Exhibit 10.2 

 

Confidential Treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as “***”. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.

 

COLLABORATION AND OPTION AGREEMENT

 

This Collaboration and Option Agreement (the “Agreement”) is entered into as of
December 18, 2014 (the “Effective Date”) by and between Fabrus, Inc., a Delaware
corporation (“Company”), having an address of 4045 Sorrento Valley Blvd, San
Diego, California 92121, U.S.A., and CNA Development, LLC, a Delaware Limited
Liability Company corporation with its office at Street C #475, Los Frailes
Industrial Park, Guaynabo PR 00969 (“Janssen”).

 

Recitals

 

Whereas, Company has expertise relating to its spatially addressed library of
antibodies and cell-based screening technology to reveal certain antibodies
against targets of interest;

 

Whereas, Janssen is engaged in the research, development and commercialization
of pharmaceutical products;

 

Whereas, Company and Janssen wish to enter into a collaboration to research and
develop antibodies from Company’s spatially addressed library against targets of
interest to Janssen on the terms and conditions set forth herein; and

 

Whereas, Company wishes to grant to Janssen, and Janssen wishes to accept, an
exclusive, time-limited option from Company to obtain certain license rights
under Company’s interest in the Joint Foreground (as defined below) to develop
and commercialize the Licensed Products (as defined in Exhibit C) on a worldwide
basis in accordance with the terms and conditions of this Agreement, subject to
the terms and conditions set forth herein.

 

Agreement

 

Now, Therefore, in consideration of the foregoing premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound, the parties agree as follows:

 

1.           Definitions

 

1.1           “Additional Target” shall mean any of the *** that may to be
designated by Janssen and accepted by Company, in accordance with Section 2.2.

 

1.2           “Affiliate” shall mean, in reference to a particular corporation
or other entity, any other entity that directly or indirectly controls or is
controlled by or is under common control with such entity. For purposes of this
definition, “control” or “controlled” shall mean ownership, directly or
indirectly, of more than fifty percent (50%) of the shares of stock entitled to
vote for the election of directors in the case of a corporation, or more than
fifty percent (50%) of the equity interest in the case of any other type of
legal entity (or if the jurisdiction where such corporation or other entity is
domiciled prohibits foreign ownership of such entity, the maximum foreign
ownership interest permitted under such laws, provided that such ownership
interest provides actual control over such entity), status as a general partner
in any partnership, or any other arrangement whereby an entity controls or has
the right to control the Board of Directors or equivalent governing body of the
entity.

 

1

 

 

Confidential Treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as “***”. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.

 

1.3           “Antibody” shall mean a molecule or gene encoding such a molecule
comprising or containing at least one immunoglobulin variable domain or parts of
such domain.

 

1.4           “Background” shall mean Company Background or Janssen Background,
as applicable.

 

1.5           “Calendar Quarter” shall mean a calendar quarter based on the
Janssen Universal Calendar.

 

1.6           “Collaboration Antibody” shall mean any Antibody identified,
discovered, validated or optimized in the performance the Collaborative
Activities that specifically binds to a Designated Target, and any fragment,
modification or variant of such Antibody that *** specifically binds to such
Designated Target.

 

1.7           “Collaborative Activities” shall mean all activities to be
undertaken by or on behalf of the parties as contemplated by the Collaborative
Research Plan for each Designated Target, including any screening, identifying,
validating and optimizing of Antibodies from Company’s library of Antibodies
that specifically bind to a Designated Target.

 

1.8           “Collaborative Research Plan” or “CRP” shall mean the high-level,
summary workplan describing the research, discovery and pre-clinical development
activities to be performed by or on behalf of the parties with respect to
screening, identifying, validating and optimizing Antibodies from Company’s
library of Antibodies directed to any Designated Target, including the budget
for such activities, as such plan may be amended in accordance with the terms of
this Agreement.

 

1.9           “Commercially Reasonable Efforts” shall mean that level of efforts
and resources consistent with the efforts the applicable Party devotes to the
research or development of a similarly situated pharmaceutical product at a
similar stage of research or development, taking into account measures of patent
coverage, relative safety and efficacy, the strategic value resulting from its
own research efforts, product profile, the competitiveness of the marketplace,
the proprietary position of such product, the regulatory structure involved, the
market potential of such product and other relevant factors, including
comparative technical, legal, scientific, and/or medical factors, based on
conditions then prevailing.

 

1.10         “Company Background” shall mean any Materials or Information
(including data) that is controlled by Company prior to, on or after entering
into this Agreement and is reasonably necessary or useful for carrying out the
Collaborative Research Plan, and Intellectual Property Rights in or to such
Materials or Information, including any such Materials or Information relating
to Company Platform, but excluding (a) all Foreground and (b) any technology or
Intellectual Property Rights in-licensed under the In-License Agreement.

 

2

 

 

Confidential Treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as “***”. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.

 

1.11         “Company Foreground” shall mean all Foreground to the extent
related solely to Company Background, including any improvements or enhancements
to Company Platform including any Intellectual Property Rights to any such
Foreground or Foreground improvements or enhancements.

 

1.12         “Company Indemnitee” shall have the meaning provided in Section
8.2.

 

1.13         “Company Platform” shall mean Company’s proprietary target
discovery platform that allows multiplexed screening for new Antibodies.

 

1.14         “Confidential Information” shall mean all Information generated by
or on behalf of a party or its Affiliates or which one party or any of its
Affiliates furnishes or otherwise makes available to the other party or its
Affiliates, whether made available orally, in writing, or in electronic form.

 

1.15         “Confidentiality Agreement” shall mean the Nondisclosure Agreement
between Company and Janssen dated August 23, 2013, as amended August 17, 2014.

 

1.16         “Control” shall mean, with respect to any Information, Patent or
other intellectual property, possession by a party of the ability (whether by
ownership, license or otherwise, but without taking into account any rights
granted by one party to the other party under the terms of this Agreement) to
grant access, a license or a sublicense to such Information, Patent or other
intellectual property right without violating the terms of any agreement or
other arrangement with any Third Party. If a Party has the ability to grant a
non-exclusive license or sublicense (but not an exclusive license or sublicense)
under any such Information, Patent or other intellectual property, and this
Agreement specifies that an exclusive license is granted, such Information,
Patent or other intellectual property shall be considered “Controlled” and such
license shall be a non-exclusive license to the extent required to comply with
the agreement with or legally binding obligation to the relevant Third Party.

 

1.17         “CPR Mediation Procedures” shall have the meaning provided in
Section 9.2(b).

 

1.18         “CPR Rules” shall have the meaning provided in Section 9.2(c).

 

1.19         “CRP Costs” shall have the meaning provided in Section 2.7.

 

1.20         “Designated Target” shall mean any of Target 1, Target 2, Target 3
and any Additional Target.

 

1.21         “Dispute” shall mean any dispute, claim, or controversy arising
from or regarding this Agreement, including the interpretation, application,
breach, termination or validity of any provision hereof.

 

1.22         “Excluded Claim” shall have the meaning provided in Section 9.2(a).

 

3

 

 

Confidential Treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as “***”. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.

 

1.23         “Foreground” shall mean all Materials or Information (including
data), whether patentable or not, conceived or reduced to practice, whether
solely by or on behalf of Company, solely by or on behalf of Janssen or jointly
by or on behalf of Company and Janssen, in the course of activities contemplated
by this Agreement, including Collaborative Activities, including any
Collaboration Antibody, and Intellectual Property Rights in or to any of the
foregoing.

 

1.24         “Hits” shall have the meaning provided in Section 2.1(a).

 

1.25         “Information” shall mean all tangible and intangible techniques,
technology, practices, , discoveries, inventions (whether patentable or not),
methods, protocols, processes, knowledge, know-how, skill, experience, data
(including pharmacological, toxicological, clinical, analytical and quality
control data), regulatory filings, software, algorithms and other scientific,
marketing, financial or commercial information or data.

 

1.26         “In-License Agreement” shall mean the license agreement between
Company and The Scripps Research Institute, dated August 8, 2014, as may be
amended, a copy (with proprietary information redacted) of which has been
provided to Janssen.

