Exhibit 10.14

 

***OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
CONFIDENTIAL TREATMENT REQUESTED 

 

DISTRIBUTION, LICENSE AND SUPPLY AGREEMENT

 

THIS AGREEMENT, effective August 3 2015, by and between EMBER THERAPEUTICS,
INC., a company incorporated under the laws of State of Delaware ("Ember") and
KNIGHT THERAPEUTICS INC., a public limited liability company incorporated under
the laws of Canada ("Knight").

 

RECITALS

 

WHEREAS Ember owns or licenses all right, title and interest in and to certain
products (all of Ember's current products including BMP-7);

 

WHEREAS Knight has extended a secured loan of US$1,000,000 to Ember to support
Ember in the execution of an IPO transaction, pursuant to a Loan Agreement
entered into between the Parties on August 3, 2015;

 

WHEREAS Knight wishes to be appointed by Ember as exclusive distributor, to
offer to sell and sell the Licensed Products in the Territory within the Field
(as such terms are defined hereinafter) and Ember is willing to grant such
exclusive appointment;

 

WHEREAS Knight wishes to procure the Licensed Products from Ember and Ember
wishes to supply the Licensed Products to Knight;

 

NOW THEREFORE in consideration of the mutual promises and covenants contained
herein, the Parties, intending to be legally bound, agree as follows:

 

1. DEFINITIONS

 

1.1Definitions. The following terms as used hereinafter in this Agreement shall
have the meaning set forth in this Section:

 

"Adverse Drug Reaction" means a noxious and unintended response to a drug, which
occurs at doses normally used or tested for the diagnosis, treatment, or
prevention of a disease or the modification of an organic function.

 

"Adverse Drug Event" means any untoward medical occurrence in a patient or
clinical investigation subject administered a pharmaceutical product and which
does not necessarily have to have a causal relationship with this treatment.

 

"Affiliate" means any company, corporation, firm, partnership or other entity
that directly or indirectly controls, is controlled by or is under common
control with a Party, with "control" meaning ownership of greater than fifty
percent (50%) of the shares, voting stock or other voting interests in the Party
or the right to receive over fifty percent (50%) of the profits or earnings of
the Party. Such other relationship as in fact results in actual control over the
management, business, and affairs of a Party shall also be deemed to constitute
control.

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 "Agreement", "hereto", "hereunder", "herein" and similar expressions mean this
Distribution, License and Supply Agreement.

 

"Applicable Laws" means, with respect to Ember, any law, regulation, rule,
guidance, order, judgment or decree having the force of law in the United
States, and with respect to Knight, any law, regulation, rule, guidance, order,
judgment or decree having the force of law in any jurisdiction within the
Territory.

 

"Business Day" means any day other than (i) Saturday or Sunday or (ii) a day
that is a public holiday in either of Montreal (Canada) or New York (NY, United
States) or (iii) any other day on which banks in either of Montreal (Canada) or
New York (NY, United States) are required to be closed.

 

"Commercial Sale" means any shipment of the Licensed Products in the Territory
pursuant to an arm's length sale by Knight or its Affiliates to a Third Party.

 

"Commercialize" means marketing, using, distributing, promoting, offering for
sale, and selling the Licensed Products (and "Commercialization" shall be
construed accordingly).

 

"Cost of Goods" means, with respect to the Licensed Products, the production
cost of such Licensed Products (for the avoidance of doubt, including, without
limitation, manufacturing oversight and quality assurance) calculated in
accordance with internal cost accounting methods consistently applied by Ember
for its other similar pharmaceutical products; provided, that such methods
comply with IFRS. Cost of Goods shall include direct labor, direct materials
(including taxes and duties), but exclude corporate administrative overhead, any
costs associated with excess capacity, any royalties or license fees payable to
Third Parties and any other indirect costs. Notwithstanding the foregoing, in
the event a Licensed Product is manufactured, in whole or in part, by a Third
Party supplier and procured by Ember, the "Cost of Goods" shall include the
costs charged for such Licensed Product by such Third Party supplier to Ember.

 

"Current Agreed Forecast" means the relevant forecast of sales prepared by
Knight and approved by Ember in accordance with Section 3.3(b).

 

"Effective Date" means the date specified in the initial paragraph of this
Agreement.

 

"Ember Corporate Name and Logos" means the name "Ember Therapeutics, Inc." plus
the corporate names of each of Ember's Affiliates, and any logos, artwork or
similar intellectual property owned or licensed by Ember and/or its Affiliates
and related to the Licensed Products.

 

"Ember Indemnified Party" has the meaning set forth in Section 8.6.

 

"Ember Marks" means the trade-marks listed in the Schedule to this Agreement, as
updated from time to time by written notice from Ember to Knight.

