Exhibit 10.5
 
***Text Omitted and Filed Separately
with the Securities and Exchange Commission.
Confidential Treatment Requested
Under 17 C.F.R. Sections 200.80(b)(4)
and 240.24b-2

 
LICENSE AGREEMENT
 
This License Agreement is effective as of June 5, 2017 (the “Effective Date”),
by and between THE SCRIPPS RESEARCH INSTITUTE, a California nonprofit public
benefit corporation ("TSRI"), and ChromaPharma, Inc. a Nevada corporation
("Licensee"), each located at the respective address set forth in Section 13.17
below, with respect to the facts set forth below.
 
RECITALS
 
A. TSRI is engaged in fundamental scientific biomedical and biochemical research
including research relating to fundamental scientific biomedical and biochemical
research including research relating to breast cancer and NAD+/NADH redox
balancing.
 
B. Licensee is engaged in the discovery and development of therapeutic drugs.
 
C. TSRI has disclosed to Licensee certain technology and TSRI has the right to
grant a license to the technology, subject to certain rights of the U.S.
Government resulting from the receipt by TSRI of certain funding from the U.S.
Government.
 
D. TSRI desires to grant to Licensee, and Licensee wishes to acquire from TSRI,
an exclusive license to certain patent rights of TSRI, all subject to the terms
and conditions set forth herein.
 
NOW, THEREFORE, in consideration of the mutual covenants and conditions set
forth herein, TSRI and Licensee hereby agree as follows:
 
1. Definitions. Capitalized terms shall have the meaning set forth herein.
 
1.1 Affiliate. The term "Affiliate" shall mean any entity which directly or
indirectly controls, or is controlled by Licensee. The term "control" as used
herein means (a) in the case of corporate entities, direct or indirect ownership
of at least fifty percent (50%) of the stock or shares entitled to vote for the
election of directors; or (b) in the case of non-corporate entities, direct or
indirect ownership of at least fifty percent (50%) of the equity interests with
the power to direct the management and policies of such non-corporate entities.
The term “Licensee” as used throughout this Agreement also includes its
Affiliates.
 
1.2 Challenge. Licensee or a Sublicensee will be deemed to have made a
"Challenge" of the Licensed Patent Rights if Licensee or a Sublicensee: (a)
institutes or maintains, or causes its counsel to institute or maintain on
Licensee's or such Sublicensee's behalf, any interference, opposition,
re-examination, post-grant review or similar proceeding with respect to any
Licensed Patent Right with the U.S. Patent and Trademark Office or any foreign
patent office; or (b) makes any filing or institutes or maintains any legal
proceeding, or causes its counsel to make any filing or institute or maintain
any legal proceeding on Licensee's or such Sublicensee's behalf, with a court or
other governmental body (including, without limitation, the U.S. Patent and
Trademark Office or any foreign patent office) in which one or more claims or
allegations challenges the validity or enforceability of any Licensed Patent
Right.
 
 
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1.3 Confidential Information. The term "Confidential Information" shall mean any
and all proprietary or confidential information of TSRI or Licensee that such
party (the “Disclosing Party”) discloses to the other party (the “Receiving
Party”)at any time and from time to time during the term of this Agreement. The
provisions of this Agreement shall be considered the Confidential Information of
both parties. Information shall not be considered confidential to the extent
that the Receiving Party can establish by competent proof that such information:
 
(a) is publicly available through no fault of the Receiving Party, either before
or after it becomes known to the Receiving Party;
 
(b) was known to the Receiving Party prior to the date of this Agreement, which
knowledge was acquired independently and not from the Disclosing Party (or the
Disclosing Party's employees); or
 
(c) is subsequently disclosed to the Receiving Party in good faith by a third
party who is not under any obligation to maintain the confidentiality of such
information, and without breach of this Agreement by the Receiving Party.
 
Specific Confidential Information disclosed to a Receiving Party shall not be
deemed to be within any of the foregoing exceptions merely because it is (i)
embraced by more general information in the public domain or in the Receiving
Party’s possession; (ii) a combination of features or data that can be pieced
together by combining individual features or data from multiple sources in the
public domain or in the Receiving Party’s possession to reconstruct the
Confidential Information, but none of which shows the entire combination; and/or
(iii) a selection or part of a document or embodiment where other information in
the same document or embodiment becomes part of the public domain or in the
Receiving Party’s possession.
 
1.4 Derivative Product. The term “Derivative Product” shall mean products that
are not Licensed Products, but are in the Field and share an active
pharmacophore or mechanism of action with any Licensed Product. If a product can
be characterized as a Licensed Product and a Derivative Product, then such
product shall be considered a Licensed Product.
 
1.5 Field. The term "Field" shall mean the prevention, treatment or amelioration
of a specific disease, symptom, state of health, or medical- or health-related
condition in humans and/or animals utilizing Nicotinamide Riboside or any NAD+
precursors limited to the patent in Exhibit B for the treat of breast cancer.
 
1.6 Licensed Biological Materials. The term “Licensed Biological Materials”
shall mean the materials identified in Exhibit A (which will be supplied by TSRI
to Licensee), together with any progeny or mutants of such materials, or
unmodified derivatives of such materials (defined as substances created by
Licensee that constitute an unmodified functional sub-unit or product expressed
by such materials) in the Field.
 
1.7 Licensed Patent Rights. The term “Licensed Patent Rights” shall mean:
 
(a) the patent application(s) set forth in Exhibit B of this Agreement;
 
(b) the foreign counterpart applications of the respective applications
 
 
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referenced in sub-clause (a) above, but only to the extent the claims of such
foreign applications are entitled to the priority date of the respective
applications referenced in sub-clause (a) above;
 
(c) divisionals, substitutions (only those claims of such substitutions that
disclose the same subject matter that is covered by the application for which it
is substituted), and continuations of any applications referenced in sub-clauses
(a) and (b) above, provided the claims of such applications are entitled to the
priority date of the respective applications referenced in sub-clause (a) above;
 
(d) any claim(s) of a continuation-in-part application of any application set
forth in sub-clauses (a) and (c) above that are entitled to the priority date of
the respective applications referenced in sub-clause (a) above;
 
(e) the patents issued from the applications referenced in sub-clauses (a) – (c)
above and any reissues, reexaminations, renewals and patent term extensions of
such patents; and
 
(f) any claim(s) of a patent issued from a continuation-in-part application
referenced in sub-clause (d) above that are entitled to the priority date of the
respective applications referenced in sub-clause (a) above, and any claim(s) of
a reissue, reexamination, renewal and patent term extension of a patent issued
from a continuation-in-part application referenced in sub-clause (d) above that
are entitled to the priority date of the respective applications referenced in
sub-clause (a) above.
 
1.8 Licensed Product. The term "Licensed Product" shall mean any product (a) the
manufacture, use, sale, offer for sale or importation of which would, in the
absence of the license granted by this Agreement, infringe any of the Licensed
Patent Rights, (b) that is comprised of, utilizes or incorporates any of the
Licensed Biological Materials, and/or (c) that is discovered, developed or made
using a Licensed Process or any of the Licensed Biological Materials, or using
any data or results produced or generated by using a Licensed Process or any of
the Licensed Biological Materials within the Field.
 
1.9 Licensed Product Data. The term “Licensed Product Data” shall mean any data,
information or other materials exclusively controlled by Licensee, including
without limitation pre-clinical, clinical and other regulatory data, generated
or produced by or on behalf of Licensee directly relating to a Licensed Product
and which is generated or produced after the Effective Date.
 
1.10 Licensed Process. The term “Licensed Process” shall mean any method or
process claimed in the Licensed Patent Rights.
 
1.11 Licensed Service. The term “Licensed Service” shall mean the performance of
a service for a third party in the Field, which performance uses or incorporates
a Product, Licensed Process or Licensed Biological Material.
 
1.12 Major Market Country. The term "Major Market Country" shall mean any of the
following countries: the United States of America, the United Kingdom, France,
Italy, Spain, Germany, Ireland and Japan.
 
 
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1.13 Net Sales. The term "Net Sales" shall mean the gross amounts invoiced by
Licensee and its Sublicensees, or any of them, on all sales of Products,
Licensed Processes and Licensed Services, less the following items, to the
extent directly applicable to such sales of Products, Licensed Processes or
Licensed Services (if not previously deducted from the amount invoiced):
[…***…]. Net Sales shall include all consideration charged by Licensee or
Sublicensees in exchange for any Products, Licensed Processes or Licensed
Services, including without limitation any monetary payments or, with regard to
any other property paid in exchange for any Products, Licensed Processes or
Licensed Services, an amount in cash equal to the fair market value of such
property. For purposes of determining Net Sales, a sale shall be deemed to have
occurred when […***…]. Sales of Products by Licensee to a Sublicensee or
Affiliate for resale or by a Sublicensee to an Affiliate of Licensee for resale
shall be excluded, and only the subsequent sale of such Products by such
Affiliates or Sublicensees to unrelated parties shall be deemed Net Sales
hereunder.
 
