Document:

Exhibit 10.14

 

Sublease

 

By and Between

 

FibroGen Inc.

 

And

 

Silver Creek

 

 

Table of Contents

 

	
1.
    	
BACKGROUND
    	
1
    
	
 
    	
 
    	
 
    
	
2.
    	
SUBLEASE
    	
1
    
	
 
    	
 
    	
 
    
	
3.
    	
TERM AND TERMINATION
    	
2
    
	
 
    	
 
    	
 
    
	
4.
    	
RENT AND OTHER AMOUNTS
    	
3
    
	
 
    	
 
    	
 
    
	
5.
    	
SERVICES
    	
3
    
	
 
    	
 
    	
 
    
	
6.
    	
TAXES
    	
4
    
	
 
    	
 
    	
 
    
	
7.
    	
SECURITY DEPOSIT
    	
5
    
	
 
    	
 
    	
 
    
	
8.
    	
WARRANTY
    	
5
    
	
 
    	
 
    	
 
    
	
9.
    	
USE
    	
6
    
	
 
    	
 
    	
 
    
	
10.
    	
CONFIDENTIALITY
    	
7
    
	
 
    	
 
    	
 
    
	
11.
    	
CONDITION OF SUBLEASED PREMISES; SURRENDER
    	
7
    
	
 
    	
 
    	
 
    
	
12.
    	
SUBORDINATION
    	
8
    
	
 
    	
 
    	
 
    
	
13.
    	
INDEMNIFICATION
    	
9
    
	
 
    	
 
    	
 
    
	
14.
    	
INSURANCE
    	
9
    
	
 
    	
 
    	
 
    
	
15.
    	
MASTER LEASE
    	
11
    
	
 
    	
 
    	
 
    
	
16.
    	
ALTERATIONS AND REPAIRS
    	
13
    
	
 
    	
 
    	
 
    
	
17.
    	
ASSIGNMENT AND FURTHER SUBLETTING
    	
13
    
	
 
    	
 
    	
 
    
	
18.
    	
BROKERS
    	
13
    
	
 
    	
 
    	
 
    
	
19.
    	
SIGNS
    	
13
    
	
 
    	
 
    	
 
    
	
20.
    	
NOTICE
    	
13
    
	
 
    	
 
    	
 
    
	
21.
    	
SEVERABILITY
    	
14
    
	
 
    	
 
    	
 
    
	
22.
    	
ENTIRE AGREEMENT
    	
14
    
	
 
    	
 
    	
 
    
	
23.
    	
WAIVER
    	
14
    
	
 
    	
 
    	
 
    
	
24.
    	
HOLDING OVER
    	
15
    

 

 

	
25.
    	
BINDING EFFECT; CHOICE OF LAW
    	
15
    
	
 
    	
 
    	
 
    
	
26.
    	
FIBROGEN ACCESS
    	
15
    
	
 
    	
 
    	
 
    
	
27.
    	
SECURITY
    	
15
    
	
 
    	
 
    	
 
    
	
28.
    	
NON-SOLICITATION
    	
16
    
	
 
    	
 
    	
 
    
	
EXHIBIT A – SERVICES AND   OTHER PROVISIONS 
    	
17
    
	
 
    	
 
    	
 
    
	
EXHIBIT B – HMIS 
    	
19
    
	
 
    	
 
    	
 
    
	
EXHIBIT C – THE INJURY AND   ILLNESS PREVENTION PROGRAM 
    	
20
    
	
 
    	
 
    	
 
    
	
EXHIBIT D – MASTER LEASE   (REDACTED) 
    	
21
    
					

 

 

SUBLEASE

 

This SUBLEASE (“Sublease”) is effective as of August 6, 2010 (“Effective Date”), by and between FibroGen, Inc., a Delaware Corporation (“FibroGen”), and Silver Creek (“Subtenant”).

 

1.             BACKGROUND

 

1.1           Under a lease dated September 22, 2006 (“Master Lease”) by and between X-4 Dolphin LLC, on behalf of Shorenstein Properties, LLC (“Master Lessor”) and FibroGen, a redacted copy of which is attached hereto and incorporated herein as Exhibit D, Master Lessor has Subleased to FibroGen a building located at 409 Illinois Street, San Francisco, California containing approximately 234,000 rentable square feet (“409 Building”) for a period commencing upon the completion of the Building, as defined in the Master Lease, and expiring on the fifteen (15) year anniversary thereof.

 

1.2           Subtenant wishes to sublease from FibroGen and FibroGen wishes to sublet to Subtenant certain office and laboratory space located in the 409 Building (the Subleased Premises) as defined in Paragraph 2.1 below.

 

1.3           Subtenant wishes to acquire services associated with the use of the Subleased Premises, and FibroGen is willing to provide such services as specified herein.

 

THE PARTIES AGREE AS FOLLOWS:

 

2.             SUBLEASE

 

2.1           Conditioned upon receipt of Master Lessor’s written consent, FibroGen hereby subleases to Subtenant and Subtenant hereby takes from FibroGen certain real property as described below (the “Subleased Premises”) comprising approximately a total grossed-up footprint equaling Seven Hundred and Fifty-six (756) square feet as follows:

 

a)             In the laboratory area #5115; office area #5202 and open area #5221.

 

b)            The Sublease Premises may be increased upon the mutual agreement of the parties hereto in the form of a signed amendment to this Sublease.  However, it is expressly understood that neither party hereto is obligated to enter into such an amendment.

 

2.2           Subtenant shall also have the non-exclusive right to use, in common with other Subtenants in the Building, any and all of the following areas which may be appurtenant to the Premises: common entrances, lobbies, elevators, stairways, corridors, and access

 

 

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ways, public restrooms, FibroGen Gym (subject to payment as specified in Exhibit A), Cafe, and common walkways and sidewalks necessary for access to the Premises.

 

3.             TERM AND TERMINATION

 

3.1           The term (“Term”) of this Sublease will commence on September 1, 2010 (“Sublease Commencement Date”).

 

3.2           This Sublease will expire on:

 

a)             September 1, 2011 (“Expiration Date”), unless Subtenant requests for an extension to the Sublease for another six (6) months in writing to FibroGen no later than thirty (30) days in advance of the Expiration Date.

 

3.3           It is expressly understood, notwithstanding the terms stated above, that either party hereto may terminate this Sublease for cause pursuant to Paragraphs 9.6 and 15.2 of this Sublease.

 

3.4           Either party hereto may terminate this Sublease at any time by giving sixty (60) days’ written notice to the other.

 

3.5           Notwithstanding any terms contained herein, it is Subtenant’s sole responsibility to place the Premises in the surrender condition required by FibroGen and Master Lessor not later than the Expiration Date, including, but not limited to, covering all costs of decertification and decommissioning (if required).

 

3.6           On the Sublease Commencement Date, FibroGen shall deliver possession of the Premises to Subtenant in the condition required by Paragraph 11.2.  No rent shall accrue under this Sublease, nor shall Subtenant have any obligation to perform the covenants or observe the conditions herein contained until the Premises have been so delivered.  If FibroGen’s ability to deliver possession by the date as set forth in this provision is delayed as a result of any of the following causes, the date for delivery shall be postponed without penalty to FibroGen for a period of time equivalent to the period caused by such delay:

 

a)                                      acts of Subtenant, its agents, or employees;

 

b)                                     acts of God which FibroGen could not reasonably have foreseen or guarded against;

 

c)                                      any strikes, boycotts or like obstructive actions by employees or labor organizations and which are beyond the control of FibroGen and which cannot be reasonably overcome; or

 

d)                                     restrictive regulations by a governmental agency.

 

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4.             RENT AND OTHER AMOUNTS.

 

4.1           Subtenant shall pay a monthly rent (“Rent”) to FibroGen for the Subleased Premises according to the following schedule:

 

	
Months
    	
 
    	
Rent/Sq.Ft./Mo.
    	
 
    	
Total Sq. Ft.
    	
 
    	
Amount/Mo.
    	
 
    
	
September 2010 –   Expiration Date
    	
 
    	
$
    	
6.80
    	
 
    	
756
    	
 
    	
$
    	
5,174.80
    	
 
    
										

 

Rent shall cover the following expenses:

 

a)             Operating expenses comprising property tax and insurance, normal utility charges, exterior building maintenance, maintenance of mechanical systems that are currently in place, normal recurring building maintenance, janitorial service according to FibroGen’s generally accepted office and laboratory cleaning standards, normal office and laboratory waste removal, a pro-rata share (based on the area actually subleased by Subtenant at the time of the emergency) of the emergency electrical backup generation services available to the 409 Building, and security systems (including issuance of up to 5 security entrance cards).

 

b)            Those services specified in Paragraph 5.1 below.

 

4.2           All Rent shall be payable without deduction or offset in advance on the first day of each month during the Term provided however, the first month’s Rent for the Subleased Premises will be paid to FibroGen no later than seven (7) days prior to the Sublease Commencement Date.  Rent for any period during the term hereof which is for less than one month shall be a pro rata portion of the monthly installment.  Rent shall be payable to FibroGen at the address stated herein or at such other address as FibroGen may from time to time designate in writing.

 

4.3           Except as expressly herein provided, any amount due FibroGen but not paid when due shall bear interest at the lesser of ten percent (10%) per annum or the maximum rate then allowable by law from the date due.  Payment of such interest shall not excuse or cure any default by Subtenant under this Sublease, provided, however, that interest shall not be payable on late charges incurred by Subtenant nor on any amounts upon which late charges are paid by Subtenant.

 

5.             SERVICES

 

5.1           Included lab services are limited to the systems that are in place on the Sublease Commencement Date to supply de-ionized water (DI) water, house vacuum, and compressed air.  It is expressly understood that no gases (other than compressed air) will be supplied to the Subleased Premises by FibroGen.  However, FibroGen will (at no cost to Subtenant) install wall mounts to secure laboratory gas cylinders in the Subleased Premises subject to the restrictions contained in Paragraph 9.5.  FibroGen represents that

 

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the DI water, house vacuum and compressed air are, and shall be, maintained by FibroGen in good working order.

 

a)             Normal business hours for services provided by FibroGen employees or agents (such as receptionist, loading, and unloading) shall be from 8 am to 5 pm, Monday through Friday, FibroGen holidays and other infrequent dates and times reasonably designated by FibroGen excepted.  No such services shall be available during nights, weekends, and FibroGen holidays.

 

5.2           Services and utilities not specified in Paragraph 5.1 above, shall be furnished and the cost borne as outlined in Exhibit A.  If any such services are not separately metered to Subtenant, Subtenant shall pay a reasonable proportion to be determined by FibroGen of all charges jointly metered with other premises.  In the event of failure by FibroGen to furnish, in a satisfactory manner, any of the services and utilities to the Premises for which FibroGen is responsible, Subtenant may furnish the same if FibroGen has not undertaken to correct such failure within five (5) days after written notice, and, in addition to any other remedy Subtenant may have, may deduct the amount thereof, including Subtenant’s service costs, from rent or other remuneration due FibroGen hereunder.

 

5.3           Charges for all services provided hereunder shall be invoiced on the fifteenth (15th) day of each month immediately following the provision of the service and shall be due and payable along with the next rent payment due after receipt of the invoice for such services.

 

5.4           Exhibit A may be amended in a signed writing to include new service or remove existing services as mutually acceptable to the parties hereto.

 

6.             TAXES

 

6.1           FibroGen specifically calls to Subtenant’s attention the fact that this Sublease may create a possessory interest subject to property taxation, and Subtenant may be subject to property tax levied on such interest.  Subtenant alone shall pay such tax.  If the right is given to pay any of the taxes, assessments or other impositions which Subtenant is herein obligated to pay either in one sum or in installments, Subtenant may elect either mode of payment.

 

6.2           Subtenant shall pay prior to delinquency all taxes assessed against and levied upon trade fixtures, furnishings, equipment and all other personal property of Subtenant contained in the Premises or elsewhere.  Subtenant shall cause said trade fixtures, furnishings, equipment and all other personal property to be assessed and billed separately from the real property of FibroGen.

 

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7.             SECURITY DEPOSIT

 

7.1           On or before the date of final signature by both parties hereto, Subtenant shall deposit with FibroGen a sum equal to one hundred percent (100%) of the first month’s Rent; and on or before the Sublease Commencement Date, Subtenant shall deposit with FibroGen an additional sum equal to two hundred percent (200%) of the first month’s Rent both sums as security for the full and faithful performance of each provision of this Sublease.

 

7.2           Subtenant shall provide a properly completed, signed and dated IRS Form W-9 or Form W-8BEN (as applicable, the “IRS W8/9 Form”) to FibroGen.

 

7.3           If Subtenant defaults with respect to any provision of this Sublease, including, but not limited to, the provisions relating to the payment of Rent or other charges, FibroGen may use, apply or retain all or any part of said deposit for the payment of Rent or other charges in default; or for the payment of any other amount which FibroGen may spend or become obligated to spend by reason of Subtenant’s default.  If any portion of said deposit is so used or applied, Subtenant shall, within ten (10) days after written demand therefore, deposit cash with FibroGen in an amount sufficient to restore said deposit to the full amount hereinabove stated, and Subtenant’s failure to do so shall be a material breach of this Sublease.  If Subtenant fully and faithfully performs every provision required by this Sublease, said deposit, or so much thereof as has not theretofore been applied or credited by FibroGen shall be returned to Subtenant (or, at FibroGen’s option, to the last assignee of Subtenant’s interest hereunder) at the expiration of the term hereof.  The making by Subtenant of such deposit, or the application thereof by FibroGen in the manner hereinabove provided, shall not constitute nor be construed as a limitation upon the exercise by FibroGen of any other rights or remedies provided to FibroGen under the terms of this Sublease in the event of Subtenant’s default.  In the event FibroGen sells or assigns FibroGen’s interest in the 409 Building, FibroGen may assign said deposit to the purchaser of FibroGen’s interest in the demised premises without liability to Subtenant.  FibroGen’s obligations with respect to the deposit are those of a debtor and not a trustee.  FibroGen may maintain the deposit separate and apart from FibroGen’s general funds or can commingle the deposit with FibroGen’s general and other funds.

 

8.             WARRANTY

 

8.1           FibroGen warrants that the Subleased Premises are non-toxic and asbestos free to the best of its knowledge subject to the conditions set forth in the Lease between the Master Lessor and FibroGen.

 

8.2           FibroGen further warrants that all laboratory space shall remain as equipped at the date of signature of the Sublease with case-goods and hoods.  It is expressly understood that equipment specifically owned and used by FibroGen is not included hereunder.

