Exhibit 10.1

 

Execution Copy CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY   CYNAPSUS
THERAPEUTICS INC.

 

Portions herein identified by [**] have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934,
as amended. A complete copy of this document has been filed separately with the
Securities and Exchange Commission.

 

LICENSE AGREEMENT

 

by and between

 

MONOSOL RX, LLC

 

and

 

cynapsus THERAPEUTICS INC.

 

Dated as of April 1, 2016

 

 

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY

CYNAPSUS THERAPEUTICS INC.

 

Portions herein identified by [**] have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934,
as amended. A complete copy of this document has been filed separately with the
Securities and Exchange Commission.

 

LICENSE AGREEMENT

 

This LICENSE AGREEMENT (together with any Schedules hereto, this “Agreement”) is
entered into as of April 1, 2016 (the “Effective Date”) by and between MonoSol
Rx, LLC, a Delaware limited liability company (“Licensor”), and Cynapsus
Therapeutics Inc., a Canadian corporation (“Licensee”). Licensor and Licensee
are sometimes referred to hereinafter individually as a “Party” and collectively
as the “Parties.”

 

RECITALS:

 

A.          Licensor owns patented and trade secret proprietary technology
related to film-based drug delivery systems which includes orally soluble film
strips containing active pharmaceutical ingredients.

 

B.          Licensee owns patented technology related to the film based drug
delivery of the active pharmaceutical ingredient, Apomorphine, and desires to
develop and commercialize a sublingual film product in the Territory (as defined
below) containing Apomorphine.

 

C.          Licensee wishes to obtain an exclusive right and license under the
Licensed Patents (as defined below) in connection with the development and
commercialization of the Product (as defined below) in the Field (as defined
below) in the Territory and Licensor desires to grant such an exclusive right to
Licensee, pursuant to the terms and subject to the conditions set forth in this
Agreement.

 

D.          In consideration of the mutual representations, warranties and
covenants contained herein, the Parties agree as follows:

 

SECTION 1. INTERPRETATION AND CONSTRUCTION; DEFINITIONS

 

1.1          Certain Definitions. As used herein, the following terms shall have
the following meanings:

 

1.1.1           “505(b)(2) NDA” means a new drug application submitted pursuant
to the requirements of the FDA under 21 U.S.C. § 355(b)(2) of the Act, and any
equivalent application submitted in any country in the Territory pursuant to any
similar abbreviated route of approval together, in each case, with all
additions, deletion or supplements thereto.

 

1.1.2           “Act” means, as applicable, the United States Federal Food,
Drug, and Cosmetic Act of 1938, as amended (21 U.S.C. §§ 301 et seq.).

 

 

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY

CYNAPSUS THERAPEUTICS INC.

 

Portions herein identified by [**] have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934,
as amended. A complete copy of this document has been filed separately with the
Securities and Exchange Commission.

 

1.1.3           “Affiliate” of a Person means any other Person that directly, or
indirectly through one or more intermediaries, controls, is controlled by or is
under common control with such first Person. As used in this definition of
Affiliate, “control” and, with correlative meanings, the terms “controlled by”
and “under common control with,” shall mean to possess the power to direct the
management or policies of a Person, whether through: (a) direct or indirect
beneficial ownership of fifty percent (50%) or more of the voting interest in
such entity; (b) the right to appoint fifty percent (50%) or more of the
directors of such entity; or (c) by contract or otherwise. The Parties
acknowledge and agree that under no circumstances shall the term “Affiliate” as
defined herein mean as to either Party, for any purpose, any (i) Venture Entity
having, directly or indirectly, an interest in or controlling, alone or with
others, such Party, or (ii) other Persons in which such Venture Entity have an
interest or are controlled by, controlling or are under common control with such
Person, unless such Party directly possesses the power to control and direct
management of such other Persons.

 

1.1.4           “Agreement” has the meaning set forth in the Preamble of this
Agreement.

 

1.1.5           “ANDA” means an abbreviated new drug application submitted
pursuant to the requirements of the FDA under 21 U.S.C. § 355(j) of the Act, and
any equivalent application submitted in any country in the Territory pursuant to
any similar abbreviated route of approval together, in each case, with all
additions, deletions or supplements thereto.

 

1.1.6           “API” means the active pharmaceutical ingredient Apomorphine and
any salts, prodrugs, derivatives and analogues thereof alone or in combination
with any antiemetic.

 

1.1.7           “Applicable Law” means all laws, rules and regulations,
including any rules, regulations, guidelines, or other requirements of
Regulatory Authorities, applicable to the Development, Commercialization or
Supply of the Product, as the case may be, that may be in effect from time to
time in any country in the Territory.

 

1.1.8            “Bankruptcy Event” means the occurrence of any of the following
with respect to a Party: (a) such Party files in any court or agency, pursuant
to any statute or regulation of any state or country, a petition in bankruptcy
or insolvency or for reorganization (except for the purposes of a bona fide
amalgamation or other reorganization); (b) such Party files for an arrangement
or for the appointment of a receiver or trustee of such Party or of its assets;
(c) such Party is served with an involuntary petition against it, filed in any
insolvency proceeding, and such petition is not be dismissed within sixty (60)
days after the filing thereof; or (d) such Party is dissolved or liquidated, or
(e) such Party shall make an assignment for the benefit of its creditors.

 

2

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY

CYNAPSUS THERAPEUTICS INC.

 

Portions herein identified by [**] have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934,
as amended. A complete copy of this document has been filed separately with the
Securities and Exchange Commission.

 

1.1.9           “Business Combination” means, with respect to a Party: (a) a
transaction or series of related transactions that results in the sale or other
disposition of all or substantially all of such Party’s assets which relate to
this Agreement; or (b) a merger or consolidation in which such Party is not the
surviving corporation or in which, if such Party is the surviving corporation,
the shareholders of such Party immediately prior to the consummation of such
merger or consolidation do not, immediately after consummation of such merger or
consolidation, possess, directly or indirectly through one or more
intermediaries, a majority of the voting power of all of the surviving entity’s
outstanding stock and other securities and the power to elect a majority of the
members of such Part’s board of directors; or (c) a transaction or series of
related transactions if the shareholders of such Party immediately prior to the
initial such transaction do not, immediately after consummation of such
transaction or any of such related transactions, own, directly or indirectly
through one or more intermediaries, stock or other securities of the entity that
possess a majority of the voting power of all of such Party’s outstanding stock
and other securities and the power to elect a majority of the members of such
Party’s board of directors.

 

1.1.10         “Business Day” means any day other than a Saturday or Sunday on
which banking institutions in New York, New York, United States are open for
business.

 

1.1.11         “Calendar Quarter” means the three (3) month period in any given
calendar year ending on March 31, June 30, September 30 and December 31.

 

1.1.12         “Commercialization” means any and all activities directed to the
making, marketing, promoting, distributing offering for sale, selling,
importation and exportation of the Product. When used as a verb, “Commercialize”
means to engage in Commercialization.

 

1.1.13         “Competitive Infringement” has the meaning set forth in Section
8.2.1.

 

1.1.14         “Confidential Information” has the meaning set forth in
Section 5.1.

 

1.1.15         “Confidentiality Agreement” means that certain Confidentiality
Agreement between Licensee and Licensor dated as of February 24, 2015.

 

1.1.16         “Control” or “Controlled” means, with respect to any Intellectual
Property, the possession (whether by ownership, license or sublicense, other
than by a license, sublicense or other right granted (but not assignment)
pursuant to this Agreement) by a Party (or its Affiliate) of the ability to
assign or grant to the other Party the licenses, sublicenses or rights to access
and use such Intellectual Property as provided for in this Agreement, without
violating the terms of any agreement or other arrangement with any third Party
in existence as of the time such Party would be required hereunder to grant such
license, sublicense, or rights of access or use.

 

1.1.17         “CPA Firm” has the meaning set forth in Section 3.10.

 

3

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY

CYNAPSUS THERAPEUTICS INC.

 

Portions herein identified by [**] have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934,
as amended. A complete copy of this document has been filed separately with the
Securities and Exchange Commission.

 

1.1.18         “CTA” means a clinical trial authorization application submitted
pursuant to the requirements of the EMA under Applicable Law, and any equivalent
application submitted in any country in the Territory, in each case, with all
additions, deletion or supplements thereto.

 

1.1.19         “Development” means pre-clinical and clinical drug development
activities conducted by or on behalf of Licensee which occur prior to or as a
condition of Regulatory Approval including, among other things: test method
development and stability testing, toxicology, formulation, process development,
manufacturing scale-up, development-stage manufacturing, cGMP audits, cGCP
audits, cGLP audits, analytical method validation, manufacturing process
validation, cleaning validation, scale-up, quality assurance/quality control
development, statistical analysis and report writing, pre-clinical and clinical
studies, regulatory filing submissions and pre-approvals, and regulatory affairs
related to the foregoing. When used as a verb, “Develop” means to engage in
Development.

 

1.1.20         “Disclosing Party” has the meaning set forth in Section 5.1.

 

1.1.21         “Drug Product” means a drug product as defined in 21 C.F.R.
§ 314.3 for administration to human subjects.

 

1.1.22         “Effective Date” has the meaning set forth in the Preamble of
this Agreement.

 

1.1.23         “EMA” means the European Medicines Agency, and any of its
successor agencies or departments.

 

1.1.24         “FDA” means the United States Food and Drug Administration, and
any of its successor agencies or departments.

 

1.1.25         “Field” means the indications in humans of: (a) the acute,
intermittent treatment of hypomobility, “off” episodes associated with
Parkinson’s disease in patients that have motor fluctuations; (b) restless leg
syndrome; and (c) erectile dysfunction.

 

1.1.26          “GAAP” means United States generally accepted accounting
principles, consistently applied.

 

1.1.27         “Governmental Authority” means any national, international,
federal, state, provincial or local government, or political subdivision
thereof, or any multinational organization or any authority, agency or
commission entitled to exercise any administrative, executive, judicial,
legislative, police, regulatory or taxing authority or power, any court or
tribunal (or any department, bureau or division thereof, or any governmental
arbitrator or arbitral body).

 

4

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY

CYNAPSUS THERAPEUTICS INC.

 

Portions herein identified by [**] have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934,
as amended. A complete copy of this document has been filed separately with the
Securities and Exchange Commission.

 

1.1.28         “IFRS” means accounting standards issued by the International
Accounting Standards Board.

 

1.1.29         “Indemnitee” has the meaning set forth in Section 6.3.1.

 

1.1.30         “Indemnitor” has the meaning set forth in Section 6.3.1.