The deductible items listed [...***...] above shall be either (i) included as
line items on the invoice, or (ii) documented as being specifically attributable
to actual sales of Products, Licensed Processes or Licensed Services in
accordance with United States Generally Accepted Accounting Principles (“GAAP”)
or International Financing Reporting Standards (“IFRS”), as applicable,
consistently applied throughout the organization of the selling party, and
provided that such amounts are included in the quarterly Royalty Reports that
Licensee sends to TSRI pursuant to Section 5.3. If Licensee or other selling
party receives refunds or reimbursements of any amounts deducted as set forth
herein, then such refunded or reimbursed amounts shall be considered Net Sales
in the applicable reporting period in which such refunded or reimbursed amounts
are received.
 
1.14 Product. The term “Product” shall mean a Licensed Product and/or Derivative
Product, as applicable.
 
1.15 Royalty Report. The term “Royalty Report” shall have the meaning ascribed
to such term as provided in Section 5.3.
 
1.16 Research Funding Agreement. The term “Research Funding Agreement” shall
mean the Research Funding Agreement between the parties dated June 1, 2017 for
sponsored research in the laboratory of Brunhilde Felding.
 
1.17 Sublicensee. The term “Sublicensee” shall mean any third party to whom
Licensee grants a sublicense or similar rights with respect to the rights
conferred upon Licensee under this Agreement, as contemplated by Section 2.3. In
addition, “Sublicensee” shall include any and all further third party
Sublicensees that may be permitted under Section 2.3.
 
1.18 Sublicense Revenues. The term “Sublicense Revenue” shall mean all revenues
and other consideration paid to Licensee or to an Affiliate in consideration of
(a) the
 
  ***Confidential Treatment Requested

 
-4-

 
 
grant of rights that includes a sublicense to the Licensed Patent Rights and/or
Licensed Biological Materials, (b) the grant of distribution or marketing rights
with respect to Products and/or Licensed Biological Materials, and/or (c) the
sale or other transfer of that portion of Licensee’s or an Affiliate’s business
or assets that relates to the rights granted under this Agreement. Without
limiting the generality of the foregoing, Sublicense Revenues shall include
without limitation all upfront fees, license fees, milestone payments,
technology access fees, premiums above the fair market value on sales of debt or
equity securities of Licensee or of an Affiliate, annual maintenance fees, and
any other payments with respect to such sublicense, distribution or marketing
rights or sale or other transfer. Sublicense Revenues include amounts received
from a Sublicensee under the terms of the agreement in which the sublicense is
granted and under the terms of other agreements entered into between Licensee
and Sublicensee as part of the same transaction as the agreement that includes
the grant of the sublicense. However, Sublicense Revenues shall exclude: (i)
royalties on a Sublicensee’s sales of Products, Licensed Services or Licensed
Processes; and (ii) payments for debt or equity securities of Licensee or of an
Affiliate that are at or below the fair market value of such securities as of
the date of receipt of such payments as mutually determined by the parties. Any
non-cash Sublicense Revenues received by Licensee or by an Affiliate shall be
valued at its fair market value as of the date of receipt as mutually determined
by the parties.
 
1.19 Valid Claim. The term "Valid Claim" shall mean a claim of an issued and
unexpired patent within the Licensed Patent Rights that has not been held
invalid or unenforceable by a court or other appropriate governmental body of
competent jurisdiction in a ruling that is unappealed or unappealable within the
time allowed for appeal. The term “Valid Claim” shall also include the claims of
a pending patent application within the Licensed Patent Rights which have not
been pending for a period of more than seven (7) years from the date of first
examination on the merits of that patent application.
 
2. Grant of License.
 
2.1 Grant of Exclusive License Under Licensed Patent Rights. TSRI hereby grants
and Licensee accepts, subject to the terms and conditions of this Agreement, an
exclusive (except as specified in Sections 2.5 and 2.6), worldwide,
royalty-bearing license, with limited rights to sublicense pursuant to Section
2.3, under the Licensed Patent Rights to make. have made, use, have used, sell,
have sold, offer to sell and import Products, Licensed Processes and Licensed
Services in the Field.
 
2.2 Grant of License for Licensed Biological Materials. TSRI hereby grants and
Licensee accepts, subject to the terms and conditions of this Agreement a
non-exclusive license to the Licensed Biological Materials to make and have
made, to use and have used, to sell and have sold, to offer to sell and to
import any Licensed Biological Materials in the Field and to create any progeny,
mutant, or derivative work thereof. Except for the license and sub-license
rights granted pursuant to this Agreement, TSRI shall not grant a license to the
Licensed Biological Materials to any party except to other nonprofit or academic
institutions, pursuant to Section 2.6, (collectively, the “Research
Institutions”) solely for research and educational use, provided that any such
license to the Licensed Biological Materials granted to the Research
Institutions shall prohibit the commercialization of such Licensed Biological
Materials by such Research Institutions and shall not in any way limit
Licensee’s commercialization rights under this Agreement.
 
 
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2.3 Sublicensing. Licensee shall have the right to grant and authorize
sublicenses to any party with respect to the rights conferred upon Licensee
under this Agreement only with TSRI’s prior written consent, which will not be
unreasonably withheld. Sublicensees shall not have the right to further
sublicense without TSRI’s prior written consent, which will not be unreasonably
withheld. Any sublicense granted under this Section 2.3 shall be subject in all
respects to the applicable provisions contained in this Agreement (including
without limitation the provisions regarding governmental interest, reservation
of rights, development efforts, reporting, audit rights, indemnity, insurance,
Challenges, warranty disclaimer, limitation of liability, confidentiality, and
rights upon expiration or termination). In the event of a conflict between this
Agreement and the terms of any sublicense, the terms of this Agreement shall
control. Licensee shall forward to TSRI a copy of any and all fully executed
sublicense agreements within […***…] days of execution. Licensee shall at all
times be and remain responsible for the compliance by Sublicensees with the
terms and conditions of this Agreement, including without limitation the payment
of all amounts that may become due hereunder as a result of any Sublicensees’
activities.
 
2.4 No Other License. This Agreement confers no license or rights by
implication, estoppel or otherwise under any patent applications or patents or
intellectual property of TSRI other than the Licensed Patent Rights regardless
of whether such patent applications, patents or intellectual property are
dominant or subordinate to the Licensed Patent Rights.
 
2.5 Governmental Interest. Licensee and TSRI acknowledge that TSRI has received,
and expects to continue to receive, funding from the United States Government in
support of TSRI’s research activities. Licensee and TSRI acknowledge and agree
that their respective rights and obligations under this Agreement shall be
subject to the rights of the United States Government, existing and as amended,
which may arise or result from TSRI’s receipt of research support from the
United States Government, including without limitation 37 C.F.R. Part 401, the
National Institutes of Health (“NIH”) Grants Policy Statement and the NIH
Guidelines for Obtaining and Disseminating Biomedical Research Resources.
 
2.6 Reservation of Rights. Notwithstanding the exclusive license granted under
Section 2.1, TSRI reserves the right to use for any internal research and
educational purposes any Licensed Patent Rights and/or Licensed Biological
Materials licensed hereunder, without TSRI being obligated to pay Licensee any
royalties or other compensation or to account to Licensee in any way. In
addition, TSRI reserves the right to grant non-exclusive licenses to use the
Licensed Patent Rights and/or Licensed Biological Materials for internal
research and educational purposes to other nonprofit or academic institutions,
without the other nonprofit or academic institution being obligated to pay
Licensee any royalties or other compensation or to account to Licensee in any
way. With regard the Licensed Biological Materials inside the Field, TSRI
reserves the right to grant non-exclusive licenses for internal research and
educational purposes to other nonprofit or academic institutions, without the
other nonprofit or academic institution being obligated to pay Licensee any
royalties or other compensation or to account to Licensee in any way, […***…].
 
 ***Confidential Treatment Requested
 
 
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3. Royalties and Other Payments.
 
3.1 License Issue Fee. Licensee shall pay to TSRI a noncreditable, nonrefundable
license issue fee in the amount of […***…] within fifteen (15) days of the
Effective Date. Failure of Licensee to make this payment shall render this
Agreement null and void (ab initio).
 
3.2 Annual Fee. Licensee shall pay to TSRI a nonrefundable minimum annual fee in
the initial amount of fifty thousand U.S. Dollars ($50,000). The first payment
is due on June 1, 2018 and on June 1 of each subsequent calendar year until June
1, 2020, at which time the amount of the minimum annual fee shall become one
hundred thousand U.S. Dollars ($100,000) and shall remain that amount which will
be due on June 1 of each subsequent calendar year during the remaining term of
this Agreement. The minimum annual fee shall be credited against running
royalties due for that calendar year and Licensee’s Royalty Reports shall
reflect such a credit. The minimum annual fee shall not be credited against any
milestone payments, Sublicense Payments, royalties due for any preceding or
subsequent calendar year or against any other amounts due by Licensee under this
Agreement.
 
3.3 Running Royalties. In the Field, Licensee shall pay to TSRI running
royalties on a Licensed Product and country-by country basis, on a Licensed
Process and country-by country basis, and on a Licensed Service and
country-by-country basis, in the amount of (a) […***…] percent ([…***…]%)] of
Net Sales of Licensed Products, Licensed Processes and Licensed Services in all
countries in which the manufacture, use, sale, offer for sale or import of such
Licensed Product, Licensed Process or Licensed Service would, in the absence of
the license under the Licensed Patent Rights granted by this Agreement, infringe
one or more Valid Claims in that country, or when the Licensed Product, Licensed
Process or Licensed Service would not infringe a Valid Claim in the country of
sale, but would infringe at least one Valid Claim in any Major Market Country,
and (b) Licensee shall pay to TSRI running royalties on a Derivative Product and
country-by country basis of Net Sales of Derivative products at […***…]% of the
Licensed Product royalty rate set forth in this Section 3.3 (a).
 
