Exhibit 10.17

 

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

EXCLUSIVE LICENSE AGREEMENT

 

University of Virginia Licensing & Ventures Group and 22nd Century Limited, LLC

 

This Exclusive License Agreement (hereinafter “Agreement”) is made as of the
14th day of December, 2016 (“Effective Date”), by and between the University of
Virginia Patent Foundation d/b/a University of Virginia Licensing & Ventures
Group, a Virginia non-profit corporation, having a principal place of business
at 722 Preston Avenue, Suite 107, Charlottesville, VA 22903 (“UVA LVG”), and
22nd Century Limited, LLC, a for-profit Delaware limited liability company with
its principal place of business at 9530 Main Street, Clarence, New York 14031
(“Licensee”).

 

WITNESSETH

 

whereas, The Rector and Visitors of the University of Virginia (“University”)
and Licensee are parties to that certain Research Funding Agreement effective
November 10, 2011, and that certain Research and Funding Agreement dated as of
December 1, 2016 (collectively, the “Research Agreement”) pursuant to which
University has conducted and will continue to conduct research on behalf of and
at the cost of Licensee, as the sponsor under the Research Agreement, that is
directed to modification of flue-cured tobacco and will be conducting research
focused on the development of biological platforms and differentiated plants and
cannabinoid expression and profiles for research and production in industrial
hemp and medical marijuana (the “Research”);

 

WHEREAS, University has assigned to UVA LVG any and all of University’s rights
in and to any and all plants, biological materials, technology and associated
intellectual property resulting from the Research, including without limitation
University’s joint ownership rights in the Licensed Technology and IP Rights.

 

WHEREAS, Licensee and UVA LVG are joint owners of the Licensed Technology and IP
Rights;

 

WHEREAS, Licensee desires to obtain exclusive rights in and to any and all
plants, biological materials, technology and associated intellectual property
resulting from the Research, including without limitation the Licensed
Technology and IP Rights;

 

whereas, UVA LVG is willing to grant an exclusive license to all the results and
technology arising from the Research to Licensee in accordance with the terms of
this Agreement;

 

NOW THEREFORE, in consideration of the mutual covenants contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto intending to be legally bound do hereby
agree as follows:

 

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1.DEFINITIONS

 

As used in this Agreement:

 

1.1            “Affiliate” means any corporation or non-corporate business
entity which controls, is controlled by, or is under common control with a party
to this Agreement. A corporation or non-corporate business entity shall be
regarded as in control of another corporation if it owns, or directly or
indirectly controls, at least fifty (50%) percent of the voting stock of the
other corporation, or if it possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of such entity.

 

1.2            “Field of Use” means any and all uses of Licensed Technology in
any and all fields.

 

1.3            “IP Costs” means expenditures to obtain or maintain Licensed
Patents or other IP Rights. IP Costs include, without limitation, expenditures
related to administrative proceedings concerning the validity or invalidity of
patent protection for the Licensed Technology, including proceedings pursuant to
35 U.S.C. §§ 131-135, 251-256, 302-306, or 311-329.

 

1.4            “IP Rights” means any and all intellectual property rights of UVA
and UVA LVG, such as patents, plant variety rights, copyrights, trade secrets or
know-how, included in the Licensed Technology or covering Licensed Products.

 

1.5            “Licensed Know-How” means any and all information or knowledge of
UVA and UVA LVG, including but not limited to test results, data, research
methodologies and transformation processes, (i) related to any Sponsor
Biological Materials or Licensed TBM, (ii) arising or resulting from the
Research or developed or created under the Research Agreement, including without
limitation developed or created using any funding or other items provided at any
time by or at the direction of Licensee pursuant to the Research Agreement,
(iii) developed or created with the use of any confidential information,
equipment, materials or resources of Licensee, (iv) included in a “Research
Deliverable” (as defined in the Research Agreement), or (v) created by or
derived from the activities of the inventors of the Licensed Patents under the
Research Agreement that is useful for the commercialization of Licensed
Products, including Confidential Information, publicly available information,
and information not readily reducible to tangible form prior to specific inquiry
by Licensee.

 

1.6            “Licensed Patents” means any and all (i) patent applications in
and to any and all inventions conceived, reduced to practice or developed by
UVA, either solely or jointly with another or others, in the performance of the
Research Agreement, (ii) any and all patent applications now or hereafter filed
with respect to “Research IP” (as defined in the Research Agreement), (iii) any
and all applications claiming the benefit of the filing date or claiming
priority, directly or indirectly, from any of the foregoing patent applications,
including without limitation any and all substitutions, extensions, divisionals,
continuations, continuations-in-part, international, regional and national
applications and foreign corresponding or counterparts of such patent
applications, and (iv) any and all patents which issue from any of the foregoing
patent applications anywhere in the world, including without limitation
reexamined and reissued patents.

 

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1.7            “Licensed Products” means any product or service that is covered
by, incorporates, or uses, wholly or in part, any Licensed Technology.

 

1.8            “Licensed PVR” means any and all UVA or UVA LVG Plant Variety
Rights covering any Licensed TBM.

 

1.9            “Licensed TBM” means any and all Tangible Biological Materials
(i) derived or propagated from any Sponsor Biological Materials, (ii) arising or
resulting from the Research or developed, grown or created under the Research
Agreement, including without limitation developed, grown or created using any
funding or other items provided at any time by or at the direction of Licensee
pursuant to the Research Agreement, (iii) developed, grown or created with the
use of any confidential information, equipment, materials or resources of
Licensee, or (iv) provided or referenced in a “Research Deliverable” (as defined
in the Research Agreement).

 

1.10         “Licensed Technology” means, collectively, (i) the Licensed
Patents, (ii) the Licensed PVR, (iii) the Licensed TBM, and (iv) the Licensed
Know-How. The Licensed Technology is provided “as is.”

