CONFIDENTIAL TREATMENT REQUESTED. Confidential portions of this document have
been
redacted and have been separately filed with the Commission.

 

Exhibit 10.37

 

SUBLICENSE AGREEMENT

 

By And Between

 

TG BIOLOGICS, INC.

 

And

 

ILDONG PHARMACEUTICAL CO. LTD.

 

November 13, 2012

 

CONFIDENTIAL

 

 

 

 

TABLE OF CONTENTS

 

    Page       1. DEFINITIONS 2       2. LICENSE GRANTS; EXCLUSIVITY 17        
  2.1 Sublicense. 17   2.2 Right to Sublicense. 20   2.3 No Other Rights. 20  
2.4 Exclusivity. 20       3. DEVELOPMENT OF PRODUCTS 22           3.1
Development Program. 22   3.2 Development Diligence. 23   3.3 Preparation of
Development Plan. 23   3.4 Compliance. 23   3.5 Supply of Compound(s) or
Products(s) for Development. 24   3.6 Use of Proprietary Materials. 24       4.
REGULATORY ACTIVITIES 24           4.1 Responsibility for Regulatory Filings. 24
  4.2 Disclosure; Right of Access. 25   4.3 Disclosure of Certain Events. 25  
4.4 Communication with Regulatory Authorities in the SUBLICENSOR
Commercialization Territory. 26       5. COMMERCIALIZATION OF PRODUCTS 26      
    5.1 Commercialization Plan. 26   5.2 Responsibility for Commercialization of
Products. 26   5.3 Commercialization Diligence. 27   5.4 Failure to Satisfy
Commercialization Diligence Obligations. 27   5.5 Failure to achieve Sales
Targets 28   5.6 Compliance. 29   5.7 No Unauthorized Sales. 29   5.8 Records;
Reports. 29   5.9 Supply of Product for Commercialization. 30   5.10 Product
Recalls. 30       6. SUPPLY OF THE COMPOUND AND/OR PRODUCT 30           6.1
Supply of LFB-R603 for Development and Commercialization. 30   6.2 Supply of
TG20 for Development and Commercialization. 31       7. PAYMENTS 31          
7.1 Upfront Payment. 31   7.2 Sales Milestones. 31   7.3 Payment of Royalties;
Royalty Rates; Accounting and Records. 32

 

i

 

 

8. TREATMENT OF CONFIDENTIAL INFORMATION; PUBLICITY 35           8.1
Confidentiality. 35   8.2 Publicity. 36   8.3 No Use of Name. 37       9.
INTELLECTUAL PROPERTY RIGHTS 37           9.1 SUBLICENSOR Intellectual Property
Rights. 37   9.2 Improvement 37   9.3 Joint Improvement 37   9.4 Patent
Coordinators. 38   9.5 Notice; Inventorship. 38       10. FILING, PROSECUTION
AND MAINTENANCE OF PATENT RIGHTS 39           10.1 Patent Filing, Prosecution
and Maintenance. 39   10.2 Enforcement and Defense. 40   10.3 Trademark
Prosecution and Registration. 43       11. TERM AND TERMINATION 44          
11.1 Term. 44   11.2 Termination. 44   11.3 Consequences of Termination of
Agreement. 45   11.4 Surviving Provisions. 47       12. REPRESENTATIONS AND
WARRANTIES 48           12.1 Mutual Representations and Warranties. 48   12.2
Additional Representations of SUBLICENSOR. 48   12.3 Additional Representations
of ILDONG. 49       13. INDEMNIFICATION; INSURANCE 50           13.1
Indemnification of SUBLICENSOR by ILDONG. 50   13.2 Indemnification of ILDONG by
SUBLICENSOR. 50   13.3 Conditions to Indemnification. 51   13.4 Insurance. 51  
13.5 Warranty Disclaimer. 51   13.6 No Warranty of Success. 52   13.7 Limited
Liability. 52       14. MISCELLANEOUS 52           14.1 Disputes; Consent to
Jurisdiction. 52   14.2 Notices. 52   14.3 Governing Law. 53   14.4 Competition
Law. 53   14.5 Binding Effect. 54   14.6 Headings. 54   14.7 Counterparts. 54  
14.8 Amendment; Waiver. 54

 

ii

 

 

  14.9 No Third Party Beneficiaries. 54   14.10 Purposes and Scope. 54   14.11
Assignment and Successors. 55   14.12 Force Majeure. 55   14.13 Interpretation.
55   14.14 Integration; Severability. 55   14.15 Further Assurances. 56

 

List of Exhibits and Schedules

 

Exhibit A Commercial Supply Agreement(s)     Schedule 2 Commercialization Plan
Schedule 3 Description of LFB-R603 Schedule 4 Licensed Patent Rights and
Background Patent Rights Schedule 5 Description of TG20 Schedule 6 Press Release
Schedule 7 Licensed Trademarks

 

iii

 

 

SUBLICENSE AGREEMENT

 

This SUBLICENSE AGREEMENT (this “Agreement”) is entered into as of November 13,
2012 (the “Effective Date”) by and between TG Biologics, Inc., a Delaware
corporation with a principal place of business at 787 Seventh Avenue, 48th
Floor, New York, New York 10019 (“TG” or SUBLICENSOR”) and Ildong Pharmaceutical
Co. Ltd., a Korean limited company with a principal place of business at 60
Yangjae-dong, Seocho-ku, Seoul 137-733 KOREA (“ILDONG”). Each of ILDONG and
SUBLICENSOR is sometimes referred to individually herein as a “Party” and
collectively as the “Parties.”

 

RECITALS

 

WHEREAS, SUBLICENSOR is clinical-stage biopharmaceutical company focused on the
acquisition, development and commercialization of innovative and medically
important pharmaceutical products for the treatment of cancer and other
underserved therapeutic needs;

 

WHEREAS, ILDONG is a pharmaceutical company engaged in producing pharmaceutical
specialties, pharmaceutical raw materials and environmental products;

 

WHEREAS, prior to the signature of the present Agreement, SUBLICENSOR has
entered into an exclusive license agreement (the “LFB/GTC License”) with LFB
Biotechnologies SAS, LFB/GTC LLC, and GTC Biotherapeutics Inc dated on 30th of
January, 2012. (collectively the “Senior Licensors”) related to the Compounds
(as such term is defined below);

 

WHEREAS, pursuant to the terms of the LFB/GTC License, SUBLICENSOR has acquired
rights to certain license agreements related to the Compounds, including:

 

-A license agreement with Dr. Hadam on an anti CD 20 monoclonal antibody, CAT
13.6.E12 and the hybridoma cell-line producing such murine antibody

-A license agreement with Pharming on the casein promoter

-A license agreement with Start/Viagen on the cloning and nuclear transfer
technology;

 

WHEREAS, pursuant to Article 2.2 of the LFB/GTC License, SUBLICENSOR retains
full rights to grant sublicense to certain patents, technology and material
related to the Compounds;

 

Whereas, pursuant to that executed term sheet between SUBLICENSOR and ILDONG,
dated June 13, 2012, the Parties have agreed to enter into a license on the
terms and subject to the conditions set forth in this Agreement; and

 

Whereas, in furtherance of such transaction, SUBLICENSOR and ILDONG have also
agreed to enter into a Commercial Supply Agreement on the terms described
herein;

 

1

 

 

 NOW, THEREFORE, in consideration of the mutual covenants contained herein, and
for other good and valuable consideration, the Parties hereto, intending to be
legally bound, hereby agree as follows:

 

1.      DEFINITIONS

 

Whenever used in this Agreement with an initial capital letter, the terms
defined in this Article 1 shall have the meanings specified.

 

1.1      “Acceptance” means, with respect to a Drug Approval Application filed
for a Product, the acceptance of such filing by the applicable Regulatory
Authority in any country within the Territory.

 

1.2      “Adverse Event” means any untoward medical occurrence in a human
clinical trial subject or in a patient who is administered a Compound or
Product, whether or not considered related to the compound or product, including
any undesirable sign (including abnormal laboratory findings of clinical
concern), symptom or disease associated with the use of a Compound or Product,
as defined more fully in 21 CFR §312.32.

 

1.3      “Affiliate” means, with respect to any Person, any other Person that,
directly or indirectly, controls, or is controlled by, or is under common
control with, such Person. For purposes of this definition, “control” means (a)
ownership of more than fifty percent (50%) of the shares of stock entitled to
vote for the election of directors in the case of a corporation, or more than
fifty percent (50%) of the equity interests in the case of any other type of
legal entity, (or such lesser maximum percentage permitted in those
jurisdictions where majority ownership by foreign entities is prohibited); (b)
status as a general partner in any partnership; or (c) any other arrangement
whereby a Person controls or has the right to control the board of directors of
a corporation or equivalent governing body of an entity other than a
corporation.

 

1.4      “Agreement” means this sublicense agreement and its Exhibits and
Schedules listed in the table of contents.

 

1.5       “Annual Net Sales” means, with respect to any Calendar Year, the
aggregate amount of Net Sales for such Calendar Year.

 

1.6      “Anticipated Date of Receipt of Marketing Authorization” means, the
date of receipt of Marketing Authorization from the applicable regulatory agency
set forth in the Development Plan (Schedule 1)

 

1.7      “API” means the active pharmaceutical ingredient that is intended to be
used in the Manufacture of any Product.

 

2

 

 

 

1.8      “Applicable Laws” means any national, international, federal, state or
local laws, treaties, statutes, ordinances, rules and regulations, including any
rules, regulations, guidance or guidelines of Regulatory Authorities having the
binding effect of law, or of any national securities exchanges or securities
listing organizations or other government authorities other than Regulatory
Authorities, that are in effect from time to time during the Term and applicable
to a particular activity hereunder.

 

1.9      “Background Patent Rights” means any Patent Rights that are Controlled
by SUBLICENSOR, other than Licensed Patent Rights, containing one or more claims
that could Cover any Compound or Product (including its Manufacture or its
formulation or a method of its delivery or of its use). For the sake of clarity,
the Background Patent Rights existing as of the Effective Date are listed on
Schedule 4.

 

1.10    “BLA” means (a) any Biologic License Application, as defined in the FDCA
and regulations promulgated thereunder, or any successor application or
procedure required to market and sell a Product in the Territory; and (b) all
supplements and amendments to the foregoing.

 

1.11    “Branding” means all matters relating to the branding of any Product,
including any matters related to the selection of any trademarks, brand names,
product logos, branding colors, trade dress, positioning and key messages to be
incorporated into Promotional Materials used for any Product in the Territory.

 

1.12    “Business Day” means any day other than a Saturday or Sunday on which
banking institutions in New York, New York, USA or Seoul, Korea are open for
business.

 

1.13    “Calendar Quarter” means the period beginning on the Effective Date and
ending on the last day of the calendar quarter in which the Effective Date
falls, and thereafter each successive period of three (3) consecutive calendar
months ending on March 31, June 30, September 30 or December 31; provided, that,
the final Calendar Quarter shall end on the last day of the Term.

 

1.14    “Calendar Year” means the period beginning on the Effective Date and
ending on December 31 of the calendar year in which the Effective Date falls,
and thereafter each successive period of twelve (12) months commencing on
January 1 and ending on December 31; provided, that, the final Calendar Year
shall end on the last day of the Term.

 

1.15    “Challenge” means any challenge to the validity or enforceability of any
of the Licensed Patent Rights before any administrative, judicial or other
governmental authority, court, tribunal or arbitration panel, including by (a)
filing a declaratory judgment action in which any of the Licensed Patent Rights
is alleged to be invalid or unenforceable; (b) citing prior art pursuant to 35
U.S.C. §301, filing a request for re-examination of any of the Licensed Patent
Rights pursuant to 35 U.S.C. §302 and/or §311, or provoking or becoming a party
to an interference with an application for any of the Licensed Patent Rights
pursuant to 35 U.S.C. §135; or (c) filing or commencing any re-examination,
opposition, cancellation, nullity or similar proceedings against any of the
Licensed Patent Rights in any country.

 

3

 

  

1.16      “Change of Control” means, with respect to ILDONG, a transaction or
series of related transactions (including any merger, consolidation, share
exchange, reorganization or combination) involving ILDONG and any Third Party
that results in (a) the holders of outstanding voting securities of ILDONG
immediately prior to such transaction ceasing to represent at least fifty
percent (50%) of the combined outstanding voting power of ILDONG or of the
surviving or continuing entity immediately after such transaction or series of
transactions; (b) any Third Party (other than a trustee or other fiduciary
holding securities under an employee benefit plan) becoming the beneficial owner
of fifty percent (50%) or more of the combined voting power of the outstanding
securities of ILDONG (including as a single Third Party all persons who in
concert or act together as a “group” for purposes of acquiring shares of ILDONG,
in accordance with Section 13(d) of the Securities Act of 1934) (other than an
investment transaction by an entity not engaged in the pharmaceutical or
biotechnology business, the purpose of which is to raise capital for ILDONG); or
(c) the sale or other disposition to a Third Party of all or substantially all
of ILDONG’s assets or business to which this Agreement relates.

 

1.17      “Clinical Data” means any and all data (together with all Clinical
Trial reports and the results of analyses thereof) derived or generated from any
Clinical Trial of a Compound or Product or from testing of subjects or the
analysis of samples used in any such Clinical Trial.

 

1.18      “Clinical Trial” means, collectively, any Phase 1 Clinical Trial,
Phase 2 Clinical Trial, Phase 3 Clinical Trial, as applicable.

 

1.19      “Combination Product” means a single product that includes, in
combination with a Product, one or more therapeutically-active ingredients other
than a Product that are sold in a single package or as a unit at a single price
either as a fixed dosage form or as separate dosage forms.

 

1.20      “Commercialization” or “Commercialize” means any and all activities
directed to the offering for sale and sale of a Product after Marketing
Authorization has been obtained with respect to such Product, including, (a)
activities directed to marketing, promoting, detailing, distributing,
Manufacturing, importing, selling and offering to sell such Product; (b)
interacting with Regulatory Authorities regarding any of the foregoing; and (c)
seeking Pricing Approvals and Reimbursement Approvals for such Product (d) Post
Approval Clinical Trials. When used as a verb, “to Commercialize” and
“Commercializing” means to engage in Commercialization and “Commercialized” has
a corresponding meaning.

 

4

 

  

1.21      “Commercialization Plan” means, with respect to any Product, the
written report prepared by ILDONG pursuant to Section 5.1 and submitted to
SUBLICENSOR for its review that (a) describes the Commercialization activities
that ILDONG reasonably expects to conduct with respect to such Product in the
Territory, and (b) sets forth (i) a non-binding estimate of projected sales of
such Product in the Territory, and (ii) a summary of all actual sales of such
Product in the Territory, as such report may be amended or updated by ILDONG
from time to time. Without limiting the foregoing, each Commercialization Plan
shall include, without limitation, (a) demographics and market dynamics, market
strategies, a marketing plan (including advertising, detailing forecasts,
Pricing strategies pertaining to discounts and sales forecasts) for the
Territory; (b) specific Commercialization and marketing objectives, projected
milestones, resource allocation requirements and activities to be performed over
such period (including all anticipated Clinical Trials) (collectively, the
“Commercialization Targets”); (c) a timeline for such activities, including the
estimated launch date(s) in the Territory; (d) a sales and expense forecast
(including at least five (5) years of estimated sales and expenses in terms of
both volume and value) for the Territory; (e) Manufacturing plans and the
expected product profile; and (f) the expected Regulatory Filings to be required
and prepared, and the expected timetable for making such Regulatory Filings.

 

1.22       “Commercially Reasonable Efforts” means, with respect to the
activities of ILDONG, and/or its Affiliates, Sublicensees, Distributors, in the
Development or Commercialization, as the case may be, of a particular Compound
and/or Product, the level of efforts and resources typically used and expected
from a pharmaceutical company of similar size for the development or
commercialization of products of comparable market potential, taking into
account all relevant factors including, as applicable, the stage of development,
observed efficacy and safety of the Product and relative to Competitive Products
in the marketplace, actual or anticipated Regulatory Authority approved
labeling, the nature and extent of market exclusivity (including patent
coverage, regulatory exclusivity and competitiveness of alternative products),
the cost and likelihood of obtaining Marketing Authorization, the actual or
projected profitability, and the reasonably expected and actual pricing,
reimbursement and formulary status. For purposes of clarity, Commercially
Reasonable Efforts shall be determined on a market-by-market and
Indication-by-Indication basis for a particular Compound and/or Product, and it
is anticipated that the level of effort may be different for different markets
and may change over time, reflecting changes in the status of the Compound or
Product and the market(s) involved.

 

1.23      “Competitive Entity” means any Third Party that (a) together with its
Affiliates and subsidiaries, collectively had worldwide sales of ethical
pharmaceutical products, in the Calendar Year that preceded the Change of
Control, of at least One Billion Dollars (USD $1,000,000,000), and (b) on the
date of such Change of Control is actively working on any research program
involving the expenditure of funds or the application of full time equivalents
in the aggregate amount of at least $500,000 per Calendar Year involving a
Competitive Program.

 

1.24      “Competitive Products” means any anti CD 20 monoclonal antibody for
use in the Field

 

1.25      “Competitive Program” means any program that involves the research,
development or commercialization of any (a) transgenically-derived chimeric
monoclonal antibody or (b) cell-product anti CD 20 monoclonal antibody for use
in the Field.

 

5

 

  

1.26      “Completion” means, with respect to any Clinical Trial, the date on
which all material data reasonably expected to be derived therefrom has been
generated and the final study report with respect thereto has been finalized. 

 

1.27      “Compounds” means ublituximab, collectively, (i) TG20 and/or (b)
LFB-R603.