 

1.27         “Intellectual Property Rights” or “IPR” shall mean Patents,
Information, know-how, copyright and trade secrets and any other intellectual
property or intangible right of any kind, excluding trademarks and trade dress.

 

1.28         “Janssen Background” shall mean any Materials or Information
(including data) that is controlled by Janssen prior to, on or after entering
into this Agreement and is necessary or useful for carrying out the
Collaborative Research Plan, and Intellectual Property Rights in or to such
Materials or Information, but excluding all Foreground.

 

1.29         “Janssen Foreground” shall mean all Foreground to the extent
related solely to Janssen Background including any Intellectual Property Rights
to any such Foreground.

 

1.30         “Janssen Indemnitee” shall have the meaning provided in Section
8.1.

 

1.31         “Joint Foreground” shall mean all Foreground that is not Janssen
Foreground or Company Foreground including any Intellectual Property Rights
thereto.

 

1.32         “License” shall have the meaning provided in Section 3.1.

 

1.33         “License Agreement” shall have the meaning provided in Section 3.1.

 

1.34         “License Option” shall have the meaning provided in Section 3.1.

 

1.35         “License Option Term” shall have the meaning provided in
Section 3.2.

 

1.36         “Losses” shall have the meaning provided in Section 8.1.

 

4

 

 

Confidential Treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as “***”. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.

 

1.37         “Materials” shall mean any all biological, chemical or other
materials and any constituents, progeny, mutants, derivatives or replications
thereof or therefrom.

 

1.38         “Notice Date” shall have the meaning provided in Section 9.2(b).

 

1.39         “Option Exercise Payment” shall have the meaning provided in
Section 3.2.

 

1.40         “Option Notice” shall have the meaning provided in Section 3.2.

 

1.41         “Patents” shall mean (a) all patents, including design patents,
certificates of invention, applications for certificates of invention, priority
patent filings and patent applications, including provisional patent
applications and design patent applications, and (b) any renewal, divisional,
continuation, continuation-in-part, or request for continued examination of any
of such patents, certificates of invention and patent applications, and any and
all patents or certificates of invention issuing thereon, and any and all
reissues, reexaminations, extensions, certificates of correction, divisions,
renewals, substitutions, confirmations, registrations, revalidations, revisions,
and additions of or to any of the foregoing.

 

1.42         “Research Term” shall mean, with respect to a given CRP for a
Designated Target, the time period agreed by the parties for the performance of
such CRP, commencing on the date indicated in such CRP (but no earlier than the
Effective Date) and ending on the date indicated in such CRP, which shall in no
event exceed *** months in each case from the commencement date indicated in
such CRP unless agreed in writing by the parties, unless earlier terminated upon
termination of this Agreement.

 

1.43         “Results” shall mean all results, of any nature and form, including
any Information, Materials and deliverables.

 

1.44         “SEC” shall have the meaning provided in Section 6.5(a).

 

1.45         “Stage 1” shall have the meaning provided in Section 2.1(a).

 

1.46         “Stage 2” shall have the meaning provided in Section 2.1(b).

 

1.47         “Stage 3” shall have the meaning provided in Section 2.1(c).

 

1.48         “Tax or Taxes” shall mean any present or future taxes, levies,
imposts, duties, charges, assessments or fees of any nature (including any
interest thereon).

 

1.49         “Target 1” shall mean ***.

 

1.50         “Target 2” shall mean ***.

 

1.51         “Target 3” shall mean ***.

 

5

 

 

Confidential Treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as “***”. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.

 

1.52         “Target Designation Period” shall mean the *** period starting at
the conclusion of the Research Term for a CRP, unless earlier terminated upon
termination of this Agreement.

 

1.53         “Term” shall have the meaning provided in Section 7.1.

 

1.54         “Third Party” shall mean any entity other than Company or Janssen
or an Affiliate of Company or Janssen.

 

2.           Collaborative Activities

 

2.1           Collaborative Research Plans. The research, discovery and
pre-clinical development activities to be undertaken by or on behalf of the
parties for the purpose of screening, identifying, validating and optimizing
Antibodies from Company’s spatially addressed library directed to Designated
Targets are set forth in the Collaborative Research Plans on a Designated
Target-by-Designated Target basis. Company and Janssen shall work
collaboratively to design and carry out the CRP for each Designated Target. For
the avoidance of doubt, one CRP may cover more than a single target. A CRP may
be amended only by written agreement of Company and Janssen (except for
modification of the related budget to the extent permitted by Section 2.7). The
initial Collaborative Research Plan has been agreed to by the parties with
respect to Target 1 and attached hereto as Exhibit A, the form of which shall be
used for the CRP(s) for Target 2, Target 3 and Additional Targets. Without
limiting the foregoing, the parties envision the activities set forth in the
Collaborative Research Plans to be comprised of the following steps:

 

 (a)          (i) screening of cell lines to identify initial Antibody hits from
Company’s spatially arrayed library against the applicable Designated Target
(“Hits”) and (ii) evaluation of strength, specificity, sequences and expression
levels of Hits conducted by or on behalf of Company or Janssen (“Stage 1”);

 

 (b)          (i) joint validation of Hits from Stage 1 and (ii) confirmation of
binding specificity conducted by or on behalf of Company or Janssen (“Stage 2”);
and

 

 (c)          (i) optimization of validated Hits from Stage 2 and (ii)
completion of full developability experiments conducted by or on behalf of
Company or Janssen (“Stage 3”).

 

2.2           Additional Targets. During the Target Designation Period, Janssen
shall have the right, but not the obligation, to designate *** Additional
Targets, in addition to Target 1, Target 2 and Target 3, by providing written
notice to Company identifying the proposed target (each an “Additional Target
Designation Notice”); provided that such Additional Target Designation Notice is
delivered to Company no later than *** from the conclusion of the Research Term
of the last-to-end CRP that is currently in effect. Company shall provide
Janssen written notice within thirty (30) days after receipt of the Additional
Target Designation Notice whether it accepts the proposed target identified in
such Additional Target Designation Notice as an Additional Target, such
acceptance not to be unreasonably withheld. Following acceptance of an
Additional Target by Company, the parties shall work collaboratively to design
and agree on a CRP for such Additional Target, including an associated budget
and a list of Materials for Collaborative Activities relating to such Additional
Target.

 

6

 

 

Confidential Treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as “***”. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.

 

2.3           Performance of Collaborative Activities. During the Research Term,
each party shall use Commercially Reasonable Efforts to perform the
Collaborative Activities. Each party may perform some or all of the
Collaborative Activities through one or more subcontractors, including through
its respective Affiliates; provided that each party shall remain responsible for
the performance by its subcontractors and the compliance of its subcontractors
with the provisions of this Agreement in connection with such performance. The
parties acknowledge that Company’s obligations to perform the Collaborative
Activities shall be subject to compliance by Janssen with its payment
obligations in this Agreement. Each party shall perform the Collaborative
Activities in accordance with this Agreement and all applicable laws, rules and
regulations, and shall maintain records, in sufficient detail and in good
scientific manner appropriate for patent and regulatory purposes, which shall
fully and properly reflect all work done and results achieved in its performance
of the Collaborative Activities.

 

2.4           Materials. All Materials provided by one party to another party as
contemplated by this Agreement will remain the sole property of the providing
party, will not be used or delivered to or for the benefit of any Third Party
without the prior written consent of the providing party, and will be used only
for the Collaborative Activities and in compliance with all applicable laws,
rules and regulations. Each party acknowledges that any Materials provided to it
by or on behalf of the other party (a) are experimental in nature and not for
use in humans, and (b) must be used with prudence and appropriate caution in any
experimental work because not all of their characteristics may be known. Except
as expressly set forth herein, THE MATERIALS ARE PROVIDED “AS IS” AND WITHOUT
ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED
WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE OR ANY
WARRANTY THAT THE USE OF THE MATERIALS WILL NOT INFRINGE OR VIOLATE ANY PATENT
OR OTHER PROPRIETARY RIGHTS OF ANY THIRD PARTY.