 

1.1.31         “Intellectual Property” means all: (a) all patents, patent
applications including provisional applications and statutory invention
registrations, including reissues, divisions, continuations,
continuations-in-part, and reexaminations and all inventions disclosed therein;
(b) copyrightable works, copyrights in works of authorship of any type,
including computer software and industrial designs, registrations and
applications for registration thereof; (c) trade secrets, know-how, processes,
specifications, product designs, descriptions of the manufacturing process and
equipment and all other manufacturing information, engineering and other manuals
and drawings, standard operating procedures, flow diagrams, chemical,
pharmacological, toxicological, pharmaceutical, physical and analytical, safety,
quality assurance, quality control and clinical data, technical information,
data, research records, supplier lists and similar data and information and
other material confidential or proprietary technical, business and other
information; (d) any and all rights of application regarding any of the
foregoing; and (e) rights to sue and recover damages or obtain injunctive relief
for infringement, or misappropriation thereof.

 

1.1.32         “Licensed Patents” means all patents and patent applications in
the Territory, in each case owned or Controlled by Licensor or its Affiliates as
of the Effective Date or at any time during the Term, including any
continuations, continuations-in-part, divisions, or any substitute applications,
any patent issued with respect to any such patent applications, any reissue,
reexamination, renewal or extension (including any supplementary protection
certificate) of any such patent, and any confirmation patent or registration
patent or patent of addition based on any such patent, and all foreign
counterparts of any of the foregoing, or as applicable portions thereof or
individual claims therein, which would be infringed, absent a license or other
right to practice granted under such patents and patent applications, by the
Development or Commercialization of the Product in the Territory. Except for
inadvertent inaccuracies and/or omissions, the Licensed Patents existing as of
the Effective Date are set forth in Schedule 1.1B attached hereto.

 

1.1.33         “Licensee” has the meaning set forth in the Preamble to this
Agreement.

 

1.1.34         “Licensee Indemnitees” has the meaning set forth in Section 6.2.

 

1.1.35         “Licensor” has the meaning set forth in the Preamble to this
Agreement.

 

1.1.36         “Licensor Indemnitees” has the meaning set forth in Section 6.1.

 

5

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY

CYNAPSUS THERAPEUTICS INC.

 

Portions herein identified by [**] have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934,
as amended. A complete copy of this document has been filed separately with the
Securities and Exchange Commission.

 

1.1.37         “Losses” means any and all damages, awards, deficiencies,
settlement amounts, defaults, assessments, fines, dues, penalties, costs, fees,
liabilities, obligations, taxes, liens, losses, lost profits and expenses
(including, without limitation, court costs, interest and reasonable fees of
attorneys, accountants and other experts), together with all documented
out-of-pocket costs and expenses incurred in complying with any judgments,
orders, decrees, stipulations, investigations and injunctions that arise from or
relate to a Third Party Claim.

 

1.1.38         “Major Market” means the United States, the European Union or
Japan.

 

1.1.39          “Material Decline” has the meaning set forth in Section 3.3.3.

 

1.1.40         “NDA” means a new drug application submitted pursuant to the
requirements of the FDA under 21 U.S.C. § 355(b)(1) of the Act, and any
equivalent application submitted in any country in the Territory, in each case,
with all additions, deletion or supplements thereto.

 

1.1.41         “Net Sales” means, for any period of determination, with respect
to the Product sold by Licensee (or any Affiliate, successor, sublicensee,
subcontractor or agent of Licensee or sublicensee), the aggregate gross sales
for such Product by Licensee (or any Affiliate, successor, sublicensee,
subcontractor or agent of Licensee or Sublicensee) on an arms-length basis from
Third Parties in the Territory during such period, less the following deductions
applied on a per Unit basis:

 

(a)              trade discounts, including cash and quantity discounts or
rebates, credits or refunds;

 

(b)              allowances or credits granted upon claims or returns;

 

(c)              charges included in the gross sales price for freight,
insurance, transportation, postage, and handling of the Product;

 

(d)              customs duties, sales, excise and use taxes and any other
governmental charges (including value added tax) paid in connection with the
transportation, distribution, use or sale of the Product (but excluding what is
commonly known as income taxes);

 

(e)              rebates and chargebacks or retroactive price reductions made to
federal, state or local governments (or their agencies), or any Third Party
payor, administrator or contractor, including managed health organizations; and

 

(f)              commissions related to import, distribution or promotion of the
Product paid to Third Parties (specifically excluding any amounts paid to sales
personnel, sales representatives and sales agents who are employees or
consultants of, or members of a contract sales force engaged by or on behalf of,
Licensee or its Affiliates or sublicensees).

 

6

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY

CYNAPSUS THERAPEUTICS INC.

 

Portions herein identified by [**] have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934,
as amended. A complete copy of this document has been filed separately with the
Securities and Exchange Commission.

 

For the avoidance of doubt, any sale of the Product by Licensee (or any
Affiliate, successor, sublicensee, subcontractor or agent of Licensee or
sublicensee) to another of these entities for resale by such entity to a Third
Party shall not be deemed a sale for purposes of this definition of Net Sales.

 

Further, transfers or dispositions of the Product: (i) in connection with
patient assistance programs; (ii) for charitable or promotional purposes; (iii)
for preclinical, clinical, regulatory or governmental purposes or under
so-called “named patient” or other limited access programs; or (iv) for use in
any tests or studies reasonably necessary to comply with any Applicable Law or
request by a Regulatory Authority shall not, in each case of (i) through (iv),
be deemed sales of the Product for purposes of this definition of Net Sales.

 

The amounts of any deductions accrued pursuant to this Section shall be
determined from books and records maintained in accordance with GAAP or IFRS, as
the case may be, as required by the accounting standards organization in the
jurisdiction of the Licensee, and shall only be deducted once and only to the
extent not otherwise deducted from the aggregate amount invoiced.

 

1.1.42         “Party” or “Parties” has the meaning set forth in the Preamble to
this Agreement.

 

1.1.43         “Patent Infringement Claims” has the meaning set forth in
Section 8.3.

 

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

 

1.1.45         “Phase III Studies” means Phase III clinical studies conducted by
or on behalf of Licensee showing additional therapeutic benefits of the Product
as indicated with data on the labels and/or required for a Regulatory Approval
Application.

 

1.1.46         “Product” means any Drug Product in a dosage form for oral
administration, which Drug Product contains API as an active pharmaceutical
ingredient.

 

1.1.47         “Product Patent” has the meaning set forth in Section 8.1.2.

 

7

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY

CYNAPSUS THERAPEUTICS INC.

 

Portions herein identified by [**] have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934,
as amended. A complete copy of this document has been filed separately with the
Securities and Exchange Commission.

 

1.1.48         “Quarterly Royalty Reports” has the meaning set forth in
Section 3.5.

 

1.1.49         “Receiving Party” has the meaning set forth in Section 5.1.

 

1.1.50         “Reference Listed Drug” means a listed Drug Product identified by
FDA, or similar Regulatory Authority outside of the United States, as a Drug
Product upon which an applicant may rely in seeking approval of any Regulatory
Approval Application.

 

1.1.51         “Regulatory Approval” means any approvals (including applications
therefore, supplements and amendments thereto and pricing and reimbursement
approvals), licenses, registrations or authorizations of any Regulatory
Authority, necessary for the Development, Commercialization, Supply,
manufacture, testing, labeling, packaging, or shipping of the Product in the
Territory, including the 505(b)(2) NDA, NDA, any sNDA and CTA for the Products.

 

1.1.52         “Regulatory Approval Application” means any filings submitted to
the FDA, EMA or similar Regulatory Authority outside of the United States or
Europe, including any 505(b)(2) NDA, NDA, sNDA, CTA and any equivalent
application submitted in any country pursuant to any similar route of approval
together, in each case, with all additions, deletion or supplements thereto, for
Regulatory Approval of the Products in the Territory.

 

1.1.53         “Regulatory Authority” means any national, regional, state,
provincial or local regulatory agency, department, bureau, commission, council
or other governmental authority in the Territory involved in the granting of
approvals (including pricing and reimbursement approvals), licenses,
registrations or authorizations for the marketing, sale, manufacturing, testing,
labeling, storage, handling, packaging, shipping or supply of Drug Products,
including the FDA and EMA.

 

1.1.54          “sNDA” means a Supplemental NDA, which is an application for an
already approved NDA for the Product for any changes in packaging, labeling,
dosages, formulations, new indications, or additional therapeutic benefit which
has been filed with the FDA under the Act to obtain Regulatory Approval in the
United States or with a similar Regulatory Authority outside of the United
States, including all amendments and supplements thereto and all data and
documentation submitted to the applicable Regulatory Authority in connection
therewith.

 

1.1.55         “Term” has the meaning set forth in Section 7.1.

 

1.1.56         “Territory” means worldwide.

 

1.1.57         “Third Party” means any Person other than Licensor and Licensee
and their respective Affiliates or successors.

 

8

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY

CYNAPSUS THERAPEUTICS INC.

 

Portions herein identified by [**] have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934,
as amended. A complete copy of this document has been filed separately with the
Securities and Exchange Commission.

 

1.1.58         “Third Party Claims” has the meaning set forth in Section 6.1.

 

1.1.59         “Unit” shall mean a single dosage strip of the Product, in an
individual foil pouch, for sample or sale.

 

1.1.60         “Upfront Milestone Payments” has the meaning set forth in Section
3.1.1.

 

1.1.61         “Venture Entity” shall mean a Person for which its primary
business is the investment of capital in other Persons, and shall explicitly
exclude any Person which markets, sells, promotes, develops or manufactures Drug
Products and any Person for which its primary business is owning or Controlling
Intellectual Property.

 

SECTION 2. License

 

2.1          License Granted to Licensee. Subject to the terms and conditions of
this Agreement, Licensor hereby grants to Licensee and its Affiliates, and
Licensee and its Affiliates accept:

 

2.1.1           an exclusive, limited, royalty-bearing license, with the right
to grant sublicenses (subject to Section 2.1.3) under the Licensed Patents to
Develop and Commercialize the Product in the Field in the Territory; and

 

2.1.2           Licensor covenants and agrees with Licensee that during the Term
Licensor will not Develop or Commercialize, and will not grant any license or
similar right with respect to the Product to any Affiliate or Third Party to
Develop or Commercialize, the Product in the Field. For greater certainty,
during the Term Licensor will not Develop or Commercialize, or license to a
Third Party, any Licensed Patents to Develop or Commercialize the API, alone or
in combination with another active agent, for any human use within the Field.

