/or Indemnitees that
relates to LICENSEE’s obligation of indemnification and holding
harmless.  Notwithstanding the foregoing, LICENSEE shall not settle any Claim
against an HHMI Indemnitee without HHMI’s written consent, where (a) such
settlement would include any admission of liability on the part of any HHMI
Indemnitee, (b) such settlement would impose any restriction on any HHMI
Indemnitee’s conduct of any of its activities, or (c) such settlement would not
include an unconditional release of all HHMI Indemnitees from all liability for
claims that are the subject matter of the settled Claim.

9.4LICENSEE shall require any Affiliates or Sublicensee(s) to indemnify, hold
harmless and defend DFCI and HHMI under the same terms set forth in Sections 9.1
– 9.3 and Section 9.5.

9.5HHMI is not a party to this Agreement and has no liability to any LICENSEE,
sublicensee, or user of anything covered by this Agreement, but HHMI is an
intended third-party beneficiary of this Agreement and certain of its provisions
are for the benefit of HHMI and are enforceable by HHMI in its own name.

Insurance.

9.6At such time as any product, process or service relating to, or developed
pursuant to, this Agreement is being commercially distributed or sold (other
than for the purpose of obtaining regulatory approvals) by LICENSEE or by a
Sublicensee, Affiliate or agent of LICENSEE, LICENSEE shall, at its sole cost
and expense, procure and maintain policies of commercial general liability
insurance in amounts not less than $2,000,000 per incident and $2,000,000 annual
aggregate and naming the Indemnitees as additional insureds.  Such commercial
general liability

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brackets, has been omitted because it is both (i) not material and (ii) would
likely cause competitive harm to the company if publicly disclosed.

 

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insurance must provide (a) product liability coverage and (b) contractual
liability coverage for LICENSEE's indemnification under Sections 9.1 through 9.5
of this Agreement.  If LICENSEE elects to self‑insure all or part of the limits
described above (including deductibles or retentions which are in excess of
$250,000 annual aggregate), such self‑insurance program must be acceptable to
the DFCI and the DFCI's associated Risk Management Foundation.  The minimum
amounts of insurance coverage required under these provisions may not be
construed to create a limit of LICENSEE's liability with respect to its
indemnification obligation under Sections 9.1 through 9.5 of this Agreement.

9.7LICENSEE or its insurance carrier shall provide DFCI with written evidence of
such insurance upon request of DFCI.  LICENSEE or its insurance carrier shall
promptly notify DFCI, in the event that LICENSEE receives notice of
cancellation, non-renewal or other material change in such insurance.  LICENSEE
acknowledges its obligation to maintain insurance coverage as described in
Section 9.6.  As such, in the event that LICENSEE receives notice of
cancellation, non-renewal or other material change of such insurance, LICENSEE
must elect to either (i) obtain replacement insurance providing comparable
coverage or, (ii) implement a self-insurance program acceptable to DFCI and
DFCI's associated Risk Management Foundation.  LICENSEE shall provide written
notice and proof that it has either obtained replacement insurance or
implemented self-insurance program to DFCI at least fifteen (15) days prior to
the cancellation or material change in such insurance coverage.  Notwithstanding
the foregoing, in the event that LICENSEE elects (ii) above, LICENSEE must
provide DFCI and DFCI's associated Risk Management Foundation with sufficient
information to allow a review and acceptance of LICENSEE’s self-insurance
program prior to aforementioned fifteen (15) day period.  

If LICENSEE does not notify DFCI and provide proof that it has either obtained
replacement insurance coverage or implemented a self insurance program
acceptable to DFCI at least fifteen (15) days prior to the effective date of
cancellation or material change in such insurance coverage, DFCI has the right
to terminate this Agreement effective the date the insurance coverage is
cancelled, not renewed or otherwise materially changed without additional
waiting periods.  In such event, DFCI agrees to provide written notice within
twenty-four (24) hours pursuant to Article 11 (“Notices”) to LICENSEE that this
Agreement is terminated under Article 8.2.

9.8LICENSEE shall maintain such comprehensive general liability insurance beyond
the expiration or termination of this Agreement during (a) the period that any
product, process, or service, relating to, or developed pursuant to, this
Agreement is being commercially distributed or sold (other than for the purpose
of obtaining regulatory approvals) by LICENSEE or by a Sublicensee, Affiliate or
agent of LICENSEE.

9.9LICENSEE shall require any Affiliates or Sublicensee(s) to maintain insurance
in favor of DFCI and the Indemnitees under the same terms set forth in Sections
9.6 – 9.8.