 

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8.3           Except for the warranty provided in Paragraph 8.1 and 8.2 above, the Subleased Premises and any cubicles, furniture, equipment, and fixtures provided hereunder are provided on an “as-is” basis WITHOUT WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER WARRANTY EXPRESS OR IMPLIED.

 

9.             USE

 

9.1           Subtenant shall use the Subleased Premises for the purpose of laboratory research and development, and general office purposes consistent with the requirements and limitations set forth in the Master Lease and for no other purpose without the prior written consent of Master Lessor and FibroGen.  In no case shall pets be allowed inside of the 409 Building.

 

9.2           Use of radioactive materials in the Subleased Premises is expressly prohibited without FibroGen’s express written consent.

 

9.3           In addition to all duties required under this Sublease, it is expressly understood that Subtenant shall be responsible for complying with the provisions of the Master Lease (including Article 10 [Compliance with Laws and Regulations] therein) incorporated herein by Section 15.1 relating to hazardous materials.  In no event shall Subtenant cause the classification of the 409 Building to be changed from its present classification (Level B).

 

9.4           Subtenant shall comply with all applicable federal, state and local regulations.  Subtenant shall additionally comply with as all applicable policies and procedures of FibroGen, including but not limited to the FibroGen Safety Program and the Injury and Illness Prevention Program (“IIPP”) appearing in Exhibit C.  It is expressly understood that all chemical use by Subtenant shall be in compliance with the Hazard Materials Identification System (HMIS) appearing in Exhibit B.

 

9.5           Subtenant shall obtain FibroGen’s express written authorization prior to using any gasses not listed below:

 

a)             CO2, CH4, Nitrogen, O2, Compressed Air, Liquid Nitrogen

 

9.6           Any breach of this Article 9, shall give FibroGen the right to terminate this Sublease upon fifteen (15) days written notice for any breach remaining uncured for a period of five (5) days from the date of FibroGen’s initial written notice of Subtenant’s breach.

 

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10.           CONFIDENTIALITY

 

10.1         Each party hereto acknowledges that it shares space with the other party and may come into contact with information in various forms (including visual, oral, written, graphic, or electronic) that may be deemed to be confidential and proprietary.

 

10.2         Each party hereto shall treat the Confidential Information of the other as proprietary and confidential and hold it in strict trust and confidence using at least the same degree of care as it uses to protect its own most highly confidential information, but in no event, using less than a reasonable degree of care.  The receiving party shall NOT:

 

a)                                      permit access to or disclose the Confidential Information to any unauthorized third party;

 

b)                                     reverse engineer or reverse compile the Confidential Information;

 

c)                                      make any commercial use of the Confidential Information;

 

d)                                     use any Confidential Information to support any patent application or related filing; or

 

e)                                      use Confidential Information for any purpose or in any manner which would constitute a violation of any laws or regulations, including without limitation the export control laws of the United States.

 

10.3         Each party hereto shall advise its officers, employees, independent contractors and business invitees who might have access to Confidential Information of the confidential nature thereof.

 

10.4         The knowledge of Confidential Information by one party shall not constitute any grant, option, or license to the other in any intellectual property rights or interest in the Confidential Information now or hereinafter.

 

10.5         The parties hereto agree that for any violation of any provision of this Section 10 (Confidentiality), the aggrieved party shall be entitled, in addition to any other remedies it may have and without the need to post a bond, to specific performance, injunctions or other appropriate remedies it may have for any such violation by the non-aggrieved party.

 

11.           CONDITION OF SUBLEASED PREMISES; SURRENDER.

 

11.1         Subtenant shall accept the Subleased Premises in their “as is” condition.

 

11.2         FibroGen shall deliver the Premises to Subtenant clean and free of debris on the Sublease Commencement Date and FibroGen further warrants to Subtenant that the plumbing, lighting, air conditioning, and heating systems, in the Premises shall be in good operating condition on the Sublease Commencement Date.  If this warranty has been

 

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violated, then FibroGen shall, after receipt of written notice from Subtenant setting forth with specificity the nature of the violation, promptly, at FibroGen’s sole cost, rectify such violation.  Subtenant’s failure to give such written notice to FibroGen within thirty (30) days after the Sublease Commencement Date shall cause the conclusive presumption that FibroGen has complied with all of FibroGen’s obligations hereunder.

 

11.3         Except as otherwise provided in this Sublease, Subtenant hereby accepts the Premises in the condition existing as of the Sublease Commencement Date or the date that Subtenant takes possession of the Premises, whichever is earlier, subject to all applicable zoning, municipal, county and state laws, ordinances and regulations governing and regulating the use of the Premises, and any covenants or restrictions of record, and accepts this Sublease subject thereto and to all matters disclosed thereby and by any exhibits attached hereto.  Subtenant acknowledges that neither FibroGen nor any agent of FibroGen has made any representation or warranty as to the present or future suitability of the Premises for the conduct of Subtenant’s business.

 

11.4         Within ten (10) days of the Sublease Commencement Date of this Sublease, Subtenant shall provide FibroGen with a list (“Damage List”) of any defects or damage present in the Subleased Premises, and on the cubicles, furniture, equipment, or fixtures as reasonably observable by Subtenant.  FibroGen shall have ten (10) business days to object to any defects or damage present on the Damage List.  After the ten day period after Sublease Commencement Date, Subtenant shall be precluded from claiming any defect or damage was present in the Subleased Premises or on the furniture or cubicles if such defect or damage was not present on the Damage List prior to the Sublease Commencement Date.

 

11.5         Upon the expiration or termination date of this Sublease pursuant to Article 3.2, Subtenant shall surrender to FibroGen the Subleased Premises and any and all cubicles, furniture, equipment and fixtures supplied by FibroGen in the same condition and repair as received (ordinary wear and tear, damage, and casualty that Subtenant under the Master Lease has no obligation to restore or repair excepted), broom-clean, and otherwise in the condition required by the Master Lease and shall repair any damage to the Subleased Premises occasioned by the removal of Subtenant’s fixtures, furnishings, and equipment.

 

11.6         Upon surrender of the Subleased Premises, Subtenant shall warrant that the Subleased Premises are non-toxic and asbestos-free to the best of its knowledge to the extent they were at the time Subtenant took occupancy.

 

12.           SUBORDINATION.

 

12.1         This Sublease is subject and subordinate to the Master Lease.

 

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13.           INDEMNIFICATION.

 

13.1         FibroGen shall indemnify, defend and hold harmless Subtenant, its officers, partners, agents, and employees from and against any claims, damages, costs, expenses, or liabilities (collectively “Claims”) arising out of or in any way connected with this Sublease including, without limitation, Claims for loss or damage to any property, or for death or injury to any person or persons, but only in proportion to and to the extent that such Claims arise from the negligent or wrongful acts or omissions of FibroGen, its officers, agents, or employees.

 

13.2         Subtenant shall indemnify, defend and hold harmless FibroGen, its officers, agents, and employees from and against any Claims arising out of or in any way connected with this Sublease including, without limitation, Claims for loss or damage to any property or for death or injury to any person or persons, but only in proportion to and to the extent that such Claims arise from the negligent or wrongful acts or omissions of Subtenant, its officers, partners, agents, or employees.

 

13.3         Subtenant shall further indemnify FibroGen and the Master Lessor as provided in Subparagraph 14.4 of the Master Lease.  The provisions that Subparagraph are hereby incorporated herein by reference subject to the following understandings:

 

a)                                      The term “Tenant” as used in Subparagraph 14.4 of the Master Lease shall refer to Subtenant.

 

b)                                     The term “Landlord” as used in Subparagraph 14.4 of the Master Lease shall refer to both FibroGen and the Master Lessor.

 

13.4         Intellectual Property Rights Indemnification.  Subtenant acknowledges the shared nature of the 409 Building and the fact that various business entities and FibroGen’s agents and employees may occupy portions of the 409 Building during the term of this Sublease.  It is expressly understood that FibroGen can not guarantee Subtenant’s privacy and protect its trade secrets within the 409 Building.  With respect to any and all claims arising out of or connected to a breach of Subtenant’s privacy and protection of its trade secrets associated with Subtenant’s intellectual property rights, Subtenant hereby agrees to indemnify and hold FibroGen harmless against said claims.

 

14.           INSURANCE.

 

14.1         Subtenant, at its sole cost and expense, shall insure its activities in connection with this Sublease and obtain, keep in force and maintain insurance as follows:

 

a)             Commercial Form General Liability Insurance (contractual liability included) with minimum limits as follows:

 

i)                                         Each Occurrence $ 1,000,000

 

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ii)                                      Products/Completed Operations Aggregate $ N/A

 

iii)                                   Personal and Advertising Injury $ 1,000,000

 

iv)                                  General Aggregate $ 2,000,000

 

If the above insurance is written on a claims-made form, it shall continue for three (3) years following termination of this Sublease.  The insurance shall have a retroactive date of placement prior to or coinciding with the Sublease Commencement Date.

 

b)                                     Business Automobile Liability Insurance for owned, scheduled, non-owned, or hired automobiles with a combined single limit of not less than one million dollars ($ 1,000,000) per occurrence.

 

c)                                      Property, Fire and Extended Coverage Insurance in an amount sufficient to reimburse Subtenant for all of its equipment, trade fixtures, inventory, fixtures and other personal property located on or in the Premises including Subleasehold improvements hereinafter constructed or installed.

 

d)                                     Workers’ Compensation as required by California law.

 

e)                                      Such other insurance in such amounts which from time to time may be reasonably required by the mutual consent of Subtenant and FibroGen against other insurable risks relating to performance.

 

14.2         The coverages referred to under 14.1a) and 14.1b) above shall include FibroGen  as an additional insured.  Such a provision shall apply only in proportion to and to the extent of the negligent acts or omissions of Subtenant, its officers, partners, agents, and employees.

 

14.3         Subtenant, upon the execution of this Sublease, shall furnish FibroGen with certificates of insurance evidencing compliance with all requirements.  Certificates shall provide for thirty (30) days (ten [10] days for non-payment of premium) advance written notice to FibroGen of any material modification, change or cancellation of any of the above insurance coverages.

 

14.4         The coverages required herein shall not limit the liability of Subtenant.

 

14.5         Waivers of Subrogation.  Notwithstanding the provisions of Article 13, Subtenant hereby waives any right of recovery against FibroGen due to loss of or damage to the property of Subtenant when such loss of or damage to property arises out of the acts of God or any of the property perils included in the classification of fire, extended perils (“all risk” as such term is used in the insurance industry) whether or not such perils have been insured, self-insured or non-insured.

 

14.6         Exemption of FibroGen from Liability.  Notwithstanding the terms of Article 13, Subtenant hereby agrees that FibroGen shall not be liable for injury to Subtenant’s

 

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business or any loss of income therefrom or for damage to the goods, wares, merchandise or other property of Subtenant, Subtenant’s employees, invitees, customers, or any other person in or about the Premises, nor shall FibroGen be liable for injury to the person of Subtenant, Subtenant’s employees, agents or contractors, as a result of any condition of the Premises or the 409 Building, whether such damage or injury is caused by or results from fire, steam, electricity, gas, water or rain, or from the breakage, leakage, obstruction or other defects of pipes, sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures, or from any other cause in or about the Premises, whether the said damage or injury results from conditions arising in the Premises or in other portions of the 409 Building, or from other sources or places and regardless of whether the cause of such damage or injury or the means of repairing the same is inaccessible to Subtenant.  FibroGen shall not be liable for any damages arising from any act or neglect of any other Subtenant, if any, of the 409 Building.

 

15.           MASTER LEASE

 

15.1         Except for:

 

·                  Paragraph 14.4 of the Master Lease that is incorporated by reference hereinabove;

 

·                  the following Paragraphs of the Master Lease (which are not incorporated into this Sublease): 1.12, 1.15, 2.6, 3.1, 3.4, 11.1, 13.3, 13.4, 23.1, 24.1(d), 27.1, 35.2, 35.24(a), and 35.24(b); and

 

·                  the following Articles of the Master Lease (which are not incorporated into this Sublease): 4, 5, 8, 12, 15, 16, 18, 19, 21, 33, and 34;

 

and to the extent not otherwise inconsistent with the agreements and understandings expressed in this Sublease or applicable only to the original parties to the Master Lease, the provisions of the Master Lease are hereby incorporated herein by reference subject to the following understandings:

 

a)                                      Subtenant shall pay any real estate taxes, personal property taxes, and property insurance on its alterations, trade fixtures, and personal property that are not included in the Rent.

 

b)                                     The term “Tenant” as used therein shall refer to Subtenant.

 

c)                                      The term “Landlord” as used therein shall refer to FibroGen.

 

d)                                     FibroGen shall not be obligated to exercise any options provided in the Master Lease.

 

e)                                      All of Master Lessor’s rights under the Master Lease shall inure to the benefit of FibroGen as well as to Master Lessor.

 

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15.2         Each party hereto, respectively, shall perform and comply with the provisions of the Master Lease relating to Master Lessor’s and Subtenant’s obligations.  Subtenant hereby assumes and agrees to perform all of the obligations of Subtenant under the Master Lease accruing or arising during the term of this Sublease in the manner and within the time required under the Master Lease provided, however, the obligation of Subtenant hereunder shall be interpreted to apply only to the extent to which the obligations of Subtenant under the Master Lease are applicable or allocable to the Subleased Premises.  Subtenant further covenants that Subtenant will neither commit nor permit to be committed by any third party, any act or omission which would violate any term or condition of the Master Lease, or be the cause for termination of the Master Lease by Master Lessor.  In any case where Master Lessor has the right to declare a default under the Master Lease, said right shall inure to the benefit of FibroGen.

 

15.3         FibroGen shall have all of the rights and remedies afforded Master Lessor under the Master Lease.  In addition to exercising any other rights or remedies afforded to the Master Lessor under the Master Lease, FibroGen shall have the right (but not the obligation) to:

 

a)                                      cure any such breach or default by Subtenant, with Subtenant to be obligated to reimburse FibroGen immediately upon demand for all costs (including costs of settlements, defense, court costs and attorneys’ fees) which FibroGen may incur in effecting the cure of such breach or default;

 

b)                                     reenter and retake possession of the Subleased Premises and immediately terminate this Sublease and Subtenant’s interest in the Subleased Premises; and

 

c)                                      have any and all rights and remedies now or hereafter afforded a landlord under applicable law, including but not limited to: (A) all of the remedies afforded under Section 1951.2 of the California Civil Code (or any successor statute or similar applicable statute), specifically including Subsection (a)(3) thereof with respect to recovering the worth at the time of award of the amount by which the unpaid Rent for the balance of the term of this Sublease after the time of award exceeds the amount of such rental loss that Subtenant proves could be reasonably avoided, and in respect to this paragraph, it is expressly agreed that an interest rate of ten percent (10%) per annum is to be used in computing the “worth at the time of award” with respect to the damages recoverable under Subsections (a)(1) and (a)(2) thereof, and (B) notwithstanding any abandonment of the Subleased Premises by Subtenant, the remedy afforded under Section 1951.4 of the California Civil Code (or any successor statute or similar applicable statute) of continuing the Sublease in effect and recovering from Subtenant, the Rent and other amounts payable hereunder as they become due under this Sublease.