 

1.28      “Confidential Information” means with respect to each Party, all
information, Technology and Proprietary Materials that is (i) ILDONG Background
Technology, in the case of ILDONG and (ii) Licensed Technology, in the case of
SUBLICENSOR, and, that, in any case, is disclosed or provided by or on behalf of
such Party (the “Disclosing Party”) to the other Party (the “Receiving Party”)
or to any of the Receiving Party’s employees, consultants, Affiliates or
sublicensees; provided, that, none of the foregoing shall be Confidential
Information if: (A) as of the date of disclosure, it is known to the Receiving
Party or its Affiliates as demonstrated by contemporaneous written documentation
maintained in the ordinary course of business, other than by virtue of a prior
confidential disclosure to such Receiving Party; (B) as of the date of
disclosure it is in the public domain, or it subsequently enters the public
domain through no fault of the Receiving Party; (C) it is obtained by the
Receiving Party from a Third Party having a lawful right to make such disclosure
free from any obligation of confidentiality to the Disclosing Party; or (D) it
is independently developed by or for the Receiving Party without reference to or
use of any Confidential Information of the Disclosing Party as demonstrated by
contemporaneous written documentation maintained in the ordinary course of
business. For purposes of clarity, (a) unless excluded from Confidential
Information pursuant to the preceding sentence, any scientific, technical,
manufacturing or financial information of a Party that is disclosed through any
report (including any audit report) shall constitute Confidential Information of
the Disclosing Party; (b) all Clinical Data produced by ILDONG in connection
with the Development of a Compound or Product and/or in the conduct of Clinical
Trials shall be Confidential Information of ILDONG; and (c) any combination of
Confidential Information shall not be considered in the public domain or in the
possession of the Receiving Party merely because individual elements of such
Confidential Information are in the public domain or in the possession of the
Receiving Party unless the combination and its principles are in the public
domain or in the possession of the Receiving Party.

 

1.29      “Control” or “Controlled” means (a) with respect to Technology (other
than Proprietary Materials) or Patent Rights, the possession by a Party (or an
Affiliate of such Party, as applicable) of the right to grant a license or
sublicense to such Technology or Patent Rights as provided herein without
violating the terms of any agreement or arrangement with, infringing the Patent
Rights of, or misappropriating the proprietary or trade secret information of,
any Third Party and without violating any Applicable Laws and (b) with respect
to Proprietary Materials, the possession by a Party of the right to supply such
Proprietary Materials to the other Party as provided herein without violating
the terms of any agreement or arrangement with any Third Party and without
violating any Applicable Laws. Notwithstanding the foregoing, no Party (or
Affiliate of a Party, as applicable) shall be deemed to Control any Technology,
Proprietary Materials or Patent Rights solely by virtue of the license grants
set forth in this Agreement.

 

6

 

 

1.30       “Cover” or “Covered” means, with respect to a Product, that the
manufacture, use or sale of such Product in a particular country by an
unlicensed Third Party would infringe a Valid Claim.

 

1.31      “Development” or “Develop” means, with respect to a Product, (a) all
non-clinical and clinical drug development activities that are undertaken after
the Effective Date up to and including the date of obtaining of Marketing
Authorization of such Product to obtain including (i) the conduct of Clinical
Trials, toxicology and pharmacology testing, test method development and
stability testing, process development (including the Manufacture of validation
and engineering batches), formulation development, delivery system development,
quality assurance and quality control development, analytical method
development, human clinical studies and regulatory affairs activities and
statistical analysis and report writing; (ii) the preparation of Clinical Trial
design and operations; (iii) preparing and filing Drug Approval Applications,
and (b) all activities related to Manufacturing Development and (c) any and all
other activities that may be necessary or useful to obtain Regulatory Approval,
Pricing Approval, or Reimbursement Approval. When used as a verb, “Developing”
means to engage in Development and “Developed” has a corresponding meaning.

 

1.32      “Development Plan” means, with respect to the Compound and/or any
Product, the non-binding written plan for, and estimated budget applicable to,
the Development activities anticipated to be conducted by ILDONG for the
Compound and/or Product, as such written plan may be amended, modified or
updated in accordance with Section 3.1.3. Topics that may be covered in the
plan, (a) the Clinical Trials (including investigator-initiated clinical trials)
that are expected to be conducted and the expected timeline for conducting such
Clinical Trials; (b) the expected Drug Approval Applications to be required and
prepared, and the expected timetable for making such Drug Approval Applications;

 

1.33      “Development Program” means (a) the Development activities to be
conducted by ILDONG during the Term with respect to the Compounds and (b) the
Development activities to be conducted by SUBLICENSOR during the Term under the
Development Services and Manufacturing Agreement as set forth in the Development
Plan and defined in 3.1.2.

 

1.34      “Distributor” means any Person that purchases Product from ILDONG or
any of ILDONG’s Affiliates or Sublicensees for purposes of resale of Product to
end users in the Territory (including any wholesalers, pharmacists or
hospitals).

 

7

 

  

1.35      “Divest” means, with respect to a Competitive Program, a divestiture
of such Competitive Program to a Third Party by sale, license or otherwise;
provided, that, if such divestiture is made by ILDONG by way of one or more
licenses or sublicenses, (a) ILDONG and its Affiliates shall not hold or retain
any rights with respect to such Competitive Program other than (i) the right to
receive license fees, milestone payments and royalties on sales of products (or
other sources of revenue, including with respect to Manufacturing) with respect
to such Competitive Program, (ii) the right to defend claims of infringement,
(iii) the right to assert claims of infringement against Persons who may
infringe its intellectual property rights with respect to products with respect
to such Competitive Program and (iv) the right to otherwise control filings and
patent term extensions connected with any licensed or sublicensed Patent Rights,
and (b) ILDONG and its Affiliates are not consulted with respect to, and do not
otherwise participate in, any decisions (other than those described in clauses
(ii), (iii) and (iv) above), or otherwise collaborate with any Third Party, with
respect to (x) the commercialization of products with respect to such
Competitive Program or (y) the commercial strategy with respect to products with
respect to such Competitive Program.

 

1.36      “Drug Approval Application” means, with respect to a Product in the
Territory, an application for Marketing Authorization for such Product in the
Territory. For purposes of clarity, Drug Approval Application shall include,
without limitation (a) a counterpart of an NDA or BLA (as in the US), sNDA or
sBLA (as in the US), or MAA (as in Europe) in any country or region in the
Territory; and (b) and all supplements and amendments to the foregoing.

 

1.37      “Excluded Application” means (a) any application involving the
determination or monitoring of (i) the presence or absence of a disease; (ii)
the stage, progression or severity of a disease or (iii) the effect on a disease
of a particular treatment; (b) any application involving the selection of
patients for a particular treatment; and (c) any in vitro applications or uses.

 

1.38      “Executive Officer” means the Chief Executive Officer of SUBLICENSOR
and the Chief Executive Officer of ILDONG.

 

1.39      “FDA” means the United States Food and Drug Administration or any
successor agency or authority thereto.

 

1.40      “FDCA” means the United States Federal Food, Drug, and Cosmetic Act,
as amended.

 

1.41      “Field” means the treatment, control, mitigation, prevention and/or
cure of all human therapeutic Indications. For purpose of clarity, the
definition of “Field” shall not include any Excluded Application.

 

1.42      “First Commercial Sale” means, with respect to a Product in the
Territory, the first sale, transfer or disposition for value to an end user of
such Product in the Territory after Marketing Authorization for such Product has
been received in the Territory; provided, that, a First Commercial Sale shall
not include: (a) any sale to an Affiliate, Sublicensee or Distributor (unless
the Affiliate, Sublicensee or Distributor is the last entity in the distribution
chain of the Product), (b) any use of a Product in Clinical Trials, pre-clinical
studies or other research or development activities, or (c) the disposal or
transfer of Products for a bona fide charitable purpose, including compassionate
use or named patient use.

 

8

 

  

1.43      “Force Majeure” means any occurrence beyond the reasonable control of
a Party that (a) prevents or substantially interferes with the performance by
such Party of any of its obligations hereunder and (b) occurs by reason of any
act of God, flood, fire, explosion, earthquake, strike, lockout, labor dispute,
casualty or accident, or war, revolution, civil commotion, act of terrorism,
blockage or embargo, or any injunction, law, order, proclamation, regulation,
ordinance, demand or requirement of any government or of any subdivision,
authority or representative of any such government.

 

1.44      “GLP” means the then-current Good Laboratory Practice Standards
promulgated or endorsed by the FDA or, in the case of foreign jurisdictions,
comparable regulatory standards promulgated or endorsed by the applicable
Regulatory Authority.

 

1.45      “GMP” means current Good Manufacturing Practices that apply to the
Manufacture of API and/or the clinical or commercial supply of Products,
including, without limitation, the United States regulations set forth under
Title 21 of the United States Code of Federal Regulations, parts 210 and 211, as
amended from time-to-time, as well as all applicable guidance published from
time-to-time by the FDA or, in the case of foreign jurisdictions, comparable
regulatory standards promoted or endorsed by the applicable Regulatory Authority
and the International Conference on Harmonization Guidelines ICHQ7A Good
Manufacturing Practice Guidance for API or the principles and guidelines of Good
Manufacturing Practices for Medicinal Products as defined with EC Directive
2003/94/EC and associated EC Guide to Good Manufacturing Practice.

 

1.46      “Good Clinical Practice” or “GCP” means the applicable regulations or
guidance relating to the design, conduct, recording, and reporting of Clinical
Trials that involve the participation of human subjects, when generating
Clinical Trial data intended to be submitted to Regulatory Authorities, as set
forth in the FDCA and any regulations or guidance documents promulgated
thereunder, including but not limited to the ICH E6 consolidated guidance on
Good Clinical Practice.

 

1.47      “Hadam License Agreement” means that certain License Agreement, dated
August 15, 2006, by and between LFB Biotechnologies (“LFB”) and Dr. Martin Hadam
and licensed to SUBLICENSOR pursuant to the LFB/GTC License.

 

1.48      “Hatch-Waxman Act” means the Drug Price Competition and Patent Term
Restoration Act of 1984, as amended.

 

1.49      “IND” means: (a) an Investigational New Drug Application, as defined
in the FDCA and regulations promulgated thereunder, or any counterpart,
successor application, or procedure required to initiate clinical testing of a
Product in humans in the Territory; and (b) all supplements and amendments to
the foregoing.

 

1.50      “Indication” means each separate and distinct disease, illness and/or
condition in humans including without limitation Non-Hodgkin's Lymphoma, Chronic
Lymphocytic Leukemia, Lupus, and Rheumatoid Arthritis, for which Regulatory
Approval is being sought.

 

9

 

  

1.51      “Investigator’s Brochure” means a compilation of preclinical and
clinical data with respect to a new investigational drug that is proposed for
filing with a Regulatory Authority and used to provide information to clinical
investigators and Regulatory Authorities.

 

1.52      “Joint Improvement” means any Program Technology that is (a) jointly
conceived, developed or reduced to practice by one or more employees of, or
consultants to, ILDONG and/or its Affiliates, Sublicensees, Distributors and one
or more employees of, or consultants to, SUBLICENSOR or (b) conceived ,
developed, or reduced to practice solely by one or more employees of, or
consultants to ILDONG resulting from the use by ILDONG in any material respect
of the Licensed Technology, Licensed Patent Rights, Background Patent Right or
SUBLICENSOR Materials.

 

1.53      “Joint Patent rights” means any Patent Rights related to Joint
Improvements.

 

1.54      “Knowledge” or “Known” means, with respect to a Party, the actual
knowledge of the Executive Officer or of any executive officer (as defined for
purposes of Section 14 of the Securities Exchange Act of 1934, as amended) of
such Party.

 

1.55      “LFB-R603” means the cell-culture produced chimeric monoclonal
antibody described on Schedule 3 attached hereto and incorporated herein by
reference.

 

1.56      “Licensed Patent Rights” means any Patent Rights that are Controlled
by SUBLICENSOR during the Term and that (a) contain one or more claims that
Cover any Compound or Product; and (b) are necessary or useful for ILDONG to
Develop and/or Commercialize any Compound or Product in the Field and in the
Territory. For purposes of clarity, (a) the Licensed Patent Rights existing as
of the Effective Date are listed on Schedule 4 attached hereto and (b) Schedule
4 shall be updated by SUBLICENSOR by written notice to ILDONG on an annual basis
during the Term to include any additional patents and patent applications not
previously listed; provided, that, the exclusion of a patent or patent
application from Schedule 4 shall not be deemed to be a conclusive indication of
whether that patent or application is or should be considered a “Licensed Patent
Right” for purposes of this Agreement.

 

1.57      “Licensed Technology” means any Technology that is Controlled by
SUBLICENSOR during the Term and that (a) relates to any Compound or Product and
(b) is necessary or useful for ILDONG to Develop, and/or Commercialize any
Compound or Product in the Field and in the Territory.

 

1.58      “Licensed Trademark” shall mean the registered trademarks listed in
Schedule 7 hereto which are owned or controlled by SUBLICENSOR and which may be
used by ILDONG in connection with the sale and marketing of the product in the
Territory.

 

10

 

  

1.59      “SUBLICENSOR Materials” means any Proprietary Materials that are
Controlled by SUBLICENSOR and used by SUBLICENSOR, or provided by SUBLICENSOR
for use, in the Development Program.

 

1.60      “SUBLICENSOR Improvement” means any Program Technology that is
conceived or first reduced to practice by employees of, or consultants to,
SUBLICENSOR alone or jointly with any Third Party, without the use, in any
material respect, of any ILDONG Materials or Joint Improvement.

 

1.61       “Manufacture” or “Manufacturing” or “Manufactured” means all
activities related to the production of any API or Product, including the
manufacture, receipt, inspection, storage and handling of materials, and the
manufacture, processing, purification, packaging, labeling, warehousing, quality
control testing (including in-process release and stability testing), shipping
and release of API or Product.

 

1.62      “Manufacturing Development” means, with respect to any API or Product,
all activities related to the optimization of a commercial-grade Manufacturing
process for the Manufacture of such API or Product including, test method
development and stability testing, formulation, validation, productivity,
trouble shooting and next generation formulation, process development,
Manufacturing scale-up, strain improvements, development-stage Manufacturing,
and quality assurance/quality control development.

 

1.63      “Marketing Authorization” means, with respect to any Product, the
Regulatory Approval required by Applicable Laws to market and sell such Product
for use for any Indication including without limitation Non-Hodgkin's Lymphoma,
Chronic Lymphocytic Leukemia, Lupus, and Rheumatoid Arthritis for humans in the
Territory.

 

1.64      “NADA” means a New Animal Drug Application required by the US Food and
Drug Administration for the use of any genetically engineered animal in which
the gene coding for the API is stably integrated in the genome of the animal.

 

1.65      “NDA” means (a) any New Drug Application, as defined in the FDCA and
regulations promulgated thereunder, or any counterpart, successor application,
or procedure required to market and sell a Product in the Territory; and (b) all
supplements and amendments to the foregoing.

 

1.66      “Net Sales” means the gross amount billed or invoiced by ILDONG or any
of its Affiliates, Sublicensees or Distributors (each, a “Seller”) to Third
Parties in the Territory for sales or other dispositions or transfers for value
of Products less (a) allowances for trade, quantity and cash discounts actually
allowed and taken; (b) freight, transportation, insurance, postage charges and
customs duties included on a Seller’s bill or invoice or as a separate item; (c)
credits, rebates, allowances, and amounts repaid due to returns, recalls or
government regulations, including allowances for uncollectible amounts and/or
bad debts on previously sold Products; (d) retroactive price reductions that are
actually allowed or granted; (e) sales taxes, excise taxes, value-added taxes
and other taxes (other than income taxes) levied on the invoiced amount; and (f)
duties, tariffs and other governmental charges. In addition, Net Sales are
subject to the following:

 

11

 

 

(i)       Net Sales shall not include sales or transfers between ILDONG and any
of its Affiliates, Sublicensees or Distributors unless such Affiliate,
Sublicensee or Distributor is the end user of the Product.

 

(ii)      If any Seller effects a sale, disposition or transfer of a Product to
a Third Party in a particular country other than on customary commercial terms
or for non-monetary consideration, the Net Sales of such Product to such Third
Party shall be deemed to be “the fair market value” of such Product. For
purposes of this subsection (ii), “fair market value” means the value that would
have been derived had such Product been sold as a separate product to another
customer in the country concerned on customary commercial terms.

 

(iii)      For purposes of this Agreement, “sale” shall mean any transfer or
other distribution or disposition, but shall not include transfers or other
distributions or dispositions of Product at no charge for academic research,
preclinical, clinical, or regulatory purposes (including the use of a Product in
Clinical Trials) or in connection with patient assistance programs or other
charitable purposes or to physicians or hospitals for promotional purposes
(including free samples to a level and in an amount which is customary in the
industry and/or which is reasonably proportional to the market for such
Product).

 

(iv)     For the purposes of determining royalty rates and the royalties payable
on Combination Products, Net Sales of Product shall be calculated by multiplying
the Net Sales of the Combination Product by the fraction A/A+B, where A is the
average selling price, during the royalty paying period in question, of the
Product sold separately in the country in which the sale of the Combination
Product is made, and B is the average selling price, during the royalty period
in question, of the other active ingredients or components sold separately. In
the event that such average selling price cannot be determined for both Product
and all other active ingredients and components included in the Combination
Product, Net Sales for purposes of determining payments under this Agreement
shall be calculated by multiplying the Net Sales of the Combination Product by
the fraction C/(C+D) where C is the standard fully-absorbed cost of the Product
portion of the combination, and D is the standard fully-absorbed cost of the
other active ingredient or component included in the Combination Product, as
determined by ILDONG using its standard accounting procedures consistently
applied. In the event that the standard fully-absorbed cost of the Product
and/or the other active ingredients or components included in such Combination
Product cannot be determined, for the purposes of determining royalties payable
hereunder, the Parties shall negotiate in good faith to determine an appropriate
commercial value for all the components in the Combination Product and calculate
Net Sales of such Combination Product accordingly.

 

1.67      “Patent Rights” means the rights and interests in and to issued
patents and pending patent applications (which, for purposes of this Agreement,
include certificates of invention, applications for certificates of invention
and priority rights) in any country or region, including all provisional
applications, substitutions, continuations, continuations-in-part, divisions,
renewals, all letters patent granted thereon, and all reissues, re-examinations
and extensions thereof, and all foreign counterparts of any of the foregoing.

 

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1.68      “Person” means an individual, sole proprietorship, partnership,
limited partnership, limited liability partnership, corporation, limited
liability company, business trust, joint stock company, trust, incorporated
association, joint venture or similar entity or organization, including a
government or political subdivision, department or agency of a government.

 

1.69      “Phase 1 Clinical Trial” means a human clinical trial conducted for a
Product in any country that would satisfy the requirements of 21 CFR 312.21(a),
as amended (or its foreign equivalent).