3.4 Royalty Payments. Licensee shall pay to TSRI all royalties required by this
Section 3 within […***…] days after the end of each calendar quarter, based upon
Net Sales during the immediately preceding calendar quarter. Licensee shall make
all such royalty payments itself to TSRI, and/or cause its Affiliates or
Sublicensees to pay to TSRI all royalties resulting from Net Sales by its
Affiliates or Sublicensees, within the time period specified in the preceding
sentence.
 
3.5 Royalty Credit. If Licensee is required, upon the advice of patent counsel,
to obtain a license under patent rights of one or more third parties that would,
in the absence of such license, be infringed by Licensee’s practice of the
inventions claimed by the Licensed Patent Rights in the manufacture, use or sale
of a Product, such that the total royalties paid by Licensee to such third
parties and to TSRI for that Product exceeds […***…] percent ([…***…]%) of Net
Sales of such Product in a particular royalty reporting period, then License
shall be entitled to deduct from the royalties due to TSRI under Section 3.3
with respect to sales of that Product up to […***…] percent ([…***…]%) of the
royalties Licensee actually paid to such third parties in excess of […***…]
percent ([…***…]%) of Net Sales of such Product in that reporting period. The
above offset right is subject to the
 
 ***Confidential Treatment Requested
 
 
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requirement that (i) the royalties paid to TSRI hereunder with respect to such
Product shall not be reduced below […***…] percent ([…***…]%) of the royalties
for that Product that would otherwise be due hereunder without such credit, and
(ii) all such third parties who license patent rights to Licensee for that
Product similarly agree to a royalty stacking credit in their license agreements
with Licensee. For clarity, only one of Licensee, its Affiliates or Sublicensees
may exercise such right to deduct with respect to a given third-party royalty
obligation. Notwithstanding the above, Licensee, its Affiliates or its
Sublicensees shall have no right to deduct or offset any royalties or other
amounts with respect to a) third party composition of matter IP, b) generic or
other competitive products and/or c) any third party technology that is involved
in any cross license or similar arrangements (whether in the same or related
transactions) where Licensee, its Affiliates or its Sublicensees grant or
provide to such third party or agents licenses, options or other rights to
existing or future technology, intellectual property, research or development
activities or other information or materials. Licensee will give TSRI prior
written notice of any third party license that would satisfy the above
requirements for a royalty credit sufficiently in advance of deducting such
credit from royalties due to TSRI hereunder in order to allow TSRI and Licensee
to mutually determine whether the requirements of this Section have been
satisfied.
 
3.6 No Multiple Royalties. No multiple royalties shall be due because any
Licensed Product, Licensed Service or Licensed Process is covered by more than
one of the Licensed Patent Rights or can be categorized as a Licensed Product
and a Derivative Product. In such case, Licensee shall pay only one royalty at
the applicable rate pursuant to Section 3.4 above. If both Sections 3.3 (a) and
3.3 (b) are applicable to a given Product, then Licensee shall pay the rate
specified in Section 3.3 (a).
 
3.7 Arms-Length Transactions. On sales of Products, Licensed Services or
Licensed Processes which are made in other than an arm’s-length transaction, the
value of the Net Sales attributed under this Section 3 to such a transaction
shall be that which would have been received in an arm’s-length transaction,
based on sales of like quality and quantity products, services or processes on
or about the time of such transaction.
 
3.8 Payment Increase in the Event of a Challenge.
 
3.8.1 Increase. Notwithstanding anything to the contrary in this Agreement, in
the event Licensee or a Sublicensee directly or indirectly institutes or makes
any Challenges, the amount of the minimum annual fee and the milestone payments
and the percentage rates for royalties and Sublicense Payments required under
Sections 3 and 4 of this Agreement shall be doubled during the pendency of such
Challenges from the date the challenging party first institutes or makes such
Challenges and during the pendency of such Challenges, and shall continue to
apply after the conclusion of such Challenges in the event that at least one (1)
Valid Claim that covers a Licensed Product, Licensed Service or Licensed Process
is held to be valid and enforceable.
 
3.8.2 No Right to Recoup. In the event Licensee or a Sublicensee directly or
indirectly institutes or makes any Challenges, Licensee shall have no right to
recoup, recover, set-off or otherwise get reimbursement of any royalties, annual
fees, Sublicense Payments, equity issuances to TSRI, milestone payments, patent
costs or other monies paid hereunder to TSRI prior to or during the period of
such Challenges. Licensee hereby voluntarily and irrevocably waives any right to
seek return of such royalties, annual fees, Sublicense Payments, equity
issuances,
 
  ***Confidential Treatment Requested

 
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milestone payments, patent costs or other monies in the event Licensee or a
Sublicensee directly or indirectly institutes or makes any Challenges.
 
3.8.3 Pre-Challenge Requirements. Licensee will provide written notice to TSRI
at least one hundred eighty (180) days prior to Licensee or a Sublicensee
instituting or making any Challenges, and Licensee agrees that the challenging
party will not institute such Challenge for at least one hundred eighty (180)
days after the date of such notice. Licensee will include with such written
notice a list of all prior art and a description of the other facts and
arguments that support its contention that any of the Licensed Patent Rights are
invalid or unenforceable. During such one hundred eighty (180) day period, the
parties will discuss the same and attempt in good faith to mutually resolve such
issues.
 
3.8.4 Reasonable Provisions. The parties agree that neither of them is entering
into this Agreement with the anticipation that Challenges will be instituted or
made by Licensee or any of its Sublicensees against TSRI, and consequently the
percentage rates for royalties and Sublicense Payments and the other financial
terms and conditions herein reflect that understanding. Licensee and TSRI
further agree that if the parties did expect that such Challenges would be made
against TSRI, the percentage rates for royalties and Sublicense Payments and the
other financial terms and conditions herein would be significantly higher.
Accordingly, the parties agree that the provisions for increasing the percentage
rates for royalties and Sublicense Payments and the other amounts specified in
Section 3.8.1 and the other provisions of this Section 3.8 are reasonable and
reflect a mutual adjustment of certain financial provisions of this Agreement to
accommodate those situations in which a Challenge is made against TSRI in lieu
of increasing the percentage rates for royalties and Sublicense Payments and the
other financial terms and conditions of this Agreement as of the Effective Date.
 
3.9 Duration of Royalty Obligations. The royalty obligations of Licensee as to
each Product, Licensed Service or Licensed Process shall continue on a
country-by-country basis until (a) the later of (i) the expiration of the last
to expire Valid Claim that covers such Licensed Product, Licensed Service or
Licensed Process in that country, or when a Licensed Product, Licensed Service
or Licensed Process is not covered by a Valid Claim in the country of sale but
is covered by at least one Valid Claim in a Major Market Country, upon the
expiration of the last to expire Valid Claim that covers such Licensed Product,
Licensed Service or Licensed Process in a Major Market Country, and (ii) the
fifteenth (15th) anniversary of the first commercial sale of such Product,
Licensed Service or Licensed Process in such country, or (b) for a Product,
Licensed Service or Licensed Process in any country in which the manufacture,
use or sale of such Licensed Product, Licensed Service or Licensed Process is
not covered by a Valid Claim but utilizes, is comprised of or incorporates
Licensed Biological Materials, is a Derivative Product, or was discovered,
developed or made using any Licensed Process or Licensed Biological Material,
fifteen (15) years after the date of the first commercial sale of such Product,
Licensed Service or Licensed Process in such country.
 
4. Additional Consideration.
 
4.1 Sublicense Payments. All Sublicense Revenues shall be reported and
Sublicense Payments (defined below) paid to TSRI by Licensee within […***…] days
of Licensee’s receipt of such Sublicense Revenues. Licensee’s reports to TSRI
regarding Sublicense Revenues shall contain an explanation and calculation of
the amount of Sublicense Payments due
 
  ***Confidential Treatment Requested

 
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to TSRI pursuant to the schedule below. Licensee’s obligation to pay Sublicense
Payments to TSRI shall continue for as long as royalties are due to TSRI
pursuant to Section 3.9. Licensee shall pay to TSRI a non-creditable,
non-refundable percentage of Sublicense Revenues according to the following
schedule (“Sublicense Payments”):
 
Date of Agreement with Third Party/Sublicensee
Percent of Sublicense Revenue Payable to TSRI*
 
Before IND approval of Phase 1 clinical trials of a Product covered by such
sublicense
 
 
[…***…]%
After IND approval of Phase 1 clinical trials, but prior to first dosing in IND
approved study, of a Product covered by such sublicense
 
[…***…]%
After first dosing in IND approved study of a Product covered by such sublicense
 
[…***…]%

 
*In the event that Sublicense is with respect to a Derivative Product, Licensee
shall pay to TSRI a reduced percentage of Sublicense Revenue equal to […***…]
percent ([…***…]%) of the rates set forth in the table above. For example, if a
Sublicense is granted with respect to a Derivative Product prior to IND approval
of Phase 1 Clinical Trial for such Derivative Product, Licensee shall pay to
TSRI Sublicense Revenues equal to […***…]%.
 