 

15.4         Subtenant and FibroGen each represent and warrant that they have read and are familiar with the terms and conditions of the Master Lease.

 

12

 

16.           ALTERATIONS AND REPAIRS

 

16.1         Subtenant shall make no alterations to the Premises without the prior written authorization of FibroGen.

 

17.           ASSIGNMENT AND FURTHER SUBLETTING

 

17.1         Subject to Master Lessor and FibroGen’s express written consent, Subtenant shall have the right to assign all or any portion of its interest under this Sublease or sublet all or any portion of the Subleased Premises to any third party, parent, subsidiary or affiliate of Subtenant; any party which results from any merger or consolidation of Subtenant; or any party which acquires all or substantially all the assets or stock of Subtenant.

 

17.2         Other than expressly permitted in Paragraph 17.1 above, Subtenant shall have no right to allow any other party to sublease, assign, or otherwise use the facilities referenced hereunder for any purpose without FibroGen’s express written authorization.

 

18.           BROKERS

 

18.1         FibroGen and Subtenant each represents and warrants to the other that it has not engaged any broker, finder or other person who would be entitled to any commission or fees in respect of the negotiation, execution or delivery of this Sublease and shall indemnify and hold harmless the other against any loss, cost, liability or expense incurred by the indemnified party as a result of any claim asserted by any such broker, finder or other person on the basis of any arrangements or agreements made or alleged to have been made by or on behalf of indemnifying party.

 

19.           SIGNS

 

19.1         FibroGen shall add Subtenant’s name to a placard located on in the reception area of the main lobby.  Aside from the foregoing, Subtenant shall not have any other signs on the Subleased Premises or the 409 Building other than signs within the Subleased Premises for Subtenant’s internal use and convenience.

 

20.           NOTICE

 

20.1         Any notices or demands to be given pursuant to the Master Lease or this Sublease shall be in writing and shall be delivered personally or sent by registered or certified mail, return receipt requested, with all postage and fees prepaid, to FibroGen or Subtenant, respectively, at the following addresses, or at such other address as such party shall designate by written notice to the other party.  Such addresses are:

 

13

 

	
FibroGen:
    	
FibroGen, Inc.
    
	
 
    	
409   Illinois St.
    
	
 
    	
San   Francisco, CA 94158
    
	
 
    	
Attention:   CFO
    

 

	
Subtenant:
    	
Silver   Creek
    
	
 
    	
409   Illinois St.
    
	
 
    	
San   Francisco, CA 94158
    
	
 
    	
Attention:   President
    

 

Personal delivery may be accomplished by means of commercial “overnight” or “express” delivery services providing for written record or delivery, or otherwise.  Such notices shall be deemed to have been received and to be effective for all purposes upon receipt or refusal to accept delivery at such address as indicated on the return receipt or other record of delivery, or (if earlier) on the second business day after being mailed in accordance with the requirements of this paragraph.

 

21.           SEVERABILITY

 

21.1         The invalidity of any provision of this Sublease as determined by a court of competent jurisdiction, shall in no way affect the validity of any other provision hereof.

 

22.           ENTIRE AGREEMENT

 

22.1         Attached hereto and incorporated herein are Exhibits A, B, C, and D which constitute part of this Sublease.

 

22.2         There are no oral agreements or understandings between the parties hereto affecting this Sublease.  This Sublease cannot be changed or terminated orally but only by an agreement in writing signed by the party against whom enforcement or any waiver, change, modification or discharge is sought.

 

23.           WAIVER

 

23.1         No waiver by FibroGen of any provision hereof shall be deemed a waiver of any other provision hereof or of any subsequent breach by Subtenant of the same or any other provision.  FibroGen’s consent to, or approval of, any act shall not be deemed to render unnecessary the obtaining of FibroGen’s consent to or approval of any subsequent act by Subtenant.  The acceptance of rent hereunder by FibroGen shall not be a waiver of any preceding breach by Subtenant of any provision hereof, other than the failure of

 

14

 

Subtenant to pay the particular rent so accepted, regardless of FibroGen’s knowledge of such preceding breach at the time of acceptance of such rent.

 

24.           HOLDING OVER

 

24.1         If Subtenant, with FibroGen’s consent, remains in possession of the Premises or any part thereof after the expiration of the term hereof, such occupancy shall be a tenancy from month to month upon all the provisions of this Sublease pertaining to the obligations of Subtenant, with the exception of rent which shall be at one hundred twenty-five percent (125%) of the then current rent, but all options and rights of first refusal, if any, granted upon the terms of this Sublease shall be deemed terminated and be of no further effect during said month to month tenancy.

 

25.           BINDING EFFECT; CHOICE OF LAW

 

25.1         Subject to any provisions hereof restricting assignment or subletting by Subtenant, this Sublease shall bind the parties, their personal representatives, successors and assigns.  This Sublease shall be governed by the laws of the State of California, and any legal dispute arising hereunder shall be adjudicated in a court of law located in San Francisco, California.

 

26.           FIBROGEN ACCESS

 

26.1         FibroGen and FibroGen’s agents shall have the right to enter the Premises at reasonable times, for the purpose of making alterations, repairs, improvements or additions to the Premises or to the Building as FibroGen may deem necessary or desirable.  FibroGen and FibroGen’s agents shall provide Subtenant with one (1) regular business day notice prior to entry of the Premises for the purpose of inspecting the same, showing the same to prospective purchasers, lenders, or lessees.  Any entry by FibroGen and FibroGen’s agents shall not impair Subtenant’s operations more than reasonably necessary, and shall comply with Subtenant’s reasonable security measures.  Except in case of an emergency, FibroGen shall not enter the Premises (except for the performance of regular janitorial service) unless accompanied by a representative of Subtenant.

 

27.           SECURITY

 

27.1         Subtenant assumes all responsibility for the protection of Subtenant, its agents and invitees from acts of third parties.  FibroGen shall provide Subtenant with keys to the Premises, Building and the Incubator Lab at FibroGen’s cost and expense.

 

15

 

28.           NON-SOLICITATION

 

28.1         During the Term of this Sublease and for a period of six (6) months following the termination or expiration thereof, neither party hereto shall directly or indirectly induce or solicit any employee of the other party to leave their employment.

 

IN WITNESS WHEREOF, the parties hereto have executed this Sublease effective as of the day and year first above written.

 

	
 
    	
FIBROGEN, INC.
    
	
 
    	
 
    
	
 
    	
JENNIFER   KAJISA
    
	
 
    	
Name
    
	
 
    	
 
    
	
 
    	
/s/   Jennifer S. Kajisa
    
	
 
    	
Signature
    
	
 
    	
 
    
	
 
    	
SENIOR   MANAGER, FINANCIAL REPORTING
    
	
 
    	
Title
    
	
 
    	
 
    
	
 
    	
8/12/10
    
	
 
    	
Date
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SILVER   CREEK
    
	
 
    	
 
    
	
 
    	
ULRIK   NIELSEN
    
	
 
    	
Name
    
	
 
    	
 
    
	
 
    	
/s/   Ulrik Nielsen
    
	
 
    	
Signature
    
	
 
    	
 
    
	
 
    	
PRESIDENT
    
	
 
    	
Title
    
	
 
    	
 
    
	
 
    	
8/20/10
    
	
 
    	
Date
    

 

16

 

EXHIBIT A – SERVICES AND OTHER PROVISIONS

 

Service Charges

 

for

 

Premises Located at

 

409 Illinois Street, San Francisco, California 94158

 

 

Silver Creek - Service Charges for
 409 Illinois Street, San Francisco, CA 94158

 

	
Mail/Receiving/Receptionist Support
    	
 
    	
N/A Included in rent
    
	
 
    	
 
    	
 
    
	
Security Guard Services
    	
 
    	
N/A  

Included in Rent
    
	
 
    	
 
    	
 
    
	
Security  
   Cost/Security Card
    	
 
    	
 

Initial 5 no charge 

$25 each thereafter
    
	
 
    	
 
    	
 
    
	
Telecommunications/Data Support  
   Infrastructure Charge
    	
 
    	
 

$70/month
    
	
 
    	
 
    	
 
    
	
Cost/month/phone
    	
 
    	
$10.33 each + monthly 

Usage charges
    
	
 
    	
 
    	
 
    
	
Installation charges (phone & voicemail)
    	
 
    	
$150 (one-time charge)
    
	
 
    	
 
    	
 
    
	
Custom IT Services (pay as you go)
    	
 
    	
 
    
	
a. Helpdesk
    	
 
    	
$60/hour
    
	
b. Network Configuration
    	
 
    	
$120/hour
    
	
c. Server set-up
    	
 
    	
$150/hour
    
	
d. Secure wireless network
    	
 
    	
 
    
	
– Wireless internet only
    	
 
    	
$70/month flat rate
    
	
– Wireless internet plus internal network access
    	
 
    	
$70/month, plus a $480 

one-time set up fee
    
	
e. Secure Remote Access (via Cisco VPN software)
    	
 
    	
$70/month/user account 

Plus $480 one-time set up fee
    
	
f. Data Center Rack Space (1U = 1.75 inches of   vertical rack space)
    	
 
    	
$120/1U/month, plus $240 

one-time set up fee
    
	
*Any   additional data drops or outlets beyond what is provided shall be charged   separately
    	
 
    	
 
    
	
 
    	
 
    	
TBD
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
$/Run
    
	
Glasswash/Autoclave  

Total Cost/run-glasswash/dryer
    	
 
    	
$40.00
    
	
 
    	
 
    	
 
    
	
Autoclave 

Glasswash/dryer and autoclave
    	
 
    	
$40.00 

$60.00
    
	
 
    	
 
    	
 
    
	
Parking  

Parking charge per day/ per vehicle 

*Can be included as a corporate cost or paid   directly by employees
    	
 
    	
 

$24/day or $235/month
    
	
 
    	
 
    	
 
    
	
FibroGym - Workout   Room (located on the 1st Floor)
    	
 
    	
$10/person/month
    
	
 
    	
 
    	
 
    
	
Conference Room
   With exception of conference rooms to be shared by all micro companies,   charges for use
   of major conference rooms, will be based on length of time needed
    	
 
    	
 
    

 

 

EXHIBIT B – HMIS

 

Fire Code Permit Amounts

 

For

 

Hazardous Materials

 

As allowed on Each Floor of the

 

409 Building

 

 

EXHIBIT C – THE INJURY AND ILLNESS PREVENTION PROGRAM

 

The

 

Injury and Illness

 

Prevention Program

 

September 2008

 

 

EXHIBIT D – MASTER LEASE (REDACTED)

 

Redacted copy of

 

The Lease Agreement

 

Between

 

Master Lessor

 

And

 

FibroGen

 

September 22, 2006

 

 

AMENDMENT NO. 1 TO SUBLEASE

 

THIS AMENDMENT NO. 1 (the “First Amendment”) is effective as of February 1, 2011 (the “First Amendment Effective Date”) by and between Silver Creek Pharmaceuticals (“Subtenant”) and FibroGen, Inc. (“FibroGen”).  This First Amendment amends the Sublease entered into by and between Subtenant and FibroGen on August 6, 2010 (the “Sublease”).  Subtenant and FibroGen shall be referred to individually herein as a “Party”, and collectively as, the “Parties”.  The Sublease and this First Amendment are collectively, “the Agreement”.

 

WHEREAS, Subtenant wishes to occupy an additional 510 square foot portion of laboratory space of the 409 Illinois Building to the space Subtenant is currently subletting from FibroGen.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:

 

(1)          Unless otherwise defined herein, all capitalized terms and phrases used in this First Amendment shall have the meaning ascribed to them in the Sublease.

 

(2)          Section 2.1 of the Sublease is hereby deleted in its entirety and replaced with the following:

 

2.1          Conditioned upon receipt of Master Lessor’s written consent, FibroGen hereby subleases to Subtenant and Subtenant hereby takes from FibroGen certain real property as described below (the “Subleased Premises”) comprising approximately total grossed-up footprint equaling one thousand two hundred and sixty-six (1271) square feet as follows

 

(a)       In Laboratory Area #5002 (equaling to: five hundred and ten (510) square feet);

 

(b)       In the Laboratory Area #5115; Office Area #5202 and Open Area #5221 (equaling to: seven hundred and fifty-six (761) square feet); and

 

(c)        The Sublease Premises may be increased upon the mutual agreement of the Parties hereto in the form of a signed amendment to this Sublease.  However, it is expressly understood that neither Party hereto is obligated to enter into such an amendment.

 

(3)          Section 4.1 of the Sublease is hereby amended with the following:

 

4.1          Subtenant shall pay a monthly rent (“Rent”) to FibroGen for the Subleased Premises according to the following Schedule

 

	
 
    	
Months
    	
 
    	
Rent/Sq.Ft./Mo.
    	
 
    	
Total Sq. Ft.
    	
 
    	
Amount/Mo.
    	
 
    
	
 
    	
September 2010 –   January 2011
    	
 
    	
$
    	
6.80
    	
 
    	
761
    	
 
    	
$
    	
5,174.80
    	
 
    
	
 
    	
February 2011 –   September 2011
    	
 
    	
$
    	
6.80
    	
 
    	
1271
    	
 
    	
$
    	
8,642.80
    	
 
    

 

(4)          This First Amendment, together with the Sublease, contains the entire understanding of the Parties with respect to the subject matter hereof.  Except as otherwise provided herein, the Sublease has not been modified or amended and remains in full force and effect.  All express or implied agreements and understandings, either oral or written, heretofore made with respect to subject matter herein are expressly superseded in this First Amendment.

 

 

(5)          This First Amendment may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.  Counterparts may be signed and delivered by facsimile and/or via portable document format (pdf), each of which shall be binding when sent.

 

IN WITNESS WHEREOF, the Parties have executed this First Amendment to the Sublease as of the First Amendment Effective Date.