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"Ember Patents" means all patents in the Territory, including patent
applications, continuations, divisional patents, re-examined patents, reissued
patents, and foreign equivalents thereof, that are owned by or licensed to Ember
which claim inventions reasonably necessary for the Commercialization of the
Licensed Products in the Territory.

 

"Field" means the treatment of osteoarthritis, chronic kidney disease and Alport
Syndrome and any other indication to be approved in the Territory.

 

"Force Majeure" has the meaning set forth in Section 12.6.

 

"GMP" means good manufacturing practices as required under the rules of the
applicable Governmental Authority in each jurisdiction within the Territory.

 

"Governmental Authority" means any federal, state, provincial, or municipal
government body, commission, agency, board, court or tribunal in a jurisdiction
within the Territory and having authority in the particular circumstances.

 

"IFRS" means, at any time, the International Financial Reporting Standards,
promulgated by the International Accounting Standards Board, as amended,
supplemented or replaced from time to time.

 

"Improvements" means any new indications, dosage strengths, reformulations, line
extensions or other advances in, modifications of or improvements to the
Licensed Products.

 

"Initial Term" has the meaning set forth in Section 9.1.

 

"Knight Corporate Name and Logos" means the name "Knight Therapeutics Inc." plus
the corporate names of each of Knight's Affiliates, and any logos, artwork or
similar intellectual property owned or licensed by Knight and/or its Affiliates.

 

"Knight Indemnified Party" has the meaning set forth in Section 8.5.

 

"Know-How" means all scientific, technical, manufacturing, marketing,
production, sales and other information relating to the Licensed Products that
is known to or controlled by Ember and which is reasonably necessary for the
Commercialization of the Licensed Products in the Territory in accordance with
the terms of this Agreement.

 

"Launch" means the date of the first Commercial Sale in the Territory of the
applicable Licensed Product.

 

"Licensed Products" means all of Ember's current products including BMP-7 and
"Licensed Product" means any one of them (as the context shall require).

 

"Long Term Inability to Supply" shall mean the inability to supply at least
seventy percent (70%) of the volumes of a Licensed Product for a particular
jurisdiction within

 

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the Territory indicated in the Current Agreed Forecast for a continuous period
that exceeds one hundred and twenty (120) days, other than a disruption
resulting from a Force Majeure.

 

"Net Sales" means the gross amounts invoiced by or on behalf of Knight and its
Affiliates for sales of Licensed Products to third parties that are not
Affiliates of Knight in bona fide, arm's length transactions, less the following
deductions, in each case if and to the extent they are (a) reasonable and
customarily provided to unaffiliated entities and (b) actually taken by Knight
or its Affiliates with respect to such sales:

 

(i)credits, price adjustments or allowances for damaged Licensed Products,
returns or rejections of the Licensed Products;

 

(ii)normal and customary trade, cash and quantity discounts, allowances and
credits (other than price discounts granted at the time of invoicing which have
already been included in the gross amount invoiced);

 

(iii)chargeback payments, repayments and rebates (or the equivalent thereof)
granted to or imposed by group purchasing organizations, managed health care
organizations or federal, state/provincial, local and other governments,
including any or all of their regulatory authorities, agencies, review boards or
tribunals, or trade customers;

 

(iv)sales, value-added (to the extent not refundable in accordance with
Applicable Law) and excise taxes, tariffs and duties, and other taxes directly
related to the sale (but not including taxes assessed against the income derived
from such sale);

 

(v)stocking allowances; and

 

(vi)any other payment which reduces gross revenue and is permitted to be
deducted in calculating net sales in accordance with IFRS,

 

provided that "Net Sales" (a) shall not include sales between or among Knight
and its Affiliates unless Knight or any such Affiliate is the end user, and (b)
shall be calculated in accordance with the standard internal policies and
procedures of Knight, which shall at all times be in accordance with IFRS.

 

"Non-Renewal Fee" has the meaning set forth in Section 9.7.

 

"Non-Renewal Notice" has the meaning set forth in Section 9.1.

 

"Party" means either Ember or Knight and "Parties" means both Ember and Knight.

 

"Proprietary Information" means any and all scientific, clinical, regulatory,
marketing, financial and commercial information or data, whether communicated in
writing, orally

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or by any other means, which is owned and/or under the protection of one Party
and is being provided by that Party to the other Party in connection with this
Agreement.

 

"Regulatory Approval" means any and all approvals, marketing authorizations,
registrations and licenses (including amendments and supplements thereto)
necessary from a Governmental Authority for the Commercialization of the
Licensed Products in or for the Territory.

 

"Regulatory Submissions" means all applications, filings, dossiers and the like
submitted to a Governmental Authority for the purpose of obtaining Regulatory
Approval.

 

"Renewal Term" has the meaning set forth in Section 9.1.