 
4.2 Product Development Milestones. Licensee shall pay to TSRI the following
non-creditable, non-refundable amounts for the achievement of the following
product development milestone events within […***…] days of the first occurrence
of each milestone for each Product to meet such milestone as follows:
 
Milestone
 
Payment
[…***…]
 
U.S. $[…***…]
[…***…]
 
U.S. $[…***…]
[…***…]
 
U.S. $[…***…]
[…***…]
 
U.S. $[…***…]
[…***…]
 
U.S. $[…***…]
[…***…]
 
U.S. $[…***…]

 
 
 ***Confidential Treatment Requested
 
 
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*In the event that the product development milestone achieved in the Field is
with respect to a Derivative Product, Licensee shall pay to TSRI a reduced
milestone payment equal to […***…] percent ([…***…]%) of the amounts set forth
in the table above. For example, upon Initiation of the Phase 1 Trial for such
Derivative Product, Licensee shall pay to TSRI a milestone payment equal to
[…***…] dollars ($[…***…]).
 
For purposes of this Section 4.2, the following definitions shall apply:
 
(a) The term “Initiation” means, with respect to a clinical trial, the first
dosing of the first patient in such trial.
 
(b) The term “Phase 1 Trial” means a human clinical trial that would satisfy the
requirements for a Phase 1 study as defined in 21 C.F.R. §312.21(a) (or its
successor regulation), or its foreign equivalent.
 
(c) The term “Phase 2 Trial” means a human clinical trial that would satisfy the
requirements for a Phase 2 study as defined in 21 C.F.R. §312.21(b) (or its
successor regulation), or its foreign equivalent.
 
(d) The term “Phase 3 Trial” means a human clinical trial that would satisfy the
requirements for a Phase 3 study as defined in 21 C.F.R. §312.21(c) (or its
successor regulation), or its foreign equivalent.
 
5. Development and Commercialization Activities.
 
5.1 Development Plan and Benchmarks. Attached hereto as Exhibit C is Licensee’s
development plan under which Licensee intends to bring the subject matter of the
Licensed Patent Rights to the point of commercial use (“Commercial Development
Plan”). Pursuant to the Commercial Development Plan, Licensee shall achieve the
Benchmarks specified in Exhibit D within the time periods set forth in Exhibit D
(“Benchmarks”). In addition, Licensee shall use commercially reasonable efforts,
itself or through its Sublicensees, to develop and obtain regulatory approvals
to market and sell Products, Licensed Services and Licensed Processes in the
Field as promptly as is reasonably and commercially feasible, and, subject to
obtaining necessary regulatory approvals, to produce and sell reasonable
quantities of Products, Licensed Services and Licensed Processes sufficient to
meet market demands.
 
5.2 Progress Reports. Licensee shall keep TSRI generally informed as to
Licensee’s progress with respect to its development of Products, Licensed
Services and Licensed Processes, including without limitation its regulatory
filings and approvals, marketing, production, sale and its efforts to sublicense
the Licensed Patent Rights or Licensed Biological Materials. Licensee shall also
provide to TSRI written annual reports on its progress in the development and
commercialization of Products, Licensed Services and Licensed Processes in the
Field by June 30 of each calendar year. These progress reports shall include
without limitation: progress on research and development; status of applications
for regulatory approvals; progress towards achieving the
 
 ***Confidential Treatment Requested
 
 
-11-

 
 
Benchmarks; manufacturing; sublicensing; marketing; importing; sales efforts
during the preceding calendar year as well as plans for the present calendar
year; and a summary of the results of animal experiments and IND-enabling
studies, and the Licensed Product Data from the preceding calendar year and
analyses thereof that will provide meaningful understanding of the current
status of Licensee’s development of Products, Licensed Services and Licensed
Processes. If reported progress in these annual reports differs from that
projected in the Commercial Development Plan and Benchmarks, Licensee shall
explain the reasons for such differences in its annual reports. Licensee agrees
to provide any additional information reasonably required by TSRI to evaluate
Licensee’s performance under this Agreement. Licensee shall also report to TSRI
the dates that Licensee or its Sublicensees achieve the events described on
Exhibit E attached hereto within […***…] days of such occurrences.
 
5.3 Commercial Development Obligation. In order to maintain the license granted
hereunder in force, Licensee shall […***…] develop Licensed Patent Rights which
are licensed hereunder into commercially viable Licensed Products, as promptly
as is reasonably and commercially feasible, and thereafter to produce and sell
reasonable quantities of Licensed Products. The parties hereto acknowledge and
agree that achievement of mutually agreeable milestones shall be evidence of
compliance by Licensee with its commercial development obligations hereunder.
Notwithstanding the foregoing, if Licensee believes that it cannot, within the
exercise of prudent and reasonable business judgment, perform any mutually
agreed upon milestones within the time period required therefor, Licensee may
request, no more than one time per milestone, an extension of time for the
performance date to a date that Licensee believes to be reasonable and prudent
and TSRI shall agree to any requested extension which is not more than one (l)
year in length from the originally required date and will not unreasonably
withhold consent to requests for longer extensions. In the event TSRI has a
reasonable basis to believe that Licensee is not using reasonable efforts and
due diligence as required hereunder, upon notice by TSRI to Licensee which
specifies the basis for such belief, TSRI and Licensee shall negotiate in good
faith to attempt to mutually resolve the issue. In the event TSRI and Licensee
cannot agree upon any matter related to Licensee's commercial development
obligations, the parties agree to utilize an arbitrator mutually agreed to by
the parties in order to resolve the matter. If the arbitrator determines that
Licensee has not complied with its obligations hereunder, and such default is
not cured within sixty (60) days after the arbitrator's decision, TSRI may
terminate Licensee's rights under this Agreement.
 
5.4 Royalty Reports. Licensee shall submit to TSRI, no later than […***…] days
after the end of each calendar quarter, a royalty report (the "Royalty Report")
setting forth for such quarter at least the following information on a
country-by-country and Licensed Product, Derivative Product, Licensed Service
and Licensed Process basis:
 
(a) the number of units of Licensed Products and Derivative Products sold by
Licensee and its Sublicensees;
 
(b) the gross amounts due or invoiced for such Licensed Products and Derivative
Products sold by Licensee and its Sublicensees;
 
 ***Confidential Treatment Requested
 
 
-12-

 
 
(c) the gross amounts due or invoiced for all Licensed Processes and Derivative
Products used or sold by Licensee and its Sublicensees;
 
(d) the gross amounts due or invoiced for all Licensed Services performed by
Licensee and its Sublicensees;
 
(e) a detailed listing of any royalty credits permitted under Section 3.5 and
deductions applicable to determine Net Sales of Products, Licensed Services and
Licensed Processes pursuant to Section 1.13, and any refunds or reimbursed
amounts previously deducted which are deemed Net Sales pursuant to Section 1.13;
and
 
(f) the amount of royalties due under Section 3, or if no royalties are due to
TSRI for any reporting period, the statement that no royalties are due and a
detailed explanation why they are not due for that quarterly period.
 
Each Royalty Report shall be certified as correct by an officer of Licensee.
 
5.5 Payments. Licensee shall pay to TSRI with each Royalty Report the amount of
royalties due with respect to such quarter. If multiple technologies are covered
by the licenses granted hereunder and Products, Licensed Services or Licensed
Processes are based on different technologies, Licensee shall specify which
Licensed Patent Rights and Licensed Biological Materials are utilized for each
Product, Licensed Service or Licensed Process included in the Royalty Report.
All payments due under this Agreement shall be deemed received when funds are
credited to TSRI’s bank account and shall be payable by check or wire transfer
in United States Dollars to an account designated by TSRI.
 
5.6 Foreign Sales. The remittance of royalties payable on sales outside the
United States shall be payable to TSRI in United States Dollar equivalents at
the official rate of exchange of the currency of the country from which the
royalties are payable, as quoted in The Wall Street Journal for the last
business day of the calendar quarter in which the royalties are payable. If the
transfer of or the conversion into the United States Dollar equivalents of any
such remittance in any such instance is not lawful or possible, the payment of
such part of the royalties as is necessary shall be made by the deposit thereof,
in the currency of the country where the sale was made on which the royalty was
based, to the credit and account of TSRI or its nominee in any commercial bank
or trust company designated by TSRI and located in that country, prompt written
notice of which shall be given by Licensee to TSRI.
 
6. Record Keeping. Licensee shall keep, and shall require its Affiliates and its
Sublicensees to keep, accurate records (together with supporting documentation)
of all Products, Licensed Services and Licensed Processes made, used and sold
under this Agreement, as appropriate to determine the amount of royalties
(including the calculations of royalty credits), product development milestone
payments and other monies due to TSRI hereunder, as well as records regarding
Sublicense Revenues, Sublicense Payments and Licensee’s compliance with this
Agreement. Such records shall be retained for at least five (5) years following
the end of the reporting period to which such records relate. Such records shall
be available, upon prior written notice to Licensee, during normal business
hours for examination and copying by TSRI and/or its designated certified public
accountant for the purpose of verifying the accuracy of Licensee’s reports and
payments hereunder and its compliance with this Agreement. In conducting
 
 
-13-

 
 
examinations pursuant to this Section, TSRI and/or its accountant shall have
access to, and such accountant may disclose to TSRI, all records which TSRI or
its accountant reasonably believes to be relevant to the calculation of
royalties and other payments under Section 3, other consideration under Section
4, other financial obligations under this Agreement and to Licensee’s compliance
with this Agreement. These examinations shall be at TSRI’s expense, except that
if an examination shows an underreporting or underpayment of […***…] percent
([…***…]%) or more for any […***…] month period, then Licensee shall pay the
cost of such examination (including without limitation TSRI’s attorney’s fees,
accountant’s fees and other costs), as well as any additional payments that
would have been payable to TSRI had Licensee reported correctly, plus interest
on such amounts at the rate of […***…] percent ([…***…]%) per month. All
payments due hereunder shall be made within thirty (30) days of Licensee’s
receipt of a copy of the audit report. TSRI may exercise its audit rights under
this Section 6 no more frequently than once in any calendar year.
 