 

	
FIBROGEN, INC.
    	
SILVER   CREEK PHARMACEUTICALS
    
	
 
    	
 
    
	
By:
    	
/s/   Pat Cotroneo
    	
 
    	
By:
    	
/s/   Ulrik Nielsen
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Name:
    	
PAT COTRONEO
    	
 
    	
Name:
    	
ULRIK   NIELSEN
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Title:
    	
CFO
    	
 
    	
Title:
    	
CEO
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Date:
    	
1/20/2011
    	
 
    	
Date:
    	
1/19/11
    

 

 

AMENDMENT NO. 2 TO SUBLEASE

 

THIS AMENDMENT NO. 2 (the “Second Amendment”) is effective as of May 1, 2011 (the “Second Amendment Effective Date”) by and between Silver Creek Pharmaceuticals (“Subtenant”) and FibroGen, Inc. (“FibroGen”).  This Second Amendment amends the Sublease entered into by and between Subtenant and FibroGen on August 6, 2010 (the “Sublease”), as amended pursuant to the First Amendment on February 1, 2011 (the “Prior Amendment”).  Subtenant and FibroGen shall be referred to individually herein as a “Party”, and collectively as, the “Parties”.

 

WHEREAS, Subtenant wishes to occupy an additional 83 square foot portion of open office space of the 409 Illinois Building to the space Subtenant is currently subletting from FibroGen.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:

 

(1)          Unless otherwise defined herein, all capitalized terms and phrases used in this Second Amendment shall have the meaning ascribed to them in the Sublease as amended by the Prior Amendment.

 

(2)          Section 2.1 of the Sublease is hereby deleted in its entirety and replaced with the following:

 

2.1          Conditioned upon receipt of Master Lessor’s written consent, FibroGen hereby subleases to Subtenant and Subtenant hereby takes from FibroGen certain real property as described below (the “Subleased Premises”) comprising approximately total grossed-up footprint equaling one thousand three hundred and fifty-four (1354) square feet as follows

 

a)            In Laboratory Area #5002 (equaling to: five hundred and ten (510) square feet);

 

b)            In the Laboratory Area #5115; Office Area #5202 and Open Area #5221 (equaling to: eight hundred and forty-four (844) square feet); and

 

c)             The Sublease Premises may be increased upon the mutual agreement of the Parties hereto in the form of a signed amendment to this Sublease.  However, it is expressly understood that neither Party hereto is obligated to enter into such an amendment.

 

(3)          Section 4.1 of the Sublease is hereby amended with the following:

 

4.1          Subtenant shall pay a monthly rent (“Rent”) to FibroGen for the Subleased Premises according to the following Schedule

 

	
 
    	
Months
    	
 
    	
Rent/Sq.Ft./Mo.
    	
 
    	
Total Sq. Ft
    	
 
    	
Amount/Mo.
    	
 
    
	
 
    	
September 1, 2010 –   January 31, 2011
    	
 
    	
$
    	
6.80
    	
 
    	
761
    	
 
    	
$
    	
5,174.80
    	
 
    
	
 
    	
February 1, 2011 –   April 30, 2011
    	
 
    	
$
    	
6.80
    	
 
    	
1271
    	
 
    	
$
    	
8,642.80
    	
 
    
	
 
    	
May 1, 2011 –   August 31, 2011
    	
 
    	
$
    	
6.80
    	
 
    	
1354
    	
 
    	
$
    	
9,207.20
    	
 
    

 

 

(4)          This Second Amendment, together with the Sublease as amended by the Prior Amendment, contains the entire understanding of the Parties with respect to the subject matter hereof.  Except as otherwise provided herein and in the Prior Amendment, the Sublease has not been modified or amended and remains in full force and effect.  All express or implied agreements and understandings that conflict with the terms of this Second Amendment, either oral or written, heretofore made with respect to subject matter herein are expressly superseded by this Second Amendment.

 

(5)          This Second Amendment may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.  Counterparts may be signed and delivered by facsimile and/or via portable document format (pdf), each of which shall be binding when sent.

 

IN WITNESS WHEREOF, the Parties have executed this Second Amendment to the Sublease as of the Second Amendment Effective Date.

 

	
FIBROGEN, INC.
    	
SILVER   CREEK PHARMACEUTICALS
    
	
 
    	
 
    
	
By:
    	
/s/   Pat Cotroneo
    	
 
    	
By:
    	
/s/   Ulrik Nielsen
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Name:
    	
Pat Cotroneo
    	
 
    	
Name:
    	
Ulrik   Nielsen
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Title:
    	
CFO
    	
 
    	
Title:
    	
President   and CEO
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Date:
    	
5/4/2011
    	
 
    	
Date:
    	
5/3/11
    

 

 

AMENDMENT NO. 3 TO SUBLEASE

 

THIS AMENDMENT NO. 3 (the “Third Amendment”) is effective as of June 15, 2011 (the “Third Amendment Effective Date”) by and between Silver Creek Pharmaceuticals (“Subtenant”) and FibroGen, Inc. (“FibroGen”).  This Third Amendment amends the Sublease entered into by and between Subtenant and FibroGen on August 6, 2010 (the “Sublease”), as amended pursuant to the First Amendment on February 1, 2011 and the Second Amendment on May 1, 2011 (the “Prior Amendments”).  Subtenant and FibroGen shall be referred to individually herein as a “Party”, and collectively as, the “Parties”.

 

WHEREAS, Subtenant wishes to occupy an additional 348.33 square foot portion of the vivarium of the 409 Illinois Building to the space Subtenant is currently subletting from FibroGen and

 

WHEREAS, Subtenant agrees to pay an additional monthly rent and charges for IACUC review relating to the vivarium space as indicated in the attached Exhibit E hereto.

 

Now, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:

 

(1)          Unless otherwise defined herein, all capitalized terms and phrases used in this Third Amendment shall have the meaning ascribed to them in the Sublease as amended by the Prior Amendments.

 

(2)          Section 2.1 of the Sublease is hereby deleted in its entirety and replaced with the following:

 

2.1          Conditioned upon receipt of Master Lessor’s written consent, FibroGen hereby subleases to Subtenant and Subtenant hereby takes from FibroGen certain real property as described below (the “Subleased Premises”) comprising approximately total grossed-up footprint equaling one thousand seven hundred and thirty-eight point thirty-three (1738.33) square feet as follows:

 

a)            In Vivarium Area #2010, #2012, #2014, #2016, #2018 and #2024

(equaling to three hundred forty-eight point thirty-three (348.33) square  feet)

 

b)            In Laboratory Area #5002 (equaling to: five hundred and ten (510) square feet);

 

c)             In the Laboratory Area #5115; Office Area #5202 and Open Area #5221 (equaling to: eight hundred and forty-four (844) square feet); and

 

1

 

d)            The Sublease Premises may be increased upon the mutual agreement of the Parties hereto in the form of a signed amendment to this Sublease.  However, it is expressly understood that neither Party hereto is obligated to enter into such an amendment.

 

(3)          Section 4.1 of the Sublease is hereby amended with the following:

 

4.1          Subtenant shall pay a monthly rent (“Rent”)  to FibroGen for the Subleased Premises according to the following Schedule:

 

	
 
    	
Months
    	
 
    	
Rent/Sq.Ft./Mo
    	
 
    	
Total Sq. Ft.
    	
 
    	
Amount/Mo.
    	
 
    
	
 
    	
September 1, 2010 –   January 31, 2011
    	
 
    	
$6.80
    	
 
    	
761.00
    	
 
    	
$5,174.80
    	
 
    
	
 
    	
February 1, 2011 –   April 30, 2011
    	
 
    	
S6.80
    	
 
    	
1271.00
    	
 
    	
$8,642.80
    	
 
    
	
 
    	
May 1, 2011 – June 14,   2011
    	
 
    	
$6.80
    	
 
    	
1354.00
    	
 
    	
$9,207.20
    	
 
    
	
 
    	
June 15, 2011 –   August 31, 2011
    	
 
    	
$6.50/vivarium
    	
 
    	
348.33
    	
 
    	
$2,264.15
    	
 
    
	
 
    	
(lab/office/vivarium)
    	
 
    	
$6.80/office/lab
    	
 
    	
1354.00
    	
 
    	
$9,207.20
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
Total Sq. Ft.
   1738.33
    	
 
    	
Total Amt./Mo.
   $11,471.35
    	
 
    

 

(4)          A new Section 3.7 is hereby added to the Sublease as follows:

 

3.7          FibroGen may terminate Subtenant’s right to use the vivarium area specified in Section 2.1 a) above at any time by giving five business (5) days’ written notice if Subtenant misuses the vivarium area in FibroGen’s sole discretion.  A misuse shall include, but not be limited to, any failure to meet the requirements of IACUC, or any other state or federal law, regulation, or guideline.

 

(5)          Exhibit E entitled “Recap of Preclinical Facility Related Costs & Labor-Revised 4/12/11” is attached hereto and hereby added to the Sublease.

 

(6)          A new Section 5.5 is hereby added to the Sublease as follows:

 

5.5          Fees. Expenses, and costs relating to the use of the vivarium and charges for IACUC review which are listed in Exhibit E, shall be invoiced on the fifteenth (15th) day of each month immediately following the provision of the charges and shall be due and payable along with the next rent payment due after receipt of the invoice for such charges.

 

(7)          This Third Amendment, together with the Sublease as amended by the Prior Amendments, contains the entire understanding of the Parties with respect to the subject matter hereof.  Except as otherwise provided herein and in the Prior Amendments, the Sublease has not been modified or amended and remains in full force and effect.  All express or implied agreements and understandings that conflict

 

2

 

with the terms of this Third Amendment, either oral or written, heretofore made with respect to subject matter herein are expressly superseded by this Third Amendment.

 

(8)          This Third Amendment may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.  Counterparts may be signed and delivered by facsimile and/or via portable document format (pdf), each of which shall be binding when sent.

 

 

IN WITNESS WHEREOF, the Parties have executed this Third Amendment to the Sublease as of the Third Amendment Effective Date.

 

	
FIBROGEN, INC.
    	
SILVER   CREEK PHARMACEUTICALS
    
	
 
    	
 
    
	
By:
    	
/s/   Pat Cotroneo
    	
 
    	
By:
    	
/s/   Ulrik Nielsen
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Name:
    	
Pat Cotroneo
    	
 
    	
Name:
    	
Ulrik   Nielsen
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Title:
    	
CFO
    	
 
    	
Title:
    	
CEO
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Date:
    	
5/26/11
    	
 
    	
Date:
    	
5/26/11
    

 

3

 

Exhibit E
  Recap of Preclinical Facility Related Costs & Labor — Revised 4/12/11

 

I.                 VIVARIUM Administration:

 

	
FTE   SUPPORT per Microcompany
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
*ADMINISTRATION
    	
 
    	
 
    	
 
    
	
(1) ASP   Protocol, (1) Yearly Renewal, and up to (1) Amendment
   (committee submission / PI notifications / records management)
    	
 
    	
 
    	
 
    
	
(1) Animals   Order
   (review, enter requisition, obtain PO, place order w/vendor, email order   confirmations)
    	
 
    	
 
    	
 
    
	
(1) Animal   Receipt
   (manage animal orders / health / animal census records, prepare animal ID cage   cards)
    	
 
    	
 
    	
 
    
	
Order   Food, Bedding, Disposable Supplies
   (place orders w/vendors, receive / store / distribute)
    	
 
    	
 
    	
 
    
	
Training   Program
   (coordinate training / procedure evaluations w/IACUC designated   trainers/qualifiers, training record management)
    	
 
    	
 
    	
 
    
	
Compliance   Oversight
   (animal welfare / IACUC protocol / institutional policies / preclinical   facility policies / standard procedures / regulatory agencies monitoring and   enforcement)
    	
 
    	
 
    	
 
    
	
Occupational   Health & Safety for Vivarium Users
   (new user orientation & safely training, material documentation,   updates, records management)
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    

	
*Above is based on one (1) Protocol   per year (including up to one   (1) Amendment) and 1 animal order per   month
    
	
5 hours/company/month @ $100/hr à $500/company/month
    

 

4

 

II.             HUSBANDRY Services:

 

 

	
FTE   SUPPORT for 200 MICE
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
HUSBANDRY
    	
 
    	
 
    	
 
    
	
Animal   Receipt (pick-up from warehouse, disinfect shipping crates, uncrate animals   and distribute into prepared housing units, remove identifying labels from   crates, stack crates for disposal, sweep & disinfect receiving area,   submit receiving paperwork to office)
    	
 
    	
 
    	
 
    
	
Cage   Unit Set-Up (cages, fill cages w/bedding, cage lids, cage filter tops, cage   card holders, cage identification cards, enrichment objects/nesting   materials/snacks, rodent food, fill water bottles)
    	
 
    	
 
    	
 
    
	
Cage   Exchanges (load clean cage units onto cart and transport to animal holding   room and relocate animals from soiled cage units into clean prepared cage   units)
    	
 
    	
 
    	
 
    
	
Soiled   Cage Unit Break-Down (load soiled cage units onto cart and transport from   animal holding room to dirty wash room, discard food, empty water bottles,   remove cage unit objects and sort into washer containers, discard soiled   bedding, empty soiled trash bins, sweep & disinfect dirty wash room)
    	
 
    	
 
    	
 
    
	
Cage   Washing (load cages into cage washer, cage washer operation, unload cages   from cage washer)
    	
 
    	
 
    	
 
    
	
Animal   Holding Room Racks and Floor Sanitation
    	
 
    	
 
    	
 
    
	
Animal   Holding Room Complete Sanitation
    	
 
    	
 
    	
 
    
	
Animal   Health Observations / Holding Room Environmental Control Documentation
   (7 days/week, 365 days/yean assess animal health of general   population & document, assess health of post-op/post-procedural   animals & document, check food & water levels (supplement   if necessary), document room temperature & humidity, check   temperature setting & water levels in water circulating heating pads   (supplement if necessary)
    	
 
    	
 
    	
 
    
	
200 MICE   (50 Cages)
    	
 
    
	
 
    	
 
    
	
30 hours/week @ $20/hr =   $600/week = $2400/month à $800/company/month
    

 

5

 

III.     FOOD & BEDDING Estimates:

 

Monthly FOOD estimate for 200 mice:  ~3 bags/month @$27.50/bag à  $82.50/month

 

Monthly BEDDING estimate for 200 mice:  ~6 bags/month @$11/bag à  $66/month

 

Food & Bedding cost estimate for 200 mice  =  $148/month  à

$49.33/company/month

 

Monthly Costs without IACUC and /or Veterinary Services, per company:

 

	
 
    	
 
    	
$ 500.00 Administration
    
	
 
    	
 
    	
$800.00 Husbandry Services
    
	
 
    	
 
    	
$ 49.33 Food and Bedding
    	
 
    
	
 
    	
Total:
    	
$1,349.33   per month per sub-tenant
    

 

 

(Does not include IACUC and /or Veterinary Services)

 

 

IV.                                FibroGen’s IACUC Committee  à  billed per activity below:

 

·                  IACUC ASP Committee Review Process @ $1000/ASP protocol

(6 IACUC members @ $100/member x ~1.75 hours/member/ASP review)

·                  IACUC ASP Annual Renewal Committee Review Process @ $500/ASP

(6 IACUC members @ $100/member x ~.75 hours/member/ASP renewal)

·                  IACUC ASP AMENDMENT full Committee Review Process @ $200/Amendment

(6 IACUC members @ $100/member x ~.33 hours/member/ASP Amendment)

 

V.                                    Veterinary Services  à  billed per services rendered below:

 

·                  Teleconference / Conference Calls @ $200/hr

·                  On-Site Training Services @ $200/hr

·                  Hands On Training

·                  Standard Procedure Qualification Evaluation

·                  Animal Health Evaluation / Treatments @ $200/hr

 

6Exhibit 10.15

 

Confidential Materials omitted and filed separately with the

Securities and Exchang Commission. Asterisks denote omissions.

