Exhibit 10.1

 

 

 

 

COLLABORATION AND OPTION AGREEMENT

BY AND BETWEEN

FATE THERAPEUTICS, INC.

AND

JANSSEN BIOTECH, INC.

DATED

APRIL 2, 2020

 

 

 

 

 

 

 

[***] Certain information in this exhibit has been omitted because it is both
(i) not material and (ii) would likely cause competitive harm to the registrant
if publicly disclosed.

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Table of Contents

 

Page

 

ARTICLE 1

Definitions

1

ARTICLE 2

Governance

26

2.1

Joint Research Committee

26

2.2

Joint Manufacturing Committee

27

2.3

Joint Steering Committee

28

2.4

Meetings and Minutes

28

2.5

Subcommittees

29

2.6

Limitations of Committee Authority

29

2.7

Discontinuation of Committees

29

2.8

Alliance Managers

29

ARTICLE 3

Research

30

3.1

Overview

30

3.2

Janssen Antigens

30

3.3

Research Plans

32

3.4

Research Term Extension

34

3.5

Conduct of Research

34

3.6

Research Cost

34

3.7

IND Enabling Studies

35

3.8

Records; Reports

36

3.9

Subcontracting

37

3.10

Materials

37

3.11

Potential [***]

37

ARTICLE 4

Commercial Option

38

4.1

Commercial Option

38

4.2

Delivery of IND Data Packages; Preparation of Master iPSC Bank

38

4.3

Option Exercise

39

4.4

Effect of Option Exercise

40

4.5

Ongoing Activities

41

4.6

Non-Exercise of Option

41

ARTICLE 5

Grant Of Rights; Exclusivity

42

5.1

Licenses To Janssen

42

5.2

License to Fate

44

 

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5.3

[***]

45

5.4

Collaboration Intellectual Property

46

5.5

Sublicense

47

5.6

Functional Improvements; Next Generation Candidates

48

5.7

Product Trademarks; Patent Marking

50

5.8

Third Party In-Licenses

50

5.9

No Implied Licenses; Retained Rights; Government Rights

50

5.10

Exclusivity and Other Restrictions

51

ARTICLE 6

Fate Opt-In Option

52

6.1

Grant of Fate Opt-In Option

52

6.2

Delivery of POC Data Packages

53

6.3

Exercise of Fate Opt-In Option

53

6.4

Consequences of Exercise of Fate Opt-In Option

54

ARTICLE 7

Development and Commercialization

54

7.1

General

54

7.2

Restriction on [***]

54

7.3

Standards of Conduct; Records

54

7.4

Development Reports

54

7.5

Commercialization Reports

54

7.6

Diligence

55

7.7

Subcontracting

55

ARTICLE 8

Regulatory

56

8.1

General

56

8.2

Transition of Existing Regulatory Filings and Regulatory Approvals

56

8.3

Right of Reference

58

8.4

Regulatory Assistance

58

8.5

Pharmacovigilance Agreement

59

ARTICLE 9

Manufacture and Supply

59

9.1

CMC Development

59

9.2

Fate Manufacturing Facilities; Facility Manufacturing Schedules

61

 

 

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9.3

Manufacture and Supply of Early Stage Clinical Supplies

61

9.4

Manufacture and Supply of Pivotal Clinical Supplies and Initial Commercial
Supplies

62

9.5

Manufacture and Supply of Other Commercial Supplies

65

9.6

Cell Banks

66

9.7

Compliance; Safety Issues

67

9.8

Audits

67

9.9

Manufacturing Technology Transfer

67

9.10

Third Party Subcontractors

68

ARTICLE 10

Financial Terms

69

10.1

Upfront Payment

69

10.2

Payments during Research Term

69

10.3

Effect of Commercial Option Exercise

70

10.4

Clinical Development and Regulatory Milestones

70

10.5

Sales Milestones

73

10.6

Royalty Payments

74

10.7

CMC Development Costs

77

10.8

Payments After Fate Exercises the Fate Opt-In Option

77

10.9

Manner of Payment

78

10.10

Records

78

10.11

Audits

78

10.12

Taxes

79

ARTICLE 11

Intellectual Property

80

11.1

Inventions

80

11.2

Patent Prosecution

81

11.3

Patent Enforcement

84

11.4

Patent Term Extension

87

11.5

Regulatory Data Protection

87

11.6

Patent Invalidity Claims

88

11.7

Claimed Infringement

88

11.8

Third Party Licenses

89

11.9

Common Interest Disclosures

90

 

 

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ARTICLE 12

Confidentiality

91

12.1

Nondisclosure

91

12.2

Exceptions

91

12.3

Authorized Disclosure

91

12.4

Terms of this Agreement

93

12.5

Securities Filings

93

12.6

Relationship to Confidentiality Agreement

93

12.7

Equitable Relief

93

12.8

Research Program Information and Scientific Publications

93

12.9

Publicity

94

ARTICLE 13

Representations, Warranties, And Covenants; Disclaimers; Limitation of Liability

95

13.1

Mutual Representations and Warranties

95

13.2

Additional Representations and Warranties of Fate

95

13.3

Additional Representations and Warranties of Janssen

96

13.4

Mutual Covenants

97

13.5

Compliance with Anti-Corruption Laws

98

13.6

DISCLAIMERS

101

13.7

LIMITATION OF LIABILITY

101

ARTICLE 14

Indemnity and Insurance

101

14.1

Janssen Indemnity

101

14.2

Fate Indemnity

102

14.3

Indemnification Procedure

102

14.4

Insurance

102

ARTICLE 15

Term and Termination

103

15.1

Term; Expiration

103

15.2

Termination for Material Breach

104

15.3

Janssen Unilateral Termination Rights

104

15.4

Termination for [***]

104

15.5

Termination for Insolvency

105

15.6

Termination for [***]

106

15.7

Consequences of Termination

107

 

 

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15.8

Survival

108

ARTICLE 16

Dispute Resolution

109

16.1

Exclusive Dispute Resolution Mechanism

109

16.2

Resolution by Executive Officers

109

16.3

Arbitration

109

16.4

Preliminary Injunctions

111

16.5

Patent Disputes

111

16.6

No Trial by Jury

111

ARTICLE 17

Miscellaneous

111

17.1

Severability

111

17.2

Notices

111

17.3

Force Majeure

112

17.4

Assignment

112

17.5

Further Assurances

113

17.6

Waivers

113

17.7

Governing Law

113

17.8

Relationship of the Parties

113

17.9

Third Party Beneficiary

114

17.10

Entire Agreement; Amendment; Exhibits

114

17.11

Interpretation; Headings

114

17.12

Competition Law Filings

115

17.13

Performance by Affiliates

116

17.14

Effects of Fate Change of Control

116

17.15

Counterparts; Electronic Delivery

117

 

 

 

 

 

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COLLABORATION AND OPTION AGREEMENT

This Collaboration and Option Agreement (the “Agreement”) is made and entered
into as of April 2, 2020 (the “Effective Date”), by and between Fate
Therapeutics, Inc., a Delaware corporation located at 3535 General Atomics
Court, Suite 200, San Diego, California 92121, United States of America
(“Fate”), and Janssen Biotech, Inc., a Pennsylvania corporation located at
800/850 Ridgeview Drive, Horsham, Pennsylvania 19044, United States of America
(“Janssen”). Fate and Janssen are sometimes referred to herein individually as a
“Party” and collectively as the “Parties”.

RECITALS

Whereas, Fate has expertise in induced pluripotent stem cell (iPSC) biology and
hematopoietic cell therapeutics, including NK cell and T-cell lymphocytes
derived from iPSCs;

Whereas, Janssen has expertise in the research, development and
commercialization of pharmaceutical products, including novel oncology target
identification and antibody engineering;

Whereas, Janssen and Fate desire to collaborate using Fate’s proprietary iPSC
technology to research and preclinically develop allogeneic iPSC-derived NK cell
and T-cell lymphocytes expressing a chimeric antigen receptor directed to
specific antigens selected by the Parties as further described in this
Agreement;

Whereas, Janssen desires to have an option to obtain an exclusive license to
develop, manufacture and commercialize certain CAR-T cell and CAR-NK cell
therapeutics developed by the Parties under this Agreement, subject to Fate
having an option to participate in the commercialization of such cell
therapeutics in the United States; and

Whereas, Fate desires to retain certain rights to manufacture the CAR-T cell and
CAR-NK cell therapeutics for which Janssen may obtain the rights as described
above;

AGREEMENT

Now, Therefore, in consideration of the foregoing and the mutual agreements set
forth below, the Parties agree as follows:

ARTICLE 1
Definitions

The terms in this Agreement (including the Profit Share Product Exhibit) with
initial letters capitalized, whether used in the singular or the plural, shall
have the meaning set forth below or, if not listed below, the meaning designated
in places throughout this Agreement or the Profit Share Product Exhibit.

1.1“Acquirer” means any Third Party that is a counterparty in any Change of
Control transaction and any of such Third Party’s Affiliates.

 

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1.2“Affiliate” means, with respect to a Person, any other Person that directly
or indirectly is controlled by, controls or is under common control with such
first Person at the time the determination of affiliation is being made. For the
purposes of this definition, the term “control” (including, with correlative
meanings, the terms “controlled by” and “under common control with”) as used
with respect to any Person means (a) direct or indirect ownership of more than
fifty percent (50%) of the voting securities, capital stock or equity interests
of such Person or (b) possession, directly or indirectly, of the power to direct
the management and policies of such Person, as applicable, whether through the
ownership or control of voting securities, by contract or otherwise.

1.3“Agreement” has the meaning set forth in the Preamble.

1.4“Allogeneic” means the use of cells or tissues derived, directly or
indirectly, from any human subject other than the particular human subject to
which such cells or tissues are administered or transplanted.  

1.5“Annual Net Sales” means the Net Sales generated over any given Calendar
Year.

1.6“Antigen Binding Domain” means a protein fragment (such as an scFv)
constructed from one (1) or more CDRs of an antibody, which protein fragment is
Directed to a specific tumor-associated antigen.

1.7“Antigen Research Term” means, with respect to each Janssen Antigen, the
period beginning on the Effective Date (or, with respect to Janssen Antigen 3
and Janssen Antigen 4, the date that such Janssen Antigen is selected pursuant
to Section 3.2.2) and ending the last day of the Initial Research Term (or, if
the Agreement is terminated with respect to the applicable Janssen Antigen
pursuant to Section 15.3 or Section 15.4, the effective date of termination of
this Agreement with respect to such Janssen Antigen), as may be extended or
reinstated pursuant to Section 3.4.1 or Section 3.4.2 for such Janssen
Antigen.  

1.8“Biosimilar Product” means, with respect to a Licensed Product and on a
country-by-country basis in the Territory, a product that (a) is marketed for
sale in such country by a Third Party (not licensed, supplied or otherwise
authorized by a Party or its Affiliates or Sublicensees); (b) contains, as an
active pharmaceutical ingredient, a CAR-targeted T lymphocyte or CAR-targeted NK
lymphocyte therapeutic that is the same as or a substantial equivalent of the
active pharmaceutical ingredient contained in the corresponding Licensed
Product; and (c) obtained marketing approval in such country by means of an
abbreviated procedure that relies (i) in whole or in part on the safety and
efficacy data contained in the BLA or MAA for such Licensed Product submitted by
a Party in such country, and (ii) on establishing bioequivalence to the Licensed
Product.

1.9“Business Day” means a day other than Saturday, Sunday or any day on which
commercial banks located in New York, New York are authorized or obligated by
Laws to close.

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1.10“Calendar Quarter” means a quarter based on the Janssen Parent Universal
Calendar for that quarter (a copy of which is attached hereto as Exhibit 1.10);
provided, however, that (a) the first Calendar Quarter of any particular period
shall extend from the commencement of such period to the end of the first
complete Calendar Quarter thereafter; and (b) the last Calendar Quarter shall
end upon the effective date of the expiration or termination of this Agreement.

1.11“Calendar Year” means a year based on the Janssen Parent Universal Calendar
for that year (a copy of which is attached hereto as Exhibit 1.10); provided,
however, that (a) the first Calendar Year of the Term shall begin on the
Effective Date and end on the last day of Calendar Year 2020 and (b) the last
Calendar Year of the Term shall begin on the first day of the Calendar Year in
which this Agreement expires or terminates and end on the effective date of
expiration or termination of this Agreement.

1.12“CAR Cell Construct” means a CAR-NK Cell or CAR-T Cell, as applicable.  

1.13“CAR Cell Type” refers to the cell type distinction between CAR-NK Cells and
CAR-T Cells.

1.14“CAR-NK Cells” means Allogeneic NK Cells expressing a CAR that are derived
from iPSCs, which iPSCs may be in the form of a clone, a composition of cells, a
cell line, a master cell bank or a working cell bank.

1.15“CAR-T Cells” means Allogeneic T Cells expressing a CAR that are derived
from iPSCs, which iPSCs may be in the form of a clone, a composition of cells, a
cell line, a master cell bank or a working cell bank.

1.16“CD34 Composition” means a CD34 positive hematopoietic cell or a population
of CD34 positive hematopoietic cells, which: (a) may be in the form of a clone,
a composition of cells, a cell line, a master cell bank or a working cell bank;
and (b) are derived from iPSCs, which may be in the form of a clone, a
composition of cells, a cell line, a master cell bank or a working cell bank.   

1.17“CD34 Composition Process” means any and all processes and protocols
developed and used to differentiate iPSCs into CD34 Compositions and to
characterize, compare, select, maintain, expand, test, qualify, cryopreserve,
store, and thaw such CD34 Compositions, but for clarity does not include iPSC
Generation, Cell Bank Process or the processes and protocols developed and used
to differentiate CD34 Compositions into CAR-NK Cells and CAR-T Cells and the
further expansion and formulation of such CAR-NK Cells and CAR-T Cells.

1.18“CD34 Composition Process Development” means any and all activities
undertaken to improve and further develop the CD34 Composition Process.

1.19“CD34 Composition Manufacturing” means the Manufacture of a CD34 Composition
using a Master iPSC Bank through the practice of the CD34 Composition Process.

1.20“CDR” means the complementarity determining regions of an antibody.

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1.21“Cell Bank Process” means any and all processes and protocols developed and
used to create a master cell bank or working cell bank of iPSCs and to
characterize, compare, select, maintain, expand, test, qualify, cryopreserve,
store, and thaw such master cell bank or working cell bank, but for clarity does
not include iPSC Generation or CD34 Composition Process.

1.22“Cell Bank Process Development” means any and all activities undertaken to
improve and further develop the Cell Bank Process.  

1.23“Change of Control” means, with respect to a Party, the direct or indirect
occurrence of any of the following:

(a)completion of a merger, consolidation, stock sale, reorganization,
amalgamation, arrangement, share exchange, tender or exchange offer, private
purchase, business combination, recapitalization, issuance of securities or
other similar transaction or series of transactions involving such Party, a
result of which either (i) the stockholders of such Party immediately preceding
such transaction hold less, directly or indirectly, than 50% of the outstanding
shares, or less than 50% of the outstanding voting power, of the ultimate
company or entity resulting from such transaction immediately after the
consummation thereof (including a company or entity which as a result of such
transaction owns the then outstanding securities of such Party or all or
substantially all of such Party’s assets, either directly or through one or more
subsidiaries), or (ii) any single Third Party Person or group (within the
meaning of the U.S. Securities Exchange Act of 1934 and the rules of the SEC
thereunder as in effect, referred to as a “Group”) holds 50% or more, directly
or indirectly, of the outstanding shares or voting power of the ultimate company
or entity resulting from such transaction immediately after the consummation
thereof (including a company or entity which as a result of such transaction
owns the then outstanding securities of such Party or all or substantially of
such Party’s assets, either directly or through one or more subsidiaries);
provided, however, solely with respect to clause (a)(i) and without limitation
of the remainder of this Section 1.23, excluding a bona fide equity financing
transaction or a series of bona fide equity financing transactions in which such
Party issues shares of common stock in exchange for cash in one or more public
underwritten offering(s);

(b)the direct or indirect acquisition (including by means of a tender offer or
an exchange offer) by any Third Party or Group of beneficial ownership, or the
right to acquire beneficial ownership, or formation of any Third Party Group
which beneficially owns or has the right to acquire beneficial ownership, of 50%
or more of either the outstanding voting power or the then outstanding shares of
such Party, in each case on a fully diluted basis;

(c)individuals who, as of the date hereof, constitute the Board of Directors of
a Party (the “Incumbent Board”) cease for any reason to constitute at least a
majority of the Board of Directors of such Party (provided, however, that any
individual becoming a director subsequent to the date hereof whose election, or
nomination for election by such Party’s shareholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent Board shall
be considered as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of any person other than the
Board of Directors of such Party);

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(d)the adoption of a plan relating to the liquidation or dissolution of a Party,
other than in connection with a corporate reorganization (without limitation of
clause (a) above); or

(e)the sale or disposition to a Third Party of all or substantially all the
assets of such Party (determined on a consolidated basis), including such
Party’s assets related to the Collaboration Candidates and Licensed
Products.    

1.24“Chimeric Antigen Receptor” or “CAR” means a recombinant synthetic modular
fusion protein receptor that comprises an Antigen Binding Domain, a spacer
domain, a transmembrane domain, and an intracellular signaling domain (such as a
domain containing immunoreceptor tyrosine-based activation motifs (ITAMs)).

1.25“Clearance Date” means the date on which the following conditions are met
with respect to a Competition Law Filing under Section 4.3.2: (a) the waiting
period under the HSR Act or other applicable Competition Law shall have expired
or earlier been terminated; (b) no injunction (whether temporary, preliminary or
permanent) prohibiting effectiveness of exercise of the Commercial Option or the
[***], as applicable, shall be in effect; (c) no judicial or administrative
proceeding opposing such effectiveness shall be pending; and (d) no requirements
or conditions shall have been imposed by the DOJ, FTC or other applicable
governmental authority in connection with such Competition Law Filing, other
than requirements or conditions that are consented to in writing by the Party on
whom such requirements or conditions are imposed.

1.26“Clinical Trials” means Phase I Trials, Phase II Trials, Phase III Trials,
Phase IV Trials, or variations of such trials (for example, phase II/III
studies).

1.27“Close Homolog” means, with respect to an Antigen Binding Domain, [***].

1.28“CMC Development” means CD34 Composition Process Development and Product
Process Development.  For clarity, CMC Development does not include iPSC
Generation or Cell Bank Process Development.  

1.29“CMC Development Costs” means CMC Development FTE Costs and Out-of-Pocket
Expenses incurred by each Party and its Affiliates in conducting activities
under a CMC Development Plan.  CMC Development Costs shall exclude (i) Shared
Development Costs, (ii) Allowable Expenses, (iii) any payments made pursuant to
the Profit Share Product Exhibit, (iv) capital expenditures for facility or
equipment; provided, however, that Out-of-Pocket Expenses shall include capital
expenditures for equipment used exclusively for the performance of activities
under a CMC Development Plan and, then, only to the extent such capital
expenditures are depreciable, and (v) costs attributable to general corporate
activities, executive management, investor relations, treasury services,
business development, corporate government relations, external financial
reporting and other general and administrative overhead.

1.30“CMC Development FTE” means work carried out by one or more qualified
employees, contractors or consultants of a Party or its Affiliates devoted to or
in direct support of the CMC Development Plan activities, where the work of a
CMC Development FTE shall be considered full-time based on [***] hours of work
and, in the case of work that is less than full-time, will be pro-rated based on
the actual number of hours expended by such CMC Development FTE.  CMC
Development FTE does not include work performed by personnel performing
administrative and corporate functions (including human resources, finance,
legal and investor relations).

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1.31“CMC Development FTE Costs” means the amount calculated by multiplying [***]
by [***].

1.32“CMC Development FTE Rate” means a rate of [***] per full-time CMC
Development FTE per Calendar Year; provided, however, that such rate shall be
increased or decreased annually beginning on January 1, 2021 by the percentage
increase or decrease in the CPI between the last day of the most recently
completed Calendar Year and December 31, 2019, plus [***] or an alternative
methodology that is mutually agreed to by both Parties.  The CMC Development FTE
Rate is “fully burdened” and will cover employee salaries (excluding stock-based
compensation), benefits, utilities, facilities, and travel expenses.

1.33“Collaboration Candidate” means, with respect to a Janssen Antigen, any CAR
Cell Construct generated by Fate during the applicable Antigen Research Term,
where the CAR expressed by such CAR Cell Construct incorporates [***].

1.34“Combination Product” means a product, pharmaceutical preparation or
formulation that contains (a) a Licensed Product and (b) at least one (1)
additional therapeutically active pharmaceutical ingredient other than a
Licensed Product, where all of the foregoing ingredients are presented, labelled
for use together, and sold together, in the same therapeutic preparation or
formulation or as part of a co-packaged or label-directed combination therapy,
as a single unit for a single price and invoiced as a single unit for a single
price. For clarity, drug delivery vehicles, adjuvants and excipients are hereby
deemed not to be “therapeutically active pharmaceutical ingredients,” and their
presence in itself shall not be deemed to create a Combination Product.

1.35“Commercialization” or “Commercialize” means marketing, promoting,
detailing, distributing, importing, exporting, offering for sale or selling a
drug or biological product, including Medical Affairs Activities, regulatory
activities directed to obtaining pricing and reimbursement approvals,
reimbursement/access services, health policy/advocacy activities and price
calculations and related reporting to Governmental Authorities, and interacting
with Regulatory Authorities with respect to the foregoing.  Commercialization
does not include any activities that are Development activities or Manufacturing
activities.

1.36“Commercialization Approval” means, with respect to a Licensed Product and
any country or regulatory jurisdiction, receipt of both: (i) approval of a
Marketing Approval Application for such Licensed Product by the applicable
Regulatory Authority in such country or regulatory jurisdiction; and [***]

(a)[***]

(b)[***]

(c)[***]

(d)[***]

(e)[***]

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1.37“[***] Efforts” means [***].

1.38“Committee” means (a) each of the JRC and JMC; (b) if Janssen exercises a
Commercial Option, each of the JSC and JMC; and (c) if Fate exercises the Fate
Opt-In Option, the JSC, JMC, JDC, and USJCC and JFC.

1.39“Competing Product” means, with respect to a Janssen Antigen, [***].

1.40“Confidential Information” means all non-public or proprietary information
(a) disclosed orally, visually, in writing or in other form by or on behalf of a
Party (or an Affiliate or representative of such Party) to the other Party (or
to an Affiliate or representative of such other Party) pursuant to or in
connection with this Agreement, whether prior to, on or after the Effective
Date, or (b) otherwise expressly deemed to be “Confidential Information” of a
Party under another provision of this Agreement. 

1.41“Controlled” or “Control” means, when used in reference to Know-How,
Patents, Confidential Information, or intellectual property rights, the legal
authority or right (either by ownership or license (other than a license granted
pursuant to this Agreement)) of a Party (or any of its Affiliates) to grant a
license or sublicense of such Know-How, Patents, Confidential Information, or
intellectual property rights to the other Party, or to otherwise disclose such
Know-How, Patents, Confidential Information, or intellectual property rights to
the other Party, without violating or breaching the terms of any agreement with
any Third Party, or misappropriating such Know-How, Patents, Confidential
Information, or intellectual property rights of any Third Party, such Third
Party agreement existing (a) as of the Effective Date or (b) subsequent to the
Effective Date if (in the case of this clause (b)) such Party first acquired
rights to such Know-How, Patents, Confidential Information, or intellectual
property rights pursuant to such agreement.

1.42“Cooperative Group” means any cooperative group that is funded by the U.S.
National Cancer Institute Clinical Trials Cooperative Group Program or any
similar cooperative group in any country outside the U.S.

1.43“Cost of Goods” or “COGS” means a Party’s reasonable internal and Third
Party costs incurred in manufacturing or acquisition of Collaboration Candidate
or Licensed Product, determined in accordance with such Party’s standard cost
accounting policies that are in accordance with GAAP and consistently applied
across all of such Party’s manufacturing network to other products that the
Party manufactures.  COGS does not include any CMC Development Costs.  “COGS”
are comprised of Standard Cost of Goods Manufactured, Cost Variances, and Other
Costs Not Included in Standard, where:

(a)[***]

(b)[***]

(c)[***]

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1.44“Cover” means, with respect to a Licensed Collaboration Candidate or a
Licensed Product (including, in each case, its Precursor iPSC, Master iPSC Bank
or CD34 Composition), that, in the absence of a license granted under or
ownership of such Valid Claim, the making, use, offering for sale, sale, or
importation of such Licensed Collaboration Candidate or Licensed Product
(including, in each case, its Precursor iPSC, Master iPSC Bank or CD34
Composition) would or is reasonably likely to infringe such Valid Claim (or, for
any pending patent claim, infringe such Valid Claim as if it were issued), in
each case for the purpose of Royalty Term without regard to the research
exemption under the Hatch-Waxman Act.

1.45“Currency Hedge Rate” means the Janssen Parent currency hedge rate, which is
the result of the effectively performed currency hedging at Janssen Parent for
the upcoming Calendar Year and will be set up once a Calendar Year and will
remain constant throughout such Calendar Year.  The Janssen Parent currency
hedge rate is calculated as a weighted average hedge rate of the outstanding
external foreign currency forward hedge contracts of Janssen Parent with Third
Party banks.

1.46“Development” means: (a) all non-clinical, preclinical and clinical drug
development activities and processes to support Commercialization Approval of a
drug or biological product, including toxicology, pharmacology, and other
non-clinical and preclinical efforts, test method development, statistical
analysis, Clinical Trials (including post-marketing commitments), and Medical
Affairs Studies; (b) CMC Development activities; (c) regulatory activities
relating to Clinical Trials and CMC Development activities, including the
preparation and submission of IND/CTAs; (d) regulatory activities in support of
obtaining Commercialization Approval, including preparation and submission of
information and Regulatory Filings to a Regulatory Authority, regulatory
affairs, project management, drug safety surveillance and REMS programs as
required by the FDA or other Regulatory Authorities; (e) Early Access Programs;
and (f) pharmacovigilance activities with respect to a drug or biological
product, including establishing, updating and maintaining of a global safety
database.  Development excludes all activities directed toward Manufacturing or
Commercialization of Collaboration Candidates and Licensed Products. When used
as a verb, “Develop” means to engage in Development.

1.47“[***] Efforts” means, with respect to each Party’s obligations to conduct
specific activities allocated to such Party under this Agreement, [***].

1.48“Directed to” means, with respect to a particular antigen binding domain and
an antigen, [***].  

1.49“Discontinued Collaboration Candidate” means (a) each DC Collaboration
Candidate that is deemed to be a Discontinued Collaboration Candidate pursuant
to Section 3.7.3, provided that, when used in reference to a particular Janssen
Antigen, Discontinued Collaboration Candidate shall only encompass such DC
Collaboration Candidate incorporating a Janssen Antigen Binding Domain with
respect to such Janssen Antigen; and (b) each Pre-IND Collaboration Candidate
incorporating a Janssen Antigen Binding Domain that is deemed to be a
Discontinued Collaboration Candidate pursuant to Section 3.7.5, 4.3.2 or 4.6.

1.50“Dollar” or “$” means the lawful currency of the United States.

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1.51“Early Access Program” or “EAP” means, with respect to any country, any
program to provide patients with a drug or biological product before receipt of
Marketing Approval and before First Commercial Sale in such country, in which
program the use of the drug or biological product is not primarily intended to
obtain information about the safety or effectiveness of such drug or biological
product, including Treatment INDs / Protocols, Named Patient Programs and
Compassionate Use programs.  For clarity, an EAP with respect to a drug or
biological product may continue to be performed following receipt of Marketing
Approval of such drug or biological product and costs may continue to be
incurred in accordance with the performance of such EAP after Marketing
Approval.

1.52“Effective Date” has the meaning set forth in the Preamble.

1.53“EMA” means the European Medicines Agency, or any successor agency thereto.

1.54“Equivalent” means: [***].

1.55“European Union” or “EU” means the countries of the European Economic Area,
as it is constituted on the Effective Date and as it may be modified from time
to time after the Effective Date;  provided, however, that if the United Kingdom
ceases to be a member of the European Union it shall continue to be treated as a
country in the European Union for the purposes of this definition.

1.56“Executive Officers” means: (a) with respect to Fate, its Chief Executive
Officer (or a senior executive officer of Fate or its Affiliates designated by
its Chief Executive Officer); and (b) with respect to Janssen, (i) if a matter
pertains to the Development of a Collaboration Candidate, Licensed Collaboration
Candidate or a Licensed Product, the Global Therapeutic Head, Oncology (or a
senior executive officer of Janssen or its Affiliates designated by such
officer), (ii) if a matter pertains to the Commercialization of a Licensed
Product, the Global Commercial Strategy Leader, Oncology (or a senior executive
officer of Janssen or its Affiliates designated by such officer), or (iii) if a
matter pertains to the Manufacturing of a Licensed Collaboration Candidate or
Licensed Product, President, Janssen Supply Group, LLC (or a senior executive
officer of Janssen or its Affiliates designated by such officer).  In the event
that the position of any of the Executive Officers identified in this Section no
longer exists due to a corporate reorganization, corporate restructuring or the
like that results in the elimination of the identified position, the applicable
Executive Officer shall be replaced with another executive officer with
responsibilities and seniority comparable to the eliminated Executive Officer.

1.57“Existing Functional Elements” means, individually and collectively: [***].

1.58“Fate” has the meaning set forth in the Preamble.

1.59“Fate Platform Technology” means Patents and Know-How Controlled by Fate or
its Affiliates as of the Effective Date or at any time during the Term that
comprise [***].

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1.60“Fate Product Know-How” means all Know-How Controlled by Fate or its
Affiliates as of the Effective Date or at any time during the Term that is
reasonably necessary or useful for the Development, Manufacture or
Commercialization of any Licensed Collaboration Candidate or Licensed Product
(including, in each case, its Master iPSC Bank or CD34 Compositions), including
any Fate Confidential Methods.

1.61“Fate Product Patents” means all Patents Controlled by Fate or its
Affiliates as of the Effective Date or, subject to Section 11.7.2(c), at any
time during the Term that claim (a) the compositions of matter of any Licensed
Collaboration Candidate or Licensed Product (including, in each case, its Master
iPSC Bank and CD34 Compositions), or ingredients, manufacturing components, or
intermediates thereof, (b) the use, or methods of manufacture, treatment or
administration, of any Licensed Collaboration Candidate or Licensed Product
(including, in each case, its Master iPSC Bank and CD34 Compositions) or (c) any
Fate Product Know-How.

1.62“Fate Research Know-How” means all Know-How Controlled by Fate or its
Affiliates as of the Effective Date or during the Research Term that is
reasonably necessary or useful for Janssen to perform its obligations as set
forth under the Research Plans.

1.63“Fate Research Patents” means all Patents Controlled by Fate or its
Affiliates as of the Effective Date or, subject to Section 11.7.2(c), during the
Research Term that are reasonably necessary or useful for a Party to perform its
obligations as set forth under the Research Plans.

1.64“FDA” means the U.S. Food and Drug Administration, or any successor agency
thereto.

1.65“Field” means all uses, including all diagnostic, therapeutic, prognostic
and prophylactic applications in humans.

1.66“Filing of a Marketing Approval Application” means: (a) with respect to a
BLA or a Supplemental Application to a BLA, the date on which FDA has completed
its filing review of such BLA or Supplemental Application and has determined
that it is sufficient to permit a substantive review (which shall be deemed to
occur [***] days after FDA’s receipt of the application unless the FDA refuses
to file the application, or the equivalent thereof in the event the FDA modifies
such process after the Effective Date); and (b) with respect to an MAA filed
with the EMA or a Supplemental Application to an MAA filed with the EMA, the
date on which the CHMP validation period is complete.

1.67“First Commercial Sale” means, with respect to a Licensed Product in a
country, the first commercial sale of such Licensed Product to a Third Party in
such country after Marketing Approval of such Licensed Product has been granted,
or such marketing and sale is otherwise permitted, by the Regulatory Authority
of such country.  Sales for Clinical Trial purposes, Early Access Programs,
registration samples or compassionate use shall not constitute a First
Commercial Sale.  In addition, sales of a Licensed Product by and between a
Party and its Affiliates, licensees and Sublicensees, or between the Parties (or
their respective Affiliates, licensees or Sublicensees) for eventual resale to a
Third Party shall not constitute a First Commercial Sale.

1.68“Functional Improvement” means [***].

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1.69“GAAP” means generally accepted accounting principles in the United States,
consistently applied.  Unless otherwise defined or stated, financial terms shall
be calculated by the accrual method under GAAP.

1.70“Good Clinical Practices” or “GCP” means the current standards for the
conduct of Clinical Trials, as set forth in the applicable regulations and ICH
guidance, including ICH E6, as amended from time to time, and such standards of
good clinical practice as are required by the European Union and other
organizations and governmental agencies in countries in which a Licensed Product
is intended to be tested to the extent such standards are not less stringent
than U.S. Good Clinical Practice.

1.71“Good Laboratory Practices” or “GLP” means the regulations set forth in 21
C.F.R. Part 58 and the requirements expressed or implied thereunder imposed by
the FDA or (as applicable) any equivalent or similar standards in jurisdictions
outside the United States, to the extent such standards are not less stringent
than U.S. Good Laboratory Practice.

1.72“Good Manufacturing Practices” or “GMP” means the part of quality assurance
which ensures that products are consistently produced and controlled in
accordance with the quality standards appropriate to their intended use as
defined in 21 C.F.R. Parts 210 and 211, European Directive 2003/94/EC,
Eudralex 4, Annex 16, and applicable U.S., European Union, Canadian, Japanese
and ICH Guidance or regulatory requirements for a drug or biological product.

1.73“Good Tissue Practices” or “GTP” means the part of quality assurance which
ensures requirements governing the methods used in, and the facilities and
controls used for, the manufacture of HCT/Ps, including all steps in recovery,
donor screening, donor testing, processing, storage, labeling, packaging, and
distribution as defined in U.S. subparts C and D of 21 CFR part 1271 or (as
applicable) any equivalent or similar standards in jurisdictions outside the
United States, to the extent such standards are not less stringent than U.S.
Good Tissue Practice.

1.74“Governmental Authority” means any national, federal, state or local
government, or political subdivision thereof, or any multinational organization
or authority or any authority, agency or commission entitled to exercise any
administrative, executive, judicial, legislative, police, regulatory or taxing
authority or power, any court or tribunal (or any department, bureau or division
thereof), or any governmental arbitrator or arbitral body.  

1.75“Improvement Period” means, with respect to a Licensed Product, the period
beginning on the applicable Exercise Effective Date for the Licensed
Collaboration Candidate contained in such Licensed Product and ending on the
earlier of (a) the [***] anniversary of the Exercise Effective Date for the
Licensed Collaboration Candidate contained in such Licensed Product; or (b) the
last day of the Exclusivity Period with respect to the applicable Janssen
Antigen; provided, however, that if Janssen does not commence a Clinical Trial
for any Licensed Product with respect to the applicable Janssen Antigen within
[***] years after the date on which the IND becomes effective in the U.S. under
21 C.F.R. 312.40 for the first such Licensed Product with respect to such
Janssen Antigen, then the Improvement Period for each Licensed Product with
respect to such Janssen Antigen shall end on the last day of such [***] year
period, unless Janssen does not commence a Clinical Trial during such [***] year
period due to Fate’s failure to perform any of its obligations under this
Agreement in a timely manner or due to a circumstance that is outside Janssen’s
reasonable control.    

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1.76“IND/CTA” means (a) any Investigational New Drug Application, as defined in
the United States Federal Food, Drug and Cosmetics Act, as amended from time to
time, and the regulations promulgated thereunder, filed with the FDA pursuant to
Part 312 of Title 21 of the U.S. Code of Federal Regulations, including any
amendments thereto (an “IND”); and (b) any comparable filing(s) outside the
United States (such as a CTA in the European Union) necessary to commence
Clinical Trials, including any amendments thereto (a “CTA”).

1.77“IND Enabling Studies” means all preclinical and non-clinical activities,
conducted under GLP as necessary, the protocol and results of which are
necessary to prepare a complete IND for a drug or biological product, including,
to the extent necessary, PK/ADME studies, potency studies, pharmacodynamics,
safety, toxicology, pharmacology, pre-formulation, and formulation
development.  

1.78“Indication” means the diagnosis, treatment or prevention of a discrete
clinically recognized form of a disease. [***]

1.79“Initial Research Term” means the period commencing on the Effective Date
and ending on the date that is the [***] anniversary of the Effective Date.

1.80“iPSC Generation” means any and all processes, protocols and activities
developed and used to harvest somatic cells from donors and make, engineer,
characterize, compare, select, maintain, expand, test, qualify, cryopreserve,
store, and thaw iPSCs from such harvested cells, which iPSCs may be in the form
of a clone, a collection of cells, a cell line, a master cell bank (including a
Master iPSC Bank), or a working cell bank.

1.81“Janssen” has the meaning set forth in the Preamble.

1.82“Janssen Antigen” means, individually and collectively, Janssen Antigen 1
and Janssen Antigen 2, and, if selected by Janssen, Janssen Antigen 3 and
Janssen Antigen 4.

1.83“Janssen Antigen Binding Domain” means, with respect to a Janssen Antigen:
(a) up to [***] Antigen Binding Domains, each of which: [***].

1.84“Janssen Parent” means Johnson & Johnson.

1.85“Janssen Product Know-How” means all Know-How Controlled by Janssen or its
Affiliates as of the Effective Date or at any time during the Term that is
actually used by Janssen (or that Janssen authorizes Fate to use during the
course of conducting a Research Plan or the CMC Development Plan) for the CMC
Development and/or Manufacture of any Licensed Collaboration Candidate or
Licensed Product (including, in each case, its Master iPSC Bank or CD34
Compositions).

1.86“Janssen Product Patents” means all Patents Controlled by Janssen or its
Affiliates as of the Effective Date or at any time during the Term that claim
(a) the compositions of matter of any Licensed Collaboration Candidate or
Licensed Product (including, in each case, its Master iPSC Bank or CD34 Cell
Intermediate), or ingredients, manufacturing components, or intermediates
thereof, (b) methods of manufacture of any Licensed Collaboration Candidate or
Licensed Product (including, in each case, its Master iPSC Bank or CD34
Compositions), or (c) any Janssen Product Know-How.

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1.87“Janssen Research Know-How” means all Know-How Controlled by Janssen or its
Affiliates as of the Effective Date or during the Research Term that is
reasonably necessary or useful for Fate to perform its obligations as set forth
under the Research Plans, including any such Know-How relating to a Janssen
Antigen Binding Domain.

1.88“Janssen Research Patents” means all Patents Controlled by Janssen or its
Affiliates as of the Effective Date or during the Research Term that are
reasonably necessary or useful for a Party to perform its obligations as set
forth under the Research Plans, including those that claim the compositions of
matter of, or the method of making or using, any Janssen Antigen Binding Domain.

1.89“Know-How” means technical, scientific and other information and know-how,
including: (a) biological, chemical, pharmacological, toxicological, clinical,
nonclinical, preclinical, manufacturing and clinical data; (b) assays; (c) trade
secrets; (d) methods; (e) techniques; (f) processes; (g) procedures; (h)
specifications; and (i) sourcing information, in each case that is not generally
known to the public, but expressly excluding concepts and ideas.

1.90“Laws” means all laws, statutes, rules, regulations, ordinances and other
pronouncements, including any order by any court, regulatory agency or other
Governmental Authority, having the effect of law of any federal, national,
multinational, state, provincial, county, city or other political subdivision,
domestic or foreign, in each case that are applicable to the activity in
question and the jurisdiction in which it is conducted.

1.91“Licensed Collaboration Candidate” means a Collaboration Candidate for which
Janssen has exercised the Commercial Option in accordance with Section 4.3.  For
clarity, such Licensed Collaboration Candidate will remain a Collaboration
Candidate (and all terms of this Agreement applicable to Collaboration
Candidates will continue to apply to such Licensed Collaboration Candidate).

1.92“Licensed Product” means a product, pharmaceutical preparation or
formulation containing, as its active ingredient, a Licensed Collaboration
Candidate. For clarity, if one or more product, pharmaceutical preparation or
formulation contains, as its active ingredient, the same Licensed Collaboration
Candidate for which Janssen has exercised the Commercial Option in accordance
with Section 4.3, all such products, pharmaceutical preparations or formulations
shall be considered the same Licensed Product so long as such products,
pharmaceutical preparations or formulations do not also contain, as an active
ingredient, a different Licensed Collaboration Candidate (in which case, such
products, pharmaceutical preparations or formulations shall not be considered
the same Licensed Product).

1.93“Major European Countries” means France, Germany, Italy, Spain and the
United Kingdom.

1.94“Major Markets” means each of the following: United States, United Kingdom,
Italy, Germany, France, Spain, People’s Republic of China and Japan.

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1.95“Manufacturing” or “Manufacture” means activities directed to producing,
manufacturing, processing, filling, finishing, packaging, labeling, quality
assurance testing and release, shipping and storage of a product.  For clarity,
when used with respect to a Licensed Collaboration Candidate or a Licensed
Product, Manufacturing shall include CD34 Composition Manufacturing and Product
Manufacturing.

1.96“Marketing Approval” means approval of a Marketing Approval Application by
the applicable Regulatory Authority.

1.97“Marketing Approval Application” means: (a) a Biologics License Application
submitted to the FDA pursuant to Section 351(a) of the Public Health Service Act
and the regulations promulgated thereunder (a “BLA”); (b) an application for
authorization to market or sell a biological product submitted to a Regulatory
Authority in any country or jurisdiction in the OUS Territory, including, with
respect to the European Union, a marketing authorization application filed with
the EMA pursuant to the Centralized Approval Procedure or with the applicable
Regulatory Authority of a country in the European Economic Area with respect to
the decentralized procedure, mutual recognition or any national approval
procedure (an “MAA”); or (c) with respect to any biological product for which a
BLA or MAA (as defined in the preceding clauses (a) and (b)) has previously been
approved by the applicable Regulatory Authority, an application to supplement or
amend such BLA or MAA to expand the approved label for such biological product
to include use of such biological product for an additional indication (a
“Supplemental Application”).

1.98“Master iPSC Bank” means, with respect to a particular Licensed
Collaboration Candidate and Licensed Product containing such Licensed
Collaboration Candidate, a master induced pluripotent stem cell bank
corresponding to such Licensed Collaboration Candidate, including any working
cell bank corresponding thereto and the iPSC clones contained therein, that is
established under this Agreement and is used as the starting material for the
Manufacture of such Licensed Collaboration Candidate and Licensed Product
containing such Licensed Collaboration Candidate.

1.99“Medical Affairs Activities” means activities directed to interacting with
physicians and other healthcare professionals who utilize or conduct research
related to a drug or biological product, including: medical and scientific
information; responding to external inquiries or complaints; pharmacovigilance
activities; medical education; Health Economics and Outcomes Research (HECOR,
HEMAR); speaker programs; advisory boards; grants, fellowships and sponsorships;
drug safety; local country government affairs; deployment of field-based medical
science liaisons (MSLs); MD’s in the field (separate from medical science
liaisons); publications; medical communications; field medical education;
registries; advocacy support; and slide libraries/kits, reprints and publication
planning, but excluding activities directed toward the conduct or support of
Medical Affairs Studies.

1.100“Medical Affairs Study” means any of the following:

(a)any Clinical Trial that is sponsored and conducted by a Cooperative Group as
sponsor-investigator (a “Cooperative Group Study”) that is supported or enabled
by a Party or one of its Affiliates or Sublicensees;

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(b)any Clinical Trial that is sponsored and conducted by a Third Party as a
sponsor-investigator, other than a Cooperative Group Study (sometimes referred
to as an “Investigator Initiated Study” or “IIS”) that is supported or enabled
by a Party or one of its Affiliates or Sublicensees; or

(c)any Clinical Trial that: (i) is sponsored and conducted by a Party or one of
its Affiliates or Sublicensees as a sponsor; (ii) is not intended for use as a
basis for obtaining Marketing Approval (e.g., for a further indication, label
expansion or otherwise); and (iii) is not being conducted as a commitment made
to or a requirement imposed by a Regulatory Authority as a condition of, or in
connection with obtaining or maintaining, a Marketing Approval, including any
Real World Evidence (RWE) study that is intended to support commercial efforts
to secure and retain reimbursement, including Phase IV Trials.

1.101“Natural Killer Cells” or “NK Cells” means innate lymphoid cells having the
inherent ability to recognize and destroy stressed cells, including
virus-infected and tumor cells, without prior sensitization to such transformed
cells.

1.102“Net Sales” means, with respect to a Licensed Product, the gross amounts
invoiced on sales of such Licensed Product by a Party (it being understood that,
for purposes of this definition, any such gross amounts invoiced by a Party’s
Affiliate, licensee or Sublicensee shall be deemed to be invoiced by such Party)
to a Third Party purchaser in an arms-length transaction, less the following
customary deductions, determined in accordance with GAAP and standard internal
policies, procedures, and accounting standards consistently applied throughout
the Party recording such sales to calculate revenue for financial reporting
purposes, including deductions actually taken, paid, accrued, allocated or
allowed based on good faith estimates, with respect to such sales (and
consistently applied as set forth below):

(a)normal and customary trade, cash or quantity discounts, allowances,
wholesaler and pharmacy fees and credits allowed or paid, in the form of
deductions actually allowed or actually paid with respect to sales of such
Licensed Product (to the extent not already reflected in the amount invoiced)
excluding commissions for commercialization;

(b)excise taxes, use taxes, tariffs, sales taxes and customs duties, or other
government charges imposed on the sale of such Licensed Product (but
specifically excluding, for clarity, any income taxes assessed against the
income arising from such sale) (including VAT, but only to the extent that such
VAT taxes are not reimbursable or refundable);

(c)outbound freight, shipment and insurance costs to the extent included in the
price and separately itemized on the invoice;

(d)compulsory and negotiated payments and cash rebates imposed on sales of such
Licensed Product paid to a Governmental Authority (or agent thereof) pursuant to
governmental regulations by reason of any national or local health insurance
program or similar program, including pay-for-performance agreements, risk
sharing agreements as well as government levied fees as a result of the PPACA;

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(e)retroactive price reductions, credits or allowances actually granted upon
rejections or returns of such Licensed Product, including for recalls or damaged
good and billing errors;

(f)rebates, charge backs and discounts (or equivalent thereof) actually granted
to managed health care organizations, pharmacy benefit managers (or equivalent
thereof), federal, state/provincial, local or other governments, or their
agencies or purchasers, reimbursers, or trade customers;

(g)actual bad debt write-off attributable directly to the sale of such Licensed
Product (provided that any such amounts subsequently recovered will be included
in Net Sales for the Calendar Quarter in which recovered); and

(h)coupons, discount/rebates associated with co-pay cards or the appropriate
share of other patient support contributions or investments accounted for in
gross to net.

All aforementioned deductions shall only be allowable to the extent they are
commercially reasonable, and shall be determined, on a country-by-country basis,
as incurred in the ordinary course of business in type and amount consistent
with the Party’s, the Affiliate’s, licensee’s or Sublicensee’s (as the case may
be) business practices consistently applied across its product lines and
accounting standards and verifiable.  All such discounts, allowances, credits,
rebates and other deductions shall be fairly and equitably allocated to such
Licensed Product and other products of the Party and its Affiliates, licensees
and Sublicensees such that such Licensed Product does not bear a
disproportionate portion of such deductions.

Sales of a Licensed Product by and between a Party and its Affiliates, licensees
and Sublicensees, or between the Parties (or their respective Affiliates,
licensees or Sublicensees) for eventual resale to Third Parties are not sales to
Third Parties and shall be excluded from Net Sales calculations.

In the event a Licensed Product is a Combination Product, [***]. Payments
related to such Combination Product under this Agreement, including royalty
payments, will be calculated, due and payable based only on such allocated Net
Sales.  

1.103“OUS Territory” means the entire world and all countries, territories and
possessions therein, excluding the U.S.

1.104“Out-of-Pocket Expenses” means amounts paid by or on account of a Party to
Third Party vendors or contractors for supplies and materials for use, or for
services provided by them, directly in the performance of activities relating to
the Collaboration Candidates and Licensed Products under this Agreement (or
other activities for which sharing of Out-of-Pocket Expenses is otherwise
specified in this Agreement).  For clarity, Out-of-Pocket Expenses do not
include: (a) payments for the Parties’ or their Affiliates’ salaries or
benefits, benefits, utilities, travel expenses, general office supplies,
insurance, information technology, capital expenditures (unless such capital
expenditures are used exclusively for the performance of activities under a
Research Plan and, then, only to the extent such capital expenditures are
depreciable by Fate), or the like; or (b) amounts paid relating to activities
that were not performed under this Agreement.

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1.105“Patents” means patents and patent applications and (a) any foreign
counterparts thereof, (b) all divisionals, continuations, continuations in-part
thereof or any other patent application claiming priority directly or indirectly
to (i) any such specified patents or patent applications or (ii) any patent or
patent application from which such specified patents or patent applications
claim direct or indirect priority, and (c) all patents issuing on any of the
foregoing, and any foreign counterparts thereof, together with all
registrations, reissues, re-examinations, renewals, supplemental protection
certificates, or extensions of any of the foregoing, and any foreign
counterparts thereof.

1.106“Person” means any individual, firm, corporation, partnership, limited
liability company, trust, business trust, joint venture, governmental authority,
association or other entity.

1.107“Phase 1 Proof-of-Concept Date” means, with respect to a particular
Licensed Product, [***].

1.108“Phase I Trial” means a human clinical trial in any country, the principal
purpose of which is a preliminary determination of safety in healthy individuals
or patients, as more fully defined in 21 C.F.R. § 312.21(a), or its successor
regulation, or the equivalent in any foreign country.

1.109“Phase II Trial” means a human clinical trial in any country that is
intended to explore a variety of doses, dose response, and duration of effect,
and to generate initial evidence of clinical safety and activity in one or more
target patient populations, as more fully described in 21 C.F.R. § 312.21(b), or
its successor regulation, or the equivalent in any foreign country.

1.110“Phase III Trial” means a human clinical trial in any country in one or
more target patient populations that is (a) conducted at a dose and schedule for
which evidence suggesting clinical safety and effectiveness of the Licensed
Product has been obtained in such patient population(s) pursuant to one or more
previous human clinical trials, and (b) conducted to gather additional
information about effectiveness and safety of such dose and schedule in such
patient population(s) as needed to evaluate the benefit-risk relationship of the
drug and to provide an adequate basis for submission of a Marketing Approval
Application to the FDA or other Regulatory Authority, as more fully defined in
21 C.F.R. § 312.21(c), or its successor regulation, or the equivalent in a
country other than the United States.

1.111“Phase IV Trial” means a human clinical trial commenced after receipt of
Marketing Approval in the country for which such trial is being conducted and
that is conducted within the parameters of the Marketing Approval for the
Licensed Product. Phase IV Trials may include epidemiological studies, modeling
and pharmacoeconomic studies of a Licensed Product and post-marketing
surveillance studies.

1.112“PPACA” means the U.S. Patient Protection and Affordable Care Act.

1.113“Precursor iPSC” means, with respect to a Collaboration Candidate
(including a Licensed Collaboration Candidate), an engineered iPSC clone, which
may exist in various stages of expansion (e.g., a clone, in a collection of
cells, in a cell line or in a master cell bank) and may be used for the
generation of a CD34 Composition and then subsequently into such Collaboration
Candidate.

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1.114“Prior CDA” means the Confidential Disclosure Agreement between Fate and
Janssen’s Affiliate, having an effective date of November 21, 2018, as amended
on November 14, 2019.

1.115“Product Domain Names and Websites” means any and all domain names and
websites registered for use in association solely with the Licensed Products and
the Product Trademarks, excluding website content.

1.116“Product Manufacturing” means the Manufacture of CAR-T Cells and CAR-NK
Cells (as applicable), which are made from a CD34 Composition Manufactured using
a Master iPSC Bank, through the practice of the Product Process.  For clarity,
Product Manufacturing does not include iPSC Generation, Cell Bank Process, or
CD34 Composition Manufacturing.

1.117“Product Process” means any and all processes and protocols developed and
used to differentiate CD34 Compositions into CAR-NK Cells and CAR-T Cells and
the products containing such CAR Cell Types, including the development of
differentiation processes and protocols, test methods, stability testing,
process validation, process scale-up, formulation development, delivery system
development, quality assurance and quality control development, and other
related activities.  For clarity, Product Process does not include iPSC
Generation, Cell Bank Process or CD34 Composition Process.

1.118“Product Process Development” means any and all activities undertaken to
improve and further develop the Product Process.  For clarity, Product Process
Development does not include iPSC Generation, Cell Bank Process Development or
CD34 Composition Process Development.

1.119“Product Trademarks” means any trademark, trade name or service mark
(whether registered or unregistered) used on, with, or to refer to a Licensed
Product or used with patient support or other information or services or
promotional materials in association with a Licensed Product, and all
intellectual property rights residing in the foregoing.