7. Patent Matters.
 
7.1 Patent Prosecution and Maintenance. From and after the date of this
Agreement, the provisions of this Section 7 shall control the prosecution of any
patent application and maintenance of any patent included within Licensed Patent
Rights. TSRI shall (a) direct and control the preparation, filing and
prosecution of the United States and foreign patent applications within Licensed
Patent Rights (including without limitation any reissues, reexaminations,
appeals to appropriate patent offices and/or courts, post-issuance proceedings,
interferences and foreign oppositions); and (b) maintain the patents issuing
therefrom. TSRI shall have the right, in its sole discretion, to use TSRI’s
Office of Patent Counsel (“OPC”) in lieu of or in addition to outside patent
counsel for the patent prosecution and maintenance described herein. The fees
and expenses associated with such work done by TSRI’s OPC and its outside patent
counsel shall be paid by Licensee as set forth below.
 
7.2 Information to Licensee. TSRI shall keep Licensee timely informed with
regard to the patent application and maintenance processes. TSRI shall deliver
to Licensee copies of all patent applications, amendments, related
correspondence and other related patent documents. Licensee shall have full
rights of consultation with TSRI’s OPC and with TSRI’s outside patent counsel on
all matters relating to the prosecution and maintenance of the Licensed Patent
Rights.
 
7.3 Patent Costs. Licensee acknowledges and agrees that the licenses granted
hereunder are in partial consideration for Licensee’s assumption of patent fees
and expenses as described herein. Licensee shall pay to TSRI all fees and
expenses for the work referenced in Sections 7.1 and 7.2. In addition, Licensee
agrees to reimburse and pay TSRI for all patent fees and expenses previously
incurred by TSRI’s OPC and its outside patent counsel with respect to the
Licensed Patent Rights before the Effective Date. Licensee shall pay to TSRI all
such past and future patent fees and expenses associated with the work on the
Licensed Patent Rights performed by TSRI’s OPC and/or its outside patent counsel
within thirty (30) days after Licensee receives an invoice itemizing such
expenses. Failure of Licensee to pay patent fees and expenses as set forth in
this Section 7.3 shall immediately relieve TSRI from its obligation to incur any
further patent fees and expenses. For clarity, if Licensee does not pay any
patent fees and expenses due to TSRI (for work performed by TSRI’s OPC or by
outside patent counsel) within thirty (30) days after Licensee’s receipt of an
itemized invoice therefor, TSRI shall have the right, in its sole discretion, to
cease all patent prosecution and maintenance and allow Licensed Patent Rights to
go abandoned.
 
  ***Confidential Treatment Requested

 
-14-

 
 
Such action by TSRI shall not constitute a breach of this Agreement. Licensee
may elect with a minimum of […***…] days’ prior written notice to TSRI, to
discontinue payment for the filing, prosecution and/or maintenance of any patent
application and/or patent within Licensed Patent Rights. Licensee shall remain
liable for all patent prosecution and maintenance fees and costs incurred prior
to the date of such notice of election and during such […***…]-day notice
period. Any such patent application or patent so elected shall immediately be
excluded from the definition of Licensed Patent Rights and from the scope of the
licenses granted under this Agreement, and all rights relating thereto shall
revert exclusively to TSRI.
 
7.4 Ownership. TSRI exclusively owns all right, title and interest in and to the
Licensed Patent Rights set forth in Exhibit B Part 1. The Licensed Patent Rights
developed under the Research Funding Agreement are jointly owned by TSRI and
Licensee as set forth in Exhibit B Part 2 and the Licensed Biological Materials
are also jointly owned and set forth in Exhibit A.
 
7.5 TSRI Right to Pursue Patent. If at any time during the term of this
Agreement, Licensee's rights with respect to any of the Licensed Patent Rights
are terminated, TSRI has the right, but not the obligation, to take whatever
action TSRI deems appropriate to obtain or maintain the corresponding patent
protection. If TSRI pursues such patent protection under this Section 7.5,
Licensee agrees to cooperate fully, including by providing, at no charge to
TSRI, all appropriate technical data and executing all necessary legal
documents.
 
7.6 Infringement Actions.
 
7.6.1 Prosecution of Infringements. Licensee agrees to promptly notify TSRI in
the event that Licensee becomes aware of any infringement or threatened
infringement by a third party of any of the Licensed Patent Rights. In order to
maintain the licenses granted hereunder in force, Licensee shall prosecute any
and all infringements of any Licensed Patent Rights by third parties, unless
otherwise agreed in writing by TSRI and Licensee. Licensee may enter into
settlements, stipulated judgments or other arrangements respecting such
infringement, at its own expense, but only with TSRI’s prior written consent if
such settlements, stipulated judgments or other arrangements would affect TSRI’s
business or its rights in the Licensed Patent Rights. Licensee shall hold TSRI
harmless from all liabilities and expenses with respect to such infringements.
Failure on the part of Licensee to prosecute any such infringement shall be
grounds for termination of the licenses granted to Licensee hereunder, with
respect to the country in which such infringement occurs, at TSRI’s option. If
Licensee fails to prosecute any such infringement, Licensee shall promptly
notify TSRI in writing. In such events, TSRI will have the right, but not the
obligation, to prosecute such infringement itself.
 
7.6.2 Allocation of Recovery. Any damages, settlements or other recovery from an
infringement action undertaken by Licensee pursuant to Section 7.6.1 shall first
be used to reimburse the parties for the fees and expenses incurred in such
action, and shall thereafter be allocated between and paid to the parties as
follows: […***…] percent ([…***…]%) to TSRI, and […***…] percent ([…***…]%) to
Licensee. If Licensee fails to prosecute any such action or fails to prosecute
such action to completion, and TSRI instead prosecutes such action, then any
damages or other recoveries net of the parties’ fees and expenses incurred in
such infringement action shall be allocated entirely to TSRI.
 
7.6.3 Defense of Infringements. Licensee shall, at its expense, have the
 
   ***Confidential Treatment Requested
 
-15-

 
 
first right, but not the obligation, to defend any suits against Licensee or
Sublicensees alleging infringement of any third party intellectual property
right due to Licensee’s or its Sublicensee’s practice of the Licensed Patent
Rights or its development or commercialization of Licensed Products, Licensed
Services or Licensed Processes. Licensee shall promptly notify TSRI in writing
of such claims, and TSRI and Licensee shall confer with each other and cooperate
during the defense of any such action. TSRI shall, at its expense, have the
right to retain separate independent counsel to assist in defending any such
actions. In no event shall TSRI have any liability whatsoever for any damages,
litigation costs or other amounts due to any third party (except for costs of
TSRI’s own counsel as provided above). If the third party intellectual property
right is held not to be infringed or is held unenforceable or invalid, any
recovery of damages with respect to such suit shall first be applied to
reimburse all litigation fees and expenses of TSRI, next to reimburse all
litigation fees and expenses of Licensee, and thereafter Licensee shall be
entitled to keep the remaining balance from any such recovery. For clarity, the
parties agree that this Section 7.6.3 shall in no way limit Licensee's
obligations under Section 8.1 to indemnify, defend and hold harmless Indemnitees
(as defined in Section 8.1 below) with respect to third party claims alleging
infringement of such third party's intellectual property rights.
 