 

2.5           Limited Research License. Subject to the terms and conditions of
this Agreement, (a) Company hereby grants to Janssen a non-exclusive,
royalty-free license, with no right to sublicense except to Janssen’s Affiliates
and subcontractors who are conducting Collaborative Activities, under Company
Foreground and Company Background (excluding Company Platform) that are
reasonably necessary or useful for Janssen to practice in order to perform its
obligations under the applicable CRP, solely to conduct Collaborative Activities
to be conducted by Janssen under such CRP during the applicable Research Term,
and (b) Janssen hereby grants to Company a non-exclusive, royalty-free license,
with no right to sublicense except to Company’s Affiliates and subcontractors
that are conducting Collaborative Activities, under Janssen Foreground and
Janssen Background that are reasonably necessary or useful for Company to
practice in order to perform its obligations under the applicable CRP, solely to
conduct Collaborative Activities to be conducted by Company under such CRP
during the applicable Research Term. Each party shall have the right to practice
the Joint Foreground to conduct Collaborative Activities to be conducted by such
party under such CRP during the applicable Research Term.

 

7

 

 

Confidential Treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as “***”. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.

 

2.6           Reports. Each party shall keep the other party reasonably informed
and updated regarding the Collaborative Activities performed by it or on its
behalf and provide the other party such other information required under the
Collaborative Research Plan relating to the progress of the goals or performance
of the Collaborative Activities. The parties shall meet on a regular basis, but
in any event no less than once per month, via teleconference, videoconference or
face-to-face meetings to discuss progress of the CRP(s). Upon achievement of a
research and development milestone event defined in the applicable CRP, Company
shall submit to Janssen a written status report describing the research and the
Results of such milestone event and, if requested by Janssen, transfer to
Janssen any deliverable associated with such milestone event. Company and
Janssen shall work together to prepare and acknowledge a final study report as
indicated in each CRP, and if requested by Janssen, Company shall provide a
description of each Collaboration Antibody as agreed to by the parties and
including the amino acid sequence of such Collaboration Antibody.

 

2.7           Funding of Collaborative Activities and Reimbursement. Janssen
shall reimburse Company for direct and indirect costs incurred by Company in the
performance of the Collaborative Activities (“CRP Costs”). The budget for the
CRP for Targets 1, 2 and 3 has been agreed to by the parties and attached hereto
as Exhibit B. The budget for Target 4 and Additional Targets shall include
direct and indirect costs and rates such as those included in Exhibit B and
shall be included in the CRP(s) for Target 4 and Additional Target(s). During
the Research Term, Company shall invoice Janssen on a Calendar Quarterly basis
for CRP Costs incurred during such quarter in performing Collaborative
Activities in accordance with the applicable budget as may be increased by an
amount up to ten percent (10%) of such budget. Any modification of the budget to
increase such budget by more than ten percent (10%) shall be subject to written
approval by Janssen. Janssen shall pay such invoices within sixty (60) days of
receipt of such invoice. Invoices must be sent to the Johnson & Johnson Accounts
Payable Department via www.ap.jnj.com if Company establishes a web invoice
account or sent by postal mail to the address indicated in the PO. Company may
contact the Johnson & Johnson Accounts Payable Hotline at (877) 557-4487 with
any questions related to the status of payments on invoices. Copies of all
invoices shall be sent concurrently to: Janssen CFC PR / CNA Development LLC,
Attention - *** Road #2, Km. 45.6, Bo. Campo Alegre, Manatí, PR 00674, ***.
Janssen reserves the right to return to Company unprocessed and unpaid those
invoices that do not reference the applicable PO number. Invoices shall include
the nature and amount of research and development services rendered or
deliverables provided and Company will provide proper support for invoiced FTE
costs. Janssen Research & Development, L.L.C. may act as paying agent for
Janssen under this Agreement.

 

8

 

 

Confidential Treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as “***”. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.

 

2.8          Target Exclusivity.

 

(a)          Company. On a Designated Target-by-Designated Target basis, during
the License Option Term with respect to a Designated Target, Company shall not,
alone or in collaboration with an Affiliate or Third Party, conduct any work on
its own behalf, for, or with a Third Party, on such Designated Target. In no
event shall this Section 2.8(a) apply to any acquirer of Company or any
Affiliate of such acquirer (other than Company) so long as Company does not
engage any such activities with or on behalf of such acquirer or its Affiliate
and no Company Background, Company Foreground or Joint Foreground is used by
such acquirer or its Affiliate in connection with such activities.

 

(b)          Janssen. At any time during or after the Term, Janssen and its
Affiliates are authorized to work, independently of Company, alone or in
collaboration with an Affiliate or Third Party, to discover research, develop,
manufacture and commercialize products (other than any Collaboration Antibody)
directed against any Designated Target.

 

2.9          Intellectual Property.

 

(a)          Inventions. Inventorship of inventions made in the course of the
Collaborative Activities shall be determined in accordance with U.S. patent law,
regardless of where any such invention is made.

 

(b)          Ownership of Background. As between the parties, (i) Janssen has,
and shall retain, all right, title and interest in and to Janssen Background,
and (ii) Company has, and shall retain, all rights in and to Company Background.

 

(c)          Ownership of Foreground. Company shall own all right, title and
interest in and to Company Foreground. Janssen shall own all right, title and
interest in and to Janssen Foreground. Company and Janssen shall own jointly all
right, title and interest in and to Joint Foreground. Each party hereby assigns
to the other party such rights as it may acquire in Foreground as may be
necessary or appropriate to cause such Foreground to be owned by the applicable
party or by the parties jointly as provided in this Section 2.9(c), or if
assignment is not permitted by law, waives such rights as to the other party or
grants to the other party an exclusive (or co-exclusive in the case of Joint
Foreground), fully-paid, perpetual, irrevocable, worldwide license under such
rights (with the right to sublicense) for any and all purposes. Each party
agrees to execute any assignment or other documents reasonably necessary to
convey to the other party any right, title or other interest to Foreground as
necessary to effect the ownership of Foreground as provided in this
Section 2.9(c), and, upon request, will assist the other party in connection
with the preparation and prosecution of any application for Intellectual
Property Rights in or to any Foreground owned by such other party pursuant
hereto.

 

(d)          Limitations on Joint Foreground. Janssen shall have the right to
practice and use the Joint Foreground solely for internal research purposes
whether or not it exercises the commercial License Option and takes a License to
Company’s interest in the Joint Foreground (as described in Section 3.2), and
Company shall have the right to practice and use the Joint Foreground solely for
internal research purposes. Any rights by Janssen to commercialize or otherwise
use the Joint Foreground in addition to internal research purposes shall be
arranged under Section 3.2.

 

9

 

 

Confidential Treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as “***”. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.

 

(e)          Prosecution of Foreground. Company shall, at its own cost, be
responsible for filing, prosecuting, maintaining, defending and enforcing
Company Foreground IPR. Janssen shall, at its own cost, be responsible for
filing, prosecuting, maintaining, defending and enforcing Janssen Foreground IPR
and Joint Foreground IPR. Janssen shall keep Company informed regarding the
filing, prosecution, maintenance, defense and enforcement of Joint Foreground
IPR, and shall in good faith take into consideration any comments from Company
with respect thereto. If (i) Janssen decides not to file a Patent application
within Joint Foreground IPR, or (ii) ceases to diligently pursue prosecution or
procurement of Joint Foreground IP, or fails to maintain the same, in any
country, Janssen shall notify Company in writing in sufficient time for Company
to be able to take action, and Company shall have the right, at its own
discretion and cost and subject to the License Option, to file Patent
applications, control prosecution and procurement, and maintain procured Patents
within such Joint Foreground IPR. If Janssen chooses not to file a Patent
application within Joint Foreground IPR and then exercises the License Option
after Company filed a Patent application within such Joint Foreground IPR, then
Janssen shall reimburse Company for reasonable costs incurred by Company with
respect to filing and prosecuting such Joint Foreground IPR concurrently with
execution of the License Agreement.