1.120“Profit Share Product” means a Licensed Product for which Fate has
exercised the Fate Opt-In Option in accordance with Section 6.3 and for which
Fate has not [***]. For clarity, if one or more product, pharmaceutical
preparation or formulation contains, as its active ingredient, the same Licensed
Collaboration Candidate, all such products, pharmaceutical preparations or
formulations shall be considered the same Profit Share Product so long as such
products, pharmaceutical preparations or formulations do not also contain, as an
active ingredient, a different Licensed Collaboration Candidate (in which case,
such products, pharmaceutical preparations or formulations shall not be
considered the same Profit Share Product).

1.121“Profit Share Term” means, with respect to a Profit Share Product, the
period of time commencing on the Opt-In Exercise Date with respect to such
Profit Share Product and ending on the earlier of (a) [***] and (b) the last day
of the Term with respect to such Profit Share Product.  

1.122“Registration Study” means any Clinical Trial of a Licensed Product for
which [***].  

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1.123“Regulatory Approvals” means, with respect to any Licensed Product in any
jurisdiction, any and all approvals (including Marketing Approvals and
Commercialization Approvals), licenses (including an import license),
registrations and authorization from any Regulatory Authority that are required
under applicable Law or reasonably necessary to Develop, Manufacture or
Commercialize a drug or biological product in any country or jurisdiction for
one or more uses, and all amendments and supplements thereto.

1.124“Regulatory Authority” means any national or supranational governmental
authority, including the FDA or EMA, or any successor agency thereto, that has
responsibility in countries in the Territory over the Development, Manufacture
or Commercialization of a Collaboration Candidate or a Licensed Product.

1.125“Regulatory Exclusivity” means any exclusive marketing rights or data
protection or other exclusivity rights conferred by any Regulatory Authority
with respect to a drug or biological product that prevent (i) such Regulatory
Authority from granting any regulatory approval of a Third Party product that
has a composition that is the same as or substantially identical to the
composition of such biological product; or (ii) a Third Party from making a
cross reference to data held by such Regulatory Authority including orphan drug
exclusivity, pediatric exclusivity, rights conferred in the U.S. under
Section 351 of the Public Health Service Act, 42 U.S.C. §262, the Drug Price
Competition and Patent Term Restoration Act (21 U.S.C. §355), as amended, the
PPACA or in the European Union under Directive 2001/83/EC, as amended, and
Regulation (EC) No. 1901/2006, as amended, or rights similar thereto in other
countries or regulatory jurisdictions.  If a Regulatory Authority confers more
than one type of exclusivity with respect to a biological product in a country
or jurisdiction (e.g., the FDA grants both biologic drug reference product
exclusivity and orphan drug exclusivity with respect to such biological
product), “Regulatory Exclusivity” will be deemed to apply to such biological
product in such country or jurisdiction so long as any exclusivity granted to
such biological product prevents such Regulatory Authority from granting any
regulatory approval of a Third Party product that is a Biosimilar Product or
making any cross reference to data held by such Regulatory Authority.

1.126“Regulatory Filings” means any documentation comprising or relating to or
supporting any Regulatory Approval with respect to a drug or biological product,
or its use or potential use in humans, including any documents or reports
submitted to any Regulatory Authority and all supporting data, including
IND/CTAs, Marketing Approval Applications and all correspondence with any
Regulatory Authority with respect to any drug or biological product (including
minutes of any meetings, telephone conferences or discussions with any
Regulatory Authority).

1.127“Related Licensed Products” means, with respect to a Profit Share Product,
any other Licensed Products with respect to the same Janssen Antigen as such
Profit Share Product.  For example, if the Profit Share Product is a Licensed
Product with respect to Janssen Antigen 2, any other Licensed Products with
respect to Janssen Antigen 2 are Related Licensed Products.  For clarity, a
Related Licensed Product may be of the same CAR Cell Type or different CAR Cell
Type from the Profit Share Product.

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1.128“Research” means all scientific investigation, preclinical and non-clinical
activities relating to identifying, generating, testing and optimizing a
Collaboration Candidate. When used as a verb, “Research” means to engage in
Research.

1.129“Research Costs” means Research FTE Costs and Out-of-Pocket Expenses
incurred by a Party and its Affiliates in conducting activities under the
Research Plans.  Research Costs shall exclude [***], and (v) costs attributable
to general corporate activities, executive management, investor relations,
treasury services, business development, corporate government relations,
external financial reporting and other general and administrative overhead.   

1.130“Research FTE” means work carried out by one or more qualified employees,
contractors or consultants of a Party or its Affiliates devoted to or in direct
support of the Research Plan activities, where the work of a Research FTE shall
be considered full-time based on [***] hours of work and, in the case of work
that is less than full-time, will be pro-rated based on the actual number of
hours expended by such Research FTE.  Research FTE does not include work
performed by personnel performing administrative and corporate functions
(including human resources, finance, legal and investor relations).

1.131“Research FTE Costs” means the amount calculated by [***] by [***].

1.132“Research FTE Rate” means a rate of [***] per full-time Research FTE per
Calendar Year; provided, however, that such rate shall be increased or decreased
annually beginning on [***] by the percentage increase or decrease in the CPI
between the last day of the most recently completed Calendar Year and [***],
plus [***] or an alternative methodology that is mutually agreed to by both
Parties.  The Research FTE Rate is “fully burdened” and will cover employee
salaries (excluding stock-based compensation), benefits, utilities, facilities,
and travel expenses.

1.133“Research Program” means, with respect to a Janssen Antigen, a program to
be conducted by the Parties for the research and development of Collaboration
Candidate(s) (including any Next Generation Candidate(s)) pursuant to the
Research Plan for such Janssen Antigen.  

1.134“Segregate” means, with respect to any given product or program, to use
[***] Efforts to segregate activities directed to the exploitation of such
product or program from activities directed to the exploitation of Collaboration
Candidates or Licensed Products under this Agreement, including using [***]
Efforts to ensure that: [***].

1.135“Sublicense” means a license or sublicense granted by written agreement
pursuant to which a Third Party became a Sublicensee.

1.136“Sublicensee” means (a) any Third Party granted a license or sublicense by
Janssen to use, Developed, have Developed, make, have made and otherwise
Manufacture, sell, offer to sell, have sold, promote, distribute, import, export
and otherwise Commercialize a Licensed Product within a particular country or
countries of the Territory, or (b) a Third Party granted a further Sublicense by
a Sublicensee, in each case ((a) and (b)), in accordance with Section 5.5 and
Section 9.10.

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1.137“T Cells” means any cytotoxic T lymphocytes that, through receptors found
on their cell surface, inherently have the ability to recognize specific peptide
antigens presented by major histocompatibility complex molecules and induce
programmed cell death of target cells. For clarity, T Cells exclude regulatory
or immunosuppressive T cells that generally suppress or downregulate induction
and proliferation of effector T cells and maintain tolerance to self-antigens.

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

1.139“Territory” means the world.

1.140“Third Party” means any Person other than Janssen, Fate, and their
respective Affiliates.

1.141“United States” or “U.S.” means the United States of America and all its
territories and possessions.

1.142“Valid Claim” means, with respect to any country (a) a claim of an issued
and unexpired patent (as may be extended through supplementary protection
certificate or patent term extension or the like) to the extent such claim has
not been revoked, held invalid or unenforceable by a patent office, court, or
other governmental agency of competent jurisdiction in a final and
non-appealable judgment (or judgment from which no appeal was taken within the
allowable time period) and which claim has not been disclaimed, denied, or
admitted to be invalid or unenforceable through reissue, re-examination, or
disclaimer or otherwise (in each case other than as a result of any [***] by
Janssen for the original unexpired term as if such [***] had not occurred), and
(b) a pending claim of a pending patent application that (i) has not been
abandoned or finally rejected without the possibility of appeal or refiling
(other than as a result of any [***] by Janssen for the original unexpired term
as if such [***] had not occurred), and (ii) has not been pending longer than
[***] years from the date of issuance of the first substantive patent office
action considering patentability of such claim by the relevant patent office in
the country or territory in which such claim is pending, after which time such
pending claim shall cease to be a Valid Claim unless and until such claim
becomes the claim of an issued patent pursuant to clause (a) above.  

1.143Additional Definitions. Each of the following definitions is set forth in
the Section of this Agreement indicated below:

Defined Term

Section

AAA Rules

16.3.1

Acquiring Party

5.10.4

Additional Milestone Payment

10.4.3

Agreement

the Introduction

Alliance Manager

2.8

Allowable Expenses

Exhibit 6.4

Anti-Corruption Laws

13.5.1(a)

Antigen Selection Period

3.2.2

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Defined Term

Section

Approved CMO

9.10.1

Background IP

5.4.2(b)

Back-Up Fate Facility

9.2.1

Bankruptcy Code

15.5.2

Biosimilar Application

11.3.4

BLA

1.97

Breaching Party

15.2

Claim Basis

14.3

Clinical Development Milestone Event

10.4.1

CMC Development Budget

9.1.2(c)

CMC Development Cost Report

10.7.2

CMC Development Plan

9.1.2(a)

CMO

9.10.1

COC IP

17.14.1

Co-Chair

2.4

co-exclusive (with Fate)

5.2.5

co-exclusive (with Janssen)

5.2.5

Commercial License

5.1.2(b)

Commercial Option

4.1

Commercial Option Start Date

4.3.1(b)

Commercial Option Term

4.3.1(b)

Commercial Supply Criteria

9.4.1(c)

Committee Matters

2.6

Competition Law Filings

4.3.2

Competition Laws

4.3.2

Compliant Clinical Manufacturing Facility

9.3.2

Compliant Commercial Manufacturing Facility

9.4.1(d)

Cooperative Group Study

1.100

Corresponding Antibody

1.83

CTA

1.76

Cure Period

15.2

DC Collaboration Candidates

3.7.1

DC Data Package

3.7.1

Disclosing Party

12.1

Disputes

16.1

DOJ

17.12(ii)

Early Stage Clinical Supplies

9.3.1

Early Stage Clinical Supply Agreement

9.3.3

Effective Date

the Introduction

Effective Royalty Rate

10.6.3(d)

embodiments

15.5.2

Exclusivity Period

5.10.1(b)

Exercise Effective Date

4.3.1(a)

Exercise Notice

4.3.1(a)

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Defined Term

Section

Existing Agreements

11.8.1

Existing Fate Facility

9.2.1

Fate

the Introduction

Fate ABD Patent

11.2.1(d)

Fate Confidential Methods

Error! Reference source not found.

Fate Existing Technology

11.8.2(a)

[***]

[***]

[***]

[***]

Fate Indemnitees

14.1

Fate Licensor Patent

10.6.2

Fate Opt-In Option

6.1

Fate Patents

11.2.1(b)

Fate Product-Specific Patents

11.2.1(c)

[***]

[***]

Force Majeure

17.3

FTC

17.12(ii)

[***]

[***]

Group

1.23(a)

HSR Act

4.3.2

Improved Platform License

11.8.2(b)(i)

Incumbent Board

1.23(c)

IND

1.76

IND Data Package

4.2.1

IND Data Package Delivery Date

4.2.2

IND Selection Criteria

3.3.1(a)

Indemnification Claim

14.3

Indemnitee

14.3

Indemnitor

14.3

Infringement Action

11.3.2(a)

Infringement Claim

11.7

Initial Commercial Supplies

9.4.1(a)

Insolvency Event

15.5.1

Invalidity Claim

11.6

Inventions

11.1.1

Investigator Initiated Study or IIS

1.100

Janssen

the Introduction

Janssen Antigen 1

3.2.1

Janssen Antigen 2

3.2.1

Janssen Antigen 3

3.2.2

Janssen Antigen 4

3.2.2

Janssen Antigen Binding Domains with respect to a Janssen Antigen

3.1.3

[***]

[***]

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

 

Defined Term

Section

[***]

[***]

Janssen Indemnitees

14.2

Janssen Manufacturing Standards

9.1.1(a)

Janssen Profit Share Patents

11.2.2

JMC

2.2.1

Joint Inventions

11.1.2(c)

Joint Patent Costs

11.2.3(b)

Joint Patents

11.1.2(c)

Joint Product-Specific Patents

11.2.3(c)

[***]

[***]

JRC

2.1.1

JSC

2.3.1

Licensed Product DMFs

8.3.1

Losses

14.1

MAA

1.97

Manufacturing License

5.1.2(a)(ii)

Materials

3.10

Next Generation Candidate

5.6.2

Non-breaching Party

15.2

Opt-In Exercise Date

6.3

Option Exercise Payment

10.2.4

[***]

[***]

[***]

[***]

Other Income

Exhibit 6.4

Other Janssen ABD Product

11.2.1(d)

Party

the Introduction

patent counsel

11.2.1(b)

[***]

[***]

[***]

[***]

Pharmacovigilance Agreement

8.5.1

Pivotal Clinical and Commercial Supply Agreement

9.4.2(c)

Pivotal Clinical Supplies

9.4.1(a)

Planned Fate Facility

9.2.1

POC Data Package

6.2

POC Data Package Delivery Date

6.2(d)

Pre-IND Collaboration Candidates

3.7.3

Product Claim

10.6.2

Product Infringement

11.3.1

Product License

5.1.2(a)(i)

[***]

[***]

Profit Share Product Exhibit

6.4

Prosecution

11.2.1(b)

Public Official

13.5.4

Purple Book

11.5

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

 

Defined Term

Section

Quarterly Net Sales

10.6.3(d)

Receiving Party

12.1

Regulatory Milestone Event

10.4.2

Rejected Candidates

3.7.1

Research Budget

3.3.2

Research Cost Report

10.2.1

Research License

5.1.1

Research Plan

3.3.1

Research Program Information

12.8.1

Research Program Inventions

5.4.2(a)

Research Program Inventions Cross License

5.4.2(a)

Reserved Antigens

3.2.2

[***]

[***]

Right of Reference

8.3.1

Royalty Term

10.6.2

Sales Milestone Event

10.5

Selection Date

3.7.3

Shared Development Costs

Exhibit 6.4

[***]

[***]

Step Down Date

10.6.3(a)

Subcontractor

7.7

Supplemental Application

1.97

Technology Transfer Plan

9.9.2

Term

15.1

[***]

[***]

Third Party Competitive Product

11.3.1

Unadjusted Quarterly Royalties

10.6.3(d)

[***]

[***]

U.S. Commercialization Option

Exhibit 6.4

USJCC

Exhibit 6.4

U.S. Pre-Tax Profits and Losses

Exhibit 6.4

Withholding Tax Action

10.12.2

 

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ARTICLE 2
Governance

2.1Joint Research Committee.

2.1.1JRC Formation; Composition.  The Parties shall establish a joint research
committee (the “JRC”) to oversee and direct the Parties’ activities under the
Research Programs during the applicable Antigen Research Terms.  The Parties
shall establish the JRC, and shall use [***] Efforts to do so within [***] days
after the Effective Date.  The JRC shall be composed of at least three (3)
employee representatives of each Party, each with scientific and technical
capabilities to carry out the responsibilities of the JRC and sufficient
seniority within the applicable Party to make decisions arising within the scope
of the JRC’s responsibilities.  Each Party may change its JRC representatives
from time to time in its sole discretion, effective upon written notice to the
other Party of such change.  The JRC shall be disbanded after the end of the
last Antigen Research Term (except to the extent it needs to be formed again to
perform duties relating to improvements under Section 5.6).  

2.1.2JRC Responsibilities.  The JRC shall: (a) oversee the implementation of the
Research Plans (other than the CMC Development activities in the Research Plans,
which shall be subject to the oversight of the JMC as described below in Section
2.2); (b) serve as a forum for and facilitate communications between the Parties
with respect to the activities conducted under each Research Plan during the
applicable Antigen Research Term (other than the CMC Development activities);
(c) prepare, discuss, and approve any amendments to a Research Plan in
accordance with Section 3.3.5, other than amendments to the CMC Development
activities; (d) prepare, discuss and approve the initial Research Plans for
Janssen Antigens 3 and 4 in accordance with Section 3.3.4, other than the CMC
Development activities included in such initial Research Plans; (e) select
Collaboration Candidates to further develop in IND Enabling Studies in
accordance with Section 3.7; (f) approve the IND submission for a Licensed
Product in accordance with Section 4.4.3 (other than the CMC portions thereof);
and (g) perform the other functions that are expressly delegated to the JRC in
this Agreement.  

2.1.3JRC Decision Making.  The JRC shall determine, approve or resolve Committee
Matters within the authority of the JRC by unanimous vote, with each Party’s
representatives on the JRC collectively having one (1) vote.  If the JRC
representatives of the Parties do not reach consensus as to a particular
Committee Matter within [***] days after such matter is first presented to the
JRC, after reasonable discussion and good faith consideration of each Party’s
comments, then:

(a)[***]

(b)[***]

(i)[***]

(ii)[***]

(iii)[***]  

[***].

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2.2Joint Manufacturing Committee.  

2.2.1JMC Formation; Composition.  The Parties shall establish a joint
manufacturing committee (the “JMC”).  The Parties shall establish the JMC, and
shall use [***] Efforts to do so within [***] days after the Effective
Date.  The JMC shall be composed of at least three (3) employee representatives
of each Party, each with scientific and technical capabilities to carry out the
responsibilities of the JMC and sufficient seniority within the applicable Party
to make decisions arising with the scope of the JMC’s responsibilities.  Each
Party may change its JMC representatives from time to time in its sole
discretion, effective upon written notice to the other Party of such change.

2.2.2JMC Responsibilities.  

(a)During the Antigen Research Term for a Janssen Antigen, the JMC shall: (i)
provide high-level oversight of the activities conducted by Fate under the
applicable Research Plan pertaining to [***] and activities conducted by Fate
pertaining to [***]; (ii) allocate responsibility for, and oversee the
implementation of, the [***] in the Research Plan; (iii) serve as a forum for
and facilitate communications between the Parties with respect to the CMC
Development activities conducted under the Research Plan; (iv) prepare, discuss,
and approve any amendments to the CMC Development activities included in the
Research Plan in accordance with Section 3.3.5 (including corresponding
amendments to the Research Budget), and the CMC Development activities included
in the initial Research Plans for Janssen Antigens 3 and 4 in accordance with
Section 3.3.4 (including the amounts budgeted for such activities in the
applicable Research Budget); (v) approve [***] in accordance with Section 4.4.3;
and (vi) perform the other functions that are expressly delegated to the JMC
during the Antigen Research Term in this Agreement.

(b)If Janssen exercises the Commercial Option for a Collaboration Candidate, the
JMC shall: (i) develop and approve a [***] in accordance with Section 9.1.2;
(ii) allocate responsibility for, and oversee the implementation of, the [***];
(iii) serve as a forum for and facilitate communications between the Parties
with respect to the CMC Development activities conducted under the CMC
Development Plan; (iv) prepare, discuss, and approve any amendments to the CMC
Development Plan in accordance with Section 9.1.2; (v) oversee Fate’s
Manufacture of Early Stage Clinical Supplies of Licensed Products in accordance
with Section 9.3; (vi) allocate responsibility for, and oversee the
implementation of, [***] in accordance with Sections 9.4 and 9.5; and (vii)
perform the other functions that are expressly delegated to the JMC in this
Agreement.

2.2.3JMC Decision Making.  The JMC shall determine, approve or resolve Committee
Matters within the authority of the JMC by unanimous vote, with each Party’s
representatives on the JMC collectively having one (1) vote.  If the JMC
representatives of the Parties do not reach consensus as to a particular
Committee Matter within [***] days after such matter is first presented to the
JMC, after reasonable discussion and good faith consideration of each Party’s
comments, then:

(a)[***]

(b)[***]

(c)[***]

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2.3Joint Steering Committee.

2.3.1JSC Formation; Composition.  If Janssen exercises any Commercial Option in
accordance with Section 4.3, the Parties shall establish a joint steering
committee (the “JSC”) to discuss and communicate regarding Janssen’s global
clinical Development and Commercialization of Licensed Products.  The Parties
shall use [***] Efforts to establish the JSC within [***] days after Janssen’s
first exercise of the Commercial Option with respect to any Collaboration
Candidate.  The JSC shall be composed of at least three (3) senior executives
from each Party.  Each Party may change its JSC representatives from time to
time in its sole discretion, effective upon written notice to the other Party of
such change.  

2.3.2JSC Responsibilities.  The JSC shall: (a) serve as a forum for discussions
regarding Janssen’s global Development and Commercialization of the Licensed
Products as described in this Agreement; and (b) if Fate exercises any Fate
Opt-In Option, have the responsibilities set forth in the Profit Share Product
Exhibit.  

2.3.3JSC Authority.  Except as provided in the Profit Share Product Exhibit, the
JSC shall be a forum for information exchange and discussion only with respect
to Licensed Products and has no decision-making authority.  

2.4Meetings and Minutes.  Each Committee shall hold meetings in accordance with
a schedule established by mutual written agreement of the Parties, and each
Committee shall meet at least once each Calendar Quarter, unless otherwise
agreed by the applicable Committee.  Each Committee may meet in person or by
means of teleconference, Internet conference, videoconference or other similar
communications equipment, as agreed to by the Parties; provided, however, that,
unless otherwise agreed by the Parties, each Committee shall hold at least two
(2) in-person meetings per year, with the location for such in-person meetings
alternating (on a Committee-by-Committee basis) between Fate’s and Janssen’s
facilities in the United States, or such other location as may be mutually
agreed upon by the members of the relevant Committee.  For each Committee, each
Party shall designate one of its representatives on such Committee to co-chair
the meetings for such Committee (each, a “Co-Chair”).  Each Party’s Co-Chair may
also call for special meetings to resolve particular matters requested by such
Party upon [***] Business Days’ prior written notice to the other Party’s
applicable Committee members.  Each Party shall bear its own expenses related to
participation in and attendance at such meetings by its Committee
representatives.  The Co-Chairs shall, with and through the assistance of the
Alliance Managers, coordinate and prepare the agenda for, and ensure the orderly
conduct of, the meetings of each Committee.  The Co-Chairs shall, with and
through the assistance of the Alliance Managers, solicit agenda items from
Committee members and provide an agenda, along with appropriate information for
such agenda, reasonably in advance of any meeting.  Such agenda shall include
all items requested by either Co-Chair for inclusion therein.  In the event a
Co-Chair or another Committee member from either Party is unable to attend or
participate in a meeting of a Committee, the Party whose Co-Chair or member is
unable to attend may designate a substitute co-chair or other representative for
such meeting.  Each Party, through its Co-Chair and Alliance Manager, shall
alternate responsibility for preparing written minutes of the meetings of each
Committee and shall provide such minutes to the Committee members for review no
later than [***] Business Days after the date of the meeting to which the
minutes pertain, which minutes shall become official if the Parties do not
provide any comments to such minutes within [***] Business Days of its receipt
(or such additional period of time as mutually agreed by the Parties) after the
Party entrusted with such responsibility at such meeting provides such minutes
to the Parties for review.  In the event that a Party provides comments to the
minutes within such [***] Business Day period (or such additional period of time
as mutually agreed by the Parties), the Committee members of each Party will
discuss such comments in good faith to resolve any discrepancies within [***]
Business Days after receipt of such comments.  

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2.5Subcommittees.  From time to time, each Committee may establish subcommittees
to perform particular tasks and oversee particular projects or activities within
the forming Committee’s authority.  Each such subcommittee shall be constituted
and shall operate as the forming Committee determines, provided that no
subcommittee shall have any decision-making authority, but shall instead make
recommendations to the forming Committee with respect to such matters within its
authority.  

2.6Limitations of Committee Authority. Each Committee shall only have authority
to determine, approve or resolve matters that such Committee is expressly
authorized to determine, approve or resolve under this Agreement (“Committee
Matters”).  No Committee has the authority to: (a) modify or amend the terms and
conditions of this Agreement; (b) waive or determine either Party’s compliance
with the terms and conditions of this Agreement; (c) decide any issue in a
manner that would conflict with the express terms and conditions of this
Agreement; (d) decide any issue for which this Agreement expressly requires a
Party’s approval or consent; or (e) resolve any Dispute under this Agreement,
including a Dispute as to whether a Committee Matter is subject to Janssen’s
final decision-making authority or a Dispute related to any payments.  

2.7Discontinuation of Committees. The activities to be performed by each
Committee shall solely relate to governance and information sharing under this
Agreement, and are not intended to be, or involve the delivery of, services.
Each Committee shall continue to exist for so long as this Agreement provides,
unless and until the first to occur of: (a) the Parties mutually agreeing to
disband the Committee; or (b) Fate providing written notice to Janssen of its
intention to disband and no longer participate in such Committee.  Once the
Parties mutually agree or Fate has provided written notice to disband such
Committee, such Committee shall have no further authority or duties under this
Agreement.  Thereafter, (i) each Party shall designate a contact person for the
exchange of information previously exchanged through such Committee, and (ii)
any decisions that are designated under this Agreement as being subject to the
review or approval of such Committee shall be made by mutual agreement of the
Parties directly (other than any matter that was subject to the final
decision-making authority of a Party under Section 2.1.3(b) or Section 2.2.3 of
this Agreement or Section 2.6.4 of the Profit Share Product Exhibit, which shall
be made directly by such Party), subject to the other terms and conditions of
this Agreement.  

2.8Alliance Managers. Promptly after the Effective Date, each Party shall
appoint an individual to act as the alliance manager for such Party (each, an
“Alliance Manager”).  The Alliance Managers shall not be members of any
Committee, but shall be permitted to attend meetings of any Committee as a
nonvoting observer.  The Alliance Managers shall be the primary point of contact
for the Parties regarding their collaboration under this Agreement and shall
facilitate communication regarding all activities under this Agreement,
including relating to decisions made by the Committees.  Each Party may change
its designated Alliance Manager from time to time upon notice to the other
Party.  The name and contact information for each Alliance Manager and any
replacement shall be promptly provided to the other Party.

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ARTICLE 3
Research

3.1Overview.  As further described in this ARTICLE 3 and other provisions of
this Agreement:

3.1.1During the Antigen Research Term applicable to each Janssen Antigen, the
Parties will collaborate, including through Fate’s practice of Fate Platform
Technology, to conduct the Research Program for each Janssen Antigen selected by
the Parties in accordance with Section 3.2, with the objective of, for each
Janssen Antigen, advancing at least one Collaboration Candidate through
completion of IND Enabling Studies.

3.1.2For each Janssen Antigen, there will be a single Research Plan, where such
Research Plan may incorporate multiple Collaboration Candidates, including
Collaboration Candidates that are CAR-NK Cells, CAR-T Cells or both.  If the
Parties update a Research Plan to incorporate activities for a Next Generation
Candidate in accordance with Section 5.6, such activities shall become part of
the original Research Program for the applicable Janssen Antigen.

3.1.3For each Research Program, Janssen will designate and provide no more than
[***] Janssen Antigen Binding Domains to Fate for the purpose of generating
Collaboration Candidates incorporating such Janssen Antigen Binding
Domain.  Janssen may provide a Janssen Antigen Binding Domain to Fate either by
providing tangible materials containing the binding domain or by disclosing the
amino acid sequence of the binding domain.  References in this Agreement to
“Janssen Antigen Binding Domains with respect to a Janssen Antigen” means all
Janssen Antigen Binding Domains designated and provided to Fate by Janssen for
the particular Research Program, even if none of the resulting Collaboration
Candidates contain such Janssen Antigen Binding Domain.  [***].

3.2Janssen Antigens.  There shall be at least two (2) and up to four (4) Janssen
Antigens, selected as follows:

3.2.1Janssen Antigens 1 and Janssen Antigen 2. As of the Effective Date, the
Parties have agreed on the initial two (2) Janssen Antigens: [***] is referred
to as “Janssen Antigen 1” and [***] is referred to as “Janssen Antigen 2”.  The
Parties acknowledge that the initial objective of the Research Plan for Janssen
Antigen 1 is to Research Collaboration Candidates that could treat [***], and
the initial objective of the Research Plan for Janssen Antigen 2 is to Research
Collaboration Candidates that could treat [***].  These initial objectives do
not limit the potential scope of the Research Plan, and do not create a field
limitation on any of the licenses granted to Janssen under ARTICLE 5.  

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3.2.2Janssen Antigen 3 and Janssen Antigen 4.  As of the Effective Date, the
Parties have identified the [***] antigens listed on Exhibit 3.2.2 as the
antigens that are reserved for selection by Janssen under this Agreement (the
“Reserved Antigens”).  Within [***] months after the Effective Date (the
“Antigen Selection Period”), Janssen may select any Reserved Antigen as “Janssen
Antigen 3” and as “Janssen Antigen 4” by giving written notice to Fate,
[***].  If Janssen has not selected both Janssen Antigen 3 and Janssen Antigen 4
prior to the expiration of the Antigen Selection Period, Janssen will have the
right to extend such Antigen Selection Period by an additional [***] months by
giving written notice to Fate; provided, however, that such [***]-month
extension will be effective only if Janssen removes [***] Reserved Antigens from
Exhibit 3.2.2 at the time of such extension (in which case such removed Reserved
Antigens will no longer be Reserved Antigens and shall be removed from Exhibit
3.2.2).  For clarity, Janssen may select Janssen Antigen 3 and Janssen Antigen 4
at different times during such period (and, upon each such selection, such
selected Reserved Antigen will be a Janssen Antigen and will no longer be a
Reserved Antigen and shall be removed from Exhibit 3.2.2).  Fate will not enter
into an agreement with a Third Party relating to, or grant any rights to any
Third Party with respect to, any CAR-T Cells or CAR-NK Cells expressing a CAR
Directed to any antigen that is then-currently a Reserved Antigen.  For clarity,
upon expiration of such Antigen Selection Period (or, if extended, such
additional [***] month period) after the Effective Date, all Reserved Antigens
on Exhibit 3.2.2 will promptly be removed from Exhibit 3.2.2 and no antigens
will be Reserved Antigens under this Agreement.

3.2.3Replacement of Janssen Antigen 2 and Substitution of Reserved
Antigens.  Janssen may replace Janssen7 Antigen 2 with a Reserved Antigen, or
substitute any Reserved Antigen with another antigen, in each case subject to
the following provisions of this Section 3.2.3.

(a)[***].

(b)[***].

(c)As of the Effective Date, the antigen [***] is not included as a Reserved
Antigen on Exhibit 3.2.2 because [***].  If such antigen becomes available
during the Antigen Selection Period, Fate shall promptly notify
Janssen.  Janssen may substitute a Reserved Antigen with such antigen by written
notice to Fate within [***] days of such notice from Fate.  Such substitution
shall not be subject to Fate’s prior written approval.  After any such
substitution, such antigen will be a Reserved Antigen and such original Reserved
Antigen shall no longer be a Reserved Antigen and shall be removed from Exhibit
3.2.2.

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3.3Research Plans.

3.3.1Content. The Parties shall conduct each Research Program for each Janssen
Antigen during the Antigen Research Term pursuant to a comprehensive written
research plan (each, a “Research Plan”).  

(a)The objective of each Research Program shall be to identify, develop and
optimize Collaboration Candidate(s), and to further develop at least one (1)
such Collaboration Candidate in IND Enabling Studies and, if Janssen exercises a
Commercial Option for such Collaboration Candidate in accordance with Section
4.3, submit an IND for at least one (1) Licensed Product.  The Research Plan for
a Research Program shall set forth: (i)  all activities to be conducted by each
of the Parties with the aim to achieve such objective, including the activities
described in Exhibit 3.3.3, and an allocation of activities between the Parties
that is consistent with Exhibit 3.3.3; (ii) the resources to be allocated to and
the anticipated number and type of FTEs to be dedicated to performing each of
such activities; (iii) the projected timeline for completing, and milestone
events to be achieved for, such activities; (iv) the criteria for evaluating and
selecting Collaboration Candidates when determining which ones will be further
developed in IND Enabling Studies (the “IND Selection Criteria”); (v) a
description of the DC Data Package for such Research Program; and (vi) a
description of the IND Data Package for such Research Program.  

(b)Data Packages.  For each Research Program with respect to a Janssen Antigen,
the Research Plan shall describe the contents of the DC Data Package and IND
Data Package for such Research Program.  

3.3.2Research Budget.   Each Research Plan shall include a rolling, [***] year
budget for Research Costs to be incurred by each Party and its Affiliates in
conducting the activities described in the Research Plan that are scheduled to
be commenced or conducted during the [***] (with respect to such Calendar Years,
the “Research Budget”).  The Research Budget shall be broken down by Calendar
Quarter and, for each Calendar Quarter, shall be broken down by Research FTE
Costs and Out-of-Pocket Expenses.  The [***] of each Research Budget shall be
[***], and the [***] shall serve as [***].

3.3.3Responsibilities of the Parties.  

(a)Janssen shall generate and provide to Fate the Janssen Antigen Binding
Domains for use in each Research Program.  

(b)Descriptions of the key steps and activities that will be taken to generate
Collaboration Candidates of a particular CAR Cell Type Directed to the
applicable Janssen Antigen under each Research Plan are set forth on Exhibit
3.3.3.  Unless the JRC determines otherwise, each Party will have the
responsibilities under each Research Program that are set forth on Exhibit
3.3.3.  

(c)At the request of either Party, the JRC will also consider and determine
whether Janssen should conduct itself or transfer assays, models and materials
to Fate that are useful for Fate to conduct its Research Plan activities.

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3.3.4Initial Research Plans; Janssen Antigens 3 and 4 Research Plans.

(a)As of the Effective Date, the Parties have agreed on the initial Research
Plans for Janssen Antigen 1 and Janssen Antigen 2, which are attached hereto as
Exhibit 3.3.4.  

(b)Within [***] days of the selection of each of Janssen Antigen 3 and Janssen
Antigen 4 by Janssen pursuant to Section 3.2.2, the JRC shall prepare, discuss,
and approve the Research Plan (including the Research Budget) for such Janssen
Antigen, subject to the JMC’s responsibility for the portions relating to CMC
Development activities as described in Section 3.3.5(d).  Such Research Plan
shall be, in form and substance (including with respect to the activities to be
conducted thereunder and the number of FTEs needed to conduct such activities),
substantially similar to the form and substance of the Research Plans for
Janssen Antigen 1 and Janssen Antigen 2.  

(c)In the event that the JRC does not reach consensus on the Research Budget for
the initial Research Plan for Janssen Antigen 3 or Janssen Antigen 4 within such
[***]-day period, then such Research Budget shall equal [***]; provided,
however, that in no event shall a Research Plan require Fate to conduct
activities that, taken as a whole, would result in Fate incurring Research Costs
in excess of the applicable Research Budget for such Research Plan.  The
Research Plans for Janssen Antigen 3 and Janssen Antigen 4 shall, when
practicable, stage activities based on the data, results and information
generated from the Research Programs for Janssen Antigen 1 and Janssen Antigen
2.  

3.3.5Updates and Amendments.  

(a)The JRC shall regularly review the Research Plans and the progress of
activities being conducted under the Research Plans, subject to the JMC’s
responsibility for the portions relating to CMC Development activities as
described in Section 3.3.5(d). During the Antigen Research Term for each Janssen
Antigen, the JRC and the JMC (with respect to CMC Development activities) shall
review the applicable Research Plan annually and prepare any recommended
updates.  No later than [***] of the then-current Calendar Year, the JRC shall
prepare an updated Research Budget covering the next [***].  After each Party
performs its internal budgeting process, the JRC shall use reasonable efforts to
approve such updates no later than [***] of each Calendar Year.  

(b)Either Party may propose amendments to the Research Plan, including the
Research Budget, for any Janssen Antigen from time to time, including (i)
amendments that take into account completion, commencement, or cessation of
activities contemplated in the then-current Research Plan for, or any newly
available information related to, the Janssen Antigen or the Research Program
and (ii) amendments that would include Research of a Collaboration Candidate of
a different CAR Cell Type for any Janssen Antigen under the Research Program.
The JRC shall discuss whether to approve such proposal at its next meeting,
subject to the JMC’s responsibility for the portions relating to CMC Development
activities as described in Section 3.3.5(d).  

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(c)Such updates and amendments shall be effective upon JRC approval, subject to
the JMC’s responsibility for the portions relating to CMC Development activities
as described in Section 3.3.5(d).

(d)The JMC will have authority for [***].

3.4Research Term Extension.

3.4.1Extension for Ongoing Activities.  In the event there are any activities
under the then-current Research Plan with respect to a particular Janssen
Antigen that have not been completed before the expiration of the Initial
Research Term, the Antigen Research Term for such Janssen Antigen shall be
extended automatically until such activities are completed; provided, however,
that the Research Plan shall not be modified or amended during such extension
period without the Parties’ mutual written agreement.  

3.4.2Extension or Reinstatement for Functional Improvements.  

(a)If, during the Antigen Research Term, the JRC updates or the Parties update
the Research Plan for a Janssen Antigen pursuant to Section 5.6 to include
activities for a Next Generation Candidate Directed to such Janssen Antigen, the
Antigen Research Term will be extended automatically with respect to such
Janssen Antigen to take into account such update.

(b)If, during the Improvement Period with respect to a Licensed Product, the JRC
updates or the Parties update the Research Plan for the Janssen Antigen that is
targeted by such Licensed Product pursuant to Section 5.6 to include activities
for a Next Generation Candidate Directed to such Janssen Antigen, the Antigen
Research Term will be reinstated with respect to such Janssen Antigen solely as
necessary to conduct such activities, and such reinstated Antigen Research Term
shall commence on the date the JRC updates such Research Plan and end when the
applicable activities are completed.  

3.5Conduct of Research.  Each Party shall use [***] Efforts to carry out the
activities assigned to it in the Research Plans in accordance with the timelines
set forth in such plans.  Each Party shall conduct such activities in good
scientific manner, and in compliance with all applicable Laws.  Each Party shall
keep the other Party reasonably informed as to the progress of the conduct of
the Research Plans through meetings of the JRC.

3.6Research Cost.  Janssen shall be responsible for one hundred percent (100%)
of the costs and expenses incurred by Janssen in performing the Research
Plans.  Janssen shall reimburse Fate for Research Costs incurred by or on
account of Fate in performing the Research Plans pursuant to Section 10.2.

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3.7IND Enabling Studies.

3.7.1For each Research Plan, after Fate completes the activities described in
Step 5 in Exhibit 3.3.3, Fate shall promptly prepare and deliver to Janssen a
complete DC Data Package for the Collaboration Candidates that the JRC is
considering for further development (such Collaboration Candidates, the “DC
Collaboration Candidates”).  The “DC Data Package” means a collection of all
then-available information, data, and results arising from the completion of
such activities by Fate for such DC Collaboration Candidates so that a
determination may be made as to whether any of such DC Collaboration Candidates
should be further developed in IND Enabling Studies.  Any cells (including
Collaboration Candidates) that are generated in the course of generating the DC
Collaboration Candidates included in a particular DC Data Package, but not
included in such DC Data Package, will be deemed to be “Rejected Candidates.”

3.7.2If Fate delivers a DC Data Package and Janssen notifies Fate within [***]
days following receipt that such DC Data Package is not complete, and such
notice specifies the information, data or results described in the applicable
Research Plan with respect to such Collaboration Candidates that was intended to
be included and was not included in such DC Data Package, Fate shall generate or
provide the missing information, data or results as soon as possible; provided,
however, that Fate shall not be required to generate or provide any information,
data, or results beyond those specified in the applicable Research Plan.    

3.7.3After the complete DC Data Package is delivered, the JRC shall determine
within [***] days (as such period may be extended by the JRC) whether any of the
applicable DC Collaboration Candidates should be further developed in IND
Enabling Studies; provided, however, if the JRC does not reach consensus on such
matter during such period, then such period shall be extended by an additional
[***] Business Days to [***] to further develop any such DC Collaboration
Candidate(s) in IND Enabling Studies shall be deemed the “Selection Date” for
such DC Collaboration Candidate(s), and such DC Collaboration Candidate(s) shall
be deemed to be “Pre-IND Collaboration Candidates.”  With respect to any such DC
Collaboration Candidates that are not selected for further development as a
Pre-IND Collaboration Candidate, the JRC will determine whether to maintain such
DC Collaboration Candidates (to the extent feasible) or whether to destroy such
DC Collaboration Candidates; provided, however, that in no event will Fate be
required to maintain any DC Collaboration Candidates for more than [***]
days.  A DC Collaboration Candidate will be deemed to be a Discontinued
Collaboration Candidate, and will become subject to Section 3.7.6, upon the
earlier of: (i) the date on which the JRC decides to destroy such candidate,
(ii) the date on which Fate destroys such candidate in accordance with the
immediately preceding sentence or (iii) the last day of the Antigen Research
Term for the applicable Janssen Antigen if such candidate has not been selected
for further development as  a Pre-IND Collaboration Candidate before such day.
For clarity, the JRC may select (or, if the JRC does not reach consensus,
Janssen may select by exercising its final decision-making authority under
Section 2.1.3) a DC Collaboration Candidate as a Pre-IND Collaboration Candidate
even if such DC Collaboration Candidate does not satisfy the IND Selection
Criteria.  

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3.7.4Following the Selection Date, the JRC shall update the Research Plan as
necessary to set forth the specific IND Enabling Studies for the Pre-IND
Collaboration Candidate(s) and related activities to be conducted.  If the JRC
or Janssen has not previously selected a Collaboration Candidate as a Pre-IND
Collaboration Candidate with respect to the applicable Janssen Antigen, Janssen
shall pay to Fate a milestone fee in accordance with Section 10.2.3.  Each Party
shall then perform such additional activities allocated to it under the
applicable Research Plan with respect to such IND Enabling Studies for each
Pre-IND Collaboration Candidate.  

3.7.5Any Pre-IND Collaboration Candidate for which Janssen does not exercise its
Commercial Option during the applicable Commercial Option Term shall be deemed a
Discontinued Collaboration Candidate in accordance with Section 4.3.2 or 4.6, as
applicable.  

3.7.6Fate shall destroy any Rejected Candidates, and Fate and Janssen shall
destroy any Discontinued Collaboration Candidates, including, in each case, all
Precursor iPSCs and CD34 Compositions thereof, in the ordinary course.  Neither
Party will maintain or use any tangible materials regarding any Rejected
Candidates or Discontinued Collaboration Candidates unless otherwise agreed by
the Parties in writing.  Any information or data generated with respect to the
Rejected Candidates and Discontinued Collaboration Candidates shall be subject
to the license under Section 5.4.1.  Given the nature of the Rejected Candidates
and Discontinued Collaboration Candidates, and the competitive damage that may
result to a Party upon unauthorized maintenance or use of the Rejected
Candidates or Discontinued Collaboration Candidates, the Parties agree that
monetary damages may not be a sufficient remedy for any breach of this Section
3.7.6.  In addition to all other remedies, each Party shall be entitled to seek
specific performance and injunctive and other equitable relief as a remedy for
any breach or threatened breach of this Section 3.7.6 by the other Party.

3.8Records; Reports.

3.8.1Records. Fate (and Janssen, to the extent any activities are assigned to
Janssen under a Research Plan) shall maintain, consistent with its then-current
internal policies and practices, and cause its employees and Subcontractors to
maintain, records and laboratory notebooks of its activities under each Research
Plan for each Janssen Antigen in sufficient detail and in a good scientific
manner appropriate for regulatory and intellectual property protection
purposes.  If requested by Janssen, Fate shall provide Janssen with a copy of
any such records of Fate, except that Fate may redact any portion of such
records that relate to any Fate Confidential Methods.

3.8.2Reports. Fate (and Janssen, to the extent any activities are assigned to
Janssen under a Research Plan) shall report to Janssen (or Fate, if applicable)
through the JRC its results in conducting activities under the Research Plan for
each Janssen Antigen. For each Research Program, Fate shall provide the JRC with
the deliverables set forth in the Research Plan for such Research Program,
including summaries of the information, data and results generated under each
Research Program, in accordance with any timelines set forth in the Research
Plan, and if reasonably requested by Janssen any raw data relating to such
activities. In no event will Fate be required to provide Janssen or the JRC any
information, data, or results that Fate reasonably determines to be any Fate
Confidential Methods.

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3.9Subcontracting.  Each Party may fulfill its obligations under the Research
Plan through subcontracting to a Third Party contractor or contract service
organization; provided, however, that: (a) such Party obtains the other Party’s
prior written consent to subcontract the applicable activities to the applicable
Third Party, not to be unreasonably withheld or delayed; (b) such subcontracting
shall not adversely affect its ability to fulfill its obligations under this
Agreement or the other Party’s rights under this Agreement; (c) any such Third
Party contractor to whom a Party discloses Confidential Information of the other
Party shall enter into an appropriate written agreement obligating such Third
Party contractor to be bound by obligations of confidentiality and restrictions
on use of such Confidential Information that are no less restrictive than the
obligations in ARTICLE 12; (d) the Party engaging such Third Party will obligate
such Third Party contractor to agree in writing to assign or license (with the
right to grant sublicenses) to such Party any inventions (and Patents covering
such inventions) made by such Third Party contractor in performing such
subcontracted activities; and (e) the Party engaging such subcontractor shall at
all times be responsible for the performance of such Third Party contractor and
shall remain primarily responsible for the fulfillment of its obligations under
this Agreement even after such obligations are subcontracted to such Third Party
contractor.

3.10Materials. To facilitate the performance of activities under the Research
Programs, either Party may provide to the other Party certain biological
materials or chemical compounds owned by or licensed to the supplying Party for
use by the other Party (such materials or compounds and any progeny,
collectively, “Materials”). All such Materials shall remain the sole property of
the supplying Party, shall be used by the receiving Party solely to perform its
obligations under the Research Programs, shall not be used or delivered to or
for the benefit of any Third Party without the prior written consent of the
supplying Party, and shall not be used in research or testing involving human
subjects, unless expressly agreed. The Materials supplied under this Section are
supplied “as is” and must be used with prudence and appropriate caution in any
experimental work, since not all of their characteristics may be known.

3.11Potential [***].  In addition to the Research Programs to be conducted
pursuant to this Agreement, during the period commencing on the Effective Date
and ending on [***], the Parties will discuss whether to enter into an agreement
for [***].  During such period, Fate will not grant any rights to any commercial
Third Party with respect to [***]. Without limiting the foregoing, during such
period, Fate will be permitted to conduct (i) internal research and development,
including clinical development and Clinical Trials, of [***], and (ii) sponsored
research with academic investigators for the research and development, including
clinical development and Clinical Trials (but not commercialization), of [***].

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ARTICLE 4
Commercial Option

4.1Commercial Option.  Fate hereby grants to Janssen an exclusive option to
obtain the Commercial License under Section 5.1.2 and Section 5.1.3 for each
Pre-IND Collaboration Candidate exercisable in accordance with Section 4.3
(each, a “Commercial Option”).  Janssen shall not have the right to, and shall
not, Develop (except pursuant to the Research License), Manufacture or
Commercialize any Collaboration Candidate, or any product containing such
Collaboration Candidate, other than those Pre-IND Collaboration Candidates for
which Janssen exercises the Commercial Option with respect to such Pre-IND
Collaboration Candidate pursuant to Section 4.3.  

4.2Delivery of IND Data Packages; Preparation of Master iPSC Bank.  

4.2.1With respect to each Pre-IND Collaboration Candidate, Fate shall promptly
prepare and deliver to Janssen a complete IND Data Package within [***] days
following the completion of all IND Enabling Studies for such Pre-IND
Collaboration Candidate set forth in the Research Plan.  The “IND Data Package”
means a collection of all then-available information, data, and results from IND
Enabling Studies for such Pre-IND Collaboration Candidate.  Fate will include in
the IND Data Package evidence of the early phase CMC Development process for
such Pre-IND Collaboration Candidate, with data demonstrating process
manufacturability for future adaption into the pivotal and commercial
Manufacturing process.  

4.2.2If Fate delivers an IND Data Package and Janssen notifies Fate within [***]
days following receipt that such IND Data Package is not complete, and such
notice specifies the information, data or results described in the applicable
Research Plan that was intended to be included and was not included in such IND
Data Package, Fate shall generate or provide the missing information, data and
results as soon as possible; provided, however, that Fate shall not be required
to generate or provide any information, data, or results beyond those specified
in the applicable Research Plan.  The date on which Janssen is in receipt of an
IND Data Package for a Pre-IND Collaboration Candidate (together with any such
missing information as set forth above) shall be deemed the “IND Data Package
Delivery Date” with respect to such Collaboration Candidate.  

4.2.3Fate shall also make available such other information relating to such
Pre-IND Collaboration Candidate as Janssen may reasonably request in order to
make an informed decision regarding whether to exercise its Commercial Option
with respect to such Pre-IND Collaboration Candidate; provided, however, that
Janssen shall not have a right to require that Fate (i) provide any information,
data, or results arising outside the scope of the Research Plan or that relates
to the Fate Confidential Methods, (ii) perform any further activities with
respect to such Pre-IND Collaboration Candidate that are not set forth in the
Research Plan, or (iii) generate or prepare information, data or results that
would require Fate to incur material additional expenditures (unless such
activity is set forth in the Research Plan).  Janssen shall make its request, if
any, for such additional information, data or results within [***] days after
the receipt of the applicable IND Data Package, and Fate shall provide such
additional information, data and results to Janssen no later than [***] days
after Janssen’s request.

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4.2.4With respect to each Pre-IND Collaboration Candidate, promptly following
the completion of all IND Enabling Studies for such Pre-IND Collaboration
Candidate set forth in the Research Plan, Fate shall prepare, test, qualify and
release a cryopreserved Master iPSC Bank for such Pre-IND Collaboration
Candidate for commencement of IND-enabling pilot manufacture of such Pre-IND
Collaboration Candidate by Fate under this Agreement, and shall notify Janssen
in writing upon completion of such activities.      

4.3Option Exercise.  

4.3.1Option Exercise.  

(a)If Janssen desires to exercise its Commercial Option with respect to a
Pre-IND Collaboration Candidate, it may do so at any time during the applicable
Commercial Option Term by giving Fate written notice of exercise specifying the
applicable Pre-IND Collaboration Candidate (the “Exercise Notice” and, subject
to Section 4.3.2, the first Business Day after Fate’s receipt of such notice,
the “Exercise Effective Date”).  Each Pre-IND Collaboration Candidate as to
which Janssen has exercised a Commercial Option during the applicable Commercial
Option Term shall automatically be a Licensed Collaboration Candidate upon the
Exercise Effective Date, subject to Section 4.3.2.  For clarity, the Commercial
Option is exercisable on a Pre-IND Collaboration Candidate-by-Pre-IND
Collaboration Candidate basis during the applicable Commercial Option Term for
each such Pre-IND Collaboration Candidate.  Within [***] days after the Exercise
Effective Date, Fate will deliver to Janssen non-disturbance agreements (in a
form mutually acceptable to the Parties) executed by each secured lender of
record of Fate that holds a senior security interest in any of the intellectual
property subject to the Commercial License (if any), consenting to the
Commercial License and agreeing not to disturb Janssen’s interest in such
intellectual property in the event of foreclosure of such security interest for
so long as Janssen is in compliance with the terms and conditions of this
Agreement.

(b)“Commercial Option Term” means, with respect to a Pre-IND Collaboration
Candidate, the time period [***] (the “Commercial Option Start Date”), and (z)
ending on the date that is [***] days after the Commercial Option Start Date for
such Collaboration Candidate[***].  Notwithstanding the foregoing, if Janssen is
stayed from exercising its Commercial Option for a Pre-IND Collaboration
Candidate during such [***] day period by the filing of a petition by Fate under
the Bankruptcy Code or otherwise under the Bankruptcy Code, the Commercial
Option Term for such Pre-IND Collaboration Candidate shall not end before the
date that is [***] days after the lifting or expiration of such stay.

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4.3.2Clearance Date.  Notwithstanding the foregoing, if Janssen determines a
filing or submission with respect to the exercise of a Commercial Option under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”) or any
antitrust, competition or merger control Law applicable to such exercise
(collectively, “Competition Laws” and, such filing or submission, “Competition
Law Filings”) is required or advisable, Janssen shall provide, prior to or
concurrently with its exercise of the Commercial Option pursuant to Section
4.3.1, written notice to Fate that the exercise of the Commercial Option will be
subject to Competition Law Filings.  If Janssen so notifies Fate, the provisions
of Section 17.12 shall apply. Fate shall provide to Janssen any information
reasonably requested by Janssen in its assessment of potential notifications
under applicable Competition Laws pursuant to this Section 4.3.2.  In such
event, the applicable Commercial Option Term will automatically be tolled until
the Clearance Date, and the Exercise Effective Date will be deemed to be the
date that is the Clearance Date.  Following the earlier occurrence of: (i) the
FTC or DOJ obtains a preliminary injunction against the Parties to enjoin the
transactions contemplated by the applicable Exercise Notice or (ii) the
Clearance Date does not occur within [***] days after the Competition Law
Filing, Janssen shall have the right, but not the obligation, to withdraw the
applicable Exercise Notice by delivery of written notice to Fate.  Immediately
upon such a withdrawal, the applicable Exercise Notice shall become null and
void and have no further force or effect, the Commercial Option Term shall
expire and the applicable Pre-IND Collaboration Candidate shall be deemed to be
a Discontinued Collaboration Candidate.

4.4Effect of Option Exercise.  If Janssen exercises the Commercial Option with
respect to a particular Pre-IND Collaboration Candidate in accordance with
Section 4.3, then upon and after the occurrence of the Exercise Effective Date,
the following provisions of this Section 4.4 shall apply.