 

2.1.3           Licensee shall have the right to sublicense the license rights
set forth in this Section 2.1 to any Affiliate and to a Third Party subject to
Licensor’s prior written consent, which will not be unreasonably withheld.
Notwithstanding the foregoing, the Licensee shall have the right to subcontract
(and grant related sublicenses) for the manufacture of the Products with up to
two (2) Third Parties (at any one time) without Licensor’s prior written
consent. Upon request, Licensee shall provide the names of the subcontract
manufacturers to Licensor.

 

2.2          No Implied Licenses; Negative Covenant. Except as expressly set
forth in this Agreement, Licensee shall not acquire any license or other
Intellectual Property interest, by implication or otherwise, under any
Intellectual Property Controlled by Licensor or its Affiliates. Licensee shall,
not, nor shall it permit any of its Affiliates or permitted sublicensees to,
practice the Licensed Patents licensed to it by Licensor outside the scope of
the license granted to it under this Agreement.

 

9

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY

CYNAPSUS THERAPEUTICS INC.

 

Portions herein identified by [**] have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934,
as amended. A complete copy of this document has been filed separately with the
Securities and Exchange Commission.

 

2.3          Licensor Retained Rights.   Any rights of Licensor not expressly
granted to Licensee under the provisions of this Agreement shall be retained by
Licensor. Licensor, except as set forth in Section 2.1.2, shall retain the right
to exploit the Licensed Patents for purposes outside of scope of the license
granted in Section 2.1 anywhere in the world, without any duty to account to
Licensee or obtain Licensee’s consent for such exploitation.

 

2.4          Clarification of Rights.         The Parties acknowledge that the
Licensed Patents are "intellectual property" for purposes of Section 365(n) of
the U.S. Bankruptcy Code and that Licensee will have the right to exercise all
rights provided by Section 365(n) with respect to the Licensed Patents.

 

SECTION 3. PAYMENTS AND REPORTS

 

3.1          Milestone Payments.

 

3.1.1           Upfront Milestone Payments. In consideration for the license
granted herein by Licensor, Licensee shall pay to Licensor the following
one-time non-refundable payments (the “Upfront Milestone Payments”):

 

Milestone Payment

(U.S. Dollars)

   Date Payment Due $5,000,000.00   Upon execution of this Agreement.
$4,000,000.00   On December 1, 2016. $5,000,000.00   On the earlier to occur
of:  (a) the filing of a NDA for the Product by Licensee; or (b) June 30, 2017.

 

3.1.2           Ongoing Milestone Payments. In addition to the Upfront Milestone
Payments, Licensee shall pay to Licensor the following one-time non-refundable
payments:

 

Milestone Payment

(U.S. Dollars)

   Date Payment Due $4,000,000.00   On the earlier to occur of:  (a) submission
of a Regulatory Approval Application to any Regulatory Authority within the
European Union; or (b) December 1, 2018. $[**]   On the earlier to occur
of:  (a) the first day of Product availability at a pharmacy in the United
States; or (b) six (6) months after the approval of the NDA by the FDA. $[**]  
On the earlier to occur of:  (a) the first day of Product availability at a
pharmacy in the European Union: or (b) six (6) months after the approval of the
CTA by the EMA or a European Union member county.

 

10

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY

CYNAPSUS THERAPEUTICS INC.

 

Portions herein identified by [**] have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934,
as amended. A complete copy of this document has been filed separately with the
Securities and Exchange Commission.

 

3.1.3           Sales Milestone Payments. Licensee shall pay to Licensor the
following one-time non-refundable sales milestone payments; provided, however,
that in no event shall two (2) sales milestone payments be due and payable by
Licensee in the same calendar year:

 

Milestone Payment

(U.S. Dollars)

   Date Payment Due $[**]   Upon the achievement of $[**] in Net Sales of the
Product within a calendar year within the Territory. $[**]   Upon the
achievement of $[**] in Net Sales within a calendar year within the Territory.
$[**]   Upon the achievement of $[**] in Net Sales within a calendar year within
the Territory.

 

3.1.4           In the event any Business Combination or Product licensing event
involving Licensee occurs within ninety (90) calendar days of the Effective
Date, then, upon the consummation of such Business Combination or Product
licensing event, Licensee shall immediately pay to Licensor any remaining
Upfront Milestone Payments and Licensee shall continue to be obligated to pay
all other milestone payments as set forth in this Section 3.1 and all royalty
payments as set forth in Section 3.3 as and when due.

 

3.1.5           In the event any Business Combination involving Licensee occurs
prior to March 31, 2017 but more than ninety (90) calendar days after the
Effective Date, then, upon the consummation of such Business Combination,
Licensee shall pay to Licensor the final Upfront Milestone Payment upon the
earlier to occur of (1) the filing of an NDA for the Product and (2) March 31,
2017 and Licensee shall continue to be obligated to pay all other milestone
payments as set forth in this Section 3.1 and all royalty payments as set forth
in Section 3.3 as and when due.

 

3.2          Notice; Payment. Licensee shall deliver written notice to Licensor
of the achievement of any other milestone event set forth in Section 3.1.1, or
3.1.2 upon achievement of the applicable milestone event by Licensee or its
Affiliates together with the payment of the associated milestone payment.
Licensee shall deliver written notice to Licensor of the achievement of any
milestone event set forth in Section 3.1.3 within thirty (30) days after the
achievement of the applicable milestone event by Licensee or its Affiliates
together with the payment of the associated milestone payment.

 

11

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY

CYNAPSUS THERAPEUTICS INC.

 

Portions herein identified by [**] have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934,
as amended. A complete copy of this document has been filed separately with the
Securities and Exchange Commission.

 

3.3          Royalties.

 

3.3.1           Subject to Section 3.4, from the Effective Date through December
31, 2024, and in addition to any payments set forth in Section 3.1, Licensee or
its Affiliates during such time shall pay to Licensor an amount equal to [**]
percent ([**]%) of the quarterly Net Sales of the Product in the Territory.

 

3.3.2           Subject to Section 3.4, from January 1, 2025 until the
termination of this Agreement, Licensee or its Affiliates, in consideration of
the rights granted to Licensee under Section 2.1.1 and/or 2.1.2, as applicable,
shall pay to Licensor an amount equal to [**] percent ([**]%) of the quarterly
Net Sales of the Product in the Territory, provided that in respect of any
jurisdiction or jurisdictions in the Territory, Licensee may terminate its
rights with respect to the Licensed Patents upon one hundred and eighty (180)
days prior written notice to Licensor. In such event Licensee or its Affiliates
shall cease to be obligated to pay to Licensor an amount equal to [**] percent
([**]%) of the quarterly Net Sales of the Product in such jurisdiction or
jurisdictions. Licensor will have no further obligations under this Agreement in
jurisdictions where Licensee is not paying and/or ceases to pay a royalty after
January 1, 2025.

 

3.3.3           Notwithstanding Section 3.3.2, from January 1, 2025 until the
termination of this Agreement, in the event that Net Sales of the Product in any
jurisdiction or jurisdictions in the Territory suffer a Material Decline as the
result of either (i) the entry of a non-authorized generic of the Product in
film into such jurisdiction or jurisdictions or (ii) off-label prescribing of
the Product in film impacting sales of branded Rx scripts for the Product in
film outside the Field, the Licensor shall agree to the reduction of the royalty
rate specified in Section 3.3.2 with respect to such jurisdiction or
jurisdictions from [**] percent ([**]%) to [**] percent ([**]%). In order to
access the rights provided under this Section 3.3.3 and/or Section 7.2.3, the
Licensee shall provide to the Licensor a written report detailing the Material
Decline in Net Sales and the reasons therefor, which report shall be subject to
verification by Licensor. For the purpose of this Section 3.3.3 and Section
7.2.3, Material Decline shall mean a reduction in Net Sales of the Product in
any jurisdiction of more than twenty percent (20%) in the current twelve month
period compared to the preceding twelve month period (the “Material Decline”).
The revised royalty rate contemplated by this Section 3.3.3 shall take effect
for the Calendar Quarter immediately following the delivery of the written
report and Licensor’s verification thereof, specified above.

 

12

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY

CYNAPSUS THERAPEUTICS INC.

 

Portions herein identified by [**] have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934,
as amended. A complete copy of this document has been filed separately with the
Securities and Exchange Commission.

 

3.3.4           Notwithstanding anything contained herein to the contrary, any
payment due and payable by Licensee in accordance with this Section 3.3 shall be
paid to Licensor on a quarterly basis within thirty (30) days after the end of
the applicable Calendar Quarter.

 

3.4          Minimum Royalty. Notwithstanding anything set forth in this
Agreement to the contrary, as of January 1, 2020, the minimum annual royalty
payment due and payable by Licensee to Licensor shall be [**] Dollars ($[**]).

 

3.5          Royalty Reports and Payments. During the Term, Licensee shall
submit quarterly royalty reports (“Quarterly Royalty Reports”) to Licensor
within thirty (30) days following the end of each Calendar Quarter, provided
that in respect of the final quarter of the year, Licensee shall have sixty (60)
days in which to submit the required Quarterly Royalty Report. Each Quarterly
Royalty Report shall cover the most recently completed Calendar Quarter and
shall show: (a) the aggregate gross and Net Sales of the Product during the most
recently completed Calendar Quarter including reasonable detail with respect to
the calculation of Net Sales such as, Units sold, discounts, credits and other
components in the calculation of Net Sales; (b) the royalties, in U.S. dollars,
payable with respect to such Net Sales; and (c) with respect to the Quarterly
Royalty Report for the fourth Calendar Quarter of each year, any true-up
required. Each Quarterly Royalty Report shall be accompanied by the payment
shown as due on such Quarterly Royalty Report.

 

3.6          Manner of Payment. All sums due under this Agreement shall be
payable in U.S. dollars by bank wire in immediately available funds to such bank
account(s) as Licensor shall designate in writing. All overdue amounts due to
Licensor hereunder shall bear interest at the rate equal to one and one half
percent (1.5%) per month or at the highest rate permitted by Applicable Law,
whichever is less.

 

3.7          Bartering Prohibited. Licensee and its Affiliates and
subcontractors shall not solicit or accept any bartered goods or services in
exchange for the sale or transfer of the Product.

 

3.8          Taxes and Withholding. Except with respect to the calculation of
Net Sales, all payments under this Agreement will be made without any deduction
or withholding for or on account of any tax, duties, levies, or other charges
unless such deduction or withholding is required by Applicable Law. If Licensee
is so required to deduct or withhold, Licensee will: (a) notify Licensor of such
requirement in writing; (b) pay to the relevant authorities the full amount
required to be deducted or withheld promptly upon the earlier of determining
that such deduction or withholding is required; and (c) forward to Licensor an
official receipt (or certified copy) or other documentation reasonably
acceptable to Licensor evidencing such payment to such authorities.