 

(f)          Results. Company and Janssen shall jointly own the Results and any
reports describing the Results. Each party shall be free to use the Results and
such reports for its any purpose whatsoever.

 

2.10         Reservation of Rights. Subject to the License Option and to any
licenses that are or may be granted pursuant to Section 2.9 or any License
Agreement and the other terms and conditions of this Agreement, (a) Company will
retain all rights under Company Background and Company Foreground and Company’s
interest in Joint Foreground, and Janssen agrees not to practice any of the
foregoing, except pursuant to the licenses expressly granted to Janssen in this
Agreement or the License Agreement, and (b) Janssen will retain all rights under
Janssen Background and Janssen Foreground and Janssen’s interest in Joint
Foreground, and Company agrees not to practice any of the foregoing, except
pursuant to the licenses expressly granted to Company in this Agreement. No
right or license under any Intellectual Property Rights of either party is
granted or shall be granted by implication. All such rights or licenses are or
shall be granted only as expressly provided in the terms of this Agreement or
the License Agreement.

 

3.           License Option

 

3.1           Grant of License Option. On a Designated Target-by-Designated
Target basis and subject to the terms and conditions of this Agreement, Company
hereby grants to Janssen the exclusive option to obtain (a) an exclusive,
worldwide, royalty-bearing license, with the right to sublicense, under
Company’s interest in the Joint Foreground with respect to the applicable
Designated Target to make, have made, use, import, offer for sale, sell, and
have sold Licensed Products in the Field (as such terms are defined in
Exhibit C) and (b) a non-exclusive, worldwide, royalty-bearing license, with the
right to sublicense, under any Company Background and Company Foreground with
respect to the applicable Designated Target (but only to the extent such Company
Background and Company Foreground are reasonably necessary to make, have made,
use, import, offer for sale, sell, and have sold Licensed Products in the Field
(as such terms are defined in Exhibit C)) to make, have made, use, import, offer
for sale, sell, and have sold Licensed Products in the Field (the “License”)
pursuant to a written agreement (the “License Agreement”) on mutually agreed
terms and conditions, including the terms set forth on Exhibit C (such option,
the “License Option”). For clarification, nothing in this Agreement shall
prevent Company from negotiating or completing any transaction for the sale of
all or substantially all of the business or assets of Company, whether by
merger, sale of stock, sale of assets or otherwise; provided, that any successor
to Company in such transaction shall remain subject to the License Option during
the License Option Term.

 

10

 

 

Confidential Treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as “***”. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.

 

3.2           Exercise of License Option. On a Designated Target-by-Designated
Target basis and subject to the terms and conditions of this Agreement, Janssen
may exercise the License Option with respect to a Designated Target at any time
during the applicable Research Term and for a period of *** thereafter unless
earlier terminated upon written notice by Janssen to Company (the “License
Option Term”) by sending to Company written notice of such exercise (“Option
Notice”) and payment of *** (the “Option Exercise Payment”). If Janssen
exercises the License Option during the License Option Term in accordance with
this Section 3.1(b), the parties shall promptly negotiate in good faith the
terms of the License Agreement (including those terms set forth in Exhibit C).
In the event the parties are unable to enter License Agreement within ninety
(90) days following the exercise of the License Option (or such longer period as
may be agreed by the parties in writing), either party shall have the right to
refer the matter to a third party mediator mutually agreed by the parties to
determine the terms and conditions of the License Agreement, and the parties
hereby agree ***.

 

3.3           Effect of Expiration or Termination of License Option Term. If
Janssen does not exercise the License Option during the License Option Term in
accordance with this Section 3.3, the License Option shall terminate and be of
no further force or effect. In addition, upon termination of such License
Option, Company and Janssen shall negotiate in good faith regarding the license
by Janssen to Company of Janssen’s interest in the Joint Foreground on
commercially reasonable terms to be agreed in good faith by the parties.

 

4.           Payments

 

4.1           Access Fee. Within fifteen (15) days after the Effective Date,
Janssen shall pay Company a one-time, non-refundable access fee of ***. Company
shall invoice Janssen for such payment.

 

4.2           Project Initiation Fee. Upon initiation of each CRP, Janssen shall
pay Company a one-time, non-refundable project initiation fee of ***. Company
shall invoice Janssen for such payment, and Janssen shall pay within fifteen
(15) days after receipt of invoice.

 

4.3           Payment Mechanics.

 

 (a)          Manner and Place of Payment. All payments hereunder shall be
payable in U.S. dollars. All payments owed under this Agreement shall be made by
wire transfer in immediately available funds to a bank and account designated in
writing by the party receiving payment, unless otherwise specified in writing by
such party.

 

11

 

 

Confidential Treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as “***”. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.

 

 (b)          Income Tax Withholding. Janssen will make all payments to Company
under this Agreement without deduction or withholding for Taxes except to the
extent that any such deduction or withholding is required by law in effect at
the time of payment. Any Tax required to be withheld on amounts payable under
this Agreement will be paid by Janssen on behalf of Company to the appropriate
governmental authority, and Janssen will furnish Company with proof of payment
of such Tax. Any such tax required to be withheld will be an expense of and
borne by Company. If any such tax is assessed against and paid by Janssen, then
Company will indemnify and hold harmless Janssen from and against such tax.
Janssen and Company will cooperate with respect to all documentation required by
any taxing authority or reasonably requested by Janssen to secure a reduction in
the rate of applicable withholding Taxes. On the date of execution of this
Agreement, Company will deliver to Janssen an accurate and complete Internal
Revenue Service Form W-9.

 

 (c)          Late Payments. In the event that any undisputed payment due under
this Agreement is not made when due, the payment shall accrue interest from the
date due at the rate of one and one-half percent (1.5%) per month; provided,
however, that in no event shall such rate exceed the maximum legal annual
interest rate. The payment of such interest shall not limit the party to whom
payment is due from exercising any other rights it may have as a consequence of
the lateness of any payment.

 

5.           Representations and Warranties

 

5.1           Mutual Representations and Warranties. Each party represents and
warrants to the other party as of the Effective Date that:

 

 (a)          Organization. It is duly organized and validly existing under the
laws of its jurisdiction of incorporation or formation, and has full corporate
or other power and authority to enter into this Agreement and to carry out the
provisions hereof.

 

 (b)          Authorization. It is duly authorized to execute and deliver this
Agreement and to perform its obligations hereunder, and the person or persons
executing this Agreement on its behalf has been duly authorized to do so by all
requisite corporate or partnership action.

 

 (c)          Binding Agreement. This Agreement is legally binding upon it,
enforceable in accordance with its terms, and does not conflict with any
agreement, instrument or understanding, oral or written, to which it is a party
or by which it may be bound, nor violate any law or regulation of any court,
governmental body or administrative or other agency having jurisdiction over it.

 

12

 

 

Confidential Treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as “***”. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.

 

 (d)          No Conflict. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby do not and shall not
(i) conflict with or result in a breach of any provision of its organizational
documents, (ii) result in a breach of any agreement to which it is a party; or
(iii) to its knowledge, violate any applicable laws, rules or regulations.

 

 (e)          Agreements with Employees and Contractors. All of such party’s
employees or contractors acting on its behalf pursuant to this Agreement are and
will be obligated under a binding written agreement to (i) assign to such party
all Information generated in the course of performing activities on its behalf
pursuant to this Agreement, and (ii) comply with obligations of confidentiality
and non-use consistent with those set forth in Article 6.

 

 (f)          No Debarment. Except with regard to Janssen as reflected by, and
subject to the terms of, the Corporate Integrity Agreement between The Office of
Inspector General of the Department of Health and Human Services and Johnson &
Johnson dated October 31, 2013 (publicly available at
https://www.janssenbiotech.com/company/pharmaceutical-affiliate-corporate-integrity-agreement),
as of the Effective Date, neither party is debarred under the United States
Federal Food, Drug and Cosmetic Act or comparable laws in any other country or
jurisdiction, and it does not, and will not during the Term, employ or use the
services of any person or entity who is debarred, in connection with the
Collaborative Activities. In the event that either party becomes aware of the
debarment or threatened debarment of any person or entity providing services to
such party, including the party itself and its Affiliates, which directly or
indirectly relate to activities under this Agreement, the other party shall be
immediately notified in writing.