8. Indemnity and Insurance.
 
8.1 Indemnity. Licensee hereby agrees to indemnify, defend (by counsel
reasonably acceptable to TSRI) and hold harmless TSRI and any parent, subsidiary
or other affiliated entity of TSRI and their respective trustees, directors,
officers, employees, scientists, agents, students, successors, assigns and other
representatives (collectively, the “Indemnitees”) from and against all damages,
liabilities, losses and other expenses, including without limitation reasonable
attorney’s fees, expert witness fees and costs incurred by the Indemnitees, with
respect to any third party claim, suit or action asserted against any of the
Indemnitees, whether or not a lawsuit or other proceeding is filed (collectively
“Claims”), that arise out of or relate to (a) Licensee’s or any of its
Sublicensees’ practice of any invention claimed by the Licensed Patent Rights or
use of Licensed Biological Materials, (b) alleged defects or other problems with
any of the Products, Licensed Services or Licenses Processes manufactured, sold,
distributed or rendered by or on behalf of Licensee or any Sublicensee,
including without limitation any personal injuries, death or property damages
related thereto, (c) the research, development, manufacture, use, marketing,
advertising, distribution, sale or importation of any Product, Licensed Service
or Licensed Process by or on behalf of Licensee or any of its Sublicensees, (d)
the negligent or willful acts or omissions of Licensee or any of its
Sublicensees, (e) any allegations that the Products, Licensed Services or
Licensed Processes developed, manufactured, sold, distributed or rendered by or
on behalf of Licensee or any Sublicensee and/or any trademarks, service marks,
logos, symbols, slogans or other materials used in connection with or to market
Products, Licensed Services or Licensed Processes violate or infringe upon the
trademarks, service marks, trade dress, trade names, copyrights, patents, works
of authorship, inventorship rights, trade secrets, database rights, rights under
unfair competition laws, rights of publicity, privacy or defamation, or any
other intellectual or industrial property right of any third party, (f)
Licensee’s or any Sublicensee’s failure to comply with any applicable laws,
rules or regulations, and/or (g) the labeling, packaging or patent marking of
any Product or containers thereof by or on behalf of Licensee or any
Sublicensee. Licensee shall not enter into any settlement, stipulated judgment
or other arrangement with respect to such Claims that (i) imposes any obligation
on Indemnitees, (ii) does not unconditionally release Indemnitees from all
liability, or (iii) would have an adverse effect on TSRI’s reputation or
business, without TSRI’s prior written consent. Notwithstanding the above,
 
 
-16-

 
 
Indemnitees, at their expense, shall have the right to retain separate
independent counsel to assist in defending any such Claims. In the event
Licensee fails to promptly indemnify and defend such Claims and/or pay
Indemnitees’ expenses as provided above, Indemnitees shall have the right, but
not the obligation, to defend themselves, and in that case, Licensee shall
reimburse Indemnitees for all of their reasonable attorney’s fees, costs and
damages incurred in settling or defending such Claims within thirty (30) days of
each of Indemnitees’ written requests. This indemnity shall be a direct payment
obligation and not merely a reimbursement obligation of Licensee to Indemnitees.
 
8.2 Insurance.
 
8.2.1 TSRI as Additional Insured. Licensee shall name and cause TSRI and
Indemnitees to be named as “additional insureds” on any commercial general
liability and product liability insurance policies maintained by Licensee, its
Affiliates and Sublicensees applicable to the Products, Licensed Services,
Licensed Processes and Licensed Biological Materials.
 
8.2.2 Coverages. Beginning at the initiation of the first clinical trial
involving any Product, Licensed Process, Licensed Service or Licensed Biological
Material and continuing throughout the time any Product, Licensed Process or
Licensed Service is being commercially distributed or sold by Licensee or a
Sublicensee, Licensee shall, at its sole expense, procure and maintain
commercial general liability insurance with reputable insurers in amounts not
less than $10,000,000 per occurrence and $10,000,000 annual aggregate. Prior to
the initiation of the first clinical trial involving any Product, Licensed
Process, Licensed Service or Licensed Biological Material, Licensee shall, at
its sole expense, procure and maintain commercial general liability insurance
with reputable insurers in amounts not less than $5,000,000 per occurrence and
$5,000,000 annual aggregate. Such commercial general liability insurance shall
provide coverage, to the extent available, for: (i) product liability; (ii)
completed operations; (iii) clinical trials, as applicable; (iv) broad form
property damage; (v) advertising injury; (vi) premises operation; (vii) personal
injury; and (viii) contractual liability coverage for Licensee’s indemnification
and other obligations under this Agreement. If Licensee desires to self insure
all or part of the limits described above, such self-insurance program must be
approved in advance by TSRI in its sole discretion. The insurance coverage
amounts specified herein or the maintenance of such insurance policies shall not
in any way limit Licensee’s indemnity or other liability under this Agreement.
 
8.2.3 Waiver of Subrogation. Licensee, on behalf of itself and its insurance
carriers, waives any and all claims and rights of recovery against TSRI and the
Indemnitees, including without limitation all rights of subrogation, with
respect to either party’s performance under this Agreement or for any loss of or
damage to Licensee or its property or the property of others under its control.
Licensee’s commercial general liability insurance policy shall also include a
waiver of subrogation consistent with this Section in favor of TSRI and the
Indemnitees. Licensee shall be responsible for obtaining such waiver of
subrogation from its insurance carriers. Licensee’s insurance policies shall be
primary and not contributory to any insurance carried by its Sublicensees or by
TSRI. At the time when Licensee sends its annual progress report to TSRI under
Section 5.2 and upon TSRI’s additional request, Licensee shall deliver to TSRI
copies of insurance certificates and endorsements that comply with the
requirements of this Section 8.2.
 
 
-17-

 
 
8.2.4 Cancellation/Changes in Coverages. Licensee shall, to the extent possible,
provide TSRI with written notice at least […***…] days prior to the
cancellation, non-renewal or material change in any insurance required by this
Section 8.2. If Licensee does not obtain replacement insurance providing
comparable coverage within such […***…] day period (or prior to the
cancellation, non-renewal or material change in the existing policy), TSRI shall
have the right to terminate this Agreement if Licensee fails to cure within
[…***…] days of TSRI’s written notice of intent to terminate.
 
8.2.5 Continuation of Coverage. Licensee shall maintain such commercial general
liability and product liability insurance beyond the expiration or termination
of this Agreement during (a) the period that any Product, Licensed Process or
Licensed Service is being commercially distributed or sold by or on behalf of
Licensee or a Sublicensee; and (b) a reasonable period after the period referred
to in sub-clause (a) above, which in no event shall be less than fifteen (15)
years.
 
9. Disclaimer and Limitation of Liability.
 
9.1 Disclaimer. TSRI MAKES NO WARRANTIES OR REPRESENTATIONS CONCERNING LICENSED
PATENT RIGHTS, LICENSED BIOLOGICAL MATERIALS OR ANY OTHER MATTER WHATSOEVER,
INCLUDING WITHOUT LIMITATION ANY EXPRESS, IMPLIED OR STATUTORY WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD
PARTY RIGHTS, TITLE, ACCURACY OR ARISING OUT OF COURSE OF CONDUCT OR TRADE
CUSTOM OR USAGE, AND DISCLAIMS ALL SUCH EXPRESS, IMPLIED OR STATUTORY
WARRANTIES. TSRI MAKES NO WARRANTY OR REPRESENTATION AS TO THE VALIDITY, SCOPE
OR ENFORCEABILITY OF ANY OF THE LICENSED PATENT RIGHTS OR LICENSED BIOLOGICAL
MATERIALS, OR THAT ANY PRODUCT, LICENSED PROCESS, LICENSED SERVICE, LICENSED
PATENT RIGHTS OR LICENSED BIOLOGICAL MATERIALS WILL NOT INFRINGE ANY THIRD PARTY
RIGHTS, OR THAT NO THIRD PARTY IS IN ANY WAY INFRINGING UPON OR MAY INFRINGE
UPON ANY LICENSED PATENT RIGHTS OR LICENSED BIOLOGICAL MATERIALS COVERED BY THIS
AGREEMENT. FURTHER, TSRI HAS MADE NO INVESTIGATION AND MAKES NO REPRESENTATION
OR WARRANTY THAT THE LICENSED PATENT RIGHTS OR LICENSED BIOLOGICAL MATERIALS ARE
SUITABLE FOR LICENSEE’S PURPOSES.
 
9.2 Limitation of Liability. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY
INDIRECT, SPECIAL, INCIDENTAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES (INCLUDING
WITHOUT LIMITATION DAMAGES FOR LOST PROFITS OR EXPECTED SAVINGS) ARISING OUT OF
OR IN CONNECTION WITH THIS AGREEMENT OR ITS SUBJECT MATTER, EXCEPT WITH RESPECT
TO LICENSEE’S INDEMNITY OBLIGATIONS UNDER SECTION 8.1. TSRI’S AGGREGATE
LIABILITY, IF ANY, FOR ALL DAMAGES OR OTHER RELIEF OF ANY KIND RELATING TO THIS
AGREEMENT OR ITS SUBJECT MATTER SHALL NOT EXCEED THE AMOUNT PAID BY LICENSEE TO
TSRI UNDER THIS AGREEMENT. THE FOREGOING EXCLUSIONS AND LIMITATIONS SHALL APPLY
TO ALL CLAIMS AND ACTIONS OF ANY KIND AND ON ANY THEORY OF LIABILITY, WHETHER
BASED ON CONTRACT, TORT (INCLUDING WITHOUT LIMITATION NEGLIGENCE OR STRICT
LIABILITY), OR
 

  ***Confidential Treatment Requested
 
 
-18-

 
 
ANY OTHER GROUNDS, AND REGARDLESS OF WHETHER A PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES, AND NOTWITHSTANDING ANY FAILURE OF ESSENTIAL
PURPOSE OF ANY LIMITED REMEDY. THE PARTIES FURTHER AGREE THAT EACH WARRANTY
DISCLAIMER, EXCLUSION OF DAMAGES OR OTHER LIMITATION OF LIABILITY HEREIN IS
INTENDED TO BE SEVERABLE AND INDEPENDENT OF THE OTHER PROVISIONS BECAUSE THEY
EACH REPRESENT SEPARATE ELEMENTS OF RISK ALLOCATION BETWEEN THE PARTIES.
 