 

"Short Term Inability to Supply" shall mean the inability to supply at least
seventy percent (70%) of the volumes of a Licensed Product for a particular
jurisdiction within the Territory indicated in the Current Agreed Forecast for a
continuous period that exceeds sixty (60) days but is less than one hundred and
twenty (120) days, other than a disruption resulting from a Force Majeure.

 

"Specifications" means the finished product specifications for each Licensed
Product as required by the applicable Regulatory Approval and as may be modified
from time to time in accordance with the provisions of this Agreement.

 

"Term" means the Initial Term or a Renewal Term.

 

"Territory" means Canada, Israel, Russia and the sub-Saharan Africa.

 

"Third Party" means any person other than the Parties and their Affiliates.

 

1.2Other Definitional and Agreement References. References to any agreement,
contract, statute, act, or regulation are to that agreement, contract, statute,
act, or regulation as amended, modified or supplemented from time to time in
accordance with the terms hereof and thereof.

 

1.3Ambiguities. Ambiguities, if any, in this Agreement shall not be construed
against any Party, irrespective of which Party may be deemed to have authored
the ambiguous provision.

 

1.4Sections and Headings. The term "Section" refers to the specified Section of
this Agreement, unless otherwise specified. Headings and captions of the
Sections hereof are for convenience only and are not to be used in the
interpretation of this Agreement.

 

1.5United States Dollars. References in this Agreement to "Dollars" or "$" shall
mean the legal tender of the United States, unless otherwise noted.

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1.6Date References. References from or through any date mean, unless otherwise
specified, from and including or through and including, respectively.

 

1.7Gender. Words of one gender include the other gender.

 

1.8Include, Includes, Including. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation", whether or not they are in fact followed by
those words or words of like import.

 

1.9Solidary Obligations. Unless specified otherwise in this Agreement, the
obligations of any Party consisting of more than one person are solidary (joint
and several).

 

1.10No Strict Construction. This Agreement has been prepared jointly and shall
not be strictly construed against either Party.

 

1.11Number of Days. Whenever this Agreement refers to a number of days, unless
otherwise specified, such number shall refer to calendar days.

 

1.12Party References. Reference to any Party includes the successors and
permitted assigns of that Party.

 

1.13Singular/Plural. Words using the singular or plural number also include the
plural or singular number, respectively.

 

2.GRANT OF RIGHTS

 

2.1Appointment. Subject to the terms of this Agreement, Ember, on behalf of
itself and its Affiliates, hereby appoints Knight as its exclusive distributor
of the Licensed Products in the Field in the Territory during the Term and
further grants to Knight, and Knight hereby accepts, an exclusive license under
the Ember Patents, Product Trademarks and Know- How to Commercialize the
Licensed Products in the Field in the Territory during the Term.

 

2.2Mutual non-exclusive license. Subject to the terms of this Agreement, and
solely for the purposes of the performance by the Parties of their respective
obligations under this Agreement and the Commercialization of the Licensed
Products in the Field in the Territory, (i) Ember grants to Knight, and Knight
hereby accepts, a non-exclusive license for the use, during the Term, of the
Ember Corporate Name and Logos, and (ii) Knight grants to Ember, and Ember
hereby accepts, a non-exclusive license for the use, during the Term, of the
Knight Corporate Name and Logos.

 

2.3Sublicensing. Upon written notice to Ember, Knight may sublicense its rights
granted hereunder or use sub-distributors or third party service providers to
exercise its right or fulfill its obligations hereunder; provided, however, that
without the prior written consent of Ember, Knight shall not enter into any
sublicense agreements, distribution or other arrangements or agreements with any
Third Party that markets, sells or distributes

 

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products that are directly competitive with the Licensed Products in the
Territory. All sublicense agreements, distribution or other arrangements or
agreements shall be consistent with the terms and conditions of this Agreement
and shall provide that the sublicensee, distributor or other party shall be
bound by and subject to all applicable terms and conditions of this Agreement in
the same manner and to the same extent as Knight is bound thereby. Knight
assumes full responsibility for any actions taken by or omissions by any
sublicensee, distributor or other party and any of the expenses, costs, or fees
incurred by any sublicensee, distributor or other party. Notwithstanding
anything herein to the contrary, Knight shall be responsible for the performance
of all financial and other obligations hereunder, including, without limitation,
the payment of all amounts due to Ember under Section 6.2 whether or not paid to
Knight by any such sublicensee, distributor or other party.

 

2.4No Implied Licenses. Neither Party grants to the other Party any right or
license to use any of its intellectual property, know-how or other proprietary
information, materials or technology, or to practice any of its patent,
trademark, or trade dress rights, except as expressly set forth in this
Agreement.