 

5.2           Disclaimer. Except as expressly set forth herein, EACH PARTY
EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED,
INCLUDING WITHOUT LIMITATION THE WARRANTIES OF DESIGN, MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE, NONINFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF
THIRD PARTIES, OR ARISING FROM A COURSE OF DEALING, USAGE OR TRADE PRACTICES.

 

6.           Confidentiality

 

6.1           Confidential Information. Except to the extent expressly
authorized by this Agreement or otherwise agreed in writing by the parties, the
parties agree that, during the Term and for ten (10) years thereafter, each
party (in such capacity, the “receiving party”) shall keep confidential and
shall not publish or otherwise disclose and shall not use for any purpose other
than as expressly provided for in this Agreement or any other written agreement
between the parties any Confidential Information of the other party (in such
capacity, the “disclosing party”). For clarification, (a) all Company Foreground
shall be Confidential Information of Company and Company shall be considered the
disclosing party and Janssen shall be considered the receiving party with
respect thereto; (b) all Janssen Foreground shall be Confidential Information of
Janssen and Janssen shall be considered the disclosing party and Company shall
be considered the receiving party with respect thereto; and (c) all Joint
Foreground and Results shall be Confidential Information of both Company and
Janssen and Company and Janssen shall both be considered the disclosing party
and the receiving party with respect thereto. Except as expressly permitted in
this Agreement, the receiving party may only disclose Confidential Information
of the disclosing party to employees, agents, consultants and other
representatives of the receiving party to the extent reasonably necessary for
the purposes of, and for those matters undertaken pursuant to, this Agreement;
provided that such persons and entities are bound to maintain the
confidentiality of the Confidential Information in a manner consistent with the
confidentiality provisions of this Agreement. The receiving party will use at
least the same standard of care as it uses to protect proprietary or
confidential information of its own (but not less than reasonable care) to
ensure that its employees, agents, consultants and other representatives do not
disclose or make any unauthorized use of the Confidential Information of the
disclosing party. The receiving party will promptly notify the disclosing party
upon discovery of any unauthorized use or disclosure of the Confidential
Information of the disclosing party.

 

13

 

 

Confidential Treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as “***”. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.

 

6.2          Exceptions. Confidential Information shall not include any
information which the receiving party can demonstrate by competent evidence:
(a) is now, or hereafter becomes, through no act or failure to act on the part
of the receiving party, generally known or available; (b) is known by the
receiving party at the time of receiving such information, as evidenced by its
records; (c) is hereafter furnished to the receiving party by a Third Party, as
a matter of right and without restriction on disclosure; or (d) is independently
discovered or developed by the receiving party without the use of Confidential
Information of the disclosing party. The exceptions in Section 6.2(b) and (d)
shall not apply with respect to Company as the receiving party with respect to
Janssen Foreground or Joint Foreground and shall not apply with respect to
Janssen as the receiving party with respect to Company Foreground or Joint
Foreground.

 

6.3          Authorized Disclosure. The receiving party may disclose
Confidential Information of the disclosing party as expressly permitted by this
Agreement and if and to the extent such disclosure is reasonably necessary in
the following instances:

 

(a)          prosecuting or defending litigation as permitted by this Agreement;

 

(b)          complying with applicable court orders or governmental regulations;
and

 

(c)          disclosure in confidence to actual or bona fide potential Third
Party investors or other Third Party transactional partners and to their
bankers, lawyers, accountants, agents, provided, in each case that each such
Third Party investor or other transactional partner or advisor thereof is bound
to maintain the confidentiality of the Confidential Information in a manner
consistent with the confidentiality provisions of this Agreement.

 

Notwithstanding the foregoing, in the event the receiving party is required to
make a disclosure of the disclosing party’s Confidential Information pursuant to
Section 6.3(a) or (b), it will, except where impracticable, give reasonable
advance notice to the disclosing party of such disclosure and use efforts to
secure confidential treatment of such information at least as diligent as the
receiving party would use to protect its own confidential information, but in no
event less than reasonable efforts. In any event, the receiving party agrees to
take all reasonable action to avoid disclosure of Confidential Information of
the disclosing party.

 

14

 

 

Confidential Treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as “***”. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.

 

6.4          Confidentiality of this Agreement and its Terms. Except as
otherwise provided in this Article 6, each party agrees not to disclose to any
Third Party the existence of this Agreement or the terms of this Agreement
without the prior written consent of the other party hereto, except that each
party may disclose the terms of this Agreement that are not otherwise made
public as contemplated by Section 6.5 as permitted under Section 6.3.

 

6.5          Publicity.

 

(a)          Press Releases. Subject to the conditions below in this paragraph,
Janssen consents to Company’s issuance of a press release after execution of
this Agreement in a form to be agreed by the parties. Except for such press
release and as required by law (including disclosure requirements of the U.S.
Securities and Exchange Commission (“SEC”), the NASDAQ stock exchange or any
other stock exchange on which securities issued by a party or its Affiliates are
traded), neither party shall make any other public announcement concerning this
Agreement or the subject matter hereof without the prior written consent of the
other, which shall not be unreasonably withheld or delayed; provided, that it
shall not be unreasonable for a Party to withhold consent with respect to any
public announcement containing any of such Party’s Confidential Information. In
the event of a required public announcement, to the extent practicable under the
circumstances, the Party making such announcement shall provide the other Party
with a copy of the proposed text of such announcement sufficiently in advance of
the scheduled release to afford such other Party a reasonable opportunity to
review and comment upon the proposed text.

 

(b)          Filing of Agreement. The parties shall coordinate in advance with
each other in connection with the filing of this Agreement (including redaction
of certain provisions of this Agreement) with the SEC, the NASDAQ stock exchange
or any other stock exchange or governmental agency on which securities issued by
a party or its Affiliate are traded, and each party shall use reasonable efforts
to seek confidential treatment for the terms proposed to be redacted; provided,
that each party shall ultimately retain control over what information to
disclose to the SEC, the NASDAQ stock exchange or any other stock exchange or
governmental agency, as the case may be, and provided further that the parties
shall use their reasonable efforts to file redacted versions with any governing
bodies which are consistent with redacted versions previously filed with any
other governing bodies. Other than such obligation, neither party (nor its
Affiliates) shall be obligated to consult with or obtain approval from the other
party with respect to any filings to the SEC, the NASDAQ stock exchange or any
other stock exchange or governmental agency.

 

6.6          Publication. Company and Janssen may jointly publish regarding the
Foreground after prior concurrence on content and timing of such publication.
Each party shall individually have the right to issue such publication, subject
to the following: (a) if a party decides to publish, it shall provide the other
party with a complete draft of any proposed publication sixty (60) days in
advance of the proposed submission date; (b) each party may request, and the
other party hereby agrees to, delay such proposed publication for an additional
period of thirty (30) days in order to remove the non-publishing party’s
Confidential Information from the proposed publication prior to publication; and
(c) Janssen will have an additional period of ninety (90) days in order to apply
for a patent for any invention described in any publication proposed by Company,
or to use or add Information in support of or to (an) existing patent
application(s).

 

15

 

 

Confidential Treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as “***”. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.

 

6.7          Equitable Relief. Given the nature of the Confidential Information
and the competitive damage that could potentially result to the disclosing party
upon authorized disclosure, use or transfer of its Confidential Information to
any Third Party, the parties agree that monetary damages may, in certain
circumstances not be a sufficient remedy for any breach of this Article 6. In
addition to all other remedies, the disclosing party may, under such specific
circumstances be entitled to seek specific performance and injunctive and other
equitable relief as a remedy for any breach or threatened breach of this
Article 6.

 

7.           Term and Termination

 

7.1          Term. The term of this Agreement shall commence on the Effective
Date and continue until the end of the last License Option Term, subject to
earlier termination pursuant to Section 7.2 (the “Term”).

