Exhibit 10.1

 

Development Agreement

 

This Development Agreement (the “Agreement”) dated as of March 20, 2020 (the
“Effective Date”) is entered into by and between CNS Pharmaceuticals, Inc.
(“CNS”), a Nevada corporation, having a business address of 2100 West Loop
South, Suite 900, Houston, Texas 77027, and WPD Pharmaceuticals, (“WPD”), a
Polish corporation, having a business address of ul. Żwirki i Wigury 101, 02-089
Warszawa. CNS and WPD are sometimes referred to herein individually as a “Party”
and collectively as the “Parties.”

 

RECITALS

 

WHEREAS, WPD is party to a sublicense agreement dated February 19, 2019 with
Moleculin Biotech, Inc. (“MBI”) (the “Sublicense Agreement”) to research and
develop, manufacture, have manufactured, use, export/import, offer to sell
and/or sell certain products for use in certain territories;

 

WHEREAS, WPD is developing certain anti-viral indications pursuant to the
Sublicense Agreement; and

 

WHEREAS, CNS has agreed to fund a portion of the development of such indications
in exchange for certain economic rights.

 

NOW, THEREFORE, in consideration of the covenants, conditions and agreements
hereinafter set forth, and other valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, WPD and CNS hereby agree as
follows:

 

ARTICLE 1
DEFINITIONS

 

1.1               “Approval Achievement Date” means the earlier of the: (i) date
on which WPD receives marketing approval for a Development Product in one-half
of the countries included in the Sublicensed Territory, as defined in the
Sublicense Agreement; or (ii) the payment by WPD to CNS of Development Fees
hereunder of $1.0 million.

 

1.2               “Business Day” means any day other than a day which is a
Saturday, a Sunday or any other day on which banks are authorized or required to
be closed in New York City, NY.

 

1.3               “Calendar Quarter” means the consecutive three month period
ending on one of March 31, June 30, September 30, or December 31.

 

1.4               “Confidential Information” includes: (1) all information
contained in documents marked "confidential" and disclosed by one Party (the
"disclosing party") to the other Party (the "recipient party") pursuant to this
Agreement; (2) orally disclosed information which is disclosed by the disclosing
party to the recipient party pursuant to this Agreement, summarized in writing,
identified as "confidential" and delivered to the recipient party; and (3) all
proprietary technical information, business and financial information, and all
other information which a reasonable person would treat confidentially that
relates to the Development Products and disclosed from the disclosing party to
the recipient party, whether or not the information is marked as “confidential.”
Notwithstanding anything to the contrary, CNS shall be permitted to make such
disclosures as CNS determines, in its sole discretion, is required pursuant to
the Securities Exchange Act of 1934, as amended, and the rules and regulations
thereof.

 

1.5               “Development Fee” means 50% of the Net Sales for any
Development Products in the Development Territory.

 

1.6               “Development Products” means: (i) Sublicensed Products, as
defined in the Sublicense Agreement, in the field of pharmaceutical drug
products for the treatment of any viral infection in humans; and (ii) any other
drug or product in the field of pharmaceutical drug products for the treatment
of any viral infection in humans that is licensed between WPD and MBI after this
date.

 

1.7               “Development Territory” means (i) until the Approval
Achievement Date, the Sublicensed Territory, as defined in the Sublicense
Agreement; and (ii) after the Approval Achievement Date, the Sublicensed
Territory, as defined in the Sublicense Agreement, other than Poland.

 

 

 

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1.8               “Net Sales” shall be defined in the same way as defined in
Sections 6.1 (a)-(f) of the Sublicense Agreement, as applicable only to the
relevant Development Products less any “pass-thru royalties” or “override
royalty percentage” paid by WPD pursuant to the Sublicense Agreement.

 

1.9               “Phase II Milestone Payment” means the completion by WPD of a
Phase II Study in one of the countries included within the Development
Territory, which clinical trial meets all endpoints and is sufficient to form
the basis of an application for approval of a Development Product in one
Development Territory other than Poland.

 

1.10            “Sale”, “Sells”, “Sold” means the transfer or disposition of a
Development Product, for value, to a person or entity for end use.