 

2.5Restriction on Knight Sales. Knight shall not: (a) knowingly solicit orders
for Licensed Products to a Third Party outside the Field or the Territory; (b)
knowingly distribute any Licensed Products for sale or use outside the Field or
the Territory; or (c) supply any Third Party that has distributed or offered to
distribute Licensed Products outside the Field or the Territory after Knight has
actual knowledge that said Third Party has distributed or offered to distribute
Licensed Products obtained from Knight outside of the Field or the Territory.
Further, Knight shall take commercially reasonable steps to prevent the
distribution of Licensed Products to Third Parties outside the Field or the
Territory.

 

2.6Restriction on Ember Sales. Ember shall not: (a) knowingly solicit or accept
orders for distribution of Licensed Products to a Third Party for sale or
distribution in the Field in the Territory; (b) knowingly distribute any
Licensed Products for sale or use in the Field in the Territory; (c) supply any
Third Party that has distributed or offered to distribute Licensed Products in
the Field in the Territory after Ember has actual knowledge that said Third
Party has distributed or offered to distribute Licensed Products obtained from
Ember in the Field in the Territory; or d) develop, manufacture, purchase,
promote, market, distribute or sell, directly, indirectly or through an
Affiliate, (or have or enter into any agreement or arrangement with respect to)
a product in the Field in the Territory. Further, Ember shall take commercially
reasonable steps to prevent the distribution of Licensed Products by Third
Parties in the Field in the Territory and shall comply with any steps or
procedures defined and agreed upon by the Parties prior to the Launch of the
relevant Licensed Products.

 

2.7Performance by Affiliates. The Parties agree that their respective rights and
obligations may be exercised or performed by any of their Affiliates; provided,
however, that each Party shall be fully responsible and liable for the actions
of such Affiliates in the performance of such obligations and shall ensure that
such Affiliates comply with the terms of this Agreement. Notwithstanding the
foregoing, Knight shall be responsible for the performance of all financial and
other obligations hereunder, including, without limitation, the payment of all
amounts due to Ember under Section 6.2.

 

 

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2.8Repurchase options. Ember shall have the right to repurchase the rights
granted to Knight in respect of any of the Licensed Products in the Territory
hereunder, provided that it may only exercise this right prior to Regulatory
Submission in connection with, or (if no Regulatory Submission is required)
prior to Launch of, such Licensed Product, and upon payment to Knight, the
greater of:

 

(i)[***]; and

(ii)[***]; and

(iii)[***]

 

3. REGULATORY AND DEVELOPMENT

 

3.1Regulatory Submissions. Knight shall be responsible, at its cost and expense,
for preparing, filing, and managing any Regulatory Submission and for
maintaining any Regulatory Approval for the Licensed Products in the Territory.
Ember shall provide Knight with copies of all regulatory dossiers and clinical
data and shall provide reasonable assistance to Knight in making submissions to
Governmental Authorities and maintaining such Regulatory Approvals. Unless
otherwise required by Applicable Law, any Regulatory Approvals shall be filed,
owned and held in the name of Knight.

 

3.2Regulatory Correspondence. In the event that Ember receives any
correspondence from a Governmental Authority in the Territory (to the extent
that such correspondence relates to Licensed Products in the Field within a
jurisdiction of the Territory), it shall promptly forward copies of such
correspondence to Knight and such correspondence shall be dealt with by Knight.
In the event that Knight receives (or is provided by Ember with copies of) any
such correspondence requiring a response, Ember will cooperate fully with Knight
in preparing such response and will promptly provide Knight with any data or
information that is known to or possessed or controlled by Ember and required by
Knight in preparing any such response.

 

3.3Other Covenants of Knight. In addition to its other obligations, commitments
and undertakings set out in this Agreement, Knight agrees:

 

(a)to assume all commercially reasonable sales and marketing activities related
to the promotion of the Licensed Products in the Field in the Territory. The
promotion of the Licensed Products by Knight in the Territory shall be
consistent with Ember's global positioning of Licensed Products;

 

(b)to provide, on a quarterly basis, a non-binding twelve (12)-month forecast of
Licensed Product sales;

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(c)to use commercially reasonable efforts to obtain in a timely manner all
Regulatory Approvals, including, without limitation, pricing and reimbursement
approvals, necessary for the Commercialization of Licensed Products in the Field
in the Territory;

 

(d)to use commercially reasonable efforts to Launch each Licensed Product as
quickly as practicable after obtaining the necessary Regulatory Approvals;

 

(e)to provide Ember, in a timely manner, with all commercial, marketing and
regulatory information relating to the Licensed Products;

 

(f)not to undertake, and to cause its Affiliates not to undertake, any actions
to market, sell or distribute products that are used instead of the Licensed
Products;

 

(g)to assume all commercially reasonable sales and distribution expenses related
to the Commercialization of the Licensed Products in the Field in the Territory;
and

 

(h)to cooperate with Ember in the defense of any intellectual property rights
associated with the Licensed Products in the Territory at Ember's reasonable
request (such request to be in writing), provided that under no circumstances
shall Knight be liable for any Third Party costs connected with such defense.