 

1.11         “Net Sales” means the [*], less the total of all:

 

1.11.1[*];

 

1.11.2[*];

 

1.11.3[*];

 

1.11.4[*]; and

 

1.11.5[*].

 

No [*].

 

1.12         “Plant Variety Rights” or “PVR” means intellectual property in the
form of rights applied for or granted/issued under applicable law to the breeder
of a new variety of plant that give the breeder control over the propagating
material or harvested material of a plant variety or the use thereof (such as
for example, “Plant Patent,” “Plant Variety Protection,” “PVP Certificates,”
“Plant Variety Right Certificates,” and “Plant Breeders’ Rights Certificates,”
and any other rights granted by a member state of the International Union for
the Protection of New Varieties of Plants (UPOV) to comply with the
International Convention for the Protection of New Varieties of Plants (UPOV
Convention).

 

1.13         “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 such
conditions as to establish that the Licensed Technology is being utilized and
that its benefits are, to the extent permitted by law or government regulations,
available to the public on reasonable terms.

 

1.14         “Revenue” means [*].

 

1.15         “Royalties” means [*].

 

1.16         “Sale,” “Sold” and “Sell” means and include, without limitation,
sales, leases, licenses, rentals, provision of services with, and other
transfers of Licensed Product(s).

 

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1.17         “Sublicensee” means any third party to whom Licensee has granted a
Sublicense.

 

1.18         “Sublicense” means an agreement in which Licensee:

 

1.18.1grants or otherwise transfers any of the rights granted hereunder;

 

1.18.2agrees not to assert the IP Rights or agrees not to sue, prevent or seek a
legal remedy for the practice of same;

 

1.18.3assigns or otherwise transfers this Agreement other than as permitted
under the Assignment Section hereinbelow; or

 

1.18.4is under an obligation to do any of the foregoing, or to forbear from
offering or doing any of the foregoing with any other entity, including
licenses, option agreements, right of first refusal agreements, standstill
agreements, settlement agreements or other agreements.

 

1.19         “Sublicensing Revenue” means [*].

 

1.20         “Sponsor Biological Materials” means any and all Tangible
Biological Materials provided to UVA or caused to be provided to UVA by or
through Licensee, including without limitation all Tangible Biological Materials
provided to UVA by third parties at the direction of Licensee or pursuant to an
agreement with Licensee.

 

1.21         “Tangible Biological Materials” means [*].

 

1.22         “UVA” means the Commonwealth of Virginia and the Rector and
Visitors of the University of Virginia, its governors, trustees, officers,
agents, employees, faculty, staff and students.

 

1.23         “Valid Claim” means a subsisting claim contained in an issued and
unexpired patent that has not been held unenforceable, unpatentable or invalid
by a court or other governmental agency of competent jurisdiction in a decision
that is unappealable or not appealed within the time allowed and which is not
invalid or unenforceable through abandonment or the like.

 

2.LICENSE

 

2.1            UVA LVG hereby grants to Licensee and Licensee hereby accepts an
exclusive, worldwide right and license to use and commercialize the Licensed
Technology and IP Rights, including without limitation the exclusive right to
make, grow, have made, have grown, use, import, offer for sale, and sell
Licensed Products in the Field of Use.

 

2.2            Licensee may Sublicense any or all of the rights licensed
hereunder to Affiliates provided that UVA LVG is notified in writing of each
such Sublicense. Any act or omission of any Sublicensed Affiliate shall be
deemed an act or omission of Licensee. UVA LVG and UVA may not contact or
solicit any Sublicensee of Licensee.

 

2.3            Licensee shall have the right to Sublicense any or all of the
rights licensed hereunder to non-affiliated third parties, provided that:

 

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2.3.1Each Sublicense obligates the Sublicensee to not violate the terms of this
Agreement;

 

2.3.2Licensee does not receive and does not agree to receive anything of value
other than cash in consideration for a Sublicense, unless expressly agreed in
writing by UVA LVG after review of the proposed transaction as a whole, and in
which case such value will be subject to the Sublicensing Revenues provisions
set forth below;

 

2.3.3Each Sublicense is otherwise consistent with the terms and conditions of
this Agreement;

 

2.3.4A copy of each Sublicense is provided to UVA LVG promptly following its
execution, together with a written statement disclosing any and all prior and
contemporaneous contractual relationships between Licensee and the Sublicensee;
and

 

2.3.5Licensee represents and warrants that no such other contractual
relationships contain consideration due to Licensee reasonably attributable to
the sublicensed rights. Licensee agrees to be fully responsible for the
performance of its Sublicensees hereunder.

 

2.4            Notwithstanding any other provision of this Agreement, UVA and
UVA LVG will not, by action or inaction, cause or allow any Licensed TBM and/or
any other Licensed Products (“Restricted Materials”) to be disclosed, given,
made available, distributed, conveyed or transferred by any means (collectively,
“Transferred”) to any third party. No exceptions are permitted to this
restriction, except only by the prior written consent of Licensee. UVA and UVA
LVG will not abandon control of any of the Restricted Materials. In the event
UVA or UVA LVG desires to abandon control of any of the Restricted Materials,
then UVA shall deliver all such Restricted Materials to Licensee promptly after
UVA receives written authorization from Licensee. In the event UVA or UVA LVG
relinquishes control of any part of any location containing Restricted
Materials, UVA or UVA LVG will inform Licensee in writing at least thirty (30)
days in advance of such relinquishment and, unless Licensee requests otherwise
in writing, UVA and UVA LVG will destroy the Restricted Materials located in
such location before a third party acquires possession or control of such
location.