 

1.70      “Phase 2 Clinical Trial” means a human clinical trial conducted for a
Product for any Indication that would satisfy the requirements of 21 CFR
312.21(b), as amended (or its foreign equivalent) and is intended to explore one
or more doses, dose response, and duration of effect, and to generate initial
evidence of clinical activity and safety for such Product in the target patient
population.

 

1.71      “Phase 3 Clinical Trial” means a pivotal human clinical trial
conducted for a Product for any Indication that would satisfy the requirements
of 21 CFR 312.21(c), as amended (or its foreign equivalent) and is intended to
confirm with statistical significance the efficacy and safety of such Product
with respect to a particular Indication, and is performed to obtain Marketing
Authorization.

 

1.72       “Pivotal Clinical Trial” means (a) a Phase 3 Clinical Trial or, (b) a
Phase 2 Clinical Trial to the extent: (i) in the United States, the protocol for
that Phase 2 Clinical Trial shall have been reviewed by the FDA under its
current Special Protocol Assessment Guidelines (or equivalent guidelines issued
in the future), and any comments from the FDA on that protocol are incorporated
in the final protocol for that Phase 2 Clinical Trial or are resolved to the
FDA’s satisfaction as evidenced by further written communications from the FDA;
or (ii) a process with a comparable result – acceptance of a Phase 2 Clinical
Trial protocol as “potentially pivotal” – has occurred with the EMA/CHMP in the
European Union; or (iii) based on the results of that Phase 2 Clinical Trial,
either the FDA, EMA, or corresponding Regulatory Authority in the Territory has
determined that the Phase 2 Clinical Trial can be considered as a pivotal
clinical trial for purposes of obtaining Marketing Authorization.

 

1.73      “Post Approval Clinical Trials” means any Phase 4 clinical trial
and/or any clinical trial undertaken after any Marketing Approval is granted
such as Investigator sponsored study.

 

1.74      “Pricing” means the determination of Product pricing at all levels,
including the Product list price (also referred to as Wholesale Acquisition
Cost) and the net price in which the Product is offered to purchasers and payers
(including both private sector and government entities).

 

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1.75      “Pricing Approval” means, with respect to a Product in the Territory,
any pricing and reimbursement approvals, guidance or recommendations reasonably
necessary to market such Product in the Territory.

 

1.76       “Product” shall mean any pharmaceutical or medicinal item, substance,
formulation or dosage that is comprised of, or contains, a Compound (whether or
not such Compound is the sole active ingredient).

 

1.77      “Product Improvement” means any Program Technology related to or
concerning the Product and/or Licensed Technology, whether or not patentable,
copyrightable or otherwise protectable under any intellectual property rights.

 

1.78      “Program Technology” means any Technology or Proprietary Material that
is conceived and first reduced to practice (actually or constructively), by
ILDONG and/or its Affiliates or jointly by the Parties, or by any Sublicensee or
by any Distributors, whether or not patentable, in the conduct of the
Development Program and/or in connection with the Commercialization of Products.

 

1.79      “Proprietary Materials” means any tangible chemical, biological or
physical materials that (a) are furnished by or on behalf of one Party to the
other Party in connection with this Agreement, whether or not specifically
designated as proprietary by such Transferring Party, or (b) that are otherwise
conceived or reduced to practice by ILDONG in the conduct of the Development
Program and/or in connection with the Commercialization of Products.

 

1.80       “Regulatory Approval” means, with respect to the Territory, any
approval, product and establishment license, registration or authorization of
any Regulatory Authority required for the Manufacture, use, storage,
importation, exportation, transport or distribution of a Product in the
Territory, including any Marketing Authorization.

 

1.81      “Regulatory Authority” means any national, international, regional,
state or local regulatory agency, department, bureau, commission, council or
other governmental entity with authority over the distribution, importation,
exportation, Manufacture, production, use, storage, transport, clinical testing,
marketing, Pricing or sale of a Product in the Territory.

 

1.82      “Regulatory Filings” means, collectively: (a) all INDs, NDAs, BLAs,
NADAs, MAAs establishment license applications, Drug Master Files, and all other
similar filings (including, without limitation, counterparts of any of the
foregoing in the Territory); (b) all supplements and amendments to any of the
foregoing; (c) all data and other information contained in, and correspondence
relating to, any of the foregoing; and (d) any and all orphan drug applications.

 

1.83      “Reimbursement Approval” means, with respect to a Product in the
Territory, any pricing reimbursement registration or listing on formularies and
all approval necessary to an optimal introduction of the Product on the market.

 

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1.84      “Royalty Term” means with respect to each Product in each country in
the Territory, the period beginning on the date of First Commercial Sale of such
Product in such country and ending on the later of (a) the expiration of the
last to expire Valid Claim of the Licensed Patent Rights or ILDONG Program
Patent Rights in such country that Covers the composition of matter,
Manufacture, use or sale of such Product, and (b) fifteen (15) years from the
date of the First Commercial Sale of such Product in such country.

 

1.85      “Sales Target” means that proportion of the total patient market for
the Product provided to Sublicensor by ILDONG and expressed as either a
percentage or calculated number of vials of the Product as set forth in Schedule
3.

 

1.86      “Serious Adverse Event” means any untoward medical occurrence that, at
any dose, results in death, is life-threatening, requires inpatient
hospitalization or prolongation of existing hospitalization, results in
persistent or significant disability/incapacity, or is a congenital
anomaly/birth defect, as more full defined in 21 CFR § 312.32.

 

1.87      “Significant Development Event” means any of the following material
Development events, a summary of which shall be included in any Development
Report: (a) any material interaction and/or written correspondence between
ILDONG and any Regulatory Authority with respect to the Compound or a Product;
(b) any material event with respect to any Clinical Trial involving the Compound
and/or a Product, including any such event that is ongoing as of the date of the
applicable Development Report, or is reasonably expected to occur or be
initiated within twelve (12) months of the date of the applicable Development
Report; and (c) any material result obtained in the conduct of any Clinical
Trial involving the Compound and/or a Product during the period covered by the
Development Report. For purposes of clarity, all information provided to
SUBLICENSOR with respect to Significant Development Events, shall be deemed to
be Confidential Information of ILDONG. For purposes of this definition,
“material” shall be defined as any event and/or result which have had or may
have a significant impact on the activities and timelines defined in the
Development plan of each Product.

 

1.88      “sBLA” means a Supplemental Biologic License Application, as defined
in the FDCA and applicable regulations promulgated thereunder.

 

1.89      “sNDA” means a Supplemental New Drug Application, as defined in the
FDCA and applicable regulations promulgated thereunder.

 

1.90      “Sublicensee” means any Third Party to which ILDONG grants a
sublicense in accordance with Section 2.2.

 

1.91      “Sublicense Agreement” means any agreement by and between a Party and
a Sublicensee which is entered into in accordance with Section 2.2.

 

1.92       “Technology” means, collectively, all inventions, discoveries,
improvements, trade secrets and proprietary information and methods, whether or
not patentable or patented, including without limitation: (a) methods of
Manufacture or use of, and structural and functional information pertaining to,
chemical compounds; (b) compositions of matter, data, formulations, processes,
techniques, know-how and results (including any negative results) and (c)
results of clinical trials, pre-clinical trials and other Development
activities.

 

15

 

  

1.93      “Territory” means South Korea, Taiwan, Singapore, Indonesia, Malaysia,
Thailand, Philippines, Vietnam, and Myanmar.

 

1.94      “TG20” means the transgenic-derived chimeric monoclonal antibody
described more fully on Schedule 5 attached hereto and incorporated herein by
reference.

 

1.95      “ILDONG Materials” means any Proprietary Materials that are Controlled
by ILDONG and used by ILDONG, or provided by ILDONG for use, in the Development
Program.

 

1.96       “Third Party” means (a) with respect to ILDONG, any Person other than
ILDONG and its respective Affiliates, Sublicensees and Distributors and (b) with
respect to SUBLICENSOR, any Person other than its Affiliates.

 

1.97      “Valid Claim” means any claim of (a) an issued unexpired patent that
(i) has not been finally cancelled, withdrawn, abandoned or rejected by any
administrative agency or other body of competent jurisdiction, (ii) has not been
permanently revoked, held invalid, or declared unpatentable or unenforceable in
a decision of a court or other body of competent jurisdiction that is
unappealable or unappealed within the time allowed for appeal, (iii) has not
been rendered unenforceable through terminal disclaimer or otherwise, and (iv)
is not lost through an interference proceeding that is unappealable or
unappealed within the time allowed for appeal; or (b) a claim of a pending
Patent application, which claim has not been abandoned or finally disallowed
without the possibility of appeal.

 

Additional Definitions. In addition, each of the following definitions shall
have the respective meanings set forth in the section of this Agreement
indicated below:

 

Definition   Section       Action   10.2.1(a)(ii) Anticipated Approval Notice  
5.11.1(a) Claims   13.1 Commercialization Report   5.8 Competitive Program
Transaction   2.4.2(a) Competitive Program Transaction Notice   2.4.2(a)
Development Report   3.4.1 Diligence Failure Notice   5.4 Disclosing Party  
1.28 Dispute   14.1 Effective Date   Preamble Filing Party   10.1.4

 

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Definition   Section       LFB   Preamble LFB/GTC   Preamble SUBLICENSOR  
Preamble SUBLICENSOR Indemnities   13.1 ICH   3.4 Indemnified Party   13.3
Indemnifying Party   13.3 Infringement   10.2.1(a)(i) Infringement Notice  
10.2.1(a)(i) Losses   13.1 Option   Recitals Option Agreement   Recitals
Party/Parties   Preamble Patent Coordinator   9.4 Recall   5.10 Receiving Party
  1.28 Recipient Party   3.6 ILDONG   Preamble ILDONG Diligence Failure Notice  
5.4 ILDONG Indemnities   13.2 Term   11.1 Transferring Party   3.6

 

2.      LICENSE GRANTS; EXCLUSIVITY

 

2.1     Sublicense.

 

2.1.1      Grant of Sublicense to ILDONG. Subject to the terms and conditions of
this Agreement, SUBLICENSOR hereby grants to ILDONG, a royalty-bearing,
exclusive within the Territory, license or sublicense (with respect to Licensed
Technology and/or Licensed Patent Rights licensed by Third Parties to
SUBLICENSOR), including the right to grant sublicenses as provided in Section
2.2, under the Licensed Technology and Licensed Patent Rights to Develop the
Compounds or Products as part of the Development Program and to Commercialize,
use, have used, supply, sell, offer to sell, import, have imported, market, and
otherwise Commercialize Products in the Field in the Territory.

 

In addition, SUBLICENSOR hereby grants to ILDONG a non-exclusive, fully paid up
license or sublicense, including the right to grant sublicenses as provided in
Section 2.2, under the Background Patent Rights to Develop the Compounds or
Products as part of the Development Program and to Commercialize, use, have
used, and supply, sell, offer to sell, import, have imported, market, and
otherwise Commercialize Products in the Field in the Territory.

 

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2.1.2      Reversion. Should ILDONG or its Sublicensee(s) stop the
Commercialization of any Product, any and all license granted to ILDONG by
SUBLICENSOR in respect of such Product shall automatically revert back to
SUBLICENSOR (including licenses granted according to Sections 2.1.1 and 2.1.4).
In such case, ILDONG commits to grant to SUBLICENSOR an exclusive, royalty free
license or sublicense (with respect to Rights licensed by Third Parties to
ILDONG), including the right to grant sublicenses, under all Patent Rights
Controlled by ILDONG, Joint Improvement and Joint Patent Right necessary or
useful for SUBLICENSOR to Develop such Compounds or Product and/or use, have
used, supply, sell, offer to sell, import, have imported, market, and otherwise
Commercialize such Products in the Field and in the Territory.

 

For the avoidance of doubt, the Commercialization of a Product shall be
considered as stopped if, after all Regulatory Approvals and Reimbursement
Approvals have been granted in South Korea when:

 

-the aggregate amount spent by ILDONG or its Sublicensee(s) on the
Commercialization activities is less than $* per year for such Product; and

 

-or, a minimum of thirty percent (*%) of Sales Target has not been recorded for
over a period of more than * (*) years;

  

2.1.3      Disclosure of Technology. SUBLICENSOR shall provide prompt written
notice to ILDONG of all Licensed Patent Rights or Licensed Technology Controlled
by SUBLICENSOR and their respective Affiliates that come under the Control of
SUBLICENSOR or their respective Affiliates after the Effective Date during the
Term.

 

2.1.4      Grant of License to Licensed Trademark.

 

(a)      Ownership of Trademarks. ILDONG hereby acknowledges that SUBLICENSOR
has already performed a Trademarks research and has registered the Licensed
Trademarks. However, ILDONG is entitled to use and register any other
trademarks, on SUBLICENSOR behalf, and at ILDONG’S own cost, for Development and
Commercialization purposes ILDONG agrees that it will not apply for the
registration of the Licensed Trademark (or any mark confusingly similar thereto)
anywhere in the world.

 

(b)      Grant of License. Subject to the terms and conditions of this
Agreement, SUBLICENSOR hereby grants to ILDONG a royalty bearing, sublicense to
use the Licensed Trademark solely for the purpose of registering, using,
Commercializing, importing, exporting, selling, offering for sale, and having
sold the Product in the Field in the Territory on the terms and subject to the
conditions set forth in this Agreement.

 

 

* Confidential material redacted and filed separately with the Commission.

 

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(c)      Covenants of ILDONG. ILDONG hereby agrees that all use of the Licensed
Trademark by ILDONG, and any goodwill associated with the use of the Licensed
Trademark by ILDONG, shall inure to the benefit of SUBLICENSOR. ILDONG hereby
agrees that nothing in this Agreement shall give ILDONG any right, title or
interest in the Licensed Trademark other than the right to use the Licensed
Trademark in accordance with this Agreement. ILDONG further agrees that it will
not: (i) oppose or assist any Third Party in opposing any application for
registration, re-registration or renewal of the Licensed Trademark; ii) apply
for or otherwise seek (or assist any Third Party in applying for or otherwise
seeking) complete or partial revocation, cancellation, invalidation or removal
of the Licensed Trademark from any register or (iii) challenge or bring (or
assist any Third Party in challenging or bringing) any proceeding or action in
relation to the use or ownership of the Licensed Trademark.

 

(d)      Registration of Licensed Trademark. SUBLICENSOR shall have the sole
right to apply for registration of the Licensed Trademark in the Territory to
the extent such registration has not already been obtained by SUBLICENSOR at the
Effective Date and for paying all applicable fees, including all registration
and application fees and renewal fees. SUBLICENSOR shall update attached the
Schedule 7 for ILDONG’s use of the Licensed trademarks in the Territory prior to
the NDA in each country..

 

(e)      Use of Licensed Trademark. ILDONG shall use the Licensed Trademark
solely (i) in the manner specified in this Agreement and (ii) in connection with
the Product and not for any other goods or services. ILDONG agrees not to use
any other trademark or service mark in combination with the Licensed Trademark
without the prior written consent of SUBLICENSOR. ILDONG, at its sole cost and
expense, will provide to SUBLICENSOR representative samples of all products,
product packaging, literature, brochures, signs, and advertising materials
prepared by ILDONG which bear, display, or include any reference to the Licensed
Trademark, and ILDONG shall obtain the written approval of SUBLICENSOR with
respect to all such materials prior to the use thereof. ILDONG will not
distribute or otherwise use any samples or materials or other media bearing or
displaying the Licensed Trademark unless and until SUBLICENSOR has notified
ILDONG in writing of SUBLICENSOR’s approval, which approval shall not be
reasonably withheld.

  

(f)      Notice. ILDONG shall promptly notify SUBLICENSOR (i) of any claim,
threat, lawsuit, filing, or other notice or allegation of infringement of which
it is aware regarding ILDONG’s use of the Licensed Trademark and/or (ii) if it
becomes aware of the existence of any Third Party applications to register
anywhere in the world any mark or name which consists of or incorporates the
Licensed Trademark. SUBLICENSOR shall have the sole right, but not the
obligation, to bring infringement, unfair competition, or other claims or
proceedings involving the Licensed Trademark and ILDONG hereby acknowledges and
agrees that it shall have no such right. If requested by SUBLICENSOR, ILDONG
shall cooperate with SUBLICENSOR in connection with any such action.

 

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2.2Right to Sublicense.

 

2.2.1      Sublicense. ILDONG shall have the right to grant sublicenses under
the licenses granted to it under Section 2.1.1 to any Sublicensee; with
SUBLICENSOR prior written notification provided, that, (a) the terms of each
such sublicense shall be consistent with the rights and obligations of ILDONG
under the Agreement; (b) it shall be a condition of any such sublicense that
such Sublicensee agrees to be bound by the terms of this Agreement applicable to
the Development and Commercialization of Products in the Field in the Territory;
(c) ILDONG shall provide SUBLICENSOR with a copy of any such Sublicense
Agreement within ten (10) days of the execution of each such Sublicense
Agreement; and (d) ILDONG shall not be relieved of its obligations pursuant to
this Agreement as a result of such sublicense, except to the extent such
obligations are satisfactorily performed by any such sublicense.

 

2.2.2      Grant of Rights to Distributors. ILDONG or any of its Affiliates and
Sublicensees shall have the right, with SUBLICENSOR prior written notification,
to appoint one or more Distributors for Products in the Territory. ILDONG shall
provide SUBLICENSOR with a copy of each such agreement with any Distributor
within ten (10) days of execution of such agreement.

 

2.3No Other Rights.

 

2.3.1      ILDONG shall have no rights to use or otherwise exploit Licensed
Technology, Licensed Patent Rights, or SUBLICENSOR Proprietary Materials, and
SUBLICENSOR shall have no rights to use or otherwise exploit ILDONG Technology,
ILDONG Patent Rights or ILDONG Proprietary Materials, in each case, except as
expressly set forth in this Agreement.

 

2.4Exclusivity.

 

2.4.1      Exclusivity Obligation. During the Term of this Agreement, ILDONG
shall not, and shall cause each of its Affiliates to not, conduct any activity,
either on its own, or with, for the benefit of, or sponsored by, any Third
Party, that, in any case, involves the research, development or
commercialization of any other anti CD 20 monoclonal antibody, or any compound
that embodies or is derived from any anti CD 20 monoclonal antibody, for use in
the Field that is competitive with or adversely affects the Development or
Commercialization of any of the Compounds or Products, except hereunder in
connection with the research, Development and/or the Commercialization of the
Compounds and Products. Notwithstanding the foregoing, at ILDONG’s request,
SUBLICENSOR may allow ILDONG to Develop and Commercialize all combinations with
the Compounds and Products which would be benefit in improving the Development
and/or the Commercialization of the Compounds and Products, such consent to not
be unreasonably withheld.