 

3.4Other Covenants of Ember. In addition to its other obligations, commitments
and undertakings set out in this Agreement, Ember agrees to:

 

(a)provide Knight with copies of all regulatory dossiers and clinical data
relating to the Licensed Products and provide reasonable assistance to Knight in
preparing the regulatory submissions to Governmental Authorities within the
Territory;

 

(b)provide reasonable assistance to Knight for the initial Licensed
Products-related training of medical and sales staff in the Territory;

 

(c)provide Knight with copies of international marketing and sales materials;

 

(d)manufacture and supply, or cause to be manufactured and supplied the Licensed
Products and deliver such equipment and disposables directly to hospitals and
clinics in accordance with the terms of the relevant purchase order;

 

(e)be responsible for and assume all costs associated with replacing all
defective or non-conforming Licensed Products at no cost to Knight, except to
the extent such defect or non-conformance arises from the handling, shipping or
storage of Licensed Products by Knight;

 

(f)not to undertake, and to cause its Affiliates not to undertake, any actions
to market, sell or distribute products that are used instead of the Licensed
Products

 

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(g)assume responsibility for, and commercially reasonable costs in connection
with, intellectual property procurement, filings and maintenance associated with
the Licensed Products in the Territory, provided that all intellectual property
rights relating to the Licensed Products shall remain the exclusive property of
Ember; and

 

(h)consult with and consider input from Knight with respect to packaging for
Licensed Products in the Field in the Territory and manage, produce and supply
all such Licensed Product packaging.

 

3.5Medical Affairs

 

(a)Knight will collect and report to Ember Adverse Drug Events, Adverse Drug
Reactions and other adverse events and/or complaint information as required by
Applicable Law and regulations and any separate Safety Exchange Agreement and
Quality Agreement entered into by the Parties. Knight will liaise with Ember for
the consolidation of that information in the Ember global databases and for
reporting to regulatory agencies.

 

(b)Knight will liaise with Ember to ensure global coordination of medical
affairs activities and priorities, and may suggest supporting
investigator-sponsored trials or conducting research projects, studies or
clinical trials in any jurisdiction within the Territory.

 

(c)Ember will review the activities set out in Section 3.5(b) above as part of
its global strategy and will, if it approves the activities suggested by Knight,
supply Licensed Products for such activities at no cost to Knight (where
required by Applicable Laws), and the balance of such costs shall be divided
equally between the Parties.

 

(d)Knight will collect medical queries in connection with any Licensed Products
that it receives from Third Parties and promptly direct them to Ember's global
call center.

 

(e)If Knight receives any Adverse Drug Event, Adverse Drug Reaction or other
adverse event and/or complaint information relating to medical affairs in
connection with the Licensed Products, it shall promptly report the Adverse Drug
Event, Adverse Drug Reaction or adverse event and/or complaint to Ember (and in
any event in sufficient time to enable Ember to comply with any time limits for
responding or taking any other actions as required by applicable law and
regulations) and provide all related information that is known to or controlled
by Knight. Knight shall provide Ember with assistance or other input relating to
each Adverse Drug Event, Adverse Drug Reaction or other adverse event and/or
complaint information relating to medical affairs in connection with the
Licensed Products in the Field in the Territory. The Parties shall enter into a
Pharmacovigilance Agreement within ninety (90) days of filing for regulatory
approval with Health Canada.

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4.TRADEMARKS

 

4.1Trade-Mark License. Ember hereby grants to Knight an exclusive, royalty-free
license to use, during the Term, the Ember Marks in the Territory in association
with the Commercialization of Licensed Products in the Field. Ember hereby
further agrees to collaborate with Knight for the registration, at Knight's sole
expense, of such exclusive licenses with governmental authorities as reasonably
necessary or upon reasonable request by Knight.

 

4.2Ownership. Knight acknowledges that the Ember Marks are owned by Ember. The
Ember Marks shall be and remain the sole and exclusive property of Ember. Knight
shall not contest the ownership of the Ember Marks or the validity of any
registration relating thereto. Knight agrees, at the request of Ember, to
execute any and all proper documents appropriate to assist Ember in obtaining
and maintaining Ember's rights in and to the Ember Marks.

 

4.3Licensed Products to Bear Mark. Licensed Products distributed by Knight under
this Agreement shall bear the Ember Marks together with a notice that the Ember
Marks are used under license from Ember, subject to the approval of such
labeling by appropriate Governmental Authorities. Knight shall only use the
Ember Marks and apply the Ember Marks on Licensed Products in the format, manner
and size prescribed by Ember as may be updated from time to time or otherwise
having obtained Ember's prior written consent. Knight shall submit to Ember, for
prior approval, a representative sample of any marketing or promotional
materials prepared by Knight, bearing the Ember Marks.