 

PUBLIC HEALTH SERVICE

 

PATENT LICENSE AGREEMENT — NONEXCLUSIVE

 

COVER PAGE

 

For PHS internal use only:

 

License Number:

 

License Application Number: [**]

 

Serial Number(s) of Licensed Patent(s) or Patent Application(s):

 

See. Appendix A

 

Licensee:

 

Merrimack Pharmaceuticals

 

Cooperative Research and Development Agreement (CRADA) Number (if a subject invention):

 

NONE

 

Additional Remarks:

 

NONE

 

Public Benefit(s):

 

See, Paragraphs 5.1, 10.3 and 10.4

 

This Patent License Agreement, hereinafter referred to as the “Agreement”, consists of this Cover Page, an attached Agreement, a Signature Page, Appendix A (List of Patent(s) or Patent Application(s)), Appendix B (Fields of Use and Territory), Appendix C (Royalties), Appendix D ((Benchmarks and Performance), Appendix E (Commercial Development Plan), Appendix F (Example Royalty Report), and Appendix G (Royalty Payment Options). The Parties to this Agreement are:

 

1)             The National Institutes of Health (“NIH”) or the Food and Drug Administration (“FDA”), hereinafter singly or collectively referred to as “PHS”, agencies of the United States Public Health Service within the Department of Health and Human Services (“HHS”); and

 

2)             Merrimack Pharmaceuticals, Inc., a Massachusetts corporation, having offices at One Kendall Square, Building 700, Second Floor, Cambridge, Massachusetts 02139, and its Subsidiaries, as defined in Paragraph 2.16, hereinafter referred to as “Licensee.”

 

1

 

PHS PATENT LICENSE AGREEMENT—NONEXCLUSIVE

 

PHS and Licensee agree as follows:

 

1.             BACKGROUND

 

1.1           In the course of conducting biomedical and behavioral research, PHS investigators made inventions that may have commercial applicability.

 

1.2           By assignment of rights from PHS employees and other inventors, HHS, on behalf of the Government, owns intellectual property rights claimed in any United States or foreign patent applications or patents corresponding to the assigned inventions. HHS also owns any tangible embodiments of these inventions actually reduced to practice by PHS.

 

1.3           The Secretary of HHS has the authority to enter into this Agreement for the licensing of rights to these inventions under 35 U.S.C. §§200-212, the Federal Technology Transfer Act of 1986, 15 U.S.C. §3710(a), and the regulations governing the licensing of Government-owned inventions, 37 CFR Part 404. The Secretary of HHS has delegated to PHS the authority to enter into this Agreement.

 

1.4           PHS desires to transfer these inventions to the private sector through commercialization licenses to facilitate the commercial development of products and processes for public use and benefit.

 

1.5           Licensee desires to acquire commercialization rights to certain of these inventions in order to develop processes, methods, or marketable products for public use and benefit.

 

2.             DEFINITIONS

 

2.1           “Benchmarks” mean the performance milestones that are set forth in Appendix D.

 

2.2           “Collaborator” means a third party to whom Licensee grants a sublicense, as provided for in Paragraph 4.1, for furthering research and development of the Licensed Products and Licensed Processes and where such sublicense does not include the right to (a) sell Licensed Products, (b) import or export Licensed Products for sale, (c) sell products produced using Licensed Processes, or (d) import or export products produced using Licensed Processes for sale.

 

2.3           “Commercial Development Plan” means the written commercialization plan detailed in Appendix E.

 

2.4           “First Commercial Sale” means the initial transfer by or on behalf of Licensee of Licensed Products or the initial practice of a Licensed Process by or on behalf of Licensee, or its Sublicensees, in exchange for cash or some equivalent to which value can be assigned for the purpose of determining Net Sales.

 

2.5           “Government” means the Government of the United States of America.

 

2.6           “Licensed Fields of Use” means the fields of use identified in Appendix B, Section I.

 

2

 

2.7           “Licensed Patent Rights” shall mean:

 

(a)           Patent applications and PCT patent applications or patents listed in Appendix A, all divisions and continuations of these applications, all patents issuing from these applications, divisions, and continuations, and any reissues, reexaminations, and extensions of all these patents;

 

(b)           to the extent that the following contain one or more claims directed to the invention or inventions disclosed in 2.7(a):

 

(i)            continuations-in-part of 2.7(a);

 

(ii)           all divisions and continuations of these continuations-in-part;

 

(iii)          all patents issuing from these continuations-in-part, divisions, and continuations;

 

(iv)          priority patent application(s) of 2.7(a); and

 

(v)           any reissues, reexaminations, and extensions of all these patents; and

 

(c)           to the extent that the following contain one or more claims directed to the invention or inventions disclosed in 2.7(a): all counterpart foreign and U.S. patent applications and patents to 2.7(a) and 2.7(b), including those listed in Appendix A; and

 

(d)           Subject to the proviso that if the claims in any continuation-in-part as set forth in 2.7(b) or 2.7(c) are subject to a terminal disclaimer they would be considered part of the Licensed Patent Rights, Licensed Patent Rights shall not include 2.7(b) or 2.7(c) to the extent that they contain one or more claims directed to new matter which is not the subject matter disclosed in 2.7(a).

 

2.8           “Licensed Processes” means processes, which in the course of being practiced, would be within the scope of one or more claims of the Licensed Patent Rights that have not been held unpatentable, invalid or unenforceable by an unappealed or unappealable judgment of a court of competent jurisdiction. Notwithstanding the foregoing, for purposes of calculating Net Sales only Licensed Processes shall not include processes which are the subject of a patent application within the Licensed Patent Rights which patent application has been pending in excess of [**] years from the date it was actually filed and not its effective filing date.

 

2.9           “Licensed Products” means tangible materials, which in the course of manufacture, use, sale, or importation, would be within the scope of one or more claims of the Licensed Patent Rights that have not been held unpatentable, invalid or unenforceable by an unappealed or unappealable judgment of a court of competent jurisdiction. Notwithstanding the foregoing, for purposes of calculating Net Sales only Licensed Products shall not include processes which are the subject of a patent application within the Licensed Patent Rights which patent application has been pending in excess of [**] years from the date it was actually filed and not its effective filing date.

 

2.10         “Licensed Territory” means the geographical area identified in Appendix B, Section II.

 

3

 

2.11         “Most Favored Licensee” means that Licensee will not, with respect to any royalty payment to which said status is accorded, be subject to terms and conditions which are less favorable to Licensee than any other third party paying the same royalty payment with respect to a Licensed Product or Licensed Process within the Licensed Field of Use.

 

2.12         “Net Sales” means the total gross receipts for sales of Licensed Products or practice of Licensed Processes by or on behalf of Licensee or its Sublicensees, and from leasing, renting, or otherwise making Licensed Products available to others without sale or other dispositions, whether invoiced or not, less returns and allowances, discounts and charge-backs, rebates and refunds, retroactive price adjustments, packing costs, insurance costs, freight out, taxes or excise duties imposed on the transaction (if separately invoiced), and wholesaler and cash discounts in amounts customary in the trade to the extent actually granted. For avoidance of doubt, payment made to PHS shall only be due once for sales of Licensed Products or practice of Licensed Processes whereby such payments are made either by Licensee or its Sublicensees, not both. No deductions shall be made for commissions paid to individuals, whether they are with independent sales agencies or regularly employed by Licensee or its Sublicensees, and on its payroll, or for the cost of collections.

 

2.13         “Practical Application” means to manufacture in the case of a composition or product, to practice in the case of a process or method, or to operate in the case of a machine or system; and in each case, under these conditions as to establish that the invention is being utilized and that its benefits are to the extent permitted by law or Government regulations available to the public on reasonable terms.

 

2.14         “Pro Rata Share” is used in reference to the amount of patent expenses to be reimbursed by Licensee in accordance with Paragraph 6.7 of this Agreement, and is calculated to be equal to one (1) divided by the total number of agreements including the Licensed Patent Rights that include the Licensed Fields of Use and is measured (a) for Future Patent Prosecution Expenses as set forth in Appendix C, Section VII(B) at the time when a request for payment thereof is made or (b) with respect to the calculation of the amount of any credit due to Licensee at the time of First Commercial Sale by Licensee.

 

2.15         “Sublicensee(s)” means a third party to whom Licensee grants a sublicense of the rights hereunder as described in Article 4.

 

2.16         “Subsidiary” of a party means any corporation, company, or other entity more than fifty percent (50%) of whose outstanding securities representing the right, other than as affected by events of default, to vote for the election of directors or other governing authorities are now or hereafter owned or controlled, directly or indirectly by such party, and where such party has the legal right to bind such Subsidiary to the terms of this Agreement, but such corporation, company or other entity shall be deemed to be a Subsidiary only so long as such control exists.

 

4

 

3.             GRANT OF RIGHTS

 

3.1           PHS hereby grants and Licensee accepts, subject to the terms and conditions of this Agreement, (a) a nonexclusive license under the Licensed Patent Rights in the Licensed Territory to make and have made, to use and have used, to sell and have sold, to offer to sell, and to import any Licensed Products in the Licensed Fields of Use set forth in Appendix B, Section I, Paragraphs (a) and (b) and to practice and have practiced any Licensed Processes in the Licensed Fields of Use set forth in Appendix B, Section I, Paragraphs (a) and (b) and (b) a nonexclusive license under the Licensed Patent Rights and in the Licensed Territory to make and have made, to use and have used, but not to sell and have sold or to offer to sell and to import and Licensed Products in the Licensed Field of Use set forth in Appendix B, Section I, Paragraph (c) and to practice and have practiced any Licensed Processes in the Licensed Field of Use set forth in Appendix B, Section I, Paragraph (c).

 

3.2           This Agreement confers no license or rights by implication, estoppel, or otherwise under any patent applications or patents of PHS other than the Licensed Patent Rights regardless of whether these patents are dominant or subordinate to the Licensed Patent Rights.

 

3.3           Upon the Effective Date of this Agreement, the prior license, [**] effective August 30, 2005 by and between PHS and Licensee will be terminated.

 

4.             SUBLICENSING

 

4.1           Upon written approval, which shall include prior review of any sublicense agreement by PHS and which shall not be unreasonably withheld and subject to the provisions regarding sublicenses granted to a Collaborator as set forth in this paragraph, Licensee may enter into sublicensing agreements in the Licensed Fields of Use and in the Licensed Territory for the Licensed Patent Rights only when Licensee is sublicensing additional intellectual property rights that belong to Licensee in conjunction with the Licensed Patent Rights to the Sublicensee. In the event that Licensee is granting the sublicense to a Collaborator for purposes of engaging in collaborative research efforts involving the Licensed Patent Rights such a sublicense is not required to include additional intellectual property that belongs to Licensee.

 

4.2           Licensee agrees that any sublicenses granted by it shall provide that the obligations to PHS of Paragraphs 8.1, 10.1, 10.2, 12.5, and 13.7-13.9 of this Agreement shall be binding upon the Sublicensee as if it were a party to this Agreement. Licensee further agrees to attach copies of these Paragraphs to all sublicense agreements.

 

4.3           Any sublicenses granted by Licensee shall provide for the termination of the sublicense, or the conversion to a license directly between the Sublicensees and PHS, at the option of the Sublicensee, upon termination of this Agreement under Article 13. This conversion is subject to PHS approval and contingent upon acceptance by the Sublicensee of the remaining provisions of this Agreement.

 

4.4           Licensee agrees to forward to PHS a complete copy of each fully executed sublicense agreement postmarked within thirty (30) days of the execution of the agreement. To the extent permitted by law, PHS agrees to maintain each sublicense agreement in confidence.

 

5

 

5.             STATUTORY AND PHS REQUIREMENTS AND RESERVED GOVERNMENT RIGHTS

 

5.1           Prior to the First Commercial Sale, Licensee agrees to provide PHS, upon PHS request and subject to availability, with reasonable quantities of Licensed Products or materials made through the Licensed Processes for PHS  in vitro research use.

 

5.2           Licensee agrees that products used or sold in the United States embodying Licensed Products or produced through use of Licensed Processes shall be manufactured substantially in the United States, unless a written waiver is obtained in advance from PHS.

 

6.             ROYALTIES AND REIMBURSEMENT

 

6.1           Licensee agrees to pay PHS a noncreditable, nonrefundable license issue royalty (“Execution Fee”) as set forth in Appendix C, Section I.

 

6.2           Licensee agrees to pay PHS a nonrefundable Annual Royalty as set forth in Appendix C, Section II.

 

6.3           Licensee agrees to pay PHS earned royalties as set forth in Appendix C, Section III.

 

6.4           Licensee agrees to pay PHS benchmark royalties (“Development Milestone Payments”) as set forth in Appendix C, Section IV.

 

6.5           In addition to any earned royalties due to PHS on behalf of Sublicensees as provided for in Paragraph 6.3 of this Agreement, Licensee agrees to pay to PHS an additional royalty as a milestone payment tied to the sublicensing of the Licensed Patent Rights (“Sublicensing Milestone Payment”). The specific terms and conditions associated with this Sublicensing Milestone Payment are set forth in Appendix C, Section V.