 

2.5            All rights granted to Licensee by UVA LVG hereunder are subject
to a reservation of non-commercial, academic rights by UVA LVG on behalf of
itself and UVA to use and practice the Licensed Know-How and Licensed Patents
solely for internal, non-commercial, educational, research, teaching, training,
and other scholarly purposes, including but not limited to sponsored
non-commercial, educational research and collaborations, as well as UVA may use
and practice the Licensed Know-How (but not the Licensed Patents) in sponsored
research and collaborations with for-profit entities, but in all events and in
all cases under this Section 2.5 excluding without limitation any sharing,
teaching or other communication or transmission of any information,
consideration and/or tangible and intangible items supplied by or at the
direction of Sponsor and any Tangible Biological Materials. Further, UVA and the
inventors of the Licensed Technology retain the right to publish any information
related to or constituting the Licensed Technology to the extent permitted in
the Research Agreement.

 

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2.6            This Agreement does not restrict UVA’s right and/or ability to
conduct further internal, non-commercial, academic research and development in
the Field of Use or other fields to the extent expressly provided in Section 2.5
of this Agreement, but UVA, UVA LVG and any of their respective Affiliates shall
not be permitted to grant to any person or entity other than Licensee any
commercial rights in any Licensed Technology in connection with such further
research and/or development activities.

 

2.7            All Licensed Products shall be manufactured and sold by Licensee
in compliance with all applicable governmental laws, rules and regulations.
Licensee shall keep UVA LVG fully informed of, and shall move expeditiously to
resolve, any investigation, inquiry or complaint by a governmental body related
to Licensed Products.

 

2.8            The Licensed Technology was not and will not be developed with
any funds of the United States federal government.

 

2.9            Licensee agrees to submit, on request of UVA LVG but no more
frequently than annually, reports on the utilization of the Licensed Technology
or on efforts at obtaining such utilization that are being made by Licensee.
Such reports shall include information regarding the status of development, date
of first commercial sale or use, and gross royalties paid by Licensee.

 

2.10         UVA and UVA LVG will provide to Licensee, at no charge and without
restriction or limitation of any kind except as expressly provided in this
Agreement, quantities of all Licensed TBM and/or Licensed Products produced, or
in the future developed, by UVA or UVA LVG as requested from time to time by
Licensee, subject only to the availability of the quantities requested by
Licensee from UVA.

 

2.11         UVA LVG shall cause UVA to comply with all obligations of UVA under
this Agreement and UVA LVG will be responsible for UVA’s satisfaction of any and
all obligations set forth in this Agreement.

 

2.12         UVA LVG hereby acknowledges Licensee’s joint ownership of the
Licensed Technology and IP Rights and that Licensee has an equal, undivided
interest in and to such Licensed Technology and IP Rights, without any
obligation of accounting to UVA LVG or UVA except as expressly provided in this
Agreement. As provided above, UVA LVG hereby grants and assigns to Licensee such
joint ownership rights in any and all Licensed Technology and IP Rights, and UVA
LVG shall take all action and shall execute, and shall cause UVA to execute,
such agreements and documents as may be necessary or advisable under law to
effectuate the intent of this Section 2.12, including without limitation all
documents deemed necessary by Licensee to reflect such joint ownership.

 

3.DUE DILIGENCE

 

3.1            Licensee shall use its reasonable commercial efforts to achieve
expeditious Practical Application and to disseminate Licensed Products in
commercial markets as soon as reasonably possible as determined by Licensee and,
thereafter, to maintain their reasonable availability in commercial markets for
public use as determined by Licensee.

 

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4.CONSIDERATION

 

4.1            Royalties payable by Licensee to UVA LVG on Net Sales shall be as
follows:

 

LEVEL OF LICENSED PRODUCTS IP COVERAGE ROYALTY PERCENT [*] [*]% [*] [*]% [*]
[*]%

 

4.2            Sales by Sublicensees shall be subject to Royalties payable to
UVA LVG as provided in Section 4.1. Within sixty (60) days of the end of each
calendar quarterly period during the Term of this Agreement, License shall pay
to UVA LVG [*] of any Sublicensing Revenue not subject to Royalties under
Section 4.1 received during the preceding calendar quarter.

 

4.3            In the event Licensee or any of its Affiliates license additional
intellectual property from one or more third-parties in order to develop,
produce, grow, offer, sell and/or otherwise commercialize a Licensed Product,
then all amounts due under this Agreement from Licensee to UVA LVG shall be
reduced by the amount that Licensee and/or its Affiliates are required to pay to
such third-parties; [*].

 

5.ROYALTY REPORTS AND PAYMENT

 

5.1            Licensee shall report Revenues, Net Sales and Sublicensing
Revenues received for each calendar quarter in a royalty report (“Royalty
Report”), and make payment for Royalties received during each calendar quarter
and payments due on Sublicensing Revenue received during each calendar quarter,
to UVA LVG within sixty (60) days of end of each quarter. Each Royalty Report
shall be in the format set forth Attachment B.

 

5.2            Royalties shall be paid by Licensee’s check sent in accordance
with Section 22 entitled “Notices”.

 

5.3            All overdue payments shall be subject to interest at a rate of
[*]. Interest payments shall be in addition to, not instead of, any other rights
or remedies available to UVA LVG (including termination).

 

6.PROGRESS REPORTS AND AUDITS

 

6.1            Beginning with the calendar year 2020, within ninety (90) days
after the end of each calendar year during the Term, Licensee shall provide to
UVA LVG a written annual progress report (“Progress Report”) for that most
recently completed calendar year. For each Licensed Product, the Progress Report
shall describe Licensee’s progress with respect to research and development,
manufacturing, sublicensing, marketing and sales during that prior calendar year
ending December 31.

 

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6.2            Licensee shall maintain accurate books and records with respect
to Revenues, Net Sales, Royalties, Sublicensing Revenues and royalties paid
thereon, and related information.