4.4.1Commercial License.  Such particular Pre-IND Collaboration Candidate will
be deemed a Licensed Collaboration Candidate, and the Commercial License granted
to Janssen under Section 5.1.2 shall apply to such Licensed Collaboration
Candidate and the corresponding Licensed Products.    

4.4.2Option Exercise Payment.  If Janssen has not previously exercised the
Commercial Option for any other Pre-IND Collaboration Candidate with respect to
the applicable Janssen Antigen, Janssen shall pay to Fate the Option Exercise
Payment in accordance with Section 10.2.4.

4.4.3IND Filing.  The Parties shall, in accordance with the applicable Research
Plan, commence the preparation of an IND application for a Licensed Product for
the applicable Licensed Collaboration Candidate.  If, at the time of the
Exercise Effective Date for the Licensed Collaboration Candidate, there are IND
Enabling Studies being conducted for other Pre-IND Collaboration Candidates that
were included in the same DC Data Package as the Licensed Collaboration
Candidate, Janssen may elect [***] Janssen will decide whether to exercise the
Commercial Option for any of such other Pre-IND Collaboration Candidate in
accordance with Section 4.3 and for which of such candidates IND applications
should be prepared.  Janssen shall make the IND application decision no later
than [***] days after the IND Data Package Delivery Date for [***].  Fate shall
be primarily responsible for the preparation of the IND application for such
Licensed Product, except that Janssen shall prepare the clinical trial
protocol.  Fate shall provide the IND application to Janssen for review and
comment, and to the JRC for review and approval (and to the JMC for review and
approval of the CMC portions of such application), prior to submitting such
application to the FDA.  Following JRC and JMC approval, Fate shall promptly
submit such IND application to the FDA for such Licensed Product. If Janssen
notifies Fate that it intends to conduct the first Clinical Trial in a country
outside the U.S., the Parties will discuss and agree upon responsibility for
preparation and submission of the CTA to the applicable Regulatory Authority in
such country.

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4.4.4Development Technology Transfer.  During the remainder of the Term with
respect to the applicable Licensed Collaboration Candidate, Fate shall
reasonably cooperate with Janssen to provide reasonable technical assistance,
including the transfer to Janssen of any Fate Product Know-How licensed to
Janssen under Section 5.1.2(a)(i) with respect to such Licensed Collaboration
Candidate, as reasonably necessary for Janssen to Develop [***], but not to
Manufacture, such Licensed Collaboration Candidate and Licensed Products
containing such Licensed Collaboration Candidate; provided, however, that any
transfer, use and disclosure of any Fate Confidential Methods shall be limited
to those set forth under Section 5.3 and subject to Section 5.3.  Fate’s
cooperation under this Section 4.4.4 may be carried out by providing Janssen
with reasonable access by teleconference or, during the first [***] months after
the Exercise Effective Date, in-person at Fate’s facilities to those Fate
personnel knowledgeable with respect to Development of such Licensed
Collaboration Candidate and Licensed Products containing such Licensed
Collaboration Candidate, but such teleconference or in-person assistance shall
not extend beyond the scope of technology transfer as set forth above.

4.4.5License to Discontinued Collaboration Candidates and Equivalents.  The
license granted to Janssen under Section 5.1.3 shall also apply to: (a)
Discontinued Collaboration Candidates of the same CAR Cell Type under the same
Research Program as the Licensed Collaboration Candidate; and (b) Equivalents of
(i) the Licensed Collaboration Candidate, (ii) the Discontinued Collaboration
Candidates described in clause (a) and (iii) any Licensed Product containing
either the Licensed Collaboration Candidate or Discontinued Collaboration
Candidates described in clause (a).

4.5Ongoing Activities.  If there is more than one (1) Pre-IND Collaboration
Candidate for which IND Enabling Studies are being conducted under the Research
Plan for a Janssen Antigen, Janssen’s exercise of the Commercial Option (or the
expiration of the Commercial Option Term) with respect to one of such Pre-IND
Collaboration Candidates will not terminate or modify the work under such
Research Plan for other Collaboration Candidate(s) of the same CAR Cell Type,
unless the Parties otherwise agree.  In addition, if a Research Program includes
Research for both CAR-NK Cells and CAR-T Cells, Janssen’s exercise of the
Commercial Option (or the expiration of the Commercial Option Term) with respect
to any Collaboration Candidate for one CAR Cell Type will not terminate or
modify the work under such Research Plan for Collaboration Candidates of the
other CAR Cell Type, unless the Parties otherwise agree.

4.6Non-Exercise of Option. If Janssen fails to give the Exercise Notice on or
before the expiration of the applicable Commercial Option Term for a Pre-IND
Collaboration Candidate or notifies Fate in writing prior to the expiration of
the applicable Commercial Option Term that Janssen will not be exercising its
Commercial Option for such Pre-IND Collaboration Candidate, then the Commercial
Option with respect to such Pre-IND Collaboration Candidate shall expire upon
the earlier of the expiration of the Commercial Option Term or the delivery of
such notice, and Section 5.10.2(a) shall apply thereafter with respect to such
Pre-IND Collaboration Candidate.  Such Pre-IND Collaboration Candidate shall
thereupon be deemed a Discontinued Collaboration Candidate.

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ARTICLE 5
Grant Of Rights; Exclusivity

5.1Licenses To Janssen.  

5.1.1Research License.  Subject to the terms and conditions of this Agreement,
during the Antigen Research Term for each Janssen Antigen, Fate hereby grants to
Janssen a non-exclusive, royalty-free, non-transferable (except as permitted
under Section 17.4) license in the Territory, with the right to grant
sublicenses solely in accordance with Section 5.5.1, under Fate Research Patents
and Fate Research Know-How solely as and to the extent necessary to enable
Janssen to perform Janssen’s obligations as set forth under the Research Plan
for each Janssen Antigen (including through the engagement of subcontractors in
accordance with Section 3.9) (the “Research License”).  For the avoidance of
doubt, (a) except as otherwise expressly set forth in the Research Plan for the
Janssen Antigen, Janssen shall not conduct any Development, Manufacture, or
Commercialization of any Collaboration Candidate, or any product containing any
Collaboration Candidate, unless and until such time as Janssen exercises its
Commercial Option in accordance with Section 4.3 for such Collaboration
Candidate and such Collaboration Candidate becomes a Licensed Collaboration
Candidate, (b) if Janssen does not exercise its Commercial Option with respect
to a Collaboration Candidate during the applicable Commercial Option Term in
accordance with Section 4.3, the Research License granted to Janssen under this
Section 5.1.1 shall expire with respect to such Collaboration Candidate upon
expiration of such Commercial Option Term; and (c) if Janssen terminates this
Agreement under Section 15.3 with respect to any particular Janssen Antigen
during the Antigen Research Term, then the Research License granted to Janssen
under this Section 5.1.1 with respect to such Janssen Antigen shall terminate in
accordance with Section 15.7.1(a) and this Agreement shall terminate with
respect to such Janssen Antigen in accordance with Section 15.3.  During the
Antigen Research Term for each Janssen Antigen, Fate shall not enter into an
agreement with a Third Party relating to, or otherwise grant any rights to any
Third Party with respect to, any CAR Cell Construct expressing a CAR Directed to
such Janssen Antigen.  

5.1.2Commercial License.  

(a)Subject to the terms and conditions of this Agreement (including ARTICLE 9),
upon and as of the Exercise Effective Date for a Licensed Collaboration
Candidate and for the remainder of the Term with respect to such Licensed
Collaboration Candidate, Fate hereby grants to Janssen:

(i) an exclusive (even as to Fate, except solely to the extent necessary for
Fate to exercise its rights and perform its obligations under this Agreement),
non-transferable (except as provided in Section 17.4), royalty-bearing license
(or sublicense, as applicable), with the right to grant sublicenses solely in
accordance with Section 5.5, under the Fate Product Patents and Fate Product
Know-How solely to: (x) use, Develop, have Developed, sell, offer to sell, have
sold, promote, distribute, import, export and otherwise Commercialize such
Licensed Collaboration Candidate and Licensed Products containing such Licensed
Collaboration Candidate in the Field in the Territory and (y) [***] (the
“Product License”); and

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(ii)a co-exclusive (with Fate), non-transferable (except as provided in Section
17.4) license (or sublicense, as applicable), with the right to grant
sublicenses solely in accordance with Section 5.5 and Section 9.10, under the
Fate Product Patents and Fate Product Know-How solely to: (x) [***] (the
“Manufacturing License”).

(b)The Product License and Manufacturing License shall collectively be deemed
the “Commercial License” with respect to the applicable Licensed Collaboration
Candidate and Licensed Products containing such Licensed Collaboration
Candidate.

5.1.3License to Discontinued Collaboration Candidates and Equivalents.  Subject
to the terms and conditions of this Agreement, upon and as of the Exercise
Effective Date for a Licensed Collaboration Candidate and effective only for the
remainder of the Term with respect to such Licensed Collaboration Candidate,
Fate hereby also grants to Janssen a Commercial License with respect to:

(a)All Discontinued Collaboration Candidates, then existing or becoming a
Discontinued Collaboration Candidate by operation of this Agreement
subsequently, of the same CAR Cell Type under the same Research Program as such
Licensed Collaboration Candidate; and

(b)Equivalents of (i) such Licensed Collaboration Candidate, (ii) the
Discontinued Collaboration Candidates described in clause (a) of this Section
5.1.3 and (iii) any Licensed Product containing either such Licensed
Collaboration Candidate or any Discontinued Collaboration Candidate described in
clause (a) of this Section 5.1.3.

Notwithstanding the foregoing, Janssen shall not have the right to practice the
Commercial License described in Section 5.1.2 for any product described in
clause (a) or (b) of this Section 5.1.3 without mutual agreement of the Parties,
and provided that Janssen may not practice such license unless and until Fate
prepares, tests, qualifies and releases a cryopreserved Master iPSC Bank for the
applicable Discontinued Collaboration Candidate or Equivalent in accordance with
Section 4.2.4.  If the Parties mutually agree that Janssen may practice the
Commercial License for such product, then the applicable Discontinued
Collaboration Candidate or Equivalent shall be deemed to be a Licensed
Collaboration Candidate for all purposes under this Agreement.   

5.1.4Limitation of License; Retained Right of Fate.  

(a)For clarity, (i) the licenses granted to Janssen under this Section 5.1 do
not include the right for Janssen to practice the Fate Research Patents, Fate
Research Know-How, Fate Product Patents or Fate Product Know-How in a manner
other than as expressly permitted under this Section 5.1 or Section 5.4 or
ARTICLE 9; and (ii) Fate retains all rights to practice the Fate Research
Patents, Fate Research Know-How, Fate Product Patents or Fate Product Know-How
for any and all purposes, other than those expressly limited by license under
Section 5.1, subject only to Section 5.1.4(b) and Section 5.10.  

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(b)Fate shall not use any of its retained rights in or to the Precursor iPSCs,
Master iPSC Banks, or CD34 Compositions corresponding to a Licensed
Collaboration Candidate for any purpose other than the performance of its
Research and Manufacturing obligations under this Agreement.  Fate shall not
grant any license or any right with respect to such Precursor iPSCs, Master iPSC
Banks, or CD34 Compositions to any Third Party.  Janssen shall not use any of
its licensed rights in or to the Precursor iPSCs, Master iPSC Banks or CD34
Compositions under clause (y) of the Product License or clause (y) of the
Manufacturing License other than as expressly permitted under ARTICLE 9.  Given
the nature of such Precursor iPSCs, Master iPSC Banks, and CD34 Compositions,
and the competitive damage that may result to a Party upon unauthorized use of
such Precursor iPSCs, Master iPSC Banks, and CD34 Compositions, the Parties
agree that monetary damages may not be a sufficient remedy for any breach of
this Section 5.1.4(b).  In addition to all other remedies, each Party shall be
entitled to seek specific performance and injunctive and other equitable relief
as a remedy for any breach or threatened breach of this Section 5.1.4(b) by the
other Party.

(c)[***].  

5.1.5Fate Affiliates.  If any of the Patents or Know-How licensed by Fate to
Janssen pursuant to this Section 5.1 or Section 5.4 is Controlled by an
Affiliate of Fate (but excluding any Patents and Know-How that are deemed not to
be Controlled by Fate or its Affiliates pursuant to Section 17.14.1), Fate shall
procure that such Affiliate grants the licenses to Janssen in accordance with
this Section 5.1 or Section 5.4.

5.2License to Fate.

5.2.1Research License.  Subject to the terms and conditions of this Agreement,
during the Antigen Research Term for each Janssen Antigen, Janssen hereby grants
to Fate a non-exclusive, royalty-free, non-transferable (except as permitted
under Section 17.4) license in the Territory, with the right to grant
sublicenses solely in accordance with Section 5.5.1, under Janssen Research
Patents and Janssen Research Know-How solely as and to the extent necessary to
enable Fate to perform Fate’s obligations as set forth under the Research Plan
for each Janssen Antigen (including through the engagement of subcontractors in
accordance with Section 3.9).  For the avoidance of doubt, if Janssen does not
exercise its Commercial Option with respect to any Collaboration Candidates
under a Research Program during the applicable Commercial Option Term in
accordance with Section 4.3, the research license granted to Fate under this
Section 5.2 shall expire with respect to all such Collaboration Candidates under
such Research Program upon expiration of such last-to-expire Commercial Option
Term.  

5.2.2Manufacturing License. Subject to the terms and conditions of this
Agreement (including ARTICLE 9), upon and as of the Exercise Effective Date for
a Licensed Collaboration Candidate and for the remainder of the Term for such
Licensed Collaboration Candidate, Janssen hereby grants to Fate a co-exclusive
(with Janssen), non-transferable (except as provided in Section 17.4) license
(or sublicense, as applicable), with the right to grant sublicenses solely in
accordance with Section 5.5 and Section 9.10, under the Janssen Product Patents
and Janssen Product Know-How solely to: (x) Manufacture and have Manufactured
such Licensed Collaboration Candidate and Licensed Products containing such
Licensed Collaboration Candidate in the Field in the Territory and (y) use
Master iPSC Banks and CD34 Compositions corresponding to such Licensed
Collaboration Candidate for the Manufacture of such Licensed Collaboration
Candidate and Licensed Products containing such Licensed Collaboration Candidate
in the Field in the Territory.

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5.2.3Limitation of License; Retained Rights of Janssen.  For clarity, (a) the
licenses granted to Fate under this Section 5.2 do not include the right for
Fate to practice the Janssen Research Patents, Janssen Research Know-How,
Janssen Product Patents or Janssen Product Know-How in a manner other than as
expressly permitted under this Section 5.2 or Section 5.4 or ARTICLE 9; and (b)
Janssen retains all rights to practice the Janssen Research Patents, Janssen
Research Know-How, Janssen Product Patents or Janssen Product Know-How for any
and all purposes, other than those expressly limited by license under Section
5.2, subject only to Section 5.1.4(b) and Section 5.10.  

5.2.4Janssen Affiliates.  If any of the Patents or Know-How licensed by Janssen
to Fate pursuant to this Section 5.2 or Section 5.4 is Controlled by an
Affiliate of Janssen, Janssen shall procure that such Affiliate grants the
licenses to Fate in accordance with this Section 5.2 or Section 5.4 .

5.2.5Definition of Co-Exclusive.  For purposes of Section 5.1.2(a)(ii) and
Section 5.2.2, “co-exclusive (with Fate)” or “co-exclusive (with Janssen)” means
that the granting Party shall retain all of the same rights granted to the other
Party under the intellectual property rights licensed thereunder.  The granting
Party covenants not to grant to any Third Party, without the prior written
consent of the other Party, a license under such retained rights to conduct the
activities licensed to the other Party.

5.3[***]  

5.3.1[***]  

(a)[***]  

(i)[***]

(ii)[***]

(iii)[***]

[***]

 

(b)[***]

(c)[***]

5.3.2[***]

(a)[***]

(b)[***]

(c)[***]

(d)[***]

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(e)[***]  

(i)[***]

(ii)[***]

(iii)[***]

(iv)[***]

5.3.3[***]

(a)[***]

(b)[***]

(i)[***]

(ii)[***]

(iii)[***]

(c)[***]

5.3.4[***]

5.3.5[***]

5.3.6[***]

5.3.7[***]

(a)[***]

(b)[***]

(c)[***]

(d)[***].

5.4Collaboration Intellectual Property.  

5.4.1[***]

(a)Subject to obligations of non-disclosure as provided under this Agreement
(including under ARTICLE 12), [***].  

(b)Subject to obligations of non-disclosure as provided under this Agreement
(including under ARTICLE 12), [***].

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5.4.2Research Program Inventions Cross License.

(a)Subject to the terms and conditions of this Agreement, each Party hereby
grants to the other Party a non-exclusive, worldwide, perpetual, irrevocable,
fully paid-up license, with the right to freely grant sublicenses through
multiple tiers, under such first Party’s rights and interests in any and all
Research Program Inventions for all purposes (the “Research Program Inventions
Cross License”); provided, however, that such Research Program Inventions Cross
License does not include a grant of (i) any rights to either Party for any
exploitation of any Collaboration Candidate, Licensed Collaboration Candidate or
Licensed Product, or (ii) any rights to practice, other than Research Program
Inventions, any Patents or Know-How owned or Controlled by such first Party or
any of its Affiliates.  For purposes of this Agreement, “Research Program
Inventions” means [***].  The foregoing Research Program Inventions Cross
License shall not include the right for Janssen to practice any Fate
Confidential Method or for Fate to practice any Janssen Confidential Method.    

(b)The Parties acknowledge and agree that the Research Program Invention Cross
License under this Section 5.4.2 does not include any Inventions conceived,
developed or reduced to practice by or on behalf of either Party or any of its
Affiliates either (i) prior to the Effective Date or (ii) after the Effective
Date outside the scope of this Agreement (the “Background IP”).  As such, to the
extent a Party wishes to incorporate any of its proprietary technology under any
Research Program or CMC Development Plan (A) that is Covered by any Patents
within such Party’s Background IP and (B) for which a license may be necessary
for such other Party to practice Research Program Inventions, such
[***].  Janssen acknowledges that the Fate Research Patents set forth on Exhibit
13.2.1 are Background IP of Fate.

5.4.3License for [***].

(a)[***]

(b)[***]

(c)[***]

(d)[***]

5.5Sublicense.

5.5.1Sublicenses to Affiliates.  Each Party shall have the right to grant
sublicenses of the licenses granted to such Party pursuant to Section 5.1, 5.2
or 5.4 to any of its Affiliates without the consent of the other Party;
provided, however, that a Party shall not grant such a sublicense if such grant
would cause adverse tax consequences to the other Party (or such Party’s
Affiliates), as reasonably demonstrated by such other Party within [***]
Business Days of being notified of a proposed sublicense.  In the event a
sublicense would so cause such adverse tax consequences, the Parties agree to
cooperate reasonably to enable such sublicense in a manner reasonably
satisfactory to the non-sublicensing Party, including, if appropriate,
indemnification by the sublicensing Party.  

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5.5.2Sublicenses to Third Parties.  Janssen shall have the right to grant
sublicenses to Third Parties through multiple tiers under the Product License
granted to Janssen under Section 5.1.2, solely in accordance with this Section
5.5.2; provided, however, that any sublicense by Janssen (other than to a Third
Party distributor on a regional basis) with respect to Commercialization of any
Profit Share Product in the U.S. shall require the prior written consent of
Fate.  In addition, each Party shall have the right to grant sublicenses to
Third Parties under the license granted to such Party under Section 5.1.2(a)(ii)
(in the case of Janssen) or 5.2.2 (in the case of Fate) to Third Party CMOs
solely in accordance with Section 9.10.  The following terms shall apply to each
Sublicense:  

(a)Each Sublicense shall refer to this Agreement, shall be subordinate to and
consistent with the terms and conditions of this Agreement, and shall not limit
the ability of the sublicensing Party (individually or through the activities of
its Sublicensee) to fully perform all of its obligations under this Agreement or
the other Party’s rights under this Agreement.

(b)In such Sublicense, the Sublicensee shall agree to comply with all applicable
terms and conditions of this Agreement.

(c)Promptly after execution of the Sublicense agreement, the sublicensing Party
shall provide a summary of such Sublicense to the other Party.

(d)The sublicensing Party shall remain responsible for the performance of this
Agreement and the performance of its Sublicensees hereunder.

(e)Each Sublicense shall terminate immediately upon the termination of this
Agreement (in whole or only with respect to the rights that are subject to such
Sublicense).

(f)The sublicensing Party shall obligate each of its Sublicensees to grant
licenses to the sublicensing Party under any Patents and Know-How owned or
controlled by such Sublicensee to enable the sublicensing Party to grant
sublicenses to the other Party under such Patents and Know-How, to the extent
that such Patents and Know-How would be licensed by the sublicensing Party to
the other Party under the terms of this Agreement if such Patents and Know-How
were solely owned by the sublicensing Party.

5.6Functional Improvements; Next Generation Candidates.  

5.6.1Notification of Functional Improvements.  If, [***], Fate develops a
Functional Improvement, Fate shall promptly disclose such Functional Improvement
to Janssen (unless such Functional Improvement was developed jointly by the
Parties in conduct of a Research Program).  Janssen shall notify Fate if it
desires to incorporate any such Functional Improvement of Fate, or any other
Functional Improvement, into a Collaboration Candidate or Licensed Product,
subject to the remainder of this Section 5.6, provided that, [***], the Parties
shall, prior to Fate’s incorporation of such Functional Improvement into any
Collaboration Candidate or Licensed Product, agree on the terms and conditions
of such sublicense (e.g., the allocation of any payment obligations between Fate
and Janssen such as royalty payment and royalty term, and the obligation for
Janssen to comply with upstream obligations such as any [***]).  

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5.6.2Janssen Right to Incorporate Functional Improvements.  If Janssen notifies
Fate that it desires to incorporate one or more Functional Improvement(s) into
any one or more Collaboration Candidates from a Research Program [***], subject
to and in accordance with the remainder of this Section 5.6, provided that,
[***], the Parties shall, prior to Fate’s incorporation of such Functional
Improvement into any Collaboration Candidate or Licensed Product, agree on the
terms and conditions of such sublicense (e.g., the allocation of any payment
obligations between Fate and Janssen such as royalty payment and royalty term,
and the obligation for Janssen to comply with upstream obligations such as any
[***]).  The JRC shall update the applicable Research Plan(s) to include the
activities necessary to incorporate such Functional Improvement into such
Collaboration Candidate or Licensed Product, as applicable (such updated
candidate, a “Next Generation Candidate”); provided, however, that in no event
will a Next Generation Candidate be of a different CAR Cell Type than the
original Collaboration Candidate or Licensed Product.  Such amendment to the
Research Plan shall in form and substance (including with respect to the
activities to be conducted thereunder and the number of FTEs needed to conduct
such activities) substantially follow the form and substance of the initial
Research Plan for the Collaboration Candidate(s) or Licensed Product to be so
updated.  In the event the JRC does not reach consensus on the budget for the
applicable Next Generation Candidate activities, then such budget shall equal
[***] of the budget set forth in the initial Research Plan for the Collaboration
Candidate(s) or Licensed Product to be updated; provided, however, that no such
Research Plan shall require Fate to conduct activities that, taken as a whole,
would result in Fate incurring Research Costs in excess of the applicable
Research Budget for such Research Plan.  Upon such update, the [***] pursuant to
Section 3.4.2.    

5.6.3Research of Next Generation Candidates.  After the JRC updates the Research
Plan to include activities for the Next Generation Candidate, the Parties shall
conduct such activities in accordance with the Research Plan and the terms of
ARTICLE 3.  If the JRC selects any Next Generation Candidates to further develop
in IND Enabling Studies in accordance with Section 3.7, then Janssen shall have
the right to exercise the Commercial Option with respect to such Next Generation
Candidates in accordance with Section 4.3.  If Janssen exercises the Commercial
Option with respect to any such Next Generation Candidate, then such Next
Generation Candidate shall become a Licensed Collaboration Candidate (subject to
Janssen paying to Fate the Option Exercise Payment in accordance with Section
10.2.4 in the event Janssen has not previously exercised the Commercial Option
for any other Collaboration Candidate with respect to the applicable Janssen
Antigen).  Janssen shall not be obligated to discontinue the Development of the
original Collaboration Candidate or Licensed Product that was the basis of such
Next Generation Candidate.  

5.6.4Improvement Period.  With respect to any Licensed Product (i.e., after
Janssen has exercised its Commercial Option), Janssen may implement Functional
Improvements in accordance with and subject to Section 5.6.2 at any time during
the Improvement Period for such Licensed Product.  For clarity, if Janssen
exercises the Commercial Option for a Next Generation Candidate, then the
Improvement Period for the Licensed Product containing such Next Generation
Candidate shall begin on the applicable Exercise Effective Date.  

5.6.5Research Costs for Next Generation Candidates.  Janssen shall be
responsible for all Research Costs incurred to implement any Functional
Improvement into Next Generation Candidates, pursuant to Section 10.2.  

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5.6.6Other Improvements. If either Party develops or identifies a Functional
Improvement that could be incorporated into a Collaboration Candidate or
Licensed Product and such improvement is not subject to the terms of Section
5.6.1 through Section 5.6.5, either Party may propose the incorporation of such
improvement to the JRC (or, if the JRC does not exist then, to the other Party)
and the JRC (or the Parties) will determine, without any obligation, whether to
incorporate such improvement and the terms for such incorporation, and if the
JRC (or the Parties) does not agree to such incorporation by consensus, such
improvement shall not be implemented.    

5.7Product Trademarks; Patent Marking.  

5.7.1Janssen shall be responsible for selection, prosecution, maintenance and
enforcement of all Product Trademarks pertaining to the Licensed Products and
for registering and maintaining all Product Domain Names and Websites.  Janssen
will own all right, title and interest in and to the Product Trademarks for the
Licensed Products.

5.7.2The packaging for each Licensed Product Commercialized by Janssen under
this Agreement shall be marked with applicable patent notices relating to the
Fate Product Patents in such a manner as may be permitted or required by Laws.  

5.8Third Party In-Licenses.  The licenses granted by Fate to Janssen under this
ARTICLE 5 include sublicenses of rights licensed to Fate under the Existing
Agreements.  Janssen acknowledges and agrees that the licenses granted by Fate
to Janssen under this ARTICLE 5 shall be non-exclusive with respect to any
intellectual property that is non-exclusively licensed to Fate under an Existing
Agreement.  Prior to the Effective Date, [***].  

5.9No Implied Licenses; Retained Rights; Government Rights.

5.9.1No Implied Licenses, Retained Rights.  No license or other right is or
shall be created or granted hereunder by implication, estoppel, or otherwise.
All licenses and rights are or shall be granted only as expressly provided in
this Agreement. All rights not expressly granted by either Party under this
Agreement are reserved by such Party and may not be used by the other Party for
any purpose.

5.9.2Government Rights.  This Agreement is expressly subject to the reservation
on behalf of the U.S. government under 35 U.S.C. § 200–212 and regulations
promulgated thereunder. Each Party shall take all action necessary on its part,
including the provision of additional information and supporting documentation
to the other Party as reasonably requested by the other Party, to enable each
Party to satisfy or to seek waivers with respect to its respective obligations
under 35 U.S.C. § 200–212 and regulations promulgated thereunder.  None of the
Fate Research Patents, Fate Research Know-How, Fate Product Patents or Fate
Product Know-How are or include any invention that was conceived or first
actually reduced to practice in the performance of work under a funding
agreement between Fate and the U.S. government.

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5.10Exclusivity and Other Restrictions.  

5.10.1During Exclusivity Period.

(a)During the Exclusivity Period, [***].  Notwithstanding the foregoing, either
Party may acquire or maintain an ownership interest in a Third Party that owns
or controls a Competing Product (for so long as such Third Party is not an
Affiliate of such Party). For clarity, each Party will retain the right (and
Fate will retain the right to use the Fate Platform Technology), including
during the Exclusivity Period, to research, develop, manufacture and
commercialize any product, including a cell product targeting any antigen
(including a Janssen Antigen), so long as such product is not a Competing
Product.  

(b)“Exclusivity Period” means, with respect to a Janssen Antigen, the period
beginning on the Effective Date (or, with respect to Janssen Antigen 3 and
Janssen Antigen 4, on the date that Janssen selects such antigen pursuant to
Section 3.2.2) and, unless the Parties agree otherwise, ending:

(i)[***]

(ii)[***];

provided, however, that if the Research Program or this Agreement is terminated
with respect to such Janssen Antigen before the date described in clause (i) or
(ii), the Exclusivity Period will end on the effective date of such termination
with respect to such Janssen Antigen. [***].

5.10.2Restricted Activities after Expiration of Commercial Option; Restriction
on Use of Janssen Antigen Binding Domains.  

(a)If Janssen does not exercise the Commercial Option with respect to a
particular Pre-IND Collaboration Candidate during the Commercial Option Term,
then, following the expiration of the Commercial Option Term for such particular
Pre-IND Collaboration Candidate, such Pre-IND Collaboration Candidate will be
deemed a [***].  

(b)During the Term with respect to a Janssen Antigen, neither Fate nor any of
its Affiliates shall use, nor have any right to use, any Janssen Antigen Binding
[***], in each case with respect to such Janssen Antigen, except to the extent
necessary to perform Fate’s obligations under ARTICLE 3 and ARTICLE 9.  For
clarity, this Section 5.10.2(b) will not survive expiration of the Term with
respect to a Janssen Antigen.    

5.10.3Change of Control.  If, as of the date of consummation of a Change of
Control of Fate, the Acquirer of Fate in such Change of Control transaction is
conducting on-going activities with respect to a Competing Product that are
prohibited under Section 5.10.1, the restrictions in Section 5.10.1 shall not
preclude the Acquirer from conducting such activities with respect to such
Competing Product after the consummation of the Change of Control transaction,
so long as during the applicable Exclusivity Period the Acquirer Segregates the
program and activities related to the Competing Product from Fate’s activities
under this Agreement in accordance with Section 17.14.2.

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5.10.4Acquisition of Competing Products. In the event that either Party or any
of its Affiliates acquires rights to any Competing Product as the result of a
merger, acquisition, combination or similar transaction with, of or by a Third
Party, and as of the date of consummation of such transaction, there are
on-going activities with respect to such Competing Product that are prohibited
under Section 5.10.1, then the Party who acquired (or whose Affiliate acquired)
such rights to such Competing Product (“Acquiring Party”) shall notify the other
Party of such transaction within [***] Business Days after the consummation of
such transaction and will promptly Segregate the program and activities related
to the Competing Product from its activities under this Agreement in accordance
with Section 17.14.2 and shall, within [***] months after the date of
consummation of such transaction, notify the other Party in writing whether it
(or its Affiliate) will:

(a)enter into a definitive agreement with a Third Party to divest such Competing
Product within [***] months after the consummation of such transaction; or

(b)discontinue or terminate its activities with respect to such Competing
Product no later than [***] months after the closing of such transaction, until
the expiration of the then-current Exclusivity Period with respect to the
applicable Janssen Antigen.

Failure to provide timely notice will be deemed an election under clause
(b).  The Acquiring Party shall be permitted to continue Developing,
Manufacturing or Commercializing such Competing Product during the applicable
time period set forth in clause (a) or (b) above, and the applicable prohibition
under Section 5.10.1 shall not apply during such applicable time period with
respect to such Competing Product, provided that the Acquiring Party Segregates
the activities with respect to such Competing Product from any activities under
this Agreement.

5.10.5Effect of Transfer of Fate Intellectual Property.  Neither Fate nor any of
its Affiliates shall sell or otherwise transfer the ownership of any Fate
Research Know-How, Fate Research Patents, Fate Product Know-How or Fate Product
Patents to any Third Party (including through a sale or ownership transfer by an
Affiliate of Fate that Controls such intellectual property) without imposing on
such Third Party the restrictions set forth in Section 5.10.1 solely with
respect to its use of the Fate Research Know-How, Fate Research Patents, Fate
Product Know-How or Fate Product Patents.

ARTICLE 6
Fate Opt-In Option

6.1Grant of Fate Opt-In Option.  For each Licensed Product, Janssen hereby
grants to Fate the right to elect, at Fate’s sole discretion, to co-fund
Development in the Territory, and to co-Commercialize and share profits and
losses in the U.S. with Janssen, with respect to such Licensed Product on the
terms set forth in the Profit Share Product Exhibit (each, a “Fate Opt-In
Option”), exercisable in accordance with the terms and conditions set forth in
this ARTICLE 6.

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6.2Delivery of POC Data Packages.  Janssen shall notify Fate promptly [***] for
each Licensed Product.  Within [***] days thereafter, Fate shall notify Janssen
of whether it desires to have Janssen prepare a data package with respect to
such Licensed Product (the “POC Data Package” for such Licensed Product), which
POC Data Package shall include:

(a)all available safety and efficacy data (including the raw tables, figures and
listings datasets) with respect to such Licensed Product through the [***];

(b)a report of [***];

(c)Janssen’s then-current internal clinical development plan and budget for such
Licensed Product (which would include total Shared Development Costs by year by
study only) to Develop such Licensed Product in the Territory for the [***]-year
period following the [***]; and

(d)Janssen’s then-current internal marketing and commercialization plan and
budget for such Licensed Product, which shall include, at a minimum, a [***] for
such Licensed Product.  

If Fate requests the POC Data Package for such Licensed Product, then Janssen
shall provide such POC Data Package to Fate within [***] days after such
request.  If Janssen delivers a POC Data Package and Fate notifies Janssen
within [***] days following receipt that such POC Data Package is not complete
and such notice specifies the information, data or results not included in such
POC Data Package, Janssen shall provide the missing information, data or results
as soon as possible and no later than [***] days after Fate’s notification.  The
date on which Fate is in receipt of a complete POC Data Package for a Licensed
Product shall be deemed the “POC Data Package Delivery Date” with respect to
such Licensed Product.  Janssen shall promptly make available such other
material information, data and results relating to such Licensed Product as Fate
may reasonably request in order to make an informed decision regarding whether
to exercise its Fate Opt-In Option with respect to such Licensed Product,
including documentation supporting the then-current internal clinical
development plan and budget and the then-current internal marketing and
commercialization plan and budget, for such Licensed Product.  

Notwithstanding the foregoing, if Fate requests the POC Data Package for a
Licensed Product and Janssen has decided not to conduct any further Development
of such Licensed Product, then Janssen shall deliver the POC Data Package, but
the Fate Opt-In Option shall not apply to such Licensed Product unless and until
Janssen decides to recommence Development of such Licensed Product (in which
case Janssen shall provide Fate with prompt written notification thereof and the
Fate Opt-In Option shall then apply).  

6.3Exercise of Fate Opt-In Option.  Fate may exercise the Fate Opt-In Option for
such Licensed Product by providing written notice of exercise to Janssen within
[***] days after the POC Data Package Delivery Date (the first Business Day
after Fate’s giving of such notice, the “Opt-In Exercise Date”).  The Licensed
Product as to which Fate has exercised the Fate Opt-In Option in accordance with
this Section 6.3 shall be deemed to be a Profit Share Product as of the Opt-In
Exercise Date and for the remainder of the applicable Profit Share Term.  

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6.4Consequences of Exercise of Fate Opt-In Option.  On and after the Opt-In
Exercise Date for a Licensed Product, the terms and conditions set forth on
Exhibit 6.4 (the “Profit Share Product Exhibit”) shall apply with respect to
such Profit Share Product.    All provisions of this Agreement shall continue to
apply to the Profit Share Product, except to the extent expressly set forth in
this Agreement or the Profit Share Product Exhibit.

ARTICLE 7
Development and Commercialization

7.1General.   From and after the Exercise Effective Date with respect to a
particular Licensed Collaboration Candidate, Janssen (itself or through its
Affiliates or its or their Sublicensees), at its sole cost and expense, shall
have the sole right and authority to Develop and Commercialize, subject to
Section 4.4, in the Territory such Licensed Collaboration Candidate and the
Licensed Products containing such Licensed Collaboration Candidate, subject to
the Fate Opt-In Option.  Janssen shall conduct such activities in accordance
with the terms and conditions of this Agreement.

7.2Restriction on [***].  With respect to any Licensed Product containing a
Licensed Collaboration Candidate that incorporates the Existing Functional
Element described in Section 1.57(a), Janssen shall not [***].  

7.3Standards of Conduct; Records.  Janssen shall conduct all Development of
Licensed Products in good scientific manner and in compliance with all
applicable Law, including GMP, GLP and GCP, as applicable. Janssen shall
maintain, consistent with its then-current internal policies and practices, and
cause its employees and Subcontractors to maintain, records and laboratory
notebooks of its Development activities under this Agreement in sufficient
detail and in a good scientific manner appropriate for regulatory and
intellectual property protection purposes. Janssen shall conduct all
Commercialization activities under this Agreement in compliance with all
applicable Laws.

7.4Development Reports.  In advance of each JSC meeting, unless otherwise agreed
between the Parties, Janssen shall provide to the JSC a high-level summary
report summarizing its Development activities with respect to each Licensed
Product and the results thereof since the previous JSC meeting, and its
anticipated Development activities with respect to each Licensed Product for the
subsequent calendar quarter.  At each JSC meeting, Janssen shall provide
additional information as reasonably requested by Fate’s JSC representatives
with respect to the Development activities summarized in such report or
otherwise conducted or anticipated to be conducted for Licensed Products.

7.5Commercialization Reports.  On a semi-annual basis after Marketing Approval
of any Licensed Product, Janssen shall provide to the JSC a high-level summary
report of its Commercialization launch status, activities, and performance with
respect to each Licensed Product since the previous JSC summary. At each JSC
meeting, Janssen shall provide additional information as reasonably requested by
Fate’s JSC representatives with respect to the Commercialization activities
summarized in such report or otherwise conducted or anticipated to be conducted
for each Licensed Product.

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7.6Diligence.  If Janssen exercises the Commercial Option with respect to one or
more Collaboration Candidates for a particular Janssen Antigen in accordance
with Section 4.3, the following provisions of this Section 7.6 shall apply with
respect to such Janssen Antigen:

(a)Janssen shall use [***]Efforts to [***];  

(b)Following [***] Janssen shall use [***] Efforts to [***]; and

(c)For clarity, if Janssen [***], Janssen is not obligated under this Section
7.6 to exercise [***] Efforts to [***].  

If Fate exercises the Fate Opt-In Option with respect to a Licensed Product
pursuant to Section 6.3, then, during the Profit Share Term for such Profit
Share Product, the foregoing provisions of Section 7.6 shall not apply to such
Profit Share Product, any Related Licensed Products or the applicable Janssen
Antigen.  Instead, Section 5.2 of the Profit Share Product Exhibit shall
apply.  

7.7Subcontracting. Janssen may subcontract the performance of any Development
and Commercialization activities for a Licensed Product under this Agreement to
one or more Third Parties (each, a “Subcontractor”); provided, however, that:
(a) any such Subcontractor (other than a CRO) to whom Janssen discloses
Confidential Information of Fate shall enter into an appropriate written
agreement obligating such Subcontractor to be bound by obligations of
confidentiality and restrictions on use of such Confidential Information that
are no less restrictive than the obligations in ARTICLE 12; (b) Janssen shall
not disclose to such Subcontractor any Fate Confidential Methods without Fate’s
express prior written consent, which may be withheld in Fate’s sole discretion
on a case-by-case basis; (c) Janssen will obligate such Subcontractor (other
than a CRO) to agree in writing to assign or license (with the right to grant
sublicenses) to Janssen any inventions (including any Patents and Know-How
covering such inventions) made by such Subcontractor in performing such
activities, to the extent necessary for Janssen to (i) grant a license to Fate
under such inventions as if such inventions were made by Janssen, and (ii) make
the assignments to Fate contemplated in Section 11.1.2 with respect to such
inventions (as if such inventions were made by Janssen); and (d) Janssen shall
at all times be responsible for the performance of such Subcontractor and shall
remain primarily responsible to Fate for the fulfillment of its obligations
under this Agreement even after such activities are subcontracted to such
Subcontractor.

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ARTICLE 8
Regulatory

8.1General. From and after the Exercise Effective Date with respect to a
particular Licensed Collaboration Candidate or Licensed Products containing such
Licensed Collaboration Candidate, subject to Sections 4.4.3 and 8.2, Janssen
(itself or through its Affiliates or its or their Sublicensees), at its sole
cost and expense, shall have the sole right to prepare and submit all Regulatory
Filings (including BLAs, MAAs and Supplemental Applications), to obtain and
maintain all Regulatory Approvals (including Marketing Approvals and
Commercialization Approvals), and to conduct communications with Regulatory
Authorities in the Territory.  With respect to each Licensed Collaboration
Candidate, [***], (a) (i) Fate shall have the right to have one (1)
representative attend all meetings (including by telephone), conferences and
discussions between Janssen or its Affiliate and the FDA pertaining to such
Licensed Product; and (ii) Janssen shall, to the extent feasible, provide Fate
with reasonable advance notice of all such meetings and other contacts and
advance copies of all related documents and other relevant information relating
to such meetings or other contacts; and (b) Janssen shall provide Fate with each
such Regulatory Filing [***] sufficiently in advance for Fate’s review and
comment.  Janssen shall [***] any such comment from Fate [***] (unless Janssen
reasonably determines that such comment is not in compliance with applicable
Law).  

8.2Transition of Existing Regulatory Filings and Regulatory Approvals.  

8.2.1If Janssen exercises the Commercial Option with respect to a Licensed
Collaboration Candidate in accordance with Section 4.3, Fate shall promptly
provide Janssen with advance drafts of any documents or other correspondence
pertaining to the IND application that Fate plans to submit to the applicable
Regulatory Authority for the Licensed Product containing such Licensed
Collaboration Candidate, and Fate shall promptly submit such IND application to
the FDA, in accordance with and subject to Section 4.4.3.  Fate shall provide
Janssen with copies of all material submissions it makes to, and all material
correspondence (including written summaries of material oral correspondence) it
receives from, the applicable Regulatory Authority with respect to such IND
application in accordance with this Section 8.2.  Notices, copies of submissions
and correspondence, and other materials to be given in advance as provided in
this Section 8.2 shall be provided to Janssen in a timely manner as to allow
Janssen a reasonable amount of time to review such notices, copies of submission
and correspondence and materials before their submission to the applicable
Regulatory Authority, and in any event at least [***] Business Days in advance,
unless circumstances necessitate a shorter time period.  Correspondence and
other documents received from a Regulatory Authority with respect to such IND
application must be provided to Janssen as soon as practicable, and in any event
within [***] Business Days.

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8.2.2Prior to the transfer of the IND application for a particular Licensed
Product as further described in Section 8.2.3 but after Janssen exercises the
Commercial Option with respect to a Licensed Collaboration Candidate in
accordance with Section 4.3, subject to applicable Law, (a) Janssen shall have
the right to have one (1) representative attend all meetings (including by
telephone), conferences and discussions between Fate or its Affiliate and the
FDA pertaining to such Licensed Product; (b) Fate shall, to the extent feasible,
provide Janssen with reasonable advance notice of all such meetings and other
contacts and advance copies of all related documents and other relevant
information relating to such meetings or other contacts; and (c) in advance of
submission to the FDA, Fate shall provide Janssen, for Janssen’s review and
comment, any information or communications relating to the clinical protocol
included in such IND or any other portion of the IND prepared by Janssen, and
Fate shall reasonably consider any such comments from Janssen.  

8.2.3As soon as practicable after the date on which the IND submitted to the FDA
by Fate for a particular Licensed Product pursuant to Section 4.4.3 becomes
effective in the U.S. under 21 C.F.R. 312.40, Fate shall transfer to Janssen
electronic copies (unless otherwise required by applicable Law) of all
Regulatory Filings relating to such Licensed Product, including [***].  

8.2.4The Parties acknowledge that any [***].  

8.2.5Upon the completion of such transfer, Fate shall, and hereby does, assign
to Janssen all such Regulatory Filings, and shall promptly (and in any case
within [***] days) take all steps reasonably necessary to effectuate the
assignment of all IND/CTAs included in such Regulatory Filings, including
submitting to any applicable Regulatory Authority a letter or other necessary
documentation (with copy to Janssen) notifying the Regulatory Authority of the
assignment, for such Licensed Product.  In the event that any such IND/CTA
cannot be transferred within such [***]-day period, Fate shall [***] with
respect to the maintenance or transfer of such IND/CTA.  Fate shall have the
right to retain ownership of any and all Regulatory Filings referenced by the
IND prepared in accordance with Section 4.4.3 (but not including the IND itself,
which shall be owned by Janssen) that are not specific to the applicable
Licensed Product; provided, however,[***].  In the event that any such IND/CTA
includes any referenced Regulatory Filings, Fate will maintain compliance with
all relevant U.S. Drug Master File (DMF) regulations or the equivalent as
required in any country or region outside the U.S., and Fate will respond in a
timely manner to all DMF Regulatory Authority audits/questions/findings.  It is
understood that DMF data is Fate Confidential Information.  However, Fate will
provide Janssen notice of DMF submissions and correspondence, and other
materials as appropriate as soon as practicable, and in any event within [***]
days, unless circumstances necessitate a shorter time period to allow Janssen
advance notice to address implications to Janssen’s regulatory filings.

8.2.6For clarity, any Fate Confidential Method disclosed to Janssen as a result
of Fate’s performance of its obligations under this ARTICLE 8 shall remain Fate
Confidential Method, and such Fate Confidential Method shall remain subject to
the terms and conditions of Section Error! Reference source not found..

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8.3Right of Reference.  

8.3.1Janssen shall have the right to cross-reference Fate’s Regulatory Filings
to the extent reasonably necessary to comply with a request from a Regulatory
Authority in connection with the Development, Manufacture or Commercialization
of Licensed Products by Janssen under this Agreement, including to any DMF or
master files within the possession and control of Fate or its Affiliates, to the
extent such DMF or master files specifically relate to the Licensed Products
(the “Licensed Product DMFs”).  [***], subject to Sections 5.3.2(b) and 9.9.1.
Fate hereby grants, and will cause its Affiliates to grant, to Janssen and its
Affiliates and Sublicensee a “Right of Reference,” as that term is defined in 21
C.F.R. § 314.3(b) in the United States, or an equivalent right of
access/reference in any other country or region, to any such Regulatory Filings
for use by Janssen to Develop, Manufacture and Commercialize Licensed Products
pursuant to this Agreement. Fate shall provide a signed statement to this
effect, if requested by Janssen, in accordance with 21 C.F.R. § 314.50(g)(3) or
the equivalent as required in any country or region or otherwise provide
appropriate notification of such right of Janssen to the applicable Regulatory
Authority and shall cause its Affiliates to provide such signed statement. Fate
will provide, and will cause its Affiliates to provide, cooperation to Janssen
to effect the foregoing.

8.3.2Fate shall have the right to cross-reference Janssen’s Regulatory Filings
for Licensed Products to the extent reasonably necessary to comply with a
request from a Regulatory Authority in connection with the development or
commercialization of products by Fate and its Affiliates (other than
Collaboration Candidates and Licensed Products) [***].  Janssen hereby grants,
and will cause its Affiliates to grant, to Fate and its Affiliates a “Right of
Reference,” as that term is defined in 21 C.F.R. § 314.3(b) in the United
States, or an equivalent right of access/reference in any other country or
region, to any such Regulatory Filings for use by Fate and its Affiliates to
develop and commercialize such products.  Janssen shall provide a signed
statement to this effect, if requested by Fate, in accordance with 21 C.F.R. §
314.50(g)(3) or the equivalent as required in any country or region or otherwise
provide appropriate notification of such right of Fate to the applicable
Regulatory Authority and shall cause its Affiliates to provide such signed
statement. Janssen will provide, and will cause its Affiliates to provide,
cooperation to Fate to effect the foregoing.

8.4Regulatory Assistance.  As soon as practicable after the date on which the
IND submitted to the FDA by Fate for a particular Licensed Product pursuant to
Section 4.4.3 becomes effective in the U.S. under 21 C.F.R. 312.40, Fate shall
reasonably cooperate with Janssen to provide regulatory assistance with respect
to such Licensed Product, as reasonably requested by Janssen, to facilitate
Regulatory Filings and communications with Regulatory Authorities in the
Territory for such Licensed Product; provided, however, that the foregoing shall
not be construed as requiring Fate to transfer or disclose to Janssen any Fate
Confidential Methods except as expressly set forth under and subject to the
terms and conditions of Section Error! Reference source not found..  Fate’s
reasonable cooperation as set forth above may be conducted by providing Janssen
with reasonable access by teleconference or, during a period of [***] months
after the submission of such IND, in-person at Fate’s facilities to those Fate
personnel knowledgeable with respect to such regulatory matters, if any.

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8.5Pharmacovigilance Agreement.

8.5.1Prior to the commencement of a Clinical Trial for a Licensed Product which
incorporates an Existing Functional Element or Functional Improvement, should
either Party reasonably believe there is a need to enter into a
pharmacovigilance agreement setting forth the responsibilities and procedures
for collecting, sharing and reporting to the applicable Regulatory Authorities
safety information associated with such Licensed Product, so as to permit each
Party to comply with applicable Laws and the requirements of Regulatory
Authorities in relation to safety (a “Pharmacovigilance Agreement”), the Parties
shall discuss in good faith and, if reasonably necessary, shall enter into a
Pharmacovigilance Agreement.

8.5.2If the Parties have not entered into a Pharmacovigilance Agreement pursuant
to Section 8.5.1 with respect to a Licensed Product, then following the exercise
of the Fate Opt-In Option for such Licensed Product, the Parties shall enter
into a Pharmacovigilance Agreement with respect to such Licensed Product.  Any
Pharmacovigilance Agreement entered into pursuant to this Section 8.5 shall
provide that Janssen shall be responsible for establishing and maintaining, and
shall be the holder of, the global safety database for each Licensed Product.

ARTICLE 9
Manufacture and Supply

9.1CMC Development.   

9.1.1During the Antigen Research Term.  For each Research Program with respect
to a Janssen Antigen, during the applicable Antigen Research Term and prior to
Janssen’s exercise of the Commercial Option for a particular Collaboration
Candidate, as between Fate and Janssen:

(a)Fate will be exclusively responsible for the conduct of, and shall use [***]
Efforts to conduct, for Collaboration Candidates, (i) the Cell Bank Process and
Cell Bank Process Development; and (ii) the CD34 Composition Process and CD34
Composition Process Development, in each case, in accordance with the applicable
Research Plan.  Fate shall report its progress in conducting, and the results of
such activities, at each meeting of the JMC.  The JMC shall discuss and provide
high-level oversight over such activities, but shall have no decision-making
authority over such activities, other than [***].  Within [***] days of the
Effective Date of the Agreement, Janssen shall provide the JMC with its
customary safety and regulatory requirements, and its quality standards, for
Manufacture of Collaboration Candidates, Licensed Collaboration Candidates and
Licensed Products (the “Janssen Manufacturing Standards”); and shall provide any
updates thereto promptly to Fate in writing, including through the JMC, during
the Term.    

(b)[***] conduct the Product Process and Product Process Development for Pre-IND
Collaboration Candidates, including optimization of the existing, and
development of improved, Product Processes for GMP Manufacturing, in accordance
with the applicable Research Plan.  [***].  Fate will be responsible for
conducting such activities in consultation with Janssen.  [***] shall report its
progress in conducting, and the results of such activities, at each meeting of
the JMC.  The JMC shall oversee and make decisions with respect to such
activities.  

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(c)All of the activities described in this Section 9.1.1 will be set forth in
the Research Plan and the JRC and JMC will coordinate as appropriate with
respect to such activities, including periodic process data review.  

9.1.2After Option Exercise.  

(a)Following Janssen’s exercise of the Commercial Option for a Pre-IND
Collaboration Candidate, Fate shall continue to be exclusively responsible for
the Cell Bank Process Development, if any.  Fate shall report its progress in
conducting, and the results of such activities, at each meeting of the JMC.  In
addition, the JMC shall develop and approve a plan that sets forth the CMC
Development activities to be undertaken with respect to the Licensed
Collaboration Candidate and Licensed Products containing such Licensed
Collaboration Candidate (the “CMC Development Plan”).  

(b)The JMC shall allocate responsibility for activities in the CMC Development
Plan between the Parties; provided, however, that Fate shall be exclusively
responsible for [***].  Each Party shall use [***] Efforts to conduct the
activities allocated to it under the CMC Development Plan.

(c)Each CMC Development Plan shall include a rolling, [***] year budget for CMC
Development Costs to be incurred by each Party and its Affiliates in conducting
the activities described in the CMC Development Plan that are scheduled to be
commenced or conducted during the [***] (with respect to such Calendar Years,
the “CMC Development Budget”).  The CMC Development Budget shall be broken down
by Calendar Quarter and, for each Calendar Quarter, shall be broken down by CMC
Development FTE Costs and Out-of-Pocket Expenses.  The [***] of the then-current
CMC Development Budget [***], and the [***] shall serve as [***].    

(d)The JMC shall review the applicable CMC Development Plan annually and prepare
any recommended updates.  No later than [***] of the then-current Calendar Year,
the JMC shall prepare an updated CMC Development Budget covering the
[***].  After each Party performs its internal budgeting process, the JMC shall
use reasonable efforts to approve such updates no later than [***] of each
Calendar Year.  

(e)Either Party may propose amendments to the CMC Development Plan from time to
time. The JMC shall discuss whether to approve such proposal at its next
meeting.  Such updates and amendments shall be effective upon JMC approval.