 

6.6           In addition to any royalty payments described in Paragraphs 6.1 through 6.5 of this Agreement, in the event that Licensee assigns this Agreement to any third party other than a Sublicensee, Licensee shall pay PHS, as an additional royalty, the “Assignment Consideration” as set forth in Appendix C, Section VI.

 

6.7           With regard to expenses incurred by PHS and associated with the preparation, filing, prosecution, and maintenance of all patent applications and patents included within the Licensed Patent Rights, Licensee shall reimburse PHS, as an additional royalty, in the manner set forth in Appendix C, Section VII.

 

6.8           A patent or patent application licensed under this Agreement shall cease to fall within the Licensed Patent Rights for the purpose of computing earned royalty payments in any given country on the earliest of the dates that:

 

(a)           the application has been abandoned and not continued;

 

(b)           the patent expires or irrevocably lapses; or

 

(c)           all of the claims have been held to be invalid or unenforceable by an unappealed or unappealable decision of a court of competent jurisdiction or administrative agency.

 

6

 

6.9           When calculating Net Sales for purposes of determining the Earned Royalty due pursuant to Paragraph 6.3, no multiple royalties shall be payable because any Licensed Products or Licensed Processes are covered by more than one of the Licensed Patent Rights.

 

6.10         On sales of Licensed Products by Licensee to Sublicensees or on sales made in other than an arms-length transaction, the value of the Net Sales attributed under this Article 6 to this transaction shall be that which would have been received in an arms-length transaction, based on sales of like quantity and quality products on or about the time of this transaction

 

6.11         Under exceptional circumstances, for example if Licensee comes to be the only party with rights under and of the particular Licensed Patent Rights, Licensee may be given the right to assume responsibility for the preparation, filing, prosecution, or maintenance of any patent application or patent included with the Licensed Patent Rights. In that event, Licensee shall directly pay the attorneys or agents engaged to prepare, file, prosecute, or maintain these patent applications or patents and shall provide PHS with copies of each invoice associated with these services as well as documentation that these invoices have been paid.

 

6.12         PHS agrees, upon written request, to provide Licensee with summaries of patent prosecution invoices for which PHS has requested payment from the Licensee under Paragraph 6.7.

 

6.13         Licensee may elect to surrender its rights in any country of the Licensed Territory under any of the Licensed Patent Rights upon sixty (60) days written notice to PHS and owe no payment obligation under Paragraph 6.7 for patent-related expenses incurred in that country after the effective date of the written notice.

 

7.             PATENT FILING, PROSECUTION, AND MAINTENANCE

 

7.1           Except in exceptional circumstances, as provided for in Paragraph 6.11 above, PHS agrees to take responsibility for the preparation, filing, prosecution, and maintenance of any and all patent applications or patents included in the Licensed Patent Rights. PHS agrees to keep Licensee fully informed as to the status of the preparation, filing, prosecution, and maintenance of all patent applications and patents included in the Licensed Patent Rights. PHS will take any comments received from Licensee with respect to the preparation, filing, prosecution, and maintenance of all patent applications and patents included in the Licensed Patent Rights into good faith consideration. In the event that PHS decides to abandon the preparation, filing, prosecution, and maintenance of any of the patent applications and patents included in the Licensed Patent Rights, it will provide notice of such decision to Licensee and will allow Licensee to assume responsibility for such activities in any such Licensed Patent Rights to Licensee.

 

7

 

8.             RECORD KEEPING

 

8.1           Licensee agrees to keep accurate and correct records of Licensed Products made, used, sold, or imported and Licensed Processes practiced under this Agreement appropriate to determine the amount of royalties due PHS. These records shall be retained for at least [**] years following a given reporting period and shall be available during normal business hours for inspection, at the expense of PHS, by an independent accountant or other designated auditor selected by PHS for the sole purpose of verifying reports and royalty payments hereunder. The accountant or auditor shall only disclose to PHS information relating to the accuracy of reports and royalty payments made under this Agreement. If an inspection shows an underreporting or underpayment in excess of five percent (5%) for any twelve (12) month period, then Licensee shall reimburse PHS for the cost of the inspection at the time Licensee pays the unreported royalties, including any additional royalties as required by Paragraph 9.8. All royalty payments required under this Paragraph shall be due within [**] days of the date PHS provides Licensee notice of the payment due.

 

9.             REPORTS ON PROGRESS, BENCHMARKS, SALES, AND PAYMENTS

 

9.1           Prior to signing this Agreement, Licensee has provided PHS with the Commercial Development Plan referred to in more detail in Appendix E, and under which Licensee intends to bring the subject matter of the Licensed Patent Rights to the point of Practical Application. This Commercial Development Plan is hereby incorporated by reference into this Agreement. Based on this plan, performance Benchmarks are determined as specified in Appendix D.

 

9.2           Licensee shall provide written reports on its product development progress or efforts to commercialize under the Commercial Development Plan for each of the Licensed Fields of Use. These written reports are due within [**] days after [**] of each calendar year beginning on [**]. The first written report will detail the progress made from the Effective Date of this Agreement through [**]. These progress reports shall include, but not be limited to: progress on research and development, status of applications for regulatory approvals, manufacturing, marketing, importing, and sales during the preceding calendar year, as well as, plans for the present calendar year. PHS also encourages these reports to include information on any of Licensee’s public service activities that relate to the Licensed Patent Rights. If reported progress differs from that projected in the Commercial Development Plan and Benchmarks, Licensee shall explain the reasons for such differences. In any annual report, Licensee may propose amendments to the Commercial Development Plan, acceptance of which by PHS may not be denied unreasonably. Licensee agrees to provide any additional information reasonably required by PHS to evaluate Licensee’s performance under this Agreement. Licensee may amend the Benchmarks at any time upon written approval by PHS. PHS shall not unreasonably withhold approval of any request of Licensee to extend the time periods of this schedule if the request is supported by a reasonable showing by Licensee of diligence in its performance under the Commercial Development Plan and toward bringing the Licensed Products to the point of Practical Application.

 

9.3           Licensee shall report to PHS the dates for achieving Benchmarks specified in Appendix D and the First Commercial Sale in each country in the Licensed Territory within [**] days of such occurrences.

 

8

 

9.4           Commencing with First Commercial Sale, Licensee shall submit to PHS, within [**] days after each [**] ending [**], a royalty report, as described in the example in Appendix F, setting forth for the preceding [**] period the amount of the Licensed Products sold or Licensed Processes practiced by or on behalf of Licensee in each country within the Licensed Territory, the Net Sales, and the amount of royalty accordingly due. With each royalty report, Licensee shall submit payment of earned royalties due. If no earned royalties are due to PHS for any reporting period, the written report shall so state. The royalty report shall be certified as correct by an authorized officer of Licensee and shall include a detailed listing of all deductions made under Paragraph 2.10 to determine Net Sales made under Article 6 to determine royalties due.

 

9.5           Licensee agrees to forward to PHS, on a [**] basis, a copy of reports received by Licensee from its sublicensees during the preceding [**] period as shall be pertinent to a royalty accounting to PHS by Licensee for activities under the sublicense.

 

9.6           Royalties due under Article 6 shall be paid in U.S. dollars and payment options are listed in Appendix G. For conversion of foreign currency to U.S. dollars, the conversion rate shall be the New York foreign exchange rate quoted in The Wall Street Journal on the day that the payment is due, and any loss of exchange, value, taxes, or other expenses incurred in the transfer or conversion to U.S. dollars shall be paid entirely by Licensee. The royalty report required by Paragraph 9.4 shall be mailed to PHS at its address for Agreement Notices indicated on the Signature Page.

 

9.7           Licensee shall be solely responsible for determining if any tax on royalty income is owed outside the United States and shall pay this tax and be responsible for all filings with appropriate agencies of foreign governments.

 

9.8           Additional royalties may be assessed by PHS on any payment that is more than [**] days overdue at the rate of [**] percent ([**]%) per month. This [**] percent ([**]%) per month rate may be applied retroactively from the original due date until the date of receipt by PHS of the overdue payment and additional royalties. The payment of any additional royalties shall not prevent PHS from exercising any other rights it may have as a consequence of the lateness of any payment.

 

9.9           All plans and reports required by this Article 9 and marked “confidential” by Licensee shall, to the extent permitted by law, be treated by PHS as commercial and financial information obtained from a person and as privileged and confidential, and any proposed disclosure of these records by the PHS under the Freedom of Information Act (FOIA), 5 U.S.C. §552 shall be subject to the predisclosure notification requirements of 45 CFR §5.65(d).

 

10.           PERFORMANCE

 

10.1         Licensee shall use its reasonable commercial efforts to bring the Licensed Products and Licensed Processes to Practical Application. “Reasonable commercial efforts” for the purposes of this provision shall include adherence to the Commercial Development Plan in Appendix E and performance of the Benchmarks in Appendix D as may be amended from time to time in accordance with the provisions of Paragraphs 9.2 and 14.4. The efforts of the Sublicensee will be considered the efforts of the Licensee.

 

9

 

10.2         Upon the First Commercial Sale, until the expiration or termination of this Agreement, Licensee shall use its reasonable commercial efforts to make Licensed Products and Licensed Processes reasonably accessible to the United States public.

 

10.3         Licensee agrees, after its First Commercial Sale, to make reasonable quantities of Licensed Products or materials produced through the use of Licensed Processes available on a compassionate use basis to patients, either through the patient’s physician(s) or the medical center treating the patient.

 

10.4         Licensee agrees, after its First Commercial Sale and as part of its marketing and product promotion, to develop educational materials (e.g., brochures, website, etc.) directed to patients and physicians detailing the Licensed Products or medical aspects of the prophylactic and therapeutic uses of the Licensed Products.

 

10.5         Licensee agrees to supply, to the Mailing Address for Agreement Notices indicated on the Signature Page, the Office of Technology Transfer, NIH with inert samples of the Licensed Products or Licensed Processes or their packaging for educational and display purposes only.

 

11.           INFRINGEMENT AND PATENT ENFORCEMENT

 

11.1         PHS and Licensee agree to notify each other promptly of each infringement or possible infringement of the Licensed Patent Rights, as well as, any facts which may affect the validity, scope, or enforceability of the Licensed Patent Rights of which either Party becomes aware.

 

11.2         In the event that a declaratory judgment action alleging invalidity of any of the Licensed Patent Rights shall be brought against PHS, PHS agrees to notify Licensee that an action alleging invalidity has been brought. PHS does not represent that it shall commence legal action to defend against a declaratory action alleging invalidity. Licensee shall take no action to compel the Government either to initiate or to join in any declaratory judgment action. Should the Government be made a party to any suit by motion or any other action of Licensee, Licensee shall reimburse the Government for any costs, expenses, or fees, which the Government incurs as a result of the motion or other action. Upon Licensee’s payment of all costs incurred by the Government as a result of Licensee’s joinder motion or other action, these actions by Licensee shall not be considered a default in the performance of any material obligation under this Agreement.

 

12.           NEGATION OF WARRANTIES AND INDEMNIFICATION

 

12.1         PHS offers no warranties other than those specified in Article 1.

 

12.2         PHS does not warrant the validity of the Licensed Patent Rights and makes no representations whatsoever with regard to the scope of the Licensed Patent Rights, or that the Licensed Patent Rights may be exploited without infringing other patents or other intellectual property rights of third parties.

 

12.3         PHS MAKES NO WARRANTIES, EXPRESSED OR IMPLIED, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF ANY SUBJECT MATTER DEFINED BY THE CLAIMS OF THE LICENSED PATENT RIGHTS OR TANGIBLE MATERIALS RELATED THERETO.

 

10

 

12.4         PHS does not represent that it shall commence legal actions against third parties infringing the Licensed Patent Rights.

 

12.5         Licensee shall indemnify and hold PHS, its employees, students, fellows, agents, and consultants harmless from and against all liability, demands, damages, expenses, and losses, including but not limited to death, personal injury, illness, or property damage in connection with or arising out of:

 

(a)           the use by or on behalf of Licensee, its directors, employees, its Sublicensees, or third parties of any Licensed Patent Rights; or

 

(b)           the design, manufacture, distribution, or use of any Licensed Products, Licensed Processes or materials by Licensee or its Sublicensees, or other products or processes developed in connection with or arising out of the Licensed Patent Rights.

 

12.6         Licensee agrees to maintain a liability insurance program consistent with sound business practice.

 

13.           TERM, TERMINATION, AND MODIFICATION OF RIGHTS

 

13.1         This Agreement is effective when signed by all parties “Effective Date”, unless the provisions of Paragraph 14.15 are not fulfilled, and shall extend to the expiration of the last to expire of the Licensed Patent Rights unless sooner terminated as provided in this Article 13.

 

13.2         In the event that Licensee is in default in the performance of any material obligations under this Agreement, including but not limited to the obligations listed in Paragraph 13.5, and if the default has not been remedied within [**] days after the date of notice in writing of the default, PHS may terminate this Agreement by written notice and pursue outstanding royalties owed through procedures provided by the Federal Debt Collection Act.

 

13.3         In the event that Licensee becomes insolvent, files a petition in bankruptcy, has such a petition filed against it, determines to file a petition in bankruptcy, or receives notice of a third party’s intention to file an involuntary petition in bankruptcy, Licensee shall immediately notify PHS in writing. Furthermore, PHS shall have the right to terminate this Agreement immediately upon Licensee’s receipt of written notice.

 

13.4         Licensee shall have a unilateral right to terminate this Agreement in any country or territory by giving PHS sixty (60) days written notice to that effect.

 

13.5         PHS shall specifically have the right to terminate or modify, at its option, this Agreement, if PHS determines that the Licensee:

 

(a)           is not executing the Commercial Development Plan, as may be amended from time to time in accordance with the provisions of Paragraphs 9.2 and 14.4, submitted with its request for a license and the Licensee cannot otherwise demonstrate to PHS’ satisfaction that the Licensee has taken, or can be expected to take within a reasonable time, effective steps to achieve Practical Application of the Licensed Products or Licensed Processes;

 

(b)           has not achieved the Benchmarks, as may be amended from time to time in accordance with the provisions of Paragraphs 9.2 and 14.4, as may be modified under Paragraph 9.2;

 

11

 

(c)           has willfully made a false statement of, or willfully omitted, a material fact in the license application or in any report required by this Agreement;

 

(d)           has committed a material breach of a covenant or agreement contained in this Agreement;

 

(e)           is not keeping Licensed Products or Licensed Processes reasonably available to the public after commercial use commences;

 

(f)            cannot reasonably satisfy unmet health and safety needs; or

 

(g)           cannot reasonably justify a failure to comply with the domestic production requirement of Paragraph 5.2, unless waived.