 

6.3            Licensee shall make its books and records with respect to
Revenues, Net Sales, Royalties, Sublicensing Revenues and royalties paid
thereon, available for inspection or audit by UVA LVG or a representative of UVA
LVG's reasonably satisfactory to Licensee subsequent to the date that is ninety
(90) days after the end of the calendar year with respect to which UVA LVG
desires to conduct any such audit, with any audit being conducted at the place
where such books and records are regularly kept and maintained by Licensee. UVA
LVG shall give Licensee at least sixty (60) days prior written notice of any
desired annual audit by UVA LVG, after which Licensee and UVA LVG will mutually
agree on the actual date of the audit. Licensee agrees to fully cooperate in any
such inspection or audit, provided that UVA LVG and its representative(s) agree
to protect the confidentiality of the information reviewed in such inspection or
audit, including without limitation the customers of Licensee and its
Sublicensees, which information shall only be reviewed for purposes of
confirming the accuracy of the payment amounts made by Licensee to UVA LVG under
this Agreement. In the event [*].

 

7.IP COSTS AND PROSECUTION

 

7.1            Licensee shall be responsible for and shall control all
intellectual property filings with legal counsel selected by Licensee. Licensee
shall bear all IP Costs incurred by Licensee subsequent to the Effective Date.
UVA LVG has not incurred any IP Costs prior to the Effective Date and UVA LVG
shall not incur any IP Costs after the Effective Date unless UVA LVG is
requested to do so in writing by Licensee, in which case UVA LVG shall send
invoices or other written notice to Licensee for such IP Costs. Reimbursement
payments shall be due and payable within thirty (30) days of receipt by Licensee
of each such invoice or notice.

 

7.2            Licensee shall be solely responsible for and shall control all
prosecution and maintenance of the Licensed Patents or other IP Rights in any
country selected by Licensee. UVA LVG will be given reasonable opportunities to
advise Licensee in the filing, prosecution, and maintenance of the Licensed
Patents and/or Licensed PVR and UVA and UVA LVG will cooperate fully with
Licensee in such filing, prosecution, and maintenance. At UVA LVG’s request,
Licensee will instruct patent counsel to provide copies of prosecution documents
relating to Licensed Patents and/or Licensed PVR so that UVA LVG may have the
opportunity to offer comments and remarks thereon, such comments and remarks to
be given due consideration by UVA LVG. However, notwithstanding anything to the
contrary in this Agreement, all final decisions with respect to the filing,
prosecution, and maintenance of Licensed Patents and/or Licensed PVR are
reserved solely to Licensee.

 

7.3            UVA LVG shall not pursue any Licensed Patent or other IP Rights
in any jurisdiction without Licensee’s prior written request to do so. If
Licensee does not reimburse UVA LVG for IP Costs incurred by UVA LVG after
written authorization from Licensee for UVA LVG to incur such IP Costs, then in
such event UVA LVG shall give written notice to Licensee that UVA LVG has not
received the reimbursement of IP Costs in a timely manner after which Licensee
shall have thirty (30) days after Licensee’s receipt of such notice to reimburse
such IP Costs to UVA LVG. If payment has still not made within such thirty (30)
day period, such Licensed Patent or IP Rights obtained by UVA LVG in such
country shall be excluded from the license rights granted to Licensee in Section
2.1 of this Agreement.

 

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7.4            UVA LVG shall send invoices or other written notice to Licensee
for IP Costs subject to reimbursement under Sections 7.1 and 7.3. Reimbursement
payments shall be due and payable within thirty (30) days of receipt by Licensee
of each such invoice or notice, such to the late notice and cure rights
contained in Section 7.3.

 

8.INTELLECTUAL PROPERTY

 

8.1            UVA LVG has been assigned any and all of University’s rights in
and to any and all plants, biological materials, technology and associated
intellectual property resulting from the Research, including without limitation
University’s joint ownership rights in the Licensed Technology and IP Rights,
and UVA LVG shall take all actions and measures necessary to assure and document
such assignment. UVA LVG shall take all actions and measures necessary to assure
that UVA LVG has the full right to grant the exclusive license provided in this
Agreement and to meet its obligations under this Agreement. Other than the
license provided to Licensee in this Agreement, UVA LVG shall not offer, sell,
transfer, pledge, license, encumber or otherwise convey any rights of UVA or UVA
LVG in any of the Licensed Patents and other IP Rights to the Licensed
Technology.

 

8.2            UVA LVG and Licensee shall not contest the validity of the
Licensed Patents or other IP Rights.

 

8.3            If, notwithstanding Section 8.2, either UVG LVG or Licensee
brings a judicial or administrative action to invalidate, contest
enforceability, or prevent issuance of any Patent, or other IP Right (a
“Challenge Action”), then (i) in the event Licensee brings the Challenge Action,
then during the Challenge Action Licensee will pay Royalties to UVA LVG at [*]
the Royalty rates set forth each of in Sections 4.1 and 4.2, and in the further
event that a Challenge Action brought by Licensee determines that any claim of a
Patent or other IP Right is valid, Licensee will thereafter pay Royalties at [*]
the Royalty rates set forth in Sections 4.1 and 4.2 for a period of [*]
thereafter; and (ii) in the event UVA LVG brings the Challenge Action, then
during the Challenge Action Licensee will pay Royalties to UVA LVG at [*] the
Royalty rates set forth in each of Section 4.1 and 4.2, and in the further event
that a Challenge Action brought by UVA LVG determines that any claim of a Patent
or other IP Right is valid, Licensee will thereafter pay Royalties to UVA LVG at
[*] the Royalty rates set forth in Sections 4.1 and 4.2 for a period of [*]
thereafter. 

 

8.4            Except as otherwise expressly provided in this Agreement, nothing
herein shall be deemed to grant any license or rights in any technology other
than or in addition to the Licensed Technology and Licensed Know-How.