 

4.4No Similar Mark. Knight will not, without Ember's prior written consent,
register or use in connection with any product, any trade-mark that is
confusingly similar to the Ember Marks or that is similar to the Ember Marks and
takes unfair advantage of or is detrimental to the distinctive character or
repute of the Ember Marks.

 

5.COMMERCIALIZATION

 

5.1Quality Complaint Reporting. Ember shall be solely responsible for collecting
and responding to any product quality complaint relating to the Licensed
Products received from a customer(s) in the Territory. Ember shall investigate
such complaints and report to Knight, in a timely manner, the results of such
investigations. If Knight receives a product quality complaint relating to the
Licensed Products from a customer in the Territory, it shall promptly report the
complaint to Ember, who will be solely responsible for communication and
response, if any, to the customer in the Territory. Furthermore, Ember shall be
responsible for investigating and submitting reports to Knight with respect to
any product quality complaints related to the manufacturing of the Licensed
Products in the Territory.

 

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5.2Other Information. In addition to the foregoing information to be provided,
each Party shall provide the other Party with any: (i) information relating to
the efficacy and/or safety of the Licensed Products in the Field, including any
recall of the Licensed Products in the Territory; (ii) complaints from
customers, healthcare professionals or competitors in the Territory relating to
the Licensed Products; (iii) information relating to any potential liability to
any Third Party in the Territory or that is reasonably likely to arise for
either Party in connection with the manufacture or Commercialization of the
Licensed Products in the Field in the Territory; (iv) information relating to
any inspections, inquiries, issues raised or actions taken by any Governmental
Authority in the Territory; and (v) any other information necessary or
reasonably desirable to enable Knight to comply with any Applicable Law in the
Territory and Ember to comply with applicable laws in the Territory or
elsewhere.

 

5.3Recall. Knight shall advise Ember of any Governmental Authority initiated
mandatory recall of Licensed Products in the Territory. Knight shall not
initiate any voluntary recall of Licensed Products in any jurisdiction within
the Territory without the written approval of Ember. Prior to executing any
recall of Licensed Products in any jurisdiction within the Territory, Knight
shall review with Ember the proposed manner in which the recall is to be carried
out. Knight will give due consideration to any reasonable recommendation from
Ember as to the manner of conducting the recall, provided that it is consistent
with the requirements of the applicable Governmental Authority. Knight shall
communicate directly with the applicable Governmental Authorities in relation to
a Licensed Products recall in the Territory. If any Licensed Products recall in
the Territory results from improper handling, shipping or storage of Licensed
Products by Knight, or to off label promotion, illegal marketing or
misrepresentation of quality, and in no way results from the manufacture,
control, handling, shipping or storage of the Licensed Products before receipt
by Knight, the costs associated with the recall, including any costs associated
with replacing recalled Licensed Products, shall be paid by Knight and Knight
shall indemnify Ember against any Third Party claims in connection with the
recall. If the recall results from any cause or issue other than ones for which
Knight is responsible as set forth in the prior sentence, all costs and expenses
arising from the recall, including any costs associated with replacing recalled
Licensed Products, shall be paid for by Ember and Ember shall indemnify Knight
against any Third Party claims in connection therewith.

 

6.MANUFACTURE AND SUPPLY

 

6.1Manufacture by Ember. During the Term, Knight agrees to obtain exclusively
from Ember all Knight's requirements in respect of the Licensed Products. Ember
agrees to supply Knight with all of its requirements, to the extent of the
Current Agreed Forecast, in respect of Licensed Products as set forth in each
order submitted by Knight, and to use commercially reasonable efforts to supply
Knight with all of its requirements to the extent such requirements exceed the
Current Agreed Forecast. Ember may, at its discretion, use the services of a
contract manufacturer to manufacture and package the Licensed Products.

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6.2Price. Knight will pay Ember a transfer price (including Cost of Goods and
royalties) equal to the greater of i) [***] or ii) [***], and applicable sales
taxes in either case.. Payments pursuant to this Section 6.2 shall be made
quarterly by Knight to Ember and within thirty-five (35) days following Knight's
receipt of an invoice from Ember at the end of each quarter. If payments
pursuant to this Section 6.2 are determined through Net Sales, such payments
will be accompanied by a quarterly sales report indicating Net Sales per
Licensed Product in each Territory. If payments pursuant to this Section 6.2 are
determined through Cost of Goods, each invoice from Ember shall detail the Cost
of Goods for each Licensed Product.

 

6.3Orders. Knight shall order Licensed Products from Ember by submitting
purchase orders to Ember. Each such purchase order shall specify, at a minimum,
the desired delivery date, unit quantity, place of delivery and an order number.
The initial purchase order will have a lead time of between ninety (90) and one
hundred and twenty (120) days between the time when an order for Licensed
Products is submitted to Ember until the Licensed Products is to be delivered to
Knight. Thereafter, purchase orders will have lead time of between sixty (60)
and ninety (90) days between the time when an order for Licensed Products is
submitted to Ember until the Licensed Products is to be delivered to Knight.