 

13

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY

CYNAPSUS THERAPEUTICS INC.

 

Portions herein identified by [**] have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934,
as amended. A complete copy of this document has been filed separately with the
Securities and Exchange Commission.

 

3.9          Accounting. All financial terms and standards defined or used in
this Agreement for sales or activities occurring in the Territory shall be
governed by and determined in accordance with GAAP or IFRS, as the case may be,
as required by the accounting standards organization in the jurisdiction of the
Licensee, including the calculation of Net Sales and royalties due Licensor
hereunder; provided that when the actual results become known relative to any
accrued amount, any difference between the actual results and the accrual is
reported and accounted for in the next payment due hereunder (subject to
customary processing periods). To the extent that the difference between such
accruals and the actual results has led to an underpayment, Licensee shall pay
Licensor the amount of such underpayment on the next date payment is due to
Licensor hereunder. To the extent that the difference between such accruals and
the actual results has led to an overpayment to Licensor, Licensee may set-off
such overpayments against subsequent payments to be made to Licensor;
additionally, if any overpayments remain upon the expiration or termination of
this Agreement, Licensor shall refund such overpayments to Licensee within
thirty (30) days of receiving an invoice for such overpayment together with
applicable supporting documentation.

 

3.10        Record Keeping; Audits. Licensee and its Affiliates shall keep books
and accounts of record in connection with Net Sales of the Product in sufficient
detail to permit accurate determination of all figures necessary for
verification of royalties to be paid hereunder. Licensee and its Affiliates
shall maintain such records for a period of at least three (3) years after the
end of the Calendar Quarter in which they were generated; provided, however,
that if any records are in dispute and Licensee has received written notice from
Licensor of the records which are in dispute, Licensee and its Affiliates shall
keep such records until the later of three (3) years or until such dispute is
resolved. No more than once every calendar year, upon reasonable advance written
notice to Licensee, Licensor will have the right to engage a nationally
recognized public accounting firm chosen by Licensor and reasonably acceptable
to Licensee (which accounting firm will not be the external auditor of Licensor,
will not have been hired or paid on a contingency basis and will have experience
auditing pharmaceutical companies) (a “CPA Firm”) to conduct an audit of such
books and records of Licensee to determine the correctness of the amount of
royalties paid to Licensor under the terms of this Agreement. The CPA Firm will
be given access to and will be permitted to examine such books and records of
Licensee as it will reasonably request, upon thirty (30) days’ prior written
notice having been given by Licensor, during regular business hours, for the
sole purpose of determining compliance with the Net Sales royalty provisions of
this Agreement. Prior to any such examination taking place, the CPA Firm will
enter into a confidentiality agreement reasonably acceptable to Licensee and
Licensor with respect to the Confidential Information to which they are given
access and will not contain in its report or otherwise disclose to Licensor or
any Third Party any information labeled by Licensee as being confidential
customer information regarding pricing or other competitively sensitive
proprietary information. Licensor and Licensee will be entitled to receive a
full written report of the CPA Firm with respect to its findings and Licensor
will provide, without condition or qualification, Licensee with a copy of the
report, or other summary of findings, prepared by such CPA Firm promptly
following Licensor’s receipt of same. In the event of any dispute between
Licensor and Licensee regarding the findings of any such inspection or audit,
the Parties will initially attempt in good faith to resolve the dispute amicably
between themselves, and if the Parties are unable to resolve such dispute within
thirty (30) days after delivery to both Parties of the CPA Firm’s report, each
Party will select an internationally recognized independent certified public
accounting firm (other than the CPA Firm), and the two firms chosen by the
Parties will choose a third internationally recognized independent certified
public accounting firm which will resolve the dispute, and such accounting
firm’s determination will be binding on both Parties absent manifest error by
such accounting firm. All costs and expenses of such auditor incurred in
connection with performing any such audit shall be paid by Licensor unless such
audit discloses an underpayment of at least five percent (5%), in which case
Licensee shall bear such costs and expenses.

 

14

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY

CYNAPSUS THERAPEUTICS INC.

 

Portions herein identified by [**] have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934,
as amended. A complete copy of this document has been filed separately with the
Securities and Exchange Commission.

 

3.11        Underpayments and Overpayments. If an audit conducted pursuant to
3.10 reveals that any additional royalty payments were due to Licensor under
this Agreement, then Licensee shall pay to Licensor such additional royalty
payments within thirty (30) days of the date Licensee receives written notice of
such underpayment from Licensor. If an audit conducted pursuant to Section 3.10
reveals that Licensor was paid royalties in excess of those royalties due to
Licensor under this Agreement, then Licensee shall, at its election, be entitled
to: (a) a refund of such amount within thirty (30) days of the date Licensor
receives written notice of such overpayment from Licensee; or (b) deduct such
amount from the next royalty payment due Licensor under this Agreement.

 

SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS

 

4.1          Representations, Warranties and Covenants of Each Party. Each Party
hereby represents and warrants as of the Effective Date to the other Party as
follows:

 

4.1.1           Corporate Existence, Power, and Authority. Such Party: (a) is
duly formed and in good standing under the laws of the jurisdiction of its
formation; (b) has the power and authority and the legal right to enter into
this Agreement and perform its obligations hereunder; and (c) has taken all
necessary action on its part required to authorize the execution and delivery of
this Agreement and the performance of its obligations hereunder.

 

4.1.2           Binding Agreement. This Agreement has been duly executed and
delivered on behalf of such Party and constitutes a legal, valid and binding
obligation of such Party and is enforceable against it in accordance with its
terms subject to the effects of bankruptcy, insolvency or other laws of general
application affecting the enforcement of creditor rights and judicial principles
affecting the availability of specific performance and general principles of
equity, whether enforceability is considered a proceeding at law or equity.

 

15

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY

CYNAPSUS THERAPEUTICS INC.

 

Portions herein identified by [**] have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934,
as amended. A complete copy of this document has been filed separately with the
Securities and Exchange Commission.

 

4.1.3           Compliance with Applicable Law. All necessary consents,
approvals and authorizations of all Regulatory Authorities and other Persons
required to be obtained by such Party in connection with the execution and
delivery of this Agreement and the performance of its obligations as of the
Effective Date hereunder have been obtained.

 

4.1.4           No Conflict with Applicable Law. The execution and delivery of
this Agreement, the performance of such Party’s obligations hereunder, and any
actions or omissions of such Party related to the activities contemplated
hereunder and the circumstances surrounding this Agreement: (a) do not and will
not conflict with or violate any Applicable Law or any provision of the articles
of incorporation, bylaws or other governing charter documents of such Party; and
(b) do not and will not conflict with, violate, or breach, or constitute a
default or require any consent under, any contractual obligation or court or
administrative order by which such Party is bound.

 

4.1.5           No Conflict with Agreement. Each Party agrees not to engage in
any action that is in violation or inconsistent with the terms and conditions of
this Agreement or that interferes with the consummation of the transactions
contemplated under this Agreement.

 

4.1.6           Bankruptcy; Insolvency. Neither Party is aware of any action or
petition, pending or otherwise, for bankruptcy or insolvency of such Party or
its Affiliates or subsidiaries in any state, country or other jurisdiction, and
it is not aware of any facts or circumstances that could result in such Party
becoming or being declared insolvent, bankrupt or otherwise incapable of meeting
its obligations under this Agreement as they become due in the ordinary course
of business.

 

4.2          Additional Licensor Representations, Warranties and Covenants.
Licensor represents, warrants and covenants to Licensee as follows:

 

4.2.1           Right to Grant License. Licensor and its Affiliates have the
right to grant the licenses granted to Licensee herein, and except in connection
with commercial lending arrangements, Licensor owns all right, title and
interest in and to, or has a license, sublicense or otherwise permission to use
and license, the Licensed Patents, as of the Effective Date, free and clear of
any liens, charges and encumbrances.

 

4.2.2           Third Party Agreements. Except in connection with commercial
lending arrangements, neither Licensor nor any of its Affiliates is a party to
or otherwise bound by any oral or written contract or agreement that will result
in any Third Party obtaining any interest in, or that would give to any Third
Party any right to assert any claim in or with respect to, any of Licensee’s
rights under this Agreement.

 

4.2.3           No Legal Action against Licensor. Licensor is not a party to,
nor to Licensor’s knowledge is Licensor threatened with, any legal or equitable
action, recall or withdrawal, or under active investigation by or before any
Governmental Authority, arbitrator, Regulatory Authority, which is reasonably
likely to adversely affect its ability to execute and deliver this Agreement or
fully and timely perform its covenants, duties and obligations set forth herein.

 

16

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY

CYNAPSUS THERAPEUTICS INC.

 

Portions herein identified by [**] have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934,
as amended. A complete copy of this document has been filed separately with the
Securities and Exchange Commission.

 

4.2.4           Patent Rights. To Licensor’s knowledge , the Licensed Patents
listed in Schedule 1.1B are valid and subsisting, in full force and effect, and
have not been canceled, expired, or abandoned. Schedule 1.1B may be amended to
correct inadvertent inaccuracies and/or omissions subsequent to execution of
this Agreement. The accuracy and completeness of Schedule 1.1B is based on
records of Licensor’s patent attorney’s docket system or as publically available
at certain databases on the internet. No review of actual files has been
conducted.

 

4.2.5           Licensed Patents. Following the Effective Date, upon notice from
Licensee, Licensor shall provide annually to Licensee an update on any patents
and published patent applications constituting Licensed Patents.

 

4.2.6           Compliance with Applicable Law. During the Term, Licensor shall
comply with and maintain in force all licenses, consents, permits and
authorizations necessary to perform its obligations under this Agreement.

 

4.3          Additional Licensee Representations, Warranties and Covenants.
Licensee further represents, warrants and covenants to Licensor that:

 

4.3.1           Third Party Agreements. As of the Effective Date, neither
Licensee nor any of its Affiliates is a party to or otherwise bound by any oral
or written contract or agreement that will result in any Third Party obtaining
any interest in, or that would give to any Third Party any right to assert any
claim in or with respect to, any of Licensor’s rights under this Agreement.

 

4.3.2           No Legal Action Against Licensee. As of the Effective Date,
Licensee is not a party to, nor to Licensee’s knowledge is Licensee threatened
with, any legal or equitable action or under active investigation by or before
any court, arbitrator, administrative agency or other tribunal which is
reasonably likely to adversely affect its ability to execute and deliver this
Agreement or fully and timely perform its covenants, duties and obligations set
forth herein.