 

8.5            Licensee and UVA LVG hereby agree that the Licensed Patents shall
be extended as and when determined by Licensee, including without limitation
extensions provided under U.S. law at 35 U.S.C. §§154(b) and 156. UVA LVG hereby
agrees to provide Licensee with all necessary assistance in securing such
extensions, including without limitation, providing all information regarding
applications for regulatory approval, approvals granted, and the timing of same.
UVA LVG acknowledges that extensions under 35 U.S.C. §156 must be applied for
within sixty (60) days of the date that a Licensed Product receives permission
under the provision of law under which the applicable regulatory review period
occurred for commercial marketing or use, and that UVA LVG’s failure to promptly
provide the necessary information or assistance to Licensee during such sixty
(60) day period will cause serious injury to Licensee, for which UVA LVG will be
liable at law, as well as being a breach of this Agreement by UVA LVG.

 

 

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9.MARKINGS, TRADEMARKS AND TRADE NAMES

 

9.1            Licensee shall have included in all sales, marketing literature
and invoices relating to Licensed Products, a statement to the effect, if
applicable, of either “Patent Pending” or the specification of the applicable
“U.S. Patent Number.”

 

9.2            Licensee shall have marked the appropriate portions of all
Licensed Products with any applicable United States and foreign Patent numbers
in accordance with the law of the applicable jurisdiction(s).

 

9.3            Except as expressly provided in this Agreement, Licensee shall
not use any UVA or UVA LVG technology, trade name or trademarks without the
written permission of UVA LVG in advance.

 

10.TERM, TERMINATION AND OTHER REMEDIES

 

10.1         Unless terminated earlier as otherwise provided in this Agreement,
the term (the “Term”) of this Agreement shall commence on the Effective Date and
shall continue in full force and effect until the expiration of the last to
expire Licensed Patents or Licensed PVR, or ten (10) years from the Effective
Date of this Agreement if no patents in the Licensed Patents or Licensed PVR
issue in the applicable country (the “Term”). Upon the expiration of the Term,
all licenses and other rights granted to Licensee herein shall become fully
paid-up and perpetual.

 

10.2         Except as otherwise explicitly provided herein, either party shall
have thirty (30) days to cure any breach of this Agreement after receipt of
written notice of such breach by the other party. Thereafter, in the absence of
timely cure, the other party may terminate this Agreement upon thirty (30) days
written notice to the party in breach.

 

10.3         UVA LVG shall have the right to terminate this Agreement upon the
occurrence of an uncured material breach by Licensee. Without limitation, any
one or more of the following shall each be deemed a material breach of this
Agreement by Licensee:

 

10.3.1Failure of Licensee to make any payment when due under this Agreement; or

 

10.3.2Failure of Licensee to provide timely Royalty Reports; or

 

10.3.3Assignment by Licensee of substantially all of its assets for the benefit
of creditors or placement in the hands of a trustee or a receiver; or

 

10.3.4Any Licensee decision to cease developing or quit the business of selling
Licensed Products; or

 

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10.3.5The uncured breach by Licensee of any other material term of this
Agreement.

 

10.4         Notwithstanding the foregoing, in the event of Licensee’s
bankruptcy (as provided in Section 24), this Agreement shall terminate
immediately.

 

10.5         Licensee shall have the right to terminate this Agreement upon the
occurrence of an uncured material breach by UVA LVG. Without limitation, any one
or more of the following shall each be deemed a material breach of this
Agreement by UVA LVG:

 

10.5.1Failure of UVA to meet any of UVA’s obligations under the Research
Agreement; or

 

10.5.2The uncured breach by UVA LVG of any material term of this Agreement.

 

10.6         In the event this Agreement is terminated pursuant to Section 10.5
for an uncured material breach by UVA LVG, all licenses and other rights granted
to Licensee herein shall become perpetual, fully paid up, royalty free and
exclusive.

 

10.7         Licensee may also terminate this Agreement with or without cause
upon no less than one hundred eighty (180) days written notice to UVA LVG. In
the event Licensee terminates this Agreement under this Section 10.7, then UVA
LVG and Licensee each shall have the right to pursue patent protection of their
respective interests under this Agreement and the Research Agreement.

 

10.8         Termination of this Agreement shall not affect Licensee’s payment
obligations to UVA LVG that accrued prior to the date of such termination of
this Agreement or its obligations under the Sections of this Agreement entitled
“Definitions”, “Progress Reports and Audits (except Section 6.1)”, “Intellectual
Property”, “IP Costs”, “Term, Termination, and Other Remedies”, “Taxes”,
“Warranty Disclaimer”, “Costs”, “Confidentiality”, “Indemnification and
Liability”, “Insurance”, “Acquiescence”, “Integration”, “Interpretation”,
“Notices”, “Assignment”, “Bankruptcy”, “Headings”, “Export Controls”, “No Third
Party Beneficiary”, “Severability”, and “Dispute Resolution” as each of those
provisions of this Agreement may be applicable prior to the date of such
termination of this Agreement. Termination or expiration of this Agreement shall
not affect UVA LVG’s obligations under the Research Agreement, Sections 2.4,
2.12 and 7.2 of this Agreement and the Sections of this Agreement entitled
“Definitions”, “Term, Termination, and Other Remedies” and “Confidentiality.”

 

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11.TAXES

 

Licensee shall pay all taxes assessed or levied on, or on account of, the
Licensed Technology, Licensed Products made, used or Sold hereunder, or on
account of the amounts payable to, or for the account of, UVA LVG under this
Agreement (other than taxes imposed by the United States of America, the
Commonwealth of Virginia or jurisdictions therein, and other than any income or
other taxes payable by UVA LVG as a result of the Royalties and other
consideration paid or payable to UVA LVG under this Agreement).