(f)Following Janssen’s exercise of the Commercial Option for a Pre-IND
Collaboration Candidate, periodic process data review will occur at the JMC
throughout the development of Licensed Products containing such Licensed
Collaboration Candidate.

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9.2Fate Manufacturing Facilities; Facility Manufacturing Schedules.  

9.2.1As of the Effective Date, Fate has established a manufacturing facility in
San Diego, California for the Manufacturing of CAR-NK Cells and CAR-T Cells (the
“Existing Fate Facility”).  The Existing Fate Facility may be used for certain
Research Plan activities; and, in the event Fate is then-currently using the
Existing Fate Facility to manufacture CAR-NK Cells or CAR-T Cells for use in a
Phase II Trial conducted by Fate or any of its other licensees, such Existing
Facility may be used to Manufacture Early Stage Clinical Supplies of Licensed
Products, subject to completion of an audit of such facility pursuant to Section
9.3.2.  In addition, Fate is planning to establish a separate manufacturing
facility for the Manufacturing of CAR-NK Cells and CAR-T Cells (the “Planned
Fate Facility”).  Fate may also engage a Third Party manufacturer for the
Manufacturing of CAR-NK Cells and CAR-T Cells on behalf of Fate at such Third
Party’s manufacturing facility (the “Back-Up Fate Facility”) in accordance with
Section 9.10.  

9.2.2At each meeting of the JMC, Fate shall provide an update on the status of
its manufacturing facilities, including the operation of its Existing Fate
Facility, and its progress toward establishing, validating and qualifying the
Planned Fate Facility and, if applicable, the Back-Up Fate Facility.  If Janssen
identifies an issue with any of the facilities that could affect its status as a
Compliant Clinical Manufacturing Facility or Compliant Commercial Manufacturing
Facility, Janssen will promptly notify Fate.  The JMC will then meet and develop
a plan to correct such issues.  For clarity, the JMC shall have no
decision-making authority over Fate’s manufacturing facilities.

9.2.3[***] for all costs of establishing, maintaining and operating the Existing
Fate Facility, the Planned Fate Facility and, if applicable, the Back-Up Fate
Facility, except to the extent such costs are expressly included in Research
Costs, CMC Development Costs, or Cost of Goods for Licensed Product supplied to
Janssen under this ARTICLE 9.  

9.2.4The JMC will review and align on the production schedule for all Licensed
Products at all facilities on a rolling [***] month basis.

9.3Manufacture and Supply of Early Stage Clinical Supplies.  

9.3.1Within [***] days following Janssen’s exercise of the Commercial Option for
a Pre-IND Collaboration Candidate, Janssen shall provide the JMC with a forecast
of its requirements of clinical supplies of Licensed Products containing the
Licensed Collaboration Candidate for use in non-Registration Studies (the “Early
Stage Clinical Supplies”).  

9.3.2Fate shall be solely responsible for Manufacturing all of Janssen’s
requirements of Early Stage Clinical Supplies of the Licensed Product.  Such
Manufacture by Fate may be conducted at either the Existing Fate Facility
(subject to the requirements set forth in Section 9.2.1), the Planned Fate
Facility, or the Back-Up Fate Facility (subject to Section 9.10), as selected by
Fate; provided, however, that [***], under Section 9.1.1(a) (a “Compliant
Clinical Manufacturing Facility”).  As soon as reasonably practicable following
the Effective Date of this Agreement, if Fate selects the Existing Fate Facility
to Manufacture Early Stage Clinical Supplies, Janssen shall conduct an initial
audit of the Existing Fate Facility in accordance with Section 9.8.  If Fate
selects the Planned Fate Facility or the Back-Up Fate Facility to Manufacture
Early Stage Clinical Supplies, Janssen shall also conduct an initial audit of
such facility in accordance with Section 9.8 as soon as practicable after Fate
establishes such facility.  The results of such internal audit by Janssen will
be shared with the JMC with the intent of assisting Fate in its efforts to
comply with GMP (including FDA, EMA and Japanese GMP), all regulatory
requirements, and the then-current Janssen Manufacturing Standards.    

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9.3.3Within [***] days following Janssen’s exercise of the Commercial Option for
a Pre-IND Collaboration Candidate, the Parties shall enter into a supply
agreement setting forth the terms and conditions applicable to the Manufacture
and supply of the Early Stage Clinical Supplies of the Licensed Products
containing the Licensed Collaboration Candidate (the “Early Stage Clinical
Supply Agreement”) and a related quality agreement; provided, however,
[***].  The Early Stage Clinical Supply Agreement shall be consistent with the
terms of this Agreement, and shall contain reasonable and customary terms for
agreements of its type and for this type of product (including forecasting and
ordering requirements, delivery, process development, technology transfer,
termination, procedures for non-conformance with specifications and
non-compliance with Laws, audit and inspection (including of books of accounts
and records by Janssen for the determination of the Cost of Goods) and
indemnification), as well as the following terms:

(a)Fate shall Manufacture and supply to Janssen, and Janssen shall obtain from
Fate, all of Janssen’s requirements of Early Stage Clinical Supplies of such
Licensed Products;

(b)Fate shall Manufacture all Early Stage Clinical Supplies of Licensed
Products, and all CD34 Composition and drug substance used to Manufacture such
Licensed Products, in a Compliant Clinical Manufacturing Facility, and Janssen
shall have the right to audit such facilities to the extent provided in Section
9.8;

(c)the JMC shall oversee the operational aspects of the Manufacture and supply
of Early Stage Clinical Supplies;

(d)supply shortage and failure to supply provisions, including [***]; and

(e)Early Stage Clinical Supplies of Licensed Product shall be supplied by Fate
to Janssen at a supply price equal to [***].

Until the Early Stage Clinical Supply Agreement is executed, the terms set forth
in clauses (a) through (e) of this Section shall apply.

9.4Manufacture and Supply of Pivotal Clinical Supplies and Initial Commercial
Supplies.  

9.4.1Commercial Supply Criteria.  Promptly following the date on which the first
IND of a Licensed Product becomes effective in the U.S. under 21 C.F.R. 312.40,
the JMC will determine whether the Planned Fate Facility or the Back-Up Fate
Facility complies with the Commercial Supply Criteria as follows:

(a)Janssen shall provide the JMC with a forecast of its requirements of clinical
supplies of the Licensed Product for use in Registration Studies (the “Pivotal
Clinical Supplies”), and for commercial supplies for launch and for each of the
[***] years following launch, of such Licensed Product (the “Initial Commercial
Supplies”).

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(b)Following receipt of Janssen’s forecast, Fate shall notify Janssen whether it
will use the Planned Fate Facility or the Back-Up Fate Facility (subject to
Section 9.10) for Manufacture of the Pivotal Clinical Supplies or Initial
Commercial Supplies.  After Fate so notifies Janssen, subject to Section
9.4.1(f), Janssen shall conduct an audit of the facility selected by Fate (i.e.,
the Planned Fate Facility or the Back-Up Fate Facility) in accordance with
Section 9.8 and shall submit its audit findings to the JMC.  The JMC shall
review the audit findings and determine whether the audited facility is in
compliance with the Commercial Supply Criteria.  

(c)The “Commercial Supply Criteria” for determination of compliance will consist
of: [***].  The JMC may update the Commercial Supply Criteria from time to time.

(d)[***] (a “Compliant Commercial Manufacturing Facility”), then Fate (at the
Planned Fate Facility or the Back-Up Fate Facility, as applicable) shall have
the obligation to Manufacture and supply to Janssen, and Janssen shall have the
obligation to obtain from Fate, all of Janssen’s requirements of Pivotal
Clinical Supplies and Initial Commercial Supplies at such Compliant Commercial
Manufacturing Facility and Section 9.4.2 shall apply.  

(e)[***].

(f)If Fate notifies Janssen that it will use the Planned Fate Facility to
Manufacture Pivotal Clinical Supplies and Initial Commercial Supplies in
accordance with Section 9.4.1(b) but, on the date on which the first IND of such
Licensed Product becomes effective in the U.S. under 21 C.F.R. 312.40, [***],
then the following terms shall apply:

(i)Fate will provide Janssen with its plan for completing the establishment of
the Planned Fate Facility, which plan shall include key milestone events and
reasonable deadlines for achievement of such milestone events.  Janssen will
reasonably determine, in consultation with Fate, [***].  If Janssen identifies
any issues with the plan, the Parties shall meet, discuss and make appropriate
modifications to such plan.

(ii)[***]

(iii)[***]

(iv)[***].

(g)If, pursuant to Section 9.4.1(e), 9.4.1(f) or 9.4.2(b), Janssen Manufactures
any Pivotal Clinical Supplies or Initial Commercial Supplies:

(i)the Parties shall enter into a supply agreement for the supply by Fate to
Janssen of sufficient quantities of CD34 Composition for the Manufacture of
Pivotal Clinical Supplies or Initial Commercial Supplies, under which Fate shall
supply such CD34 Composition to Janssen, and Janssen shall obtain its
requirements of such CD34 Composition from Fate, at a supply price equal to
[***] for Pivotal Clinical Supplies and at a supply price equal to [***], for
Initial Commercial Supplies; and

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(ii)such supply agreement shall contain reasonable and customary terms for,
pursuant to which Fate shall conduct, [***], technology transfer of the Product
Process pursuant to Section 9.9 to the Janssen facility [***] for Manufacture of
Pivotal Clinical Supplies or Initial Commercial Supplies using such CD34
Composition.    

9.4.2Fate Manufacture of Pivotal Clinical and Commercial Supplies.  [***], then
the following provisions shall apply.

(a)The JMC shall develop and approve a plan for Fate to qualify and validate the
Compliant Commercial Manufacturing Facility for the Manufacture of the Pivotal
Clinical Supplies and Initial Commercial Supplies of the Licensed Product, which
plan shall include key milestone events and deadlines for achievement of such
milestone events.  Fate shall report on its progress under such plan at each
meeting of the JMC in accordance with Section 9.2.  

(b)[***], then Janssen shall have the right to Manufacture its requirements of
Pivotal Clinical Supplies and Initial Commercial Supplies and the terms of
Section 9.4.1(g) shall apply to such Manufacture.  

(c)Subject to Section 9.4.2(b) and Section Error! Reference source not found.,
Fate shall be solely responsible for Manufacturing and supply to Janssen, and
Janssen shall obtain from Fate, all of Janssen’s requirements of Pivotal
Clinical Supplies and the Initial Commercial Supplies of the Licensed Product at
the Compliant Commercial Manufacturing Facility.   Within [***] days following
the JMC’s determination, the Parties shall enter into a supply agreement setting
forth the terms and conditions applicable to the Manufacture and supply of the
Pivotal Clinical Supplies and Initial Commercial Supplies of the Licensed
Product (the “Pivotal Clinical and Commercial Supply Agreement”) and a related
quality agreement; provided, however, [***].  The Pivotal Clinical and
Commercial Supply Agreement shall be consistent with the terms of this
Agreement, and shall contain reasonable and customary terms for agreements of
its type and for this type of product (including forecasting and ordering
requirements, delivery, process development, technology transfer, termination,
procedures for non-conformance with specifications and non-compliance with Laws,
audit and inspection (including of books of accounts and records by Janssen for
the determination of the Cost of Goods) and indemnification), as well as the
following terms:

(i)Fate shall Manufacture and supply to Janssen, and Janssen shall purchase from
Fate, all units of Licensed Product that are forecasted and ordered by Janssen
in accordance with the forecasting and ordering requirements set forth in the
Pivotal Clinical and Commercial Supply Agreement;

(ii)Fate shall Manufacture and supply to Janssen, and Janssen shall purchase
from Fate, all Pivotal Clinical Supplies and Initial Commercial Supplies of
Licensed Product, and all CD34 Composition and drug substance used to
Manufacture such Licensed Product, in the Compliant Commercial Manufacturing
Facility, and Janssen shall have the right to audit such facilities to the
extent provided in Section 9.8;

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(iii)Fate shall use [***] Efforts to ensure uninterrupted supply of any Licensed
Product ordered by Janssen in accordance with the applicable forecasting and
ordering requirements;

(iv)the JMC shall oversee the operational aspects of the Manufacture and supply
of Licensed Product, and all CD34 Composition and drug substance used to
Manufacture such Licensed Product, including forecasting, ordering and planning
to ensure business continuity with respect to the Manufacture and supply of
Licensed Product;

(v)supply shortage and failure to supply provisions, [***];

(vi)Pivotal Clinical Supplies of Licensed Product shall be supplied by Fate to
Janssen at a supply price equal to [***]; and

(vii)Initial Commercial Supplies of Licensed Product shall be supplied by Fate
to Janssen at a supply price equal to [***].

Until the Pivotal Clinical and Commercial Supply Agreement is executed, the
terms set forth in clauses (i) through (vii) of this Section shall apply.

9.5Manufacture and Supply of Other Commercial Supplies.  

9.5.1Responsibility for Manufacture of Other Commercial Supplies.  Janssen shall
have the right to Manufacture all of its requirements of commercial supplies of
Licensed Products beyond the Initial Commercial Supplies at a Janssen facility
or the facility of an Approved CMO.    

9.5.2Transition of Manufacture to Janssen.  

(a)If Fate is Manufacturing the Pivotal Clinical Supplies and Initial Commercial
Supplies of a Licensed Product under Section 9.4.2, then promptly following BLA
submission for such Licensed Product, the JMC shall meet to discuss
[***].  After the JMC discusses the allocation of responsibility for future
commercial supplies of a Licensed Product, the JMC shall develop and approve a
plan to transition the Manufacture of commercial supplies of such Licensed
Product to Janssen.  If the JMC does not approve such transition plan within
[***] days following BLA submission for such Licensed Product, then Janssen
shall have final decision-making authority with respect to such transition
plan.  Such transition plan shall include activities necessary to complete a
technology transfer of the Product Process pursuant to Section 9.9 to the
facility(ies) of Janssen or an Approved CMO that will be used by Janssen to
Manufacture such commercial supplies and activities necessary to validate and
qualify such facility(ies).  Each Party shall conduct the activities set forth
in the transition plan.  Unless and until Janssen’s facilities are qualified,
validated and approved by the applicable Regulatory Authority for the
Manufacture of such supplies, Fate will continue to Manufacture commercial
supplies at a Compliant Commercial Manufacturing Facility on the same terms and
conditions that apply to the Initial Commercial Supplies.  

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(b)Promptly following BLA submission for such Licensed Product, the Parties
shall enter into a supply agreement for the supply by Fate to Janssen of
sufficient quantities of CD34 Composition for Manufacture of such commercial
supplies of the Licensed Product, under which Fate shall supply such CD34
Composition to Janssen at a supply price equal to [***].

(c)If Janssen has the right to Manufacture its requirements of Pivotal Clinical
Supplies and Initial Commercial Supplies under Section 9.4.1(e), 9.4.1(f) or
9.4.2(b), then Fate shall have no right to Manufacture any of Janssen’s
requirements of future commercial supplies beyond the Initial Commercial
Supplies, and Janssen shall Manufacture its requirements of future commercial
supplies beyond the Initial Commercial Supplies at a Janssen facility or the
facility of an Approved CMO.  The terms of Section 9.4.1(g) shall apply to such
supplies.    

9.6Cell Banks.  

9.6.1Fate shall be responsible for generating the Master iPSC Bank for each
Licensed Product.  The JMC shall oversee the progress of the generation of the
Master iPSC Bank and determine whether to generate working cell banks.

9.6.2Upon Janssen’s exercise of the Commercial Option for a Pre-IND
Collaboration Candidate, [***].  Unless the JMC determines otherwise, during the
Term, the Master iPSC Bank shall be stored in at least two locations selected by
the JMC, one of which will be a Fate manufacturing facility and one of which
will be a location controlled by Janssen.

9.6.3Each Party shall hold the Master iPSC Bank at a facility approved by the
JMC.  Fate shall use the Master iPSC Bank, and the Parties shall use CD34
Compositions, only to Manufacture Licensed Products as permitted under this
Agreement. Neither Party shall permit any Third Party to access such Master iPSC
Bank, except a Third Party manufacturer is permitted to receive vials from such
Master iPSC Bank solely for the Manufacture of Licensed Products.  With respect
to any portion of the Master iPSC Bank stored by a Party, each Party
acknowledges and agrees that:

(a)the Master iPSC Bank shall be, and shall at all times during the Term remain,
subject to Janssen’s exclusive rights under Section 9.6.2;

(b)each Party will use a control system to ensure the Master iPSC Bank is
properly secured and has limited authorized access;

(c)each Party will maintain the Master iPSC Bank under validated storage
conditions designed to maintain viability, prevent contamination and otherwise
maintain GMP compliance, and such storage conditions will be actively monitored
and documented;

(d)each Party will provide documentation upon request regarding the use of the
vials from the Master iPSC Bank and monitored storage conditions, the foregoing
shall not be construed to expand a Party’s right to access or use of such Master
iPSC Bank; and

(e)each Party shall conspicuously mark the Master iPSC Bank as subject to the
terms of this Section 9.6.3.

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9.6.4[***]; provided, however, that the Parties agree that Fate shall be the
Party responsible for the re-generation of the Master iPSC Bank unless Fate is
unable to carry out such responsibility.  Except as set forth above, Fate shall
have the exclusive right to conduct the Cell Bank Process and Cell Bank Process
Development under this Agreement.  

9.7Compliance; Safety Issues.  

9.7.1Each Party shall conduct all CMC Development, Manufacturing and supply
activities, including the manufacture, handling, storage and shipment of all
applicable Collaboration Candidates and Licensed Products in compliance with all
Laws (including all current governmental regulatory requirements concerning GMP
and GMP requirements concerning documentation, reports and record keeping and
relating to the protection of the environment and occupational health and
safety), all Regulatory Filings, and its applicable internal specifications and
quality control procedures.  Fate shall conduct all Cell Bank Process
Development in compliance with all Laws (including all current governmental
regulatory requirements concerning GMP and GMP requirements concerning
documentation, reports and record keeping and relating to the protection of the
environment and occupational health and safety), all Regulatory Filings, and its
applicable internal specifications and quality control procedures.

9.7.2If Fate is Manufacturing any supplies of Licensed Products pursuant to this
ARTICLE 9, and Janssen reasonably determines that there is a safety or quality
issue with respect to any such supplies or the facility in which such supplies
are Manufactured, [***].  

9.8Audits.  Each Party shall have the right to audit any facility where (a) the
Master iPSC Bank or the CD34 Composition, or any working cell bank thereof, of a
Licensed Collaboration Candidate is stored by the other Party or (b) CD34
Composition, drug substance or Licensed Products are Manufactured by the other
Party (or any of its Affiliates or permitted CMOs) to ensure compliance with
this ARTICLE 9.  Any such audit shall be arranged on mutually convenient dates,
shall involve no more than two (2) auditors, take no longer than [***] Business
Days and occur no more than once in any Calendar Year, except in circumstances
in which an audit reveals issues requiring follow up visits.  Any such audit
visit will be subject to the Parties establishing appropriate confidentiality
protections regarding the audited Party’s manufacturing technology and any other
products which may be made at the applicable facility.  In the event of any
inconsistency between this Section 9.8 and the audit provisions contained in any
quality agreement entered into pursuant to this ARTICLE 9, the terms of such
quality agreement shall prevail and govern.

9.9Manufacturing Technology Transfer.  

9.9.1[***]  Any Fate Confidential Methods disclosed to Janssen under this
Section shall continue to be Fate Confidential Methods and shall continue to be
subject to Section 5.3.  

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9.9.2In the event Janssen is or becomes responsible for the conduct of any Cell
Bank Process, CD34 Composition Manufacturing, or Product Manufacturing for a
Licensed Product in accordance with this ARTICLE 9, Fate shall reasonably
cooperate with Janssen to provide technical assistance, and to transfer to
Janssen, any applicable Fate Product Know-How, including any Fate Confidential
Methods, licensed to Janssen under Section 5.1.2(a)(ii), used by Fate to conduct
the applicable activity, at Janssen’s cost and expense.  The Parties acknowledge
that any such transfer by Fate to Janssen will contain Fate Confidential Methods
and therefore shall be subject to Section 5.3.  Any Fate Confidential Methods
transferred to Janssen under this Section shall continue to be Fate Confidential
Methods and continue to be subject to Section 5.3. 

9.10Third Party Subcontractors.  

9.10.1Each Party (or its Affiliate) may subcontract the performance of any of
its Manufacturing activities under this ARTICLE 9 to a Third Party (a “CMO”)
subject to the prior written consent of the other Party, which shall not be
unreasonably withheld (such a CMO, an “Approved CMO”).   In addition, if any
activities to be conducted by a CMO reasonably requires the disclosure of any
Fate Confidential Methods, the Parties will reasonably cooperate to identify a
mutually acceptable CMO before engaging such CMO.  

9.10.2If Janssen desires to use a CMO to perform any of its Manufacturing
responsibilities and Fate has previously engaged a CMO under this Section 9.10,
then Janssen will engage Fate’s CMO for such Manufacturing unless the Parties
agree otherwise.  

9.10.3[***]

9.10.4Each CMO must satisfy and comply with at all times GMP (including FDA, EMA
and Japanese GMP), all regulatory requirements, and the then-current Janssen
Manufacturing Standards; and must satisfy and comply with at all times any
additional subcontractor criteria established by the JMC, which shall include
the following requirements: (a) any such CMO to whom a Party discloses
Confidential Information of the other Party shall enter into an appropriate
written agreement obligating such CMO to be bound by obligations of
confidentiality and restrictions on use of such Confidential Information that
are no less restrictive than the obligations in ARTICLE 12; (b) [***]; (c) the
subcontracting Party shall at all times be responsible for the performance of
such CMO and shall remain primarily responsible to the non-subcontracting Party
for the fulfillment of its obligations under this Agreement even after such
activities are subcontracted to such CMO.  

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ARTICLE 10
Financial Terms

10.1Upfront Payment. In partial consideration for the rights granted to Janssen
under this Agreement, Janssen shall pay to Fate a one-time-only, non-refundable,
non-creditable upfront payment of Fifty Million Dollars ($50,000,000) within ten
(10) Business Days after the Effective Date.

10.2Payments during Research Term.

10.2.1Fate Research Costs.  As consideration for Fate’s conduct of the Research
Plan activities, Janssen shall reimburse Fate for all Research Costs incurred by
Fate and its Affiliates on the terms set forth in this Section.  Within
[***] days  after the end of each [***], Fate shall submit to Janssen a report,
in a format established by the Parties, of all Research Costs incurred by Fate
and its Affiliates to conduct activities under each Research Plan during such
Calendar Quarter (the “Research Cost Report”).  Within [***] days following the
receipt of the Research Cost Report, Janssen shall have the right to request
reasonable additional information, including documentation of Out-of-Pocket
Expenses, related to Fate’s and its Affiliates’ Research Costs during such
Calendar Quarter.  Janssen shall pay Fate an amount equal to the Research Costs
reported in the Research Cost Report within [***] days after the end of the
applicable [***]; provided, however, that Research Costs incurred in performing
activities under a Research Plan that exceed the total amount set forth in the
applicable Research Budget in the applicable Calendar Year-to-date period shall
be included in the calculation of Research Costs to be reimbursed by Janssen
only to the extent such excess Research Costs do not exceed [***] of the total
amount set forth in such Research Budget in the applicable Calendar Year-to-date
period in accordance with such Research Budget for such Calendar Year.

10.2.2Janssen Research Costs. Janssen shall bear, and shall be fully and solely
responsible for, all costs incurred by Janssen and its Affiliates under each
Research Plan.

10.2.3Research Milestone Payments.  On a Janssen Antigen-by-Janssen Antigen
basis, Janssen shall pay to Fate a milestone payment of [***] Dollars ($[***])
within [***] days after the Selection Date of the first Collaboration Candidate
with respect to a particular Janssen Antigen that the JRC determines (or Janssen
determines) to further develop in IND Enabling Studies pursuant to Section
3.7.  The milestone payment set forth in this Section 10.2.3 shall be
non-refundable and non-creditable and shall be payable no more than once for
each Janssen Antigen, regardless of the number of Collaboration Candidates with
respect to such Janssen Antigen that the JRC determines (or Janssen determines)
to further develop in IND Enabling Studies.  For clarity, if the JRC or Janssen
does not determine to further develop in IND Enabling Studies any DC
Collaboration Candidates with respect to a particular Janssen Antigen, all such
DC Collaboration Candidates with respect to such Janssen Antigen shall become
Discontinued Collaboration Candidates, this Agreement shall be deemed terminated
with respect to such Janssen Antigen and such Janssen Antigen shall cease to be
a Janssen Antigen, and no milestone payment under this Section 10.2.3 shall be
payable with respect to such Janssen Antigen.

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10.2.4Option Exercise Payments.  On a Janssen Antigen-by-Janssen Antigen basis,
Janssen shall pay to Fate an option exercise fee of [***] Dollars ($[***]) (the
“Option Exercise Payment”) the first time Janssen exercises the Commercial
Option for a Collaboration Candidate with respect to a particular Janssen
Antigen in accordance with Section 4.3. For clarity, if Janssen has previously
exercised the Commercial Option for a different Collaboration Candidate with
respect to the same Janssen Antigen as such Collaboration Candidate, then no
payment shall be due for the exercise of the Commercial Option for any
subsequent Collaboration Candidates with respect to the same Janssen Antigen.
The Option Exercise Payment shall be paid within [***] days after the applicable
Exercise Effective Date.

10.3Effect of Commercial Option Exercise.  The provisions of Section 10.4
through Section 10.8 shall apply to Licensed Products that contain Collaboration
Candidates for which Janssen exercised the Commercial Option in accordance with
Section 4.3.

10.4Clinical Development and Regulatory Milestones.

10.4.1Clinical Development Milestone Events and Payments.  Subject to Sections
10.4.4 and Section 10.8, in consideration of Fate’s performance in achieving the
following milestone events, Janssen shall pay to Fate the milestone payments set
forth in the table below not later than [***] days after Fate delivers an
invoice to Janssen upon the first occurrence of the corresponding milestone
event set forth below with respect to each Janssen Antigen (each, a “Clinical
Development Milestone Event”).  For clarity, with respect to each Janssen
Antigen, the milestone payments set forth in this Section 10.4.1 shall be
payable no more than once for each Janssen Antigen.  Janssen shall provide
notice to Fate within [***] days after the occurrence of any of the Clinical
Development Milestone Events:  

 

Clinical Development Milestone Event

Milestone Payment

Janssen

Antigen 1

Janssen

Antigen 2

Janssen

Antigen 3

Janssen

Antigen 4

Clinical Development Milestones

1.       [***]

$[***]

$[***]

$[***]

$[***]

2.       [***]

$[***]

$[***]

$[***]

$[***]

3.       [***]

$[***]

$[***]

$[***]

$[***]

 

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10.4.2Regulatory Milestones and Payments. Subject to Section 10.4.4 and Section
10.8, in consideration of Fate’s performance in achieving the following
milestone events, Janssen shall pay to Fate the milestone payments set forth in
the table below not later than [***] days after Fate delivers an invoice to
Janssen upon the first occurrence of the corresponding milestone event set forth
below with respect to a Licensed Product (each, a “Regulatory Milestone
Event”).  For clarity, the milestone payments set forth in this Section 10.4.2
shall be payable for each Licensed Product.  Janssen shall provide notice to
Fate within [***] days after the occurrence of any of the Regulatory Milestone
Events:

Regulatory Milestone Event

Milestone Payment

Janssen

Antigen 1

Janssen

Antigen 2

Janssen

Antigen 3

Janssen

Antigen 4

1.     [***]

$[***]

$[***]

$[***]

$[***]

2.     [***]

$[***]

$[***]

$[***]

$[***]

3.     [***]

$[***]

$[***]

$[***]

$[***]

4.     [***]

$[***]

$[***]

$[***]

$[***]

5.     [***]

$[***]

$[***]

$[***]

$[***]

6.     [***]

$[***]

$[***]

$[***]

$[***]

7.     [***]

$[***]

$[***]

$[***]

$[***]

8.     [***]

$[***]

$[***]

$[***]

$[***]

9.     [***]

$[***]

$[***]

$[***]

$[***]

10.     [***]

$[***]

$[***]

$[***]

$[***]

11.     [***]

$[***]

$[***]

$[***]

$[***]

12.     [***]

$[***]

$[***]

$[***]

$[***]

13.     [***]

$[***]

$[***]

$[***]

$[***]

14.     [***]

$[***]

$[***]

$[***]

$[***]

15.     [***]

$[***]

$[***]

$[***]

$[***]

16.     [***]

$[***]

$[***]

$[***]

$[***]

17.     [***]

$[***]

$[***]

$[***]

$[***]

18.     [***]

$[***]

$[***]

$[***]

$[***]

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10.4.3Additional Milestone Payment.  For each Janssen Antigen, in consideration
of Fate’s performance in achieving the following events, Janssen shall pay to
Fate the corresponding amount set forth in the table below (for each Janssen
Antigen, the “Additional Milestone Payment”) if [***]

(a)[***]

(b)[***]

(c)[***]

(d)[***]

(e)[***]

(f)[***].

If each of the events described in clause [***] above occurs with respect to a
Janssen Antigen, then (i) Janssen shall pay to Fate the Additional Milestone
Payment corresponding to such Janssen Antigen not later than [***] days after
Fate delivers an invoice to Janssen after the occurrence of all such events and
(ii) ARTICLE 6 shall no longer apply with respect to any Licensed Products with
respect to such Janssen Antigen.    

[***]

Each Additional Milestone Payment under this Section 10.4.3 shall be
non-refundable and non-creditable, and shall be payable [***].

 

 

Janssen

Antigen 1

Janssen

Antigen 2

Janssen

Antigen 3

Janssen

Antigen 4

Additional Milestone Payment

$[***]

$[***]

$[***]

$[***]

 

10.4.4Milestone Conditions.

(a)The milestone payments under this Section 10.4 shall be non-refundable and
non-creditable.  Payments for Clinical Development Milestone Events (i.e.,
milestones #1, #2 and #3) shall be payable [***].  Payments for Regulatory
Milestone Events (i.e., milestones #4 to #21) shall be payable no more than once
for each Licensed Product that achieves such milestone event, regardless of the
number of times such Licensed Product achieves such milestone event, but shall
be payable for each Licensed Product.   

(b)If Clinical Development Milestone Event #3 ([***]) for a particular Janssen
Antigen has not occurred before Regulatory Milestone Event #4 ([***]) occurs for
such Janssen Antigen, then Clinical Development Milestone Event #3 will be
deemed to have occurred on the same date as the occurrence of Regulatory
Milestone Event #4.

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(c)With respect to Regulatory Milestone Events #14 through #21, [***].

(d)If any of Regulatory Milestone Events [***] occurs for a particular Licensed
Product and Indication, and payment has not been made for Regulatory Milestone
Events [***], respectively, or for [***], in each case for the same Licensed
Product and Indication, then such applicable payment for [***].

10.5Sales Milestones.  Subject to Section 10.8, as part of the royalty report
delivered pursuant to Section 10.6.5, Janssen shall notify Fate, with respect to
each Janssen Antigen, the first time the Annual Net Sales of Licensed Products
with respect to such Janssen Antigen in a Calendar Year by Janssen, its
Affiliates and its Sublicensees exceed, in the aggregate, any of the threshold
amounts set forth in the applicable column of the table below (each, a “Sales
Milestone Event”).  Net Sales of a particular Licensed Product in a particular
country occurring after the expiration of the Royalty Term (but during the Term)
for such Licensed Product in such country shall be included in the calculation
of Annual Net Sales for purposes of calculating the amount in the first column
of the table below in this Section 10.5.  Subject to the remainder of this
Section 10.5, Janssen shall pay to Fate the corresponding milestone payment in
the table set forth below within [***] days after the end of the [***] during
which such Sales Milestone Event is achieved.

 

Annual Net Sales of all Licensed Products with respect to the applicable Janssen
Antigen in the Territory first exceed:

Milestone Payments

Janssen

Antigen 1

Janssen

Antigen 2

Janssen

Antigen 3

Janssen

Antigen 4

1.    $[***]

$[***]

$[***]

$[***]

$[***]

2.    $[***]

$[***]

$[***]

$[***]

$[***]

3.    $[***]

$[***]

$[***]

$[***]

$[***]

4.    $[***]

$[***]

$[***]

$[***]

$[***]

 

The milestone payments under this Section 10.5 shall be non-refundable and
non-creditable.  Each milestone payment under this Section 10.5 shall be payable
[***].  The Annual Net Sales of all Licensed Products with respect to the same
Janssen Antigen shall be aggregated together in the calculation of Annual Net
Sales for purposes of this Section 10.5.  For clarity, if two or more Sales
Milestone Events occur in one Calendar Year, then the milestone payments for all
such Sales Milestone Events shall be payable.

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10.6Royalty Payments.

10.6.1Royalty Rate.  Subject to the remainder of this Section 10.6 and Section
10.8, in partial consideration of the licenses granted by Fate to Janssen in
accordance with Section 5.1.2 of this Agreement, Janssen shall pay to Fate
royalties on the aggregate Annual Net Sales of Licensed Products (excluding
Profit Share Products) during the applicable Royalty Term by Janssen, its
Affiliates and Sublicensees in the Territory during each Calendar Year at the
rates set forth in the table below. Annual Net Sales of all Licensed Products
(excluding Profit Share Products) that target the same Janssen Antigen shall be
aggregated for purposes of calculation of royalties pursuant to this
Section 10.6.  Net Sales of a particular Licensed Product in a particular
country occurring after the expiration of the Royalty Term for such Licensed
Product in such country shall be disregarded in the calculation of Annual Net
Sales for purposes of calculating the amount in the first column of the table
below in this Section 10.6.1.  

 

Aggregate Annual Net Sales of all Licensed Products with respect to the
applicable Janssen Antigen in the Territory (excluding Profit Share Products)

Royalty Rate

Janssen

Antigen 1

Janssen

Antigen 2

Janssen

Antigen 3

Janssen

Antigen 4

For that portion of Annual Net Sales of such Licensed Products (excluding Profit
Share Products) in the Territory in a Calendar Year less than or equal to $[***]

[***]%

[***]%

[***]%

[***]%

For that portion of Annual Net Sales of such Licensed Products (excluding Profit
Share Products) in the Territory in a Calendar Year greater than $[***] and less
than or equal to $[***]

[***]%

[***]%

[***]%

[***]%

For that portion of Annual Net Sales of such Licensed Products (excluding Profit
Share Products) in the Territory in a Calendar Year greater than $[***]
and less than or equal to $[***]

[***]%

[***]%

[***]%

[***]%

For that portion of Annual Net Sales of such Licensed Products (excluding Profit
Share Products) in the Territory in a Calendar Year greater than $[***]

[***]%

[***]%

[***]%

[***]%

 

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10.6.2Royalty Term.  For purposes of this Agreement, “Royalty Term” means, with
respect to a Licensed Product in a particular country, the period of time
beginning on the date of the First Commercial Sale of such Licensed Product in
such country and ending on the latest of: (i) the expiration of the
last-to-expire Product Claim with respect to such Licensed Product in such
country; (ii) the [***] anniversary of such First Commercial Sale in such
country; or (iii) the expiration of Regulatory Exclusivity for such Licensed
Product in such country, if any.  After the expiration of the Royalty Term for a
Licensed Product in a country, the last paragraph of Section 15.1 shall
apply.  For the purposes of the definition of Royalty Term, “Product Claim”
means [***]

(a)[***]

(b)[***]

(c)[***]

[***]  

[***].  

10.6.3Royalty Reductions.

(a)If, following the [***] anniversary of First Commercial Sale of a Licensed
Product in a country, such Licensed Product is sold in such country during the
Royalty Term at a time when: [***], the royalties payable on Net Sales of such
Licensed Product in such country in any Calendar Quarter during the applicable
Royalty Term shall be reduced to an amount equal to [***] of the royalties that
would otherwise be payable on Net Sales of such Licensed Product in such country
in such Calendar Quarter under Section 10.6.1, as calculated in accordance with
Section 10.6.3(d) and subject to the application of the royalty floor under
Section 10.6.3(c).

(b)If a Licensed Product is sold in a country during the applicable Royalty Term
at a time when [***], the royalties payable on Net Sales of such Licensed
Product in such country in any Calendar Quarter during the applicable Royalty
Term shall be reduced to an amount equal to [***] of the royalties that would
otherwise be payable on Net Sales of such Licensed Product in such country in
such Calendar Quarter under Section 10.6.1, as calculated in accordance with
Section 10.6.3(d) and subject to the application of the royalty floor under
Section 10.6.3(c).

(c)Notwithstanding the foregoing, in no event shall the operation of Section
10.6.3(a) and 10.6.3(b), individually or in combination, with respect to a
Licensed Product reduce the royalties owed to Fate for Net Sales of such
Licensed Product in any country in a given Calendar Quarter during the
applicable Royalty Term to less than [***] of the amount that would otherwise
have been payable pursuant to Section 10.6.1 with respect to such Net Sales of
such Licensed Product.

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(d)If the royalties payable with respect to Net Sales of a Licensed Product in a
country in a Calendar Quarter are subject to reduction under Section 10.6.3(a)
or Section 10.6.3(b), the royalties payable with respect to such Net Sales shall
be calculated as follows:

(i)First, determine the aggregate Net Sales of such Licensed Product in such
country during such Calendar Quarter that occurred during the applicable Royalty
Term (the “Quarterly Net Sales”).

(ii)Second, determine the Effective Royalty Rate for the applicable Janssen
Antigen and applicable Calendar Quarter.  The “Effective Royalty Rate” means,
with respect to a particular Janssen Antigen and a particular Calendar Quarter,
the amount (expressed as a percentage) equal to A ÷ B (i.e. A divided by B),
where:

(1)A = Aggregate amount of royalties payable under Section 10.6.1 applying the
relevant royalty tiers, on aggregate Annual Net Sales of Licensed Products with
respect to the applicable Janssen Antigen in the Territory during such Calendar
Quarter before applying any reductions under Section 10.6.3(a) or 10.6.3(b); and

(2)B = Aggregate Annual Net Sales of Licensed Products with respect to the
applicable Janssen Antigen in the Territory during such Calendar Quarter
(excluding any Net Sales of such Licensed Products that occurred after the
expiration of the applicable Royalty Term).

(iii)Third, multiply [***] by [***] to determine the royalties that would have
been payable on the Quarterly Net Sales pursuant to Section 10.6.1 if no
reduction applied under Section 10.6.3(a) or Section 10.6.3(b) (the “Unadjusted
Quarterly Royalties”).

(iv)Last, reduce the Unadjusted Quarterly Royalties to the amount specified in
Section 10.6.3(a) or Section 10.6.3(b), as applicable.

10.6.4Third Party License Payments.

(a)[***]

(b)[***]

(c)[***]

10.6.5Royalty Payment Reports.  Commencing with the First Commercial Sale of a
Licensed Product by Janssen or its Affiliates or Sublicensees in the Territory,
Janssen shall, within [***] days after the end of each [***], deliver a final
written report to Fate [***]. Simultaneously with the delivery of each such
final report, Janssen shall pay to Fate the total royalties, if any, due to Fate
for the period of such report.  If no royalties or payments for Sales Milestone
Events are due, Janssen shall so report.  All reports delivered by Janssen under
this Section shall be Confidential Information of Janssen.

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10.7CMC Development Costs.  

10.7.1As consideration for Fate’s conduct of the CMC Development Plan activities
for a Licensed Collaboration Candidate and Licensed Products containing such
Licensed Collaboration Candidate, Janssen shall reimburse Fate for all CMC
Development Costs incurred by Fate and its Affiliates on the terms set forth in
this Section.    

10.7.2Within [***] days after the end of each [***] after the JMC approves a CMC
Development Plan for a Licensed Collaboration Candidate under Section 9.1.2,
Fate shall submit to Janssen a report, in a format established by the Parties,
of all CMC Development Costs incurred by Fate and its Affiliates to conduct
activities under such CMC Development Plan during such [***] (the “CMC
Development Cost Report”).  Within [***] days following the receipt of the CMC
Development Cost Report, Janssen shall have the right to request reasonable
additional information, including documentation of Out-of-Pocket Expenses,
related to Fate’s and its Affiliates’ CMC Development Costs during such
[***].  Janssen shall pay Fate an amount equal to the CMC Development Costs
reported in the CMC Development Cost Report within [***] days after the end of
the applicable [***]; provided, however, that CMC Development Costs incurred in
performing activities under such CMC Development Plan that exceed the total
amount set forth in the applicable CMC Development Budget in the applicable
Calendar Year-to-date period shall be included in the calculation of CMC
Development Costs to be reimbursed by Janssen only to the extent such excess CMC
Development Costs do not exceed [***] of the total amount set forth in such CMC
Development Budget in the applicable Calendar Year-to-date period in accordance
with such CMC Development Budget for such Calendar Year.

10.7.3Janssen shall bear, and shall be fully and solely responsible for, all
costs incurred by Janssen and its Affiliates under each CMC Development Plan.

10.8Payments After Fate Exercises the Fate Opt-In Option.  In the event Fate
exercises the Fate Opt-In Option with respect to a Profit Share Product pursuant
to Section 6.3, ARTICLE VI  of the Profit Share Product Exhibit shall apply as
follows during the Profit Share Term:

10.8.1Regulatory Milestone Payments and Events. Section 10.4.2 shall not apply
to the Profit Share Product, and instead Section 6.1 of the Profit Share Product
Exhibit shall apply.

10.8.2Sales Milestone Payments. Section 10.5 shall not apply to the Profit Share
Product or, following the date of First Commercial Sale of such Profit Share
Product, any Related Licensed Products, and instead Section 6.2 of the Profit
Share Product Exhibit shall apply.

10.8.3Shared Development Costs, U.S. Pre-Tax Profits and Losses. Janssen shall
not be solely responsible for the costs and expenses of Developing and
Commercializing the Profit Share Product, and instead Sections 6.3 and 6.4 of
the Profit Share Product Exhibit shall apply.

10.8.4Territory Royalties. Section 10.6.1 shall not apply to the Profit Share
Product, and instead Section 6.5 of the Profit Share Product Exhibit shall
apply.

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10.8.5CMC Development Costs.  Section 10.7 shall not apply to the Profit Share
Product, and instead Section 6.3 of the Profit Share Product Exhibit shall
apply.  

10.8.6Other Financial Provisions. The other provisions of ARTICLE VI of the
Profit Share Product Exhibit shall apply.

10.9Manner of Payment.

10.9.1Payment Instruction.  All payments to be made by a Party hereunder shall
be made in Dollars by wire transfer to the bank account as shall be designated
by the Party receiving the payment.  

10.9.2Exchange Rate. If any amounts that are relevant to the determination of
amounts to be paid under this Agreement or any calculations to be performed
under this Agreement are received or paid or initially reported in a currency
other than U.S. Dollars, then such amounts shall be converted to their U.S.
Dollar equivalent as follows:

(a)[***]

(b)[***].

10.9.3Late Payment.  If either Janssen or Fate shall fail to make a timely
payment pursuant to this ARTICLE 10 or any other provision of this Agreement,
any such payment that is not paid on or before the date such payment is due
under this Agreement shall bear interest at a rate per annum equal to [***] or
the maximum rate allowable by applicable Law, whichever is lower.

10.10Records. Each Party shall keep, and cause its Affiliates and Sublicensees
to keep, complete and accurate records of the items underlying Research Costs,
CMC Development Costs and Net Sales, and with respect to each Profit Share
Product, Shared Development Costs, Allowable Expenses and Other Income, and any
other elements required to prepare the reports or calculate payments required by
under this Agreement or, with respect to each Profit Share Product, the Profit
Share Product Exhibit.  Such records must be retained for a period of [***]
months following the relevant reporting period.    

10.11Audits.  

10.11.1Each Party will have the right at its own expense to have an independent,
certified public accountant of nationally recognized standing, selected by such
Party and reasonably acceptable to the other Party, review any records of the
other Party and its Affiliates that are required to be kept pursuant to Section
10.10 in the location(s) where such records are maintained by the other Party or
its Affiliates upon [***] days prior written notice and during normal business
hours and under obligations of confidence, for the sole purpose of verifying the
basis and accuracy of payments made under this Agreement or the Profit Share
Product Exhibit, within the prior [***]-month period.  Audits may not be
conducted by a Party under this Section more than once every [***], and an audit
of the records relating to a particular Calendar Year may be conducted not more
than once.

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10.11.2The report of the independent certified public accountant shall be shared
with the audited Party before distribution to the auditing Party so that the
audited Party can provide the independent public accountant with justifying
remarks for inclusion in the report before sharing the conclusions of such
independent public audit with the auditing Party.  The final audit report will
be shared with the auditing and audited Party at the same time and shall specify
whether the amounts paid to the auditing Party during the audited period were
correct or, if incorrect, the amount of any underpayment or overpayment.  The
audit report shall only contain the information relevant to support the
statement as to whether the amounts due under this Agreement were calculated and
paid accurately and shall not include any confidential information (or
additional information that is ordinarily not included in the reports to the
auditing Party) disclosed to the auditor during the course of the audit.

10.11.3If the review of such records reveals that the audited Party has failed
to accurately report information pursuant to the relevant provisions of this
Agreement or the Profit Share Product Exhibit or make any payment (or portion
thereof) required under this Agreement, then the audited Party shall pay, within
[***] days after receipt of the final audit report by the audited Party, to the
auditing Party any underpaid amounts due under this Agreement, together with
interest calculated in the manner provided in Section 10.9.3.  If any such
discrepancies resulted in an underpayment or overpayment, as the case may be, of
amounts due under this Agreement greater than [***] of the amounts actually due
for the applicable Calendar Year, the audited Party shall pay all reasonable
costs incurred in conducting such review.    If the audited Party disagrees with
the findings of the audit report, the Parties will first seek to resolve the
matter between themselves, and in the event they fail to reach agreement, the
dispute resolution provisions set forth in ARTICLE 16 shall apply.  

10.12Taxes.  

10.12.1Except as otherwise provided in this Agreement, each Party will make all
payments to the other Party 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.    

10.12.2Any Tax required to be withheld on amounts payable under this Agreement
will be paid by the paying Party on behalf of the recipient Party to the
appropriate governmental authority, and the paying Party will furnish the
recipient Party with proof of payment of such Tax. Any such Tax required to be
withheld will be an expense of and borne by the recipient Party.  If any such
Tax is assessed against and paid by the paying Party then the recipient Party
will indemnify and hold harmless the paying Party from and against such
Tax.  Notwithstanding the foregoing, the Parties acknowledge and agree that if
the paying Party (or its assignee pursuant to Section 17.4) is required by
applicable Law to withhold Taxes in respect of any amount payable under this
Agreement, and if such withholding obligation arises solely as a result of a
Withholding Tax Action and such withholding Taxes exceed the amount of
withholding Taxes that would have been applicable if such Withholding Tax Action
had not occurred, then notwithstanding anything to the contrary herein, any such
amount payable shall be increased to take into account such increased
withholding Taxes as may be necessary so that, after making all required
withholdings the recipient Party receives an amount equal to the sum it would
have received had no such Withholding Tax Action occurred.   [***].

10.12.3The Parties will cooperate with respect to all documentation required by
any taxing authority or reasonably requested by either Party to secure a
reduction in the rate of applicable withholding Taxes.

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ARTICLE 11
Intellectual Property

11.1Inventions.

11.1.1Inventorship. The Parties agree that ownership of inventions conceived,
developed or reduced to practice in the course of activities performed under
this Agreement, together with all intellectual property rights therein
(collectively, “Inventions”) shall be consistent in the Territory with ownership
as determined by application of U.S. patent Laws pertaining to inventorship. In
no event shall either Party be liable to the other Party for compensation to any
inventors for Inventions conceived, developed or reduced to practice by
director(s), officer(s) or employee(s) of the other Party regardless of which
Party has ownership rights to such Inventions pursuant to this Section 11.1.

11.1.2Ownership.

(a)Subject to Section 11.1.2(b), all Inventions conceived, developed or reduced
to practice solely by or on behalf of Janssen shall be solely owned by Janssen,
all Inventions conceived, developed or reduced to practice solely by or on
behalf of Fate shall be solely owned by Fate, and all Inventions conceived,
developed or reduced to practice jointly by or on behalf of Janssen and Fate
shall be jointly owned by Janssen and Fate.  

(b)Notwithstanding Section 11.1.2(a), the ownership of the following Inventions
shall be as follows, regardless of the inventorship of such Inventions between
the Parties:

(i)Fate shall solely own any Invention that is [***]; and  

(ii)Janssen shall solely own any Invention that is [***].

(c)In the case of Inventions jointly owned by Janssen and Fate (“Joint
Inventions”), and any Patents that claim or disclose such Joint Inventions
(“Joint Patents”), each Party shall own an equal and undivided interest in the
Joint Inventions and Joint Patents, with the right to practice, license and
exploit the Joint Inventions and Joint Patents, without the duty or accounting
or seeking consent from the other Party, subject to any exclusive licenses
granted herein and in a manner not inconsistent with this Agreement.  

11.1.3Disclosure.  Each Party shall promptly disclose to the other Party in
writing, and shall cause its Affiliates to so disclose, the conception,
development or reduction to practice of any Invention during the Term of this
Agreement. Each Party shall cause its Affiliates, employees, directors and
officers to so assign to such Party, such person’s or entity’s right, title and
interest in and to any such Inventions, and intellectual property rights
therein, as is necessary to enable such Party to fully effect the ownership of
such Inventions, and intellectual property rights therein, as provided for in
Section 11.1.2. Each Party shall include provisions in its relevant agreements
with Third Party contractors performing obligations on its behalf pursuant to
this Agreement and with Sublicensees, that effect the intent of this ARTICLE
11.  Each Party shall, and shall cause its Affiliates, employees, directors, and
officers, Sublicensees and Third Party contractors, in each case to cooperate
with such other Party and take all reasonable additional actions and execute
such agreements, instruments and documents as may be reasonably required to
perfect such other Party’s right, title and interest in and to Inventions, and
intellectual property rights therein, as set forth in this Section
11.1.  Regardless of the foregoing and any provision of this Section 11.1, a
Party engaging a CRO (or clinical trial site) for the conduct of Clinical Trials
or a CMO may agree to such terms as to the ownership of intellectual property,
including Patents, as is reasonable under the circumstances and/or customary.  

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11.2Patent Prosecution.

11.2.1Fate Patents.  

(a)The Parties recognize that it is their shared goal to obtain the broadest
patent coverage available with regard to the Fate Product Patents, consistent
with the goal of obtaining patents that are valid and enforceable as against
Third Parties.  The Parties recognize the value and importance of Fate’s
knowledge, prior experience and expertise with the patent prosecution of the
Fate Product Patents.  Janssen acknowledges that there will be multiple
licensees of certain Fate Product Patents and that Fate has the responsibility
to determine how best to conduct patent prosecution of the Fate Product Patents
for the benefit of all licensees, including Janssen and Fate’s Third Party
licensees.  Fate acknowledges that coordination of prosecution of patents and
patent applications within the Fate Research Patents and Fate Product Patents is
consistent with the foregoing goals and responsibilities.

(b)Subject to the terms and conditions of the Existing Agreements, Fate shall be
responsible, using patent counsel used by Fate as of the Effective Date or
selected by Fate after the Effective Date and reasonably acceptable to Janssen
(for clarity, [***] for the preparation, filing, prosecution (including any
interferences, oppositions, reissue proceedings, reexaminations and similar
proceedings) and maintenance (collectively, “Prosecution”) of Fate Research
Patents and Fate Product Patents (collectively, “Fate Patents”), including those
claiming Inventions to be solely owned by Fate under this Agreement.  Fate shall
keep Janssen reasonably informed with respect to such Prosecution activities,
but Fate shall have the right to take such reasonable acts in connection
therewith as Fate, in its sole discretion, deems appropriate, provided Fate is
acting in good faith to obtain and maintain Fate Product-Specific Patents
effective for market exclusivity of Licensed Products.  

(c)With respect to those Fate Patents that are owned solely by Fate and that
[***] (“Fate Product-Specific Patents”), Fate shall promptly provide Janssen
with copies of all correspondence to or from the USPTO, EPO and equivalent
patent offices in foreign jurisdictions, relating to such Fate Product-Specific
Patents.  Fate shall take into account and consider in good faith Janssen and
its interests and requests regarding the filing, prosecution and maintenance of
Fate Product-Specific Patents under this Section; provided, however, that Fate
shall have the right to take such reasonable acts in connection therewith as
Fate, in its sole discretion, deems appropriate, provided Fate is acting in good
faith to obtain and maintain Fate Product-Specific Patents effective for market
exclusivity of Licensed Product.  

(d)If Fate, prior or subsequent to filing any Patent that would constitute Fate
Product-Specific Patents, elects not to file, prosecute or maintain such Patent,
Fate shall give Janssen notice thereof within a reasonable period prior to
allowing such Patent to lapse or become abandoned or unenforceable, and [***]
Fate shall (and shall cause its outside counsel to) prepare and file Fate
Product-Specific Patents as instructed by Janssen, including in countries
requested by Janssen to the extent permitted by applicable Law.  The Parties
understand that [***].  In such case, Fate and Janssen shall reasonably
cooperate to [***]; provided, however, that, [***], or (B) if a claim of a
Patent owned by Janssen which claims [***].  In the circumstance where
[***].  Notwithstanding such [***] for all purposes of this Agreement, including
rights of enforcement and licenses [***].  