 

ARTICLE 2
Development Agreement

 

2.1               Subject to the terms and conditions of this Agreement, WPD
hereby agrees to use its commercially reasonable efforts in good faith to take,
or cause to be taken, all actions, and to do or cause to be done, all things
necessary, proper or desirable or advisable under applicable laws to develop and
commercialize the Development Products, with a goal of eventual approval of
Development Products in the Development Territory. In exchange for the payment
by WPD of the Development Fee to CNS, CNS hereby agrees to pay WPD the following
payments: (i) within thirty Business Days from the date of this Agreement, CNS
will make an upfront payment of $225,000 to WPD; and (ii) within thirty days of
the verified achievement of the Phase II Milestone, (such verification shall be
conducted by an independent third party mutually acceptable to the parties
hereto), CNS will make a payment of $775,000 to WPD.

 

2.2               If after three years from the Effective Date of this
Development Agreement, WPD fails to use commercially reasonable efforts as set
forth in section 2.1 above, CNS shall have the right to terminate this Agreement
pursuant to the terms specified in Section 6.2 below, and CNS shall be entitled
to the return of any payments made hereunder. For the purpose of this clause, if
WPD has expended the funds provided by CNS pursuant to section 2.1 above on
developing anti-viral indications (including all direct and indirect costs of
such development), it will be deemed to have used commercially reasonable
efforts in good faith.

 

2.3               The first Development Fees payment shall be due forty-five
days after the end of the Calendar Quarter in which the first Sale of a
Development Product took place. Thereafter, WPD shall furnish to CNS Development
Fees no later than forty-five days after the end of each Calendar Quarter for
the Sale of Development Products through the end of such Calendar Quarter and
shall further furnish CNS with a written statement setting forth an accounting
showing the calculation of the Development Fees.

 

ARTICLE 3
INFORMATION AND USE

 

3.1               WPD shall furnish CNS with written reports summarizing the
progress of the research and development conducted under the Sublicense
Agreement related to the Development Products on a quarterly basis.

 

3.2               The Parties agree to a mutual exchange of any data,
information or know-how resulting from the research and development of the
Development Products.

 

ARTICLE 4
Other COMPENSATION

 

4.1               If MBI exercises its right to terminate the Sublicense
Agreement in whole, or to remove a portion of the sublicensed subject matter
that relates to some or all of the Development Products, by paying to WPD the
Buyback Consideration (as defined in the Sublicense Agreement), WPD agrees that
CNS shall receive the greater of (i) 50% of the Buyback Consideration that is
attributable to the field of anti-viral pharmaceutical drug products for humans
(such attribution to be mutually agreed upon by the Parties), and (ii) the
amounts actually provided to WPD pursuant to Section 2.1 of this Agreement.

 

 

 

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ARTICLE 5
Confidentiality

 

5.1               During the term of this Agreement and for a period of five (5)
years thereafter, the Parties each agree that Confidential Information of the
disclosing party, which is disclosed to the recipient party pursuant to this
Agreement: (i) shall be received and held in strict confidence, (ii) shall be
used only for the purposes of this Agreement, and (iii) will not be disclosed by
the recipient party (except as required by law, court order or regulation), its
agents or employees without the prior written consent of the disclosing party,
except to the extent that the recipient party can establish by competent written
proof that particular Confidential Information: (i) was in the public domain at
the time of disclosure to the recipient party; or later became part of the
public domain through no act or omission of the recipient party, its employees,
agents, successors or assigns; or (ii) was lawfully disclosed to the recipient
party by a third party having the right to disclose it to the recipient party;
or (iii) was already known by the recipient party at the time of disclosure; or
(iv) was independently developed by the recipient party without use of the
disclosing party's Confidential Information; or (iv) is required by law, court
order or regulation to be disclosed, provided that the recipient party so
obligated to disclose the Confidential Information shall promptly notify the
disclosing party of such requirement and provide the disclosing party an
opportunity to challenge or limit the disclosure requirement and to seek
confidential treatment or protection order, and that the Confidential
Information so disclosed shall remain otherwise subject to the confidentiality
and non-use obligations set forth above in this section. Particular Confidential
Information shall not be deemed to come under any of the above exceptions merely
because it is embraced by more general information that is or becomes subject to
any of the above exceptions.

 

5.2               Subject to full compliance with Section 5.3 below, either
party may disclose the other party’s Confidential Information to its employees,
consultants and affiliates who have a need to know such information in order to
satisfy such Parties obligations under this Agreement. Such employees,
consultants and affiliates shall be required to agree to maintain the
confidentiality of such information pursuant to terms no less restrictive that
the ones set forth herein.

 

5.3               Each Party shall protect the other party's Confidential
Information with at least the same degree of care as it uses to protect its own
confidential information, but at no time less than a reasonable degree of care.
This obligation will exist while this Agreement is in force and for a period of
five (5) years thereafter.