 

20

 

  

2.4.2Competitive Program Transaction.

 

(a)      Notice. If at any time during the Term, ILDONG grants a sublicense or
other rights to any Third Party to utilize any Technology or Patent Rights
Controlled by ILDONG or any of its Affiliates for the Development or
Commercialization of any of the Compounds or Products, or ILDONG undergoes a
Change of Control, or if ILDONG or any of its Affiliates acquires all or
substantially all of the assets or common stock of a Third Party (whether by
asset or stock purchase, merger, consolidation, share exchange or other similar
transaction) and, in any such case, such Third Party or any of such Third
Party’s Affiliates (in the case of a Third Party Sublicensee or a Third Party
acquirer of ILDONG), has a Competitive Program (a “Competitive Program
Transaction”), ILDONG shall provide SUBLICENSOR with prompt written notice
describing such Competitive Program Transaction in reasonable detail which shall
include a description of the nature of such Competitive Program (the
“Competitive Program Transaction Notice”). Such Competitive Program Transaction
Notice shall be provided by ILDONG prior to execution of such agreement, if
permitted under Applicable Laws and not prohibited by the terms of any agreement
between ILDONG or any of its Affiliates and any Third Party, and otherwise as
soon as practicable thereafter and, in any event, not later than promptly
following the consummation of the transaction contemplated by such agreement.

 

(b)      Meeting of the Parties. As soon as practicable following SUBLICENSOR’S
receipt of any Competitive Program Transaction Notice, the Parties shall meet to
discuss whether, notwithstanding any provision hereof, such Competitive Program
would continue following such Competitive Program Transaction. In any such
meeting the Parties will review any restrictions applicable to such Competitive
Program that may prevent its combination with this Agreement, and other issues
that may impact the potential combination of such Competitive Program with this
Agreement.

 

(c)      Integration of Competitive Program. If ILDONG and SUBLICENSOR mutually
agree that such Competitive Program may be integrated into this Agreement, then
within *(*) days after such determination the Parties shall agree upon an
amendment to this Agreement that will provide either (X) (i) that each compound
or product that is part of the Competitive Program would be deemed to be a
Compound, whether or not such compound or product meets the standards or
criteria hereunder for a Compound and (ii) the Parties’ rights and obligations
under this Agreement will apply in all relevant respects to any such deemed
Compounds (including the payment of the milestones, and royalties set forth in
this Agreement) or (Y) that the Development and Commercialization diligence
standards of this Agreement shall be revised to ensure that the effort and
resources that the Third Party applies (or ILDONG, if ILDONG is the surviving
entity) applied to the Competitive Program shall be equally applied to the
Development and Commercialization of the Compounds and Products.

 

(d)      Termination/Divesting of Competitive Program. If the Parties are unable
to reach agreement on the terms pursuant to which the integration of any
Competitive Program into this Agreement would occur, ILDONG shall have an
additional * (*) days during which it shall determine whether to (i) terminate
the Competitive Program or (ii) Divest itself of the Competitive Program. If
ILDONG notifies SUBLICENSOR in writing that it will terminate such Competitive
Program, ILDONG shall promptly terminate such Competitive Program as quickly as
possible with due regard for patient safety and the rights of any subjects that
are participants in any clinical studies relating to such Competitive Program
and Applicable Laws, and in any event within * (*) days after its delivery of
such written notice to SUBLICENSOR. If ILDONG notifies SUBLICENSOR in writing
that it will Divest itself of the Competitive Program, then it shall do so as
promptly as practicable but in any event on or before * (*) months from the date
of such notice; provided, that, during the period during which such Divestiture
is pending, ILDONG shall maintaining separate teams working on such Competitive
Program and this Agreement. If ILDONG does not notify SUBLICENSOR in writing at
the conclusion of the * (*) day period provided above that ILDONG will terminate
or Divest itself of such Competitive Program, or if ILDONG does so notify
SUBLICENSOR but fails to terminate or Divest the Competitive Program within the
periods provided above, SUBLICENSOR shall have the right to immediately
terminate this Agreement by providing written notice to ILDONG.

 

 

* Confidential material redacted and filed separately with the Commission.

 

21

 

 

3.      DEVELOPMENT OF PRODUCTS

 

For the sake of clarity, in this Section 3, ILDONG means ILDONG, and where
applicable, its Affiliates, Sublicensees, and Distributors.

 

3.1Development Program.

 

3.1.1      Objective of Development Program. The objective of the Development
Program shall be the Development by ILDONG, in conjunction with the Development
activities of the SUBLICENSOR, of the Compounds and Products in the Field in
order to obtain Marketing Authorization for such Products in the Field in the
Territory as promptly as practicable.

 

3.1.2      Responsibility for Development. ILDONG shall have the sole right and
responsibility for, and shall have full control and authority over, at its sole
cost and expense (including without limitation all costs attributable to the
supply of Product for the conduct of Clinical Trials), the Development of
Products in the Territory, including conducting all Development activities
(including bridging study(ies), if such study(ies) are necessary due to
regulatory gaps) beyond the Development activities being conducted by the
SUBLICENSOR outside of the Territory (which should be supportive of obtaining
Marketing Authorization by the FDA and/or EMA, but may or may not be sufficient
to support the obtaining of Marketing Authorization in the Territory) and
establishing the methods and means by which it performs such activities under
this Agreement. Should ILDONG, for any regulatory filing, desire to utilize data
from any clinical trials or studies conducted in indications outside *, *, *,
and *, which have been fully funded by the SUBLICENSOR, ILDONG shall pay to the
SUBLICENSOR *% of the full cost of the trial which produced such data. ILDONG
shall have the right to engage Third Party contractors to perform any of its
Development activities in the Territory, provided such Third Party contractors
are approved by SUBLICENSOR, such approval not to be unreasonably withheld, and
subject to the execution by each such Third Party contractor of an agreement
containing provisions that are consistent with and comparable in scope to,
Articles 7 and 8 of this Agreement.

 

 

* Confidential material redacted and filed separately with the Commission.

 

22

 

 

3.2      Development Diligence.

 

ILDONG, and/or its Affiliates, Sublicensees, and Distributors shall use
Commercially Reasonable Efforts during the Term to commit such resources
(including employees, consultants, contractors, facilities, equipment and
materials) as may be required to support the obtaining of Market Authorization
in the Territory as further described in 3.1.2.

 

3.3      Preparation of Development Plan.

 

A Development Plan in the Territory shall be prepared by ILDONG for each Product
and discussed with the SUBLICENSOR for its information and clinical development
and manufacturing planning purposes no less than annually after the Effective
Date. During the period commencing on and after such date and continuing for the
remainder of the Term, each party shall prepare and provide to the other party
additional Development Plans detailing any amendments, modifications and/or
updates to any existing Development Plan, within thirty (30) days of the end of
each Calendar Year. ILDONG shall seek health authority scientific advice to
determine the pivotal studies deemed necessary for product registration in the
Territory at the earliest possible time. The advice received should be reflected
in updated Development Plans. In the event of any conflict between the terms of
the Development Plan and the terms and conditions of this Agreement, the terms
and conditions of this Agreement shall prevail..

 

3.4      Compliance.

 

The Parties shall perform their activities under the Development Program in good
scientific manner and in compliance in all material respects with all Applicable
Laws. For purposes of clarity, with respect to each Development activity
performed that will or would reasonably be expected to be submitted to a
Regulatory Authority in support of a Regulatory Filing or Drug Approval
Application, ILDONG shall not willfully fail to comply in all material respects
with GLPs, GMPs or Good Clinical Practices (or, if and as appropriate under the
circumstances, International Conference on Harmonization (“ICH”) guidance or
other comparable regulation and guidance of any Regulatory Authority in the
Territory).

 

3.4.1      Records; Reports. ILDONG and/or its Affiliates, Sublicensees, and
Distributors shall (a) maintain records of its activities under the Development
Program in sufficient detail and in good scientific manner appropriate for
patent and regulatory purposes, which shall fully and properly reflect all work
performed and results achieved in the performance of the Development Program and
(b) ILDONG shall keep SUBLICENSOR regularly informed of the progress of its
efforts to Develop Products in the Territory. To facilitate such progress
updates, each Party shall provide the other Party with an annual development
report (each, a “Development Report”) (to be delivered with each annual update
to the Development Plan) that summarizes: (a) significant Development activities
conducted during the preceding Calendar Year and results obtained with respect
to Compounds and Products (including the status of all Clinical Trials), (b)
Significant Development Events applicable to the Compounds and/or Products, (c)
a summary of all Program Technology conceived or reduced to practice by the
Parties over such period, (d) a non-binding estimate of the expected timing of
any milestone events with respect to Products and (e) such other information
that each Party has in its possession as may be reasonably requested from time
to time by the other party. The Development Plan and each Development Report
shall be deemed Confidential Information. Following the commencement of
Commercialization, Development Reports will no longer be required and will be
replaced by the annual Commercialization Report as described in Section 5.8.

 

23

 

  

3.5      Supply of Compound(s) or Products(s) for Development.

 

SUBLICENSOR’s and ILDONG’s rights and responsibilities pertaining to the supply
of the Compound or the Product for the Development shall be governed by Section
6 below.

 

3.6      Use of Proprietary Materials.

 

From time to time during the Term, either Party (the “Transferring Party”) may
supply the other Party (the “Recipient Party”) with Proprietary Materials of the
Transferring Party for use in the Development Program. In connection therewith,
each Recipient Party hereby agrees that (a) it shall not use such Proprietary
Materials for any purpose other than exercising its rights or performing its
obligations hereunder; (b) it shall use such Proprietary Materials only in
compliance with all Applicable Laws; (c) it shall not transfer any such
Proprietary Materials to any Third Party without the prior written consent of
the Transferring Party, except for the transfer of Products for use in Clinical
Trials or as otherwise expressly permitted hereby; (d) the Recipient Party shall
not acquire any right, title or interest in or to such Proprietary Materials as
a result of such supply by the Transferring Party; and (e) upon the expiration
or termination of the Development Program, the Recipient Party shall, if and as
instructed by the Transferring Party, either destroy or return any such
Proprietary Materials that are not the subject of the grant of a continuing
license hereunder.

 

4.      REGULATORY ACTIVITIES

 

For the sake of clarity, in this Section 4, ILDONG means ILDONG, and where
applicable, its Affiliates, Sublicensees and Distributors.

 

4.1      Responsibility for Regulatory Filings.

 

Subject to the remainder of this Article 4, (a) ILDONG shall have the sole right
and responsibility, at its sole cost and expense, for preparing and filing all
Regulatory Filings and Drug Approval Applications, Pricing Approval
applications, or Reimbursement Approval applications required to Develop
Compounds and Commercialize Products in the Territory in its own name; (b) all
Regulatory Approvals for Products shall be solely owned by ILDONG; and (c)
ILDONG shall have the sole right and responsibility for (i) maintaining all
Regulatory Filings and/or Marketing Authorizations and (ii) reporting to any
Regulatory Authority within the Territory all Adverse Events and Serious Adverse
Events related to any Product if and to the extent required by Applicable Laws.
To maximize market protection of Product, ILDONG may file for any orphan drug
designations as appropriate within requisite timeframes prior to the submission
of any Marketing Authorization Application. Firstly, within * (*) months
following the QA approval of the Study Report of the last Clinical Trial as per
the Development Program, ILDONG shall file, or cause to be filed, before the
Regulatory Authority (KFDA) in South Korea, all authorization and registration
applications required for the promotion, marketing, distribution and sale of
Product in South Korea. ILDONG shall exercise Commercially Reasonable Efforts to
obtain Marketing Authorizations with respect to the Product. Failure to meet
this obligation will be considered a material breach of the Agreement and
SUBLICENSOR shall have the right to terminate the Agreement for breach of ILDONG
in accordance with Section 11.2.2.

 

 

* Confidential material redacted and filed separately with the Commission.

 

24

 

 

4.2      Disclosure; Right of Access.

 

Upon request from SUBLICENSOR, ILDONG shall promptly provide SUBLICENSOR with
(a) a list of all sites at which Clinical Trials with respect to Products are
being conducted by or on behalf of ILDONG; (b) copies of all Clinical Trial
protocols and Investigator’s Brochures with respect to such Clinical Trials; and
(c) access to all data (including non-clinical and Clinical Data), results and
information found in ILDONG’s regulatory files produced by or on behalf of
ILDONG, or any of its Affiliates or Sublicensees, in connection with the conduct
by ILDONG of Development activities in its original format, without translation
except that translations shall be provided at no charge where such translations
are produced in the ordinary course of business. SUBLICENSOR shall maintain the
confidentiality of such data, results and information and shall only have the
right and license to use such data (including Clinical Data), results and
information provided by ILDONG under this Section 4.2 for the performance of its
obligations and exercise of its rights under this Agreement,

 

4.3      Disclosure of Certain Events.

 

The Parties hereby agree to report to each other all Adverse Events and/or
Serious Adverse Events with respect to the Product (whether occurring in any
Clinical Trial conducted with regard to the Product or in connection with the
commercialization of the Product in any country), within timeframes consistent
with its reporting obligations under Applicable Laws and in any event, if either
Party is actively conducting a clinical trial under its own IND or
commercializing the Product under its own Marketing Authorization, then the
other Party shall report such events no later than three (3) business days for
Serious Adverse Event, and quarterly for Adverse Events, which report shall, in
each case, include the circumstances and nature of such Serious Adverse Event or
Adverse Event as required for reporting under Applicable Laws. In addition, to
the extent requested by either Party, the other Party shall promptly provide to
the requesting Party any other information or materials that the requesting
Party may require to provide to any Regulatory Authority with respect to any
such Adverse Event or Serious Adverse Event. All disclosures made under this
Section 4.3 shall be deemed Confidential Information of the disclosing Party;
provided, that, the Party receiving such disclosures may, upon written notice to
the disclosing Party, report the occurrence, circumstances and nature of such
Adverse Event and/or Serious Adverse Event to any Regulatory Authority solely
insofar as such reporting is required to comply with Applicable Laws.

 

25

 

 

4.4        Communication with Regulatory Authorities in the SUBLICENSOR
Commercialization Territory.

 

4.4.1      Participation in Meetings. ILDONG shall use reasonable efforts to
provide SUBLICENSOR with at least thirty (30) days advance notice of any
official meeting with a Regulatory Authority regarding any Marketing
Authorization for any Product in the SUBLICENSOR Commercialization Territory and
SUBLICENSOR may elect to send one (1) person reasonably acceptable to ILDONG to
participate as an observer (at SUBLICENSOR’S sole cost and expense) in such
meeting.

 

4.4.2      Access; Notice of Meetings. ILDONG shall use reasonable efforts to
provide SUBLICENSOR with at least thirty (30) days’ advance notice of any
official meeting with Regulatory Authority in the SUBLICENSOR Commercialization
Territory regarding any Drug Approval Application for Products and/or any such
audit or inspection conducted by any Regulatory Authority at any site at which
Clinical Trials with respect to Products are being conducted and SUBLICENSOR may
elect to send representatives reasonably acceptable to ILDONG to participate as
an observer in such meeting at SUBLICENSOR’ sole cost and expense.

 

5.      COMMERCIALIZATION OF PRODUCTS

 

For the sake of clarity, in this Section 5, ILDONG means ILDONG, and where
applicable, its Affiliates, Sublicensees and Distributors.

 

5.1        Commercialization Plan.

 

The initial Commercialization Plan in the territory shall be prepared by ILDONG
and submitted to SUBLICENSOR for its review as soon as practicable after the
submission of the NDA application in South Korea. On and after such date and
continuing for the remainder of the Term, additional Commercialization Plans
and/or amendments, modifications and/or updates to the Commercialization Plan,
shall be prepared by ILDONG and submitted to SUBLICENSOR for its review within
thirty (30) days of the end of each Calendar Year.

 

5.2        Responsibility for Commercialization of Products.

 

Subject to Section 5.11 below, ILDONG shall have the primary right and
responsibility for, and shall have primary control and authority over, at its
sole cost and expense, (a) all aspects of the Commercialization of Products in
the Field in the Territory including the sole responsibility for booking sales
of Product and for all returns, charge-backs and rebates with respect to
Products; and (b) the conduct of all pre-marketing, marketing, Branding,
promotion, sales, distribution, import and export activities (including securing
pricing, reimbursement, sales and marketing and conducting any post-marketing
trials or post-marketing safety surveillance and maintaining databases)
applicable to the Commercialization of Products in the Field and in the
Territory.

 

26

 

 

5.3      Commercialization Diligence.

 

ILDONG shall use Commercially Reasonable Efforts during the Term to
Commercialize Products for all approved Indications in the Field and in the
Territory. Without limiting the foregoing, (a) commencing no later than * (*)
days prior to the estimated date of First Commercial Sale of the Product, ILDONG
shall conduct pre-marketing activities in the Territory with respect to the
Product and (b) following receipt of Marketing Authorization with respect to the
Product in the Territory, ILDONG shall initiate and conduct such promotional
activities determined by ILDONG as may be required to develop a commercial
market for, launch and Commercialize the Product (including through direct
conduct with key opinion leaders) in the Territory. In addition, ILDONG, shall
establish and maintain a well-trained sales force for the Product, (together
with a well-trained support staff) adequate to service all the customers of
ILDONG and to keep the sales force knowledgeable and fully informed as to the
Product; maintain an effective distribution system for the Product in the
Territory; transport and store the Product to preserve its quality in accordance
with pre-determined QA requirements; obtain and maintain all licenses, approvals
and permits in the Territory necessary for ILDONG to perform its obligations
under this Agreement; establish and maintain suitable systems and records to
enable a recall of Product in a timely, efficient and accurate manner and
otherwise in accordance with applicable laws and regulations in the Territory;
abide by all applicable rules and regulations relating to sales, marketing and
reimbursement; ensure that no Product shipped by ILDONG is adulterated or
misbranded; maintain adequate control over the physical security of the Product;
Cause all Affiliates, sublicensees and subcontractors of ILDONG to comply with
the above.