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(e)As between the Parties, Fate shall be solely responsible for all costs and
expenses Fate incurs in connection with the Prosecution of the Fate Patents that
are not Fate Product-Specific Patents.  Janssen shall reimburse Fate for all
reasonable out-of-pocket costs incurred by Fate in connection with the
Prosecution of the Fate Product-Specific Patents; provided, however, that (i) at
any time Janssen may elect not to be responsible for such costs, in which case
such applicable Fate Product-Specific Patent will no longer be included in any
licenses granted to Janssen hereunder and (ii) such costs will be included in
Allowable Expenses to the extent related to Profit Share Products in the U.S.

11.2.2Janssen Patents.  Janssen shall be solely responsible for the Prosecution
of any Patent that is solely owned by Janssen, including those filed by Janssen
covering its solely-owned Inventions; provided, however, that Janssen shall not
file any Patent disclosing or claiming specifically any Collaboration Candidate
or corresponding Precursor iPSC, Master iPSC Bank, CD34 Composition, CD34
Composition, CAR-T Cells or CAR-NK Cells unless such Collaboration Candidate is
a Licensed Collaboration Candidate (or a Discontinued Collaboration Candidate or
Equivalent licensed to Janssen pursuant to Section 5.1.3).  With respect to any
such Patents solely owned by Janssen that claim a Profit Share Product (or any
precursor or component thereof) or its manufacture or use (“Janssen Profit Share
Patents”), Janssen shall keep Fate reasonably informed with respect to its
Prosecution activities, and Fate may consult with Janssen and provide advice to
Janssen regarding such Prosecution activities, but Janssen shall have the right
to take such reasonable acts in connection therewith as Janssen deems
appropriate, in its sole discretion, provided Janssen is acting in good faith to
obtain and maintain Janssen Profit Share Patents effective for market
exclusivity of Profit Share Products.  Janssen shall promptly provide Fate with
copies of all correspondence to or from the USPTO, EPO and equivalent patent
offices in foreign jurisdictions, relating to such Janssen Profit Share
Patents.  Janssen shall take into account and consider in good faith Fate and
its interests and requests regarding the filing, prosecution and maintenance of
Janssen Profit Share Patents under this Section.  If Janssen, prior or
subsequent to filing any Patent that would constitute any Janssen Profit Share
Patents, elects not to file, prosecute or maintain such Patent in any of the
Major Markets, Janssen shall give Fate notice thereof within a reasonable period
prior to allowing such Patent to lapse or become abandoned or unenforceable, and
Fate shall thereafter have the right, but not the obligation, to prepare, file,
prosecute and maintain such Janssen Profit Share Patents.  In the event that
Fate assumes responsibility for such Janssen Profit Share Patents pursuant to
this Section, Janssen shall reasonably cooperate with Fate in maintaining and
prosecuting such patent rights.  The reasonable out-of-pocket costs incurred by
Janssen in connection with Prosecuting the Janssen Profit Share Patents in the
U.S. will be included in Allowable Expenses.

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11.2.3Joint Patents.

(a)Upon receiving notice of the creation of Joint Inventions, Fate shall have
the first right, but not the obligation, to be responsible for Prosecuting any
Joint Patents using outside legal counsel selected by Fate and reasonably
approved by Janssen.  If Fate elects to be responsible for such activities, Fate
shall Prosecute any Joint Patents filed in the Territory, in the names of both
Fate and Janssen. Fate shall provide Janssen an opportunity to review and
comment on material documents related to such Prosecution in accordance with
this Section 11.2.3, which comments Fate shall consider in good faith. If Fate
decides not to be responsible for Prosecuting any particular Joint Patent in any
particular country, Fate shall notify Janssen in writing and Janssen shall have
the right, but not the obligation, to be responsible for such activities in such
country. In this case, Janssen may Prosecute such Joint Patents in such country
in the names of both Fate and Janssen, and Janssen shall provide Fate an
opportunity to review and comment on material documents related to such
Prosecution in accordance with this Section 11.2.3, which comments Janssen shall
consider in good faith. Each Party shall at its own cost, sign, or use [***]
Efforts to have signed, all legal documents necessary to Prosecute Joint
Patents. Each Party shall fully cooperate with the other Party in providing the
other Party with necessary information in its possession for such Prosecution.

(b)The Parties shall share equally (50/50) the reasonable out-of-pocket costs
incurred for Prosecution of Joint Patents (“Joint Patent Costs”). The Party who
is responsible for the Prosecution of the Joint Patent shall, through its patent
counsel, if applicable, invoice the other Party for its share of such Joint
Patent Costs within [***] days after the end of the month during which such
Joint Patent Costs were incurred and the other Party shall pay its share of such
Joint Patent Costs to the applicable Party or its patent counsel within
[***] days after receipt of such invoice. Notwithstanding this Section 11.2.3,
if a Party does not wish to bear Joint Patent Costs with respect to a Joint
Patent in a country, such Party may, by providing [***] days prior written
notice to the other Party, terminate its obligation to pay such Joint Patent
Costs.  In this case, such Party shall promptly assign all of its right, title
and interest in and to such Joint Patent in such country to the other Party upon
such other Party’s written request at such other Party’s cost; provided,
however, that such Joint Patent shall cease being a Joint Patent (but remain a
Research Program Inventions and, as such, subject to the Research Program
Inventions Cross License) and shall be deemed either a Fate Patent solely owned
by Fate if Janssen is the assigning Party or a Patent solely owned by Janssen if
Fate is the assigning Party.

(c)Subsection (a) above notwithstanding, with respect to those Joint Patents
that (i) Cover the composition of matter of the Licensed Collaboration Candidate
or the Licensed Product containing the Licensed Collaboration Candidate, or of
the Precursor iPSC, Master iPSC Bank or CD34 Composition corresponding to such
Licensed Collaboration Candidate, and (ii) definitively recite (in the claims) a
Janssen Antigen Binding Domain or any Close Homolog thereof (“Joint
Product-Specific Patents”), the Parties will treat a Joint Product-Specific
Patent under this Section 11.2.3 as if it were in all respects a Fate
Product-Specific Patent.

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11.2.4Cooperation. Each Party agrees to reasonably cooperate with the other with
respect to the preparation, filing, prosecution, validation, extension and
maintenance of Patents pursuant to this Section 11.2.  At the request of the
other Party, the Party responsible for preparing, filing, prosecuting,
validating, maintaining and extending a Patent shall make reasonable efforts to
separately prosecute subject matter solely related to Fate Product-Specific
Patents, Joint Product-Specific Patents, and Janssen Profit Share Patents
separate from other subject matter which may be disclosed or claimed in any
Patent hereunder, to the extent it may reasonably do so without jeopardizing or
impairing any such patent rights.  Each Party’s rights to Prosecute a Patent
pursuant to this Section 11.2 shall be subject to the applicable provisions of
any agreements between the Party Controlling such Patents and its licensor.  All
information exchanged between the Parties under this Section 11.2 pertaining to
any Fate Patent shall be deemed Confidential Information of Fate, all
information exchanged between the Parties under this Section 11.2 pertaining to
any Janssen Patent shall be deemed Confidential Information of Janssen, and all
information exchanged between the Parties under this Section 11.2 pertaining to
any Joint Patents shall be deemed Confidential Information of both Parties.

11.3Patent Enforcement.

11.3.1Notice.  In the event that, following the Exercise Effective Date with
respect to any Licensed Collaboration Candidate, Fate or Janssen becomes aware
of any actual infringement or threat of infringement of any Fate Product Patent,
Janssen Profit Share Patent or Joint Patent by means of the sale, including the
manufacture for sale, by a Third Party of a Third Party Competitive Product or a
Biosimilar Product with respect to any Licensed Collaboration Candidate or any
Licensed Product containing a Licensed Collaboration Candidate, or of the
Precursor iPSC Bank, Master iPSC Bank or the CD34 Composition corresponding to a
Licensed Collaboration Candidate, or if any Fate Product Patent, Janssen Profit
Share Patent or Joint Patent is challenged in any action or proceeding (other
than any oppositions, cancellations, interferences, reissue proceedings or
reexaminations, which are addressed above) as invalid or unenforceable (such
infringements and challenges collectively, “Product Infringement” with respect
to such Licensed Collaboration Candidate or Licensed Product containing such
Licensed Collaboration Candidate, or the Precursor iPSC, Master iPSC Bank or the
CD34 Composition corresponding to such Licensed Collaboration Candidate), such
Party shall notify the other Party promptly, and following such notification,
the Parties shall confer.  As used in this Section 11.3.1, a “Third Party
Competitive Product” means [***], in each case expressing a CAR that is Directed
to [***].

11.3.2Enforcement of Fate Product-Specific Patents, Janssen Profit Share
Patents, and certain Joint Patents.

(a)Janssen shall have the first right to institute infringement suits or take
other action under the Fate Product-Specific Patents and Joint Product-Specific
Patents, and under the Janssen Profit Share Patents, in each case to the extent
the same is directed to a Product Infringement, including defense of a
declaratory judgment action with respect to a potential Product Infringement
(whether prior to or after the First Commercial Sale of such Licensed Product)
(each, an “Infringement Action”), and in each case Janssen shall have the right
to institute such suit or other appropriate action in the name of Fate or of
Janssen, or in the names of both of them.  For clarity, Janssen shall have the
right to institute infringement suits or take other action under Patents owned
or controlled by Janssen (not Joint Patents) covering Inventions, Collaboration
Candidates, a Licensed Collaboration Candidate or a Licensed Product containing
such Licensed Collaboration Candidate, or the Precursor iPSC, Master iPSC Bank
or the CD34 Composition corresponding to such Licensed Collaboration Candidate
that are not Janssen Profit Share Patents, provided that Janssen shall keep Fate
reasonably updated on the progress of any such suits or actions.

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(b)In the event that Janssen institutes or undertakes an Infringement Action in
accordance with Section 11.3.2(a) Fate shall cooperate fully with Janssen in its
efforts to protect such patent rights and shall agree to be a party in any suit,
if required, in each case with respect to such Infringement Action, in each case
at Janssen’s sole expense.  Further, Fate shall have a right, in Fate’s sole
discretion and at Fate’s expense, to join or otherwise participate in such
Infringement Action with legal counsel selected by Fate.  Janssen shall notify
and keep Fate apprised in writing of such Infringement Action and shall consider
and take into account Fate’s reasonable interests and requests regarding such
Infringement Action.

(c)In the event that Janssen does not institute or undertake an Infringement
Action in accordance with Section 11.3.2(a) for a period of [***] days after
being requested by Fate to do so, or (if sooner) at least [***] days prior to
the last date such Infringement Action may be brought, Fate may institute or
undertake and thereafter control such Infringement Action.  In such event, Fate
shall have the right, but not the obligation, to institute or undertake such
suit or other appropriate Infringement Action in the name of Fate or of Janssen
or in the names of both of them.  Janssen shall cooperate fully with Fate in its
efforts to protect such patent rights and shall agree to be a party in any suit,
if required, in each case with respect to such Infringement Action, in each case
at Fate’s sole expense.

11.3.3Enforcement of Fate Patents other than Fate Product-Specific Patents and
certain Joint Patents.

(a)Fate shall have the first right to institute infringement suits or take other
actions directed to a Product Infringement of (i) those Fate Patents that are
not Fate Product-Specific Patents and (ii) Joint Patents other than Joint
Product-Specific Patents, including defense of a declaratory judgment action
with respect to a potential Product Infringement, and in each case Fate shall
have the right to institute such suit or other appropriate action in the name of
Fate or of Janssen, or in the names of both of them.  Janssen shall cooperate
fully with Fate in its efforts to protect such patent rights and shall agree to
be a party in any suit, if required, at Fate’s sole expense.  Fate shall notify
and keep Janssen apprised in writing of such action and shall consider and take
into account Janssen’s reasonable interests and requests regarding such action.

(b)In the event that Fate does not institute or undertake an action in
accordance with Section 11.3.3(a) for a period of [***] days after being
requested by Janssen to do so, or (if sooner) at least [***] days prior to the
last date such action may be brought, then upon Fate’s written consent, which
may be granted or withheld in Fate’s sole discretion, Janssen may institute or
undertake and thereafter control such action, in the name of Fate or of Janssen
or in the names of both of them.  If Fate consents to such action, Janssen shall
cooperate fully with Fate in its efforts to protect such patent rights and shall
agree to be a party in any suit, if required, at Janssen’s sole expense.

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11.3.4Conduct of Patent Litigation Under the Biologics Price Competition and
Innovation Act.  If either Party receives a copy of an application submitted to
the FDA under subsection (k) of Section 351 of the PHSA or equivalent in any
other jurisdiction pertaining to and naming a Licensed Product as a reference
product (a “Biosimilar Application”) or otherwise becomes aware that such a
Biosimilar Application has been filed (such as in an instance described in
Section 351(l)(9)(C) of the PHSA), such Party shall, within [***] Business Days,
notify the other Party so that the other Party may seek permission to view the
application and related confidential information from the filer of the
Biosimilar Application under Section 351(l)(1)(B)(iii) of the PHSA or equivalent
in any other jurisdiction.  If either Party receives any equivalent or similar
certification or notice in any other jurisdiction, such Party shall, within
[***] Business Days, notify and provide the other Party with copies of such
communication.  Regardless of the Party that is the “reference product sponsor”
for purposes of such Biosimilar Application, [***] shall have the sole right,
but not the obligation, to initiate an Infringement Action against the filer of
the Biosimilar Application to enforce any [***] Product-Specific Patent or any
Joint Product-Specific Patent, including whether or not to utilize, in whole or
in part, the procedures provided in Section 351 of the PHSA or equivalent in any
other jurisdiction.  If [***] institutes any such Infringement Action, then
[***] shall join as a party to such claim, suit or proceeding requiring it as a
party at [***] sole cost and expense.  With respect to a [***] Patent that is
not a [***] Product-Specific Patent or Joint Patents other than Joint
Product-Specific Patents and to the extent the action is under this Section,
[***] shall determine whether any infringement suit or other action shall be
initiated, and if so, which Party shall have the right to initiate and undertake
such action and other matters pertaining to such action.

11.3.5Cooperation. In any Infringement Action brought under this Section 11.3 in
any jurisdiction, each Party shall reasonably cooperate with each other, in good
faith, relative to the other Party’s efforts to protect the patent rights and
shall agree to be a party to such Infringement Action, if
necessary.  Notwithstanding anything to the contrary in this Section 11.3,
neither Party shall settle or compromise any related defense or infringement
suit brought under the Fate Product-Specific Patents, Janssen Profit Share
Patents or Joint Patents pursuant to this Section 11.3 without the prior written
consent of the other Party, which consent shall not be unreasonably
withheld.  Furthermore, each Party shall provide the other Party with reasonable
prior notice and opportunity to review and comment and shall consider in good
faith all reasonable comments from the other Party on any proposed arguments
asserted or to be asserted in any enforcement action under this Section 11.3.  

11.3.6Recoveries.  With respect to any Infringement Action or other action
against a Product Infringement initiated pursuant to this Section 11.3, any
recovery obtained as a result of any such proceeding, by settlement or
otherwise, shall be applied in the following order of priority:

(a)[***]

(b)[***]

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11.3.7Product Infringement with respect to Profit Share
Product.  Notwithstanding anything to the contrary in this Section 11.3, in the
case of any Product Infringement with respect to any Profit Share Product in the
U.S., the Out-of-Pocket Expenses incurred in connection with any action against
such Profit Share Product in accordance with this Section 11.3, and any
recoveries, will be included in the Allowable Expenses and Net Sales,
respectively, with respect to such Profit Share Product.

11.3.8Upstream Limitations. Each Party’s rights to enforce or defend a Fate
Product Patent or Joint Patent against a Product Infringement pursuant to this
Section 11.3 shall be subject to the applicable provisions of any agreements
between the Party Controlling such Patents and its licensor.

11.3.9Other Enforcement of Fate Patents, Janssen Patents and Joint Patents.  As
between the Parties, Fate shall have the sole right, in its sole discretion, to
enforce any Fate Patent that is not a Fate Product-Specific Patent against any
infringement that is not a Product Infringement and to retain all related
recoveries, and Janssen shall have the sole right, in its sole discretion, to
enforce any Patent owned or controlled by Janssen that is not a Janssen Profit
Share Patent against any infringement that is not a Product Infringement and to
retain all related recoveries.  If there is any infringement of any Joint
Patents that is not a Joint Product-Specific Patent and that is not a Product
Infringement, then each Party shall have the right to enforce such Joint Patents
at its sole expense.

11.4Patent Term Extension.  [***] shall have the sole discretion, after
consultation with [***], to determine which [***] Product-Specific Patents or
Joint Patents, if any, are extended with respect to any Licensed Product
pursuant to U.S. Drug Price Competition and Patent Term Restoration Act of 1984,
the Supplementary Certificate of Protection of Member States of the EU and other
similar measures in other jurisdictions worldwide.  Upon [***] request, the
Parties will discuss whether any other Fate Patent will be extended with respect
to any Licensed Product, which extension may be made only with [***] written
consent, which shall not be unreasonably withheld.  Fate and Janssen shall each
cooperate and use reasonable efforts to gain any such patent term extension
permitted under this Section 11.4.  All filings for such extensions shall be
made by the Party responsible for the prosecution of such patent rights.  

11.5Regulatory Data Protection.  To the extent required by or permitted by Law,
Fate and Janssen shall each cooperate with one another and shall use [***]
Efforts to promptly, accurately and completely list, with the applicable
Regulatory Authorities during the Term, all applicable Licensed Products that a
Party intends to, or has begun to, Commercialize and that, in case of the United
States, have become the subject of an application for a Marketing Approval
submitted to FDA, such listings to include all so called “Purple Book” listings
of biologic products by both the Center for Drug Evaluation and Research (CDER)
and Center for Biologics Evaluation and Research (CBER) required under section
351(a) of the Public Health Service Act (PHS Act) and any foreign equivalent,
and will cooperate and use [***] Efforts to secure all applicable exclusivity
protection available as a Biologic Reference Product under the Purple Book.

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11.6Patent Invalidity Claims.

11.6.1Right to Respond.  If during the Term a Third Party initiates a patent
opposition, reexamination, or other proceeding in the US Patent Office, European
Patent Office or foreign equivalent, asserting that Fate Product-Specific
Patents or Joint Product-Specific Patents are invalid or otherwise unenforceable
(an “Invalidity Claim”), the Parties shall treat this as a Prosecution in
accordance with Section 11.2.1(b) or Section 11.2.3(a).  For the avoidance of
doubt, any response to a Third Party declaratory judgment action with respect to
such Fate Product-Specific Patent claims or Joint Product-Specific Patent claims
or a counterclaim of invalidity or unenforceability of such claims made in the
context of an Infringement Action, to the extent the same pertains to a
potential Product Infringement, shall be deemed an Infringement Action and shall
be governed by Section 11.3.

11.6.2  The non-controlling Party shall cooperate with the controlling Party in
the preparation and formulation of a response to an Invalidity Claim, and in
taking other steps reasonably necessary to respond, to such Invalidity
Claim.  The controlling Party shall have the sole and exclusive right to select
counsel for the response to such Invalidity Claim.  The non-controlling Party
shall also have the right to participate and be represented relative to such
proceeding by its own counsel at its own expense.  The controlling Party shall
not settle or compromise any Invalidity Claim in a manner that admits the
invalidity or unenforceability of any Fate Patents or Joint Patents, or that
requires a payment to the Third Party in respect of such Invalidity Claim,
without the consent of the other Party, which consent shall not be unreasonably
withheld.

11.6Claimed Infringement.  Each of the Parties shall promptly notify the other
in the event that any Third Party files any suit or brings any other action
alleging patent infringement by Janssen or Fate with respect to the Development,
Manufacture, Commercialization or use of any Licensed Collaboration Candidate or
a Licensed Product containing such Licensed Collaboration Candidate, or of the
Precursor iPSC, Master iPSC Bank or the CD34 Composition corresponding to such
Licensed Collaboration Candidate (any such suit or other action referred to
herein as an “Infringement Claim”).  In the event of any Infringement Claim, the
Parties shall promptly, and within [***] days of written notice from either
Party to the other thereof, discuss which Party shall control the response to
such Infringement Claim, and if the Parties do not mutually agree upon which
Party shall control, then [***] shall have the right to control the defense of
such Infringement Claim.  Upon the request of the Party controlling the response
to the Infringement Claim, the other Party shall reasonably cooperate with the
controlling Party at the controlling Party’s expense in the reasonable defense
of such Infringement Claim.  The other Party will have the right to consult with
the controlling Party concerning any Infringement Claim and to participate in
and be represented by independent counsel in any associated litigation at its
own expense.  [***]  Notwithstanding the foregoing, (i) no settlement shall be
entered into, or accepted, without the prior written consent of the other Party
if such settlement would materially adversely affect the rights and benefits of,
or impose or adversely affect any obligations on, such other Party, which
consent shall not unreasonably be withheld, delayed or conditioned, and (ii) the
Parties’ rights and obligations under this Section 11.6 will be subject to
ARTICLE 14, if applicable.

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11.7Third Party Licenses.  

11.7.1Existing Agreements.  The Parties agree and understand that Fate has
entered into certain agreements under which Fate has been granted a license,
prior to the Effective Date, with the rights to sublicense, under certain
patents and patent applications included within the Fate Research Patents and
Fate Product Patents that are subject to royalty obligations (such agreements
collectively, the “Existing Agreements”).  In accordance with Section 10.6.4,
payments under the Existing Agreements [***].  The list of Existing Agreements
is set forth on Exhibit 11.7.1.  With respect to each of the Existing
Agreements, Fate shall:

(a)use [***] Efforts to maintain in full force and effect such agreement (in
accordance with its terms), (including by not assigning such Existing Agreement,
or any of its rights thereunder, to a Third Party without the consent of
Janssen, not to be unreasonably withheld or delayed, except in connection with a
Change of Control transaction), and keep Janssen informed of any material
development pertaining thereto that adversely affects the rights granted to
Janssen hereunder for so long as such Third Party rights are sublicensed to
Janssen in accordance with Section 5.1;

(b)not take any action to terminate, modify, amend or waive any right, to the
extent incompatible with the rights sublicensed to Janssen in accordance with
Section 5.1;

(c)not fail to enforce any right, knowingly breach or otherwise take any other
action with respect to any such Existing Agreement that would reasonably be
expected to materially impact the rights granted to Janssen under this
Agreement, without the consent of Janssen, including by failing to comply in all
material respects with the terms of such Existing Agreement or by failing to
make all payments that become due under such Existing Agreement in accordance
with its terms; and

(d)if Fate or any of its Affiliates receives written notice from the applicable
Third Party claiming that Fate or any of its Affiliates has breached or
defaulted under, or is in breach of or default under, its obligations under such
Existing Agreement, where such Third Party has the right to terminate such
agreement if Fate does not timely cure such breach or default, provide a copy
thereof to Janssen promptly after receipt and, following consultation with
Janssen, consider Janssen’s input in good faith and take such reasonable actions
as may be reasonably necessary to cure any breach or default.

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11.7.2[***] or Improved Platform Licenses.  

(a)For purposes of this Section 11.7.2, “Fate Existing Technology” means Fate’s
proprietary information, methods, protocols, processes, procedures and
technologies relating to[***].

(b)[***].  

(c)[***].  

(i)[***]  

(ii)[***]  

(iii)[***]

11.7.3[***].  

(a)[***]

(b)[***]  

11.8Common Interest Disclosures. With regard to any information, opinions or
other materials disclosed pursuant to this Agreement by one Party to the other
Party regarding intellectual property or technology owned by Third Parties,
Janssen and Fate agree that they have a common legal interest in determining
whether, and to what extent, Third Party intellectual property rights may affect
the performance of the Research, Development, Manufacturing or Commercialization
of a Licensed Collaboration Candidate or a Licensed Product containing such
Licensed Collaboration Candidate, or of the Precursor iPSC, Master iPSC Bank or
the CD34 Composition corresponding to such Licensed Collaboration Candidate, and
have a further common legal interest in defending against any actual or
prospective Third Party claims based on allegations of misuse or infringement of
intellectual property rights relating to the performance of the Research,
Development, Manufacturing or Commercialization of a Licensed Collaboration
Candidate or a Licensed Product containing such Licensed Collaboration
Candidate, or of the Precursor iPSC, Master iPSC Bank or the CD34 Composition
corresponding to such Licensed Collaboration Candidate. Accordingly, Janssen and
Fate agree that all such information, opinions and other materials obtained by
Janssen and Fate from each other will be used solely for purposes of the
Parties’ common legal interests with respect to the conduct of this Agreement.
All such information, opinions and other materials shall be treated as protected
by the attorney-client privilege, the work product privilege, and any other
privilege or immunity that may otherwise be applicable. By sharing any such
information, opinions and other materials, neither Party intends to waive or
limit any privilege or immunity that may apply to the shared information,
opinions and other materials. Neither Party shall have the authority to waive
any privilege or immunity on behalf of the other Party with respect to such
information, opinions and other materials without such other Party’s prior
written consent, nor shall the waiver of privilege or immunity resulting from
the conduct of one Party be deemed to apply against the other Party.

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ARTICLE 12
Confidentiality

12.1Nondisclosure.  Each Party agrees that, during the Term and for a period of
[***] years thereafter, a Party (the “Receiving Party”) receiving or otherwise
in possession of (itself or through its Affiliates) Confidential Information of
the other Party (the “Disclosing Party”) or its Affiliates shall (a) maintain in
confidence such Confidential Information using not less than the efforts such
Receiving Party uses to maintain in confidence its own confidential information
of similar kind and value, which shall not be less than reasonable efforts, (b)
not disclose such Confidential Information to any Third Party without the prior
written consent of the Disclosing Party, except for disclosures expressly
permitted in, and made in accordance with, Section 12.3, 12.5, 12.8.2 or 12.9
and (c) not use such Confidential Information for any purpose except those
permitted by this Agreement or internal management and operations directly
pertaining to this Agreement (it being understood that this clause (c) shall not
create or imply any rights or licenses not expressly granted under this
Agreement).  Notwithstanding anything to the contrary in this ARTICLE 12,
Janssen shall have the right to use and disclose any Fate Confidential Method
solely in accordance with Section 5.3.

12.2Exceptions. The obligations in Section 12.1 shall not apply with respect to
any portion of the Confidential Information that the Receiving Party can show by
competent evidence:

12.2.1is publicly disclosed by the Disclosing Party or its Affiliates, either
before or after it is disclosed to the Receiving Party or its Affiliates under
this Agreement;

12.2.2was known to or possessed by the Receiving Party or its Affiliates,
without any obligation to the Disclosing Party to keep it confidential or any
restriction on its use, prior to disclosure by the Disclosing Party or any of
its Affiliates;

12.2.3is subsequently disclosed to the Receiving Party or its Affiliates by a
Third Party that, to the Receiving Party’s knowledge after due inquiry, is not
bound by a duty of confidentiality to the Disclosing Party or its Affiliates or
restriction on its use;

12.2.4is published by a Third Party or otherwise becomes publicly available or
enters the public domain, either before or after it is disclosed to the
Receiving Party or its Affiliates, through no act or failure to act on the party
of the Receiving Party or any of its Affiliates in violation of this Agreement;
or

12.2.5is independently discovered or developed by or on behalf of the Receiving
Party or its Affiliates without the use of or reference to Confidential
Information of the Disclosing Party or its Affiliates.

12.3Authorized Disclosure. The Receiving Party may disclose Confidential
Information belonging to the Disclosing Party or its Affiliates only to the
extent such disclosure is reasonably necessary in the following instances:

12.3.1filing, prosecuting, maintaining, enforcing or defending Patents as
permitted by this Agreement;

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12.3.2as reasonably required in generating Regulatory Filings and filing for and
obtaining Regulatory Approvals as permitted by this Agreement;

12.3.3prosecuting or defending litigation or arbitration, including responding
to a subpoena in a Third Party litigation or arbitration;

12.3.4subject to Section 12.5, complying with Laws (including the rules and
regulations of the U.S. Securities and Exchange Commission or any national
securities exchange) and with judicial process, including as a result of any
actions taken by a Party not in violation of this Agreement; and

12.3.5with respect to Confidential Information that is not a Fate Confidential
Method or Janssen Confidential Method, disclosure, solely on a “need to know
basis”, to Affiliates, potential or actual acquirers, merger partners, or
assignees, Third Party collaborators (including Sublicensees), contractors or
services providers regarding Collaboration Candidates or Licensed Products,
investment bankers, investors, lenders, or other potential financial partners,
consultants, agents and advisors, and the Receiving Party’s directors, officers,
employees, contractors and agents, each of whom prior to disclosure shall be
bound by obligations of confidentiality and restrictions on use of such
Confidential Information that are no less restrictive than the obligations in
this ARTICLE 12; provided, however, that in the case of disclosures made to
clinical trial sites, investigators, CROs or other Third Parties directly
involved in the Research and Development of the Collaboration Candidates or
Licensed Products, the duration for the obligations of confidentiality and
non-use provided in the Receiving Party’s agreement with such clinical trial
sites, investigators, CROs or other Third Parties may be less than the duration
for the obligations of confidentiality and non-use in this Agreement so long as
such agreement specifies a duration for the obligations of confidentiality and
restrictions on use of Confidential Information that are consistent with such
obligations and restrictions agreed to by the Receiving Party in the ordinary
course of business under similar circumstances; and provided further, that in
each of the above situations, the Receiving Party shall remain responsible for
any failure by any Person who receives Confidential Information pursuant to this
Section 12.3.5 to treat such Confidential Information as required under this
ARTICLE 12.  

If and whenever any Confidential Information is disclosed in accordance with
this Section 12.3, such disclosure shall not cause any such information to cease
to be Confidential Information except to the extent that the exceptions set
forth in Section 12.2.1 or Section 12.2.4 apply to such Confidential
Information. Where reasonably possible and legally permitted and subject to
Section 12.5, the Receiving Party shall notify the Disclosing Party of the
Receiving Party’s intent to make a disclosure pursuant to Section 12.3.3 or
12.3.4, sufficiently prior to making such disclosure so as to allow the
Disclosing Party adequate time to take whatever action it may deem appropriate
to protect the confidentiality of the Confidential Information. In this case,
the Receiving Party must reasonably cooperate with the Disclosing Party’s
efforts, including by using not less than the same efforts to secure
confidential treatment of such information as it would to protect its own
confidential information from disclosure (but not less than reasonable
efforts).  In the event a Party intends to make a disclosure of the other
Party’s or its Affiliate’s Confidential Information pursuant to Section 12.3.5
to a Third Party, it will give to the other Party reasonable advance notice of
and information regarding the nature of such disclosure.

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12.4Terms of this Agreement. The Parties acknowledge that this Agreement and all
of the respective terms of this Agreement shall be treated as Confidential
Information of both Parties.

12.5Securities Filings.  In the event either Party proposes to file with the
Securities and Exchange Commission or the securities regulators of any state or
other jurisdiction a registration statement or any other disclosure document
which, in the reasonable opinion of such Party’s counsel or independent
financial auditor, requires disclosure of the terms and conditions of this
Agreement or other information relating to this Agreement or the transactions
contemplated hereby under the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, or any other applicable securities Law, such
Party shall notify the other Party of such intention and opinion and shall
provide such other Party with a copy of relevant portions of the proposed filing
[***] Business Days (or such shorter time as practicable) prior to such filing,
including any exhibits thereto relating to the terms and conditions of this
Agreement. The Party making such filing shall seek confidential treatment of the
terms and conditions of this Agreement or any portion thereof that such other
Party reasonably requests be kept confidential, and shall only disclose
Confidential Information that it is advised by its counsel is legally required
to be disclosed or by its independent financial auditor is required to be
disclosed under applicable securities Law.  No such notice is required under
this Section 12.5 if the description of or reference to this Agreement included
in the proposed filing has been included in any previous filing made in
accordance with this Section 12.5 or otherwise approved for public disclosure by
the other Party in writing.

12.6Relationship to Confidentiality Agreement. This Agreement supersedes the
Prior CDA, provided that all “Confidential Information” disclosed or received by
the Parties thereunder shall be deemed “Confidential Information” hereunder and
shall be subject to the terms and conditions of this Agreement.

12.7Equitable Relief.  Given the nature of the Confidential Information and the
competitive damage that may result to a Party upon unauthorized disclosure, use
or transfer of its Confidential Information to any Third Party, the Parties
agree that monetary damages may not be a sufficient remedy for any breach of
this ARTICLE 12.  In addition to all other remedies, a Party shall be entitled
to seek specific performance and injunctive and other equitable relief as a
remedy for any breach or threatened breach of this ARTICLE 12.

12.8Research Program Information and Scientific Publications.

12.8.1Research Program Information. The Parties acknowledge and agree that the
Research Program Information shall be deemed to be Confidential Information of
both Parties for which each Party will be deemed a Receiving Party unless and
until Janssen exercises the Commercial Option with respect to a Collaboration
Candidate.  If Janssen exercises the Commercial Option with respect to a
Collaboration Candidate, [***], provided that Janssen and Fate may continue to
use such Research Program Information solely as permitted under Section 12.1(c)
and Section 5.1.  “Research Program Information” means: [***]  

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12.8.2Publication.

(a)Either Party may publish or present results of any Clinical Trial conducted
by such Party relating to a Licensed Product in journals or at conferences,
subject to the prior review and comment by the other Party as set forth in
Section 12.8.2(b); provided, however, that Janssen shall not have the right to
make any such publication or presentation with respect to a Collaboration
Candidate prior to exercise of the Commercial Option with respect thereto.  The
Party who conducted a Clinical Trial shall be responsible for registering such
Clinical Trial in the appropriate clinical study registry and reporting Clinical
Trial results as may be required under applicable Law.  

(b)The publishing Party shall provide the non-publishing Party with the
opportunity to review any such proposed abstract, manuscript or presentation by
delivering a copy thereof to the non-publishing Party no less than [***] days
([***] days with respect to abstracts) before its intended submission for
publication or presentation. The non-publishing Party shall have [***] days
([***] days for abstracts) of its receipt of any such abstract, manuscript or
presentation to comment, and the publishing Party shall consider in good faith
such non-publishing Party’s comments in such abstract, manuscript or
presentation. In the event the non-publishing Party objects to the disclosure in
writing within the applicable review period, the publishing Party agrees to
delete from the proposed disclosure any of the non-publishing Party’s
Confidential Information upon the request of the non-publishing Party. In the
event of concern over patent protection, the publishing Party shall not submit
such publication or make such presentation containing such information until the
non-publishing Party is given a reasonable period of time, and in no event less
than [***] days, to seek patent protection for any material in such publication
or presentation which it believes is patentable, unless the publishing Party
reasonably determines that publication of such information is required by
applicable Law.

12.9Publicity.  

12.9.1Upon execution of this Agreement, Fate may, but is not obligated to, issue
the press release announcing the execution of this Agreement in the form as set
forth in Exhibit 12.9.1 at a mutually agreed time.

12.9.2Except as required to comply with applicable Law or as permitted by
Sections 12.3, 12.5 or 12.9.1, if either Party intends to issue any press
release or other public statement disclosing the transactions contemplated
hereby, it shall give the other Party a reasonable opportunity to review and
comment and shall consider any such comments in good faith.  In addition, such
Party shall not issue such press release or public statement without the prior
written consent of the other Party (not to be unreasonably withheld, delayed, or
conditioned).  If a Party intends to issue such a press release or other public
statement as required to comply with applicable Law, such Party will, except
where impracticable or not legally permitted, give reasonable advance notice to
the other Party of such disclosure.  Notwithstanding the foregoing, once
information relating to this Agreement has been publicly disclosed as permitted
under this Agreement, neither Party shall be required to obtain the other
Party’s consent or provide notice of its further public disclosure, provided
that such information remains accurate and not misleading in all material
respects at the time of such further public disclosure.

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ARTICLE 13
Representations, Warranties, And
Covenants; Disclaimers; Limitation of Liability

13.1Mutual Representations and Warranties. Each Party represents and warrants to
the other Party as of the Effective Date that:

13.1.1such Party is duly organized, validly existing and in good standing under
the Laws of the jurisdiction of its incorporation and has full corporate power,
ability and authority to enter into this Agreement and to carry out the
provisions hereof;

13.1.2execution of this Agreement and the performance by such Party of its
obligations hereunder have been duly authorized;

13.1.3this Agreement has been duly executed and delivered on behalf of such
Party, the Person or Persons executing this Agreement on its behalf have been
duly authorized to do so by all requisite corporate action, and this Agreement
constitutes a legal, valid, binding obligation, enforceable against it in
accordance with the terms hereof;

13.1.4the execution, delivery and performance of this Agreement by such Party
does not create a breach or default under any other agreement to which it is a
party or by which it is bound, nor violate any Law or regulation of any court,
governmental body or administrative or other agency having jurisdiction over
such Party;

13.1.5no government authorization, consent, approval, license, exemption of or
filing or registration with any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, under any Laws
currently in effect, is necessary for, or in connection with, the transaction
contemplated by this Agreement or any other agreement or instrument executed in
connection herewith, or for the performance by it of its obligations under this
Agreement and such other agreements, and except for Regulatory Approvals
including Commercialization Approvals obtained in accordance with this
Agreement; and

13.1.6all of its directors, employees and officers have executed agreements
requiring assignment to such Party of all Inventions, whether or not patentable,
made during the course of and as a result of their association with such Party
and obligating each such directors, employee and officer to maintain as
confidential the Confidential Information of such Party.

13.2Additional Representations and Warranties of Fate. Fate hereby represents
and warrants to Janssen, as of the Effective Date, that:

13.2.1Fate (or its Affiliates) Controls the Fate Research Patents set forth on
Exhibit 13.2.1 and Fate Research Know-How and has the right to grant the
licenses to Janssen as set forth in Section 5.1, and the Fate Research Patents
set forth on Exhibit 13.2.1 include all of the Patents owned by or licensed to
Fate or its Affiliates as of the Effective Date that are reasonably necessary
for the Parties to conduct their respective activities under the Research Plan
as in existence as of the Effective Date; with respect to the Fate Research
Patents, Exhibit 13.2.1  accurately lists each patent family and countries of
filing, including the owners of each item and, if the item is licensed to Fate
or its Affiliates, the agreement pursuant to which such license was granted;

13.2.2to the knowledge of Fate as of the Effective Date[***];

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13.2.3[***];

13.2.4[***];

13.2.5all tangible information and data provided by or on behalf of Fate or its
Affiliates to Janssen on or before the Effective Date [***];

13.2.6Fate and its Affiliates have taken commercially reasonable steps to
protect, preserve and maintain the confidentiality of all confidential or
non-public information included in Fate Research Know-How, including by [***];

13.2.7Fate has provided Janssen with a true and complete copy of each of the
Existing Agreements (except for redactions of terms not material to Janssen’s
rights thereunder), and each Existing Agreement is in full force and effect. No
written notice of default or termination has been received or given, or to
Fate’s knowledge, threatened, under any Existing Agreement, and to the knowledge
of Fate, there is no act or omission by Fate or its Affiliates, or by any
counterparty to any Existing Agreement, that would provide a right to terminate
any Existing Agreement. Neither Fate nor any of its Affiliates has waived any
material right under any Existing Agreement;

13.2.8Fate and its Affiliates have not, as of the Effective Date, granted any
license to any Third Party, or entered into any agreement with any Third Party
that would conflict or interfere with any of the rights or licenses granted to
Janssen hereunder;

13.2.9[***];

13.2.10to the knowledge of Fate, [***];

13.2.11to the knowledge of Fate, [***];

13.2.12to the knowledge of Fate, [***];

13.2.13neither Fate nor its Affiliates, nor, to the knowledge of Fate,  [***];
and

13.2.14Fate has made available to Janssen [***].  

13.3Additional Representations and Warranties of Janssen. Janssen hereby
represents and warrants to Fate, as of the Effective Date, that:

13.3.1Janssen (or its Affiliates) Controls the Janssen Research Patents and has
the right to grant the licenses to Fate as set forth in Section 5.2;

13.3.2to the knowledge of Janssen as of the Effective Date[***];

13.3.3[***];

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13.3.4to the knowledge of Janssen or its Affiliates, all inventors in Janssen
Research Patents that are owned by Janssen are correctly identified in
compliance with Law in the various jurisdictions, and all (i) inventors of the
Janssen Research Patents owned solely by Janssen and (ii) inventors of the
Janssen Research Patents owned jointly by Janssen that are employees of Janssen,
in each case (i) and (ii) have agreed to assign to Janssen their entire rights,
title and interest to and in inventions claimed in such Janssen Research Patents
and any intellectual property thereto, and no other Person has any claim of
ownership or inventorship whatsoever with respect to such Janssen Research
Patents;

13.3.5to the knowledge of Janssen or its Affiliates[***];

13.3.6[***];

13.3.7Janssen and its Affiliates have not received any written notice from or
been investigated by, any court or governmental body or administrative or other
agency having jurisdiction over activities of Janssen or its Affiliates,
including Regulatory Authorities, claiming or suggesting that performance of its
obligations hereunder or any other activities or business operation of Janssen
or its Affiliates related to Antigen Binding Domains that Janssen intends to
provide to Fate under the Research Programs for Janssen Antigen 1 or Janssen
Antigen 2 have violated or may violate any Law, including if applicable GLP, GMP
or GCP;

13.3.8 to the knowledge of Janssen, [***];

13.3.9neither Janssen nor its Affiliates nor, to the knowledge of Janssen,
[***]; and

13.3.10Janssen and its Affiliates have not, as of the Effective Date, granted
any license to any Third Party, or entered into any agreement with any Third
Party that would conflict or interfere with any of the rights or licenses
granted to Fate hereunder.

13.4Mutual Covenants.  Each Party hereby covenants to the other Party that
during the Term:

13.4.1all directors, officers, and employees of such Party or its Affiliates
working under this Agreement shall be under the obligation to assign all right,
title and interest in and to their inventions and discoveries, whether or not
patentable, if any, to such Party as the sole owner thereof;

13.4.2such Party shall perform its activities pursuant to this Agreement and
obtain, generate, prepare, maintain and retain all data, regulatory
documentation that is required to be obtained, generated, maintained or retained
in compliance with GLP, GCP, GTP and GMP, in each case as applicable under the
Laws and regulations of the country and the state and local government wherein
such activities are conducted, as determined by such Party using reasonable
discretion, and with respect to the consent eligibility, care, handling and use
in Research, Development and Commercialization activities hereunder of any human
or non-human animals sourced by or on behalf of such Party, shall at all times
comply (and shall require compliance by any of its Third Party contractors) with
all Laws, and also with the standards in the pharmaceutical industry for the
research, development and commercialization of pharmaceutical products;

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13.4.3such Party shall not knowingly employ (and, to the knowledge of it or its
Affiliates, shall not use any contractor or consultant that employs) any Person
debarred by the FDA (or subject to a similar sanction of EMA or equivalent in
the Territory), or, to the knowledge of such Party, any Person who is the
subject of an FDA debarment investigation or proceeding (or similar proceeding
of EMA or equivalent in the Territory), in the conduct of its activities under
this Agreement. Each Party agrees to inform the other Party in writing
immediately if it or any individual or entity that is performing activities
under this Agreement is debarred by the FDA (or subject to a similar sanction of
EMA or equivalent in the Territory) or is the subject of an FDA debarment
investigation or proceeding (or similar proceeding of EMA or equivalent in the
Territory);

13.4.4such Party shall not (a) enter into any agreement, instrument or
understanding, oral or written, with any Third Party or (b) grant any license to
any Third Party relating to any of the intellectual property rights it Controls,
in each case (a) or (b) which would conflict or interfere with any of the rights
or licenses granted to the other Party hereunder; and

13.4.5such Party shall ensure that the Patents and Know-How licensed to the
other Party hereunder will be free and clear of liens, charges or encumbrances
other than (a) licenses granted to or by Third Parties that are not inconsistent
with the rights and licenses granted to the other Party hereunder or (b) any
other liens, charges or encumbrances that do not affect the other Party’s rights
hereunder.  

13.5Compliance with Anti-Corruption Laws.

13.5.1Notwithstanding anything to the contrary in the Agreement, each Party
hereby agrees that:

(a)it shall not, in the performance of this Agreement, perform any actions that
are prohibited by local and other anti-corruption laws (including the provisions
of the U.S. Foreign Corrupt Practices Act, collectively “Anti-Corruption Laws”)
that may be applicable to one or both Parties to this Agreement;

(b)it shall not, in the performance of this Agreement, directly or indirectly,
make any payment, or offer or transfer anything of value, or agree or promise to
make any payment or offer or transfer anything of value, to a government
official or government employee, to any political party or any candidate for
political office or to any other Third Party related to the transaction with the
purpose of influencing decisions related to either Party or its business in a
manner that would violate Anti-Corruption Laws;

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(c)Fate shall designate an individual within its organization [***] as well as
applicable rules on interactions with health care professionals, as mutually
agreed to by the Parties.  Such designated individual shall [***] who perform
any activities under this Agreement and interact with government officials or
health care professionals in the normal course of their responsibilities.  Upon
the Parties’ mutual agreement, [***].  Fate and Janssen shall each use
reasonable efforts to provide such training or training materials to any
contractors or subcontractors of such Party engaged to perform activities under
this Agreement where such contracted or subcontracted activities include
responsibility for, directly or indirectly, interacting with Public
Officials.  Fate may fulfill its obligation under the preceding sentence by
requesting appropriate materials from Janssen and forwarding such materials, if
any, received from Janssen to the applicable contractor or subcontractor.  In
the event that Fate is not able to obtain a contractor or subcontractor’s
agreement to receive such training or materials, Fate will use reasonable
efforts [***] and materials for any such obligations;

(d)it shall, on an annual basis upon request by the other Party, verify in
writing that to the best of such Party’s knowledge, there have been no
violations of Anti-Corruption Laws by such Party or persons employed by or
subcontractors used by such Party in the performance of the Agreement, or will
provide details of any exception to the foregoing; and

(e)it shall maintain records (financial and otherwise) and supporting
documentation related to the subject matter of the Agreement in order to
document or verify compliance with the provisions of this Section, and upon
request of the other Party, up to once per year and upon reasonable advance
notice, shall provide a Third Party auditor mutually acceptable to the Parties
with access to such records for purposes of verifying compliance with the
provisions of this Section.  Acceptance of a proposed Third Party auditor may
not be unreasonably withheld by either Party.  It is expressly agreed that the
costs related to the Third Party auditor will be fully paid by the Party
requesting the audit, and that any auditing activities may not unduly interfere
with the normal business operations of the Party subject to such auditing
activities.  The audited Party may require the Third Party auditor to enter into
a reasonable confidentiality agreement in connection with such an audit.

13.5.2Each Party hereby represents and warrants to the other Party that, to its
knowledge as of the Effective Date, since [***], neither such Party nor any of
its subsidiaries nor any of their Affiliates, directors, officers, employees,
distributors, agents, representatives, sales intermediaries or other Third
Parties acting on behalf of such Party or any of its subsidiaries or any of
their Affiliates:

(a)has taken any action in violation of any applicable Anti-Corruption Law; or

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(b)has corruptly offered, paid, given, promised to pay or give, or authorized
the payment or gift of anything of value, directly or indirectly, to any Public
Official (as defined in Section 13.5.4 below), for the purposes of:

(i)influencing any act or decision of any Public Official in his official
capacity;

(ii)inducing such Public Official to do or omit to do any act in violation of
his lawful duty;

(iii)securing any improper advantage; or

(iv)inducing such Public Official to use his or her influence with a government,
governmental entity, or commercial enterprise owned or controlled by any
government (including state-owned or controlled veterinary or medical
facilities) in obtaining or retaining any business whatsoever.

13.5.3Each Party hereby represents and warrants to the other Party that, as of
the Effective Date, none of the officers, directors or employees of such Party
or of any of its subsidiaries or agents acting on behalf of such Party or any of
its subsidiaries, in each case that are employed or reside outside the United
States, are themselves Public Officials.

13.5.4For purposes of this Agreement, “Public Official” means:

(a)any officer, employee or representative of any regional, federal, state,
provincial, county or municipal government or government department, agency or
other division;

(b)any officer, employee or representative of any commercial enterprise that is
owned or controlled by a government, including any state-owned or controlled
veterinary or medical facility;

(c)any officer, employee or representative of any public international
organization, such as the African Union, the International Monetary Fund, the
United Nations or the World Bank; and

(d)any person acting in an official capacity for any government or government
entity, enterprise or organization identified above.

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13.6DISCLAIMERS.

13.6.1EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, FATE MAKES NO
REPRESENTATIONS OR WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING
ANY EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, WITH RESPECT TO ANY FATE CONFIDENTIAL INFORMATION OR ANY LICENSE
GRANTED BY FATE UNDER ITS INTELLECTUAL PROPERTY RIGHTS HEREUNDER, OR WITH
RESPECT TO ANY ANTIGEN BINDING DOMAIN, COLLABORATION CANDIDATE. LICENSED
COLLABORATION CANDIDATE,  OR LICENSED PRODUCT.

13.6.2EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, JANSSEN MAKES NO
REPRESENTATIONS OR WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING
ANY EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, WITH RESPECT TO ANY JANSSEN CONFIDENTIAL INFORMATION OR ANY LICENSE
GRANTED BY JANSSEN UNDER ITS INTELLECTUAL PROPERTY RIGHTS HEREUNDER, OR WITH
RESPECT TO ANY ANTIGEN BINDING DOMAIN, COLLABORATION CANDIDATE, LICENSED
COLLABORATION CANDIDATE,  OR LICENSED PRODUCT.

13.7LIMITATION OF LIABILITY.  EXCEPT FOR CLAIMS OF A THIRD PARTY THAT ARE
SUBJECT TO INDEMNIFICATION UNDER ARTICLE 14, NEITHER PARTY SHALL BE LIABLE TO
THE OTHER WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT, WHETHER UNDER
ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY,
FOR ANY INCIDENTAL, INDIRECT, SPECIAL, EXEMPLARY, PUNITIVE, MULTIPLE, OR
CONSEQUENTIAL DAMAGES, (INCLUDING LOST PROFITS, LOSS OF USE, DAMAGE TO GOODWILL,
LOSS OF OPPORTUNITIES, OR LOSS OF BUSINESS).

ARTICLE 14
Indemnity and Insurance

14.1Janssen Indemnity. Janssen shall indemnify, defend and hold harmless Fate
and its Affiliates, and their respective officers, directors, employees, agents,
Sublicensees, and their respective successors, heirs and assigns and
representatives (the “Fate Indemnitees”), from and against any and all claims,
threatened claims, damages, losses, suits, proceedings, liabilities, costs
(including reasonable legal expenses, reasonable costs of litigation and
reasonable attorney’s fees), or judgments, whether for money or equitable
relief, of any kind brought by a Third Party or Governmental Authority
(collectively, “Losses”), to the extent arising out of or relating to:
[***].  For clarity, Losses shall not include any losses or damages sustained by
any Fate Indemnitee as a result of the actions described in clauses (a), (b) or
(c) of the immediately preceding sentence, except to the extent that such losses
or damages are paid or incurred by a Fate Indemnitee to a Third Party or
Governmental Authority as a result of a claim or action of a Third Party or
Governmental Authority.

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14.2Fate Indemnity. Fate shall indemnify, defend and hold harmless Janssen and
its Affiliates, and their respective officers, directors, employees, agents,
Sublicensees, and their respective successors, heirs and assigns and
representatives (the “Janssen Indemnitees”), from and against any and all
Losses, to the extent arising out of or relating to: [***].  For clarity, Losses
shall not include any losses or damages sustained by any Janssen Indemnitee as a
result of the actions described in clauses (a), (b) or (c) of the immediately
preceding sentence, except to the extent that such losses or damages are paid or
incurred by a Janssen Indemnitee to a Third Party or Governmental Authority as a
result of a claim or action of a Third Party or Governmental Authority.