 

7.2          Early Termination.

 

(a)          Termination for Cause.

 

(i)          A party shall have the right to terminate this Agreement upon
written notice to the other party if such other party is in material breach of
this Agreement and has not cured such breach within sixty (60) days (ten (10)
days with respect to any undisputed payment breach) after written notice from
the terminating party requesting cure of such breach. Any such termination shall
become effective at the end of such sixty (60) day (ten (10) day with respect to
any undisputed payment breach) period unless the breaching party has cured any
such breach prior to the end of such period.

 

(ii)         A party shall have the right to terminate this Agreement upon
written notice to the other party upon the bankruptcy, dissolution or winding up
of such other party, or the making or seeking to make or arrange an assignment
for the benefit of creditors of such other party, or the initiation of
proceedings in voluntary or involuntary bankruptcy, or the appointment of a
receiver or trustee of such other party’s property that is not discharged within
ninety (90) days.

 

(b)          Termination by Janssen Without Cause. Janssen shall have the right
to terminate this Agreement at any time upon ninety (90) days’ advance written
notice to Company.

 

7.3          Effect of Termination or Expiration; Surviving Obligations.

 

(a)          Effect of Any Termination. Upon any termination of this Agreement
by either party, all rights and obligations of the parties under this Agreement
shall terminate, except as provided in Sections 7.3, 7.4 and 7.5.

 

16

 

 

Confidential Treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as “***”. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.

 

(b)          Surviving Terms. Expiration or termination of this Agreement shall
not relieve the parties of any obligation (including any payment obligations in
Sections 4.1 and 4.2 and any other payment obligations) accruing prior to such
expiration or termination. Without limiting the foregoing, (i) the obligations
and rights of the parties under Articles 1, 6, 8, and 9 and Sections 2.9(a),
(b), (c), (d) and (f), 5.2, 7.3, 7.4 and 7.5 shall survive expiration or
termination of this Agreement, (ii) any License Agreement entered into prior to
expiration or termination of this Agreement shall continue in full force and
effect, and (iii) if Janssen has exercised the License Option during the License
Option Term in accordance with Section 3.1(b) prior to the expiration or
termination of this Agreement, the rights and obligations of the parties with
regard to negotiation and entry into a License Agreement in connection therewith
shall survive expiration or termination of this Agreement as provided in
Section 3.1(b).

 

(c)          Return of Confidential Information. Within thirty (30) days
following the expiration or termination of this Agreement, each party shall
deliver to the other party or destroy any and all Confidential Information of
the other party in its possession, unless and to the extent provided in any
License Agreement and except that one (1) copy may be retained by the receiving
party under a continuing obligation of confidentiality to ensure compliance
under this Agreement.

 

7.4           Exercise of Right to Terminate. The use by either party hereto of
a termination right provided for under this Agreement shall not give rise to the
payment of damages or any other form of compensation or relief to the other
party with respect thereto.

 

7.5           Damages; Relief. Subject to Section 7.4 above, termination of this
Agreement shall not preclude either party from claiming any other damages,
compensation or relief that it may be entitled to upon such termination.

 

8.           Indemnification

 

8.1           Indemnification by Company. Company hereby agrees to save, defend
and hold Janssen and its Affiliates and their respective directors, officers,
employees and agents (each, a “Janssen Indemnitee”) harmless from and against
any and all claims, suits, actions, demands, liabilities, expenses and/or loss,
including reasonable legal expense and attorneys’ fees (collectively, “Losses”),
to which any Janssen Indemnitee may become subject as a result of any claim,
demand, action or other proceeding by any Third Party to the extent such Losses
arise directly or indirectly out of (a) the gross negligence or willful
misconduct of any Company Indemnitee, or (b) the breach by Company of any
warranty, representation, covenant or agreement made by Company in this
Agreement; except, in each case, to the extent such Losses result from the gross
negligence or willful misconduct of any Janssen Indemnitee or the breach by
Janssen of any warranty, representation, covenant or agreement made by Janssen
in this Agreement.

 

17

 

 

Confidential Treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as “***”. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.

 

8.2           Indemnification by Janssen. Janssen hereby agrees to save, defend
and hold Company and its Affiliates and their respective directors, officers,
employees and agents (each, a “Company Indemnitee”) harmless from and against
any and all Losses to which any Company Indemnitee may become subject as a
result of any claim, demand, action or other proceeding by any Third Party to
the extent such Losses arise directly or indirectly out of (a) the gross
negligence or willful misconduct of any Janssen Indemnitee, or (b) the breach by
Janssen of any warranty, representation, covenant or agreement made by Janssen
in this Agreement; except, in each case, to the extent such Losses result from
the gross negligence or willful misconduct of any Company Indemnitee or the
breach by Company of any warranty, representation, covenant or agreement made by
Company in this Agreement.

 

8.3           Control of Defense. Any person entitled to indemnification under
this Article 8 shall give notice to the indemnifying party of any Losses that
may be subject to indemnification, promptly after learning of such Losses, and
the indemnifying party shall assume the defense of such Losses with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed by
the indemnifying party with counsel so selected, the indemnifying party will not
be subject to any liability for any settlement of such Losses made by the
indemnified party without its consent (but such consent will not be unreasonably
withheld or delayed), and will not be obligated to pay the fees and expenses of
any separate counsel retained by the indemnified party with respect to such
Losses.

 

9.           General Provisions

 

9.1           Governing Law. This Agreement shall be construed and enforced
according to the laws of the State of California without regard to its conflicts
or choice of law rules.

 

9.2           Dispute Resolution.

 

(a)          Resolution of Disputes. The parties shall negotiate in good faith
and use reasonable efforts to settle any Dispute arising from or related to this
Agreement or the breach thereof. If the parties cannot resolve the Dispute
within thirty (30) days of a written request by either party to the other party,
the parties agree to hold a meeting, attended by designated senior
representatives of the respective parties having decision-making authority, as
appropriate in light of the subject matter of the Dispute, to attempt in good
faith to negotiate a resolution of the Dispute prior to pursuing other available
remedies. If, within thirty (30) days after such written request, the parties
have not succeeded in negotiating a resolution of the Dispute, and a party
wishes to pursue the matter, the remaining provisions of this Section 9.2 shall
apply.

 

(b)          Mediation. The parties shall attempt in good faith to resolve the
Dispute by confidential mediation in accordance with the then current Mediation
Procedure of the International Institute for Conflict Prevention and Resolution
(“CPR Mediation Procedure”) (www.cpradr.org) before initiating arbitration. The
CPR Mediation Procedure shall control, except where it conflicts with these
provisions, in which case these provisions control. The mediator shall be chosen
pursuant to CPR Mediation Procedure. The mediation shall be held in New York,
New York. Either party may initiate mediation by written notice to the other
party after following the procedures in Section 9.2(a). The parties agree to
select a mediator within twenty (20) days of the notice and the mediation will
begin promptly after the selection. The mediation will continue until the
mediator, or either party, declares in writing, no sooner than after the
conclusion of one (1) full day of a substantive mediation conference attended on
behalf of each party by a senior business person with authority to resolve the
Dispute, that the Dispute cannot be resolved by mediation. In no event, however,
shall mediation continue more than sixty (60) days from the initial notice by a
party to initiate meditation unless the parties agree in writing to extend that
period. Any period of limitations that would otherwise expire between the
initiation of mediation and its conclusion shall be extended until twenty (20)
days after the conclusion of the mediation.

 

18

 

 

Confidential Treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as “***”. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.