 

5.4               Data Privacy and Security Laws. WPD and its subsidiaries (if
any) will at all times during the Term be in material compliance with all
applicable data privacy and security laws and regulations, and WPD and its
subsidiaries (if any) have taken or will take commercially reasonable actions to
comply with the European Union General Data Protection Regulation (“GDPR”) (EU
2016/679) and all other applicable laws and regulations with respect to Personal
Data (defined below) that have been announced as of the date hereof as becoming
effective within 12 months after the date hereof, and for which any
non-compliance with same would be reasonably likely to create a material
liability (collectively, the “Privacy Laws”). To WPD’s knowledge, WPD and its
subsidiaries (if any) have been and currently are in material compliance with
the GDPR. To ensure material compliance with the Privacy Laws, WPD and its
subsidiaries (if any) have taken, and currently take, commercially reasonable
steps reasonably designed to ensure compliance in all material respects with
Privacy Laws relating to data privacy and security and the collection, storage,
use, disclosure, handling, and analysis of Personal Data that WPD has collected,
and collects, or is in WPD’s possession or will be in WPD’s possession during
the Term. “Personal Data” means "personal data" as defined by GDPR.

 

ARTICLE 6
Term and TERMINATION

 

6.1               The term of this Agreement will commence on the Effective Date
and remain in full force and effect until the expiration of the Sublicense
Agreement, unless earlier termination by pursuant to the terms of this Agreement
(“Term”).

 

6.2               Subject to any rights herein which survive termination, this
Agreement will earlier terminate in its entirety: (i) upon thirty (30) calendar
days written notice from either party if the other party materially breaches
this Agreement, unless before the end of such thirty (30) calendar day notice
period, the breaching party has cured the material default or breach to the
non-breaching party’s reasonable satisfaction; or (ii) at any time by mutual
written agreement between the Parties, subject to any terms herein which survive
termination.

 

 

 

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ARTICLE 7
REPRESENTATIONS, WARRANTIES AND COVENANTS

 

7.1               Each Party represents and warrants that:

 

7.1.1        it is duly organized and validly existing under the laws of its
state or country of incorporation, and has full corporate power and authority to
enter into this Agreement and to carry out the provisions hereof;

 

7.1.2        it is duly authorized to execute and deliver this Agreement and to
perform its obligations hereunder, and the person executing this Agreement on
its behalf has been duly authorized to do so by all requisite corporate action;

 

7.1.3        this Agreement is legally binding upon it and enforceable in
accordance with its terms; that the execution, delivery and performance of this
Agreement by it does not conflict with any Agreement, instrument or
understanding, oral or written, to which it is a party or by which it may be
bound, nor violate any material law or regulation of any governmental entity
having jurisdiction over it; and

 

7.1.4        it has not granted, and will not grant during the term of the
Agreement, any right to any third party that would conflict with the rights
granted to the other Party hereunder;

 

7.1.5        that it has (or will have at the time performance is due)
maintained, and will maintain, and keep in full force and effect, all
agreements, permits and licenses necessary to perform its obligations hereunder;
and in complying with the terms and conditions of this Agreement and carrying
out any obligations hereunder, it will comply (and it will ensure that its
subcontractor's comply) with all applicable laws, regulations, ordinances,
statutes, and decrees or proclamations of all governmental entities having
jurisdiction over such Party.

 

7.2               U.S. FCPA Compliance. WPD hereby agrees to at all times comply
with the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”),
and WPD shall establish, institute and maintain policies and procedures designed
to ensure that:

 

7.2.1        no agent, employee or affiliate of WPD, or any of its affiliates,
takes any action, directly or indirectly, that would result in a violation by
such person of the FCPA or any other anti-bribery or anti-corruption law, rule
or regulation of similar purpose and scope, including, without limitation,
making use of the U.S. mails or any means or instrumentality of interstate
commerce in furtherance of an unlawful offer, payment, promise to pay or
authorization of the unlawful payment of any money, or other property, gift,
promise to give, or authorization of the giving of anything of value to any
"foreign official" or any foreign political party or official thereof, of any
candidate for any foreign office or any candidate for foreign political office,
in contravention of the FCPA;

 

7.2.2        WPD, and its affiliates, shall at all times keep books, records and
accounts which, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of their assets and maintain a system of internal
accounting controls sufficient to provide reasonable assurances that
transactions are properly authorized and recorded;

 

7.2.3        WPD shall, and shall cause its respective affiliates, to permit CNS
and its respective designated representatives, at reasonable times and upon
reasonable prior notice to such parties, to review the books and records of WPD
and any of its affiliates and to discuss the affairs, finances and condition of
such party and any of its affiliates with the officers of such entities and any
of their affiliates in relation to their compliance with this section, as
applicable.