 

4.3.3           Compliance with Applicable Law. During the Term, Licensee shall
comply with and maintain in force all licenses, consents, permits and
authorizations necessary to perform its obligations under this Agreement.

 

4.3.4           Responsibilities. Licensee shall have sole responsibility for
the Development and Commercialization of the Product and all regulatory
activities associated with the Product.

 

17

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY

CYNAPSUS THERAPEUTICS INC.

 

Portions herein identified by [**] have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934,
as amended. A complete copy of this document has been filed separately with the
Securities and Exchange Commission.

 

4.4          Disclaimer. EACH PARTY HEREBY DISCLAIMS ANY AND ALL REPRESENTATIONS
AND WARRANTIES IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREIN NOT
EXPRESSLY MADE IN THIS AGREEMENT TO THE MAXIMUM EXTENT PERMITTED UNDER
APPLICABLE LAWS, INCLUDING WITH RESPECT TO THE PRODUCT OR THE LICENSED PATENTS
LICENSED OR GRANTED UNDER THIS AGREEMENT, INCLUDING ANY WARRANTY OF
NON-INFRINGEMENT, QUALITY, PERFORMANCE, MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE,
COURSE OF DEALING OR USAGE OR TRADE. FOR THE AVOIDANCE OF DOUBT, NOTHING
CONTAINED IN THIS SECTION 4.4 SHALL OPERATE TO LIMIT OR INVALIDATE ANY EXPRESS
WARRANTY CONTAINED HEREIN OR ANY IMPLIED WARRANTY OF GOOD FAITH AND/OR FAIR
DEALING.

 

SECTION 5. CONFIDENTIAL INFORMATION

 

5.1          General. Pursuant to the terms of this Agreement, each of Licensor
and Licensee (in such capacity, the “Disclosing Party”) has disclosed and will
be disclosing to the other Party, and to the Affiliates, officers, directors,
employees, agents and/or representatives of each (in such capacity, the
“Receiving Party”) certain secret, confidential or proprietary data, and related
information, including, without limitation, technical, scientific, business and
other information, data, materials and the like relating to drug applications,
patent applications, products, processes, formulations, manufacturing
technology, samples, operating methods and procedures, marketing, manufacturing,
distribution and sales methods and systems, sales figures, pricing policies and
price lists and other business information (“Confidential Information”). The
Receiving Party shall make no use of any Confidential Information of the
Disclosing Party except in the exercise of its rights and the performance of its
obligations set forth in this Agreement. The Receiving Party: (a) shall keep and
hold as confidential, and shall cause its officers, directors, employees, agents
and representatives to keep and hold as confidential, all Confidential
Information of the Disclosing Party; and (b) shall not disclose, and shall cause
its Affiliates, officers, directors, employees, agents and representatives not
to disclose, any Confidential Information of the Disclosing Party. Confidential
Information disclosed by the Disclosing Party shall remain the sole and absolute
property of the Disclosing Party, subject to the rights granted in this
Agreement or Applicable Law.

 

5.2          Prior Confidentiality Agreement. As of the Effective Date, the
terms of this Section 5 shall supersede any prior non-disclosure, secrecy or
confidentiality agreement between the Parties (or their Affiliates) relating to
the subject of this Agreement, including the Confidentiality Agreement, which is
hereby terminated. Any information disclosed pursuant to any such prior
agreement shall be deemed Confidential Information for purposes of this
Agreement.

 

18

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY

CYNAPSUS THERAPEUTICS INC.

 

Portions herein identified by [**] have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934,
as amended. A complete copy of this document has been filed separately with the
Securities and Exchange Commission.

 

5.3          Exceptions. The above restrictions set forth in Section 5.1 on the
use and disclosure of Confidential Information shall not apply to any
information which: (a) is already known to the Receiving Party at the time of
disclosure by the Disclosing Party, as demonstrated by competent proof (other
than as a result of prior disclosure under any agreement between the Parties
with respect to confidentiality); (b) is or becomes generally known or available
to the public other than through any act or omission of the Receiving Party in
breach of this Agreement (or any other agreement between the Parties with
respect to confidentiality); (c) is acquired by the Receiving Party from a Third
Party who is not directly or indirectly under an obligation of confidentiality
to the Disclosing Party with respect to same, or (d) is developed independently
by the Receiving Party without the use, direct or indirect, of the Disclosing
Party’s Confidential Information. In addition, nothing in this Section 5 shall
be interpreted to limit the ability of either Party to disclose its own
Confidential Information to any other Person on such terms and subject to such
conditions as it deems advisable or appropriate.

 

5.4          Permitted Disclosures. It shall not be a breach of Section 5.1 if a
Receiving Party discloses Confidential Information of a Disclosing Party:
(a) pursuant to Applicable Law, including securities laws applicable to a public
company, to any Regulatory Authority or the listing standards or agreements of
any national or international securities exchange or The NASDAQ Stock Market or
other Governmental Authority; or (b) in a judicial, administrative or
arbitration proceeding to enforce such Party’s rights under this Agreement;
provided, however, that the Receiving Party (i) provides the Disclosing Party
with as much advance written notice as possible of the required disclosure,
(ii) reasonably cooperates with the Disclosing Party in any attempt to prevent,
limit or seek confidential treatment for the disclosure and (iii) discloses only
the minimum amount of Confidential Information necessary for compliance.

 

5.5          Confidential Terms. Each Party acknowledges and agrees that the
terms and conditions of this Agreement shall be considered Confidential
Information of each Party and shall be treated accordingly. Notwithstanding the
foregoing, each Party acknowledges and agrees that the other may be required to
disclose some or all of the information included in this Agreement in order to
comply with its obligations under securities laws or the listing standards or
agreements of any national or international securities exchange or The NASDAQ
Stock Market, and hereby consents to such disclosure to the extent deemed
advisable or appropriate by its respective counsel (but only after consulting
with the other to the extent practicable). The Parties may also disclose the
existence of this Agreement and terms thereof to their directors, investors,
officers, employees, attorneys, accountants and other advisers on a need to know
basis and may, upon obtaining a written confidentiality agreement, further
disclose the existence and terms of this Agreement to other Third Parties to
whom it may be relevant in connection with financings, acquisitions and similar
transactions to the extent such Third Parties are under confidentiality
obligations at least as restrictive as those set forth herein.

 

19

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY

CYNAPSUS THERAPEUTICS INC.

 

Portions herein identified by [**] have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934,
as amended. A complete copy of this document has been filed separately with the
Securities and Exchange Commission.

 

SECTION 6. INDEMNIFICATION; LIMITATION OF LIABILITY

 

6.1          Indemnification by Licensee. Licensee shall defend, indemnify and
hold harmless Licensor and its Affiliates and each of their respective officers,
directors, shareholders, employees, successors and assigns (“Licensor
Indemnitees”) from and against all claims, allegations, suits, actions or
proceedings asserted against any Licensor Indemnitee by any Third Parties,
whether governmental or private (“Third Party Claims”), and all associated
Losses, to the extent arising out of or resulting from: (a) the performance or
failure to perform by Licensee (or any of its Affiliates, sublicensees,
subcontractors or agents) any of its obligations under this Agreement; (b) a
material breach by Licensee or any of its Affiliates, sublicensees,
subcontractors or agents of any of Licensee’s representations, warranties,
covenants or agreements under this Agreement; (c) the Development or
Commercialization of the Product (including, without limitation any product
liability claims relating thereto); or (d) violation of Applicable Law by any
Licensee Indemnitee; provided, however, that in all cases referred to in this
Section 6.1, Licensee shall not be liable to indemnify Licensor for any Losses
of Licensor to the extent that such Losses of Licensor were caused by (i) the
gross negligence or willful misconduct or intentional wrongdoing of Licensor or
any of its Affiliates, subcontractors or agents, (ii) any breach by Licensor or
any of its Affiliates, subcontractors or agents of Licensor’s representations,
warranties, covenants or agreements under this Agreement, or (iii) matters for
which Licensor has an obligation to indemnify any Licensee Indemnitee pursuant
to Section 6.2.

 

6.2          Indemnification by Licensor. Licensor shall defend, indemnify and
hold harmless Licensee and its Affiliates and each of their respective officers,
directors, shareholders, employees, successors and assigns (“Licensee
Indemnitees”) from and against all Third Party Claims, and all associated
Losses, to the extent arising out of or resulting from: (a) the performance or
failure to perform by Licensor (or any its Affiliates, subcontractors or agents)
of any of its obligations under this Agreement; (b) a material breach by
Licensor or any of its Affiliates, subcontractors or agents of any of its
representations, warranties, covenants or agreements under this Agreement; or
(c) violation of Applicable Law by any Licensor Indemnitee; provided, however,
that in all cases referred to in this Section 6.2, Licensor shall not be liable
to indemnify any Licensee Indemnitee for any Losses of such Licensee Indemnitee
to the extent that such Losses were caused by (i) the gross negligence or
willful misconduct or intentional wrongdoing of Licensee or any of its
Affiliates, sublicensees, subcontractors or agents, (ii) any breach by Licensee
or any of its Affiliates, sublicensees, subcontractors or agents of Licensee’s
representations, warranties, covenants or agreements under this Agreement, or
(iii) matters for which Licensee has an obligation to indemnify any Licensor
Indemnitee pursuant to Section 6.1; or (iv) with respect to a claim under
Section 8.3 by a Third Party, the API.

 

20

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY

CYNAPSUS THERAPEUTICS INC.

 

Portions herein identified by [**] have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934,
as amended. A complete copy of this document has been filed separately with the
Securities and Exchange Commission.

 

6.3          Procedure for Indemnification.

 

6.3.1           Notice. In the case of a Third Party Claim (as contemplated by
Sections 6.1 or 6.2) other than a Patent Infringement Claim (which is subject to
the procedures set forth in Section 8.3) made by any Person who is not a Party
of this Agreement (or an Affiliate thereof) as to which a Party (the
“Indemnitor”) may be obligated to provide indemnification pursuant to this
Agreement, such Party seeking indemnification hereunder (“Indemnitee”) will
notify the Indemnitor in writing of the Third Party Claim (and specifying in
reasonable detail the factual basis for the Third Party Claim and to the extent
known, the amount of the Third Party Claim) reasonably promptly after becoming
aware of such Third Party Claim; provided, however, that failure to give such
notification will not affect the indemnification provided hereunder except to
the extent the Indemnitor shall have been actually materially prejudiced as a
result of such failure.