 

13.6         In making the determination referenced in Paragraph 13.5, PHS shall take into account the normal course of such commercial development programs conducted with sound and reasonable business practices and judgment and the annual reports submitted by Licensee under Paragraph 9.2. Prior to invoking termination or modification of this Agreement under Paragraph 13.5, PHS shall give written notice to Licensee providing Licensee specific notice of, and a [**] day opportunity to respond to, PHS’ concerns as to the items referenced in 13.5(a)-13.5(g). If Licensee fails to alleviate PHS’ concerns as to the items referenced in 13.5(a)-13.5(g) or fails to initiate corrective action to PHS’ satisfaction, PHS may terminate this Agreement.

 

13.7         PHS reserves the right according to 35 U.S.C. §209(d)(3) to terminate or modify this Agreement if it is determined that the action is necessary to meet the requirements for public use specified by federal regulations issued after the date of the license and these requirements are not reasonably satisfied by Licensee.

 

13.8         Within [**] days of receipt of written notice of PHS’ unilateral decision to modify or terminate this Agreement, Licensee may, consistent with the provisions of 37 CFR §404.11, appeal the decision by written submission to the designated PHS official.  The decision of the designated PHS official shall be the final agency decision. Licensee may thereafter exercise any and all administrative or judicial remedies that may be available.

 

13.9         Within [**] days of expiration or termination of this Agreement under this Article 13, a final report shall be submitted by Licensee. Any royalty payments, including those incurred but not yet paid (such as the full minimum annual royalty), and those related to patent expense, due to PHS shall become immediately due and payable upon termination or expiration. If terminated under this Article 13, Sublicensees may elect to convert their sublicenses to direct licenses with PHS pursuant to Paragraph 4.3. Unless otherwise specifically provided for under this Agreement, upon termination or expiration of this Agreement, Licensee shall return all Licensed Products or other materials included within the Licensed Patent Rights to PHS or provide PHS with written certification of the destruction thereof.

 

12

 

14.           GENERAL PROVISIONS

 

14.1         Neither party may waive or release any of its rights or interests in this Agreement except in writing. The failure of the Government to assert a right hereunder or to insist upon compliance with any term or condition of this Agreement shall not constitute a waiver of that right by the Government or excuse a similar subsequent failure to perform any of these terms or conditions by Licensee.

 

14.2         This Agreement constitutes the entire agreement between the Parties relating to the subject matter of the Licensed Patent Rights, Licensed Products and Licensed Processes, and all prior negotiations, representations, agreements, and understandings are merged into, extinguished by, and completely expressed by this Agreement.

 

14.3         The provisions of this Agreement are severable, and in the event that any provision of this Agreement shall be determined to be invalid or unenforceable under any controlling body of law, this determination shall not in any way affect the validity or enforceability of the remaining provisions of this Agreement.

 

14.4         If either party desires a modification to this Agreement, the parties shall, upon reasonable notice of the proposed modification by the party desiring the change, confer in good faith to determine the desirability of the modification. No modification shall be effective until a written amendment is signed by the signatories to this Agreement or their designees.

 

14.5         The construction, validity, performance, and effect of this Agreement shall be governed by Federal law as applied by the Federal courts in the District of Columbia.

 

14.6         All Agreement Notices required or permitted by this Agreement shall be given by prepaid, first class, registered or certified mail or by an express/overnight delivery service provided by a commercial carrier, properly addressed to the other party at the address designated on the Signature Page, or to any other address as may be designated in writing by such other party. Agreement Notices shall be considered timely if such notices are received on or before the established deadline date or sent on or before the deadline date as verifiable by U.S. Postal Service postmark or dated receipt from a commercial carrier. Parties should request a legibly dated U.S. Postal Service postmark or obtain a dated receipt from a commercial carrier or the U.S. Postal Service. Private metered postmarks shall not be acceptable as proof of timely mailing.

 

14.7         This Agreement shall not be assigned by Licensee except:

 

(a)           with the prior written consent of PHS, this consent shall not to be withheld unreasonably; or

 

(b)           as part of a sale or transfer of substantially the entire business of Licensee relating to operations which concern this Agreement; and

 

(c)           Licensee shall notify PHS within [**] days of any assignment of this Agreement by Licensee.

 

13

 

14.8         Licensee agrees in its use of any PHS-supplied materials to comply with all applicable statutes, regulations, and guidelines, including PHS and HHS regulations and guidelines. Licensee agrees not to use the materials for research involving human subjects or clinical trials in the United States without complying with 21 CFR Part 50 and 45 CFR Part 46. Licensee agrees not to use the materials for research involving human subjects or clinical trials outside of the United States without notifying PHS, in writing, of the research or trials and complying with the applicable regulations of the appropriate national control authorities. Written notification to PHS of research involving human subjects or clinical trials outside of the United States shall be given no later than [**] days prior to commencement of the research or trials.

 

14.9         Licensee acknowledges that it is subject to and agrees to abide by the United States laws and regulations (including the Export Administration Act of 1979 and Arms Export Control Act) controlling the export of technical data, computer software, laboratory prototypes, biological materials, and other commodities. The transfer of these items may require a license from the appropriate agency of the Government or written assurances by Licensee that it shall not export these items to certain foreign countries without prior approval of the agency. PHS neither represents that a license is or is not required or that, if required, it shall be issued.

 

14.10       Licensee agrees to mark the Licensed Products or their packaging sold in the United States with all applicable U.S. patent numbers and similarly to indicate “Patent Pending” status. All Licensed Products manufactured in, shipped to, or sold in other countries shall be marked in a manner to preserve PHS patent rights in those countries.

 

14.11       By entering into this Agreement, PHS does not directly or indirectly endorse any product or service provided, or to be provided, by Licensee whether directly or indirectly related to this Agreement. Licensee shall not state or imply that this Agreement is an endorsement by the Government, PHS, any other Government organizational unit, or any Government employee. Additionally, Licensee shall not use the names of NIH, PHS, FDA or HHS or the Government or their employees in any advertising, promotional, or sales literature without the prior written approval of PHS.

 

14.12       The Parties agree to attempt to settle amicably any controversy or claim arising under this Agreement or a breach of this Agreement, except for appeals of modifications or termination decisions provided for in Article 13. Licensee agrees first to appeal any unsettled claims or controversies to the designated PHS official, or designee, whose decision shall be considered the final agency decision. Thereafter, Licensee may exercise any administrative or judicial remedies that may be available.

 

14.13       Nothing relating to the grant of a license, nor the grant itself, shall be construed to confer upon any person any immunity from or defenses under the antitrust laws or from a charge of patent misuse, and the acquisition and use of rights pursuant to 37 CFR Part 404 shall not be immunized from the operation of state or Federal law by reason of the source of the grant.

 

14.14       Paragraphs 4.3, 6.4, 8.1, 9.5-9.9, 12.1-12.5, 13.8, 13.9, 14.12 and 14.14 of this Agreement shall survive termination of this Agreement.

 

14

 

14.15       The terms and conditions of this Agreement shall, at PHS’ sole option, be considered by PHS to be withdrawn  from Licensee’s consideration and the terms and conditions of this Agreement,  and the Agreement itself to be null and void,  unless this Agreement is executed  by the Licensee and a fully executed original is received by PHS within sixty (60) days from the date of PHS signature found at the Signature Page.

 

SIGNATURES BEGIN ON NEXT PAGE

 

15

 

PHS PATENT LICENSE AGREEMENT — NONEXCLUSIVE

 

SIGNATURE PAGE

 

	
For   PHS:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/   Steven M. Ferguson
    	
 
    	
2/8/08
    
	
Steven   M. Ferguson
    	
 
    	
Date
    
	
Director,   Division of Technology Development and Transfer
    	
 
    	
 
    
	
Office   of Technology Transfer
    	
 
    	
 
    
	
National   Institutes of Health
    	
 
    	
 
    

 

Mailing Address for Agreement notices:

 

Chief, Monitoring & Enforcement Branch

Office of Technology Transfer

National Institutes of Health

6011 Executive Boulevard, Suite 325

Rockville, Maryland  20852-3804 U.S.A.

 

For Licensee (Upon, information and belief, the undersigned expressly certifies or affirms that the contents of any statements of Licensee made or referred to in this document are truthful and accurate.):

 

	
by:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/   Edward J. Stewart
    	
 
    	
2/20/08
    
	
Signature   of Authorized Official
    	
 
    	
Date
    
	
 
    	
 
    	
 
    
	
Edward   J. Stewart
    	
 
    	
Lisa A. Evren
    
	
Printed   Name
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Vice   President, Business Development
    	
 
    	
2/20/08 SVP and CFO
    
	
Title
    	
 
    	
 
    

 

I.      Official and Mailing Address for Agreement notices:

 

Edward J. Stewart

 

Vice President, Business Development

 

Merrimack Pharmaceuticals

 

One Kendall Square

 

Building 700; 2nd Floor

 

Cambridge, MA  02139

 

16

 

II.    Official and Mailing Address for Financial notices (Licensee’s contact person for royalty payments)

 

	
Edward J. Stewart
    	
 
    	
 
    
	
Name
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Vice   President, Business Development
    	
 
    	
 
    
	
Title
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Mailing   Address:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Merrimack   Pharmaceuticals
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
One   Kendall Square
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Building   700; 2nd Floor
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Cambridge,   MA  02139
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Email   Address:
    	
tstewart@merrimackpharma.com
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Phone:
    	
617.441.1000
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Fax:
    	
617.491.1386
    	
 
    	
 
    

 

Any false or misleading statements made, presented, or submitted to the Government, including any relevant omissions, under this Agreement and during the course of negotiation of this Agreement are subject to all applicable civil and criminal statutes including Federal statutes 31 U.S.C. §§3801-3812 (civil liability) and 18 U.S.C. §1001 (criminal liability including fine(s) and/or imprisonment).

 

17

 

APPENDIX A — PATENT(S) OR PATENT APPLICATION(S)

 

Patent(s) or Patent Application(s):

 

I.  U.S. Patents and Patent Applications

 

[**]

 

II.  PCT Application and Foreign Patents and Patent Applications

 

[**]

 

18

 

APPENDIX B — LICENSED FIELDS OF USE AND TERRITORY

 

I.              Licensed Fields of Use:

 

As provided for in Paragraph 2.5 the Licensed Fields of Use are set forth below:

 

(a)           Therapeutics:

 

Research, development and commercialization of Licensed Products or Licensed Processes for the treatment of erbB-3 [**] using the Licensed Patent Rights.

 

(b)           Diagnostics;

 

Research, development and commercialization of diagnostic products for the [**] related to the [**] erbB-3 [**] erbB-3 [**] using the Licensed Patent Rights. For purposes of this Agreement Diagnostics includes [**] as well as [**] with the Licensed Products or Licensed Processes.

 

(c)           Internal Research:

 

Research and development efforts which require the Licensed Patent Rights including drug [**] where the Licensed Products and Licensed Processes would not be within the Licensed Fields of Use set forth in Paragraphs (a) and (b) above.

 

II.            Licensed Territory:

 

(a)           As provided for in Paragraph 2.10 the Licensed Territory is worldwide.

 

19

 

APPENDIX C — ROYALTIES

 

Royalties:

 

I.                                         EXECUTION FEE

 

As provided for in Paragraph 6.1 of this Agreement, Licensee agrees to pay to PHS a noncreditable, nonrefundable Execution Fee, in the amount of [**] Dollars ($[**]). The Execution Fee accrues as of the Effective Date of the Agreement and is payable to PHS in two installments as follows:

 

(a)                                  A first installment in the amount of [**] Dollars ($[**]) is payable within [**] days from the Effective Date of this Agreement; and

 

(b)                                 A second installment in the amount of [**] Dollars ($[**]) is payable to PHS on the [**] anniversary of the Effective Date of this Agreement.

 

II.                                     ANNUAL ROYALTY

 

As provided for in Paragraph 6.2 of this Agreement, Licensee agrees to pay to PHS a nonrefundable Annual Royalty, The Annual Royalty is apportioned as follows:

 

(a)                                  For the period up to and including the year of [**] the amount of the Annual Royalty due and payable to PHS is [**] Dollars ($[**]). The first Annual Royalty payment, will be due [**] and is payable to PHS within [**] days thereof. For each subsequent year of the Agreement the Annual Royalty is due on [**] and is payable to PHS within [**] days thereof. The Annual Royalty payments for the time period up to [**] are [**] against any other royalty payments as set forth in Paragraphs 6.1through 6.6 of this Agreement.; and

 

(b)                                 Beginning with the [**] following [**] and on each subsequent [**] thereafter until the expiration or termination of this Agreement, the Annual Royalty will be considered a minimum annual royalty payment (“MAR”). The MAR will be in the amount of [**] Dollars ($[**]). The MAR is creditable only against [**]payments as provided for by Paragraph 6.3 and will only be creditable against [**]payments due for that [**] (e.g. The MAR is paid [**] it will be creditable against earned royalties for the calendar year [**] only). The MAR will be due on [**] of each calendar year and is payable to PHS within [**] days thereof.

 

20

 

III.                                 EARNED ROYALTY PAYMENTS

 

As provided for in Paragraph 6.3 of this Agreement and subject to the Most Favored Licensee definition of Paragraph 2.11, Licensee agrees to pay PHS earned royalties as set forth below:

 

(a)                                  For sales within the Licensed Field of Use set forth in Appendix B, Section I, Paragraph (a) (Therapeutics), Licensee agrees to pay to PHS, a nonrefundable earned royalty on Net Sales in an amount equal to [**] percent ([**]%) divided by the [**] of the value of Net Sales by or on behalf of Licensee or its Sublicensees. The earned royalty as set forth herein is to be paid in accordance with the reporting provisions of Paragraph 9.4 of this Agreement and calculated in accordance with the conditions set forth in Paragraph 9.5 of this Agreement. Notwithstanding the forgoing the total number of Licensed Products which may be used to reduce the royalty rate from the initial rate of [**] percent ([**]%) is [**].