14.3Indemnification Procedure. A claim to which indemnification applies under
Section 14.1 or Section 14.2 shall be referred to herein as an “Indemnification
Claim”.  If any Person or Persons (collectively, the “Indemnitee”) intends to
claim indemnification under this ARTICLE 14, the Indemnitee shall notify the
other Party (the “Indemnitor”) in writing promptly upon becoming aware of any
claim that may be an Indemnification Claim (it being understood and agreed,
however, that the failure by an Indemnitee to give such notice shall not relieve
the Indemnitor of its indemnification obligation under this Agreement except and
only to the extent that the Indemnitor is actually prejudiced as a result of
such failure to give notice). Each claim notice shall describe in reasonable
detail the basis for such claim (the “Claim Basis”) and specify the amount or
the estimated amount of Losses actually incurred or paid by the Indemnitee as a
result of the Claim Basis, to the extent ascertainable.  By delivering notice to
the Indemnitee within [***] days after delivery of notice described in the
immediately preceding sentence, the Indemnitor may assume and control, with the
sole power to direct, the defense of the Indemnification Claim at its own
expense with counsel selected by the Indemnitor and reasonably acceptable to the
Indemnitee. If the Indemnitor does not assume control of the defense of the
Indemnification Claim as described in this Section 14.3, above, the Indemnitee
shall control such defense at Indemnitor’s expense (subject to Sections 14.1 and
14.2). The Party not controlling such defense may participate therein at its own
expense.  Neither the Indemnitor nor the Indemnitee shall admit fault on behalf
of the other Party without the written consent of such other Party. The
Indemnitee shall not settle or compromise an Indemnification Claim without the
prior written consent of the Indemnitor, which shall not be unreasonably
withheld, delayed or conditioned. The Indemnitor shall not settle or compromise
an Indemnification Claim or consent to any judgment in respect thereof that does
not include a complete and unconditional release of the Indemnitee from all
liability with respect thereto or that imposes any liability or obligation on
the Indemnitee for which the Indemnitee is not indemnified under this Agreement,
without the prior written consent of the Indemnitee. The Party controlling the
defense of an Indemnification Claim shall keep the other Party advised of the
status of such Indemnification Claim and the defense thereof and shall
reasonably consider recommendations made by the other Party with respect
thereto.  The other Party shall cooperate fully with the Party controlling such
defense and shall make available all pertinent information under its control,
which information shall be subject to ARTICLE 12, and cause its employees to be
available in a deposition, hearing or trial.

14.4Insurance.  Each Party shall acquire and maintain, at its own expense,
insurance or self-insurance, as reasonably necessary to cover its own product
liability and its obligations under this Agreement. Within [***] days following
written request from the other Party, each Party shall furnish to such other
Party a certificate of insurance evidencing such coverage.  

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ARTICLE 15
Term and Termination

15.1Term; Expiration. The term of this Agreement (the “Term”) shall become
effective as of the Effective Date and shall continue in full force and effect,
unless earlier terminated pursuant to the rest of this ARTICLE 15, until:

15.1.1on a Janssen Antigen-by-Janssen Antigen basis, the expiration of the last
Commercial Option Term for a Collaboration Candidate in the Research Plan for
such Janssen Antigen without Janssen’s exercise of the Commercial Option for any
Collaboration Candidate with respect to such Janssen Antigen;

15.1.2if Janssen exercises a Commercial Option, on a Licensed
Product-by-Licensed Product and country-by-country basis, (a) if such Licensed
Product is not a Profit Share Product, on the date of expiration of the Royalty
Term with respect to such Licensed Product in such country or (b) if such
Licensed Product is a Profit Share Product, on the date of expiration of all
payment obligations in such country under Section 6.4 of the Profit Share
Product Exhibit (with respect to the U.S.) and under Section 6.5 of the Profit
Share Product Exhibit (with respect to any other country);

15.1.3if the Agreement expires with respect to all of the Janssen Antigens under
Section 15.1.1, in its entirety upon the expiration of the Agreement with
respect to the last Janssen Antigen;

15.1.4if Janssen exercises a Commercial Option, on a Janssen Antigen-by-Janssen
Antigen basis, upon the expiration of this Agreement with respect to all
Licensed Products in all countries in the Territory under Section 15.1.2 with
respect to such Janssen Antigen; or

15.1.5if Janssen exercises a Commercial Option, in its entirety upon expiration
of this Agreement with respect to all Licensed Products in all countries in the
Territory under Section 15.1.2.

Upon the expiration of this Agreement pursuant to Section 15.1.2 on a Licensed
Product-by-Licensed Product and country-by-country basis, the licenses granted
by Fate to Janssen under Section 5.1.2 with respect to such Licensed Product and
country shall become fully paid-up, non-exclusive, irrevocable, royalty-free and
perpetual; provided, however, that such Licensed Product in such country shall
still be included in the calculation of Annual Net Sales in Section 10.5.

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15.2Termination for Material Breach.  

15.2.1Either Party (the “Non-breaching Party”) may terminate this Agreement in
its entirety in the event of a material breach of this Agreement by the other
Party (the “Breaching Party”), by providing [***] days’ prior written notice to
the Breaching Party (the “Cure Period”).  Such notice shall reasonably describe
the alleged material breach in sufficient detail to put the Breaching Party on
notice and clearly state the Non-breaching Party’s intent to terminate this
Agreement if the alleged breach is not cured within the Cure
Period.  Notwithstanding the foregoing: (i) the Cure Period in connection with a
material breach of a payment obligation under ARTICLE 10 of this Agreement or
ARTICLE VI of the Profit Share Product Exhibit shall be [***] days; and (ii) if
the alleged material breach (other than a payment breach), by its nature, is
curable, but is not reasonably curable within the Cure Period, then such Cure
Period shall be extended if the Breaching Party provides a written plan for
curing such breach to the Non-breaching Party and uses [***] Efforts to cure
such breach in accordance with such written plan, provided that no such
extension shall exceed [***] days without the consent of the Non-breaching
Party.

15.2.2If the Breaching Party disputes in good faith the existence or materiality
of a breach specified in a notice provided by the other Party in accordance with
Section 15.2.1, and the Breaching Party provides the other Party notice of such
dispute within the Cure Period, then the non-breaching Party shall not have the
right to terminate this Agreement under Section 15.2.1 unless and until (i) the
dispute resolution process in ARTICLE 16 has finally determined that the
Breaching Party has materially breached this Agreement and (ii) the Breaching
Party fails to cure such material breach within ninety [***] (or [***] days in
the case of the breach of a payment obligation) following such final
determination.  It is understood and agreed that, during the pendency of such
dispute, all of the terms and conditions of this Agreement shall remain in
effect and the Parties shall continue to perform all of their respective
obligations hereunder.

15.3Janssen Unilateral Termination Rights.  Janssen may terminate this Agreement
at any time on a Janssen Antigen-by-Janssen Antigen basis, which termination
shall include all Collaboration Candidates, Rejected Candidates, Discontinued
Collaboration Candidates, Licensed Collaboration Candidates and Licensed
Products, and all of their Equivalents, with respect to such Janssen Antigen, or
in its entirety, upon [***] days written notice to Fate; provided that such
termination will not take effect until on or after the [***] anniversary of the
Effective Date.  

15.4Termination for [***].  Fate shall have the right to terminate this
Agreement with respect to a particular Janssen Antigen upon written notice to
Janssen within [***] after the applicable date if [***].

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15.5Termination for Insolvency.  

15.5.1Either Party may terminate this Agreement if, at any time, the other Party
files in any court or agency pursuant to any statute or regulation of any state
or country, a petition in bankruptcy or insolvency or for reorganization or for
an arrangement or for the appointment of a receiver or trustee of the Party or
of substantially all of its assets, or if the other Party is served with an
involuntary petition against it, filed in any insolvency proceeding, and such
other Party consents to the involuntary bankruptcy or such petition is not
dismissed within [***] days after the filing thereof, or if the other Party
shall propose or be a party to any dissolution or liquidation, or if the other
Party shall make an assignment of substantially all of its assets for the
benefit of creditors (each, an “Insolvency Event”).

15.5.2All rights and licenses now or hereafter granted by Fate to Janssen under
or pursuant to this Agreement, including, for the avoidance of doubt, the
licenses granted to Janssen pursuant to Section 5.1 and 5.4, are, for all
purposes of Section 365(n) of Title 11 of the United States Code, as amended
(such Title 11, the “Bankruptcy Code”), licenses of rights to “intellectual
property” as defined in the Bankruptcy Code.  Upon the occurrence of any
Insolvency Event with respect to Fate, Fate agrees that Janssen, as licensee of
such rights under this Agreement, shall retain and may fully exercise all of its
rights and elections under the Bankruptcy Code.  Without limiting the generality
of the foregoing, Fate and Janssen intend and agree that any sale of Fate’s
assets under Section 363 of the Bankruptcy Code shall be subject to Janssen’s
rights under Section 365(n), that Janssen cannot be compelled to accept a money
satisfaction of its interests in the intellectual property licensed pursuant to
this Agreement, and that any such sale therefore may not be made to a purchaser
“free and clear” of Janssen’s rights under this Agreement and Section 365(n)
without the express, contemporaneous consent of Janssen.  Further, each Party
agrees and acknowledges that no payments by Janssen to Fate hereunder, other
than royalty payments pursuant to Section 10.6 of this Agreement or Section 6.5
of Profit Share Product Exhibit, U.S. Pre-Tax Profits and Losses payments
pursuant to Section 6.4 of the Profit Share Product Exhibit and payments for
Sales Milestone Events pursuant to Section 10.5 of this Agreement or pursuant to
Section 6.2 of the Profit Share Product Exhibit, shall constitute royalties
within the meaning of Section 365(n) of the Bankruptcy Code and relate to
licenses of intellectual property hereunder.  Fate shall, during the Term,
create and maintain current copies or, if not amenable to copying, detailed
descriptions or other appropriate embodiments, to the extent feasible, of all
such intellectual property.  Fate and Janssen acknowledge and agree that
“embodiments” of intellectual property within the meaning of Section 365(n)
include the Master iPSC Bank, any CD34 Compositions, laboratory notebooks, cell
lines, product samples and inventory, research studies and data, Regulatory
Filings and Regulatory Approvals.  If (i) a case under the Bankruptcy Code is
commenced by or against Fate, (ii) this Agreement is rejected as provided in the
Bankruptcy Code, and (iii) Janssen elects to retain its rights hereunder as
provided in Section 365(n) of the Bankruptcy Code, Fate (in any capacity,
including debtor-in-possession) and its successors and assigns (including a
trustee) shall:

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(a)provide to Janssen all such intellectual property (including all embodiments
thereof) held by Fate and such successors and assigns, or otherwise available to
them, immediately upon Janssen’s written request.  Whenever Fate or any of its
successors or assigns provides to Janssen any of the intellectual property
licensed hereunder (or any embodiment thereof) pursuant to this Section 15.5.2,
Janssen shall have the right to perform Fate’s obligations hereunder with
respect to such intellectual property, but neither such provision nor such
performance by Janssen shall release Fate from liability resulting from
rejection of the license or the failure to perform such obligations; and; and

(b)not interfere with Janssen’s rights under this Agreement, or any agreement
supplemental hereto, to such intellectual property (including such embodiments),
including any right to obtain such intellectual property (or such embodiments)
from another entity, to the extent provided in Section 365(n) of the Bankruptcy
Code.

15.5.3 All rights, powers and remedies of Janssen provided herein are in
addition to and not in substitution for any and all other rights, powers and
remedies now or hereafter existing at law or in equity (including the Bankruptcy
Code) in the event of the commencement of a case under the Bankruptcy Code with
respect to Fate.  The Parties agree that they intend the following rights to
extend to the maximum extent permitted by law, and to be enforceable under
Bankruptcy Code Section 365(n):

(a)the right of access to any intellectual property (including all embodiments
thereof) of Fate, or any Third Party with whom Fate contracts to perform an
obligation of Fate under this Agreement, and, in the case of the Third Party,
which is necessary for the manufacture, use, sale, import or export of
Collaboration Candidates or Licensed Products; and

(b)the right to contract directly with any Third Party to complete the
contracted work.

15.6Termination for [***].

15.6.1[***]

15.6.2[***]

15.6.3[***]

15.6.4[***]

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15.7Consequences of Termination.

15.7.1In the event of termination of the Agreement by either Party pursuant to
Section 15.2, 15.3, 15.4, 15.5 or 15.6, then, upon the effective date of such
termination:

(a)all licenses and other rights granted to either Party pursuant to this
Agreement shall terminate (save for those (i) expressly stated to survive
termination of this Agreement pursuant to Section 15.8, or (ii) to the extent
necessary to enable either Party to perform any of its obligations that survive
termination);

(b)Janssen shall wind down any Development and Commercialization activities and
any Manufacturing activities, as quickly as reasonably practicable, subject to
compliance with ethical and legal requirements, and the Parties shall continue
to be responsible for or share, as applicable, the costs of any such activities
in accordance with the terms of this Agreement until such wind down is complete;
provided, however, if Janssen terminates this Agreement pursuant to Section
15.3, or if Fate terminates this Agreement pursuant to Section 15.2 or 15.5,
after the Opt-In Exercise Date for a Profit Share Product, then the provisions
of Section 9.1 of the Profit Share Product Exhibit shall apply with respect to
such Profit Share Product;

(c)neither Party shall Develop, Manufacture or Commercialize any Collaboration
Candidates, Rejected Candidates, Discontinued Collaboration Candidates, Licensed
Collaboration Candidates, or Licensed Products, or any of their Equivalents, and
Fate shall have no further right to use the Janssen Antigen Binding Domains
provided to Fate by Janssen, except in each case as provided with respect to
Reverted Profit Share Products pursuant to Section 9.1 of the Profit Share
Product Exhibit;

(d)each Party shall use [***] Efforts to return or destroy, at the Disclosing
Party’s election, all Confidential Information of the other Party (provided,
however, that the Receiving Party may keep one copy of such Confidential
Information subject to an ongoing obligation of confidentiality for archival
purposes only), except for any Confidential Information to which the Receiving
Party has a continuing right of use (which, for clarity, shall not include any
Fate Confidential Methods).  This obligation to return or destroy Confidential
Information does not extend to automatically generated computer back-up or
archival copies generated in the ordinary course of information system’s
procedures, provided, however, that except as expressly set out herein, the
Receiving Party shall not access nor make any use of such copies;

(e)Subject to Fate’s rights under the Profit Share Product Exhibit, Janssen
shall return to Fate or destroy (and certify such destruction in writing) all
Master iPSC Banks, all working cell banks, and CD34 Compositions.  Janssen shall
assign, and hereby does assign, to Fate title to the Master iPSC Banks, all
working cell banks, and CD34 Compositions therefor; and

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(f)All of the foregoing effects of termination are in addition to the other
rights and remedies that may be available to the Parties at law or in equity. If
this Agreement is terminated with respect to one or more Janssen Antigens
(including all Collaboration Candidates, Rejected Candidates, Discontinued
Collaboration Candidates, Licensed Collaboration Candidates, Licensed Products,
and all of their Equivalents with respect thereto) but not in its entirety, such
effects will apply only to the terminated Research Program with respect to such
Janssen Antigen (including all Collaboration Candidates, Rejected Candidates,
Discontinued Collaboration Candidates, Licensed Collaboration Candidates,
Licensed Products, and all of their Equivalents with respect thereto).

15.8Survival. Unless otherwise expressly provided herein, the following
provisions shall survive termination or expiration of this Agreement in its
entirety (including any other Sections, Articles or defined terms referred to in
such provisions or necessary to give them effect), as well as any other
provision which by its terms or by the context thereof, is intended to survive
such termination:

Section 3.7.6

Section 3.10 (Materials)

Section 5.1.4(b)

Section 5.1.5 (Fate Affiliates)

Section 5.2.4 (Janssen Affiliates)

[***]

Section 5.4 (Collaboration Intellectual Property)

Section 5.5.1 (Sublicenses to Affiliates)

Section 5.9.1 (No Implied Licenses; Retained Rights)

Sections 10.2 (Payments during Research Term) through 10.9 (Manner of Payment),
to the extent necessary to determine or pay any amounts that were incurred, or
that became due and payable, prior to the effective date of termination

Section 10.10 (Records)

Section 10.11 (Audits)

Section 10.12 (Taxes)

Section 11.1 (Inventions)

Section 11.2.3 (Joint Patents)

Sections 12.1 (Nondisclosure) through 12.7 (Equitable Relief), and Section
12.8.1 (Research Program Information), for the time period set forth in Section
12.1

Section 13.6 (Disclaimers)

Section 13.7 (Limitation of Liability)

ARTICLE 14 (Indemnity and Insurance)

Section 15.1 (Term; Expiration), last paragraph

Section 15.7 (Consequences of Termination)

Section 15.8 (Survival)

ARTICLE 16 (Dispute Resolution)

ARTICLE 17 (Miscellaneous), other than Section 17.12 (Competition Law Filings)
and Section 17.14 (Effects of Fate Change of Control)

ARTICLE VI of Exhibit 6.4 (Financial Provisions), to the extent necessary to
determine or pay any amounts that were incurred, or that became due and payable,
during the Profit Share Term prior to the effective date of termination

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Section 6.3.2 of Exhibit 6.4 (Development Costs Prior to Opt-In Exercise Date)

ARTICLE VIII of Exhibit 6.4 (Product Liability Claims)

ARTICLE IX of Exhibit 6.4 (Termination)

Termination or expiration of this Agreement shall not relieve the Parties of any
liability or obligation which accrued hereunder prior to the effective date of
such termination or expiration, nor preclude either Party from pursuing all
rights and remedies it may have hereunder or at law or in equity, subject to
ARTICLE 16, with respect to any breach of this Agreement nor prejudice either
Party’s right to other remedies such Party may have at law or
equity.  Termination or expiration of this Agreement with respect to a portion
of this Agreement (e.g., certain obligations, products or targets) shall not
affect the Parties’ respective rights and obligations in portions of this
Agreement not so terminated.

 

ARTICLE 16
Dispute Resolution

16.1Exclusive Dispute Resolution Mechanism. The Parties agree that, except with
respect to Committee Matters, which will be resolved in accordance with ARTICLE
2 or Section 2.6 of the Profit Share Product Exhibit, as applicable, the
procedures set forth in this ARTICLE 16 shall be the exclusive mechanism for
resolving any dispute, controversy, or claim between the Parties that may arise
from time to time pursuant to, arising out of or in connection with this
Agreement, including any Party’s rights or obligations hereunder or any
questions regarding the formation, existence, validity, enforceability,
performance, interpretation, tort, breach or termination hereof (collectively,
“Disputes”) that cannot be resolved through good faith negotiation between the
Parties.

16.2Resolution by Executive Officers. In the event of any Dispute, the Parties
shall first attempt in good faith to resolve such Dispute by negotiation and
consultation. In the event that such Dispute is not resolved through such
negotiation within [***] days after either Party’s request, either Party may, by
written notice to the other Party, refer the Dispute for attempted resolution by
good faith negotiation between the Executive Officers within [***] days after
such notice is received. Except as set forth in Sections 16.4 and 16.5, if any
Dispute is not resolved by the Executive Officers within the above [***]-day
period, each Party may, in its sole discretion, seek resolution of such Dispute
in accordance with Section 16.3, and each Party hereby expressly waives its
right to seek resolution of such Dispute in a court of competent jurisdiction.

16.3Arbitration.

16.3.1With respect to any Disputes that are not resolved by the Executive
Officers in accordance with Section 16.2, the Dispute shall be submitted by
either Party for resolution in arbitration pursuant to the then current
Commercial Arbitration Rules of the American Arbitration Association (“AAA
Rules”), except where they conflict with this Section 16.3, in which case this
Section 16.3 shall control.

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16.3.2A panel consisting of three (3) arbitrators, two (2) of whom are to be
nominated by the Parties without knowing which Party nominated each of them,
shall conduct the arbitration in accordance with the AAA Rules.  Each Party
shall nominate one (1) arbitrator and propose that potential arbitrator to the
other Party.  The other Party may object to the nomination on grounds of bias,
lack of subject matter experience, or any other legitimate grounds.  AAA will be
the final decision maker if there is a dispute over the objection.  Once each
Party has identified an acceptable potential arbitrator, AAA will approach each
potential arbitrator to determine whether he or she is willing and able to
serve, without informing such potential arbitrator which Party nominated him or
her.  Once the Party-nominated arbitrators are established, the two (2)
Party-nominated arbitrators shall nominate a third arbitrator, who shall act as
chairperson.  Each of the three arbitrators shall be a lawyer with at least
[***] years’ experience with a law firm or corporate law department of over 25
lawyers or who was a judge of a court of general jurisdiction. Each arbitrator
shall be impartial and independent of the Parties and shall abide by the Code of
Ethics for Arbitrators in Commercial Disputes.

16.3.3The seat, or legal place, of arbitration shall be New York, New York, and
the language used in any such proceeding shall be English.

16.3.4In such arbitration the governing law to be applied is as described in
Section 17.7. It is the intent of the Parties to enable a reasonable and
practicable amount of discovery in any proceeding. At the request of a Party,
the arbitral tribunal shall have the discretion to order the disclosure of
specified documents by the Parties. Such a request shall identify the
document(s) with a reasonable degree of specificity and establish the relevance
of the document(s) to the arbitration.  The Parties agree that this Agreement
evidences a transaction involving interstate commerce.  Notwithstanding Section
17.7 with respect to applicable substantive law, any arbitration conducted
pursuant to the terms of this Agreement shall be governed by the Federal
Arbitration Act (9 U.S.C. §§ 1 et. seq.).

16.3.5The Parties acknowledge that they desire for any arbitration to be
conducted in an efficient, speedy and economical manner. The Parties shall use
good faith efforts to complete arbitration under this Section 16.3 within [***]
following the appointment of the tribunal. In order to effectuate this desire,
the arbitrators shall establish procedures reasonably directed to facilitating
such goals and completing such arbitration within such [***] period.

16.3.6Except as otherwise specifically limited in this Agreement, the arbitral
tribunal shall have the power to grant any remedy or relief that it deems
appropriate, whether provisional or final, including but not limited to
conservatory relief and injunctive relief.

16.3.7The existence and content of the arbitral proceedings and any rulings or
awards shall be kept confidential by the Parties and members of the arbitral
tribunal except (i) to the extent that disclosure may be required of a Party to
fulfill a legal duty, protect or pursue a legal right, or enforce or challenge
an award in bona fide legal proceedings before a state court or other judicial
authority, (ii) with the consent of the Parties, (iii) where needed for the
preparation or presentation of a claim or defense in this arbitration, (iv)
where such information is already in the public domain other than as a result of
a breach of this Section 16.3.7, or (v) by order of the arbitral tribunal upon
application of a Party.

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16.3.8The arbitration award shall be final and binding on the Parties, and the
Parties undertake to carry out any award without delay. Judgment on the award
may be entered in any court of competent jurisdiction.

16.3.9Each Party shall bear its own costs and attorney’s fees, and the Parties
shall equally bear the fees, costs, and expenses of the arbitrators and the
arbitration proceedings, including costs and expenses of translators for the
arbitration proceedings; provided, however, that the arbitrators may exercise
discretion to award arbitration costs and translation costs, excluding
attorney’s fees, to the prevailing Party.

16.4Preliminary Injunctions. Notwithstanding anything in this Agreement to the
contrary, a Party may seek interim or conservatory measures, including a
temporary restraining order or a preliminary injunction, from any court of
competent jurisdiction in order to prevent immediate and irreparable injury,
loss, or damage on a provisional basis, pending the decision of the
arbitrator(s) on the ultimate merits of any Dispute.  Any such request shall not
be deemed incompatible with, or a waiver of, this agreement to arbitrate.

16.5Patent Disputes. Notwithstanding anything in this Agreement to the contrary,
any and all issues regarding the scope, construction, validity, and
enforceability of any patent in a country within the Territory shall be
determined in a court of competent jurisdiction under the applicable patent laws
of such country.

16.6No Trial by Jury. EACH PARTY HERETO WAIVES ITS RIGHT TO TRIAL OF ANY ISSUE
BY JURY.

 

ARTICLE 17
Miscellaneous

17.1Severability. If any one or more of the provisions of this Agreement is held
to be invalid, illegal or unenforceable, the provision shall be considered
severed from this Agreement and shall not serve to invalidate any remaining
provisions hereof. The Parties shall make a good faith effort to replace any
invalid, illegal or unenforceable provision with a valid, legal and enforceable
one such that the objectives contemplated by the Parties when entering this
Agreement may be realized.

17.2Notices. Any notice required or permitted to be given by this Agreement
shall be in writing and in English and shall be (a) delivered by hand or
overnight courier with tracking capabilities or (b) mailed postage prepaid by
first class, registered or certified mail addressed as set forth below unless
changed by notice so given:

If to Janssen:

[***]

 

[***]

 

[***]

 

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If to Fate:

Fate Therapeutics, Inc.

3535 General Atomics Court

Suite 200

San Diego, California 92121

Attention: Chief Executive Officer

 

and

 

Fate Therapeutics, Inc.

3535 General Atomics Court

Suite 200

San Diego, California 92121

Attention: Office of the General Counsel

 

Any such notice shall be deemed given (i) on the date received if delivered in
accordance with Section 17.2(a), or (ii) [***] Business Days after mailing if
mailed in accordance with Section 17.2(b). A Party may add, delete, or change
the person or address to which notices should be sent at any time upon written
notice delivered to the Party’s notices in accordance with this Section 17.2. It
is understood and agreed that this Section 17.2 does not intend to govern
day-to-day business communications necessary between the Parties in performing
their duties under the terms hereof.

17.3Force Majeure. Neither Party shall be liable for delay or failure in the
performance of any of its obligations hereunder (other than the payment of
money) if such delay or failure is due to causes beyond its reasonable control,
including, acts of God, fires, typhoon, floods, earthquakes, tsunami, embargoes,
acts of war (whether war be declared or not), terrorism, strikes, lockouts,
pandemics or other civil unrest, or omissions or delays in acting by any
governmental authority (“Force Majeure”); provided, however, that the affected
Party promptly notifies the other Party and further provided that the affected
Party shall use its [***] Efforts to avoid or remove such causes of
non-performance and to mitigate the effect of such occurrence, and shall
continue performance with the commercially reasonable dispatch whenever such
causes are removed. When such circumstances arise, the Parties shall negotiate
in good faith any modifications of the terms of this Agreement that may be
necessary or appropriate in order to arrive at an equitable solution.

17.4Assignment.

17.4.1Neither this Agreement nor any right or obligation of a Party hereunder
may be assigned or transferred by either Party, in whole or in part, without the
consent of the other Party, which shall not be unreasonably withheld, delayed or
conditioned. Notwithstanding the foregoing, either Party may, without the
consent of the other Party, assign or transfer all of its rights and obligations
hereunder to: (a) an Affiliate, as long as the assignee remains an Affiliate of
the assigning Party, provided that the assigning Party shall remain responsible
for the performance of, and primarily liable under, this Agreement
notwithstanding such assignment; or (b) a Third Party that acquires all or
substantially all of the business or consolidated assets of such Party (whether
by merger, reorganization, acquisition, sale or otherwise); provided, however,
that (a) such assignment or transfer includes all rights and obligations under
this Agreement, and (b) such Acquirer or Affiliate shall have agreed in writing,
as of the date of such assignment or transfer, to be bound by the terms of this
Agreement, and to assume performance of rights or obligations hereof.

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17.4.2Subject to Section 17.4.1, this Agreement shall inure to the benefit of
and be binding on the Parties’ successors and assigns. Any assignment or
transfer in violation of the foregoing shall be null and void and wholly
invalid, such assignees and transferees in any such assignment or transfer shall
acquire no rights whatsoever, and the non-assigning or non-transferring Party
shall not be required to recognize such assignment or transfer. In the event
that a Party assigns or otherwise transfers this Agreement to an Affiliate of
such Party, such Party hereby agrees to be jointly and severally liable with any
such Affiliates for the actions of such Affiliates and for any and all amounts
that become due and payable hereunder to the other Party.

17.4.3Notwithstanding anything to the contrary in this Agreement, Fate shall
have the right to assign its rights to receive payments pursuant to ARTICLE 10,
in whole or in part, to a Third Party in connection with the monetization of
Fate’s revenue stream under ARTICLE 10 only with Janssen’s prior written
consent, which shall not be unreasonably withheld, conditioned or delayed.

17.5Further Assurances. At any time or from time-to-time on and after the
Effective Date, either Party shall at the request of the other Party (a) deliver
to the requesting Party such records, data or other documents required to be
delivered under the provisions of this Agreement, and (b) execute, and deliver
or cause to be delivered, all such consents, documents or further instruments of
assignment, transfer or license consistent with the provisions of this
Agreement.

17.6Waivers. The failure or delay of any Party to assert a right hereunder or to
insist on the performance of any obligation hereunder shall not be deemed to be
a waiver of that right or such obligation. Waiver of any breach of any provision
hereof shall not be deemed to be a waiver of any other breach of such provision
or any other provision on such occasion or any succeeding occasion. No waiver,
modification, or release by either Party of any condition or term in any one or
more instances shall be construed as a continuing waiver of such condition or
term or of another condition or term. In any event no waiver shall be effective
for any purpose hereunder unless such waiver is in writing and signed by a duly
authorized officer of the Party granting such waiver.

17.7Governing Law. This Agreement shall be governed by, enforced, and shall be
construed in accordance with the Laws of the State of New York without regard to
any conflicts of law provision that would result in the application of the Laws
of any other country or state. The Parties expressly agree that the United
Nations Convention on Contracts for the International Sale of Goods shall not
apply to this Agreement.

17.8Relationship of the Parties. Each Party is an independent contractor under
this Agreement. Nothing contained herein is intended or is to be construed so as
to constitute Fate and Janssen as partners, agents or joint venturers. Neither
Party shall have any express or implied right or authority to assume or create
any obligations on behalf of or in the name of the other Party or to bind the
other Party to any contract, agreement or undertaking with any Third Party.
Neither Party (nor its successor, assignee, transferee or Affiliate) shall treat
or report the relationship between the Parties arising under this Agreement as a
partnership for United States tax purposes without the prior written consent of
the other Party, unless required by a final “determination” as defined in
Section 1313 of the United States Internal Revenue Code of 1986, as amended.

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17.9Third Party Beneficiary. Except as expressly set forth herein, this
Agreement is for the sole benefit of the Parties hereto and their successors and
permitted assigns, and there are no express or implied third party beneficiaries
hereunder except for Indemnitees specified in ARTICLE 14.  Nothing in this
Agreement shall be construed as giving any Person, other than the Parties and
Indemnitees hereto and their successors and permitted assigns, any right, remedy
or claim under or in respect of this Agreement or any provision hereof.

17.10Entire Agreement; Amendment; Exhibits. This Agreement and the attached
exhibits constitute the entire agreement between the Parties as to the subject
matter of this Agreement, and supersede and merge all prior and contemporaneous
negotiations, representations, agreements and understandings regarding the same,
including the Prior CDA, subject to Section 12.6. No subsequent alteration,
amendment, change or addition to this Agreement shall be valid or binding upon
the Parties unless in writing and signed by the respective duly authorized
officers of each of the Parties. All Exhibits and Schedules are incorporated
herein by this reference.

17.11Interpretation; Headings.

17.11.1Each of the Parties acknowledges and agrees that this Agreement has been
diligently reviewed by and negotiated by and between them, that in such
negotiations each of them has been represented by competent counsel and that the
final agreement contained herein, including the language whereby it has been
expressed, represents the joint efforts of the Parties hereto and their counsel.
Accordingly, in interpreting this Agreement or any provision hereof, no
presumption shall apply against any Party as being responsible for the wording
or drafting of this Agreement or any such provision, and ambiguities, if any, in
this Agreement shall not be construed against any Party, irrespective of which
Party may be deemed to have authored the ambiguous provision.

17.11.2Unless the context requires otherwise, (a) any definition of or reference
to any agreement, instrument or other document herein shall be construed as
referring to such agreement, instrument or other document as from time to time
amended, supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein or therein), (b) any
reference to any Laws herein shall be construed as referring to such Laws as
from time to time enacted, repealed or amended, (c) any reference herein to any
Person shall be construed to include the Person’s successors and assigns, (d)
all references herein to Articles, Sections, Exhibits or Schedules, unless
otherwise specifically provided, shall be construed to refer to Articles,
Sections, Exhibits or Schedules of this Agreement and (e) the word “will” shall
be construed to have the same meaning and effect as the word “shall”. References
to any Sections include Sections and subsections that are part of the Section
(e.g., a section numbered “Section 2.2(a)” would be part of “Article 2”, and
references to “Section 2.2(a)” would also refer to material contained in the
subsection described as “Section 2.2(a)(i)”).  

17.11.3Headings and captions are for convenience only and are not to be used in
the interpretation of this Agreement.

- 114 -

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17.11.4Whenever any provision of this Agreement uses the term “including” (or
“includes”), such term will be deemed to mean “including without limitation” (or
“includes without limitation”) and the term “or” is used in the inclusive sense
(and/or). “Herein,” “hereby,” “hereunder,” “hereof” and other equivalent words
refer to this Agreement as an entirety and not solely to the particular portion
of this Agreement in which any such word is used. In addition: (i) words in the
singular or plural form include the plural and singular form, respectively;
(ii) whenever this Agreement refers to a number of days, such number will refer
to calendar days unless Business Days are specified; (iii) when a time period
set forth in this Agreement ends on a day that is not a Business Day, the last
day of such time period shall be the next Business Day; and (iv) all words used
in this Agreement will be construed to be of such gender or number as the
circumstances require.  All definitions set forth herein will be deemed
applicable whether the words defined are used herein in the singular or the
plural.

17.12Competition Law Filings. Within at least [***] Business Days of its receipt
of written notice from Janssen with respect to the Competition Law Filings, as
applicable, in connection with (i) the exercise of a Commercial Option pursuant
to Section 4.3 or (ii) [***], at the request of Janssen, Fate will, in
consultation and cooperation with Janssen, file or submit, and assist Janssen
with any Competition Law Filing necessary or advisable in connection with the
U.S. Federal Trade Commission (the “FTC”) and the U.S. Department of Justice
(the “DOJ”) under the HSR Act and the appropriate governmental entity under any
other applicable Competition Law. Any such Competition Law Filings made by each
of Janssen and Fate will be in substantial compliance with the requirements of
the Competition Laws. Each of Janssen and Fate will use its reasonable efforts,
and cooperate with each other, to obtain as promptly as practicable all
approvals, authorizations, terminations of applicable periods and clearances in
connection with the Competition Law Filings, including (a) cooperating and
consulting with each other and furnishing to each other or each other’s counsel
information and reasonable assistance as each may request in connection with the
preparation of any Competition Law Filing, (b) giving the other reasonable prior
notice of, and the opportunity to review and discuss in advance (including
considering in good faith the views of the other), any such Competition Law
Filings to be made and, to the extent reasonably practicable, of any
communication with, or any responses to inquiries or requests for additional
information from, the FTC, the DOJ and any other governmental entity regarding
such Competition Law Filings or the transactions contemplated by the Commercial
Option or the [***], as applicable, (c) permitting the other or the other’s
counsel to participate in all material communications and meetings with any
governmental entity to the extent not prohibited by such governmental entity and
(d) subject to clauses (b) and (c) of this Section 17.12, responding as promptly
as practicable to all requests of any governmental entity and providing all
requested information to such governmental entity. Janssen and Fate will each
pay their own expenses and attorneys’ fees associated with any Competition Law
Filings (including any response to requests for additional information);
however, Janssen will pay any filing fees required with the Competition Law
Filings relating to the exercise of the Commercial Option, and Fate will pay any
filing fees required with the Competition Law Filings relating to the [***] by
Fate.

- 115 -

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

 

17.13Performance by Affiliates. Each Party shall always have the right to
perform any or all of its obligations and exercise any or all of its rights
under this Agreement through any of its Affiliates (but only for so long as such
entity remains an Affiliate of such Party), provided that each Party shall
remain responsible for the performance of this Agreement and the compliance with
the terms and conditions of this Agreement by its Affiliates and any act or
omission by an Affiliate of such Party shall constitute an act or omission by
such Party.

17.14Effects of Fate Change of Control.  In the event of the occurrence of a
Change of Control of Fate during the Term, the following provisions of this
Section 17.14 shall apply:

17.14.1[***]

(a)[***]

(b)[***]

17.14.2Competing Products.  If the Acquirer or any of its Affiliates is
Developing or Commercializing a Competing Product in the Field, then the
Acquirer shall Segregate the program and activities related to such Competing
Product, including by:

(a)adopting reasonable procedures to prevent the Acquirer’s use of Confidential
Information relating to the Collaboration Candidates or Licensed Products in the
exploitation of such Competing Product;

(b)using [***] Efforts to ensure that no personnel working on the program and
activities related to such Competing Product have access to non-public clinical
data or technical Know-How, or the marketing and commercialization plans,
relating to the Collaboration Candidates or Licensed Products being Developed or
Commercialized by the Parties under this Agreement;

(c) using [***] Efforts to ensure that no personnel working on the program and
activities related to the Collaboration Candidates or Licensed Products have
access to non-public clinical data or technical Know-How, or the marketing and
commercialization plans, relating to such Competing Product; and

(d) requiring employees and contractors of the Acquirer who have day-to-day
responsibilities for such Competing Product to recuse themselves from meetings
and conference calls between Fate and Janssen relating to this Agreement if such
Competing Product is expected to be discussed during such meeting or call.

- 116 -

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17.14.3[***]

(a)[***]

(b)[***]

(c)[***]

(d)[***]

(e)[***]

(f)[***]

(g)[***]

(h)[***]

(i)[***]

(j)[***]

17.15Counterparts; Electronic Delivery. This Agreement may be executed in
counterparts with the same effect as if both Parties had signed the same
document. All such counterparts shall be deemed an original, shall be construed
together and shall constitute one and the same instrument. Signatures to this
Agreement transmitted by facsimile, by email in “portable document format”
(“.pdf”), or by any other electronic means intended to preserve the original
graphic and pictorial appearance of this Agreement shall have the same effect as
physical delivery of the paper document bearing original signature.

 

[Signature Page Follows]

 

 

- 117 -

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IN WITNESS WHEREOF, the Parties have caused this Collaboration and Option
Agreement to be executed by their respective duly authorized officers as of the
Effective Date.

 

Fate Therapeutics, Inc.

 

Janssen Biotech, Inc.

 

 

 

 

 

By:

/s/ J. Scott Wolchko

 

By:

/s/ Thomas Cavanaugh

Name:

J. Scott Wolchko

 

Name:

Thomas Cavanaugh

Title:

President and Chief Executive Officer

 

Title:

President

 

 

 

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

 

LIST OF EXHIBITS AND SCHEDULES

 

Exhibit 1.10

 

Janssen Parent Universal Calendar

 

 

 

Exhibit 3.2.2

 

Reserved Antigens

 

 

 

Exhibit 3.3.3

 

Research Responsibilities

 

 

 

Exhibit 3.3.4

 

Research Plans for Janssen Antigen 1 and Janssen Antigen 2

 

 

 

Exhibit 6.4

 

Profit Share Product Exhibit

 

 

 

Exhibit 11.7.1

 

Existing Agreements

 

 

 

Exhibits 12.9.1

 

Press Release

 

 

 

Exhibit 13.2.1

 

Fate Research Patents

 

 

 

Schedule 5.3

 

Fate Confidential Methods

 

 

 

Schedule 5.3.7

 

Janssen Confidential Methods

 

 

 

Schedule 10.6.2

 

Fate Licensor Patents

 

 

 

Schedule 13.2.11

 

Exclusions

 

 

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

 

EXHIBIT 1.10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[***]

[***]

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[***]

[***]

[***]

 

 

 

 

 

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

 

 

EXHIBIT 3.2.2

Reserved Antigens

 

[***]

 

 

 

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

 

 

 

EXHIBIT 3.3.3

Research Responsibilities

 

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

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[***]

 

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[***]

[***]

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[***]

[***]

[***]

[***]

[***]

[***]

 

 

 

 

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

 

 

EXHIBIT 3.3.4

Research Plans for Janssen Antigen 1 and Janssen Antigen 2

 

 

 

 

 

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

 

 

EXHIBIT 3.3.4

The Initial Research Plan

 

[***]

 

 

 

 

 

 

 

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

 

EXHIBIT 6.4

Profit Share Product Exhibit

 

 

 

 

 

Exhibit 6.4 - 125

 

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

 

EXHIBIT 6.4

Profit Share PRODUCT EXHIBIT

The terms set forth in this Exhibit 6.4 shall apply with respect to each Profit
Share Product beginning on the Opt-In Exercise Date and for the remainder of the
Profit Share Term, subject to the terms of the Agreement.  Unless the context
requires otherwise, references in this Exhibit to a Section refer to the
applicable Section of this Exhibit, not the Agreement.  

Article I
DEFINITIONS

As used in this Exhibit 6.4, the following terms shall have the meanings set
forth below:

1.1“Collaboration Indication” means any Indication that is or has been the
subject of a Clinical Trial in the GDP for the Profit Share Product.

1.2“Combination Regimen” means the administration of two or more drugs or
biological products together for the treatment, diagnosis or prophylaxis of any
Indication, including a Licensed Product and at least one other distinct drug or
biological product that is not a Licensed Product, where such Licensed Product
and other drug or biological product are (i) separately presented or packaged,
(ii) sold separately and (iii) labelled for use together for the treatment,
diagnosis or prophylaxis of such Indication.

1.3“Commercial FTE” means [***] hours of work devoted to or in direct support of
the Commercialization of the Profit Share Product in the U.S. (and, with respect
to Commercial FTE Costs that are included in Allocable Global Costs, in both the
U.S. and the OUS Territory) that is carried out by one or more qualified
employees, contractors or consultants of a Party or its Affiliates, provided
that one individual conducting more than [***] hours of work in any Calendar
Year will not be considered more than one Commercial FTE and, in the case of
work by an individual that is less than [***] hours, will be pro-rated based on
the actual number of hours expended by such individual.  Commercial FTE shall
not include personnel performing administrative and corporate functions
(including human resources, finance, legal and investor relations), [***].  

1.4“Commercial FTE Costs” means, with respect to any period, the amount
calculated by multiplying [***] by [***]; provided, however, that Commercial FTE
Costs for sales representatives shall be calculated as set forth in the
definition of Selling Costs in the Financial Exhibit.

1.5“Commercial FTE Rate” means:

(a)with respect to any Commercial FTE other than a sales representative, [***]%
of the gross salaries (not including any bonus or other performance-based
incentive payments) of a Party’s or its Affiliates’ employees, contractors or
consultants who perform Commercialization activities with respect to the Profit
Share Product in the U.S. (and, with respect to Commercial FTE Costs that are
included in the Allocable Global Costs, in both the U.S. and the OUS Territory);
and

Exhibit 6.4 - 126

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

 

(b)with respect to any Commercial FTE that is a sales representative, [***]%
of  the gross salaries of a Party’s or its Affiliates’ sales representatives who
Detail the Profit Share Product in the U.S. (including (x) any cash bonus or
other performance-based cash incentive payments, to the extent based directly on
sales or promotion of the Profit Share Product (and not other products), and (y)
any cash bonus tied to the overall performance of an individual sales
representative, but not based on sales or promotion of the Profit Share Product
or any other products).  

The Commercial FTE Rate is “fully burdened” and will cover any automobile
allowance, meal expenses, travel/housing for meetings, benefits (including
non-working time), facilities, utilities, information technology, insurance and
other incidental expenses incurred by such personnel in the ordinary course of
employment (i.e., such amounts shall not be considered “salary” and shall not be
considered Out-of-Pocket Expenses, but shall be included in, and deemed
reimbursed by means of, the Commercial FTE Rate).

1.6“CPI” means the Consumer Price Index-Urban Wage Earners and Clerical Workers,
U.S. City Average, All Items, 1982-1984=100, published by the U.S. Department of
Labor, Bureau of Labor Statistics (or its successor equivalent index) in the
U.S.

1.7“Development FTE” means [***] hours of work devoted to or in direct support
of the Development of the Profit Share Product that is carried out by one or
more qualified employees or contractors or consultants of a Party or its
Affiliates, provided that one individual conducting more than [***] hours of
work in any Calendar Year will not be considered more than one Development FTE
and, in the case of work by an individual that is less than [***] hours, will be
pro-rated based on the actual number of hours expended by such
individual.  Development FTE includes scientific, medical, technical and other
personnel directly engaged in performing Development activities with respect to
the Profit Share Product (including the project management teams that support
the Profit Share Product).  Development FTE shall not include work performed by
personnel performing administrative and corporate functions (including human
resources, finance, legal and investor relations).

1.8“Development FTE Costs” means, with respect to any period, the amount
calculated by multiplying [***].

1.9“Development FTE Rate” means a rate of [***] per full-time Development FTE
per Calendar Year; provided, however, that such rate shall be increased or
decreased annually beginning on [***] by the percentage increase or decrease in
the CPI between the last day of the most recently completed Calendar Year and
[***], plus [***] or an alternative methodology that is mutually agreed to by
both Parties.  The Development FTE Rate is “fully burdened” and will cover
employee salaries (excluding stock-based compensation), benefits, utilities,
facilities, and travel expenses.

1.10“Drug Regulation Laws” means Laws regulating drugs and biological products,
including the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 301 et. seq.,
the Public Health Service Act and regulations issued by the FDA, each as in
effect and as amended from time to time, and similar Laws in the OUS Territory,
each as in effect and as amended from time to time.

Exhibit 6.4 - 127

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1.11“Fate Housemarks” means (a) the corporate logo of Fate, (b) the trademark
“Fate”, (c) any other trademark, trade name or service mark (whether registered
or unregistered) of Fate or its Affiliates that is not a Product Trademark, and
(d) all intellectual property rights residing in any of the foregoing.

1.12“Financial Exhibit” means Exhibit 1.12-1 attached hereto, as the same may be
amended from time to time by the Parties.

1.13“Government Health Care Programs” means the Medicare program (Title XVIII of
the Social Security Act), the Medicaid program (Title XIX of the Social Security
Act), TRICARE, the Federal Employees Health Benefits Program, and other foreign,
federal, state and local governmental health care plans and programs.

1.14“Health Care Laws” means Laws relating to Government Health Care Programs,
Private Health Care Plans, privacy and confidentiality of patient health
information and human biological materials, including, in the United States,
federal and state Laws pertaining to the federal Medicare and Medicaid programs
(including the Medicaid rebate program); federal Laws pertaining to the Federal
Employees Health Benefits Program, the TRICARE program and other Government
Health Care Programs; federal and state Laws applicable to health care fraud and
abuse, kickbacks, physician self-referral and false claims (including 42 U.S.C.
§ 1320a-7a, 42 U.S.C. § 1320a-7b, 42 U.S.C. § 1395nn and the federal Civil False
Claims Act, 31 U.S.C. § 3729 et. seq.); the Health Insurance Portability and
Accountability Act of 1996; and 45 C.F.R. Part 46, and similar Laws in the OUS
Territory, each as in effect and as amended from time to time.

1.15“Janssen Housemarks” means (i) the corporate logo of Janssen, (ii) the
trademark “Janssen”, (iii) any other trademark, trade name or service mark
(whether registered or unregistered) of Janssen or its Affiliates that is not a
Product Trademark, and (iv) all intellectual property rights residing in any of
the foregoing.

1.16“Janssen Profit Share Product Know-How” means all Know-How Controlled by
Janssen or its Affiliates as of the Effective Date or at any time during the
Term that is reasonably necessary or useful for the Commercialization of the
Profit Share Product.

1.17“Janssen Profit Share Product Patents” means all Patents Controlled by
Janssen or its Affiliates as of the Effective Date or at any time during the
Term that cover the Commercialization of the Profit Share Product.

1.18“Private Health Care Plans” means non-governmental Third Party health care
payors and plans, including insurance companies, health maintenance
organizations and other managed care organizations, Blue Cross and Blue Shield
plans and self-funded employers.

1.19“Shared CMC Development Costs” means CMC Development Costs incurred by the
Parties and their Affiliates with respect to the Profit Share Product under the
CMC Development Plan.  

Exhibit 6.4 - 128

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

 

1.20“Shared Development Costs” means Development FTE Costs and Out-of-Pocket
Expenses incurred by the Parties and their Affiliates in conducting Development
activities with respect to the Profit Share Product under the GDP, including:

(a)all Development FTE Costs and Out-of-Pocket Expenses incurred for activities
specified in the GDP;

(b)with respect to non-clinical and clinical research and drug development
activities for the Profit Share Product (including Clinical Trials), the Cost of
Goods for Profit Share Product and other drugs, biological products or devices
used in such Clinical Trials (including Development FTE Costs and Out-of-Pocket
Expenses to purchase or package Third Party drugs, biological products and
devices) and Development FTE Costs and Out-of-Pocket Expenses for disposal of
clinical samples;

(c)with respect to regulatory activities for the Profit Share Product,
Development FTE Costs and Out-of-Pocket Expenses for fees incurred in connection
with Regulatory Filings and Regulatory Approvals and for meetings with
Regulatory Authorities;

(d)any other Development FTE Costs and Out-of-Pocket Expenses incurred that are
expressly included in the Development Budget; and

(e)[***].  

Shared Development Costs for Combination Products and Combination Regimens that
include a product (other than a Profit Share Product) to which Janssen or its
Affiliates has any rights, including other drugs, biological products or devices
used in such Clinical Trials referred to in Section 1.20(b), will be allocated
by the JFC between such other product and the Profit Share Product, and only the
amounts allocated to the Profit Share Product will be included in the
Development Budget and as Shared Development Costs for purposes of Fate’s
payment obligations hereunder.  Shared Development Costs are not included in
Allowable Expenses for purposes of calculating U.S. Pre-Tax Profits and Losses,
and are separate from, and do not include, (i) Research Costs, (ii) any payments
made pursuant to Section 6.1, 6.2, 6.4 or 6.5 of this Exhibit, (iii) capital
expenditures, (iv) Shared CMC Development Costs or (v) costs attributable to
general corporate activities, executive management, investor relations, treasury
services, business development, corporate government relations, finance, and
other overhead.

Exhibit 6.4 - 129

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1.21Additional Definitions.  The definitions of each of the following terms is
set forth in the Section of this Exhibit 6.4 indicated below:

 

Definition

 

Section

1.

Allocable Global Costs

5.1.2(b)

2.

Allowable Expenses

Financial Exhibit

3.

Charitable Contribution Costs

Financial Exhibit

4.

Collaboration Losses

Financial Exhibit

5.

Commercialization Wind-Down Period

9.1.2(i)

6.

Controlling Party

8.1.5

7.

Cost Report

6.3.3(c)

8.

Data Costs

Financial Exhibit

9.

Detail

Financial Exhibit

10.

Development Budget

4.1.2(b)

11.

Development Reconciliation Procedures

6.3.3(b)

12.

Distribution Costs

Financial Exhibit

13.

First Position Detail

Financial Exhibit

14.

Global Development Plan or GDP

4.1.1

15.

Health Care Reform Fees

Financial Exhibit

16.

Inventory

9.1.2(f)

17.

Janssen Development Costs

6.3.2

18.

Joint Development Committee or JDC

2.2

19.

Joint Finance Committee or JFC

2.4

20.

Marketing Expenses

Financial Exhibit

21.

Medical Affairs Expenses

Financial Exhibit

22.

[***]

 

23.

[***]

 

24.

Other Commercialization Costs

Financial Exhibit

25.

Other Income

Financial Exhibit

26.

Product Liability Costs

8.1.1

27.

Profit Share Regulatory Milestone Event

6.1.2

28.

Profit Share Sales Milestone Event

6.2.2

29.

Project Management, Alliance Management and Healthcare Compliance (HCC) Costs

Financial Exhibit

30.

Recall Expenses

Financial Exhibit

31.

Regulatory Maintenance Costs

Financial Exhibit

32.

Reverted Profit Share Product

9.1.1(a)

33.

Second Position Detail

Financial Exhibit

34.

Selling Costs

Financial Exhibit

35.

Shared Product Liability Costs

8.1.2

36.

Shared Third Party Products Liability Action

8.1.4

37.

Supply Costs

Financial Exhibit

38.

Third Party Products Liability Action

8.1.4

39.

Third Position Detail

Financial Exhibit

40.

U.S. Commercialization Budget

5.1.2(b)

41.

U.S. Commercialization Option

5.1.3(b)

Exhibit 6.4 - 130

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42.

U.S. Commercialization Plan

5.1.1

43.

U.S. Joint Commercialization Committee or USJCC

2.3

44.

U.S. Pre-Tax Loss

Financial Exhibit

45.

U.S. Pre-Tax Profit

Financial Exhibit

46.

U.S. Pre-Tax Profits and Losses

Financial Exhibit

47.

U.S. Reconciliation Procedures

6.4.2

 

Article II
Governance

2.1Joint Steering Committee.  Section 2.3.2 of the Agreement shall no longer
apply with respect to the Profit Share Product and, instead, the JSC’s
responsibilities with respect to the Profit Share Product shall be to:
(i) review and approve the GDP, the Development Budget, the U.S.
Commercialization Plan, the U.S. Commercialization Budget and any other budgets
with respect to the Profit Share Product in accordance with Sections 4.1.3 and
5.1.2 of this Exhibit; (ii) resolve Committee Matters on which the Committees do
not reach consensus in accordance with Section 2.6 of this Exhibit; and
(iii) perform the other functions with respect to the Profit Share Product that
are expressly delegated to the JSC in this Exhibit.  The JSC shall have no
authority with respect to Commercialization of the Profit Share Product in the
OUS Territory, provided that the JSC shall have the authority to review and
discuss, but not approve, the global commercialization strategy in accordance
with Section 5.1.2(e) and the JSC shall serve as a forum for discussions
regarding Janssen’s Commercialization of the Profit Share Product in the OUS
Territory as described in this Exhibit.

2.2Joint Development Committee.  The Parties shall establish a joint Development
committee (the “Joint Development Committee” or “JDC”) to: (i) oversee, and make
decisions with respect to Janssen’s Development of the Profit Share Product in
the U.S. and OUS Territory pursuant to Article IV of this Exhibit; and
(ii) perform the other functions with respect to the Profit Share Product that
are expressly delegated to the JDC in this Exhibit.  The JDC shall be composed
of at least three (3) employee representatives of each Party, each with
scientific and technical capabilities to carry out the responsibilities of the
JDC and sufficient seniority within the applicable Party to make decisions
arising with the scope of the JDC’s responsibilities.  Each Party may change its
JDC representatives from time to time in its sole discretion, effective upon
written notice to the other Party of such change.  The Parties shall use [***]
Efforts to establish the JDC within [***] days after the Opt-In Exercise Date
for the first Profit Share Product.  