 

6.3.2           Defense of Claim. If a Third Party Claim is made against an
Indemnitee, the Indemnitor will be entitled, within thirty (30) days after
receipt of written notice from the Indemnitee of the commencement or assertion
of any such Third Party Claim, to assume the defense thereof by providing
written notice to Indemnitee of its intention to assume the defense of such
Third Party Claims within such thirty (30) day period (at the expense of the
Indemnitor) with counsel selected by the Indemnitor and reasonably satisfactory
to the Indemnitee for so long as the Indemnitor is conducting a good faith and
diligent defense. Should the Indemnitor so elect to assume the defense of a
Third Party Claim, the Indemnitor will not be liable to the Indemnitee for any
legal or other expenses subsequently incurred by the Indemnitee in connection
with the defense thereof; provided, however, that if under applicable standards
of professional conduct a conflict of interest exists between the Indemnitor and
the Indemnitee in respect of such claim, such Indemnitee shall have the right to
employ separate counsel to represent such Indemnitee with respect to the matters
as to which a conflict of interest exists and in that event the reasonable fees
and expenses of such separate counsel shall be paid by such Indemnitor;
provided, further, that the Indemnitor shall only be responsible for the
reasonable fees and expenses of one separate counsel for such Indemnitee. If the
Indemnitor assumes the defense of any Third Party Claim, the Indemnitee shall
have the right to participate in the defense thereof and to employ counsel, at
its own expense, separate from the counsel employed by the Indemnitor. If the
Indemnitor assumes the defense of any Third Party Claim, the Indemnitor will
promptly supply to the Indemnitee copies of all material correspondence and
documents relating to or in connection with such Third Party Claim and keep the
Indemnitee reasonably informed of developments relating to or in connection with
such Third Party Claim, as may be reasonably requested by the Indemnitee
(including, without limitation, providing to the Indemnitee on reasonable
request updates and summaries as to the status thereof). If the Indemnitor
chooses to defend a Third Party Claim, all Indemnitees shall reasonably
cooperate with the Indemnitor in the defense thereof (such cooperation to be at
the expense, including reasonable legal fees and expenses, of the Indemnitor).
If the Indemnitor does not elect to assume control by written acknowledgement of
the defense of any Third Party Claim within the thirty (30) day period set forth
above, or if such good faith and diligent defense is not being or ceases to be
conducted by the Indemnitor, the Indemnitee shall have the right, at the expense
of the Indemnitor, after five (5) Business Days’ written notice to the
Indemnitor of its intent to do so, to undertake the defense of the Third Party
Claim for the account of the Indemnitor (with counsel selected by the
Indemnitee), and to compromise or settle such Third Party Claim, exercising
reasonable business judgment.

 

21

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY

CYNAPSUS THERAPEUTICS INC.

 

Portions herein identified by [**] have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934,
as amended. A complete copy of this document has been filed separately with the
Securities and Exchange Commission.

 

6.3.3           Settlement of Claims. In no event may the Indemnitor compromise
or settle any Third Party Claim in a manner which admits fault or negligence on
the part of the Indemnitee without the prior written consent of the Indemnitee.
Without limiting the foregoing, if the Indemnitor acknowledges in writing its
obligation to indemnify the Indemnitee for a Third Party Claim, the Indemnitee
will agree to any settlement, compromise or discharge of such Third Party Claim
that the Indemnitor may recommend that by its terms obligates the Indemnitor to
pay the full amount of Losses (whether through settlement or otherwise) in
connection with such Third Party Claim and unconditionally and irrevocably
releases the Indemnitee completely from all Losses in connection with such Third
Party Claim; provided, however, that, without the Indemnitee’s prior written
consent, the Indemnitor shall not consent to any settlement, compromise or
discharge (including, without limitation, the consent to entry of any judgment),
that provides for injunctive or other nonmonetary relief affecting the
Indemnitee.

 

6.3.4           Assumption of Defense. Notwithstanding anything to the contrary
contained herein, an Indemnitee shall be entitled to assume the defense of any
Third Party Claim, at its own expense, with respect to the Indemnitee upon
written notice to the Indemnitor pursuant to this Section 6.3.4, in which case,
the Indemnitor shall be relieved of liability under Section 6.1 or 6.2, as
applicable, solely for such Third Party Claim and related Losses.

 

6.4          Insurance. During the Term and for a period of five (5) years after
the termination or expiration of this Agreement, each Party shall obtain and/or
maintain, respectively, at its sole cost and expense, comprehensive general
liability insurance, products liability insurance and clinical trials insurance
(including any self-insured arrangements), each in amounts, respectively, which
are reasonable and customary in the U.S. pharmaceutical industry for companies
of comparable size and activities at the respective place of business of each
Party but in no event less than [**] Dollars ($[**]) per occurrence and [**]
Dollars ($[**]) annual aggregate. Each Party shall also maintain any mandatory
insurance, including but not limited to workers compensation coverage, in
accordance with all Applicable Law. All insurance policies reflecting such
insurance shall be written on a “per occurrence” or “claims made” basis with an
insurance company rated at least A-3 by Best’s rating guide. Licensor and its
designees who have an insurable interest shall be added as an additional insured
on the Licensee’s product liability insurance policy. Each such insurance policy
shall provide for at least thirty (30) calendar days prior written notice to
Licensor of the cancellation or any substantial modification of the terms of
coverage. Such product liability insurance (or self-insured arrangements) shall
insure against all liability, including without limitation personal injury,
physical injury, or property damage arising out of the manufacture, sale,
distribution, or marketing of the Product. Each Party also agrees to waive, and
will require its insurers to waive, all rights of subrogation against the other
Party, and its directors, officers, employees, and agents on all the foregoing
coverages. Each Party shall provide written proof of the existence of such
insurance to the other Party upon written request.

 

22

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY

CYNAPSUS THERAPEUTICS INC.

 

Portions herein identified by [**] have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934,
as amended. A complete copy of this document has been filed separately with the
Securities and Exchange Commission.

 

6.5          Limitation of Liability. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER OR ANY OF ITS
AFFILIATES FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, SPECIAL, PUNITIVE OR
EXEMPLARY DAMAGES (INCLUDING, WITHOUT LIMITATION, LOST PROFITS, BUSINESS OR
GOODWILL) SUFFERED OR INCURRED BY SUCH OTHER PARTY OR ITS AFFILIATES IN
CONNECTION WITH THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREIN OR A BREACH
OR ALLEGED BREACH OF THIS AGREEMENT. THE FOREGOING SENTENCE SHALL NOT (A) APPLY
IN CASES OF A PARTY’S FRAUD, GROSS NEGLIGENCE OR INTENTIONAL MISCONDUCT, (B) NOT
LIMIT THE OBLIGATIONS OF EITHER PARTY TO INDEMNIFY THE OTHER PARTY FROM AND
AGAINST THIRD PARTY CLAIMS UNDER THIS SECTION 6.5, OR (C) LIMIT THE DAMAGES
AVAILABLE TO A PARTY FOR THE OTHER PARTY’S BREACH OF ITS OBLIGATIONS UNDER
SECTION 5.

 

SECTION 7. TERM AND TERMINATION

 

7.1          Term. This Agreement shall commence as of the Effective Date and,
shall continue until terminated in accordance with Section 7.2 (the “Term”).

 

7.2          Termination. In addition to any other provision of this Agreement
expressly providing for termination of this Agreement:

 

7.2.1           Licensor may, in its sole discretion, terminate this Agreement
immediately upon written notice if:

 

(a) Licensee fails to make any payments required under this Agreement when due
and Licensee does not make the required payments within thirty (30) days of
receiving notice from Licensor;

 

(b) if Licensee fails to commercialize the Product in at least one Major Market
by January 1, 2020;

 

(c) if Licensee pays to Licensor not more than the minimum royalty payment due
to Licensor for any thirty (30) consecutive months, from the date of first
commercial sale, in accordance with Section 3.4;

 

(d) if Licensee fails a primary endpoint of its current Phase III Studies
(CTH-300 and CTH-301) and either (i) fails to start another Phase III study
within six (6) months after such failed primary endpoint or (ii) fails a primary
endpoint of any subsequent Phase III Study;

 

23

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY

CYNAPSUS THERAPEUTICS INC.

 

Portions herein identified by [**] have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934,
as amended. A complete copy of this document has been filed separately with the
Securities and Exchange Commission.

 

(e) if Section 8.4 has been violated; or

 

(f) no further royalty payments are due and payable to Licensor pursuant to
Section 3.3.

 

7.2.2           Licensee may, in its sole discretion, terminate this Agreement:

 

(a) if Licensor fails to use commercially reasonable efforts to enforce or
conduct an action to defend the Licensed Patents on behalf of Licensee in
response to a Patent Infringement Claim within ninety (90) days of receipt of
written notification from Licensee of its desire that Licensor pursue such
action;

 

(b) following written notice that the Licensor is in material breach of the
Agreement, if the Licensor fails to remedy same within ninety (90) days of
receipt of the written notice describing the breach and requiring it to be so
remedied;

 

(c) at any time after June 30, 2017, but prior to Commercialization of the
initial Product, upon ninety (90) days prior written notice to Licensor, if
Licensee has abandoned further Development of the Product in all jurisdictions
and has publicly announced abandonment of the Product; or

 

(d) at any time after December 31, 2024, the Licensee may terminate this
Agreement for any reason upon one hundred and eighty (180) days prior written
notice to Licensor,

 

7.2.3           At any time during the Term of this Agreement, if Licensee can
establish that a Material Decline (as defined in Section 3.3.3) has occurred in
a jurisdiction or jurisdictions in the Territory as a result of the Licensor
licensing to a Third Party any Licensed Patents to Develop or Commercialize the
API either alone or in combination with another active agent, for any human use,
solely with respect to such jurisdiction or jurisdictions in the Territory, the
Licensee may terminate this Agreement with respect to the jurisdiction or
jurisdictions in the Territory which have suffered a Material Decline, upon
thirty (30) days prior written notice to Licensor.

 

7.2.4           Either Party may terminate this Agreement: (a) immediately upon
written notice upon the occurrence of a Bankruptcy Event with respect to the
other Party; or (b) if the other Party commits any material misrepresentation or
breach of any of its covenants, obligations, representations or warranties under
this Agreement to which such action to terminate applies and, in the case of a
breach which is capable of remedy, such Party fails to remedy the same within
ninety (90) days after receipt of a written notice describing the breach and
requiring it to be so remedied.

 

24

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY

CYNAPSUS THERAPEUTICS INC.