 

5.4      Failure to Satisfy Commercialization Diligence Obligations.

 

SUBLICENSOR shall have the right, in its sole discretion, to provide ILDONG with
written notice if it reasonably believes ILDONG has failed to satisfy its
Commercialization diligence obligations under this Agreement (a “ILDONG
Diligence Failure”). Such written notice (a “Diligence Failure Notice”) shall
set forth in reasonable detail the nature of the alleged failure and shall
request written justification, in the form of detailed reasons that would
support the proposition that ILDONG has satisfied such diligence obligations.
ILDONG shall provide such written justification to SUBLICENSOR within thirty
(30) days after receipt of such Diligence Failure Notice and shall identify any
Commercially Reasonable Justifications (as defined below) applicable thereto. If
ILDONG fails to provide SUBLICENSOR with a Commercially Reasonable Justification
within such thirty (30) day period ILDONG shall have an additional (90) day
period to cure such failure. During that period a penalty equal to the * shall
accrue on a monthly basis, to the benefit of SUBLICENSOR. Should ILDONG’s
failure continue within this additional period, ILDONG shall continue to pay the
penalty abovementioned and SUBLICENSOR reserves the right in its discretion to,
in addition to all damages caused in relation thereof, convert the licenses and
rights granted under any or all of Section 2.1 from exclusive licenses to
non-exclusive licenses only as such licenses and rights apply to such Product.
Should ILDONG’s failure continue within an additional hundred eighty (180) day
period, ILDONG shall continue to pay the penalty abovementioned and SUBLICENSOR
reserves the right in its discretion to, in addition to any other remedies it
may have as a result of all damages caused in relation thereof, terminate any or
all of the licenses and rights granted under Section 2.1 hereof with respect to
the Product that is the subject of the Diligence Failure Notice termination or
conversion, as the case may be, shall be at the discretion of SUBLICENSOR and be
effective immediately upon issuance by SUBLICENSOR of written notice to ILDONG
specifying the remedy that SUBLICENSOR is electing to exercise under this
Section 5.4.

 

 

* Confidential material redacted and filed separately with the Commission.

 

27

 

 

For purposes of this Section 5.4, “Commercially Reasonable Justification” means
the existence or occurrence of one or more of the following events or
justifications: (i) the occurrence of an event of Force Majeure; (ii) the
adoption by a Regulatory Authority of any one or more regulations that become
effective after the Effective Date and that materially affect the Development or
clinical testing of the Product or the process for obtaining any Regulatory
Approval, Pricing Approval, or Reimbursement Approval for the Product; and (iii)
the occurrence of any event, condition or circumstance (including an event,
condition or circumstance related to the manufacture or supply of the Product
(or any material component thereof) for clinical studies or a regulatory action
by any Regulatory Authority) with respect to the Product (or any material
component thereof) that (A) involves the safety, toxicity, efficacy or
pharmacokinetics of the Product or (B) prevents the use of the Product in humans
(including, without limitation, as a result of patent or other blocking rights)
and, in the case of clauses (A) or (B) above, is not attributable to (1) a
breach by ILDONG of any obligation under this Agreement, (2) the failure of
ILDONG to comply with any protocol, development plan or Applicable Laws with
respect to the development of the Product, or (3) any grossly negligent or
willful act or omission of ILDONG; or (C) that the ILDONG Diligence Failure is
caused by ILDONG’s failure to take actions that would be in excess of
Commercially Reasonable Efforts; provided, that, in any such case, ILDONG shall
use Commercially Reasonable Efforts to mitigate the effect and duration of any
such acceptable delay with respect to the Product that is the subject of the
Diligence Failure Notice.

 

5.5        Failure to achieve Sales Targets

 

5.5.1      Initial Period. For the * following the date of First Commercial Sale
(the "Initial Period") ILDONG shall achieve the Sales Target. If ILDONG fails to
achieve * percent (*%) of the Sales Target by completion of the Initial Period,
ILDONG shall, within * (*) *, pay to SUBLICENSORS a sum equal to the *. For
purposes of this Agreement, “Commercial Years” means the period commencing on
the date of First Commercial Sale of a Product and ending on the anniversary
thereof and thereafter each successive period of twelve (12) months.

 

5.5.2      Subsequent Periods. For Commercial Years subsequent to the Initial
Period ILDONG shall achieve the Sales Target. If ILDONG fails to achieve *
percent (*%) of the Sales Target for any Commercial Year subject to the Initial
Period, ILDONG shall, within * pay to SUBLICENSOR a sum equal to the *.

 

 

* Confidential material redacted and filed separately with the Commission.

 

28

 

 

In addition to the above, if ILDONG fails to achieve * percent (*%) of the Sales
Target for *, SUBLICENSOR shall have the right to terminate this Agreement with
respect to each country within the Territory where * were not achieved. In the
case where SUBLICENSOR exercises its rights to terminate this Agreement,
SUBLICENSOR shall provide * (*) months prior notice of termination and purchase
back any Product stock held by ILDONG valued at the commercial price. If during
the above mentioned * month period, ILDONG achieves * for such six-month period,
then ILDONG shall be deemed to have cured the breach and the termination shall
be null and void.

 

5.6      Compliance.

 

ILDONG shall use its Commercially Reasonable Efforts to Commercialize the
Products in compliance in all material respects with all Applicable Laws.

 

5.7       No Unauthorized Sales.

 

ILDONG shall not, and shall not permit its Affiliates and not permit
Sublicensees or Distributors to, distribute, market, promote, offer for sale or
sell the Product to any Third Party in any country in the Territory that ILDONG,
or its Affiliates, Sublicensees or Distributors, as applicable, reasonably
believes is reasonably likely to engage in an unauthorized distribution,
marketing, promotion, or sale of the Product outside the country of purchase.

 

5.8      Records; Reports.

 

ILDONG shall (a) maintain records of its Commercialization activities under this
Article 5 in sufficient detail, which shall fully and properly reflect all work
done and results achieved in the Commercialization of Products and (b) following
the commencement of Commercialization of the Products provide SUBLICENSOR with
annual written reports (each, a “Commercialization Report”) which shall (i)
summarize ILDONG’s efforts to Commercialize Products, (ii) identify the
Regulatory Filings and Drug Approval Applications with respect to such Product
that ILDONG or any of its Affiliates or Sublicensees have filed, sought or
obtained in the prior twelve (12) month period or reasonably expect to make,
seek or attempt to obtain in the following twelve (12) month period and (iii)
summarize all Clinical Data generated by ILDONG with respect to Products.
Commencing no later than ninety (90) days from the date of receipt by ILDONG of
the first Marketing Authorization for each Product and on each anniversary
thereof until the expiration of the Royalty Term applicable to such Product,
each such Commercialization Report shall also include (i) an outline of the key
sales and marketing activities that ILDONG reasonably expects to conduct with
respect to Product in the Territory, (ii) a non-binding estimate of projected
sales of Product in the Territory for the subsequent three (3) Calendar Year
period and (iii) such additional information that it has in its possession as
may be reasonably requested by SUBLICENSOR regarding the Commercialization of
any Product, which request shall not be made more than once each Calendar Year.
The Commercialization Plan and Commercialization Report can be provided as one
document.

 

 

* Confidential material redacted and filed separately with the Commission.

 

29

 

 

5.9      Supply of Product for Commercialization.

 

SUBLICENSOR’s and ILDONG’s rights and responsibilities pertaining the supply of
the Compound for the Commercialization shall be governed by Section 6 below.

 

5.10      Product Recalls.

 

In the event that any Regulatory Authority issues or requests a recall or takes
similar action in connection with a Product in the Territory, or in the event
ILDONG reasonably believes that an event, incident or circumstance has occurred
that may result in the need for a recall, market withdrawal or other corrective
action regarding a Product in the Territory (each, a “Recall”), ILDONG shall
promptly advise SUBLICENSOR thereof by e-mail, telephone or facsimile. Following
such notification, ILDONG shall have the sole right to decide, and have control
of, whether to conduct a recall or market withdrawal (except in the event of a
recall or market withdrawal mandated by a Regulatory Authority, in which case it
shall be required) or to take other corrective action in the Territory and the
manner in which any such recall, market withdrawal or corrective action shall be
conducted; provided, that, ILDONG shall keep SUBLICENSOR reasonably informed
regarding any such Recall. All expenses incurred by ILDONG in connection with
any such Recall (including, without limitation, expenses for notification,
destruction and return of the affected Product and any refund to customers of
amounts paid for such Product) shall be the sole responsibility of ILDONG.

 

6.      SUPPLY OF THE COMPOUND AND/OR PRODUCT

 

6.1      Supply of LFB-R603 for Development and Commercialization.

 

SUBLICENSOR shall use its Commercially Reasonable Effort to provide supply of
LFB-R603 as required for the Development and Commercialization of LFB-R603 when
and as required by ILDONG for the Development of Products in the Territory. All
supplies of Compound and Product for Clinical Trials supplied by SUBLICENSOR
shall be billed to ILDONG at a cost equal to *.

 

For sake of clarity, SUBLICENSOR and its affiliates shall have the exclusive
right and responsibility to provide supply of LFB-R603 as required for
Development and Commercialization in the Territory.

 

 

* Confidential material redacted and filed separately with the Commission.

 

30

 

 

6.2      Supply of TG20 for Development and Commercialization.

 

Provided that TG20 has satisfactorily completed non-clinical development, as
defined by the acceptance of an IND by the US FDA, SUBLICENSOR shall use its
Commercially Reasonable Effort to provide supply of TG20 as required for the
Development and Commercialization of TG20 when and as required by ILDONG for the
Development and Commercialization of Products in the Territory. All supplies of
Compound and Product for Clinical Trials supplied by SUBLICENSOR shall be billed
to ILDONG at a cost equal to *.

 

For sake of clarity, SUBLICENSOR and its affiliates shall have the exclusive
right and responsibility to provide supply of TG20 as required for Development
and Commercialization in the Territory. Nothing in this section shall be
construed as an obligation on the part of SUBLICENSOR to continue the
development of TG20.

 

Upon the approval of the first Drug Approval Application by ILDONG within any
country within the Territory and the subsequent determination of the National
Health Insurance (“NHI”) price, the parties will enter into a Commercial Supply
Agreement which shall be attached in Exhibit B as soon as it is executed by the
Parties and which shall include such customary terms of such agreements and
shall include the payment by ILDONG to SUBLICENSOR at a transfer price not to
exceed *% of the NHI price obtained by the relevant health authority including
margin for Cost of Goods manufactured, such that such supply price is not below
*. In the event that commercial supply price to ILDONG exceeds *% of the NHI
price, the Parties agree to renegotiate the Sales Royalty Rates outlined in
Section 7.3 in good faith. For the sake of clarity, in no way shall SUBLICENSOR
provide commercial supply to ILDONG at a price that is below *.

 

7.      PAYMENTS

 

7.1      Upfront Payment.

 

In consideration for the rights granted to ILDONG hereunder, ILDONG hereby
agrees to pay to SUBLICENSOR a non-refundable, non-creditable license fee of two
million dollars (USD $2,000,000) within thirty (30) calendar days after the
Effective Date.

 

7.2      Sales Milestones.

 

7.2.1      Sales Milestones. ILDONG shall make the following non-refundable,
non-creditable milestone payments to SUBLICENSOR upon the occurrence of each of
the following milestone events for the first Product that achieves the
corresponding Net Sales milestone for the first time in the combined territory
of South Korea and Taiwan:

 

 

* Confidential material redacted and filed separately with the Commission.

 

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    Milestone   Milestone Event   Payment        1.      On achieving annual Net
Sales of USD $*   $*         2.      On achieving annual Net Sales of USD $* 
 $*         3.      On achieving annual Net Sales of USD $*   $*        
4.      On achieving annual Net Sales of USD $*   $* 

 

7.2.2       Notice and Payment of Milestones.

 

(a)          Notice of Milestone Events. ILDONG shall provide SUBLICENSOR with
prompt written notice upon the occurrence of each milestone event set forth in
Section 7.2.1. In the event that, notwithstanding the fact that ILDONG has not
given such a notice, SUBLICENSOR believes any such milestone event has occurred,
it shall so notify ILDONG in writing and shall provide to ILDONG data,
documentation or other information that supports its belief.  Any dispute under
this Section 7.2.2(a) that relates to whether or not a milestone event has
occurred shall be resolved in accordance with Section 14.1.

 

(b)          Single Milestone Payments. ILDONG shall make a milestone payment
corresponding to each of the foregoing milestone events only once under Section
7.2.1, regardless of (i) the number of Products that achieve such milestone
event and (ii) the number of times such milestone event occurs with respect to a
Product. For the sake of clarity, each milestone event shall only trigger one
milestone payment.

 

7.3          Payment of Royalties; Royalty Rates; Accounting and Records.

 

7.3.1       Payment of Royalties. Subject to the remainder of this Section 7.3,
ILDONG shall pay SUBLICENSOR a non-refundable, non-creditable royalty on Annual
Net Sales of the Product. The rate of such royalty being determined by the
amount of Annual Net Sales as described below:

 

Annual Net Sales  Royalty Rate      Up to $* USD  *%      Between $* and $* USD 
*%      Between $* and $* USD  *%      Exceeding $* USD  *%

 

 

* Confidential material redacted and filed separately with the Commission.

 

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The royalty rate shall be applied to Annual Net Sales of each Product in each
Calendar Year (or partial Calendar Year) commencing with the First Commercial
Sale of such Product in any country in the Territory and ending upon the last
day of the last Royalty Term for such Product in such country. For purposes of
clarity, Annual Net Sales shall be determined separately for each separate
Product that is sold in a given Calendar Year.

 

7.3.2       Adjustments to Royalties for Generic Products. In the event that a
Third Party sells a Generic Product (as defined below) in a country in which a
Product is then being sold and such Generic Product is not covered by a Valid
Claim under the Licensed Patent Rights or ILDONG Program Patent Rights in such
country, then during the period in which sales of the Generic Product by such
Third Party are equal to at least * percent (*%) of ILDONG’s volume-based market
share of the Product in such country (as measured by prescriptions or other
similar information available in such country), the royalty rate applicable to
Net Sales of the Product in such country shall be reduced to * percent (*%). 
Notwithstanding the foregoing, ILDONG’s right to reduce its royalty obligation
under this Section 7.3.3(1) shall expire on the first day of the Calendar
Quarter immediately following the Calendar Quarter in which sales of such
Generic Product account for less than * percent (*%) of ILDONG’s volume-based
market share of the Product in such country (as measured by prescriptions or
other similar information available in such country). For purposes of this
Section 7.3.3), a “Generic Product” means a biosimilar product with the same
amino acid sequence as the Compound.

 

7.3.3       Payment Dates and Reports. Royalty Payments. Royalty payments shall
be made by ILDONG with respect to each Product within thirty (30) calendar days
after the end of each Calendar Quarter in which sales of such Product occur,
commencing with the Calendar Quarter in which the First Commercial Sale of such
Product occurs. ILDONG shall also provide, at the same time each such payment is
made, a report showing: (a) the Net Sales of each Product by type of Product and
country in the Territory and, if applicable, by Combination Product; (b) the
total amount of deductions from gross sales to determine Net Sales; (c) the
applicable royalty rate for Product in each country in the Territory after
applying any reductions set forth above; and (d) a calculation of the amount of
royalty due to SUBLICENSOR.

 

 

* Confidential material redacted and filed separately with the Commission.

 

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7.3.4       Records; Audit Rights. ILDONG and its Affiliates, Sublicensees and
Distributors shall keep and maintain for three (3) years from the date of each
payment of royalties hereunder complete and accurate records of gross sales and
Net Sales by ILDONG and its Affiliates, Sublicensees and Distributors of each
Product, in sufficient detail to allow royalties to be accurately determined.
SUBLICENSOR shall have the right for a period of three (3) years after receiving
any such royalty payment to appoint at its expense an independent certified
public accountant reasonably acceptable to ILDONG to audit the relevant records
of ILDONG and its Affiliates, Sublicensees and Distributors to verify that the
amount of each such payment was correctly determined; provided, that, (a) if
requested by ILDONG, SUBLICENSOR shall cause the independent certified public
accountant to enter into a confidentiality agreement reasonably acceptable to
ILDONG and (b) such independent certified public accountant may only disclose to
SUBLICENSOR whether the royalties paid are correct and the details with respect
to any discrepancies. ILDONG and its Affiliates, Sublicensees and Distributors
shall each make its records available for audit by such independent certified
public accountant during regular business hours at such place or places where
such records are customarily kept, upon thirty (30) days written notice from
SUBLICENSOR. Such audit right shall not be exercised by SUBLICENSOR more than
once in any Calendar Year or more than once with respect to sales of a
particular Product in a particular period. All records made available for audit
shall be deemed to be Confidential Information of ILDONG. The results of each
audit, if any, shall be binding on both Parties absent manifest error. In the
event there was an underpayment of royalties by ILDONG hereunder, ILDONG shall
promptly (but in any event no later than thirty (30) days after ILDONG’s receipt
of the report so concluding) make payment to SUBLICENSOR of any shortfall.
SUBLICENSOR shall bear the full cost of such audit unless such audit discloses
an underpayment by ILDONG of * percent (*%) or more of the aggregate amount of
royalties payable in any Calendar Year, in which case ILDONG shall reimburse
SUBLICENSOR for all costs incurred by SUBLICENSOR in connection with such audit.

 

7.3.5       Overdue Payments. All royalty payments not made within the time
period set forth in Section 7.3.5, and all milestone payments not made within
the time period specified in Section 7.2.1, shall bear interest at the rate of *
percent (*%) per month until paid in full or, if less, the maximum interest rate
permitted by Applicable Laws. Any such overdue royalty or milestone payment
shall, when made, be accompanied by, and credited first to, all interest so
accrued.

 

7.3.6       Payments; Withholding Tax; Currency Restrictions.

 

(a)          Payments in United States Dollars. Except as set forth in Section
6.3.7(b) below, all payments made by ILDONG under this Article 6 shall be made
by wire transfer in United States Dollars in accordance with wire transfer
instructions provided to ILDONG in writing from time to time by SUBLICENSOR. If
in any Calendar Quarter, Net Sales are made in any currency other than United
States Dollars, such Net Sales shall be converted into United States Dollars as
follows:

 

(A/B), where

 

A = foreign “Net Sales” (as defined above) in such Calendar Quarter expressed in
such foreign currency; and

 

B = foreign exchange conversion rate, expressed in local currency of the foreign
country per United States Dollar (using, as the applicable foreign exchange
rate, the spot purchase rate published in the Financial Times on the last
Business Day of each Calendar Quarter in which any payment is due and payable or
any other mutually agreed upon source, for such Calendar Quarter).