Exhibit 6.4 - 131

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2.3U.S. Joint Commercialization Committee.  The Parties shall establish a joint
U.S. commercialization committee (the “U.S. Joint Commercialization Committee”
or “USJCC”) to: (i) oversee and make decisions with respect to the Parties’
Commercialization of the Profit Share Product in the U.S. pursuant to Article V
of this Exhibit, including an allocation of activities to Fate if Fate exercises
the U.S. Commercialization Option; and (ii) perform the other functions with
respect to the Profit Share Product that are expressly delegated to the USJCC in
this Exhibit.  The USJCC shall be composed of at least three (3) employee
representatives of each Party, each with experience with commercialization of
similar pharmaceutical products sufficient to carry out the responsibilities of
the USJCC and sufficient seniority within the applicable Party to make decisions
arising with the scope of the USJCC’s responsibilities.  Each Party may change
its USJCC representatives from time to time in its sole discretion, effective
upon written notice to the other Party of such change.  The Parties shall use
[***] Efforts to establish the USJCC no later than [***] months prior to the
anticipated launch of the first Profit Share Product in the U.S.  If this
Exhibit requires that any decision be made by the USJCC before it is formed,
such decision shall be made by the JSC.  

2.4Joint Finance Committee.  The Parties shall establish a joint finance
committee (the “Joint Finance Committee” or “JFC”) to: (i) coordinate and
conduct the budgeting, accounting, reporting, reconciliation and other financial
activities with respect to the Profit Share Product to the extent provided in
this Exhibit; (ii) if requested by the JSC, develop and recommend to the JSC for
approval a process for the development and approval of budgets contemplated by
this Exhibit; and (iii) perform the other functions with respect to the Profit
Share Product that are expressly delegated to the JFC in this Exhibit.  The JFC
shall be composed of at least three (3) employee representatives of each Party,
each with reasonable expertise in the areas of accounting, cost allocation,
budgeting and financial reporting and sufficient seniority within the applicable
Party to make decisions arising with the scope of the JFC’s
responsibilities.  The Parties shall use [***] Efforts to establish the JFC
within [***] days after the Opt-In Exercise Date for the first Profit Share
Product.

2.5Joint Manufacturing Committee.  The JMC will continue to have the
responsibilities and authority relating to the Profit Share Product set forth in
the Agreement.  

2.6Decision-Making.  

2.6.1The JDC, USJCC and JFC shall determine, approve or resolve Committee
Matters by unanimous consensus, with each Party’s representatives on the
applicable Committee collectively having one (1) vote.  The JMC will continue to
make decisions in accordance with Section 2.2.3 of the Agreement, except as
described in this Section 2.6.

2.6.2If, after reasonable discussion and good faith consideration of each
Party’s comments on a particular Committee Matter, the JDC, USJCC, JFC or JMC
does not reach consensus on any Committee Matter within its authority within
[***] days after such matter is first presented to such Committee, either Party
may refer such Committee Matter to the JSC for resolution.

Exhibit 6.4 - 132

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2.6.3If, after reasonable discussion and good faith consideration of each
Party’s comments on a particular Committee Matter, the JSC does not reach
consensus (either with respect to any Committee Matter referred to it by the
JDC, USJCC, JFC or JMC or with respect to any Committee Matter within the JSC’s
authority) within [***] days after such Committee Matter is first presented to
the JSC, then, unless this Exhibit expressly provides otherwise, either Party
may refer such Committee Matter to the Executive Officers for resolution.

2.6.4The Executive Officers shall use [***] efforts to promptly resolve such
matter, which good faith efforts shall include at least one teleconference
between such Executive Officers within [***] days after submission of such
matter to them.  If the Executive Officers do not reach consensus on a Committee
Matter (other than a Committee Matter of the JMC) within [***] days after such
Committee Matter is referred to them, then [***].

2.6.5If the Executive Officers do not reach consensus with respect to a
Committee Matter of the JFC within [***] days after such matter is first
presented to the Executive Officers, then either Party may refer such matter for
resolution by [***].

2.7Additional Committee Rules.  The provisions of Sections 2.4, 2.5, 2.6 and 2.7
of the Agreement shall apply to the JDC, USJCC and JFC.  If there is more than
one Profit Share Product, there shall be only one of each Committee and such
Committee’s responsibilities and authority shall apply to all Profit Share
Products, unless either Party requests otherwise.  Consistent with Section 2.6
of the Agreement, for clarity, the following are not Committee Matters:

2.7.1[***]

2.7.2[***]

2.7.3[***]

2.7.4[***]

2.7.5[***].

2.8Opt-Out.  

2.8.1Fate shall have the right to terminate its rights and obligations set forth
in this Exhibit with respect to the Profit Share Product by giving prior written
notice to Janssen, such termination to be effective upon expiration of the
Opt-Out Notice Period (such right, the “Opt-Out”).  The “Opt-Out Notice Period”
means the period beginning on the date of such notice and ending on the last day
of the Calendar Quarter in which the [***] anniversary of the date of such
notice occurs; provided, however, that if Fate has exercised its U.S.
Commercialization Option for the Profit Share Product, then such period will end
on the last day of the Calendar Quarter in which the [***] anniversary of the
date of such notice occurs.  The Parties may mutually agree to shorten the
Opt-Out Notice Period.  For example, if the Opt-Out notice is given on [***] and
Fate has not exercised its U.S. Commercialization Option, the [***] anniversary
of such date would be [***] and the Opt-Out Notice Period would end on the last
day of the [***] of such Calendar Year.

Exhibit 6.4 - 133

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2.8.2During the Opt-Out Notice Period, the terms of this Exhibit shall continue
to apply to the Profit Share Product, except that if Fate exercises the Opt-Out
within sixty (60) days after [***] exercises its [***] under Section 2.6.4 to
either (i) increase the aggregate amount of the Development Budget for the
then-current Calendar Year or (ii) approve a Development Budget for the next
Calendar Year in which the aggregate amount of the Development Budget for the
first Calendar Year (i.e. the binding portion) is greater than the forecasted
amount set forth in the then-current Development Budget for such Calendar Year,
then in the case of either (i) or (ii) the incremental amount of the increase
approved by [***] shall be excluded from Shared Development Costs for purposes
of Section 6.3 during the Opt-Out Notice Period.

2.8.3During the Opt-Out Notice Period, the Parties will reasonably cooperate to
conduct all activities necessary to transition all responsibilities of Fate with
respect to the Commercialization (but not Manufacture) of the applicable Profit
Share Product in the U.S. to Janssen on a timely basis.

2.8.4Upon the expiration of the Opt-Out Notice Period, the terms of this Exhibit
shall no longer apply to the Profit Share Product, the applicable Licensed
Product shall no longer be a Profit Share Product, and, subject to Section
6.2.6, the terms and conditions of the Agreement shall apply to such Licensed
Product for the remainder of the Term; provided, however, that the [***] upon
expiration of the Opt-Out Notice Period.  

2.8.5Without limiting the foregoing, following the expiration of the Opt-Out
Notice Period, (a) the Parties will [***].  For clarity, Janssen shall have no
obligation to reimburse Fate for any amounts paid by Fate to Janssen under
Article VI of this Exhibit with respect to the Profit Share Product during the
Profit Share Term or retroactively increase any Milestone Payment for any event
that occurred with respect to the Profit Share Product during the Profit Share
Term.

Article III
LICENSE GRANTS

3.1Janssen Grants to Fate.

3.1.1Commercialization License.  Subject to the terms and conditions of the
Agreement and this Exhibit, Janssen hereby grants, and shall cause its
Affiliates to grant, to Fate, during the Profit Share Term for each Profit Share
Product, a co-exclusive (with Janssen), non-transferable (except as permitted
under Section 17.4 of the Agreement) license under the Janssen Profit Share
Product Patents, Janssen Profit Share Product Know-How and the Product
Trademarks, and sublicense under the Fate Product Patents and Fate Product
Know-How exclusively licensed to Janssen under Section 5.1.2 of the Agreement,
to sell, offer to sell, have sold, import and otherwise Commercialize the Profit
Share Product in the Field in the U.S.

3.1.2Sublicensing.  The license granted by Janssen to Fate under this
Section 3.1 shall be sublicensable only to the extent provided in Section 3.2.

Exhibit 6.4 - 134

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3.1.3Definition of Co-Exclusive.  For purposes of this Section 3.1,
“co-exclusive (with Janssen)” means that Janssen shall retain all of the same
rights under the Janssen Profit Share Product Patents, Janssen Profit Share
Product Know-How, Product Trademarks, Fate Product Patents and Fate Product
Know-How to Commercialize the Profit Share Product in addition to Fate under
Section 3.1.1, and Janssen covenants not to grant to any Third Party, without
the prior written consent of Fate, a license under such retained rights to the
Janssen Profit Share Product Patents, Janssen Profit Share Product Know-How,
Product Trademarks, Fate Product Patents and Fate Product Know-How to conduct
the applicable licensed activities with respect to the Profit Share Product in
the U.S.

3.1.4Janssen Affiliates.  If any of the Janssen Profit Share Product Patents,
Janssen Profit Share Product Know-How, Product Trademarks, Fate Product Patents
or Fate Product Know-How licensed by Janssen to Fate pursuant to this
Section 3.1 is Controlled by an Affiliate of Janssen, Janssen shall procure that
such Affiliate grants the licenses to Fate in accordance with this Section 3.1.

3.2Sublicensing. Fate shall have the right to grant sublicenses of the license
granted to Fate pursuant to Section  3.1.1 to any of its Affiliates without the
consent of Janssen; provided, however, that Fate shall not grant such a
sublicense if such grant would cause adverse tax consequences to Janssen (or
Janssen’s Affiliates), as reasonably demonstrated by Janssen within [***]
Business Days of being notified of a proposed sublicense.  In the event a
sublicense would so cause such adverse tax consequences, the Parties agree to
cooperate reasonably to enable such sublicense [***].  

Article IV
DEVELOPMENT

[***] the following terms of this Article IV shall apply to the Development of
the Profit Share Product during the Profit Share Term:

4.1GDP and Development Budget.  

4.1.1General.  Janssen shall conduct Development of the Profit Share Product in
accordance with the Global Development Plan.  “Global Development Plan” or “GDP”
means the written plan for Janssen’s Development of the Profit Share Product in
the U.S. and OUS Territory containing the information set forth in Section 4.1.2
below, as it may be amended from time to time in accordance with the terms of
this Exhibit.  The GDP shall include the Development Budget, as described in
Section 4.1.2 below.  If there is more than one Profit Share Product, each
Profit Share Product shall have a separate GDP.  

4.1.2GDP Contents.

(a)Each GDP shall include, with respect to the applicable Profit Share Product
and each Collaboration Indication for such Profit Share Product, all Development
activities that are reasonably necessary to seek, obtain and maintain
Commercialization Approval, and to support and sustain Commercialization, of the
Profit Share Product for such Collaboration Indication in the U.S. and OUS
Territory.  Each GDP shall at all times reflect [***] Efforts to [***].      

Exhibit 6.4 - 135

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(b)The GDP shall include a rolling, [***] budget for Shared Development Costs to
be incurred by Janssen in conducting the Development activities described in the
GDP that are scheduled to be commenced or conducted during the [***], the
“Development Budget”).  The Development Budget shall be broken down by
Development FTE Costs and Out-of-Pocket Expenses by Clinical Trial by Calendar
Year and Calendar Quarter for the [***].  The [***] of each Development Budget
shall be [***], and the [***] of such Development Budget shall serve as [***].

(c)For each Collaboration Indication in the GDP, the GDP shall include Medical
Affairs Studies that are reasonably necessary to seek, obtain and maintain
pricing and reimbursement approvals for, and to support and sustain
Commercialization of, the Profit Share Product for such Collaboration Indication
in the U.S. and OUS Territory.  Following Marketing Approval of the Profit Share
Product for an initial Collaboration Indication, the GDP may also include IISs,
Cooperative Group Studies and Real World Evidence (RWE) studies to support
Marketing Approval of the Profit Share Product for other Collaboration
Indications in the U.S. and OUS Territory.  Each Development Budget shall
include an amount for Medical Affairs Studies for each [***] covered by such
Development Budget.

(d)Notwithstanding the foregoing, the GDP will not include CMC Development
activities for the Profit Share Product.  Such activities will be included in
and governed by the CMC Development Plan for the Profit Share Product.

4.1.3Initial GDP; Updates and Amendments.

(a) The clinical development plan and budget included in the POC Data Package
delivered by Janssen to Fate in accordance with Section 6.2 of the Agreement
shall be the initial GDP and Development Budget for the Profit Share Product.
For clarity, such initial GDP and Development Budget for the Profit Share
Product shall cover the [***].  If Janssen desires to make changes to such
initial GDP and Development Budget, then Janssen may submit a proposed update or
amendment to the GDP in accordance with Section 4.1.3(d) of this Exhibit. The
GDP (including the Development Budget) may be updated and amended from time to
time only with the approval of the JSC, as described below in this
Section 4.1.3.

(b)The JDC shall review the GDP annually and prepare any recommended
updates.  No later than [***] of the then-current Calendar Year, the JDC shall
prepare an updated GDP (excluding the Development Budget).  No later than [***]
of the then-current Calendar Year, the JDC shall prepare an updated Development
Budget covering each of the [***] (in accordance with Section 4.1.2(b)).

(c)The JDC shall submit all such updates to the JSC for review and approval, as
follows:

(i)The JSC shall use reasonable efforts to grant preliminary approval of such
updates no later than [***] of each Calendar Year.

(ii)Promptly after the JSC’s preliminary approval, such updates shall be
submitted to each Party for its internal budgeting process.

Exhibit 6.4 - 136

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(iii)After each Party performs its internal budgeting process, the JSC shall use
reasonable efforts to grant final approval of such updates no later than [***]
of each Calendar Year (or at a later time if agreed by the JSC), at which time
any approved updates shall be set forth in writing in an amended version of the
GDP.

(d)Either Party may submit a proposed update or amendment to the GDP to the JDC
from time to time.  The JDC shall discuss such proposal at its next meeting and
make a recommendation to the JSC as to whether to approve such update or
amendment.  The JDC may also independently develop proposed updates and
amendments to the GDP, which the JDC shall submit to the JSC for review and
approval.  

(e)If the JSC approves an update or amendment to the GDP (including any
corresponding update or amendment to the Development Budget), the GDP (including
the Development Budget) shall be deemed to be amended accordingly on the date of
such approval.  No update or amendment to the GDP shall become effective unless
and until the JSC (or Executive Officers or Janssen, as applicable) approves a
corresponding update or amendment to the Development Budget.

(f)[***]

4.2Conduct of Development Activities.

4.2.1General.  [***]  Janssen shall use [***] Efforts to execute and to perform,
or cause to be performed, the Development activities in the GDP for the Profit
Share Product, in accordance with the timetables in the GDP.

4.2.2Allocation of Development Activities. Janssen shall be solely responsible
for conducting all Clinical Trials and all other Development activities in the
GDP for the Profit Share Product.

4.2.3Safety Concerns.

(a)Notwithstanding anything to the contrary in this Exhibit or the GDP, Janssen
shall not be obligated to commence or continue a Clinical Trial of the Profit
Share Product if Janssen reasonably determines that such Clinical Trial would
pose an unacceptable safety or tolerability risk for the study
subjects.  Janssen shall so notify Fate of its determination and the Parties
shall discuss the concerns in good faith to determine whether to terminate,
suspend, modify or continue such Clinical Trial.

(b)If Fate believes in good faith that termination or suspension of a Clinical
Trial of the Profit Share Product is warranted because of safety or tolerability
risks to the study subjects, then Fate shall so notify Janssen and the Parties
shall discuss Fate’s concerns in good faith to determine whether to terminate,
suspend, modify or continue such Clinical Trial.

4.2.4Development Reports.  In advance of each meeting of the JDC, unless
otherwise agreed between the Parties, Janssen will provide to the JDC a [***].

Exhibit 6.4 - 137

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4.2.5Day-to-Day Responsibility.  Janssen shall be responsible for day-to-day
implementation of the Development activities with respect to the Profit Share
Product under the GDP and this Exhibit and shall have the right to make
operational and administrative decisions with respect to how to implement such
Development activities (e.g., with respect to a Clinical Trial, Janssen shall
have the right to select and engage clinical trial sites), provided that such
decisions shall not conflict with the GDP or any decision of the JDC or JSC with
respect to such Development activity.  

4.3Regulatory Cooperation.    

4.3.1Participation in Meetings.  Subject to applicable Laws, Fate shall have the
right to have one representative participate in all material meetings (including
by telephone), conferences and discussions by Janssen or its Affiliate with
Regulatory Authorities in the U.S. pertaining to Development of, or any
Regulatory Filing for, the Profit Share Product.  Janssen shall, to the extent
feasible, provide Fate with reasonable advance notice of all such meetings and
other contact and advance copies of all related documents (including Regulatory
Filings) and other relevant information relating to such meetings or other
contact.

4.3.2Review of Regulatory Documentation. Janssen shall provide Fate with advance
drafts of any material documents or other material correspondence pertaining to
Regulatory Filings with respect to the Profit Share Product [***], that Janssen
plans to submit to any Regulatory Authority in the U.S.  Fate may provide
comments regarding such material documents and other material correspondence
before their submission. [***]  Janssen shall provide Fate with copies of all
material submissions it makes to, and all material correspondence (including
written summaries of material oral correspondence) it receives from, a
Regulatory Authority in the U.S. in accordance with this
Section 4.3.2.  Notices, copies of material submissions and material
correspondence, and other materials to be given in advance as provided in this
Section 4.3.2 shall be provided to Fate a reasonable time in advance in order to
allow Fate a reasonable amount of time to review such notices, copies of
submission and correspondence and materials before their submission to the
applicable Regulatory Authority, and in any event at least [***] Business Days
in advance, unless circumstances necessitate a shorter time period.  Material
correspondence and other material documents received from a Regulatory Authority
in the U.S. must be provided to Fate as soon as practicable, and in any event
within [***] Business Days.

4.3.3OUS Territory Regulatory Activities.  Janssen shall keep Fate regularly
informed through the JDC regarding material regulatory activities with respect
to the Profit Share Product in the OUS Territory.  Janssen shall provide Fate
with copies of all material submissions it makes to, and all material
correspondence (including written summaries of material oral correspondence) it
receives from, a Regulatory Authority in the Major Markets of the OUS Territory
with respect to the Profit Share Product within [***] days of any such
submission or receipt, unless circumstances necessitate a shorter time period.

Exhibit 6.4 - 138

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Article V
COMMERCIALIZATION

[***] the following terms of this Article V shall apply to the Commercialization
of the Profit Share Product during the Profit Share Term:

5.1Commercialization in the U.S.  

5.1.1General.  The Parties shall Commercialize each Profit Share Product in the
U.S. in accordance with the applicable U.S. Commercialization Plan and the terms
of this Section 5.1, subject to the oversight of the USJCC as set forth in this
Section 5.1.  “U.S. Commercialization Plan” means, for each Profit Share
Product, a written plan for Commercialization of the Profit Share Product in the
U.S. containing the information set out in Section 5.1.2 below, as it may be
amended from time to time in accordance with the terms of this Exhibit.  The
U.S. Commercialization Plan shall include the U.S. Commercialization Budget, as
described in Section 5.1.2 below.

5.1.2U.S. Commercialization Plan.

(a)Contents.  The U.S. Commercialization Plan shall set forth the strategy for
the Commercialization of the Profit Share Product in the U.S., the key
Commercialization activities to be performed to implement such strategy, and the
staffing requirements for each such Commercialization activity. If Fate
exercises the U.S. Commercialization Option pursuant to Section 5.1.3 of this
Exhibit, the U.S. Commercialization Plan shall allocate responsibility between
the Parties for Commercialization activities with respect to the Profit Share
Product in the U.S., which allocation shall be consistent with Section 5.1.3 of
this Exhibit.  

(b)U.S. Commercialization Budget.  The U.S. Commercialization Plan shall include
a [***] rolling budget for Allowable Expenses to be incurred by the Parties in
conducting Commercialization activities for the Profit Share Product in the U.S.
pursuant to the U.S. Commercialization Plan during [***] the “U.S.
Commercialization Budget”).  The U.S. Commercialization Budget shall include
budgeted amounts for Commercial FTE Costs and Out-of-Pocket Expenses, broken
down by Calendar Quarter for [***], for Commercialization activities in the U.S.
and a breakout of costs by functional area or category, as determined by the
USJCC in conjunction with the JFC.  The [***] of the U.S. Commercialization
Budget [***] to the extent provided in the Financial Exhibit, and the [***]
shall serve as [***] (subject to any other applicable restrictions in this
Exhibit).  Each U.S. Commercialization Budget shall also include an annual
amount for strategic commercial efforts that will be undertaken by Janssen and
its Affiliates at the global team level in accordance with the global
commercialization strategy described in Section 5.1.2(e), of which [***] percent
([***]%) shall be allocable to the U.S. (the “Allocable Global Costs”).

Exhibit 6.4 - 139

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(c)Initial U.S. Commercialization Plan; Annual Updates.

(i)Janssen (and, if Fate exercises the U.S. Commercialization Option, Fate)
shall prepare and develop the initial U.S. Commercialization Plan, which shall
be submitted to the USJCC for review no later than [***] months before the
anticipated First Commercial Sale of the Profit Share Product in the U.S.  The
USJCC shall review, and submit to the JSC for approval, the initial U.S.
Commercialization Plan no later than [***] before the anticipated First
Commercial Sale of the Profit Share Product in the U.S.  

(ii)Janssen (and, if Fate exercises the U.S. Commercialization Option, Fate)
shall prepare and develop annual updates to the U.S. Commercialization Plan,
which shall be submitted to the USJCC for review.  The USJCC shall submit each
updated U.S. Commercialization Plan to the JSC for review and approval in time
to permit the JSC’s preliminary approval to occur by no later than [***] of the
Calendar Year prior to the Calendar Year to which the proposed update
relates.  Upon the JSC’s preliminary approval, such plan shall be submitted to
each Party for its internal budgeting process with a target for final approval
by the JSC no later than [***] of the Calendar Year prior to the Calendar Year
to which the proposed update relates (or at a later date if agreed by the
JSC).  After final approval by the JSC, such U.S. Commercialization Plan shall
take effect on the first day of the Calendar Year to which such U.S.
Commercialization Plan applies.

(d)Amendments; Updates.  Either Party may submit a proposed update or amendment
to the U.S. Commercialization Plan to the other Party from time to time.  The
USJCC shall discuss such proposal at its next meeting and make a recommendation
to the JSC as to whether to approve such update or amendment.  The USJCC may
also independently develop proposed updates and amendments to the U.S.
Commercialization Plan, which the USJCC shall submit to the JSC for review and
approval. [***]

(e)Global Commercialization Strategy.  Fate acknowledges that Janssen’s global
commercialization strategy for the Profit Share Product will inform the U.S.
Commercialization Plan.  Janssen will develop, with input from Fate through its
participation on the USJCC, the global commercialization strategy, which will
set forth overall brand strategy/stewardship elements for the Profit Share
Product, including brand name, trademarks, global positioning, global messaging,
competitive readiness, life cycle management, and guidance for medical affairs
and other functions. Janssen will provide the JSC with a copy of the global
commercialization strategy and any updates on a quarterly basis, for review and
discussion (but not approval) by the JSC.

Exhibit 6.4 - 140

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

 

5.1.3U.S. Co-Commercialization Responsibilities.

(a)[***]  Each Party shall use [***] Efforts to perform the Commercialization
activities with respect to each Profit Share Product allocated to such Party in
the applicable U.S. Commercialization Plan; provided, however, that if Fate does
not exercise its U.S. Commercialization Option for any Profit Share Product,
then Fate shall be relieved of its obligation to use [***] Efforts with respect
to such Profit Share Product under this Section.    

(b)With respect to Commercialization of each Profit Share Product in the U.S.,
Fate shall have the right to elect to perform: (x) up to [***] percent ([***]%)
of the customer-facing efforts in the U.S. for the Profit Share Product
(including selling, account management, product support, and MSLs, but excluding
any other Medical Affairs Activities); and (y) up to [***] percent ([***]%) of
home office functions in the U.S. for the Profit Share Product (including
marketing, scientific communications, health economics research home office
coordination role) and all other Commercialization activities for the Profit
Share Product in the U.S., excluding, in each case ((x) and (y)), any efforts
required to support activities Janssen has the exclusive responsibility to
perform under Section 5.1.5 or 5.1.6 of this Exhibit (the “U.S.
Commercialization Option”).  In accordance with the percentages above, the USJCC
will allocate responsibility for specific Commercialization activities for the
Profit Share Product in the U.S. between the Parties to minimize redundancies
and duplications between the Parties’ respective responsibilities and resources
in the U.S.

(c)If Fate desires to exercise the U.S. Commercialization Option for any Profit
Share Product, it shall give notice in writing to Janssen at least [***] before
the anticipated date of the first Marketing Approval of such Profit Share
Product in the U.S., which notice shall specify the Commercialization activities
Fate desires to perform and the percentage of such Commercialization activities
that Fate desires to perform.  If Fate so notifies Janssen, the U.S.
Commercialization Plan shall be prepared and updated in accordance with
Section 5.1.2 of this Exhibit and such U.S. Commercialization Plan will allocate
activities consistent with Fate’s election, provided that allocation of
Commercialization activities shall be subject to Fate [***]to perform such U.S.
Commercialization activities.  If requested by Fate, allocation of
Commercialization activities to Fate may increase over time (up to the maximum
levels of participation set forth above) and Janssen shall be responsible for
conducting all activities set forth in the U.S. Commercialization Plan to the
extent that they are not allocated to Fate.  [***]

(d)To the extent permitted by applicable Law in the U.S., the packaging and
labeling for the Profit Share Product in the U.S. will bear both the Janssen
name and logo and the Fate name and Fate logo, and such names and logos will be
presented with substantially equivalent prominence in any product presentations,
exhibit booths, conferences, or promotion materials or activities.

5.1.4U.S. Commercialization Reports.  In advance of each meeting of the USJCC,
unless otherwise agreed between the Parties, each Party will provide to the
USJCC a [***].

Exhibit 6.4 - 141

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

 

5.1.5Booking Sales in U.S.  Janssen and its Affiliates shall book all sales of
the Profit Share Products in the U.S. and shall be solely responsible for all
aspects of distribution of the Profit Share Products in the U.S. (including
offering for sale, selling, importing, exporting, inventory management and
control, storing, warehousing, transportation, all aspects of order processing,
invoicing, collection of sales proceeds, booking of sales, preparation of sales
records and reports, customer relations and services and handling of returns)
and all pricing and reimbursement activities with respect to the Profit Share
Product in the U.S. (including obtaining pricing and reimbursement approvals,
conducting reimbursement/access services, conducting health policy/advocacy
activities, determining prices charged and discounts offered, and conducting
price calculations and related reporting to governmental authorities).  If Fate
receives any orders for Profit Share Product in the U.S., it shall refer such
orders to Janssen.

5.1.6U.S. Pricing Matters.  Janssen shall be solely responsible for and have
sole authority with respect to the prices charged and discounts, rebates and
other sale and reimbursement terms and conditions for the Profit Share Products
in the U.S.  Janssen shall keep Fate reasonably informed through the USJCC of
such matters.  [***].  

5.1.7U.S. Recalls.  Janssen shall decide, in its sole discretion, whether to
conduct a recall of any Profit Share Product in the U.S. and shall have sole
discretion to determine the manner in which any such recall shall be
conducted.  Janssen shall notify Fate prior to commencing any recall and shall
in good faith take into account any reasonable suggestions made by Fate in
respect of such recall.

5.1.8U.S. Medical Inquiries.  Janssen shall handle all medical questions or
inquiries from members of the medical profession in the U.S. regarding the
Profit Share Products.  Janssen shall keep Fate reasonably informed through the
USJCC of any material medical question or inquiry from members of the medical
profession in the U.S. regarding the Profit Share Products.

5.1.9U.S. Commercialization Subcontracting.  

(a)If Fate exercises the U.S. Commercialization Option for any Profit Share
Product, then, if a Party desires to subcontract the performance of any
Commercialization activities with respect to such Profit Share Product in the
U.S., such Party shall so notify the other Party and the other Party shall have
the right to elect to conduct such activities within [***] days of such
notice.  If the other Party elects to conduct such activities, the USJCC shall
update the U.S. Commercialization Plan accordingly.  If the other Party does not
elect to conduct such activities, then the Party may subcontract the performance
of such activities to a Third Party in accordance with Section 7.7 of the
Agreement, provided that the applicable Subcontractors satisfy any applicable
Janssen standards that Janssen applies to subcontractors for its other
products.  

(b)If Fate does not exercise the U.S. Commercialization Option for a particular
Profit Share Product, then Janssen shall have the right to subcontract the
performance of any Commercialization activities with respect to such Profit
Share Product in the U.S. to a Third Party in accordance with Section 7.7 of the
Agreement, provided that the applicable Subcontractors satisfy any applicable
Janssen standards that Janssen applies to subcontractors for its other products.

Exhibit 6.4 - 142

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

 

5.1.10U.S. Commercialization Compliance Matters.

(a)Janssen shall develop relevant sales, promotion, market access and
advertising materials relating to the Profit Share Products for use in the U.S.
by both Parties and their Affiliates that comply with Janssen’s applicable
internal policies and procedures, the U.S. Commercialization Plans, and
applicable Law and Regulatory Approvals.  

(b)Each sales representative who details any Profit Share Product in the U.S. on
behalf of either Party shall be an employee of such Party or one of its
Affiliates; provided, however, that if Fate does not exercise the U.S.
Commercialization Option with respect to a particular Profit Share Product,
Janssen may engage a contract sales organization in accordance with Section
5.1.9(b) of this Exhibit.  Janssen (and Fate, if Fate exercises the U.S.
Commercialization Option for any Profit Share Product) shall each ensure that
its and its Affiliates’ sales representatives in the U.S. do not make any
representation, statement, warranty or guaranty with respect to any Profit Share
Product that is not consistent with the applicable, current package insert of
prescribing information or other documentation accompanying or describing such
Profit Share Product, including mutually approved limited warranty and
disclaimers, if any.  Janssen (and Fate, if Fate exercises the U.S.
Commercialization Option for any Profit Share Product) shall each ensure that
its and its Affiliates’ sales representatives in the U.S. do not make any
statements, claims or undertakings to any person with whom they discuss or
promote the Profit Share Product that are not consistent with, nor provide or
use any labeling, literature or other materials other than, those promotional
materials developed and approved by Janssen.  If at any time the use of
specified promotional materials is no longer approved for the U.S., Janssen (and
Fate, if Fate exercises the U.S. Commercialization Option for any Profit Share
Product) shall as soon as practicable take action to remove the promotional
materials from use by its and its Affiliates’ sales representatives and destroy
such materials.

(c)Janssen (and Fate, if Fate exercises the U.S. Commercialization Option for
any Profit Share Product) shall each cause its and its Affiliates’ sales
representatives in the U.S. to comply with applicable Laws and guidelines
related to the performance of its obligations under this Exhibit, including
Health Care Laws, Drug Regulation Laws and all applicable regulations
thereunder, the AMA and PhRMA Guidelines, and all relevant regulations,
authorizations and local laws regarding advertisement, sale and promotion of
pharmaceutical products and any relevant code of practice.

Exhibit 6.4 - 143

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

 

(d)Janssen (and Fate, if Fate exercises the U.S. Commercialization Option for
any Profit Share Product) shall ensure that its and its Affiliates’ sales
representatives perform details of the Profit Share Products in the U.S. in
compliance with applicable Law, all of Janssen’s reasonable instructions, the
agreed quality and compliance standards, policies and guidelines relating to the
Commercialization of the Profit Share Products and any corporate integrity
agreement between Janssen and the HHS Office of Inspector General.  Janssen (and
Fate, if Fate exercises the U.S. Commercialization Option for any Profit Share
Product) shall establish and maintain a compliance program that satisfies the
seven elements for an effective compliance program set forth in the HHS Office
of Inspector General’s Compliance Program Guidance for Pharmaceutical
Manufacturers, including designation of a compliance officer and the conduct of
effective training and education.  Fate shall maintain records and supporting
documentation related to the subject matter of the Agreement in order to
document or verify compliance with the provisions of this Section 5.1.10(d), and
upon request of Janssen, up to once per year and upon reasonable advance notice,
shall provide a Third Party auditor mutually acceptable to Fate with access to
such records for purposes of verifying compliance with the provisions of this
Section 5.1.10(d).  Acceptance of a proposed Third Party auditor may not be
unreasonably withheld by Fate.  The costs related to the Third Party auditor
will be paid by Janssen, and any auditing activities may not unduly interfere
with the normal business operations of Fate.  Fate may require the Third Party
auditor to enter into a reasonable confidentiality agreement in connection with
such an audit.  Janssen (and Fate, if Fate exercises the U.S. Commercialization
Option for any Profit Share Product) shall each be responsible for tracking and
reporting transfers of value initiated and controlled by its and its Affiliates’
employees, contractors and agents pursuant to the requirements of the marketing
reporting laws or research expense reporting laws of any Governmental Authority,
including Section 6002 of PPACA, commonly referred to as the “Sunshine Act.”

5.1.11Day-to-Day Responsibility.  Janssen (and Fate, if Fate exercises the U.S.
Commercialization Option for any Profit Share Product) shall be responsible for
day-to-day implementation of the Commercialization activities with respect to
the Profit Share Products in the U.S. for which it is assigned responsibility
under the U.S. Commercialization Plans or this Exhibit and shall have the right
to make operational and administrative decisions with respect to how to
implement such Commercialization activities, provided that such decisions shall
not conflict with the U.S. Commercialization Plans or any decision of the USJCC
or JSC with respect to such Commercialization activity.  For example purposes
only (and such example shall have no impact on the allocation of U.S.
Commercialization responsibilities under Section 5.1.3), with respect to sales
representatives, if a Party is responsible under the U.S. Commercialization Plan
for providing [***] percent ([***]%) of the sales representatives in the U.S.
and the U.S. Commercialization Plan provides for a total of [***] sales
representatives in the U.S., such Party shall be responsible for hiring,
training, deploying and managing [***] sales representatives, but shall
coordinate such efforts with the other Party.

5.2Commercialization in the OUS Territory.  Janssen shall continue to have the
sole right and authority, at its sole cost and expense, to Commercialize the
Profit Share Products in the OUS Territory in accordance with Article 7 of the
Agreement.  [***]  Following [***], Janssen shall use [***] Efforts to [***].

Exhibit 6.4 - 144

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

 

Article VI
FINANCIAL PROVISIONS

6.1Regulatory Milestone Payments and Events.

6.1.1Effect on Agreement.  Section 10.4.2 of the Agreement shall not apply to
the Profit Share Products. For clarity, Section 10.4.2 of the Agreement shall
continue to apply to Related Licensed Products.  In lieu of any milestone
payments that would otherwise be due with respect to any Profit Share Product
pursuant to Section 10.4.2 of the Agreement, Janssen shall pay to Fate milestone
payments pursuant to Section 6.1.2 of this Exhibit for each Profit Share
Product.

6.1.2Profit Share Regulatory Milestone Events and Payments.  In consideration of
Fate’s performance in achieving the following milestone events, Janssen shall
pay to Fate the milestone payments set forth in the table below not later than
[***] days after Fate delivers an invoice to Janssen upon the first occurrence
of the corresponding milestone event set forth below with respect to a Profit
Share Product (each, a “Profit Share Regulatory Milestone Event”).  For clarity,
the milestone payments set forth in this Section 6.1.2 shall be payable for each
Profit Share Product.  Janssen shall provide notice to Fate within [***] days
after the occurrence of any of the Profit Share Regulatory Milestone Events:

 

Exhibit 6.4 - 145

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

 

Profit Share Regulatory

Milestone Event

 

Milestone Payment

Janssen

Antigen 1

Janssen

Antigen 2

Janssen

Antigen 3

Janssen

Antigen 4

1.    [***]

$[***]

$[***]

$[***]

$[***]

2.    [***]

$[***]

$[***]

$[***]

$[***]

3.    [***]

$[***]

$[***]

$[***]

$[***]

4.    [***]

$[***]

$[***]

$[***]

$[***]

5.    [***]

$[***]

$[***]

$[***]

$[***]

6.    [***]

$[***]

$[***]

$[***]

$[***]

7.    [***]

$[***]

$[***]

$[***]

$[***]

8.    [***]

$[***]

$[***]

$[***]

$[***]

9.    [***]

$[***]

$[***]

$[***]

$[***]

10.    [***]

$[***]

$[***]

$[***]

$[***]

11.    [***]

$[***]

$[***]

$[***]

$[***]

12.    [***]

$[***]

$[***]

$[***]

$[***]

13.    [***]

$[***]

$[***]

$[***]

$[***]

14.    [***]

$[***]

$[***]

$[***]

$[***]

15.    [***]

$[***]

$[***]

$[***]

$[***]

16.    [***]

$[***]

$[***]

$[***]

$[***]

17.    [***]

$[***]

[***]

$[***]

$[***]

18.    [***]

$[***]

$[***]

$[***]

$[***]

 

Exhibit 6.4 - 146

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

 

6.1.3Milestone Conditions.

(a)The milestone payments under this Section 6.1 shall be non-refundable and
non-creditable.  [***]  

(b)With respect to Profit Share Regulatory Milestone Events #11 through #18,
such milestone events shall not be deemed to occur unless [***].

(c)If any of Profit Share Regulatory Milestone Events [***] occurs for a
particular Profit Share Product and Indication, and payment has not been made
for Profit Share Regulatory Milestone Events [***], respectively, for the same
Profit Share Product and Indication, then such applicable payment for [***].

6.2Sales Milestone Payments.  

6.2.1Section 10.5 of the Agreement shall not apply to any Profit Share Product
or, following the date of First Commercial Sale of such Profit Share Product,
any Related Licensed Products.  In lieu of any milestone payments that would
otherwise be due pursuant to Section 10.5 of the Agreement with respect to any
Profit Share Product and Related Licensed Products after First Commercial Sale
of such Profit Share Product, Janssen shall pay to Fate milestone payments
pursuant to Section 6.2.2 or 6.2.3 of this Exhibit for each Janssen Antigen for
which there are one or more Profit Share Products.  Section 6.2.2 shall apply if
no Related Licensed Product has been sold anywhere in the Territory on the date
of First Commercial Sale of the applicable Profit Share Product in the Territory
or if no Sales Milestone Event has been achieved with respect to a Related
Licensed Product on the date of First Commercial Sale of the applicable Profit
Share Product in the Territory.  Otherwise, Section 6.2.3 shall apply.  

6.2.2As part of the royalty report delivered pursuant to Section 10.6.5 of the
Agreement, Janssen shall notify Fate the first time the Annual Net Sales of the
Profit Share Product(s) in the OUS Territory and the Related Licensed Product(s)
in the Territory for each applicable Janssen Antigen in a Calendar Year by
Janssen, its Affiliates and its Sublicensees exceed, in the aggregate, any of
the threshold amounts set forth in the applicable column of the table below
(each, a “Profit Share Sales Milestone Event”).  Net Sales of a particular
Profit Share Product in the OUS Territory, or a particular Related Licensed
Product in the Territory, in a particular country occurring after the expiration
of the Royalty Term (but during the Term) for such Profit Share Product or such
Related Licensed Product in such country shall be included in the calculation of
Annual Net Sales for purposes of calculating the amount in the first column of
the table below in this Section 6.2.2.  For clarity, Net Sales of the Profit
Share Product in the U.S. shall be disregarded in the calculation of Net Sales
for purposes of this Section 6.2.2.  Subject to the remainder of this Section
6.2, Janssen shall pay to Fate the corresponding milestone payment in the table
set forth below within [***] days after the end of the Calendar Quarter during
which such Profit Share Sales Milestone Event is achieved.

Exhibit 6.4 - 147

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

 

 

Annual Net Sales of the Profit Share Product(s) in the OUS Territory and the
Related Licensed Product(s) in the Territory first exceed:  

Milestone Payments

Janssen

Antigen 1

Janssen

Antigen 2

Janssen

Antigen 3

Janssen

Antigen 4

$[***]

$[***]

$[***]

$[***]

$[***]

$[***]

$[***]

$[***]

$[***]

$[***]

$[***]

$[***]

$[***]

$[***]

$[***]

$[***]

$[***]

$[***]

$[***]

$[***]

 

6.2.3If a Related Licensed Product has been sold anywhere in the Territory and a
Sales Milestone Event has been achieved with respect to such Related Licensed
Product on the date of First Commercial Sale of the applicable Profit Share
Product, then (a) the table set forth above shall not apply, (b) the Parties
will negotiate in good faith and mutually agree on proportionate reductions to
the payment amounts set forth in the table above in Section 6.2.2 and (c) the
calculation of Annual Net Sales for purposes of such thresholds will aggregate
the Annual Net Sales of the Profit Share Product in the OUS Territory and the
Annual Net Sales of the Related Licensed Products in the Territory (unless
otherwise agreed by the Parties).  

6.2.4If there are two or more Profit Share Products, or two or more Related
Licensed Products, with respect to the same Janssen Antigen, references in
Sections 6.2.2 and 6.2.3 to “Profit Share Product” shall be deemed to refer
collectively to such Profit Share Products and to “Related Licensed Product”
shall be deemed to refer collectively to such Related Licensed Products.

6.2.5The milestone payments under this Section 6.2 shall be non-refundable and
non-creditable.  [***]  The Annual Net Sales of the Profit Share Product in the
OUS Territory and the Annual Net Sales of the Related Licensed Products in the
Territory shall be aggregated together in the calculation of Annual Net Sales
for purposes of this Section 6.2.  For clarity, if two or more Profit Share
Sales Milestone Events occur in one Calendar Year, then the milestone payments
for all such Profit Share Sales Milestone Events shall be payable.

6.2.6[***].  

Exhibit 6.4 - 148

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

 

6.3Shared Development Costs and Shared CMC Development Costs.

6.3.1Cost Sharing.  Shared Development Costs and Shared CMC Development Costs
incurred during the Profit Share Term for the Profit Share Product by the
Parties and their Affiliates shall be borne [***] percent ([***]%) by Janssen
and [***] percent ([***]%) by Fate. Neither Shared Development Costs nor Shared
CMC Development Costs will be included in Allowable Expenses for purposes of
calculating U.S. Pre-Tax Profits and Losses, and any amounts included in
Allowable Expenses will not be included in Shared Development Costs or Shared
CMC Development Costs.

6.3.2Development Costs Prior to Opt-In Exercise Date.  Within [***] days after
the Opt-In Exercise Date for the Profit Share Product, Janssen shall provide a
final statement of (i) the Development costs incurred by Janssen (excluding any
amounts incurred under the Research Plan) to Develop the Profit Share Product in
the Territory prior to the Opt-In Exercise Date, where such costs would
otherwise qualify as Shared Development Costs for such Profit Share Product and
(ii) the CMC Development Costs incurred by Janssen (excluding any amounts
incurred under the Research Plan), or incurred by Fate and reimbursed by Janssen
under Section 10.7 of the Agreement, for the Profit Share Product in the
Territory prior to the Opt-In Exercise Date where such costs would otherwise
qualify as Shared CMC Development Costs (collectively, the “Janssen Development
Costs”).  Fate shall reimburse Janssen for [***] percent ([***]%) of all Janssen
Development Costs by [***].  

6.3.3Cost Reports.  

(a)Shared Development Costs and Shared CMC Development Costs shall initially be
borne by the Party incurring the cost or expense, subject to reimbursement as
provided in Section 6.3.4 of this Exhibit.  Each Party shall calculate and
maintain records of Shared Development Costs and Shared CMC Development Costs
incurred by it and its Affiliates in accordance with procedures to be
established by the JFC in coordination with the JDC.

(b)The procedures for quarterly reporting of actual results, quarterly review
and discussion of potential discrepancies, quarterly reconciliation, reasonable
cost forecasting, and other finance and accounting matters related to Shared
Development Costs and Shared CMC Development Costs will be determined by the JFC
(the “Development Reconciliation Procedures”).  Such procedures will provide the
ability to comply with financial reporting requirements of each Party.

(c)The Development Reconciliation Procedures will provide that, within
[***] days after the end of each Calendar Quarter, each Party shall submit to
the JFC a report, in a format established by the JFC, of all Shared Development
Costs and Shared CMC Development Costs incurred by such Party and its Affiliates
during such Calendar Quarter (each, a “Cost Report”).  Within [***] days
following the receipt of each Cost Report, each Party shall have the right to
request reasonable additional information (as determined by the JFC) related to
the other Party’s and its Affiliates’ Shared Development Costs and Shared CMC
Development Costs during such Calendar Quarter in order to confirm that such
other Party’s spending is in conformance with the approved Development Budget or
CMC Development Budget, as applicable.

Exhibit 6.4 - 149

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

 

(d)The JFC shall establish reasonable procedures for the Parties to share
estimated Shared Development Costs and Shared CMC Development Costs for each
Calendar Quarter before the end of such Calendar Quarter, to enable each Party
to appropriately accrue its share of Shared Development Costs and Shared CMC
Development Costs for financial reporting purposes.

6.3.4Reimbursement of Shared Development Costs and Shared CMC Development Costs.

(a)The Party (with its Affiliates) that incurs more than its share of the total
actual Shared Development Costs and Shared CMC Development Costs with respect to
a Calendar Quarter shall be paid by the other Party an amount of cash sufficient
to reconcile to its agreed percentage of actual Shared Development Costs and
Shared CMC Development Costs in such Calendar Quarter pursuant to Section 6.3.1
of this Exhibit.  Notwithstanding the foregoing, on a Calendar Year-to-date
basis, the Parties shall not share any Shared Development Costs in excess of the
amounts allocated for such Calendar Year-to-date period in the Development
Budget, or any Shared CMC Development Costs in excess of the amounts allocated
for such Calendar Year-to-date period in the CMC Development Budget, except as
follows:

(i)Shared Development Costs in excess of the Development Budget, and Shared CMC
Development Costs in excess of the CMC Development Budget, shall be included in
the calculation of Shared Development Costs or Shared CMC Development Costs, as
applicable, to be shared by the Parties to the extent such excess Shared
Development Costs or Shared CMC Development Costs, as applicable, do not exceed
[***] percent ([***]%) of the total Shared Development Costs or Shared CMC
Development Costs, as applicable, allocated to be incurred by such Party and its
Affiliates in the applicable Calendar Year-to-date period in accordance with the
Development Budget or CMC Development Budget, as applicable, for such Calendar
Year; and

(ii)the Parties shall share any and all Shared Development Costs in excess of
the Development Budget, and any and all Shared CMC Development Costs in excess
of the CMC Development Budget, to the extent attributable to: [***].

(b)If any excess Shared Development Costs or Shared CMC Development Costs are
excluded from sharing by the Parties for a particular Calendar Year-to-date
period pursuant to Section 6.3.4(a) of this Exhibit, such excess Shared
Development Costs or Shared CMC Development Costs shall be carried forward to
the subsequent Calendar Quarters (provided that such Calendar Quarters fall
within the same Calendar Year) and, to the extent the total Shared Development
Costs or Shared CMC Development Costs incurred by such Party and its Affiliates
for the Calendar Year-to-date as of the end of such subsequent Calendar Quarter
are less than [***] percent ([***]%) of the aggregate Shared Development Costs
or Shared CMC Development Costs allocated to such Party under the Development
Budget or CMC Development Budget, as applicable, for such Calendar Year-to-date
period, such carried forward amounts shall be included in Shared Development
Costs or Shared CMC Development Costs, as applicable, to be shared by the
Parties for such Calendar Year-to-date-period (i.e., so that the total Shared
Development Costs or Shared CMC Development Costs, as applicable, incurred by
such Party and its Affiliates that are shared pursuant to this Section during
any Calendar Year do not exceed [***] percent ([***]%) of the Shared Development
Costs or Shared CMC Development Costs, as applicable, allocated to such Party
under the Development Budget or CMC Development Budget, as applicable for such
Calendar Year, unless otherwise approved by the JSC).  For clarity, at the end
of the Calendar Year, any amounts in excess of [***] percent ([***]%) of the
aggregate Shared Development Costs allocated to such Party under the Development
Budget, or in excess of [***] percent ([***]%) of the aggregate Shared CMC
Development Costs allocated to such Party under the CMC Development Budget, for
such Calendar Year shall be borne solely by such Party and shall not be shared
by the other Party.

Exhibit 6.4 - 150

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(c)The Development Reconciliation Procedures shall require the JFC to develop a
written report setting out the calculation of any net amount owed by Fate to
Janssen or by Janssen to Fate, as the case may be, as necessary to accomplish
the sharing of Shared Development Costs and Shared CMC Development Costs set
forth in this Section, and to prepare such report promptly following delivery of
the Cost Reports and in a reasonable time (to be defined in the Development
Reconciliation Procedures) in advance of payment.

(d)The net amount payable to accomplish the sharing of Shared Development Costs
and Shared CMC Development Costs as provided under this Exhibit shall be paid by
Janssen or Fate, as the case may be, within [***] days after the end of the
applicable Calendar Quarter.

(e)In establishing the Development Reconciliation Procedures, the JFC shall work
to coordinate and harmonize the Development Reconciliation Procedures with the
U.S. Reconciliation Procedures to permit for reconciliation, and associated
payments, with respect to Shared Development Costs, Shared CMC Development Costs
and U.S. Pre-Tax Profits and Losses within [***] days after the end of the
applicable Calendar Quarter.

6.4U.S. Pre-Tax Profits and Losses.

6.4.1U.S. Pre-Tax Profits and Losses.  In partial consideration for the licenses
granted by Fate to Janssen in accordance with Section 5.1.2 of the Agreement
with respect to the Profit Share Product, the Parties shall share in U.S.
Pre-Tax Profits and Losses as follows:  Fate shall bear (and be entitled to)
[***]%, and Janssen shall bear (and be entitled to) [***]%.  The U.S. Pre-Tax
Profits and Losses shall be calculated as set forth in the Financial Exhibit.

6.4.2Quarterly Reconciliation and Payments.

(a)Procedures for quarterly reporting of actual results and review and
discussion of potential discrepancies, quarterly reconciliation, reasonable
forecasting, and other finance and accounting matters, to the extent not set
forth in the Financial Exhibit, will be established by the JFC (the “U.S.
Reconciliation Procedures”).  Such procedures will provide the ability to comply
with financial reporting requirements of each Party.  

(b)The U.S. Reconciliation Procedures shall provide that within [***] days after
the end of each Calendar Quarter, each Party shall submit to the JFC a report,
in such reasonable detail and format as is established by the JFC, of all
amounts necessary to calculate U.S. Pre-Tax Profits and Losses including Net
Sales, Other Income and Allowable Expenses.  Within [***] days following the
receipt of such report, each Party shall have the right to request reasonable
additional information (as determined by the JFC) necessary to permit
calculation and reconciliation of U.S. Pre-Tax Profits and Losses for the
applicable Calendar Quarter, including to confirm that Allowable Expenses are in
conformance with the approved U.S. Commercialization Budget.  

Exhibit 6.4 - 151

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(c)The U.S. Reconciliation Procedures shall provide for the JFC to develop a
written report setting forth the calculation of U.S. Pre-Tax Profits and Losses
for the applicable Calendar Quarter, amounts owed by Fate to Janssen or by
Janssen to Fate, as the case may be, as necessary to accomplish the sharing of
U.S. Pre-Tax Profits and Losses for the applicable Calendar Quarter, and to
prepare such report promptly following delivery of the reports from the Parties
as described above in this Section and in a reasonable time (to be defined in
the U.S. Reconciliation Procedures) in advance of applicable payments to
accomplish the sharing of U.S. Pre-Tax Profits and Losses for the applicable
Calendar Quarter.  

(d)Payments to reconcile U.S. Pre-Tax Profits and Losses shall be paid within
[***] days after the end of each Calendar Quarter.

(e)The JFC shall establish reasonable procedures for the Parties to share
estimated Allowable Expenses, Net Sales and Other Income for each Calendar
Quarter before the end of such Calendar Quarter, to enable each Party to
appropriately accrue its share of U.S. Pre-Tax Profits and Losses for financial
reporting purposes.

6.5Royalties.  

6.5.1Section 10.6.1 of the Agreement shall not apply to any Profit Share
Product, but will apply to any Related Licensed Products.  In lieu of any
royalties that would otherwise be due with respect to any Profit Share Products
pursuant to Section 10.6.1 of the Agreement, Janssen shall pay to Fate royalties
pursuant to Section 6.5.2 of this Exhibit.  

6.5.2Subject to the remainder of this Section 6.5, in partial consideration of
the licenses granted by Fate to Janssen in accordance with Section 5.1.2 of the
Agreement, Janssen shall pay to Fate royalties at a rate of [***] percent
([***]%) on the aggregate Annual Net Sales of each Profit Share Product during
the applicable Royalty Term by Janssen, its Affiliates and Sublicensees in the
OUS Territory.  