 

6.4Delivery Terms. Licensed Products will, at Knight's direction, be shipped
directly to Knight or to a Third Party in the Territory, as designated by
Knight, according to Incoterms 2010 DDP.

 

6.5Packaging and Labeling. Ember shall determine the artwork and design for the
packaging and labelling of the Licensed Products in Territory in consultation
with Knight and in accordance with local law and regulations. Knight shall not
be entitled to have its trade-marks displayed on the packaging or labelling of
the Licensed Products, but Ember may choose, at its sole discretion, to display
such trade-marks on the packaging and/or labelling of the Licensed Products
where it receives requests from Knight to do so.

 

6.6Specifications. Licensed Products manufactured and supplied to Knight
hereunder shall conform to the Specifications which may be changed from time to
time as provided in this Section 6.

 

6.7GMP. All manufacture and quality control operations by Ember or its designee
shall be in compliance with GMP or the appropriate standard for the relevant
Licensed Product.

 

6.8Shelf Life. All Licensed Products supplied by Ember hereunder shall have not
less than seventy-five percent (75%) of its shelf life remaining upon delivery
to Knight.

 

6.9Changes. A Party shall promptly notify the other Party in writing of all
proposed changes, whether voluntary or involuntary, including those arising from
a request from a Governmental Authority, concerning the manufacture or quality
of Licensed Products. The Parties shall negotiate in good faith towards an
appropriate response to a Governmental Authority in respect of each proposed
change in the quality of the

 13 

   

 

Licensed Products including any costs associated .with implementing said
changes. Ember shall notify Knight of any proposed change in manufacturing
facility or manufacturing procedures.

 

6.10Minor Changes. Minor changes in the procedures for manufacture or quality
control that do not require approval from a Governmental Authority or that will
not affect Regulatory Approvals will be communicated by Ember to Knight in an
annual review.

 

6.11Release to Knight. Ember, or its designee, shall only release for shipment
to Knight, finished batches of Licensed Products that have been examined by
Ember for compliance with the Specifications. Ember is responsible for
conducting, or having conducted, all required stability and release testing to
ensure that the finished batches of Licensed Products are in compliance with the
Specifications.

 

6.12Quality Audit. During normal working hours and upon reasonable notice,
Knight shall be entitled to inspect areas within Ember's or its contract
manufacturer's establishment where Licensed Products are manufactured or stored,
and to inspect the manufacturing, packaging, and quality control records
relating to the Licensed Products.

 

6.13Government Inspections. Both Parties shall make their internal practices,
and their manufacturing, packaging, and quality control records, relating to the
Licensed Products available to Governmental Authorities and will allow access to
all facilities used for manufacturing the Licensed Products to the applicable
Governmental Authorities for the purposes of determining Ember's or Knight's (as
the case may be) compliance with Applicable Laws. Each Party agrees to advise
the other immediately of any proposed or announced visit or inspection, and as
soon as possible but in any case within three (3) Business Days after any
unannounced visit or inspection, by a Governmental Authority in the Territory
relating to the Licensed Products. The Parties shall provide each other with a
reasonable description in writing of each such visit or inspection promptly
thereafter, and with copies of any letters, reports or other documents issued by
any such Governmental Authorities that relate to the Licensed Products.

 

6.14Defects. Any claim by Knight regarding an apparent failure of the Licensed
Products to comply with the Specifications must be made in writing with full
particulars within thirty (30) days after receipt of the Licensed Products by
Knight. In the case of latent defects, such defects shall be reported to Ember
within thirty (30) days of Knight having actual notice of the defect. In case of
a justifiable claim for defect because of a failure of the Licensed Products to
conform to the Specifications, Ember or its designee shall, without charge,
promptly replace the defective portion with supplies that are in compliance with
such Specifications. Ember shall assume all costs associated with transportation
of replacement Licensed Products. Knight shall follow any reasonable
instructions to return to Ember or dispose of, in either event at Ember's
expense, any quantities of Licensed Products as aforesaid that are not in
compliance with the Specifications. Ember shall not be under any obligation to
replace any Licensed Product under this Section 6.14 (or incur any costs or
expenses in relation to such Licensed Product) to the extent that the defect

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and/or non-conformity was the result of Knight's, or any customer's,
inappropriate handling of the Licensed Product.

 

6.15Independent Lab. If Ember does not agree with Knight that the Licensed
Products rejected by Knight fails to conform to the Specifications, the matter
will be submitted for analysis to an independent laboratory agreed between the
Parties. The decision of such independent laboratory following its analysis of
the Licensed Products shall be final. The cost of the analysis, as well as the
costs associated with reasonable shipping, handling, and storage of any Licensed
Products under dispute as to compliance with the Specifications, shall be borne
by the Party who was in error.