 

 

* Confidential material redacted and filed separately with the Commission.

 

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(b)          Tax Withholding. If Applicable Laws require withholding of income
or other taxes imposed upon any payments made by ILDONG to SUBLICENSOR under
this Agreement, ILDONG shall (i) make such withholding payments as may be
required, (ii) subtract such withholding payments from such payments to be made
to SUBLICENSOR, (iii) submit appropriate proof of payment of the withholding
taxes to SUBLICENSOR within a reasonable period of time, and (iv) promptly
provide SUBLICENSOR with all official receipts with respect thereto.

 

(c)          Currency Restrictions. If any restrictions on the transfer of
currency exist in any country in which Products are sold that prevent ILDONG
from making royalty payments thereon in United States Dollars, ILDONG shall make
royalty payments on the sales in such country in the local currency by deposit
in a local bank or other depository designated in writing by SUBLICENSOR (or, in
the absence of such designation, at a local bank or other depository selected by
ILDONG and identified by ILDONG by written notice to SUBLICENSOR).

 

8.          TREATMENT OF CONFIDENTIAL INFORMATION; PUBLICITY

 

8.1           Confidentiality.

 

8.1.1       Confidentiality Obligations. SUBLICENSOR and ILDONG each recognize
that the other Party’s Confidential Information and Proprietary Materials
constitute highly valuable assets of such other Party. SUBLICENSOR and ILDONG
each agrees that, (a) subject to Section 8.1.2, during the Term and for an
additional ten (10) years after termination or expiration of this Agreement it
will not disclose, and will cause its Affiliates, Sublicensees (with respect to
ILDONG) and Distributors or Sublicensees (with respect to SUBLICENSOR) not to
disclose whether directly or indirectly, in any manner whatsoever, any
Confidential Information or Proprietary Materials of the other Party and (b) it
will not use, and will cause its Affiliates, Sublicensees (with respect to
ILDONG) and Distributors or Sublicensees (with respect to SUBLICENSOR) not to
use, any Confidential Information or Proprietary Materials of the other Party,
without the prior written consent of the Disclosing Party, except as expressly
permitted hereunder.

 

8.1.2       Limited Disclosure. SUBLICENSOR and ILDONG each agrees that
disclosure of its Confidential Information or any transfer of its Proprietary
Materials may be made by the other Party on a need-to-know basis to any
employee, consultant or Affiliate of such other Party or, to the extent the
other Party is ILDONG, to any Third Party subcontractor engaged by ILDONG
pursuant to Section 2.2, in each case solely to the extent reasonably necessary
to enable such other Party to exercise its rights or to carry out its
responsibilities under this Agreement; provided, that, any such disclosure or
transfer shall only be made to Persons who are bound by written obligations
comparable in scope to the obligations described in Section 8.1.3. SUBLICENSOR
and ILDONG each further agrees that the other Party may disclose its
Confidential Information (a) on a need-to-know basis to such other Party’s legal
and financial advisors, (b) as reasonably necessary in connection with an actual
or potential (i) permitted sublicense of such Party’s rights hereunder, (ii)
debt or equity financing of such other Party or (iii) acquisition,
consolidation, share exchange or other similar transaction involving such Party
and any Third Party, (c) to the extent the other Party is ILDONG, to any Third
Party that is or may be engaged by ILDONG to perform services in connection with
the Commercialization of Products as necessary to enable such Third Party to
perform such services, (d) as reasonably necessary to make Regulatory Filings
with respect to Products under this Agreement or to respond to any inquiry made
by any Regulatory Authority with respect to Products and to prosecute or
maintain Patent Rights, or to file, prosecute or defend litigation related to
Patent Rights, in accordance with this Agreement; (e) as required by Applicable
Laws (which shall be determined by the Disclosing Party in its reasonable
discretion); provided, that, in the case of any disclosure under this clause
(e), the Disclosing Party shall (i) if practicable, provide the other Party with
reasonable advance notice of and an opportunity to comment on any such required
disclosure and (ii) if requested by the other Party, cooperate in all reasonable
respects with the other Party’s efforts to obtain confidential treatment or a
protective order with respect to any such disclosure, at the other Party’s
expense.

 

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8.1.3       Employees and Consultants. SUBLICENSOR and ILDONG each hereby
covenants and agrees that all of its employees and consultants, and all of the
employees and consultants of its Affiliates, who have access to Confidential
Information or Proprietary Materials of the other Party will, prior to having
such access, be bound by written obligations to maintain such Confidential
Information or Proprietary Materials in confidence that are no less stringent
than those confidentiality and non-use provisions contained in this Agreement.
Each Party agrees to use, and to cause its Affiliates to use, reasonable efforts
to enforce such obligations and to prohibit its employees and consultants from
using such information except as expressly permitted hereunder. Each Party will
be liable to the other Party for any disclosure or misuse by its employees of
Confidential Information or Proprietary Materials of the other Party.

 

8.2Publicity.

 

Notwithstanding anything to the contrary in Section 8.1, the Parties, upon the
execution of this Agreement, shall jointly issue a press release with respect to
this Agreement to be reasonably agreed by the Parties in substantially the form
attached hereto as Schedule 6, and either Party may make subsequent public
disclosure of the contents of such press release without further approval of the
other Party. Subject to the foregoing, except as required by Applicable Laws
(including those relating to disclosure of material information to investors),
neither Party shall issue a press or news release or make any similar public
announcement (it being understood that publication in scientific journals,
presentation at scientific conferences and meetings and the like are intended to
be covered by Section 8.4 and not subject to this Section 8.2) related to the
terms or existence of this Agreement or the conduct of the Development Program
or the Commercialization of Products without the prior written consent of the
other Party; provided, however, that either Party may make such a disclosure (a)
to the extent required by Applicable Laws (including the requirements of any
nationally recognized securities exchange, quotation system or over-the-counter
market on which such Party has its securities listed or traded), or (b) to any
investors, prospective investors, lenders and other potential financing sources
who are obligated to keep such information confidential. In the event that such
disclosure is required as aforesaid, the disclosing Party shall make reasonable
efforts to provide the other Party with notice beforehand and to coordinate with
the other Party with respect to the wording and timing of any such disclosure.
Once any press release or any other written statement is approved for disclosure
by both Parties, either Party may make subsequent public disclosure of the
contents of such statement without the further approval of the other Party.

 

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8.3           No Use of Name.

 

Neither Party shall use the name of the other Party in any Promotional Materials
or advertising without the prior express written permission of the other Party.

 

9.          INTELLECTUAL PROPERTY RIGHTS

 

For sake of clarity, in this Section 9, SUBLICENSOR means SUBLICENSOR and, where
applicable, Senior Licensors pursuant to the terms of the LFB/GTC License,
certain responsibilities of which may be delegated to Senior Licensors, but for
the sake of this Agreement will be overseen by SUBLICENSOR.

 

9.1           SUBLICENSOR Intellectual Property Rights.

 

SUBLICENSOR shall have ownership of all right, title and interest, or license
to, on a worldwide basis in and to any and all Licensed Technology and Licensed
Patent Rights.

 

9.2           Improvement

 

9.2.1ILDONG agrees to notify SUBLICENSOR of each Product Improvement ILDONG, its
Affiliates, or its Sublicensees has developed, conceived or acquired during the
Term of this Agreement. ILDONG shall, upon request of SUBLICENSOR, provide to
SUBLICENSOR all data and specifications concerning such Product Improvement. All
Product Improvements shall be deemed to be considered as a “Joint Improvement”.

 

9.2.2All SUBLICENSOR Improvement shall be the exclusive and sole property of
SUBLICENSOR and shall become Background Patent Right or Licensed Patent Rights,
as the case may be.

 

9.3           Joint Improvement

 

9.3.1Subject to any other provision to the contrary that may be contained in
SUBLICENSOR’s Licenses as defined in Section 2.1.1, any Joint Improvement shall
be jointly owned by ILDONG and SUBLICENSOR.

 

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9.3.2ILDONG shall have the exclusive, fully paid-up, irrevocable, transferable
right to Use such Joint Improvements in order to Develop the Compounds or
Products as part of the Development Program and to Commercialize, use, have
used, Manufacture, have Manufactured, supply, sell, offer to sell, import, have
imported, market, and otherwise Commercialize Products in the Field, within the
Territory with the right to sublicense.

 

9.3.3Each Party has the exclusive, fully paid-up, irrevocable, transferable
right to Use such Joint Improvements in order to develop and to commercialize
have used, Manufacture, have Manufactured, supply, sell, offer to sell, import,
have imported, market, any product other than the Product and Compound.

 

9.3.4Each Party shall reasonably assist the other in preparing, prosecuting and
maintaining Patent Rights for Joint Improvements pursuant to section 9.4; 9.5
and 10.

 

9.4           Patent Coordinators.

 

Each Party shall, by written notice to the other Party, appoint a patent
coordinator reasonably acceptable to the other Party (each, a “Patent
Coordinator”) to serve as such Party’s primary liaison with the other Party on
matters relating to the filing, prosecution, maintenance and enforcement of
Patent Rights. Each Party may replace its Patent Coordinator at any time by
notice in writing to the other Party. The initial Patent Coordinators shall be:

 

For SUBLICENSOR: Hari Miskin

 

For ILDONG:

 

9.5Notice; Inventorship.

 

 

The Parties hereby agree to promptly notify to the other Party, through the
Patent Coordinators, of the conception or reduction to practice of any Program
Technology or Joint-Improvement and to promptly execute any documents that may
be necessary to perfect SUBLICENSOR’s rights in and to such Program Technology
or Joint-Improvement. The Patent Coordinators shall determine inventorship of
Program Technology or Joint-Improvement under U.S. patent law. In case of a
dispute between the Patent Coordinators over inventorship and, as a result,
whether any particular Technology is SUBLICENSOR Technology or Joint
Improvement, such dispute shall be resolved according to U.S. patent law by
patent counsel selected by the Patent Coordinators who (and whose firm) is not
at the time of the dispute, and was not at any time during the five (5) years
prior to such dispute, performing services for either of the Parties. Expenses
of such patent counsel shall be shared equally by the Parties.

 

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10.         FILING, PROSECUTION AND MAINTENANCE OF PATENT RIGHTS

 

10.1         Patent Filing, Prosecution and Maintenance.

 

10.1.1           SUBLICENSOR Prosecution Rights. SUBLICENSOR shall have the sole
right and responsibility to prepare and file applications with respect to, and
prosecute and maintain, at its sole discretion, and using patent counsel or
agents of its choice, all Licensed Patent Rights (including all Joint Patent
Rights that are Licensed Patent Rights) throughout the Territory. ILDONG shall
cooperate with and assist SUBLICENSOR in all reasonable respects, in connection
with SUBLICENSOR’s preparation, filing, prosecution and maintenance of Licensed
Patent Rights.

 

10.1.2           ILDONG Prosecution Rights. ILDONG shall have the sole right and
responsibility to prepare and file applications with respect to, and prosecute
and maintain, at its sole cost, expense and discretion, and using patent counsel
or agents of its choice, all ILDONG Program Patent Rights throughout the
Territory. SUBLICENSOR shall cooperate with and assist ILDONG in all reasonable
respects, in connection with ILDONG’s preparation, filing, prosecution and
maintenance of ILDONG Program Patent Rights.

 

10.1.3           Joint Patent Rights. Subject to Section 10.1.1, within ten (10)
Business Days after it is determined pursuant to Section 9.5 that any particular
Program Technology is Joint Improvement, the Parties will determine which Party
will undertake the prosecution of such Joint Patent Rights based on the
respective expertise of the Parties and the rights of the Parties under this
Agreement. If the Parties fail to agree within such ten (10) Business Day
period, then prosecution of such Patent Rights shall be jointly controlled by
the Parties, using patent counsel agreed upon by the Patent Coordinators. All
patent costs and expenses incurred by a Party or jointly by the Parties in
connection with the preparation, filing, prosecution and maintenance of Joint
Patent Rights in the Territory that cover any Product for use in the Field shall
be shared equally by the Parties. Provided however that, if a Party refuses,
declines or fails to assume its obligations under this section 11.1.2, it shall
advise the other Party and said other Party shall have the right, at its own
expense, to prepare, prosecute and maintain Patent Rights for Joint
Improvements. In such a case, upon request of the non-defaulting Party, the
Party that refuses, declines or fails to file, prosecute or maintain any such
Patent Rights for Joint Improvements shall assign all its co-ownership rights to
the other Party.

 

10.1.4           Information and Cooperation. The Parties hereby agree to
cooperate with each other in connection with the filing, prosecution and
maintenance of Patent Rights under this Agreement, including through the prompt
execution and delivery of documents and instruments as may reasonably be
required in connection therewith. Without limiting the foregoing, each Party
responsible for the filing, prosecution and/or maintenance of Patent Rights
under Sections 10.1.1 and/or 10.1.2 above (a “Filing Party”) shall (a) promptly
provide the other Party with copies of all patent applications filed hereunder
and other material submissions and correspondence with applicable patent
offices, in sufficient time to allow for review and comment by the other Party;
(b) provide the other Party and its patent counsel with an opportunity to
consult with the Party and its patent counsel regarding the filing and contents
of any such application, amendment, submission or response; and (c) take into
consideration in good faith the advice and suggestions of the other Party and
its patent counsel in connection with such filing.

 

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10.1.5       Interference, Opposition, Reexamination and Reissue.

 

(a)          Notice. Not more than thirty (30) days following the discovery by
either Party of any request for, or the filing or declaration of, any
interference, opposition, or reexamination proceeding with respect to any
Licensed Patent Rights in the Territory, the discovering or determining Party
shall notify the other Party of such event.

 

(b)          Primary Responsibility and Cooperation. SUBLICENSOR shall have
primary responsibility, at its own expense, with respect to the course of action
taken to defend or prosecute any such interference, opposition, reexamination or
reissue, except that the Parties shall share equally the reasonable fees and
expenses incurred under this Section 10.1.4(b) with respect to Joint Patent
Rights. The Parties shall cooperate fully with each other and each shall provide
to the other any information or assistance that the other may reasonably request
with respect to any course of action taken under this Section 10.1.4.
SUBLICENSOR shall (a) keep ILDONG reasonably informed of all developments in
such interference, opposition, reexamination or reissue in the Territory,
including to the extent permissible, the status of any settlement negotiations
and the terms of any offer related thereto and (b) provide to ILDONG copies of
all submissions or agreements arising in connection with such proceeding
sufficiently in advance of their filing or due date so as to give ILDONG
sufficient time to comment thereon, and SUBLICENSOR shall give good faith
consideration to ILDONG’s comments, with due regard to the other Party’s rights
and commercial interests under this Agreement. Neither Party shall enter into
any settlement or consent decree regarding Joint Patent Rights, or assent to the
grant of any reissued or reexamined patent within the Joint Patent Rights,
without the prior written consent of the other Party, which shall not be
unreasonably withheld or delayed.

 

10.1.6       Decision Not to File; Abandonment. SUBLICENSOR shall notify ILDONG
in the event SUBLICENSOR decides at any time to abandon or discontinue
prosecution of any one or more of the patents or patent applications included in
the Licensed Patent Rights and in the Territory. Such notification will be given
as early as possible which in no event will be less than fifteen (15) days prior
to the date on which said patent(s) or patent application(s) will become
abandoned. ILDONG shall have the option, exercisable upon written notification
to SUBLICENSOR, to assume full responsibility, at its discretion for the
prosecution of the affected patent(s) or patent application(s), which shall be
conducted in the name of ILDONG.

 

10.2     Enforcement and Defense.

 

10.2.1       Third Party Infringement.

 

(a)          In General.

 

(i)          Notice. In the event either Party becomes aware of (i) any
suspected infringement or misappropriation of any Licensed Patent Rights, Joint
Patent Rights that covers the development or commercialization of a Compound or
Product in the Field in the Territory, or (ii) the submission by any Third Party
of an abbreviated NDA under the Hatch-Waxman Act for a product in the Field that
comprises the Compound (each, an “Infringement”), that Party shall promptly
notify the other Party and provide it with all details of such Infringement of
which it is aware (each, an “Infringement Notice”). The Patent Coordinators
shall promptly meet to discuss the Infringement and the strategy for patent
enforcement with respect to such Infringement.

 

40

 

 

 

(ii)         SUBLICENSOR Right to Enforce. SUBLICENSOR shall have the first
right, but not the obligation, to address any such Infringement in the Territory
by taking reasonable steps, which may include the institution of legal
proceedings or other actions (each, an “Action”), and to compromise or settle
such Action; provided, that, (A) SUBLICENSOR shall keep ILDONG reasonably
informed about such Action, (B) ILDONG shall provide reasonable cooperation to
SUBLICENSOR in connection with such Action, (C) SUBLICENSOR shall not take any
position with respect to, or compromise or settle, such Action in any way that
would be reasonably likely to directly and adversely affect the scope, validity
or enforceability of the Licensed Patent Rights without the prior consent of
ILDONG, which consent shall not be unreasonably withheld, and (D) if SUBLICENSOR
does not intend to prosecute or defend an Infringement, or determines to cease
to pursue such an Action, it shall promptly inform ILDONG and Section
10.2.1(a)(iii) shall apply. SUBLICENSOR shall incur no liability to ILDONG as a
consequence of such Action or any unfavorable decision resulting therefrom,
including any decision holding any such claim invalid, not infringed or
unenforceable. All costs, including, without limitation, attorneys’ fees,
relating to such legal proceedings or other action shall be borne by
SUBLICENSOR.