6.5.3If there are two or more Profit Share Products with respect to the same
Janssen Antigen, references in Section 6.5.2 to “Profit Share Product” shall be
deemed to refer collectively to such Profit Share Products.

6.5.4The provisions of Sections 10.6.2, 10.6.3 and 10.6.5 of the Agreement shall
apply to the payments under this Section 6.5 mutatis mutandis.  Janssen may in
its discretion deliver a single report pursuant to Section 10.6.5 of the
Agreement with respect to royalties payable under Section 10.6 of the Agreement
and this Section 6.5.

6.6Payment Terms.  Sections 10.9, 10.10, 10.11 and 10.12 of the Agreement shall
apply with respect to payments under this Article VI.  

Exhibit 6.4 - 152

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Article VII
TRADEMARKS

7.1Trademarks.  Section 5.7.1 of the Agreement shall not apply with respect to
any Profit Share Product.  In addition to the other provisions of the Agreement
(and in lieu of Section 5.7.1 of the Agreement), the following terms of this
Article VII shall apply to the Product Trademarks relating to the Profit Share
Products during the Profit Share Terms.

7.1.1Product Trademarks.  Janssen will manage the development and clearance
process for proposed names for Product Trademarks for Profit Share Products,
including the hiring of appropriate Subcontractors and conducting development
activities, name safety testing, market research and legal searches.  [***]
percent ([***]%) of the costs of the development and searching/clearance process
of such proposed Product Trademarks shall be included as Allowable Expenses.
Janssen shall select all Product Trademarks for the Profit Share Product, and
Janssen will own all right, title and interest in and to the Product Trademarks
for the Profit Share Product.  Neither Party will, and will ensure that its
Affiliates do not: (i) challenge any Product Trademark or the registration
thereof in any country (other than based upon a trademark filed or used by Fate
or Janssen prior to knowledge of the Product Trademark); (ii) file, register or
maintain any registrations for any trademarks or trade names that are
confusingly similar to any Product Trademark (other than for the Profit Share
Product), in any country without the express prior written consent of the other
Party; or (iii) authorize or assist any Third Party to do the
foregoing.  Janssen shall also be responsible for registering and maintaining
all Product Domain Names and Websites for the Profit Share Product and shall own
all rights, title and interest in such Product Domain Names and Websites.  

7.1.2Prosecution and Maintenance.  Janssen shall be responsible for prosecution
and maintenance of all Product Trademarks pertaining to the Profit Share
Products and for registering and maintaining all Product Domain Names and
Websites for Profit Share Products.  If Janssen determines, in its sole
discretion, to abandon or not maintain any such Product Trademark in the U.S.,
then Janssen shall provide Fate with written notice of such determination within
a period of time sufficiently in advance to enable Fate to determine whether it
will assume responsibility for such Product Trademark (which notice shall be
given no later than [***] days prior to any final deadline for any pending
action or response that may be due with respect to such Product Trademark with
the applicable trademark authority).  If Fate provides written notice to Janssen
that it will assume responsibility for such Product Trademark in the U.S.,
Janssen shall transfer such responsibility to Fate and shall execute any
documents necessary to complete such transfer.  The Out-of-Pocket Expenses of
prosecution and maintenance of Product Trademarks pertaining to the Profit Share
Products, and registration and maintenance of Product Domain Names and Websites
for Profit Share Products, in the U.S. shall be included as Allowable Expenses.

7.1.3Coordination Regarding Product Trademarks. The JSC shall discuss and agree
on an overall strategy pertaining to the Product Trademarks pertaining to the
Profit Share Products and related marks and activities, however [***] shall have
the [***] regarding selection of the Product Trademarks for the Profit Share
Products.  Janssen will provide updates to the JSC as reasonably requested by
Fate regarding filing and material issues pertaining to such Product
Trademarks.  Each Party may use the Product Trademarks solely to carry out its
respective obligations under this Exhibit.

Exhibit 6.4 - 153

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7.1.4 Housemark Licenses.

(a)To Janssen.  Fate hereby grants to Janssen a non-exclusive, royalty-free
license to use the Fate Housemarks solely as set forth in the promotional
materials for the Profit Share Products and other materials provided to it by
Fate, and solely to Develop and Commercialize the Profit Share Products in
accordance with this Exhibit.

(b)To Fate.  Janssen hereby grants to Fate a non-exclusive, royalty-free license
to use the Janssen Housemarks and Product Trademarks solely as set forth in the
promotional materials for the Profit Share Products and other materials provided
to it by Janssen, and solely to Commercialize the Profit Share Products in
accordance with this Exhibit.

(c)Rights in Housemarks.  Janssen will not have, assert or acquire any right,
title or interest in or to any Fate Housemarks or the goodwill pertaining
thereto, and Fate will not have, assert or acquire any right, title or interest
in or to any Janssen Housemarks or the goodwill pertaining thereto, in each case
by means of entering into or performing under the Agreement or this Exhibit,
except in each case for the limited licenses explicitly provided in the
Agreement or this Exhibit.  All use by a Party of the Housemarks of the other
Party shall inure to the benefit of such other Party.

7.1.5Required Use and Compliance.  Each Party agrees that it and its Affiliates
will: (i) ensure that each use of the Product Trademarks and the other Party’s
Housemarks by such Party is accompanied by an acknowledgement that the Product
Trademarks or Housemarks are owned by the other Party (i.e. the use by one Party
of the other Party’s Housemark shall indicate that such Housemark is used under
license) and includes the trademark registration symbol ® or TM as appropriate;
(ii) not use the Product Trademarks or the other Party’s Housemarks in a way
that might materially prejudice their distinctiveness or validity or the
goodwill of the other Party therein; and (iii) not use any trademarks or trade
names so resembling any of the Product Trademarks or the other Party’s
Housemarks as to be likely to cause confusion or deception; and (iv) use the
other Party’s Housemarks in accordance with that Party’s reasonable quality
standards as notified in writing from time to time. Each Party may use the other
Party’s Housemarks solely to carry out its respective obligations under this
Exhibit.

7.1.6Trademark Infringement.

(a)Each Party will monitor the Product Trademarks pertaining to the Profit Share
Products in the U.S. and Janssen will monitor such Product Trademarks in the OUS
Territory against infringing uses relating to the Profit Share Products.  Each
Party will promptly notify the other Party of any infringement or threatened
infringement of any of such Product Trademarks of which it becomes aware.  Each
Party may use Third Party watch services, as necessary, to monitor filings for
similar Third Party trademarks.  Except to the extent that Fate has assumed
responsibility for a Product Trademark pertaining to any Profit Share Product in
the U.S. in accordance with Section 7.1.2, Janssen shall defend the Product
Trademarks pertaining to the Profit Share Products in the U.S. and OUS Territory
against oppositions, nullity or other legal actions filed by Third Parties and
shall promptly undertake to oppose, nullify or take other appropriate action,
where reasonable, against similar or identical Third Party trademarks filed for
products or services related to those claimed by such Product
Trademarks.  Janssen will determine what action, if any, to take in response to
any such opposition, infringement or threatened infringement of any such Product
Trademark in accordance with this Section 7.1.6.

Exhibit 6.4 - 154

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(b)Janssen shall be primarily responsible for protecting and maintaining the
Product Trademarks pertaining to the Profit Share Products, including all
enforcement and defense thereof.  Fate may, at its own expense with respect to
actions in the OUS Territory, participate in any litigation relating to the
enforcement or defense of any such Product Trademark in a subordinate role and
Janssen shall consider input on strategy and tactics offered by Fate.  In the
event Janssen fails to initiate a suit or take other commercially reasonable
action to enforce or defend any such Product Trademark in the U.S. within [***]
days after becoming aware of the basis for such suit or actions, then Fate may,
in its discretion, provide Janssen with notice of its intent to initiate a suit
or take other commercially reasonable action with respect to the enforcement and
defense of such Product Trademark.  If Fate provides such notice and Janssen
fails to initiate a suit or take such other commercially reasonable action
within [***] days after receipt of such notice from Fate, then Fate shall have
the right to initiate a suit or take other commercially reasonable actions that
it believes are reasonably required to enforce and defend such Product Trademark
in the U.S.  The non-enforcing Party may participate in any such action and be
represented in any such action by its own counsel and the enforcing Party shall
consider the input on strategy and tactics offered by the non-enforcing
Party.  The non-enforcing Party shall, at the enforcing Party’s expense, provide
all assistance reasonably requested by the enforcing Party in connection with
the maintenance, enforcement and defense of the applicable Product
Trademarks.  Each Party will be responsible for all expenses it incurs under
this Section 7.1.6 for the OUS Territory, and all Out-of-Pocket Expenses
incurred under this Section 7.1.6 with respect to the U.S. will be included in
Allowable Expenses.

7.1.7Recording of License.  If Fate considers it advisable to record Fate as a
licensee or “registered user” of any of the Product Trademarks pertaining to any
Profit Share Product under local law, Janssen shall do all such acts and sign or
have signed all such documents as are reasonably proper and necessary to secure
such recordation and for any changes thereof in the future.  In such event, Fate
shall be responsible for recording the Agreement or this Exhibit, or a document
reflecting the contents of the Agreement or this Exhibit, with any applicable
Governmental Authority, and all associated recordation fees and related costs
and expenses shall be included in Allowable Expenses.  Upon termination of
Fate's right to use a Product Trademark, Janssen may at any time thereafter
apply for cancellation of the record of Fate as a licensee upon written notice
to Fate, and Fate consents to such cancellation.

Article VIII
PRODUCT LIABILITY CLAIMS

8.1Product Liability Claims.  

8.1.1“Product Liability Costs” means amounts paid to Third Parties (including
damages and amounts paid in settlement to Third Parties and reasonable
attorneys’ and experts fees and expenses), and internal costs incurred, by the
Parties and their Affiliates that are associated with [***].

8.1.2“Shared Product Liability Costs” means all Product Liability Costs other
than [***].  

Exhibit 6.4 - 155

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8.1.3All Shared Product Liability Costs shall be borne [***]% by Janssen and
[***]% by Fate.  Product Liability Costs that are Losses entitled to
indemnification under [***] shall be borne by the Indemnitor.  Product Liability
Costs that relate to [***].

8.1.4Each of the Parties shall promptly notify the other in the event that any
Third Party asserts or files any products liability claim or other claim, suit,
proceeding, litigation or action relating to alleged defects in the Profit Share
Product (whether design defects, manufacturing defects or defects in sales or
marketing) (“Third Party Products Liability Action”) against such Party;
provided, however, failure to give or delay in giving such notice shall not
relieve either Party of its obligations under this Section 8.1, except to the
extent the other Party is actually, materially prejudiced as a result of such
failure or delay.  To the extent such Third Party Products Liability Action
relates to the Commercialization of the Profit Share Product in the OUS
Territory, Janssen shall have the sole right to defend and settle such Third
Party Products Liability Action at its sole expense.  With respect to any other
Third Party Products Liability Action (a “Shared Third Party Products Liability
Action”), Janssen shall have the first right to defend and settle such Shared
Third Party Products Liability Action.  In the event that Janssen does not
assume the defense of such Shared Third Party Products Liability Action within
[***] days following delivery and receipt of notice described in the first
sentence of this Section 8.1.4, Fate may notify Janssen of Fate’s desire to take
the lead role in the defense of such Shared Third Party Products Liability
Action.  If, within [***] days after Fate notifies Janssen of such desire,
Janssen does not assume defense of such Shared Third Party Products Liability
Action, then Fate may take the lead role in the defense of such Shared Third
Party Products Liability Action.  Each Party agrees to cooperate and to provide
reasonable assistance to the other Party with respect to any Third Party
Products Liability Action.

8.1.5The Party assuming the defense of any Shared Third Party Products Liability
Action under this Section 8.1 (the “Controlling Party”) shall consult with the
other Party on all material aspects of the defense, including settlement, of
such Shared Third Party Products Liability Action, and the Parties shall
cooperate fully with each other in connection therewith.  The non-defending
Party shall also have the right to participate in the defense of any Shared
Third Party Products Liability Action utilizing attorneys of its choice, and any
expenses incurred in connection with such participation (including reasonable
attorney’s fees) will be included in Shared Product Liability Costs and
allocated between the Parties in accordance with Section 8.1.3.  In furtherance
of the Parties’ cooperation, the Controlling Party will consult with the other
Party regarding strategic decisions, including the retention of counsel and
defense of each Shared Third Party Products Liability Action.  The Controlling
Party will otherwise keep the other Party fully informed of the status and
progress of the defense and any settlement discussions concerning the Shared
Third Party Products Liability Action.  Any settlement of a Shared Third Party
Products Liability Action that would admit liability on the part of any Party or
its Affiliates, or that would involve any relief other than the payment of money
damages within a budget previously agreed to by the Parties, shall be subject to
the prior written approval of both Parties, such approval not to be unreasonably
withheld, delayed or conditioned.  All damages and expenses (including
reasonable attorney’s fees of the Controlling Party) incurred in connection with
the defense of a Third Party Products Liability Action shall be allocated
between Janssen and Fate in accordance with Section 8.1.3.

Exhibit 6.4 - 156

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8.1.6Shared Product Liability Costs shall initially be borne by the Party
incurring the cost or expense, subject to quarterly reimbursement (or such other
reimbursement schedule as the JFC may approve) pursuant to procedures to be
established by the JFC.  Each Party shall calculate and maintain records of
Shared Product Liability Costs incurred by it and its Affiliates in accordance
with procedures to be established by the JFC promptly following commencement of
any Shared Third Party Products Liability Action.

Article IX
TERMINATION

9.1Effects of Termination.  

9.1.1

(a)If Janssen terminates the Agreement in its entirety, or with respect to a
Janssen Antigen targeted by a Profit Share Product, under Section 15.3 of the
Agreement (Janssen Unilateral Termination Rights), or if Fate terminates the
Agreement under Section 15.2 (Termination for Material Breach) or Section 15.5
(Termination for Insolvency), then Fate will have a right to elect to continue
developing, manufacturing and commercializing any applicable Reverted Profit
Share Product by giving notice to Janssen at least [***] days before the
effective date of termination.  For purposes of this Exhibit, a “Reverted Profit
Share Product” means [***].

(b)If Fate makes such election, Janssen hereby grants to Fate, effective as of
the effective date of termination, a perpetual, worldwide, exclusive,
royalty-bearing, irrevocable license with a right to sublicense (in multiple
tiers) under Patents and Know-How Controlled by Janssen or its Affiliates to the
extent reasonably necessary for Fate to Develop, have Developed and use, to
make, have made and otherwise Manufacture, and to sell, have sold, offer for
sale, import and otherwise Commercialize the Reverted Profit Share Product
(including, in each case, its Master iPSC Bank and CD34 Composition) in the
Field in the Territory; provided, however, that: (i) if any such Patent or
Know-How was in-licensed or acquired from a Third Party and is subject to
payment or other obligations to such Third Party, Janssen shall promptly
disclose such obligations to Fate in writing and such Patent or Know-How shall
be subject to the license granted in this Section only to the extent (x) if
applicable, such Third Party consents to the sublicensing of such Patent or
Know-How to Fate and (y) Fate agrees in writing to be bound by such obligations
and reimburse all amounts owed to such Third Party as a result of Fate’s
exercise of such license with respect to such Patent or Know-How; (ii) the
Patents licensed to Fate pursuant to this Section shall not include any
proprietary manufacturing, formulation or drug delivery technology of Janssen
that was not actually used by or on behalf of Janssen in the Development,
Manufacture, or Commercialization of the Reverted Profit Share Product; and
(iii) the Know-How licensed to Fate shall not include any Confidential
Information of Janssen relating to the Commercialization of Janssen oncology
products generally that is disclosed pursuant to Article V of this Exhibit and
is marked by Janssen as “Competitively Sensitive Information” in accordance with
Section 5.4.1 of the Agreement.

Exhibit 6.4 - 157

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(c)If Fate does not elect to continue developing and commercializing the
Reverted Profit Share Product in accordance with this Section, then Janssen
shall wind down all of its Development, Manufacture, and Commercialization
activities with respect to the Profit Share Product as quickly as reasonably
practicable, subject to compliance with ethical and legal requirements, and the
Parties shall continue to share the reasonable costs of such activities in
accordance with the terms of this Exhibit until such wind down is complete.

9.1.2If Fate elects to continue developing and commercializing the Reverted
Profit Share Product in accordance with Section 9.1.1 of this Exhibit, the
following provisions of this Section 9.1.2 shall apply upon the effective date
of such termination solely with respect to the Reverted Profit Share Product:

(a)If there are any Patents or Know-How licensed under Section 9.1.1(b) and Fate
practices such license in connection with its development and commercialization
of the Reverted Profit Share Product, then Fate shall pay to Janssen royalties
at a rate equal to [***] ([***]%) of the royalty rates set forth in Section 10.6
of the Agreement; otherwise, Fate shall pay to Janssen royalties at a rate equal
to [***] ([***]%) of the royalty rates set forth in Section 10.6 of the
Agreement.  Such payments shall be on the same terms set forth in Section 10.6
of the Agreement with respect to Net Sales of Licensed Products mutatis
mutandis, provided that the definition of Royalty Term in Section 10.6.2 of the
Agreement shall remain the same.

(b)As soon as practicable, Janssen will assign or otherwise transfer to Fate all
Regulatory Filings and Regulatory Approvals (which, for clarity, shall exclude
any Regulatory Filings or Regulatory Approvals for, or any portion thereof
pertaining to, any compound or product that is not the Reverted Profit Share
Product) and copies of all clinical and nonclinical data relating to the
Reverted Profit Share Product Controlled by Janssen or any of its Affiliates or
Sublicensees.  Janssen shall, and shall procure that its Affiliates and
Sublicensees shall, take such actions and execute such instruments, assignments
and documents as may be reasonably requested by Fate to effect the transfer of
rights under such Regulatory Filings and Regulatory Approvals to Fate.  If
applicable Law prevents or delays the transfer of ownership of any such
Regulatory Filings or Regulatory Approvals to Fate, Janssen shall grant, and
does hereby grant, to Fate an exclusive and irrevocable right of access and
reference to such Regulatory Filings and Regulatory Approvals for the Reverted
Profit Share Product, and shall cooperate with Fate to make the benefits of such
Regulatory Filings and Regulatory Approvals available to Fate or its designee(s)
with effect from the effective date of such termination.

(c)If Janssen is Manufacturing the Reverted Profit Share Product, Janssen hereby
grants Fate (effective upon the effective date of such termination) a right of
reference to any DMF or master files within the possession and Control of
Janssen or its Affiliates that are necessary for the Manufacture of the Reverted
Profit Share Product.      

(d)Following receipt of written request from Fate, Janssen shall deliver to Fate
all safety data contained in the global safety database for the Reverted Profit
Share Product and promptly transfer control of and responsibility for
maintaining the global safety database for the Reverted Profit Share Product to
Fate.

Exhibit 6.4 - 158

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(e)If Janssen is, as of the effective date of termination of the Agreement,
party to any subcontracts or Sublicenses that pertain solely to the Reverted
Profit Share Product, then Janssen will assign to Fate any such subcontracts or
Sublicenses requested by Fate, to the extent it has the right under such
contract(s) to do so (and will use reasonable efforts to obtain any required
consents).  If Janssen is not able to assign any such subcontracts or
Sublicenses, at Fate’s request, or in the event that any subcontract pertains
both to the Reverted Profit Share Product and to any other product of Janssen,
Janssen shall use [***] Efforts to facilitate negotiations between Fate and any
of Janssen’s Subcontractors or Sublicensees that at the effective date of
termination are performing any Development, Manufacturing or Commercialization
activities with respect to the Reverted Profit Share Product, subject to Fate’s
agreement to any associated reasonable costs.

(f)Janssen shall transfer to Fate, at Fate’s request, any remaining inventory of
the Reverted Profit Share Product, and components thereof and raw materials used
by or on behalf of Janssen in the Manufacture of the Reverted Profit Share
Product (collectively, “Inventory”), that, in each case, is in Janssen’s or its
Affiliate’s possession as of the effective date of termination at a price equal
to [***]; provided, however, that to the extent any Inventory in Janssen’s
possession as of the effective date of termination is necessary for Janssen to
perform its supply obligations under Section 9.1.2(g) or its Commercialization
Wind-Down Period obligations under Section 9.1.2(i) (if any) after the effective
date of termination, then Janssen’s Inventory transfer obligations under the
preceding provisions of this Section shall apply to any Inventory that is in
Janssen’s possession as of the date Janssen’s obligations under Section 9.1.2(g)
or Section 9.1.2(i) (as applicable) expire or terminate (or, if earlier, as of
the date that Janssen no longer requires such Inventory for the performance of
such obligations).  Within [***] days after the effective date of termination
(or within [***] days after such later date described in the preceding proviso,
if applicable), Janssen shall notify Fate (i) of the quantity(ies) and type(s)
of the remaining Inventory and the Cost of Goods thereof and (ii) whether any
such Inventory will need to be relabeled or repackaged to remove any Janssen
Housemarks, and Fate shall have [***] days after receipt of such notice in which
to notify Janssen of the quantity(ies) and type(s) of the remaining Inventory
that Fate wishes to acquire.  If Fate does not so notify Janssen within the
applicable period specified above, or notifies Janssen within the applicable
period specified above that Fate elects to purchase less than all of the
remaining Inventory, then (i) in the case of Inventory remaining in Janssen’s
possession as of the effective date of termination, Janssen shall be entitled to
elect to continue to sell such Inventory for up to [***] after the effective
date of termination, or to destroy such Inventory, and (ii) in the case of
Inventory remaining in Janssen’s possession as of the date Janssen’s obligations
under Section 9.1.2(g) or Section 9.1.2(i) (as applicable) expire or terminate
(or, if earlier, as of the date that Janssen no longer requires such Inventory
for the performance of such obligations), Janssen shall destroy such
Inventory.  Any Reverted Profit Share Product that is Commercialized by Janssen
after the effective date of termination pursuant to this Section (x) in the OUS
Territory, shall be subject to payment of royalties pursuant to Section 6.5 of
this Exhibit, and (y) in the U.S., shall be subject to Section 6.4 of this
Exhibit.

Exhibit 6.4 - 159

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(g)Janssen shall, at Fate’s request, use [***] Efforts to facilitate an orderly
and prompt transition of any Manufacturing of the Reverted Profit Share Product
then being conducted by Janssen and any of its Affiliates or Third Party
subcontractors to Fate or its designee.  At Fate’s request, while such
Manufacturing activities are transitioned, Janssen shall supply Fate or its
designee with the Reverted Profit Share Product at a price equivalent to [***],
provided that Janssen shall not be obligated to continue to supply the Reverted
Profit Share Product for more than [***] following the effective date of
termination.

(h)Janssen shall return to Fate all Master iPSC Banks and CD34 Compositions for
the Reverted Profit Share Product in Janssen’s possession, and Janssen shall
assign, and hereby assigns to Fate, effective upon the effective date of
termination, title to all Master iPSC Banks for the Reverted Profit Share
Product.

(i)If the First Commercial Sale of the Reverted Profit Share Product has
occurred in a country prior to the effective date of termination of the
Agreement, then, if requested by Fate, Janssen shall continue to Commercialize
the Reverted Profit Share Product in such country in accordance with the terms
and conditions of the Agreement, for a period requested by Fate not to exceed
[***] from the effective date of termination of the Agreement (the
“Commercialization Wind-Down Period”), provided that Fate may terminate such
activities during the Commercialization Wind-Down Period upon [***] days’ notice
to Janssen.  Any Reverted Profit Share Product Commercialized by Janssen during
the Commercialization Wind-Down Period (x) in the OUS Territory, shall be
subject to payment of royalties pursuant to Section 6.5 of this Exhibit, and
(y) in the U.S., shall be subject to Section 6.4.

(j)To the extent permitted by applicable Law, Janssen shall transfer to Fate
promotional materials, sales training materials, Commercialization plans and
customer contact information in Janssen’s possession that are solely related to
Commercialization of the Reverted Profit Share Product (subject to the
transition plan agreed to by the Parties pursuant to Section 9.1.2(n) of this
Exhibit with respect to OUS Territory plans and information).

(k)If, at the date of notice of termination, any Clinical Trial is on-going
(i.e. first patient dosed prior to the date of notice of termination) with
respect to the Reverted Profit Share Product pursuant to the GDP, then Fate
shall notify Janssen in writing within [***] days after the notice of
termination to confirm whether Fate elects to have Janssen:

(i)wind down such Clinical Trial as soon as practicable, subject to compliance
with ethical and legal requirements; or

(ii)transfer responsibility for and control of such Clinical Trial to Fate as
soon as practicable.  Janssen shall use [***] Efforts to effect such transfer,
and Fate shall use [***] Efforts to assume responsibility for and control of
such Clinical Trial as promptly as practicable after the effective date of
termination and, in any event, within [***] months following the effective date
of termination.

Exhibit 6.4 - 160

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The costs of any such Clinical Trial shall be shared by the Parties as Shared
Development Costs pursuant to the Agreement or this Exhibit until the effective
date of termination, beyond which (1) Shared Development Costs which are
incurred in the winding down of any Clinical Trial shall be shared by the
Parties in accordance with Section 6.3 of this Exhibit and (2) Shared
Development Costs incurred in the conduct of any Clinical Trial that Fate elects
to have transferred to Fate shall be borne solely by Fate.  If Fate fails to
notify Janssen which option ((i) or (ii)) it chooses within the prescribed time
period set out in this Section, then Janssen may proceed on the basis that any
Clinical Trial should be wound down in accordance with clause (i) of this
Section.

(l)Following the date of notice of termination, Janssen shall have no obligation
to initiate any Clinical Trial, or to commence any other new Development
activities for the Reverted Profit Share Product.  If Fate elects to initiate
any Clinical Trial of the Reverted Profit Share Product or to commence any other
new Development activities for the Reverted Profit Share Product after the date
of notice of termination, then the costs of such activity shall be borne solely
by Fate and shall not be shared by the Parties pursuant to Section 6.3 of this
Exhibit.

(m)Janssen shall cause to be assigned to Fate all worldwide rights in and to any
Product Trademarks and Product Domain Names and Websites solely relating to the
Reverted Profit Share Product.

(n)As soon as practicable following the date of notice of termination, the
Parties shall meet to discuss a transition plan that sets forth the steps and
process to be followed following the date of notice of termination to achieve an
efficient and orderly handover of Development, Manufacturing and
Commercialization activities with respect to the Reverted Profit Share Product
and to undertake the activities as set out in this Section 9.1.2.   Such
transition plan will include, at Janssen’s election, either a transfer of the
existing OUS Territory Commercialization plans and customer contact information
with respect to the Reverted Profit Share Product or a process by which the
Parties will work together in good faith to develop new OUS Territory
Commercialization plans and customer contact information for the Reverted Profit
Share Product.   Except as expressly provided otherwise in this Section 9.1.2,
any costs incurred by the Parties between the date of notice of termination and
the effective date of termination to conduct activities pursuant to this Section
9.1.2 shall be shared in accordance with the Agreement or this Exhibit, as
applicable, and thereafter each Party shall bear its own costs.

(o)If, as of the effective date of termination, Janssen is Developing or
Commercializing the terminated Profit Share Product as part of a Combination
Regimen that includes another drug or biological product that is owned or
controlled by Janssen or its Affiliate, then upon Fate’s request, the Parties
will negotiate in good faith a clinical trial collaboration agreement pursuant
to which (i) Janssen would supply such drug or biological product to Fate,
solely for Fate’s use in conducting one or more clinical trials of the
Combination Regimen and (ii) Janssen would provide rights of reference necessary
for Fate to seek, obtain and maintain regulatory approval of the Profit Share
Product as part of the Combination Regimen.

(p)Fate shall indemnify, defend and hold harmless the Janssen Indemnitees from
and against any and all Losses to the extent arising out of or relating to the
Research, Development, Commercialization, transfer, Manufacture, handling or
storage, or use of, or exposure to, the Reverted Profit Share Product by or for
Fate or any of its Affiliates, Sublicensees, agents and contractors, on or after
the effective date of termination.  Any claim of indemnification by a Janssen
Indemnitee under this Section will be subject to the procedures set forth in
Section 14.3 of the Agreement.  

 

 

Exhibit 6.4 - 161

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Exhibit 1.12-1

Financial Exhibit

 

U.S. Pre-Tax Profits and Losses for the Profit Share Product during the Profit
Share Term shall be calculated in accordance with this Financial Exhibit.  

(1)

Calculation of U.S. Pre-Tax Profits and Losses

“U.S. Pre-Tax Profits and Losses” means, for a Calendar Quarter, the amount
equal to A + B – C, where A equals the Net Sales of the Profit Share Product in
the U.S. for such Calendar Quarter, B equals any Other Income with respect to
the Profit Share Product in the U.S. for such Calendar Quarter and C equals the
Allowable Expenses incurred with respect to the Profit Share Product in the U.S.
for such Calendar Quarter.  Any positive U.S. Pre-Tax Profit and Losses may be
referred to as a “U.S. Pre-Tax Profit,” and any negative U.S. Pre-Tax Profits
and Losses may be referred to as a “U.S. Pre-Tax Loss.”

U.S. Pre-Tax Profits and Losses shall exclude the upfront payment and all
milestone payments, all Shared Development Costs, Shared CMC Development Costs
and capital expenditures, and any other cost not specifically included in
Allowable Expenses, including costs attributable to general corporate
activities, executive management, investor relations, treasury services,
business development, corporate government relations, finance, and other
corporate overhead.  Cost items included in components of U.S. Pre-Tax Profits
and Losses shall not be double counted and shall not be included in Shared
Development Costs or Shared CMC Development Costs.  

Expenses shall not be included in Allowable Expenses for a Calendar Year if such
expenses are in excess of the amounts allocated for such Calendar Year in the
U.S. Commercialization Budget; except: (a) to the extent such excess expenses do
not exceed [***] percent ([***]%) of the total Allowable Expenses allocated to
be incurred by the relevant Party in the Calendar Year  in accordance with the
latest approved U.S. Commercialization Budget for such Calendar Year; or (b) to
the extent attributable to: [***].

(2)

Definitions

The following definitions shall apply for purposes of calculating U.S. Pre-Tax
Profits and Losses for the Profit Share Product in accordance with this
Financial Exhibit.

“Allowable Expenses” means the following Commercial FTE Costs and Out-of-Pocket
Expenses incurred by the Parties and their Affiliates in conducting
Commercialization activities with respect to the Profit Share Product in the
U.S.:

 

(a)

Allocable Global Costs;

 

(b)

Charitable Contribution Costs to the extent such costs are directly attributable
to a Profit Share Product;

 

(c)

Collaboration Losses;

Exhibit 6.4 - 162

 

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(d)

Distribution Costs;

 

(e)

Health Care Reform Fees;

 

(f)

Marketing Expenses;

 

(g)

Medical Affairs Expenses;  

 

(h)

Other Commercialization Costs;

 

(i)

Recall Expenses;

 

(j)

Regulatory Maintenance Costs;

 

(k)

Selling Costs;

 

(l)

Supply Costs;  

 

(m)

Project Management, Alliance Management and Healthcare Compliance (HCC) Costs;

 

(n)

Costs described in Sections 7.1.1, 7.1.2, 7.1.6(b) and 7.1.7 as included in
Allowable Expenses; and

 

(o)

[***].

Allowable Expenses that are incurred with respect to both the U.S. and OUS
Territory (and that cannot be attributed solely to the U.S. or solely to the OUS
Territory) will be allocated [***] percent ([***]%) to the U.S. and [***]
percent ([***]%) to the OUS Territory, unless otherwise agreed by the Parties
(and only the amounts allocated to the U.S. will be included in Allowable
Expenses).

To the extent that any activity is conducted (or any Commercial FTE Costs or
Out-of-Pocket Expense incurred) in support of both the Profit Share Product and
other products, services or efforts of a Party or its Affiliates, including with
respect to any product (including any Related Licensed Product) included in a
Combination Product or Combination Regimen containing a Profit Share Product,
then the Commercial FTE Costs and Out-of-Pocket Expenses thereof shall be
included in Allowable Expenses only to the extent allocable to the Profit Share
Product and included in the U.S. Commercialization Budget, or expressly and
specifically included under this Financial Exhibit (e.g., in the case of
Commercial FTE Costs for sales representatives promoting both the Profit Share
Product and other products, as specified below).  In connection with the JSC’s
review of a proposed U.S. Commercialization Budget for approval, upon request by
either Party, the JSC shall review the methodology used to allocate to Allowable
Expenses the Commercial FTE Costs and Out-of-Pocket Expenses of such combined
activity.

“Charitable Contribution Costs” means Out-of-Pocket Expenses incurred by a Party
in making any charitable contributions related to Commercialization of the
Profit Share Product, including to support co-pay foundations and product
donations.

Exhibit 6.4 - 163

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“Collaboration Losses” means Losses (as defined in Section 14.1 of the
Agreement) that arise out of the performance, in good faith, of the
Commercialization of the Profit Share Product in the U.S. in accordance with the
Agreement, excluding any such Losses that (a) are subject to indemnification by
such Party pursuant to Section 14.1 or Section 14.2 of the Agreement or (b) are
Product Liability Costs.

“Data Costs” means costs for product specific market research, market
intelligence, in-market product usage and other data required to execute the
U.S. Commercialization Plan.

“Distribution Costs” means the amount equal to [***]% of Net Sales of the Profit
Share Product in the U.S., which amount shall be deemed to have been incurred as
Allowable Expenses by the Party that distributes the Profit Share Product in the
U.S.  It is understood that such amount is intended to cover all Commercial FTE
Costs and Out-of-Pocket Expenses incurred by or on behalf of a Party that are
attributable to the distribution to a Third Party of the Profit Share Product in
the U.S., including: (i) handling and transportation to fulfill orders
(excluding such costs, if any, treated as a deduction in the definition of Net
Sales); (ii) customer services, including order entry, billing and adjustments,
inquiry and credit and collection; and (iii) direct cost of storage and
distribution of the Profit Share Product.

“Health Care Reform Fees” means Out-of-Pocket Expenses representing the annual
fee paid to the U.S. government as defined in the PPACA and similar taxes and
governmental fees in the United States, in each case to the extent directly
attributable to the Profit Share Product and not included as a deduction in
calculating Net Sales.  If any similar governmental fee is legislated or rule
created in any jurisdiction in the U.S., to the extent directly attributable to
the Profit Share Product, this shall also be included as an Allowable Expense.

“Marketing Expenses” means Commercial FTE Costs and Out-of-Pocket Expenses
identifiable to the advertising, promotion and marketing of the Profit Share
Product in the U.S., and related professional education, in each case to the
extent incurred specifically with respect to the Profit Share Product (and to
the extent not performed by sales representatives), including:

 

(a)

Advertising, which includes Commercial FTE Costs and Out-of-Pocket Expenses
associated with media costs, direct mails, production expenses, agency fees, and
medical congresses and meetings;

 

(b)

Promotion, which includes Commercial FTE Costs and Out-of-Pocket Expenses
associated with professional samples, public relations and communications
expenses, development of information and data for national accounts, managed
care organizations and group purchasing organizations;

 

(c)

Market Research, which includes Commercial FTE Costs and Out-of-Pocket Expenses
associated with market information, focus groups, and market research
professional staff and related Out-of-Pocket Expenses such as travel, business
meals, and training;

 

(d)

Marketing Management, which includes the Commercial FTE Costs of the Profit
Share Product management FTEs, to the extent directly performing activities with
respect to the marketing of the Profit Share Product;

Exhibit 6.4 - 164

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

 

 

(e)

Reimbursement/Access Services, which includes Out-of-Pocket Expenses incurred to
manage marketing programs and marketing costs (educational material) directly
attributable to the Profit Share Product; provided, however, that, if employees
of Fate or Janssen or any of their respective Affiliates provide this service,
then the Commercial FTE Costs of such employees and the related Out-of-Pocket
Expenses such as travel, business meals and entertainment will be included; and

 

(f)

Health Policy/Advocacy, which includes expenses reasonably necessary and
identifiable to the Profit Share Product, such as advocacy sponsorships for the
Profit Share Product’s specific disease state and any specific policy lobbying
and trade and government relations related expenses, in each case to the extent
attributable to and specifically conducted with respect to the Profit Share
Product.

“Medical Affairs Expenses” means Commercial FTE Costs and Out-of-Pocket Expenses
reasonably necessary and identifiable to the Profit Share Product incurred with
respect to any Medical Affairs Activities in the U.S., excluding Commercial FTE
Costs and Out-of-Pocket Expenses relating to Medical Affairs Studies.

“Other Commercialization Costs” means any Commercial FTE Costs and Out-of-Pocket
Expenses incurred with respect to the Profit Share Product that are approved by
the USJCC or JSC and included in the U.S. Commercialization Plan and the U.S.
Commercialization Budget, but that are not otherwise included in any other
Allowable Expense category.

“Other Income” means any payment or income (other than Net Sales) received by a
Party or its Affiliate from a Third Party that is attributable to the Profit
Share Product or is received in connection with the grant of a sublicense or
other right or activity with respect to the Profit Share Product.  For clarity,
Other Income does not include payments by one Party or its Affiliate to the
other Party or its Affiliate with respect to supply of the Profit Share Product.

“Project Management, Alliance Management and Healthcare Compliance (HCC) Costs”
means Commercial FTE Costs and Out-of-Pocket Expenses reasonably necessary and
identifiable and attributable to the Profit Share Product incurred with respect
to any Project Management, HCC and Alliance Management.

“Recall Expenses” means Commercial FTE Costs and Out-of-Pocket Expenses directly
associated with notification, retrieval and return of the Profit Share Product,
destruction of such returned Profit Share Product, replacement Profit Share
Product and distribution of the replacement Profit Share Product, in each case
that are incurred with respect to a recall conducted in the U.S. in accordance
with Section 5.1.7 of the Profit Share Product Exhibit.  The Parties acknowledge
that if the recall was not anticipated at the time the U.S. Commercialization
Budget was established for a Calendar Year, then the Recall Expenses associated
with such recall shall not be included for determining whether the Party
conducting such recall has exceeded the amounts budgeted to be incurred by such
Party in such Calendar Year for Allowable Expenses.

Exhibit 6.4 - 165

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“Regulatory Maintenance Costs” means Commercial FTE Costs and Out-of-Pocket
Expenses (including maintenance fees paid to a Regulatory Authority) relating to
maintaining and enforcing Marketing Approval for the Profit Share Product in the
U.S.

“Selling Costs” means the following:  

 

(a)

Total Commercial FTE Costs for sales representatives, which shall be the
following percentages of Commercial FTE Costs of sales representatives Detailing
the Profit Share Product in the U.S.: (i) [***]% to the extent such sales
representatives Detail only the Profit Share Product (and no other products);
(ii) [***]% to the extent such sales representatives Detail two products with
the Profit Share Product as the First Position Detail; (iii) [***]% to the
extent such sales representatives Detail three or more products with the Profit
Share Product as the First Position Detail; (iv) [***]% to the extent such sales
representatives Detail two products with the Profit Share Product as the Second
Position Detail, (v) [***]% to the extent such sales representatives Detail
three or more products with the Profit Share Product as the Second Position
Detail, and (vi) [***]% to the extent such sales representatives Detail three or
more products with the Profit Share Product as the Third Position Detail.  For
the avoidance of doubt, if a sales representative Details the Profit Share
Product in different positions in different Details (e.g., First Position Detail
in a portion of the Details and Second Position Details in other Details), then
a pro rata share of the foregoing percentages, to be calculated based on the
time spent by such sales representative on Detailing the Profit Share Product in
each such position, will be included in Selling Costs. For periods in which U.S.
sales representatives are performing activities in support of the Profit Share
Product in the U.S., but are not Detailing the Profit Share Product in the U.S.
(e.g., during launch preparation or training), the costs for such sales
representatives will be allocated to Selling Costs based on the percentage of
time such sales representatives are devoted to such activities in support of the
Profit Share Product.

 

(b)

Commercial FTE Costs and Out-of-Pocket Expenses, other than Commercial FTE Costs
for sales representatives included in (a) above, directly attributable to
selling the Profit Share Product in the U.S., including first line sales
managers, exhibits at shows or conventions including samples, charges for space,
sales aids and brochures, sales meetings, specialty sales forces, consultants,
call reporting and other Third Party monitoring/tracking services, and the like.

Exhibit 6.4 - 166

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For purposes of the definition of Selling Costs, “Detail” means an interactive
face-to-face visit by a sales representative with a medical professional having
prescribing authority or who is able to influence prescribing decisions, within
the target audience during which approved uses, safety, effectiveness,
contraindications, side effects, warnings or other relevant characteristics of a
pharmaceutical product are discussed in an effort to increase prescribing
preferences of a pharmaceutical product for its approved uses. Detail includes
First Position Details and Second Position Details. Activities conducted by
medical support staff (such as medical science liaisons) will not constitute
Details. E-details, activities conducted at conventions or similar gatherings
and activities performed by market development specialists, managed care account
directors and other personnel not performing face-to-face sales calls or not
specifically trained with respect to a pharmaceutical product will not
constitute Details. “Detailing” means the act of performing Details and to
“Detail” mean to perform Details. For such purposes:

 

(i)

“First Position Detail” means a Detail in which the applicable pharmaceutical
product is Detailed before any other product and the predominant portion of time
is devoted to the Detailing of such pharmaceutical product.

 

(ii)

“Second Position Detail” means a Detail in which the applicable pharmaceutical
product is Detailed in the second position (i.e., no more than one other product
is presented to or discussed with the healthcare professional before the Profit
Share Product) and the second most predominant portion of time is devoted to the
Detailing of such pharmaceutical product.

 

(iii)

“Third Position Detail” means a Detail in which the applicable pharmaceutical
product is Detailed in the third position (i.e., no more than two other products
are presented to or discussed with the healthcare professional before the Profit
Share Product) and the third most predominant portion of time is devoted to the
Detailing of such pharmaceutical product.

“Supply Costs” means the sum of (a) Fate’s Cost of Goods for Profit Share
Product supplied by Fate to Janssen under any supply agreements for
Commercialization in the U.S. and (b) Janssen’s Cost of Goods for Profit Share
Product manufactured by Janssen for Commercialization in the U.S.; provided that
Supply Costs do not include [***].

Exhibit 6.4 - 167

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(3)

General Principles.

Each Party shall provide financial statements in such reporting format as the
JFC may establish.

All calculations to be made pursuant to this Financial Exhibit shall be made in
accordance with (i) the applicable definitions and terms set forth in this
Financial Exhibit and in the Agreement in a manner consistent with the
methodologies used for the U.S. Commercialization Budget as established by the
JFC (first priority), (ii) the specific accounting policies as may be
established by the JFC (second priority) and (iii) GAAP (third priority).  All
undefined terms shall be construed in accordance with GAAP, but only to the
extent consistent with the other express terms and definitions in this Financial
Exhibit, the Profit Share Product Exhibit and the Agreement and specific
accounting policies established by the JFC.

For the avoidance of doubt, income and withholding taxes imposed on either of
the Parties or their Affiliates under the Agreement will not be included in the
calculation of U.S. Pre-Tax Profits and Losses.

(4)

Reconciliations

The JFC will coordinate to resolve any differences in or disputes regarding the
calculation of U.S. Pre-Tax Profits and Losses, or any component thereof.  If
the JFC is unable to resolve any such difference or dispute, the matter shall be
subject to resolution pursuant to Section 2.6 of this Exhibit.  

 

 

Exhibit 6.4 - 168

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EXHIBIT 11.8.1

Existing Agreements

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

 

 

 

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EXHIBIT 12.9.1

Press Release

[ge2sj0uhtrcz000001.jpg]

Fate Therapeutics Announces Worldwide Collaboration with Janssen for Novel
iPSC-derived Cell-based Cancer Immunotherapies

ꟷ Collaboration leverages Company’s iPSC product platform and Janssen’s
proprietary tumor-targeting antigen binders to create novel CAR NK and CAR
T-Cell product candidates ꟷ

ꟷ Fate to receive $50 million upfront payment and $50 million equity investment,
plus full funding for the research and development of collaboration candidates
through IND filing ꟷ

ꟷ Collaboration candidates to be developed against up to four tumor-associated
antigens for hematologic malignancies and solid tumors ꟷ

ꟷ Fate eligible to receive payments of up to $1.8 billion in development and
regulatory milestones and up to $1.2 billion in commercial milestone payments,
plus double-digit royalties ꟷ

 

San Diego, CA – April 2, 2020 – Fate Therapeutics, Inc. (NASDAQ: FATE), a
clinical-stage biopharmaceutical company dedicated to the development of
programmed cellular immunotherapies for cancer and immune disorders, announced
today a global collaboration and option agreement with Janssen Biotech, Inc.
(Janssen), one of the Janssen Pharmaceutical Companies of Johnson & Johnson.

 

Under the multi-year collaboration agreement, Janssen will contribute
proprietary antigen binding domains for up to four tumor-associated antigen
targets. The Company will apply its iPSC product platform to research and
preclinically develop new iPSC-derived chimeric antigen receptor (CAR) NK and
CAR T-cell product candidates. The Company will receive $50 million in cash and
$50 million from the purchase by Johnson & Johnson Innovation – JJDC, Inc. of
newly issued shares of the Company’s common stock at a price per share of
$31.00. Janssen will also reimburse the Company for all activities conducted
under the collaboration.

 

“We are delighted to enter this strategic collaboration, which brings together
Janssen’s scientific and global commercialization leadership, deep domain
expertise in oncology and proprietary technologies for targeting and binding
certain tumors and our industry-leading iPSC product platform to develop novel
off-the-shelf CAR NK and T-cell cancer immunotherapies,” said Scott Wolchko,
President and Chief Executive Officer of Fate Therapeutics. “The collaboration
strengthens our financial and operating position through a focused effort of
developing cell-based cancer immunotherapies utilizing Janssen’s proprietary
antigen binding domains, while enabling us to continue to exploit our deep
pipeline of wholly-owned product candidates and further develop our
off-the-shelf, iPSC-derived cell-based immunotherapies.”

 

 

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

 

 

The Company will advance candidates under the collaboration to the filing of an
Investigational New Drug (IND) application, after which Janssen will have the
right to exercise its option for an exclusive license for the development and
commercialization of collaboration candidates targeting the tumor-associated
antigens. The Company will be primarily responsible for the manufacture of
collaboration candidates, the cost of which will be paid for by Janssen. The
Company is eligible to receive payments of up to $1.8 billion upon the
achievement of development and regulatory milestones and up to $1.2 billion upon
the achievement of commercial milestones, plus double-digit royalties on
worldwide commercial sales of products targeting the antigens. In addition, the
Company has the right to elect to co-commercialize each collaboration candidate
in the U.S. and share equally in profits and losses in the U.S., subject to its
payment of certain clinical development costs and adjustments in milestone and
royalty payments.

 

About Fate Therapeutics’ iPSC Product Platform

The Company’s proprietary induced pluripotent stem cell (iPSC) product platform
enables mass production of off-the-shelf, engineered, homogeneous cell products
that can be administered with multiple doses to deliver more effective
pharmacologic activity, including in combination with cycles of other cancer
treatments. Human iPSCs possess the unique dual properties of unlimited
self-renewal and differentiation potential into all cell types of the body. The
Company’s first-of-kind approach involves engineering human iPSCs in a one-time
genetic modification event and selecting a single engineered iPSC for
maintenance as a clonal master iPSC line. Analogous to master cell lines used to
manufacture biopharmaceutical drug products such as monoclonal antibodies,
clonal master iPSC lines are a renewable source for manufacturing cell therapy
products which are well-defined and uniform in composition, can be mass produced
at significant scale in a cost-effective manner, and can be delivered
off-the-shelf for patient treatment. As a result, the Company’s platform is
uniquely capable of overcoming numerous limitations associated with the
production of cell therapies using patient- or donor-sourced cells, which is
logistically complex and expensive and is subject to batch-to-batch and
cell-to-cell variability that can affect clinical safety and efficacy. Fate
Therapeutics’ iPSC product platform is supported by an intellectual property
portfolio of over 250 issued patents and 150 pending patent applications.

 

About Fate Therapeutics, Inc.

Fate Therapeutics is a clinical-stage biopharmaceutical company dedicated to the
development of first-in-class cellular immunotherapies for cancer and immune
disorders. The Company has established a leadership position in the clinical
development and manufacture of universal, off-the-shelf cell products using its
proprietary induced pluripotent stem cell (iPSC) product platform. The Company’s
immuno-oncology product candidates include natural killer (NK) cell and T-cell
cancer immunotherapies, which are designed to synergize with well-established
cancer therapies, including immune checkpoint inhibitors and monoclonal
antibodies, and to target tumor-associated antigens with chimeric antigen
receptors (CARs). The Company’s immuno-regulatory product candidates include
ProTmune™, a pharmacologically modulated, donor cell graft that is currently
being evaluated in a Phase 2 clinical trial for the prevention of
graft-versus-host disease, and a myeloid-derived suppressor cell immunotherapy
for promoting immune tolerance in patients with immune disorders. Fate
Therapeutics is headquartered in San Diego, CA. For more information, please
visit www.fatetherapeutics.com.

 

 

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

 

 

Forward-Looking Statements

This release contains "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 including statements relating
to the expected benefits of the Company's collaboration with Janssen, the
Company's expectations regarding future potential milestone and royalty payments
under the collaboration, the objectives, plans and goals of the collaboration,
the parties’ rights and obligations under the collaboration, and the safety and
therapeutic potential of the Company’s iPSC product platform. These and any
other forward-looking statements in this release are based on management's
current expectations of future events and are subject to a number of risks and
uncertainties that could cause actual results to differ materially and adversely
from those set forth in or implied by such forward-looking statements. These
risks and uncertainties include, but are not limited to, the risk that the
Company may not comply with its obligations under and otherwise maintain its
collaboration agreement with Janssen on the agreed upon terms, the risk that the
Company may cease or delay planned development and clinical trials of any of its
product candidates for a variety of reasons (including any delay in the
Company’s ability to conduct and complete preclinical studies and to enroll
patients in current and planned clinical trials, requirements that may be
imposed by regulatory authorities on the conduct of clinical trials or to
support regulatory approval, difficulties in manufacturing or supplying the
Company’s product candidates for clinical testing, or the occurrence of any
adverse events or other negative results that may be observed during
development), the risk that Janssen or the Company may terminate the
collaboration agreement for a variety of reasons, the risk that results observed
in preclinical studies of its product candidates may not be replicated in
ongoing or future clinical trials or studies, and the risk that its product
candidates may not produce therapeutic benefits or may cause other unanticipated
adverse effects. For a discussion of other risks and uncertainties, and other
important factors, any of which could cause the Company’s actual results to
differ from those contained in the forward-looking statements, see the risks and
uncertainties detailed in the Company’s periodic filings with the Securities and
Exchange Commission, including but not limited to the Company’s most recently
filed periodic report, and from time to time in the Company’s press releases and
other investor communications. Fate Therapeutics is providing the information in
this release as of this date and does not undertake any obligation to update any
forward-looking statements contained in this release as a result of new
information, future events or otherwise.

 

Contact:

Christina Tartaglia

Stern Investor Relations, Inc.

212.362.1200

christina@sternir.com

 

 

 

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EXHIBIT 13.2.1

Fate Research Patents

[***].

 

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

 

[***]

[***]

 

 

[***].  

 

 

 

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

 

 

SCHEDULE 5.3

Fate Confidential Methods

 

[***]

[***]

 

•

[***]

 

•

[***]

 

•

[***]

 

•

[***]

 

•

[***]

 

[***]

[***]

 

•

[***]

 

•

[***]

 

[***]

[***]

 

•

[***]

 

•

[***]

 

•

[***]

 

[***]

[***]

 

•

[***]

 

•

[***]

 

•

[***]

 

[***]

[***]

 

•

[***]

 

•

[***]

 

•

[***]

[***]

 

[***]

[***]

 

•

[***]

 

[***]

[***]

 

•

[***]

[***]

 

 

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

 

 

[***]

[***]

 

•

[***]

 

•

[***]

 

•

[***]

 

•

[***]

 

[***]

[***]

 

•

[***]

 

•

[***]

 

•

[***]

 

[***]

[***]

 

•

[***]

 

o

[***]

 

o

[***]

 

o

[***]

 

o

[***]

 

o

[***]

 

o

[***]

 

o

[***]

 

o

[***]

 

•

[***]

 

o

[***]

 

o

[***]

 

o

[***]

 

o

[***]

 

o

[***]

 

o

[***]

 

[***]

[***]

 

•

[***]

 

•

[***]

 

 

 

 

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

 

 

SCHEDULE 5.3.7

Janssen Confidential Methods

 

[***]

[***]

 

•

[***]

 

•

[***]

 

•

[***]

 

•

[***]

 

[***]

[***]

 

•

[***]

 

•

[***]

 

[***]

 

•

[***]

 

 

 

 

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

 

 

SCHEDULE 10.6.2

Fate Licensor Patents

[

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

 

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

 

 

 

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

 

 

[***]

[***]

[***]

 

 

[***]

[***]

[***]

 

 

[***]

[***]

 

 

 

[***]

 

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

 

 

SCHEDULE 13.2.11

Exclusions

 

•

[***]  

•

[***]  

•

[***]