 

(c)          Arbitration. If the parties fail to resolve the Dispute in
mediation, and a party desires to pursue resolution of the Dispute, the Dispute
shall be submitted by either party for resolution in arbitration pursuant to the
then current CPR Non-Administered Arbitration Rules (“CPR Rules”)
(www.cpradr.org), except where they conflict with these provisions, in which
case these provisions control. The arbitration will be held in New York, New
York. All aspects of the arbitration shall be treated as confidential except to
the extent necessary to confirm or enforce an award or as may be required by
Applicable Laws. The arbitrators will be chosen from the CPR Panel of
Distinguished Neutrals, unless a candidate not on such panel is approved by both
parties. Each arbitrator shall be a lawyer with at least fifteen (15) years’
experience with a law firm or corporate law department of over twenty-five (25)
lawyers or who was a judge of a court of general jurisdiction. To the extent
that the Dispute requires special expertise, the parties will so inform CPR
prior to the beginning of the selection process. The arbitration tribunal shall
consist of three (3) arbitrators, of whom each party shall designate one (1) in
accordance with the "screened" appointment procedure provided in CPR Rule 5.4.
The chair will be chosen in accordance with CPR Rule 6.4. If, however, the
aggregate award sought by the parties is less than $5 million and equitable
relief is not sought, a single arbitrator shall be chosen in accordance with the
CPR Rules. Candidates for the arbitrator position(s) may be interviewed by
representatives of the parties in advance of their selection, provided that all
parties are represented. The parties agree to select the arbitrator(s) within
forty-five (45) days of initiation of the arbitration. The hearing will be
concluded within nine (9) months after selection of the arbitrator(s) and the
award will be rendered within sixty (60) days of the conclusion of the hearing,
or of any post-hearing briefing, which briefing will be completed by both sides
within forty-five (45) days after the conclusion of the hearing. In the event
the parties cannot agree upon a schedule, then the arbitrator(s) shall set the
schedule following the time limits set forth above as closely as practical. The
hearing will be concluded in ten (10) hearing days or less. Multiple hearing
days will be scheduled consecutively to the greatest extent possible. A
transcript of the testimony adduced at the hearing shall be made and shall be
made available to each party. The arbitrator(s) shall be guided, but not bound,
by the CPR Protocol on Disclosure of Documents and Presentation of Witnesses in
Commercial Arbitration (www.cpradr.org) ("Protocol"). The parties will attempt
to agree on modes of document disclosure, electronic discovery, witness
presentation, etc. within the parameters of the Protocol. If the parties cannot
agree on discovery and presentation issues, the arbitrator(s) shall decide on
presentation modes and provide for discovery within the Protocol, understanding
that the parties contemplate reasonable discovery. The arbitrator(s) shall
decide the merits of any Dispute in accordance with the law governing this
Agreement, without application of any principle of conflict of laws that would
result in reference to a different law. The arbitrator(s) may not apply
principles such as “amiable compositeur” or “natural justice and equity.” The
arbitrator(s) are expressly empowered to decide dispositive motions in advance
of any hearing and shall endeavor to decide such motions as would a United
States District Court Judge sitting in the jurisdiction whose substantive law
governs. The arbitrator(s) shall render a written opinion stating the reasons
upon which the award is based. The parties consent to the jurisdiction of the
United States District Court for the district in which the arbitration is held
for the enforcement of these provisions and the entry of judgment on any award
rendered hereunder. Should such court for any reason lack jurisdiction, any
court with jurisdiction may act in the same fashion. Each party has the right to
seek from the appropriate court provisional remedies such as attachment,
preliminary injunction, replevin, etc. to avoid irreparable harm, maintain the
status quo, or preserve the subject matter of the Dispute. Rule 14 of the CPR
Rules does not apply to this Agreement.

 

19

 

 

Confidential Treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as “***”. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.

 

(d)          Waiver. EACH PARTY HERETO WAIVES: (1) ITS RIGHT TO TRIAL OF ANY
ISSUE BY JURY, AND (2) ANY CLAIM FOR ATTORNEY FEES, COSTS AND PREJUDGMENT
INTEREST.

 

9.3           Limitation of Liability. NEITHER PARTY SHALL BE ENTITLED TO
RECOVER FROM THE OTHER PARTY ANY SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR
PUNITIVE DAMAGES (EVEN IF CLASSIFIED AS DIRECT DAMAGES) IN CONNECTION WITH THIS
AGREEMENT, ANY LICENSE GRANTED HEREUNDER, OR TERMINATION THEREOF, INCLUDING THE
LOSS OF PROSPECTIVE PROFITS OR ANTICIPATED SALES, OR ON ACCOUNT OF EXPENSES,
INVESTMENTS, OR COMMITMENTS IN CONNECTION WITH THE BUSINESS OR GOODWILL FROM
EITHER PARTY; provided, however, that this Section 9.3 shall not be construed to
limit either party’s indemnification obligations under Article 8 or limit either
party’s liability for breach of the confidentiality provisions in Article 6.

 

9.4           Entire Agreement; Modification. This Agreement, together with all
Exhibits hereto, is both a final expression of the parties’ agreement and a
complete and exclusive statement with respect to all of its terms. This
Agreement supersedes all prior and contemporaneous agreements and
communications, whether oral, written or otherwise, concerning any and all
matters contained herein and therein, including the Confidentiality Agreement.
This Agreement may only be modified or supplemented in a writing expressly
stated for such purpose and signed by the parties to this Agreement.

 

9.5           Relationship Between the Parties. The parties’ relationship, as
established by this Agreement, is solely that of independent contractors. This
Agreement does not create any partnership, joint venture or similar business
relationship between the parties. Neither party is a legal representative of the
other party, and neither party can assume or create any obligation,
representation, warranty or guarantee, express or implied, on behalf of the
other party for any purpose whatsoever.

 

9.6           Non-Waiver. The failure of a party to insist upon strict
performance of any provision of this Agreement or to exercise any right arising
out of this Agreement shall neither impair that provision or right nor
constitute a waiver of that provision or right, in whole or in part, in that
instance or in any other instance. Any waiver by a party of a particular
provision or right shall be in writing, shall be as to a particular matter and,
if applicable, for a particular period of time and shall be signed by such
party.

 

20

 

 

Confidential Treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as “***”. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.

 

9.7           Assignment. Except as expressly provided hereunder, neither this
Agreement nor any rights or obligations hereunder may be assigned or otherwise
transferred by either party without the prior written consent of the other party
(which consent shall not be unreasonably withheld); provided, however, that,
either party may assign or otherwise transfer this Agreement and its rights and
obligations hereunder without the other party’s consent:

 

(a)          in connection with the transfer or sale of all or substantially all
of the business or assets of such party to a Third Party, whether by merger,
sale of stock, sale of assets or otherwise; or

 

(b)          to an Affiliate, provided that the assigning party shall remain
liable and responsible to the non-assigning party hereto for the performance and
observance of all such duties and obligations by such Affiliate.

 

The rights and obligations of the parties under this Agreement shall be binding
upon and inure to the benefit of the successors and permitted assigns of the
parties. Any assignment not in accordance with this Agreement shall be void.

 

9.8           No Third Party Beneficiaries. This Agreement is neither expressly
nor impliedly made for the benefit of any party other than those executing it,
except as otherwise provided in this Agreement with respect to Janssen
Indemnitees under Section 8.1 and Company Indemnitees under Section 8.2.

 

9.9           Severability. If, for any reason, any part of this Agreement is
adjudicated invalid, unenforceable or illegal by a court of competent
jurisdiction, such adjudication shall not affect or impair, in whole or in part,
the validity, enforceability or legality of any remaining portions of this
Agreement. All remaining portions shall remain in full force and effect as if
the original Agreement had been executed without the invalidated, unenforceable
or illegal part.

 

9.10         Cumulative Remedies. No remedy referred to in this Agreement is
intended to be exclusive, but each shall be cumulative and in addition to any
other remedy referred to in this Agreement or otherwise available under law.

 

9.11         Notices. Any notice to be given under this Agreement must be in
writing and delivered either in person, by any method of mail (postage prepaid)
requiring return receipt, or by overnight courier or facsimile confirmed
thereafter by any of the foregoing, to the party to be notified at its
address(es) given below, or at any address such party has previously designated
by prior written notice to the other. Notice shall be deemed sufficiently given
for all purposes upon the earliest of: (a) the date of actual receipt; (b) if
mailed, three (3) days after the date of postmark; or (c) if delivered by
overnight courier, the next business day the overnight courier regularly makes
deliveries.

 

21

 

 

Confidential Treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as “***”. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.