 

7.2.4        WPD understands and agrees that CNS may terminate this Agreement
immediately and without any early termination penalty in the event that WPD, or
any of its affiliates, materially violates the FCPA or any other anti-bribery or
anti-corruption law. WPD understands and agrees that, if WPD, or any of its
affiliates, intends to use foreign subcontractors to provide any services
pursuant to this Agreement, such party and each of its affiliates is prohibited
from engaging or using subcontractors for performance of services under this
Agreement without prior and express authorization, in writing, by CNS. If WPD,
or any of its affiliates, is authorized to engage or use subcontractors for such
work, such party and each of its affiliates so involved agrees to obtain a
commitment from the subcontractor to comply with the FCPA and any other
anti-bribery or anti-corruption law.

 

 

 

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ARTICLE 8 Indemnification

 

8.1               WPD hereby agrees to hold harmless and indemnify CNS, its
officers, affiliates, employees, and agents (the “CNS Indemnitees”) from and
against any and all third party claims, demands, causes of actions, costs of
suit and reasonable and documented attorney’s fees (collectively “Claims”)
caused by, arising out of, or resulting from WPD’s, its employees, agents’,
affiliates’, licensees’, sublicensees’ or subcontractors’ (i) negligence or
willful misconduct; (ii) breach of any warranty or representations set forth
herein; (iii) breach or alleged breach of third party intellectual property
rights; and (iv) use or sale of Development Products.

 

ARTICLE 9
MISCELLANEOUS

 

9.1               The Parties shall execute and deliver any and all additional
papers, documents, and other instruments and shall do any and all further acts
and things reasonably necessary, if any, in connection with the performance of
its obligation hereunder to carry out the intent of this Agreement.

 

9.2               This Agreement contains the entire understanding of the
Parties, and supersedes all prior agreements and understandings between the
Parties. This Agreement may be amended only by a written instrument signed by
the Parties.

 

9.3               The waiver by any Party of any terms or condition of this
Agreement, or any part hereof, shall not be deemed a waiver of any other term or
condition of this Termination Agreement, or of any later breach of this
Agreement.

 

9.4               Any notice required by this Agreement will be given by
personal delivery (including delivery by reputable messenger services such as
Federal Express) or by prepaid, first class, certified mail, return receipt
requested, addressed to:

 

If to WPD: If to CNS:     WPD Pharmaceuticals sp. z o.o CNS Pharmaceuticals,
Inc.   Attention: CEO Attention: CEO ul. Żwirki i Wigury 101 2100 West Loop
South, Suite 900 02-089 Warszawa, Poland Houston, TX 77027

 

9.5               The Article and Section captions in this Agreement have been
inserted as a matter of convenience and are not part of this Termination
Agreement. References to $ or “dollars” means United States dollars.

 

9.6               This Agreement may be executed in counterparts, all of which
together shall constitute a single agreement.

 

9.7               If any provision of this Agreement or application thereof to
anyone is adjudicated to be invalid or unenforceable, such invalidity or
unenforceability shall not affect any provision or application of this Agreement
which can be given effect without the invalid or unenforceable provision or
application, and shall not invalidate or render unenforceable such provision or
application. Further, the judicial or other competent authority making such
determination shall have the power to limit, construe or reduce the duration,
scope, activity and/or area of such provision, and/or delete specific words or
phrases as necessary to render, such provision enforceable.

 

9.8               This Agreement will be governed by, construed and enforced in
accordance with the laws of the State of Texas. Any dispute between the Parties
regarding or related to this Agreement shall be litigated in the courts located
in Houston, Texas, and WPD agrees not to challenge personal jurisdiction in that
forum.

 

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement by their
duly authorized representatives with full right, power and authority to enter
into and perform under this Agreement.

 

CNS Pharmaceuticals, Inc.

 

By____/s/ John Climaco___________________
John Climaco, CEO

 

WPD Pharmaceuticals SP. z o.o.

 

By__/s/ Mariusz Olejniczak___________
Mariusz Olejniczak, President

 

 

 

 

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