 

Portions herein identified by [**] have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934,
as amended. A complete copy of this document has been filed separately with the
Securities and Exchange Commission.

 

7.2.5           This Agreement may be terminated by the non-breaching Party upon
written notice to the other Party, if the other Party has violated the
exclusivity provisions set forth in its obligations under Section 2 or the
confidentiality provisions set forth in Section 5 and fails to remedy same
within thirty (30) days of receipt of a written notice describing the breach and
requiring it to be so remedied.

 

7.3          No Waiver. The right of Licensee or Licensor to terminate this
Agreement, as herein above provided, shall not be affected in any way by
Licensee’s or Licensor’s respective waiver or failure to take action with
respect to any prior default or breach.

 

7.4          Effects of Termination.

 

7.4.1           Effect of Termination Generally. On the expiration or earlier
termination of this Agreement for any reason, except as otherwise expressly
provided herein, all rights and obligations of each Party hereunder shall cease.

 

7.4.2           Milestone Payments; Disposition and Transfer of Inventory upon
Termination; Royalties Due Thereon Not Affected By Termination. Subject to
Section 7.4.3, on the termination of this Agreement: (a) Licensee shall pay to
Licensor all milestones as set forth in Section 3.1.1, to the extent not already
paid to Licensor; (b) all unpaid royalty payments payable to Licensor pursuant
to Section 3.3 for Product sold as of the Effective Date of termination shall
remain due and payable as scheduled; and (c) Licensee shall pay to Licensor a
royalty, in the same amount and calculated in accordance with the terms set
forth in Section 3.3 and subject to all of the provisions of Section 3.4 through
Section 3.11 inclusive, on each sale of remaining inventory of Product by
Licensee (or any Affiliate, successor, sublicensee, subcontractor or agent of
Licensee or sublicensee) when and as such Product is sold.

 

7.4.3           Milestone Payments; Disposition and Transfer of Inventory upon
Termination; Royalties Due Thereon Affected By Termination.         On the
termination of this Agreement by Licensor pursuant to Section 7.2.1(d) or
Licensee pursuant to Section 7.2.2(a) to Section 7.2.2(d), Licensee shall have
no further obligation to pay to Licensor any milestone payments as set forth in
Section 3.1, to the extent not already paid or due to Licensor.

 

7.4.4           Accrued Rights. Termination, relinquishment or expiration of
this Agreement for any reason shall be without prejudice to any right which
shall have accrued to the benefit of either Party prior to such termination,
relinquishment or expiration including damages arising from any breach under
this Agreement. Termination, relinquishment or expiration of this Agreement
shall not relieve either Party from any obligation which is expressly or by
implication intended to survive such termination, relinquishment or expiration
of this Agreement and shall not affect or prejudice any provision of this
Agreement which is expressly or by implication provided to come into effect on,
or continue in effect after, such termination, relinquishment or expiration.
Remedies for breaches under this Agreement shall also survive any termination,
relinquishment or expiration of this Agreement.

 

25

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY

CYNAPSUS THERAPEUTICS INC.

 

Portions herein identified by [**] have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934,
as amended. A complete copy of this document has been filed separately with the
Securities and Exchange Commission.

 

7.4.5           Survival. The following Sections of this Agreement, as well as
any other provisions in this Agreement which specifically state they will
survive termination or expiration of this Agreement, shall survive termination
of this Agreement for any reason: Section 1, Section 2 (provided that the
license granted in Section 2.1 shall be non-exclusive and all such sections
shall survive for the sole purpose of selling out remaining inventory of
Product), Section 3.1 and Section 3.2 (with respect to earned and unpaid
milestone payments), Section 3.3 and Section 3.4 (with respect to earned and
unpaid royalty payments), Sections 3.5 through Section 3.11 inclusive (with
respect to milestone and royalty payments due prior to and earned and unpaid
accrued milestone and royalty payments owed after such termination or
expiration), Sections 4.4, 5, 6, 7.3, 7.4, 8 (with respect to pending claims
thereunder), and Section 9.

 

7.4.6           Return of Confidential Information. Within thirty (30) days of
any expiration or termination of this Agreement: (a) Licensee shall deliver to
Licensor, upon written request, all Confidential Information of Licensor, except
for any documents or records that Licensee is required to retain by Applicable
Law; and (b) Licensor shall cease to use and shall deliver to Licensee, upon
written request, all Confidential Information of Licensee except for any
documents or records that Licensor is required to retain by Applicable Law.

 

SECTION 8. INTELLECTUAL PROPERTY

 

8.1          Patent Prosecution and Maintenance.

 

8.1.1           Licensor shall be responsible for the preparation, filing,
prosecution and maintenance of the Licensed Patents. The cost of such
preparation, filing, prosecution and maintenance of the Licensed Patents shall
be borne by Licensor.

 

8.1.2           Licensee shall have the option, but not the obligation, of
leading the preparation, filing, prosecution and maintenance of any and all
patents or patent applications which claim the API or its use which, if granted
in the United States, would satisfy the requirements for listing in the Orange
Book for the Product Developed or Commercialized by the Licensee under this
Agreement (“Product Patents”). The Parties will work together to prosecute such
Product Patents. The cost of such preparation, filing, prosecution and
maintenance of any such Product Patents shall be borne by Licensee.

 

26

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY

CYNAPSUS THERAPEUTICS INC.

 

Portions herein identified by [**] have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934,
as amended. A complete copy of this document has been filed separately with the
Securities and Exchange Commission.

 

8.1.3           In the event that Licensor desires to abandon or cease
prosecution or maintenance of any Licensor Patent in any country in the
Territory, Licensor shall provide reasonable prior written notice to Licensee of
such intention to abandon (which notice shall, to the extent possible, be given
no later than sixty (60) days prior to the next deadline for any action that
must be taken with respect to any such Licensor Patent in the relevant patent
office). In such case, upon Licensee’s written election provided no later than
thirty (30) days after such notice from Licensor, Licensee shall have the right
to assume prosecution and maintenance of such Licensor Patent at Licensee’s
expense. If Licensee does not provide such election within thirty (30) days
after such notice from Licensor, Licensor may, in its sole discretion, continue
prosecution and maintenance of such Licensor Patent or discontinue prosecution
and maintenance of such Licensor Patent.

 

8.1.4           Cooperation of the Parties. The Parties shall cooperate at the
requesting Party’s expense, with respect to the preparation, filing, prosecution
and maintenance of any Licensed Patents and Product Patents and in the obtaining
and maintenance of any extensions, supplementary protection certificates and the
like with respect to any Licensor Patents and Product Patents. Such cooperation
includes promptly informing the other Party of any matters coming to such
Party’s attention that may affect the preparation, filing, prosecution or
maintenance of any such patent applications.

 

8.2          Infringement by Third Parties.

 

8.2.1           Each Party shall promptly notify the other Party in writing of
any alleged or threatened infringement of any Licensed Patent in the Field or
Product Patent of which it becomes aware (a “Competitive Infringement”). In any
such instance Licensor shall have the sole right, at its option, to bring such
alleged or threatened Competitive Infringement to an end and Licensee shall
provide reasonable assistance to Licensor in connection therewith, at Licensee’s
cost and expense (the costs and expenses of the Licensor in connection
therewith, including the investigation and analysis thereof, to be reimbursed to
Licensor by Licensee on an as-incurred basis). Licensee shall be entitled to be
represented by independent counsel of its own choice and at its own expense.
Licensor shall keep Licensee and/or its designated legal counsel reasonably
informed as to the progress in connection with the foregoing Competitive
Infringement. If Licensor fails to initiate a suit or take other appropriate
action that it has the right to initiate or take pursuant to this Section 8.2
with respect to a Competitive Infringement in the Territory within ninety (90)
days after becoming aware of the basis for such suit or action, then Licensee
may, in its discretion, provide Licensor with written notice requiring Licensor
to initiate a suit or take other appropriate action with respect to such
Competitive Infringement in the Territory, such suit or other appropriation
action to be taken at the sole cost and expense of Licensee. Notwithstanding
anything to the contrary contained in this Agreement, Licensor shall have the
unilateral right to enter into any settlement without the prior written consent
of Licensee with respect to any Competitive Infringement suit or action to the
extent such settlement would not adversely affect the Licensee’s rights or
benefits with respect to the Development or Commercialization of the Product, in
which case, Licensee’s prior written consent shall be required, which consent
shall not be unreasonably withheld.

 

27

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY

CYNAPSUS THERAPEUTICS INC.

 

Portions herein identified by [**] have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934,
as amended. A complete copy of this document has been filed separately with the
Securities and Exchange Commission.

 

8.2.2           If Licensor recovers monetary damages in any enforcement action
pursuant to Section 8.2.1, such recovery shall be allocated (i) first to the
reimbursement of any unreimbursed expenses incurred by Licensor in such
enforcement action, (ii) second to any expenses incurred by Licensee in such
enforcement action, and (iii) any remaining amounts shall be allocated to
Licensor and Licensee in such proportion so as to compensate each Party for
their respective provable losses resulting from the Competitive Infringement.

 

8.3          Infringement of Third Party Rights. Each Party shall promptly
notify the other Party in writing if it becomes aware of any allegation by a
Third Party that the activity of either of the Parties or their Affiliates or
sublicensee or subcontractor in connection with the Development or
Commercialization of any Product infringes the issued patent rights (or would
infringe the claims, if issued, of a pending patent application) of any Third
Party in the Territory (“Patent Infringement Claims”). The Party, directly or
through an Affiliates or sublicensee or subcontractor, alleged to have infringed
the patent rights of a Third Party shall have the sole right to defend such
alleged infringement. In the event of a litigation in accordance with this
Section 8.3, the Party not controlling such litigation shall use its reasonable
efforts to cooperate at the controlling Party’s cost and expense (the costs and
expenses of the non-controlling Party in connection with such litigation,
including the investigation and analysis thereof, to be reimbursed to the
non-controlling Party on an as-incurred basis), including: (a) if required for
the purposes of any cross claim or counterclaim, the furnishing of a power of
attorney to bring suit in the other Party’s name and/or being named as a party
in such suit and as necessary, becoming a client of the other Party’s legal
counsel and agreeing that such legal counsel will act solely under the
instruction of the other Party and will sign a waiver with such legal counsel to
that effect and the Party bringing the action shall keep the other Party and/or
their designated legal counsel reasonably informed as to the progress of such
action; and (b) providing reasonable assistance to the controlling Party in
connection therewith (including in connection with investigation and analysis
thereof by the non-controlling Party’s legal counsel and advisors). Neither
Party shall enter into any settlement of any actual or threatened litigation
under this Section 8.3 where the Product is directly named, without the prior
written consent of the other Party, such consent not to be unreasonably
withheld, conditioned or delayed; provided that the Party whose actions have
allegedly infringed the issued patents rights of a Third Party shall have the
unilateral right to enter into any such settlement without the prior written
consent of the other Party to the extent such litigation or threatened
litigation involves in any manner such Party’s owned Intellectual Property and
such settlement would not be reasonably expected to adversely affect the other
Party’s rights or benefits with respect to such Product or its Commercialization
of such Product, in which case, the other Party’s prior written consent shall be
required which consent shall not be unreasonably withheld.