 

(iii)        ILDONG Right to Enforce. If (A) SUBLICENSOR informs ILDONG that
SUBLICENSOR does not intend to prosecute an Action in respect of any Licensed
Patent Rights or Joint Patent Rights pursuant to Section 10.2.1(a)(ii), (B)
within sixty (60) days after the Infringement Notice, SUBLICENSOR has not
commenced any Action, or (C) if SUBLICENSOR determine to cease to pursue any
such Action with respect to such Infringement, then ILDONG shall have the right,
at its own expense, upon notice to SUBLICENSOR to take appropriate action to
address such Infringement, including by initiating its own Action or taking over
prosecution of any Action initiated by SUBLICENSOR; provided, that, in such
event, (1) ILDONG shall keep SUBLICENSOR reasonably informed about such Action
and shall consult with SUBLICENSOR before taking any major steps during the
conduct of such Action, (2) SUBLICENSOR shall provide reasonable cooperation to
ILDONG in connection with such Action, and (3) ILDONG shall not take any
position with respect to, or compromise or settle, such Action in any way that
is reasonably likely to directly and adversely affect the scope, validity or
enforceability of the Licensed Patent Rights without SUBLICENSOR’S prior written
consent, which consent shall not be unreasonably withheld. SUBLICENSOR shall
incur no liability to ILDONG as a consequence of such Action or any unfavorable
decision resulting therefrom, including any decision holding any such claim
invalid, not infringed or unenforceable. All costs, including, without
limitation, attorneys’ fees, relating to such legal proceedings or other action
shall be borne by ILDONG.

 

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(iv)        Joint Patent Rights. In the event of an Infringement of a Joint
Patent Right, the Parties shall enter into good faith discussions as to whether
and how to eliminate the Infringement. Subject to the foregoing, (A) ILDONG
shall have the first right and option to eliminate such Infringement by
reasonable steps, which may include the institution of legal proceedings or
other action and (B) all costs, including without limitation attorneys’ fees,
relating to such legal proceedings or other action shall be borne by ILDONG. If
ILDONG does not take or initiate commercially reasonable steps to eliminate the
Infringement within one hundred twenty (120) days from any Infringement Notice,
then SUBLICENSOR shall have the right an option to do so at its expense.

 

(b)          Right to Representation. Each Party shall have the right to
participate and be represented by counsel that it selects, in any Action
instituted under Section 10.2.1(a)(ii), (iii) or (iv) by the other Party. If a
Party with the right to initiate an Action under Section 10.2.1(a) to eliminate
an Infringement lacks standing to do so and the other Party has standing to
initiate such Action, then the Party with the right to initiate an Action under
Section 10.2.1(a) may name the other Party as plaintiff in such Action or may
require the Party with standing to initiate such Action at the expense of the
other Party.

 

(c)          Cooperation. In any Action instituted under this Section 10.2.1,
the Parties shall cooperate with and assist each other in all reasonable
respects. Upon the reasonable request of the Party instituting such Action, the
other Party shall join such Action and shall be represented using counsel of its
own choice, at the requesting Party’s expense.

 

(d)                             Allocation of Proceeds. Any amounts recovered by
either Party pursuant to Actions under Sections 10.2.1(a)(ii), (iii) or (iv)
with respect to any Infringement, whether by settlement or judgment, shall,
after reimbursing ILDONG and SUBLICENSOR for their respective reasonable
out-of-pocket expenses incurred in pursuing such Action and obtaining such
recovery (which amounts shall be allocated pro rata if insufficient to cover the
totality of such expenses) be retained by or paid to ILDONG and treated as Net
Sales of the Product affected by the Infringement and for purposes of this
Agreement, such that ILDONG shall pay to SUBLICENSOR the applicable royalty due
on such Net Sales pursuant to Section 7.3.1.

 

10.2.2      Defense of Claims.

 

(a)          Notice. In the event that any action, suit or proceeding is brought
against either Party or any Affiliate of either Party or any Sublicensee or
Distributor of ILDONG alleging the infringement of the Technology or Patent
Rights of a Third Party by reason of or the Development or Commercialization,
including the Manufacture, use or sale, of any Compound or Product, by or on
behalf of ILDONG, its Affiliates, Sublicensees or Distributors, such Party shall
notify the other Party within five (5) days of the earlier of (i) receipt of
service of process in such action, suit or proceeding, or (ii) the date such
Party becomes aware that such action, suit or proceeding has been instituted and
the Patent Coordinators shall meet as soon as possible to discuss the overall
strategy for defense of such matter.

 

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(b)          Prosecution of Infringement claims in the Territory. Except as
unanimously agreed by the Patent Coordinators and subject to Article 14, (i)
SUBLICENSOR shall have the primary right but not the obligation to institute and
control such action, suit or proceeding in its own name and at its sole expense
and in such case, SUBLICENSOR and/or any of its Affiliates shall have the right
to separate counsel at its own expense in any such action, suit or proceeding
and, ILDONG shall cooperate with SUBLICENSOR in all reasonable respects in any
such action, suit or proceeding ; (ii) in the event SUBLICENSOR waives its
primary right as defined in (i) the Parties may elect, without being obliged, to
jointly commence an action, and in this respect shall be represented by a
counsel jointly chosen by the Parties, decide on a course of action, and share
equally in the costs and expenses, and in the amounts recovered in accordance
with, subject to and within the limits set out in SUBLICENSOR’s Licenses, or
(iii) in the event SUBLICENSOR waives its primary right as defined in (i) ILDONG
may defend any action, suit or proceeding in its own name and at its sole
expense and in such case ILDONG and/or any of its Affiliates shall have the
right to separate counsel at its own expense in any such action, suit or
proceeding and SUBLICENSOR shall cooperate with ILDONG in all reasonable
respects in any such action, suit or proceeding.

 

(c)          Cooperation. Each Party shall promptly furnish the other Party with
a copy of each communication relating to the alleged infringement that is
received by such Party including all documents filed in any litigation. In no
event shall either Party settle or otherwise resolve any such action, suit or
proceeding brought against the other Party or any of its Affiliates or
sublicensees without the other Party’s prior written consent.

 

10.2.3           Patent Term Restoration. The Parties hereto shall cooperate
with each other in obtaining patent term restoration or supplemental protection
certificates or their equivalents in any country in the Territory where
applicable to Licensed Patent Rights. Such cooperation shall include diligently
and timely conferring and coordinating with respect to such matters to ensure
compliance with applicable filing deadlines, and agreeing on procedures to be
followed by the Parties to ensure such compliance. In the event that elections
with respect to obtaining such patent term restoration are to be made,
SUBLICENSOR shall have the right to make the election with respect to Licensed
Patent Rights.

 

10.3Trademark Prosecution and Registration.

 

SUBLICENSOR shall control the registration of the Licensed Trademark, to be used
with Products in the Territory. SUBLICENSOR shall have the primary right but not
the obligation to take any actions as are required to continue and maintain in
full force and effect and enforce and defend all Licensed Trademarks and
registrations thereof, against infringement and misappropriation in the
Territory, and shall be solely responsible for all expenses incurred in
connection therewith. In the event SUBLICENSOR waives its primary right to take
such action, ILDONG may have the right to take any actions as are required to
continue and maintain in full force and effect and enforce and defend all
Licensed Trademarks and registrations thereof, against infringement and
misappropriation in the Territory, and shall be solely responsible for all
expenses incurred in connection therewith..

 

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11.         TERM AND TERMINATION

 

11.1      Term.

 

This Agreement shall commence on the Effective Date and shall continue in full
force and effect, unless otherwise terminated pursuant to Section 11.2, (a)
until such time as ILDONG is no longer Developing at least one (1) Compound
and/or at least one (1) Product or (b) if, as of the time ILDONG is no longer
Developing at least one (1) Compound and/or at least one (1) Product, ILDONG is
Commercializing a Product, until the expiration of all applicable Royalty Terms
with respect to Products under this Agreement (the “Term”). Upon the expiration
of this Agreement as set forth in this Section 11.1, the license rights granted
hereunder shall be converted to perpetual and fully paid-up licenses on Licensed
Technology and Licensed Patent Rights, with the right to grant unlimited
sublicenses. However, ILDONG shall continue to pay to SUBLICENSOR royalties on
the use of Licensed Trademarks.

 

11.2       Termination.

 

This Agreement may be terminated by either Party as follows:

 

11.2.1           Unilateral Right to Terminate Agreement.

 

(a)          SUBLICENSOR Rights to Terminate for Challenge.  Except to the
extent the following is unenforceable under the Applicable Laws of a particular
jurisdiction where a patent application within the Licensed Patent Rights is
pending or a patent within the Licensed Patent Rights is issued, SUBLICENSOR may
terminate this Agreement immediately upon written notice to ILDONG in the event
that ILDONG or any of its Affiliates or Sublicenses Challenges any Licensed
Patent Rights or assists a Third Party in initiating a Challenge of any Licensed
Patent Rights.

 

11.2.2           Termination for Breach. Either Party may terminate this
Agreement, effective immediately upon written notice to the other Party, for a
material breach (including ILDONG’s failure to meet its diligence requirements
and responsibilities as set forth in Section 3; 4 and 5) by the other Party of
any term of this Agreement that remains uncured ninety (90) days (sixty (60)
days in the event that the breach is a failure of a Party to make any payment
required hereunder) after the non-breaching Party first gives written notice to
the other Party of such breach and its intent to terminate this Agreement if
such breach is not cured. For purposes of clarity, the obligation of the
breaching Party to cure any such breach shall be stayed for any time period
during which such breach is the subject of a dispute resolution proceeding
pursuant to Section 14.1; provided, that, the obligation of the breaching Party
to cure such breach such breach shall resume commencing on the date of any final
resolution of such proceeding.

 

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11.2.3           Termination for Insolvency. In the event that either Party
makes an assignment for the benefit of creditors, appoints or suffers
appointment of a receiver or trustee over all or substantially all of its
property, files a petition under any bankruptcy or insolvency act or has any
such petition filed against it which is not discharged within sixty (60) days of
the filing thereof, then the other Party may terminate this Agreement effective
immediately upon written notice to such Party.

 

11.3       Consequences of Termination of Agreement.

 

In the event of the termination of this Agreement pursuant to Section 11.2, the
following provisions shall apply, as applicable.

 

11.3.1           Termination by SUBLICENSOR. If this Agreement is terminated by
SUBLICENSOR pursuant to Section 11.2.1, 11.2.2 or 11.2.3:

 

(a)          All licenses and rights granted by SUBLICENSOR to ILDONG, including
all licenses granted to ILDONG pursuant to Section 2.1, shall immediately
terminate.

 

(b)          ILDONG shall cease to use all Licensed Trademarks, any Marketing
Authorization obtained in accordance with the AGREEMENT and shall further
promptly transfer such Marketing Authorizations and/or orphan drug designations
to SUBLICENSOR at no cost for SUBLICENSOR..

 

(c)          ILDONG shall cease to conduct any activity related to the
Development and Commercialization of the Product.

 

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(d)          Upon request of SUBLICENSOR, ILDONG shall promptly, and in any
event within sixty (90) days after SUBLICENSOR’s request (which request may
specify any or all of the actions in clauses (A) through (H): (A) transfer to
SUBLICENSOR all of its right, title and interest in all Drug Approval
Applications and then in its name applicable to the Product, if any, and all
Confidential Information Controlled by ILDONG as of the date of termination
relied on by such Drug Approval Applications; (B) notify the applicable
Regulatory Authorities and take any other action reasonably necessary to effect
such transfer; (C) provide SUBLICENSOR with copies of all correspondence between
ILDONG and such Regulatory Authorities relating to such Drug Approval
Applications; (D) unless expressly prohibited by any Regulatory Authority,
transfer sponsorship and control to SUBLICENSOR of all Clinical Trials of the
Product being conducted as of the effective date of termination and continue to
conduct such Clinical Trials after the effective date of termination to enable
such transfer to be completed without interruption of any such Clinical Trial
for up to twelve (12) months from the effective date of termination, except for
termination for breach of ILDONG, the fully burdened cost of such continuation
to be paid for by SUBLICENSOR (E) cooperate with SUBLICENSOR, cause its
Affiliates to cooperate with SUBLICENSOR and use commercially reasonable efforts
to require any Third Party with which ILDONG has an agreement with respect to
the conduct of Clinical Trials for the Product (including agreements with
contract research organizations, clinical sites and investigators), to cooperate
with SUBLICENSOR in order to accomplish the transfer to SUBLICENSOR of similar
rights as held by ILDONG under its agreements with such Third Parties; (F)
provide SUBLICENSOR with copies of all reports and Clinical Data generated or
obtained by ILDONG or its Affiliates, and all Promotional Materials used by
ILDONG, pursuant to this Agreement that relate to the Product that have not
previously been provided to SUBLICENSOR and provide SUBLICENSOR with a right of
access, a right of reference and a right to use and incorporate all Clinical
Data, results and information in all Drug Approval Applications then in its name
applicable to the commercialization of Product and all material aspects of
Confidential Information Controlled by it as of the date relating to such Drug
Approval Applications for SUBLICENSOR to use to seek Regulatory Approvals,
Pricing Approvals, or Reimbursement Approvals; (G) provide SUBLICENSOR at cost
with all supplies of Compounds and Products in the possession of ILDONG or any
Affiliate or contractor of ILDONG; and (H) provide SUBLICENSOR with copies of
all reports and data generated or obtained by ILDONG or its Affiliates pursuant
to this Agreement that relate to any Product that have not previously been
provided to SUBLICENSOR; (I) enter into negotiations with SUBLICENSOR and agree
upon and implement a plan for the orderly transition of Development and
Commercialization from ILDONG to SUBLICENSOR in a manner consistent with
Applicable Laws and standards of ethical conduct of human Clinical Trials and
will seek to replace all ILDONG personnel engaged in any Development or
Commercialization activities, in each case, as promptly as practicable. In
connection therewith, ILDONG shall be deemed to have granted to SUBLICENSOR an
exclusive, fully-paid, royalty-free, irrevocable license, with the right to
grant sublicenses under ILDONG’s interest in Joint Improvements and Joint Patent
Rights, for the sole purpose of using, making, having made, offering for sale,
selling, having sold, importing and exporting any Products being Developed
and/or Commercialized by ILDONG as of the effective date of such termination in
the Field and in the Territory.

 

(e)          Each Party shall promptly return all Confidential Information and
Proprietary Materials of the other Party that are not subject to a continuing
license hereunder; provided, that, each Party may retain one copy of the
Confidential Information of the other Party in its archives solely for the
purpose of establishing the contents thereof and ensuring compliance with its
obligations hereunder.

 

(f)          ILDONG shall promptly return to SUBLICENSOR all raw data and
results generated in each such Clinical Trial.

 

SUBLICENSOR agrees that it will not voluntarily terminate the LFB/GTC Agreement
(or allow such agreement to be terminated by the Senior Licensors), unless
SUBLICENSOR maintains its license for the Territory on terms and conditions no
less favorable to ILDONG as in this Agreement or makes arrangements for ILDONG
to be granted a direct license from the Senior Licensors with terms and
conditions no less favorable to ILDONG as in this Agreement.

 

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(g)          Upon any termination of this Agreement by SUBLICENSOR, (excluding
termination by SUBLICENSOR pursuant to 11.2.2), or upon termination by ILDONG
pursuant to 11.2.2, SUBLICENSOR shall buy back from ILDONG, at the Purchase
Price, any unsold, unopened SUBLICENSOR Products in ILDONG’s possession that
have been purchased from SUBLICENSOR which are in marketable condition (as
determined in the sole discretion of SUBLICENSOR) and are of a product
designation then included in the products being offered for sales by
SUBLICENSOR. The aggregate amount to be paid to ILDONG under this provision may
be offset by SUBLICENSOR against claims it has against ILDONG, including payment
of goods supplied under this Agreement. In order to ensure the marketable
condition of such Products, all documentation must be presented indicating
proper storage, handling, and shipment of such Products at all times while in
possession by ILDONG. Additionally, and at ILDONG’S sole expense, SUBLICENSOR
may request a sample of such Product be analyzed by an independent laboratory
(to be agreed upon by both Parties), to assess the Product’s marketable
condition and adherence to product specifications. In the case that such Product
is determined not to be in marketable condition, SUBLICENSOR will not be
obligated to purchase back such Product from ILDONG.

 

11.3.2           Termination by ILDONG. If this Agreement is terminated by
ILDONG pursuant to Section, 11.2.2 or 11.2.3:

 

(a)          At ILDONG’s election, all licenses granted by SUBLICENSOR to ILDONG
pursuant to Section 2.1 shall survive such termination, in each case subject to
ILDONG’s continued payment of all milestone, royalty and other payments under
and in accordance with this Agreement with respect thereto.

 

(b)          Each Party shall promptly return all Confidential Information and
Proprietary Materials of the other Party that are not subject to a continuing
license hereunder; provided, that, each Party may retain one copy of the
Confidential Information of the other Party in its archives solely for the
purpose of establishing the contents thereof and ensuring compliance with its
obligations hereunder.

 

(c)          ILDONG shall promptly return to SUBLICENSOR all raw data and
results generated in each such Clinical Trial.

 

11.4Surviving Provisions.

 

Termination or expiration of this Agreement for any reason shall be without
prejudice to:

 

(a)          Survival of rights specifically stated in this Agreement to
survive, including without limitation as set forth in Section 11.3;

 

(b)          The rights and obligations of the Parties provided in Sections 8,
9, 10, 12, 13, 14.1 and 14.2 (including all other Sections or Articles
referenced in any such Section or Article), all of which shall survive such
termination except as provided in this Article 10; and

 

(c)          Any other rights or remedies provided at law or equity which either
Party may otherwise have.

 

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12.         REPRESENTATIONS AND WARRANTIES

 

12.1         Mutual Representations and Warranties.

 

SUBLICENSOR and ILDONG each hereby represent and warrant to the other, as of the
Effective Date, as follows:

 

12.1.1           Organization. It is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, and has all requisite power and authority, corporate or otherwise,
to execute, deliver and perform this Agreement.

 

12.1.2           Authorization. The execution and delivery of this Agreement and
the performance by it of the transactions contemplated hereby have been duly
authorized by all necessary corporate action and will not violate (a) such
Party’s certificate of incorporation or bylaws (or equivalent charter or
organizational documents), (b) any agreement, instrument or contractual
obligation to which such Party is bound in any material respect, (c) any
requirement of any Applicable Laws, or (d) any order, writ, judgment,
injunction, decree, determination or award of any court or governmental agency
presently in effect applicable to such Party.

 

12.1.3           Binding Agreement. This Agreement is a legal, valid and binding
obligation of such Party enforceable against it in accordance with its terms and
conditions.

 

12.1.4           No Inconsistent Obligation. It is not under any obligation,
contractual or otherwise, to any Person that conflicts with or is inconsistent
in any respect with the terms of this Agreement or that would impede the
diligent and complete fulfillment of its obligations hereunder.