 

(b)                                 For sales within the Licensed Field of Use set forth in Appendix B, Section I, Paragraph (b) (Diagnostics), Licensee agrees to pay to PHS, a nonrefundable earned royalty on Net Sales in an amount equal to [**] percent ([**]%) divided by the [**] of the value of Net Sales by or on behalf of Licensee or its Sublicensees. The earned royalty as set forth herein is to be paid in accordance with the reporting provisions of Paragraph 9.4 of this Agreement and calculated in accordance with the conditions set forth in Paragraph 9.5 of this Agreement. Notwithstanding the forgoing the total number of Licensed Products which may be used to reduce the royalty rate from the initial rate of [**] percent ([**]%) is [**].

 

IV.                                 DEVELOPMENTAL MILESTONE PAYMENTS

 

As provided for in Paragraph 6.4 of this Agreement and subject to the Most Favored Licensee definition of Paragraph 2.11, Licensee agrees to pay PHS a nonrefundable developmental milestone payments associated with specific Licensed Fields of Use as set forth below:

 

(a)                                  For the development of Therapeutics (Appendix B(I)(a))

 

(1)                                  A Validation Milestone Payment, as additional consideration indicative of the value of the Licensed Patent Rights, in the amount of [**] Dollars ($[**]). The Validation Milestone Payment is due upon each occurrence of the [**], and where [**] (a) is for a Licensed Product or (b) for a product produced by a Licensed Process, or (c) contains descriptions of materials or methods within the scope of the Licensed Patent Rights. Notwithstanding the foregoing, the total amount of any benchmark payments under this Paragraph (a)(1) shall not exceed [**] Dollars ($[**]). Each payment is due upon achieving the milestone and is payable within [**] days thereof. The obligation to pay the Validation Milestone Payment survives any termination or expiration of this Agreement.

 

(2)                                  A Clinical Milestone Payment upon achieving the first [**] in the amount of [**] Dollars ($[**]).  The Clinical Milestone Payment is due upon achieving the milestone and is payable to PHS within [**] days thereof.  The obligation to pay the Clinical Milestone Payment survives any termination or expiration of this Agreement

 

21

 

(3)                                  A Regulatory Approval Milestone Payment, upon achieving the first occurrence of, [**], for example [**], for a Licensed Product, a Licensed Process, or a product made by a Licensed Process or from a Licensed Product, from the [**], in the amount of [**] Dollars ($[**]). The Regulatory Approval Milestone Payment is due upon achieving the milestone and is payable to PHS within [**] days thereof. The obligation to pay the Regulatory Milestone Payment survives any termination or expiration of this Agreement.

 

(b)                                 For the development of Diagnostics (Appendix B(I)(b))

 

(1)                                  A Regulatory Milestone Payment, in the amount of [**] Dollars ($[**]), upon the first occurrence of the [**], where such [**] is for a diagnostic and/or prognostic product that [**]. For purposes of this Paragraph activity includes but is not limited to [**]. This milestone payment is due upon achieving the milestone and is payable to PHS within [**] days thereof. The obligation to pay the Regulatory Milestone Payment survives any termination or expiration of this Agreement.

 

Upon the Effective Date of this Agreement the obligation to pay the Milestone Payments set forth in Appendix C, Section C of the prior license between PHS and Licensee having PHS reference number [**] and effective August 30, 2005 is extinguished and replaced by the obligation to make certain milestone payments as set forth in this, Section IV, Paragraphs (a)(1) and (b)(1).

 

V.                                     SUBLICENSING MILESTONE

 

As provided for by Paragraph 6.5, Licensee agrees to pay PHS, upon sublicensing any or all of the Licensed Patent Rights to a third party, an additional Milestone Payment in the amount of [**] Percent ([**]%) of the value of the [**] consideration due to Licensee as of the effective date of the sublicense excluding those amounts (a) received by Licensee as [**] of this Agreement and (b) those amounts received by Licensee as [**] for the Licensed Products and Licensed Processes [**] by Licensee after the Effective Date of the prior license, [**] effective August 30, 2005 by and between PHS and Licensee. The Sublicensing Milestone Payment accrues as of the effective date of the sublicense and is payable to PHS within [**] days thereof. Notwithstanding the foregoing, in the event the sublicense is one granted to a Collaborator, Licensee shall owe no sublicensing royalty under Paragraph 6.5.

 

VI.                                 ASSIGNMENT CONSIDERATION

 

As provided for by Paragraph 6.6, and subject to the Most Favored Licensee definition of Paragraph 2.11 Licensee agrees to pay PHS, as consideration for receiving PHS consent to the assignment of the Agreement as required by Paragraph 14.7, a royalty in the amount of:

 

(a)                                  [**] Dollars ($[**]), in the event that the assignment of the Agreement is required because Licensee is selling substantially all of their assets as part of a merger or acquisition.  In addition to the aforementioned Assignment Consideration outlined within this paragraph, the Assigned Licensee shall provide to PHS an updated Development Plan and Benchmarks within [**] days of the Assignment ; or

 

22

 

(b)                                 [**] Percent ([**]%) of the value of the cash consideration due to the Licensee as of the effective date of the assignment, excluding (1) [**] of this Agreement and (2) those [**] by and between PHS and Licensee, in the event that the assignment of this Agreement is required because Licensee is selling only the assets associated with the commercialization of a product requiring access to this Agreement.  In addition to the aforementioned Assignment Consideration outlined within this paragraph, the Assigned Licensee shall provide to PHS an updated Development Plan and Benchmarks within [**] days of the Assignment

 

VII.                             REIMBURSEMENT OF PATENT PROSECUTION COSTS

 

As provided for in Paragraph 6.7 of this Agreement, Licensee agrees to pay to PHS, as an additional, nonrefundable royalty representing reimbursement to PHS for the expenses incurred by or on behalf of PHS in the prosecution and maintenance of the Licensed Patent Rights. Unless specifically provided for this royalty is not creditable against any other payment obligations set forth in this Agreement. The specific terms and conditions associated with the reimbursement of PHS’ patent expenses are as follows:

 

(a)                                  For patent expenses incurred through [**] and not previously reimbursed to PHS by a third party(prior patent expenses), Licensee agrees to pay PHS [**]. This amount is equal to [**] percent ([**]%) of the expenses incurred by PHS through [**] (CY [**]) for each issued patent and PCT application as set forth in Appendix A. This payment is due as of the Effective Date of the Agreement and is payable to PHS within [**] days thereof.

 

(b)                                 For patent expenses incurred beginning [**] and not previously reimbursed to PHS by a third party (Future Patent Expenses), Licensee agrees to reimburse PHS as follows:

 

(1)                                  For any pending application within the Licensed Patent Rights, with the exception of one that is involved in any administrative proceeding as noted in Paragraphs (b)(3) and (b)(4) below, as long as the application is pending and no patent has issued, Licensee shall not be responsible for reimbursing PHS’ Future Patent Expenses. At the time of issuance of a patent for any pending application within the Licensed Patent Rights, Licensee shall pay to PHS an amount equal to (a) [**] Percent ([**]%) or (b) a [**], whichever is less, of the expenses incurred by PHS, until issuance of the patent. After issuance of the patent Future Patent Expenses are subject to the provisions of Paragraph (b)(2).

 

(2)                                  For each issued patent within the Licensed Patent Rights, with the exception of a patent that is involved in any administrative proceeding as noted in Paragraphs (b)(3) and (b)(4) below, Licensee, shall pay to PHS, an amount equal to [**] Percent ([**]%), or a [**]

 

(3)                                  In the event of an interference, reexamination, reissue, opposition proceeding or other administrative proceeding of similar nature conducted before a National Patent Office and initiated by Licensee or at Licensee’s request, by PHS on behalf of Licensee, Licensee will pay to PHS an amount equal to [**] Percent ([**]%) of PHS’ Future Patent Prosecution Expenses related to the administrative proceedings; and

 

23

 

(4)                                  In the event of an interference, reexamination, reissue, opposition proceeding or other administrative procedure of a similar nature conducted before a National Patent Office initiated by a third party, Licensee will pay to PHS an amount equal to [**] Percent ([**]%) or a [**], whichever is less, of PHS’ Future patent Expenses related to the administrative proceedings.

 

For any Future Patent Expenses payment described in Paragraphs (b)(1) through (b)(4) above, the amount of the Future Patent Expenses is based on PHS’ Future Patent Expenses incurred with respect to the Licensed Patent Rights for any given calendar year, and may be billed to Licensee on an annual basis, although the interval for billing such expenses may be greater. Any Future Patent Prosecution Expenses to be reimbursed by Licensee are due as of the date which PHS incurs such expenses but are not payable by Licensee until a period not to exceed [**] calendar days after PHS’ request for reimbursement thereof.

 

With respect to any Future Patent Expenses due or paid to PHS under Paragraph (b)(3) above and in such cases where Licensee initiates the administrative proceeding or where PHS has initiated the administrative proceeding on behalf of Licensee, at the time of First Commercial Sale,  Licensee will be entitled to a [**] as provided for in Paragraph 6.3 of this Agreement. The amount of the [**] available will be equal to the amount of [**] at the time of Licensee’s First Commercial Sale. Notwithstanding the foregoing, any credit due in accordance with this Paragraph shall not reduce the amount of the earned royalty due for any given calendar year below the minimum annual royalty and may, if necessary, be carried forward until the amount of the credit is exhausted.

 

24

 

APPENDIX D — BENCHMARKS AND PERFORMANCE

 

Licensee will use commercially reasonable efforts to achieve the following Benchmarks for its performance under this Agreement and, within [**] days of achieving a Benchmark, shall notify PHS that the Benchmark has been achieved.

 

I.                                         For the Licensed Field of Use set forth in Appendix B, Section I(a)

 

(a)                                  Development of antibody therapy for cancers

 

	
Benchmark
    	
 
    	
Projected Time to
   Achieve Benchmark
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    

 

(b)                                 Development of second therapeutic

 

	
Benchmark
    	
 
    	
Expected Date
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    

 

II.                                     For the Licensed Field of Use as set forth in Appendix B, Section I(b)

 

	
Benchmark
    	
 
    	
Expected Date
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    

 

25

 

APPENDIX E — COMMERCIAL DEVELOPMENT PLAN

 

In accordance with the provisions of 37 CFR Part 404 and Paragraph 9.1 of this Agreement, Licensee is providing a detailed Commercial Development Plan for the period January 1, 2007 through December 31, 2008. This detailed Commercial Development Plan will be updated on an annual basis by Licensee through the submission of the annual progress reports required by Paragraph 9.2 of this Agreement. In addition to this detailed Commercial Development Plan, for the next and following calendar years, Licensee has previously outlined their general plans for commercialization over the life of the license in the license application submitted November 2, 2006 and which has been given NIH Reference Number [**]. The Licensee’s general plans for commercial development have been reduced to the specific Benchmarks as set forth in Appendix D.

 

I.                                         Research and Development

 

[**]

 

II.                                     Regulatory Activities

 

[**]

 

III.                                 Manufacturing

 

[**]

 

IV.                                 Sublicensing

 

[**]

 

V.                                     Marketing, Importing and Sales

 

[**]

 

26

 

APPENDIX F — EXAMPLE ROYALTY REPORT

 

Required royalty report information includes:

 

·                  OTT license reference number (L-XXX-200X/0)

·                  Reporting period

·                  Catalog number and units sold of each Licensed Product (domestic and foreign)

·                  Gross Sales per catalog number per country

·                  Total Gross Sales

·                  Itemized deductions from Gross Sales

·                  Total Net Sales

·                  Earned Royalty Rate and associated calculations

·                  Gross Earned Royalty

·                  Adjustments for Minimum Annual Royalty (MAR) and other creditable payments made

·                  Net Earned Royalty due

 

Example

 

	
Catalog Number
    	
 
    	
Product Name
    	
 
    	
Country
    	
 
    	
Units Sold
    	
 
    	
Gross Sales
   (US$)
    
	
1
    	
 
    	
A
    	
 
    	
US
    	
 
    	
[**]
    	
 
    	
[**]
    
	
1
    	
 
    	
A
    	
 
    	
UK
    	
 
    	
[**]
    	
 
    	
[**]
    
	
1
    	
 
    	
A
    	
 
    	
France
    	
 
    	
[**]
    	
 
    	
[**]
    
	
2
    	
 
    	
B
    	
 
    	
US
    	
 
    	
[**]
    	
 
    	
[**]
    
	
3
    	
 
    	
C
    	
 
    	
US
    	
 
    	
[**]
    	
 
    	
[**]
    
	
4
    	
 
    	
D
    	
 
    	
US
    	
 
    	
[**]
    	
 
    	
[**]
    

 

	
 
    	
Total   Gross Sales
    	
 
    	
[**]
    
	
 
    	
Less   Deductions:
    	
 
    	
 
    
	
 
    	
Freight
    	
 
    	
[**]
    
	
 
    	
Returns
    	
 
    	
[**]
    
	
 
    	
Total   Net Sales
    	
 
    	
[**]
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Royalty Rate
    	
 
    	
[**]
    
	
 
    	
Royalty Due
    	
 
    	
[**]
    
	
 
    	
Less   Creditable Payments
    	
 
    	
[**]
    
	
 
    	
Net Royalty Due
    	
 
    	
[**]
    

 

27

 

APPENDIX G — ROYALTY PAYMENT OPTIONS

 

NIH/PHS License Agreements

 

*In order to process payment via Electronic Funds Transfer sender MUST supply the following information:

 

Procedure for Transfer of Electronic Funds to NIH for Royalty Payments

 

Bank Name: [**]

 

ABA# [**]

TREAS NYC

BNF=/[**]

OBI=Licensee Name and OTT Reference Number

Dollar Amount Wired=$$

 

NOTE:  Only U.S. banks can wire directly to the Federal Reserve Bank. Foreign banks cannot wire directly to the Federal Reserve Bank, but must go through an intermediary U.S. bank. Foreign banks may send the wire transfer to the U.S. bank of their choice, who, in turn forwards the wire transfer to the Federal Reserve Bank.

 

Checks drawn on a U.S. bank account should be sent to the following address:

 

National Institutes of Health (NIH)

P.O. Box 979071

St. Louis, MO 63197-9000 USA

 

Overnight or courier deliveries should be sent to the following address:

 

US Bank

Government Lockbox SL-MO-C2GL

1005 Convention Plaza

St. Louis, MO 63101

Phone: 314-418-4087

 

Checks drawn on a foreign bank account should be sent directly to the following address:

 

National Institutes of Health (NIH)
 Office of Technology Transfer
 Royalties Administration Unit
 6011 Executive Boulevard
 Suite 325, MSC 7660
 Rockville, MD 20852
 Phone: 301-496-7057

 

All checks should be made payable to: NIH/Patent Licensing

 

The OTT Reference Number MUST appear on checks, reports and correspondence

 

28

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