Article 10 - Disclaimer of Warranties

10.1DFCI MAKES NO WARRANTY, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION,
ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE
WITH RESPECT TO ANY PATENT, TRADEMARK, SOFTWARE, NON‑PUBLIC OR OTHER
INFORMATION, OR TANGIBLE RESEARCH PROPERTY, LICENSED OR OTHERWISE PROVIDED TO
LICENSEE HEREUNDER AND HEREBY DISCLAIMS THE SAME.

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brackets, has been omitted because it is both (i) not material and (ii) would
likely cause competitive harm to the company if publicly disclosed.

 

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10.2DFCI DOES NOT WARRANT THE VALIDITY OF THE PATENT RIGHTS LICENSED HEREUNDER
AND MAKES NO REPRESENTATION WHATSOEVER WITH REGARD TO THE SCOPE OF THE LICENSED
PATENT RIGHTS OR THAT SUCH PATENT RIGHTS MAY BE EXPLOITED BY LICENSEE, AFFILIATE
OR SUBLICENSEE WITHOUT INFRINGING OTHER PATENTS.  DFCI MAKES NO REPRESENTATION
THAT BIOLOGICAL MATERIALS OR THE METHODS USED IN MAKING OR USING SUCH BIOLOGICAL
MATERIALS ARE FREE FROM LIABILITY FOR PATENT INFRINGEMENT OR THAT SUCH MATERIALS
ARE NOT SUBJECT TO CLAIMS OF JOINT OWNERSHIP BY THIRD PARTIES.

10.3THE LIABILITY OF DFCI, ITS AGENTS, OR ITS EMPLOYEES, WITH RESPECT TO ANY AND
ALL SUITS, ACTIONS, LEGAL PROCEEDINGS, CLAIMS, DEMANDS, DAMAGES, COSTS AND
EXPENSE ARISING OUT OF THE PERFORMANCE OR NON PERFORMANCE OF ANY OBLIGATION
UNDER THIS AGREEMENT WHETHER BASED ON CONTRACT, WARRANTY, TORT (INCLUDING
WITHOUT LIMITATION NEGLIGENCE), STRICT LIABILITY, STATUTORY OR OTHERWISE SHALL
BE LIMITED TO DIRECT, ACTUAL DAMAGES INCURRED AS A RESULT OF DFCI's FAILURE TO
PERFORM ITS OBLIGATIONS AS REQUIRED BY THIS AGREEMENT AND SHALL NOT EXCEED IN
THE AGGREGATE A SUM EQUAL TO THE TOTAL AMOUNTS PAYABLE TO DFCI UNDER THIS
AGREEMENT.

10.4DFCI acknowledges that it has the right to enter into this Agreement.  

10.5FibroGen acknowledges that the license agreement between Imigen and
FibroGen, effective October 13, 2003, is no longer an effective instrument.  

Article 11 - Notices

11.1Notices to DFCI.  Unless otherwise specified in this Agreement, reports,
notices and other communications from LICENSEE to DFCI as provided hereunder
must be sent to:

Sr. Vice President for Research

Dana‑Farber Cancer Institute

44 Binney Street

Boston, MA 02115

 

With a copy sent to:

Vice President

Dana-Farber Cancer Institute

Office of Research and Technology Ventures

44 Binney Street

Boston, MA 02115

 

or other individuals or addresses as DFCI subsequently furnish by written notice
to LICENSEE.

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brackets, has been omitted because it is both (i) not material and (ii) would
likely cause competitive harm to the company if publicly disclosed.

 

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11.2Notices to LICENSEE.  Unless otherwise specified in this Agreement, reports,
notices and other communications from DFCI to LICENSEE as provided hereunder
must be sent to:

FibroGen, Inc.

225 Gateway Blvd

South San Francisco, CA, 94080

Attention:  President

CC: Legal Department

650 –866-7200 (Phone)

650 –866-7201 (Fax)

or other individuals or addresses as LICENSEE subsequently furnish by written
notice to DFCI.

 

Article 12 - Dispute Resolution

12.1Negotiation between the Parties.  The parties shall first attempt to resolve
any controversy that arises from this Agreement, or claim for breach of the
Agreement, by good faith negotiations, first between their respective business
development representatives and then, if necessary, between senior
representatives for the parties, such as the Sr. Vice President for Research or
President of DFCI or the President of LICENSEE.