 

28

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY

CYNAPSUS THERAPEUTICS INC.

 

Portions herein identified by [**] have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934,
as amended. A complete copy of this document has been filed separately with the
Securities and Exchange Commission.

 

8.4          No Challenges. During the Term: (a) neither Licensee nor any
Affiliate thereof shall publicly challenge the validity or enforceability of the
Licensed Patents to the extent directly related to the Agreement; and (b)
Licensee shall ensure that no sublicensee or subcontractor of Licensee or any
Affiliate thereof, or any other Third Parties involved in the Development or
Commercialization of the Product (including without limitation, contract
manufacturers) shall publicly challenge the validity or enforceability of the
Licensed Patents, to the extent directly related to the Agreement, such that, in
the case of clause (b), if such challenge was successful, any obligation owed to
Licensor under this Agreement would be avoided.

 

SECTION 9. MISCELLANEOUS

 

9.1          Independent Contractor. Neither Licensor nor Licensee, together in
each case with their respective employees and representatives, are under any
circumstances to be considered as employees, partners, joint venturers, agents
or representatives of the other by virtue of this Agreement, and neither shall
have the authority or power to bind the other or contract in the other’s name.

 

9.2          Registration and Filing of this Agreement. To the extent, if any,
that either Party concludes in good faith that it or the other Party is required
to file or register this Agreement or a notification thereof with any Regulatory
Authority including, without limitation, the U.S. Securities and Exchange
Commission or the U.S. Federal Trade Commission, in accordance with Applicable
Law, such Party shall inform the other Party thereof. Should both Parties
jointly agree in writing that either of them is required to submit or obtain any
such filing, registration or notification, they shall cooperate, each at its own
expense, in such filing, registration or notification and shall execute all
documents reasonably required in connection therewith. In such filing,
registration or notification, the Parties shall request confidential treatment
of sensitive provisions of this Agreement, to the extent permitted by Applicable
Law. The Parties shall promptly inform each other as to the activities or
inquiries of any such Regulatory Authority relating to this Agreement, and shall
reasonably cooperate to respond to any request for further information therefrom
on a timely basis.

 

9.3          Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be deemed given when so delivered in
person, by overnight courier, by facsimile transmission (with receipt confirmed
by automatic transmission report) or two (2) Business Days after being sent by
registered or certified mail (postage prepaid, return receipt requested), as
follows:

 

29

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY

CYNAPSUS THERAPEUTICS INC.

 

Portions herein identified by [**] have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934,
as amended. A complete copy of this document has been filed separately with the
Securities and Exchange Commission.

 

If to Licensee: Cynapsus Therapeutics Inc.   828 Richmond Street West   Toronto,
Ontario   Canada M6J 1C9   Attention:  Chief Executive Officer   Telephone:
416-703-2449   Facsimile:  416-703-8752     With a copy to: Borden Ladner
Gervais LLP   40 King Street West, Suite 4200   Toronto, Ontario M5H 3Y4  
Attention:  Jeffrey Graham   Telephone:  416-367-6174   Facsimile:  416-361-7377
    If to Licensor: MonoSol Rx, LLC   30 Technology Drive   Warren, New Jersey
07059   Attn:  Vice President, Business Development   Facsimile
No.:  908.561.1209     With a copy to: Day Pitney LLP   One Jefferson Road  
Parsippany, New Jersey 07054   Attention:  Thomas A. Zalewski, Esq.   Facsimile
No.:  973.966.1015

 

Either Party may by notice given in accordance with this Section 9.3 to the
other Party designate another address or person for receipt of notices
hereunder.

 

9.4          Equitable Remedies. Each Party specifically recognizes that any
breach by it of Section 2 or Section 5 may cause irreparable injury to the other
Party and that actual damages may be difficult to ascertain, and in any event,
may be inadequate. Accordingly (and without limiting the availability of legal
or equitable, including injunctive, remedies under any other provisions of this
Agreement), each Party agrees that in the event of any such breach, the other
Party shall be entitled to seek injunctive relief and such other legal and
equitable remedies as may be available.

 

30

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY

CYNAPSUS THERAPEUTICS INC.

 

Portions herein identified by [**] have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934,
as amended. A complete copy of this document has been filed separately with the
Securities and Exchange Commission.

 

9.5          Binding Effect; No Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties and their respective successors and
permitted assigns. Neither Licensor nor Licensee may assign any of its rights or
delegate any of its liabilities or obligations hereunder, whether by operation
of law, or otherwise, without the prior written consent of the other Party,
provided, however, without the prior written consent of the other Party, either
Party may assign this Agreement in connection with a Business Combination,
unless the assignee of the Licensee is engaged, to a material extent, in
manufacturing water-soluble polymer films, compounds, and solutions, in which
case the prior written consent of the Licensor would be required.
Notwithstanding the above, either Party may assign any of its rights to payments
of royalties and any other amounts due under this Agreement to any of its
Affiliates or any Third Party. Any assignee shall agree in writing to be bound
by all of the obligations of the assigning Party hereunder. Any purported
assignment or transfer in violation of this Section 9.5 will be void ab initio
and of no force or effect.

 

9.6          No Implied Waivers; Rights Cumulative. No failure on the part of
Licensor or Licensee to exercise and no delay in exercising any right, power,
remedy or privilege under this Agreement, or provided by statute or at law or in
equity or otherwise, including the right or power to terminate this Agreement,
shall impair, prejudice or constitute a waiver of any such right, power, remedy
or privilege or be construed as a waiver of any breach of this Agreement or as
an acquiescence therein, nor shall any single or partial exercise of any such
right, power, remedy or privilege preclude any other or further exercise thereof
or the exercise of any other right, power, remedy or privilege.

 

9.7          Severability. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement shall remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree shall remain in
full force and effect to the extent not held invalid or unenforceable. The
Parties further agree to replace such invalid or unenforceable provision of this
Agreement with a valid and enforceable provision that shall achieve, to the
extent possible, the economic, business and other purposes of such invalid or
unenforceable provision.

 

9.8          Amendment. This Agreement may not be amended and no provision
hereof may be modified or waived, except by an instrument in writing duly
executed by each of the Parties hereto.

 

9.9          Rules of Construction. The Parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or ruling
of construction providing that ambiguities in an agreement or other document
shall be construed against the Party drafting such agreement or document.

 

9.10        Publicity. The Parties intend to issue a joint press release upon
the execution of this Agreement. The Parties shall jointly agree to the language
of the joint press release prior to issuance. Parties shall also jointly agree
on any future press releases and other public statements disclosing the
existence of or relating to this Agreement prior to any such release or
disclosure; provided, however, that neither Party shall be prevented from
complying with any duty of disclosure it may have pursuant to Applicable Law,
including securities laws applicable to a public company.

 

31

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY

CYNAPSUS THERAPEUTICS INC.

 

Portions herein identified by [**] have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934,
as amended. A complete copy of this document has been filed separately with the
Securities and Exchange Commission.

 

9.11        Expenses. Except as expressly set forth herein, each Party shall
bear all fees and expenses incurred by such Party in connection with, relating
to or arising out of the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby, including
attorneys’, accountants’ and other professional fees and expenses.

 

9.12        Governing Law; Waiver. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New Jersey
without regarding to its conflict of laws principles. Each of Licensor and
Licensee hereby irrevocably submits with regard to any action or proceeding for
itself and in respect to its property, generally and unconditionally, to the
non-exclusive jurisdiction of the Federal Courts located in New Jersey. The
Parties waive trial by jury in any suit or action brought for the resolution of
any dispute under this Agreement.

 

9.13        Entire Agreement. This Agreement contains the entire agreement
between the Parties with respect to the subject matter hereof and supersede all
prior agreements, written or oral, between the Parties.

 

9.14        Third Party Beneficiaries. None of the provisions of this Agreement,
express or implied, is intended to be or shall be for the benefit of or
enforceable by any Person (including, without limitation, any creditor of either
Party hereto) other than Licensee and Licensor and their respective successors
and permitted assigns. No such Person shall obtain any right under any provision
of this Agreement or shall by reason of any such provision make any claim in
respect of any debt, liability or obligation (or otherwise) against either Party
hereto.

 

9.15        Interpretation and Construction. The headings of Sections in this
Agreement are provided for convenience only and shall not affect its
construction or interpretation. All references to “Section” or “Sections” refer
to the corresponding Section or Sections of this Agreement. All words used in
this Agreement shall be construed to be of such gender or number as the
circumstances require. Unless otherwise expressly provided in this Agreement,
the word “including” does not limit the preceding words or terms and shall be
deemed to be followed by the words “without limitation.” Unless otherwise
expressly provided in this Agreement, the terms “shall have responsibility for”,
“shall be responsible for” or the like, shall be deemed to be followed by “and
shall be obligated to duly carry out such responsibility.”

 

9.16        Counterparts; Signatures. This Agreement may be executed in multiple
counterparts, all of which, when executed, shall be deemed to be an original and
all of which together shall constitute one and the same document. Signatures
provided by facsimile or e-mail transmission shall be deemed to be original
signatures.

 

32

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY

CYNAPSUS THERAPEUTICS INC.

 

Portions herein identified by [**] have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934,
as amended. A complete copy of this document has been filed separately with the
Securities and Exchange Commission.

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their duly authorized representatives, effective as of the Effective Date.

 

  CYNAPSUS THERAPEUTICS INC.       By: /s/ Anthony Giovinazzo   Name: Anthony
Giovinazzo   Title: President and Chief Executive Officer       MONOSOL RX, LLC
      By: /s/ Keith Kendall   Name: Keith Kendall   Title: Chief Executive
Officer

 

[Signature Page to License Agreement]

 

 

 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY

CYNAPSUS THERAPEUTICS INC.

 

Portions herein identified by [**] have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934,
as amended. A complete copy of this document has been filed separately with the
Securities and Exchange Commission.

 

Schedule 1.1B

 

Licensed Patents as of the Effective Date

 

[**]