10. Confidentiality and Publicity.
 
10.1 Treatment of Confidential Information. The parties agree that during the
term of this Agreement, and for a period of five (5) years after this Agreement
terminates, a party receiving Confidential Information of the other party will
(a) maintain in confidence such Confidential Information to the same extent such
party maintains its own proprietary information, but with no less than a
reasonable degree of care; (b) not disclose such Confidential Information to any
third party without the other party’s prior written consent; and (c) not use
such Confidential Information for any purpose except those permitted by this
Agreement. Notwithstanding the foregoing, if a party is required by law,
regulation or court order to disclose Confidential Information of the other
party, the party required to make such disclosure shall (i) promptly send a copy
of the order or notice to the other party not less than ten (10) days before the
proposed disclosure (or such shorter period of time as may be reasonably
practical under the circumstances); (ii) reasonably cooperate with the other
party if the other party wishes to object or condition such disclosure through a
protective order or otherwise; (iii) limit the extent of such disclosure to the
minimum required to comply with the order or notice; and (iv) use reasonable
efforts to seek confidential treatment (i.e., filing “under seal”) for that
disclosure. In addition, a party may disclose Confidential Information of the
other party to its Affiliates and employees, to Sublicensees and potential
Sublicensees, to investors or potential investors of a party in connection with
due diligence or similar investigations or in confidential financing documents,
to an organization to whom TSRI intends to assign or transfer or does assign or
transfer this Agreement or the payment obligations due hereunder to TSRI, or to
TSRI’s Assignee, in each case, that any such agrees in writing to be bound by
terms of confidentiality and non-use at least as stringent as those set forth in
this Section 10.1, but with no further right to disclose or otherwise distribute
the other party’s Confidential Information.
 
10.2 Publications. Licensee agrees that TSRI shall have the right to publish in
accordance with its general policies, and that this Agreement shall not
restrict, in any fashion, TSRI’s right to publish. Notwithstanding the
foregoing, TSRI agrees to provide Licensee a copy of any proposed publication
that uses material provided to TSRI under the Material Transfer Agreement
between TSRI and ChromaDex corporation dated June 13, 2013 (“Material Transfer
Agreement”), pursuant to the terms set forth in Section 4.1 of the Material
Transfer Agreement.
 
10.3 Publicity. Except as otherwise required by law, no party shall originate or
distribute any publication, news release or other public announcement, written
or oral, whether in the public press, stockholders' reports or otherwise,
relating to this Agreement or to any sublicense hereunder, or to the performance
hereunder or under any such sublicense agreements, without the prior written
approval of the other party, which approval shall not be unreasonably withheld.
Scientific publications published in accordance with Section 10.2 of this
Agreement shall not be construed as publicity governed by this Section 10.3.
 
 
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11. Term and Termination.
 
11.1 Term. Unless terminated sooner in accordance with the terms set forth
herein, this Agreement shall expire upon such time that no further royalties are
due to TSRI pursuant to Section 3.9.
 
11.2 Termination Upon Mutual Agreement. This Agreement may be terminated by
mutual written consent of both parties.
 
11.3 Termination by TSRI. TSRI has the right to immediately terminate this
Agreement as follows (unless a further cure period is provided below):
 
(a) If Licensee does not make a payment due hereunder and fails to cure such
non-payment (including the payment of interest in accordance with Section 13.2)
within thirty (30) days after the date of TSRI’s written notice of such
non-payment;
 
(b) If Licensee defaults upon its indemnification or insurance obligations under
Section 8;
 
(c) As provided in Section 5.3;
 
(d) Upon TSRI’s written notice to Licensee in the event Licensee becomes
insolvent, has a petition in bankruptcy filed for or against it, has a receiver
appointed over any of Licensee’s assets, makes an assignment for the benefit of
creditors, or has any other proceedings filed against Licensee under any
bankruptcy or insolvency laws;
 
(e) If Licensee is convicted of a felony relating to the development,
manufacture, use, marketing, distribution or sale of Products, Licensed
Services, Licensed Processes or Licensed Biological Materials;
 
(f) In the event Licensee or a Sublicensee directly or indirectly institutes or
makes any Challenges;
 
(g) In the event Licensee does not cure any defaults in its payments as set
forth in the Research Funding Agreement; or
 
(h) Except as provided in subparagphs (a) – (h) above, if Licensee defaults in
the performance of any other obligations under this Agreement and the default
has not been remedied within thirty (30) days after the date of TSRI’s written
notice of such default.
 
11.4 Rights Upon Expiration. Upon the expiration of this Agreement, neither
party shall have any further rights or obligations, other than the obligation of
Licensee to make any and all reports and payments due under Sections 3, 4, 7 and
11.8 with respect to events that occurred prior to such expiration in accordance
with Sections 3.4, 4, 5.4, 5.5, 5.6 and 7.3 (all
 

 
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of which Sections referenced in this sentence shall survive such expiration for
such purposes). Notwithstanding the above, Sections 1, 2.4, 2.5, 2.6, 6, 7.4, 8,
9, 10, 11.5, 12.2 and 13 shall also survive the expiration of this Agreement.
 
11.5 Rights Upon Termination. Notwithstanding any other provision of this
Agreement, upon any termination of this Agreement prior to the regularly
scheduled expiration date of this Agreement, the licenses granted hereunder
shall terminate and revert to TSRI, and all sublicenses granted by Licensee
shall also automatically terminate. Except as otherwise provided in Section 11.7
of this Agreement with respect to work-in-progress, upon such termination,
Licensee and its Sublicensees shall have no further right to develop,
manufacture, market, distribute or sell any Product, Licensed Service, Licensed
Process, or to otherwise practice or use any Licensed Patent Rights or Licensed
Biological Materials. Upon any such termination, Licensee shall promptly return
all materials, samples, documents, information and other items which embody or
disclose any Licensed Patent Rights or Licensed Biological Materials; provided,
however, that Licensee shall not be obligated to provide TSRI with Licensee’s
proprietary information which Licensee can show that it independently developed,
other than the Licensed Product Data or that which is jointly owned in
accordance with the Research Funding Agreement. Upon any termination of this
Agreement, TSRI shall have the right, and Licensee hereby grants to TSRI upon
such termination, a non-exclusive, worldwide, fully paid-up license, with the
right to sublicense, to use the Licensed Product Data in order to research, have
researched, develop, have developed, make, have made, use, have used, sell, have
sold, offer to sell, import and have imported Products, Licensed Services,
Licensed Processes and/or Licensed Biological Materials in the Field, and the
right to reference any Licensed Product Data contained in any of Licensee’s
regulatory filings with the FDA (as defined in Section 4.3) or with any
equivalent foreign agency or governmental authority with respect to TSRI’s or
its sublicensees’ development or commercialization activities. Any such
termination shall not relieve either party from any obligations accrued to the
date of such termination, including without limitation the obligation of
Licensee to make any and all reports and payments due under Sections 3, 4, 7 and
11.8 with respect to events that occurred prior to such termination or as
provided in Section 11.7, in accordance with Sections 3.6, 4, 5.4, 5.5, 5.6 and
7.3 (all of which Sections referenced in this sentence shall survive such
termination for such purposes). In addition, Sections 1, 2.4, 2.5, 2.6, 3.2, 6,
7.4, 8, 9, 10, 11.6, 11.7, 12.2 and 13 shall also survive the termination of
this Agreement.
 
11.6 Work-in-Progress. Upon any early termination of the licenses granted
hereunder, Licensee shall be entitled to finish any work-in-progress and to sell
any completed inventory of Products which remain on hand as of the termination
date, so long as Licensee sells such inventory in the normal course of business
and at regular selling prices and pays to TSRI the royalties applicable to such
subsequent sales in accordance with the provisions of this Agreement, provided
that no such sales shall be permitted following the date that is six (6) months
after the termination date.
 
11.7 Final Royalty Report. Upon termination or expiration of this Agreement,
Licensee shall promptly submit a final report to TSRI, and any payments due to
TSRI under this Agreement that accrued prior to such termination or expiration
shall be paid by Licensee to TSRI at the time of delivery of the final report.
 
 
-21-

 
 
12. Assignment; Successors.
 
12.1 Assignment. Any and all assignments of this Agreement or any rights granted
hereunder by Licensee without TSRI’s prior written consent are void.
 
12.2 Binding Upon Successors and Assigns. Subject to the limitations on
assignment in Section 12.1, this Agreement shall be binding upon and inure to
the benefit of any successors in interest and assigns of TSRI and Licensee. Any
successor or assignee of Licensee's interest shall expressly assume in writing
the performance of all the terms and conditions of this Agreement to be
performed by Licensee and such written assumption shall be delivered to TSRI as
a condition to TSRI’s agreement to consent to any such assignment.
 
13. General Provisions.
 
13.1 Independent Contractors. The relationship between TSRI and Licensee is that
of independent contractors. TSRI and Licensee are not joint venturers, partners,
principal and agent, master and servant, employer and employee, and have no
other relationship other than independent contracting parties. TSRI and Licensee
shall have no power to bind or obligate each other in any manner, other than as
is expressly set forth in this Agreement.
 
13.2 Late Payments. Late payments of any and all amounts due hereunder shall
bear interest from the due date until the date paid at a rate of one percent
(1%) per month, or Two Hundred Fifty Dollars ($250), whichever is greater.
 