 

12.WARRANTY DISCLAIMER

 

ALL TECHNOLOGY, INTELLECTUAL PROPERTY, AND information, granted or provided by
UVA LVG pursuant to this agreement (“DELIVERABLES”) are “as is”. UVA LVG makes
no warranties of any kind, either expressed or implied, as to any matter
including, but not limited to, warranty of fitness for particular purpose,
merchantability, USEFULNESS, TITLE, OR NONINFRINGEMENT. nEITHER party shall be
liable tO the OTHER for indirect, special, or consequential damages, such as
loss of profits or INABILITY to use deliverables. UVA LVG does not make any
warranty of any kind with respect to freedom from patent, trademark, or
copyright infringement, or theft of trade secrets and does not assume any
liability hereunder for any infringement of any patent, trademark, or copyright
arising from use of DELIVERABLES. Licensee agrees that it will not make any
warranty on behalf of UVA LVG TO ANY THIRD PARTY.

 

13.COSTS

 

All costs or expenses incurred by Licensee in carrying out its obligations under
this Agreement shall be paid by Licensee, and Licensee shall not be entitled to
reimbursement from Royalties or otherwise from UVA LVG, except as otherwise
provided in this Agreement. Licensee shall obtain at its own expense all
necessary licenses and permits and shall comply with all laws, ordinances, rules
or regulations affecting the manufacture, import, exportation, use, and/or sale
or transfer of Licensed Technology and Licensed Products.

 

14.CONFIDENTIALITY

 

14.1         Confidential Information” means (i) the Licensed Know-How, (ii) any
information relating to the Licensed TBM, (iii) any information relating to the
specific terms of this Agreement (as from time to time amended), (iv) any
information relating to Net Sales, Royalties, Revenue, Sublicensees,
Sublicensing Revenue and Royalty Reports, (v) any information relating to
Licensed Patents, Licensed PVR and other IP Rights covered by this Agreement
(including information disclosed to either party by the other party prior to the
Effective Date) and/or (vi) any information disclosed by either party or its
representatives to the other party or its representatives in connection with
performance of this Agreement, provided that such information is marked
“Confidential” or designated “Confidential” and described in writing within
thirty (30) days of disclosure by the disclosing party to the receiving party.

 

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14.2         Confidential Information does not include information that (i) was
already in the possession of the receiving party prior to the disclosure by the
disclosing party; (ii) becomes publicly known without the wrongful act or breach
of this Agreement; or (iii) is rightfully received by the receiving party from a
third party not under an obligation of confidentiality with respect thereto; or
(iv) is rightfully disclosed by UVA pursuant to the publication rights of
Section 10 of the Research Agreement; or (v) is publically disclosed by Licensee
in furtherance of commercialization of Licensed Products; or (vi) is disclosed
by Licensee as part of Licensee’s required public disclosure as a public
company.

 

14.3         Each of UVA LVG, UVA and Licensee shall maintain the
confidentiality of all Confidential Information and will not use or exploit it
for any purpose not expressly permitted herein, until ten (10) years after
termination of this Agreement. Each of UVA LVG, UVA and Licensee shall protect
Confidential Information from disclosure and unauthorized use with the same care
used to protect its most valuable confidential information but in no event less
than reasonable care.

 

14.4         Upon termination of this Agreement, UVA LVG and UVA shall return to
Licensee all originals and copies of all materials (other than this Agreement)
containing any Confidential Information. The independent, external legal counsel
of UVA LVG may, however, retain one archival copy of any such information for
purposes of legal compliance only.

 

14.5         Notwithstanding any other provision of this Agreement, all
information provided to UVA, UVA LVG or their respective Affiliates or obtained
by UVA, UVA LVG or their respective Affiliates regarding the supply and the
suppliers of any Tangible Biological Materials to be delivered or provided to
UVA by or at the direction of Licensee (“Supplied TBM”) shall be the
Confidential Information of Licensee, and UVA, UVA LVG or their respective
Affiliates shall not contact, solicit, contract with and/or enter into any
agreement or understanding with, either directly or indirectly, any third party
suppliers of Supplied TBM; provided, however, that this provision shall only
apply to one (1) third-party supplier that will provide Supplied TBM to UVA at
the direction of Licensee, which supplier shall be identified in writing by
Licensee to UVA LVG in ATTACHMENT D hereto (the “Named Supplier”) after the
execution by the parties of both this Agreement and the related Research
Agreement, dated an even date herewith, between Licensee and UVA. Licensee
represents to UVA LVG that the agreements between Licensee and the Named
Supplier contain restrictions on the Named Supplier not being permitted to
contact, solicit, contract with and/or enter into any agreement or understanding
with any third-party entities with whom Licensee is sponsoring research, which
will include but not be limited to UVA and UVA LVG.

 

15.INDEMNIFICATION AND LIABILITY

 

15.1         UVA LVG shall not be liable to Licensee, Affiliates, Sublicensees,
or customers of Licensee for compensatory, special, incidental, indirect,
consequential or exemplary damages resulting from the manufacture, testing,
design, labeling, use or sale of Licensed Products.

 

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15.2         Licensee shall defend, indemnify and hold harmless UVA and UVA LVG,
and their respective trustees, officers, employees, attorneys and agents from
all claims or demands made against them (and any related losses, expenses or
reasonable attorney’s fees) arising out of or relating to Licensee’s conduct or
possession, use, or Sale of Licensed Products, Licensed Technology or
Confidential Information, including but not limited to, any claims of product
liability, personal injury, death, damage to property or violation of any law or
regulation; provided, however, that Licensee shall not have any indemnification
obligations under this Agreement in the event the subject claims or demands
arise from either a breach of this Agreement by UVA LVG or a breach of the
Research Agreement by UVA. This obligation shall survive termination of this
Agreement.

 

16.INSURANCE

 

Throughout the term of this Agreement and for a period of five (5) years
thereafter, Licensee shall obtain and maintain, in full force and effect and at
Licensee’s sole cost and expense, the insurance coverage as set forth in
Attachment C, the terms of which are incorporated herein by this reference. In
the event that Licensee fails to obtain the insurance required hereunder, or if
the insurance lapses or is cancelled, then Licensee shall be in breach of this
Agreement, in which event UVA LVG may terminate this Agreement in the event
Licensee does not cure such breach as provided under Section 10.2. Nothing
herein shall be construed to release either party from any obligation that
matured prior to the effective date of such termination.