 

12.1.5           No Government Authorization Required. No government
authorization, consent, approval, license, exemption of or filing or
registration with any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, under any Applicable
Laws currently in effect, is or will be necessary for, or in connection with,
the transactions contemplated by this Agreement, or for the performance by it of
its obligations under this Agreement.

 

12.1.6           ILDONG represents and warrants that it has all necessary
financial and human resources to enter and perform all its commitments and
obligations contained in the Agreement.

 

12.2         Additional Representations of SUBLICENSOR.

 

SUBLICENSOR further represents and warrants to ILDONG, as of the Effective Date,
as follows:

 

12.2.1           Validity of Patent Rights. All Licensed Patent Rights listed on
Schedule 4 are existing and, to SUBLICENSOR’ Knowledge, no issued patents which
are part of the Licensed Patent Rights listed on Schedule 4 are invalid or
unenforceable.

 

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12.2.2           No Claims. There are no claims, judgments or settlements
against SUBLICENSOR pending, or to SUBLICENSOR’ Knowledge, threatened, that
invalidate or seek to invalidate the Licensed Patent Rights. There is no
litigation pending against SUBLICENSOR or any Affiliate of SUBLICENSOR that
alleges that any of SUBLICENSOR’ activities relating to the Compound have
violated, or by Developing the Compound would violate, any of the intellectual
property rights of any Third Party (nor has it received any written
communication threatening such litigation). To SUBLICENSOR’ Knowledge, no
litigation has been threatened against SUBLICENSOR or any Affiliate of
SUBLICENSOR which alleges that any of its activities relating to the Compound
have violated, or by Developing the Compound would violate, any of the
intellectual property rights of any Third Party.

 

12.2.3           No License. SUBLICENSOR has not previously entered into any
agreement pursuant to which it granted a license with respect to the Compound,
or Product or under the Licensed Patent Rights or Licensed Technology to any
Affiliate or Third Party, which license grant remains in effect or which
agreement has surviving license rights, or other surviving terms, that are
inconsistent with the rights and licenses granted to ILDONG under this
Agreement.

 

12.2.4           Third Party Patents. Except the patents disclosed during
ILDONG’S due diligence and to SUBLICENSOR’ Knowledge, no Patent Rights owned or
controlled by any Third Party would be infringed by the Development,
Manufacture, use of Commercialization by or on behalf of ILDONG of the Compound
or any Product pursuant to this Agreement.

 

12.2.5           No Interference. To SUBLICENSOR’S Knowledge, (a) the Licensed
Patent Rights are not the subject of any interference proceeding and (b) there
is no pending or threatened action, suit, proceeding or claim by any Third Party
challenging SUBLICENSOR’S ownership rights in, or the validity or scope of, the
Licensed Patent Rights.

 

12.3         Additional Representations of ILDONG.

 

ILDONG further represents and warrants to SUBLICENSOR, as of the Effective Date,
as follows:

 

12.3.1           No Claims. There is no litigation pending against ILDONG or any
Affiliate of ILDONG that relates, directly or indirectly, to the subject matter
of this Agreement and that alleges that any of ILDONG’s activities to be
conducted relating to the Development of the Compound would violate any of the
intellectual property rights of any Third Party (nor has it received any written
communication threatening such litigation).

 

12.3.2           Compliance with Applicable Laws.  ILDONG is in compliance with
all Applicable Laws, and is not in default under or in violation of any
Applicable Laws, that, in any case, would reasonably be expected to adversely
affect the ability of ILDONG to comply with and perform its obligations under
this Agreement.

 

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12.3.3           Electronic Dataroom. ILDONG represents and warrants that it has
been granted access to an electronic dataroom organized by SUBLICENSOR and
therefore has a clear and perfect knowledge and a good understanding of all
documents, information and data contained in such electronic dataroom, and their
consequences on rights granted by LICENCOR under the Agreement. Within thirty
(30) days of the date hereof, SUBLICENSOR will use Commercially Reasonable
Efforts to transfer a copy of the contents of the electronic dataroom in their
original format to ILDONG and will transfer such other manifestations of the
Licensed Technology useful or necessary for ILDONG to Develop and Commercialize
the Products, including without limitation raw data and results generated in
each clinical trial and pre-clinical studies  previously conducted and batch
reports from manufacturing runs through the date hereof, to the extent not
included in the dataroom.  On and after the date hereof, SUBLICENSOR will use
Commercially Reasonable Efforts to forward such manifestations of the Licensed
Technology that it has in its possession to ILDONG on a regular basis or upon
request.

 

13.         INDEMNIFICATION; INSURANCE

 

13.1         Indemnification of SUBLICENSOR by ILDONG.

 

ILDONG shall indemnify, defend and hold harmless SUBLICENSOR, its Affiliates,
their respective directors, officers, employees and agents, and their respective
successors, heirs and assigns (collectively, the “SUBLICENSOR Indemnities”),
against all liabilities, damages, losses and expenses (including, without
limitation, reasonable attorneys’ fees and expenses of litigation)
(collectively, “Losses”) incurred by or imposed upon SUBLICENSOR Indemnities, or
any of them, as a direct result of claims, suits, actions, demands or judgments
of Third Parties, including, without limitation, personal injury and product
liability claims (collectively, “Claims”), arising out of (a) the Development,
testing, sale, offer for sale, or Commercialization by ILDONG or any of its
Affiliates, Sublicensees or Distributors of any Product; (b) any breach of this
Agreement by ILDONG or any of its Affiliates, Sublicensees, Distributors or
agents; and (c) the gross negligence or willful misconduct of any ILDONG
Indemnity or Sublicensee of ILDONG; excluding, in each of (a), (b) and (c)
above, any Claim or Loss with respect to which SUBLICENSOR has an obligation to
indemnify ILDONG Indemnities pursuant to Section 13.2, as to which Claim or Loss
each Party will indemnify the other to the extent of their respective liability
for such Loss (unless such Claim or Loss is otherwise expressly excluded from a
Party’s indemnification obligations under this Agreement).

 

13.2Indemnification of ILDONG by SUBLICENSOR.

 

SUBLICENSOR shall indemnify, defend and hold harmless ILDONG, its Affiliates,
their respective directors, officers, employees and agents, and their respective
successors, heirs and assigns (collectively, the “ILDONG Indemnities”), against
all Losses (including, without limitation, reasonable attorneys’ fees and
expenses of litigation) incurred by or imposed upon the ILDONG Indemnities, or
any of them, as a direct result of Claims arising out of (a) the
commercialization by SUBLICENSOR of any SUBLICENSOR Commercialization Product in
the SUBLICENSOR Commercialization Territory following exercise of SUBLICENSOR
commercialization option (b) any breach of this Agreement by SUBLICENSOR or any
of its Affiliates, (sub)licensees, distributors or agents; or (c) the gross
negligence or willful misconduct of any SUBLICENSOR Indemnity or (sub)licensee
of SUBLICENSOR; excluding, in the case of clauses (a) and (b) above, any Claim
or Loss with respect to which ILDONG or any of its Affiliates has an obligation
to indemnify SUBLICENSOR pursuant to Section 13.1, as to which Claim or Loss
each Party will indemnify the other to the extent of their respective liability
for such Loss.

 

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13.3         Conditions to Indemnification.

 

A Person seeking modification under this Article 13 (the “Indemnified Party”) in
respect of a Claim shall give prompt notice of such Claim to the Party from
which indemnification is sought (the “Indemnifying Party”); provided, that, the
Indemnifying Party is not contesting its obligation under this Section 13, shall
permit the Indemnifying Party to control any litigation relating to such Claim
and the disposition of such Claim; provided, that, the Indemnifying Party shall
(a) act reasonably and in good faith with respect to all matters relating to the
settlement or disposition of such Claim as the settlement or disposition relates
to such Indemnified Party and (b) not settle or otherwise resolve such claim
without the prior written consent of such Indemnified Party (which consent shall
not be unreasonably withheld, conditioned or delayed). Each Indemnified Party
shall cooperate with the Indemnifying Party in its defense of any such Claim in
all reasonable respects and shall have the right to be present in person or
through counsel at all legal proceedings with respect to such Claim.

 

13.4         Insurance.

 

Not later than thirty (30) days before the date on which ILDONG or any Affiliate
or Sublicensee of ILDONG shall, on a commercial basis, make, use, or sell any
Products, and at all times thereafter until the expiration of all applicable
statutes of limitation pertaining to any such manufacture, marketing,
possession, use, sale of other disposition of any Products, ILDONG will, at its
expense, and SUBLICENSOR will, at its expense, with respect to Products, obtain
and maintain in full force and effect, comprehensive general liability
insurance, including product liability insurance and Clinical Trial insurance in
such amounts as each such Party customarily maintains with respect to the
development, manufacture and sale of its other products. Notwithstanding the
foregoing, either Party may elect to self-insure with respect to any insurance
coverage it is required to obtain hereunder as part of a comprehensive
self-insurance program adopted by such Party. For the avoidance of doubt, all
insurance obligations and associated costs for any sale and development of
Product within the Territory and over which SUBLICENSOR has little or no
control, shall be borne solely by ILDONG.

 

13.5         Warranty Disclaimer.

 

EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY MAKES
ANY WARRANTY WITH RESPECT TO ANY KNOW-HOW, GOODS, SERVICES, RIGHTS OR OTHER
SUBJECT MATTER OF THIS AGREEMENT AND EACH PARTY HEREBY DISCLAIMS ALL WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT.

 

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13.6         No Warranty of Success.

 

Nothing contained in this Agreement shall be construed as a warranty, either
express or implied, on the part of either Party that (a) the Development Program
will yield a Product or otherwise be successful or meet its goals, time lines or
budgets, or (b) the outcome of the Development Program will be commercially
exploitable in any respect.

 

13.7         Limited Liability.

 

EXCEPT AS SET FORTH UNDER SECTIONS 13.1 OR 13.2, NEITHER PARTY SHALL BE LIABLE
TO THE OTHER PARTY OR ANY OF ITS AFFILIATES FOR (I) ANY SPECIAL, PUNITIVE,
INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING, WITHOUT LIMITATION,
LOST PROFITS OR LOST REVENUES, OR (II) COST OF PROCUREMENT OF SUBSTITUTE GOODS,
KNOW-HOW OR SERVICES, WHETHER UNDER ANY CONTRACT, WARRANTY, NEGLIGENCE, STRICT
LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY.

 

14.         MISCELLANEOUS

 

14.1         Disputes; Consent to Jurisdiction.

 

The Parties shall use reasonable efforts to settle any Disputed Matter arising
from or related to this Agreement or the breach thereof (each, a “Dispute”) by
promptly referring any such dispute to the Executive Officer of each Party. If
the Executive Officers are unable to resolve any Dispute within thirty (30) days
of the date on which the Dispute was referred to them for resolution, the
Dispute shall be subject to the sole jurisdiction of, and venue in, the U.S.
federal courts of competent jurisdiction located within New York, New York, USA
(if available), and otherwise the state courts of competent jurisdiction located
within New York, New York, USA. ILDONG and SUBLICENSOR each irrevocably consent
to the jurisdiction of such courts, irrevocably waive any objection based on
inconvenience of forum, and agree that process may be served in the manner
provided herein for giving notices or otherwise as allowed by New York or
applicable federal law. Notwithstanding the foregoing, either Party shall have
the right, without waiving any right or remedy available to such Party under
this Agreement or otherwise, to seek and obtain from any court of competent
jurisdiction any interim or provisional relief that is necessary or desirable to
protect the rights or property of such Party.

 

14.2         Notices.

 

All notices and communications shall be in writing and delivered personally or
by internationally-recognized overnight express courier providing evidence of
delivery or mailed via certified mail, return receipt requested, addressed as
follows, or to such other address as may be designated from time to time:

 

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If to SUBLICENSOR: TG Biologics, Inc.   787 Seventh Ave., 48th Floor   New York,
NY 10019   Attention: Hari Miskin   Tel.:  212-554-4492   Fax:  212-554-4531    
  With a copy to:   Alston & Bird LLP   Attn : Mark McElreath   90 Park Avenue  
New York, NY 10016   Tel : 212-210-9595     If to ILDONG: ILDONG Pharmaceutical
Co., Ltd.       Attn:  SUNGSANG SEO   Tel:  +82-2-526-3357  
Fax:  +82-2-526-3020       With a copy to:   BD&Licensing Team   ILDONG
PHARMACEUTICAL CO., LTD.   Attention: Dong-young Park   Tel: +82-2-526-3383  
Fax: +82-2-526-3020

 

Except as otherwise expressly provided in this Agreement or mutually agreed in
writing, any notice, communication or document (excluding payment) required to
be given or made shall be deemed given or made and effective upon actual receipt
or, if earlier, (a) three (3) Business Days after deposit with an
internationally-recognized overnight express courier with charges prepaid, or
(b) five (5) Business Days after mailed by certified, registered or regular
mail, postage prepaid, in each case addressed to a Parties at its address stated
above or to such other address as such Party may designate by written notice
given in accordance with this Section 14.2.

 

14.3Governing Law.

 

This Agreement shall be governed by and construed in accordance with the laws of
the State of Delaware, without regard to the application of principles of
conflicts of law.

 

14.4         Competition Law.

 

SUBLICENSOR and ILDONG agree that nothing in this Agreement shall be interpreted
in a way that conflicts with EC Block Exemption No: 418/85 on research and
development agreements, or EC Block Exemption No: 240/96 on technology transfer
agreements, as issued by the European Commission (as these may be amended or
replaced from time to time).

  

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14.5         Binding Effect.

 

This Agreement shall be binding upon and inure to the benefit of the Parties and
their respective legal representatives, successors and permitted assigns.

 

14.6         Headings.

 

Section and subsection headings are inserted for convenience of reference only
and do not form a part of this Agreement.

 

14.7         Counterparts.

 

This Agreement may be executed simultaneously in two or more counterparts, each
of which shall be deemed an original and both of which, together, shall
constitute a single agreement.

 

14.8         Amendment; Waiver.

 

This Agreement may be amended, modified, superseded or canceled, and any of the
terms of this Agreement may be waived, only by a written instrument executed by
each Party or, in the case of waiver, by the Party or Parties waiving
compliance. The delay or failure of either Party at any time or times to require
performance of any provisions shall in no manner affect the rights at a later
time to enforce the same. No waiver by either Party of any condition or of the
breach of any term contained in this Agreement, whether by conduct, or
otherwise, in any one or more instances, shall be deemed to be, or considered
as, a further or continuing waiver of any such condition or of the breach of
such term or any other term of this Agreement.

 

14.9         No Third Party Beneficiaries.

 

Except as set forth in Sections 13.1 and 13.2, no Third Party (including,
without limitation, employees of either Party) shall have or acquire any rights
by reason of this Agreement.

 

14.10         Purposes and Scope.

 

The Parties hereto understand and agree that this relationship is limited to the
activities, rights and obligations as set forth in this Agreement. Nothing in
this Agreement shall be construed (a) to create or imply a general partnership
between the Parties, (b) to make either Party the agent of the other for any
purpose, (c) to alter, amend, supersede or vitiate any other arrangements
between the Parties with respect to any subject matters not covered hereunder,
(d) to give either Party the right to bind the other, (e) to create any duties
or obligations between the Parties except as expressly set forth herein, or (f)
to grant any direct or implied licenses or any other right other than as
expressly set forth herein.

 

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14.11Assignment and Successors.

 

Neither this Agreement nor any obligation of a Party hereunder may be assigned
by either Party without the consent of the other which shall not be unreasonably
withheld, except that each Party may assign this Agreement and the rights,
obligations and interests of such Party, (a) in whole or in part, to any of its
Affiliates, or (b) in whole, but not in part, to any purchaser of all of its
assets or all of its assets to which this Agreement relates or shares
representing a majority of its common stock voting rights or to any successor
corporation resulting from any merger, consolidation, share exchange or other
similar transaction.

 

14.12         Force Majeure.

 

Neither ILDONG nor SUBLICENSOR shall be liable for failure of or delay in
performing obligations set forth in this Agreement, and neither shall be deemed
in breach of its obligations, if such failure or delay is due to a Force
Majeure. In event of such Force Majeure, the Party affected shall use reasonable
efforts to cure or overcome the same and resume performance of its obligations
hereunder.

 

14.13         Interpretation.

 

The Parties hereto acknowledge and agree that: (a) each Party and its counsel
reviewed and negotiated the terms and provisions of this Agreement and have
contributed to its revision; (b) the rule of construction to the effect that any
ambiguities are resolved against the drafting Party shall not be employed in the
interpretation of this Agreement; and (c) the terms and provisions of this
Agreement shall be construed fairly as to each Party and not in a favor of or
against either Party, regardless of which Party was generally responsible for
the preparation of this Agreement. In addition, unless a context otherwise
requires, wherever used, the singular shall include the plural, the plural the
singular, the use of any gender shall be applicable to all genders, the word
“or” is used in the inclusive sense (and/or) and the word “including” is used
without limitation and means “including without limitation”.

 

14.14         Integration; Severability.

 

This Agreement, and when executed, the Commercial Supply Agreement(s) set forth
the entire agreement with respect to the subject matter hereof and thereof and
supersede all other agreements and understandings between the Parties with
respect to such subject matter. If any provision of this Agreement is or becomes
invalid or is ruled invalid by any court of competent jurisdiction or is deemed
unenforceable, it is the intention of the Parties that the remainder of this
Agreement shall not be affected.

 

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14.15         Further Assurances.

 

Each of SUBLICENSOR and ILDONG agrees to duly execute and deliver, or cause to
be duly executed and delivered, such further instruments and do and cause to be
done such further acts and things, including, without limitation, the filing of
such additional assignments, agreements, documents and instruments, as the other
Party may at any time and from time to time reasonably request in connection
with this Agreement or to carry out more effectively the provisions and purposes
of, or to better assure and confirm unto such other Party its rights and
remedies under, this Agreement.

 

[Remainder of page intentionally left blank.]

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their duly authorized representatives.

 

  TG BIOLOGICS, INC.         By: /s/ Michael S. Weiss   Name: Michael S. Weiss  
Title: Executive Chairman, President, & CEO       ILDONG PHARMACEUTICAL CO.,
LTD.         By: /s/ Jung-chi Lee   Name: Jung-chi Lee   Title: Chairman & CEO

 

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