13.3 Governmental Approvals and Compliance. Licensee shall, at its expense, be
responsible for obtaining all necessary governmental approvals for the
development, production, distribution, performance, sale and use of any Product,
Licensed Service or Licensed Process, and shall comply with all applicable laws,
rules and regulations in conducting its activities under this Agreement.
Licensee shall, at its expense, also be responsible for any warning labels,
packaging and instructions produced or distributed with respect to the use of
Products, Licensed Services or Licensed Processes and for the quality control
for any Products, Licensed Services or Licensed Processes.
 
13.4 Patent Marking. To the extent required by applicable law, Licensee and its
Sublicensees shall properly mark all Products or their containers in accordance
with the applicable patent marking laws. Upon TSRI’s request, Licensee shall
provide to TSRI copies of its patent marking of all Products. To the extent
Licensee or a Sublicensee marks any Licensed Products by referencing the
Licensed Patent Rights thereon, Licensee represents and warrants that such
Licensed Products are covered by a claim of the applicable referenced Licensed
Patent Rights.
 
13.5 No Use of Name. The use of the name "The Scripps Research Institute",
"Scripps", “TSRI” or any variation thereof in connection with the marketing,
advertising, distribution, sale or performance of Products, Licensed Services or
Licensed Processes is expressly prohibited.
 
13.6 U.S. Manufacture. To the extent commercially practicable, Licensee agrees
that it and its Sublicensees will abide by the Preference for United States
Industry
 
 
-22-

 
 
as set forth in 37 C.F.R. Section 401.14 (I), which requires that any Product or
Licensed Process sold in the United States shall be manufactured substantially
in the United States.
 
13.7 Foreign Registration. Licensee agrees, at its expense, to register this
Agreement with any foreign governmental agency which requires such registration.
 
13.8 Use of Biological Materials. Licensee agrees that its and its Sublicensees’
use of any Licensed Biological Materials shall comply with all applicable laws,
rules, regulations and guidelines. Licensee agrees that the Licensed Biological
Materials will not be used for research involving human subjects or clinical
trials in the United States without complying with 21 C.F.R. Part 50 and 45
C.F.R. Part 46. Licensee agrees that the Licensed Biological Materials will not
be used for research involving human subjects or clinical trials outside of the
United States without complying with the applicable foreign laws, rules and
regulations.
 
13.9 Dispute Resolution. Any dispute or claim between the parties arising out of
or relating to this Agreement, including without limitation the breach thereof,
shall be resolved according to the following dispute resolution procedures:
 
(a) Such dispute shall be first addressed by the representatives of TSRI and
Licensee who have primary responsibility for managing this Agreement.
 
(b) If the dispute is not resolved by such representatives within fifteen (15)
days after the date either party gives written notice that such dispute exists,
then the dispute shall be referred to and addressed by the senior management of
each party.
 
(c) If such dispute is not resolved by the parties’ senior management within
thirty (30) days after the date the dispute is referred to them, then the
dispute shall be submitted to mediation. The mediator shall be a retired judge
or other neutral third party mutually selected by TSRI and Licensee who has at
least ten (10) years experience in mediating or arbitrating cases in the
bio-pharmaceutical industry and regarding the same or substantially similar
subject matter as the dispute between Licensee and TSRI. If the parties are
unable to agree on such mediator within twenty (20) days after they exchange
initial lists of potential mediators, a mediator with the same qualifications
will be selected by the JAMS office in San Diego located at 401 B Street, San
Diego, CA 92101 (after consultation with the parties).
 
(d) The location of the mediation shall be in the County of San Diego,
California. TSRI and Licensee hereby irrevocably submit to the exclusive
jurisdiction and venue of the mediator mutually selected by the parties or to
the neutral mediator selected by JAMS of San Diego for purposes of the
mediation, and to the exclusive jurisdiction and venue of the federal and state
courts located in San Diego County, California for any action or proceeding
regarding this Agreement in the event mediation is unsuccessful as provided in
sub-clause (e) below, or as provided in sub-clause (f) below, and waive any
right to contest or otherwise object to such exclusive jurisdiction or venue,
including without limitation any claim that such exclusive venue is not a
convenient forum.
 
(e) If the dispute is not resolved through mediation, either party may
 
 
-23-

 
 
refer the dispute to a court of competent jurisdiction in San Diego County,
California.
 
(f) Notwithstanding anything to the contrary in this Agreement, prior to or
while a mediation proceeding is pending, either party has the right to seek and
obtain injunctive and other equitable relief from a court of competent
jurisdiction to enforce that party’s rights hereunder.
 
13.10 Entire Agreement; Modification. This Agreement and all of the attached
Exhibits (which are incorporated herein) set forth the entire agreement between
the parties as to the subject matter hereof, and supersede all prior or
contemporaneous agreements or understandings, whether oral or written, regarding
this subject matter. This Agreement cannot be amended except by a written
instrument signed by both parties.
 
13.11 California Law. This Agreement shall be construed and enforced according
to the laws of the State of California without regard to its conflicts or choice
of law rules.
 
13.12 Headings. The headings for each Section in this Agreement have been
inserted for convenience of reference only and are not intended to limit or
expand on the meaning of the language contained in the particular Section.
 
13.13 Severability. If any provision of this Agreement is judicially determined
to be invalid, void or unenforceable, the remaining provisions shall remain in
full force and effect, and the stricken provision shall be revised in a manner
that best reflects the original intent of the parties.
 
13.14 No Waiver. The failure of a party to enforce any of its rights hereunder
or at law or in equity shall not be deemed a waiver or a continuing waiver of
any of its rights or remedies against the other party, unless such waiver is in
writing and signed by the waiving party.
 
13.15 Name. Whenever there has been an assignment by Licensee as permitted by
this Agreement, the term "Licensee" as used in this Agreement shall also include
and refer to, if appropriate, such assignee.
 
13.16 Attorneys' Fees.. In the event of a dispute between the parties or any
default hereunder, the party prevailing in the resolution of such dispute or
default shall be entitled to recover its reasonable attorneys' fees and other
costs incurred in connection with resolving such dispute or default, in addition
to any other relief to which it is entitled. Notwithstanding anything to the
contrary herein, the parties agree that this Section 13.16 shall not apply and
attorney’s fees and costs shall not be awarded to either party with respect to
any Challenge or any action where Licensee or a Sublicensee alleges that it is
not required to comply with or perform some or all of the provisions of this
Agreement based upon a good faith claim that any of the Licensed Patent Rights
are invalid or unenforceable. TSRI and Licensee each represent that it has been
represented by its own counsel in the negotiation and execution of this
Agreement. Each party further represents that it has relied solely on the advice
and representation of its respective counsel in agreeing to this Section 14.16
and all of the other provisions of this Agreement.

 
-24-

 
 
13.17 Notices. Any notices required or permitted by this Agreement shall be in
writing and shall be delivered as follows, with notice deemed given as
indicated: (a) by personal delivery, when received; (b) by overnight courier
guaranteeing next-day delivery, upon the next business day immediately following
delivery to such overnight courier; or (c) by registered or certified mail,
return receipt requested and postage prepaid, upon verification of receipt.
Notices shall be sent to the respective addresses set forth below, unless
subsequently changed by written notice to the other party:
 
For TSRI:                                           The Scripps Research
Institute
10550 North Torrey Pines Road, TPC-9
La Jolla, California 92037
Attention: Vice President, Business Development
 
with a copy to:                                   The Scripps Research Institute
10550 North Torrey Pines Road, TPC-8
La Jolla, California 92037
Attention: Chief Business Counsel
 
For Licensee:                                     ChromaPharma, Inc.
10005 Muirlands Blvd, Suite G
Irvine, California 92618
Attention: Chief Financial Officer
 
13.18 Counterparts. This Agreement may be executed in several counterparts that
together shall constitute originals and one and the same instrument.
 
13.19 Cumulative Remedies. The rights and remedies stated in this Agreement
shall be cumulative and in addition to any other rights and remedies the parties
may have at law or in equity.
 
 
IN WITNESS WHEREOF, the parties have executed this Agreement by their duly
authorized representatives as of the Effective Date.
 
TSRI:
LICENSEE:
 
 
THE SCRIPPS RESEARCH INSTITUTE
ChromaPharma, Inc.
 
 
 
By: /s/ Matt Tremblay
By: /s/ Tom Varvaro
 
       Tom Varvaro
 
 
Title: Vice President, Business Development
Title: CFO 6/9/2017

 
 
 
-25-

 
 
 
 
 
 
 
 
 
-26-

 
 
 
EXHIBIT A
 
LICENSED BIOLOGICAL MATERIALS
 
None.
 
 
 
-27-

 
 
EXHIBIT B
 
LICENSED PATENT RIGHTS
 
[…***…]

 
  ***Confidential Treatment Requested
 
-28-

 
 
EXHIBIT C
 
COMMERCIAL DEVELOPMENT PLAN
 
None.
 
 
-29-

 
 
EXHIBIT D
 
BENCHMARKS
 
 
[…***…]
 
 

***Confidential Treatment Requested
 
-30-

 
 
EXHIBIT E
 
REPORTING EVENTS
 
Licensee shall notify TSRI in writing of each of the following events with
respect to each Product, Licensed Service and Licensed Process in a Major Market
Country within […***…] days of such occurrence:
 
1.            
[…***…];
 
2.           
[…***…];
 
3.           
[…***…]; and
 
4.           
[…***…].
 
 
  ***Confidential Treatment Requested
 
-31-