 

17.ACQUIESCENCE

 

No acquiescence in any breach of this Agreement by either party shall operate to
excuse any subsequent or prior breach.

 

18.INTEGRATION

 

Except for any confidential disclosure agreement executed by the parties and the
Research Agreement, this Agreement (including the exhibits referenced herein and
attached hereto) supersedes all previous agreements relating to the subject
matter hereof, whether oral or in a writing, and constitutes the entire
agreement of the parties hereto and shall not be amended or altered in any
respect except in a writing executed by the parties.

 

19.INTERPRETATION

 

This Agreement shall be governed by, and construed and enforced in accordance
with, the laws of the Commonwealth of Virginia, United States of America,
without regard to conflict of law principles. All singular terms shall include
plural, and vice versa, as necessary to interpret and enforce the intent of this
Agreement.

 

20.DISPUTE RESOLUTION

 

The parties consent to the exclusive jurisdiction of the courts of City of
Charlottesville, Virginia to resolve any and all disputes relating to this
Agreement. Licensee hereby irrevocably and unconditionally waives any objection
to the laying of venue in any court located in City of Charlottesville, Virginia
with respect to any lawsuit relating to this Agreement, consents to receive
service of any summons or other legal process by registered or certified mail,
postage prepaid, at the address for notices set forth below, and waives all
objections to the validity of any such summons or legal process.

 

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21.INFRINGEMENT

 

21.1         To the extent permitted by law, Licensee shall have the sole right
during the Term of this Agreement to commence an action for infringement of the
Patents or other IP Rights against any unlicensed third party for any
infringement occurring within the Field of Use. UVA LVG shall have the right at
its own expense to appear in such action by counsel of its own selection. If, as
a matter of law, an infringement action must be prosecuted in UVA LVG’s name,
then UVA LVG shall participate in Licensee’s pursuit of such action at
Licensee’s expense (including without limitation reasonable legal fees and
expenses), including without limitation by being joined as a party to such
action. Notwithstanding the foregoing, if an appearance or infringement action
would subject UVA LVG to the jurisdiction of a foreign tribunal that could not
otherwise assert jurisdiction over UVA LVG, then UVA LVG shall have the right to
decline to appear or otherwise pursue such action. Settlement of any action
initiated and/or paid for by Licensee shall require the consent of UVA LVG and
Licensee, which neither shall unreasonably withhold from the other. Licensee
shall be entitled to retain all damages or costs awarded in such action.

 

21.2         If Licensee fails, within one hundred twenty (120) days after
providing or receiving notice of a potential infringement, to institute an
action against such infringer or notifies UVALVG that it does not plan to
institute such action, then UVA LVG shall have the right to do so at its own
expense. Licensee shall cooperate with UVA LVG in such effort at UVA LVG’s cost
and expense (including without limitation reasonable legal fees and expenses),
including being joined as a party to such action if necessary. Notwithstanding
the foregoing, if an appearance or infringement action would subject Licensee to
the jurisdiction of a foreign tribunal that could not otherwise assert
jurisdiction over Licensee, then Licensee shall have the right to decline to
appear or otherwise pursue such action. Settlement of any action initiated
and/or paid for by UVA LVG shall require the consent of UVA LVG and Licensee,
which neither shall unreasonably withhold from the other. UVA LVG shall be
entitled to retain all damages or costs awarded in such action. Notwithstanding
the pendency of any infringement (or other) claim or action by or against
Licensee or UVA LVG, Licensee shall have no right to terminate or suspend (or
escrow) payment of any amount payable to UVA LVG unless the claim or action
arises from either a breach of this Agreement by UVA LVG or a breach of the
Research Agreement by UVA.

 

22.NOTICES

 

Any notice under any of the provisions of this Agreement shall be in writing and
deemed given on the second business day after such notice and all applicable
costs are given to a national overnight delivery services (such as UPS or FedEx)
addressed to the applicable party at the address stated on the signature page
hereof, or such other address as such party shall specify for itself by like
notice to other party. Each party shall also transmit a copy of such notice by
electronic mail to the other party.

 

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23.NO ASSIGNMENT

 

UVA LVG shall neither assign nor transfer this Agreement or any interest herein
without the prior written consent of Licensee. Licensee may assign or transfer
this Agreement upon written notice to UVA LVG.

 

24.BANKRUPTCY

 

In the event Licensee by its own actions or the action of any of its
shareholders or creditors (if applicable), files or has filed against it, under
the Bankruptcy laws of the United States, Licensee hereby waives the benefits of
an automatic stay provided in 11 U.S.C. 362 and consents and agrees to raise no
objection to any petition for relief from such stay by UVA LVG. Licensee further
agrees that this Agreement shall immediately in the event that a creditor or
other claimant takes possession of, or a receiver, administrator or similar
officer is appointed over any of the assets of Licensee, or in the event that
Licensee makes any voluntary arrangement with its creditors or becomes subject
to any court or administration order pursuant to any U.S. Bankruptcy proceedings
or insolvency law. Licensee will promptly inform UVA LVG of its intention to
file a voluntary petition in bankruptcy or of another’s communicated intention
to file an involuntary petition in bankruptcy.

 

25.HEADINGS

 

The section headings contained in this Agreement are set forth for the
convenience of the parties only, do not form a part of this Agreement and are
not to be considered a part hereof for the purpose of construction or
interpretation hereof, or otherwise.

 

26.EXPORT CONTROLS

 

UVA LVG is subject to United States laws and regulations controlling the export
of technical data, computer software, laboratory prototypes and other
commodities (including the Arms Export Control Act, as amended and the Export
Administration Act of 1979), and its obligations hereunder are contingent on
compliance with applicable United States export laws and regulations. The
transfer of certain technical data and commodities may require a license from
the cognizant agency of the United States and/or written assurances that
Licensee shall not export data or commodities to certain foreign countries
without prior approval of such agency. UVA LVG neither represents that a license
shall not be required nor that, if required, it shall be issued.