12.2Non-Binding Mediation.  If the controversy or claim cannot be settled
through good faith negotiation between the parties, the parties agree first to
try in good faith to settle their dispute by non-binding mediation under the
Mediation Rules of the American Arbitration Association, before resorting to
arbitration, litigation or other dispute resolution procedure.  For the sake of
clarity, no dispute affecting the rights or property of HHMI shall be subject to
binding arbitration unless HHMI so agrees after the dispute arises.

Article 13 - Independent Contractor

For the purpose of this Agreement and all services to be provided hereunder,
both parties are and will be deemed to be, independent contractors and not
agents or employees of the other.  Neither party has authority to make any
statements, representations or commitments of any kind, or to take any action,
that will be binding on the other party.

Article 14 - Severability

If any one or more of the provisions of this Agreement is held to be invalid,
illegal or unenforceable, the validity, legality or enforceability of the
remaining provisions of this Agreement will not in any way be affected or
impaired thereby.

 

Article 15 - Non‑assignability

Neither this Agreement nor any part of the Agreement is assignable by either
party without the express written consent of the other, which consent a party
will not unreasonably withhold.  However, LICENSEE may assign this agreement in
conjunction with the sale of essentially all of its related business
assets.  Any attempted assignment without such consent is void.

 

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brackets, has been omitted because it is both (i) not material and (ii) would
likely cause competitive harm to the company if publicly disclosed.

 

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Article 16 - Entire Agreement

This instrument contains the entire Agreement between the parties.  No verbal
agreement, conversation or representation between any officers, agents, or
employees of the parties either before or after the execution of this Agreement
may affect or modify any of the terms or obligations herein contained.

 

Article 17 - Modifications in Writing

No change, modification, extension, or waiver of this Agreement, or any of the
provisions herein contained is valid unless made in writing and signed by a duly
authorized representative of each party.

 

Article 18 - Governing Law

The validity and interpretation of this Agreement and the legal relations of the
parties to it are governed by the laws of the State of New York without regard
to any choice of law principal that would dictate the application of the law of
another jurisdiction.  

Article 19 - Captions

The captions are provided for convenience and are not to be used in construing
this Agreement.

 

Article 20 - Construction

The parties agree that they have participated equally in the formation of this
Agreement and that the language herein should not be presumptively construed
against either of them.

 

Article 21 - Force Majure

Either party shall be excused from any performance required hereunder if such
performance is rendered impossible or unfeasible due to any catastrophe or other
major event beyond its reasonable control, including, without limitation, war,
riot, and insurrection; laws, proclamations, edicts, ordinances, or regulations;
strikes, lockouts, or other serious labor disputes; and flood, fires,
explosions, or other natural disasters.  When such events have abated, the
parties’ respective obligations shall resume.

 

Article 22 - Lapse

The terms contained in this Agreement shall be null and void if the certificate
of merger with the Secretary of State of the State of Delaware for the Imigen
Acquisition is not filed on or before  February 28, 2006.  

 

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brackets, has been omitted because it is both (i) not material and (ii) would
likely cause competitive harm to the company if publicly disclosed.

 

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IN WITNESS WHEREOF, the parties hereto have caused this agreement to be executed
in quadruplicate by their duly authorized representatives as of the date first
above written.

 

DANA‑FARBER CANCER INSTITUTE, INC.

FIBROGEN, Inc.

 

 

 

 

 

 

 

By:

 

/s/ Anthony del Campo

 

By:

  

/s/ Thomas B. Neff

 

 

 

 

 

 

 

 

  

Anthony A. del Campo, MBA

 

 

 

Thomas B. Neff

 

 

V. P., Research and Technology Ventures

 

 

 

Chief Executive Officer

 

 

 

 

 

 

 

Date:

 

2/1/2006

 

Date:

 

26 Jan 06

 

L:2836

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brackets, has been omitted because it is both (i) not material and (ii) would
likely cause competitive harm to the company if publicly disclosed.

 

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Schedule 1

 

Exclusively Licensed Biological Materials

 

[ * ]

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brackets, has been omitted because it is both (i) not material and (ii) would
likely cause competitive harm to the company if publicly disclosed.

 

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Schedule 2

 

Non-Exclusively Licensed Biological Materials

 

[ * ]

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brackets, has been omitted because it is both (i) not material and (ii) would
likely cause competitive harm to the company if publicly disclosed.

 

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Schedule 3

 

Patent Rights

 

[ * ]

28

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brackets, has been omitted because it is both (i) not material and (ii) would
likely cause competitive harm to the company if publicly disclosed.