 

For Janssen:                                      Janssen Biotech, Inc.

800 Ridgeview Drive

Horsham, PA 19044

***

***

 

with a copy to:                                  Janssen Research & Development,
LLC

Welsh & Mckean Roads

Spring House, PA 19477

***

***

 

and:                                                   Chief Intellectual
Property Counsel

Johnson & Johnson

One Johnson & Johnson Plaza

New Brunswick, NJ 08933

***

 

and:                                                   Janssen CFC PR / CNA
Development LLC

***

Road #2, Km. 45.6 

Bo. Campo Alegre 

Manatí, PR 00674

***

 

For Company:                                   Fabrus, Inc.

4045 Sorrento Valley Blvd

San Diego, California 92121

Attention: Chief Executive Officer

 

With a copy to:                                 Cooley llp

4401 Eastgate Mall

San Diego, California 92121

***

***

 

9.12         Force Majeure. Except for the obligation to make payment when due,
each party shall be excused from liability for the failure or delay in
performance of any obligation under this Agreement by reason of any event beyond
such party’s reasonable control including but not limited to acts of God, fire,
flood, explosion, earthquake, or other natural forces, war, civil unrest,
accident, destruction or other casualty, any lack or failure of transportation
facilities, any lack or failure of supply of raw materials, any strike or labor
disturbance, or any other event similar to those enumerated above. Such excuse
from liability shall be effective only to the extent and duration of the
event(s) causing the failure or delay in performance and provided that the party
has not caused such event(s) to occur. Notice of a party’s failure or delay in
performance due to force majeure must be given to the other party within ten
(10) days after its occurrence. All delivery dates under this Agreement that
have been affected by force majeure shall be tolled for the duration of such
force majeure. In no event shall any party be required to prevent or settle any
labor disturbance or dispute.

 

22

 

 

Confidential Treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as “***”. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.

 

9.13        Interpretation.

 

(a)          Captions & Headings. The captions and headings of clauses contained
in this Agreement preceding the text of the articles, sections, subsections and
paragraphs hereof are inserted solely for convenience and ease of reference only
and shall not constitute any part of this Agreement, or have any effect on its
interpretation or construction.

 

(b)          Interpretation. All references in this Agreement to the word
“including” shall be deemed to be followed by the phrase “without limitation” or
like expression. The word “or” means “and/or” unless the context dictates
otherwise because the subject of the conjunction are mutually exclusive. The
words “herein,” “hereof” and “hereunder” and other words of similar import refer
to this Agreement as a whole and not to any particular Article, Section or other
subdivision. Unless otherwise specified, references in this Agreement to any
article shall include all sections, subsections, and paragraphs in such article;
references in this Agreement to any section shall include all subsections and
paragraphs in such sections; and references in this Agreement to any subsection
shall include all paragraphs in such subsection. All references to days, months,
quarters or years are references to calendar days, calendar months, calendar
quarters, or calendar years, unless stated otherwise. All references in this
Agreement to the singular shall include the plural where applicable, and all
references to gender shall include both genders and the neuter.

 

(c)          Ambiguities. Ambiguities and uncertainties in this Agreement, if
any, shall not be interpreted against either party, irrespective of which party
may be deemed to have caused the ambiguity or uncertainty to exist.

 

(d)          English Language. This Agreement has been prepared in the English
language and the English language shall control its interpretation. In addition,
all notices required or permitted to be given hereunder, and all written,
electronic, oral or other communications between the parties regarding this
Agreement shall be in the English language.

 

9.14        Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original document, and all of
which, together with this writing, shall be deemed one instrument. Signatures
provided by facsimile transmission or in Adobe™ Portable Document Format (PDF)
sent by electronic mail shall be deemed to be original signatures.

 

[Remainder of this page intentionally left blank.]

 

23

 

 

Confidential Treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as “***”. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.

 

In Witness Whereof, the parties hereto have duly executed this Collaboration and
Option Agreement as of the Effective Date.

 

Fabrus, Inc.   CNA Development, LLC       By: /s/ Ronald A. Martell   By: /s/
Maria Gonzalez       Name: Ronald A. Martell   Name: Maria Gonzalez       Title:
Chief Executive Officer   Title: General Manager

 

Signature Page to Collaboration and Option Agreement

 

 

 

 

Confidential Treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as “***”. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.

 

Exhibit A

 

Collaborative Research plan For Targets 1, 2 and 3

 

Work Plan (***)

 

***

 

A-1

 

 

Confidential Treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as “***”. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.

 

Exhibit B

 

Budget For Each of Target 1, 2 and 3

(***)

 

***

 

B-1

 

 

Confidential Treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as “***”. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.

 

Exhibit C

 

License Terms1

 

Parties   Fabrus, Inc. (“Company”) and [Janssen Biotech, Inc.] (“Janssen”)      
Milestones and Milestone Payments  

Janssen shall pay Company, the following non-creditable, non-refundable amounts
for the achievement of the following development and commercial milestones on
Licensed Products. Payments are due within thirty (30) days of the achievement
of the applicable milestone event.

 

***                                                                                                ***

***                                                                                                ***

***                                                                                                ***

***                                                                                                ***

 

For clarification, each of the foregoing milestone payments shall be payable one
time only upon the first achievement of the specified milestone event by a
Licensed Product (one Licensed Product per Designated Target), regardless of the
number of Licensed Products to achieve the applicable milestone event.

      Royalty   During the Royalty Term, ***, capped at *** per Licensed Product
      Field   “Field” shall mean all uses.       Licensed Product   “Licensed
Product” shall mean any pharmaceutical and diagnostic product (including,
without limitation, vaccines) developed by Janssen or any of its Affiliates,
licensees, or legal successors, comprising or containing at least one
Collaboration Antibody, including and including all formulations, combination
products, line extensions and modes of administration thereof.       Territory  
“Territory” means worldwide.       Valid Claim   “Valid Claim” means (a) a claim
of an unexpired issued patent that has not been disclaimed, revoked or held to
be invalid or unenforceable by a court or other authority of competent
jurisdiction, from which decision no appeal can be further taken; or (b) a claim
of a pending patent application prosecuted in good faith for which no more than
seven (7) years have elapsed from the earliest priority date to which such
pending application is entitled.  If a claim of a patent application that ceased
to be a Valid Claim under clause (b) of this subsection later issues or grants
as a patent within the scope of clause (a) of this subsection, then such claim
shall again be considered to be a Valid Claim, effective as of the earlier of
the grant or issuance of such patent.

 

 

1 These terms do not apply to any Licensed Product that incorporates any cow
antibody technology, including rights in-licensed under the In-License
Agreement, which terms would need to be separately negotiated. If a sublicense
to the rights in-licensed under the In-License Agreement is necessary to make
and sell Licensed Products, then a separate sublicense of such rights would be
granted on separate terms that comply with the In-License Agreement and cover
the payments to The Scripps Research Institute thereunder.

 

C-1

 

 

Confidential Treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as “***”. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.

 

     “Cover(ed)(ing)” shall mean, in the case of a Licensed Product or
Collaboration Antibody and a Valid Claim, that, but for the grant of a license
or right under, or ownership of, such Valid Claim, the making, using, selling,
offering for sale or importation of such Licensed Product or Collaboration
Antibody would infringe such Valid Claim (in the case of patent applications,
assuming issuance thereof).       Royalty Term  

Janssen’s obligation to pay a royalty under this agreement for a Licensed
Product in a given country shall be in effect in each country of sale from First
Commercial Sale in the country and shall expire, on a country-by-country basis,
on the later of ***.

 

Janssen shall have the right to terminate the License Agreement at any time upon
ninety (90) days’ advance notice. The License Agreement shall also include other
standard termination provisions.

      First Commercial Sale   “First Commercial Sale” means, with respect to a
Licensed Product in a particular country, the first commercial sale of such
Licensed Product in such country after all needed Regulatory and Pricing
Approvals have been obtained in such country.       Other Provisions   Parties
agree that a final License agreement will contain other customary provisions as
deemed necessary by both Parties.

 

C-2