 

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27.NO THIRD PARTY BENEFICIARY

 

No person or entity shall be considered a third party beneficiary of this
Agreement.

 

28.SEVERABILITY

 

Should any provision of this Agreement be determined to be unenforceable or
otherwise unlawful, then such provision shall be without effect, as if such
provision had not been included herein, the remaining terms of this Agreement
shall survive, the Agreement shall be interpreted so as to most fully achieve
the intention of the parties.

 

(The Balance of This Page Intentionally Left Blank – Signature Page to Follow)

 

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in witness whereof, the parties hereto have caused this Agreement to be duly
executed in duplicate counterparts, each of which shall be deemed to constitute
an original, effective as of Effective Date.

 

The undersigned verify that they have the authority to bind to this Agreement
the party on behalf of which they are executing below.

 

University of Virginia Patent Foundation

d/b/a University of Virginia Licensing and Ventures Group

 

22nd Century Limited, LLC

     

By:

 

 

By:

 

           Michael P. Straightiff     Henry Sicignano, III           Executive
Director     President and Manager      

Date:

 

 

Date:

 

     

By:

 

 

           Erik L. Hewlett, M.D.                Chair          

Date:

 

 

     

Address for Notices:

 

Address for Notices: 

     

UVA Licensing & Ventures Group

722 Preston Avenue, Suite 107

Charlottesville, VA 22903

 

22nd Century Limited, LLC

9530 Main Street

Clarence, NY 14031

     

Attention: Executive Director

  Attention: President and Manager Email:   Email:

  

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Attachment A

 

Licensed Patents

 

UVA LVG Tech ID: Track Code:

 

Title:

Patent Applications:

 

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Attachment B

 

Royalty Report Format

 

Licensee

 

Address

 

City, State, Zip

 

Progress Report covering the period [January-December, YR] for the License
between Licensee and UVALVG dated ________________,

As required under Section 4 of the above-referenced license agreement, the
following details the progress made during the reporting period in
commercializing the licensed technology.

 

§Overview

 

§Scientific/Technical Development

·[*]

·[*]

·[*]

·[*]

§Commercial Development

·Business Development Initiatives and Partnership

·Fund Raising

·Grants

 

§Licensed Products sold and royalties due

·Including [*]

 

§Sublicensees

·Summary of reports received in reporting period

·Overview of consideration received in reporting period

 

§Summary

 

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Attachment C

 

Required Insurance Coverages

 

XXII is reviewing these insurance coverages. XXII will revise this section to
comport with the existing insurance levels of XXII. XXII will not procure more
insurance than its current coverages.

 

1.General. Licensee shall obtain and maintain, in full force and effect and at
Licensee’s sole cost and expense one or more insurance policies providing:

 

a)Commercial general liability insurance (including coverage and any necessary
endorsements for products /completed operations as well as for clinical trials
if any such trials are to be performed by or on behalf of Licensee) which
provides, for each annual policy period, coverage of no less than the minimum
limits specified below for injury, death and property damage resulting from each
occurrence during the policy period; and

 

b)Worker’s compensation insurance in respect of all of Licensee’s employees with
limits of liability and coverage not less than statutory limits provided by the
Commonwealth of Virginia or other applicable laws and regulations; and

 

c)Automobile liability insurance to cover owned and non-owned automobiles.

 

2.Policy Limits. Subject to the further provisions of this Section, the
commercial general liability and products liability coverages shall have the
following minimum limits:

 

a)Commercial general liability: [*]. Licensee shall have thirty (30) days
following the Effective Date to obtain such coverage.

 

b)Products liability:  From the date immediately prior to first Sale: [*].

 

c)UVA LVG may periodically evaluate the adequacy of the minimum coverage of
insurance and coverage limits specified in this Agreement. UVA LVG reserves the
right to require Licensee to adjust the insurance coverage by modifying the
types of required coverages, the limits and/or financial rating and/or the
method of financial rating of Licensee’s insurers as such changes are required
of UVA LVG by its insurance carrier. UVA LVG shall provide Licensee with
reasonable notice, contingent on UVA LVG receiving timely notice from its
insurance carrier, of any proposed modification and, if so requested by
Licensee, discuss any proposed modifications in good faith.

 

3.Policy Specifics. Each policy of insurance required by this Agreement shall:

 

a)be issued by reputable and financially secure insurance carriers having at
least an A- rating (A- rating or above by A.M. Best) and an A.M. Best Class Size
of at least VIII,

 

b)list each of UVA and UVA LVG, their respective trustees, officers, employees,
faculty, staff, students, agents and their respective successors, heirs and
assigns as additional insureds,

 

c)be endorsed to provide that the insurer waives all subrogation rights it has
or may have against any additional insured, and

 

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d)be primary in respect of all additional insureds.

 

4.Evidence of Insurance. Within thirty (30) days following the Effective Date,
and thereafter no later than the day on which any such policy of insurance is
renewed or replaced, Licensee shall provide UVA LVG with a Certificate of
Insurance from each such insurer which evidences compliance by Licensee with its
obligations hereunder. Upon the request of UVA LVG, Licensee shall provide UVA
LVG with a copy of the policy, status of claims and claims history respecting
any of the insurance required to be maintained by Licensee hereunder. Further,
Licensee will not cancel or fail to renew the identified insurance without
giving UVA LVG at least thirty (30) days’ prior written notice thereof.

 

5.Clarifications. For the avoidance of doubt, the minimum insurance coverage and
limits set forth in this Agreement do not constitute a limitation on Licensee’s
liability or obligations to indemnify or defend UVA LVG and UVA and any other
additional insured under this Agreement.

 

 

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ATTACHMENT D

 

 

 

 

 

Named Supplier

 

 

 

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