 

6.16Short Shipment. If there is a shortage in the quantity of any shipment of
Licensed Products (from quantities specified in the relevant bill of lading or
other shipping documents), and it is determined that the discrepancy existed at
the time the shipment was delivered to Knight by Ember, Knight shall notify
Ember in writing as soon as reasonably possible (and in any event within thirty
(30) days after receipt of the Licensed Products by Knight), and [***]

 

6.17Failure.

 

(a)In the event of any Short Term Inability to Supply the Licensed Products in
any jurisdiction within the Territory, Ember shall be liable for payments to
Knight as follows: (i) [***] and (ii) [***]. Knight shall attempt to quantify
the financial impact of any Short Term Inability to Supply, in writing, as soon
as reasonably possible to Ember and shall use all reasonable efforts to mitigate
such impact. Subject to Section 10.1 in the case of a disputed claim, payments
due under this Section 6.17 shall be payable within thirty (30) days of receipt
of said claim. In the event that two (2) Short Term Inability to Supply events
occur within twenty four (24) month period, then Ember shall, upon Knight's
request and Ember's expense, be required to enter into a contract manufacturing
agreement with a Third Party for the manufacture in the relevant jurisdiction
within the Territory and supply of the Licensed Products to Knight. Any
additional costs reasonably incurred by Knight or Ember for the supply of the
Licensed Products as a result of two (2) Short Term Inability to Supply events
within a twenty four (24) month period resulting in the engagement of a Third
Party manufacturer will [***]. However, subject to the conditions outlined in
the directly preceding sentence, Ember's rights to payment under Section 6.2
will be not be affected.

 

 

 15 

   

 

(b)In the event of a Long Term Inability to Supply, Knight shall be entitled to
all of the rights and recourses set forth in Section 6.17(a) (provided that
Ember shall continue to receive, subject to the conditions outlined in Section
6.17(a) and as applicable, payments due to be made by Knight under Section 6.2).
In addition, Knight shall be entitled by notice in writing to terminate the
supply arrangements contemplated in this Agreement, in which event:

 

(i)Knight shall be entitled to purchase the Licensed Products from a Third
Party. For greater certainty, but subject to clause (iii) below, Ember shall
grant to a Third Party designated by Knight a limited, non-exclusive license to
use all necessary intellectual property for or in respect of the manufacture of
the Licensed Products for Commercialization by Knight in the Field in the
Territory.

 

(ii)Ember shall provide such assistance as is required by Knight acting
reasonably, from time to time to assist in sourcing the Licensed Products from a
Third Party.

 

(iii)Without limiting the generality of the foregoing, Ember and a Third Party
manufacturer selected by Knight shall enter into a technology transfer agreement
reasonably satisfactory to Ember, including, without limitation, with respect to
confidentiality and the ownership of intellectual property, under which Ember
shall license to the selected manufacturer all technical information necessary
to manufacture the Licensed Products and supply the Licensed Products in the
Territory or a particular jurisdiction within the Territory.

 

(iv)Ember shall continue to receive all payments due to be made by Knight under
Section 6.2, provided that any additional costs incurred by either Party for the
supply of the Licensed Products as a result of a Long Term Inability to Supply
leading to the engagement of a Third Party manufacturer will [***].

 

6.18Shortfall. In the event of an interruption or shortfall in supply of
Licensed Products, for whatever reason, that exceeds ninety (90) days in
duration, such that not all purchase orders for Licensed Products hereunder can
be met, then Ember shall immediately notify Knight and shall allocate a prorated
share of its available sources and supplies among Knight and Ember's other
partners (distributors, licensees, agents,) and internal needs, based on the
respective forecasted commercial supply requirements of each of the parties for
that allocation period. In any case, the Parties will discuss and agree in good
faith on acceptable delivery dates and measures to mitigate the effects of the
interruption or shortfall. Ember shall use commercially reasonable efforts to
eliminate, cure or overcome such shortage and to resume performance of its
obligations hereunder as soon as reasonably possible.

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6.19Capacity and Supply. Ember will maintain sufficient manufacturing time in
its production schedule to provide consistent availability of Licensed Products
to meet orders from Knight within the Current Agreed Forecast. Ember shall
maintain or cause its contract manufacturer to maintain sufficient volumes of
Licensed Products in accordance with the Current Agreed Forecast or as otherwise
determined by Knight and Ember from time to time, each acting reasonably and
based on the then current and anticipated sales. At a minimum, Ember will be
required to maintain sufficient volumes of Licensed Products to meet the first
rolling three months quantities in the then Current Agreed Forecast, and Knight
will be required to sell or otherwise purchase, at a minimum, such quantities.

 

6.20Payment Method. All payment due to Ember hereunder will be paid in US
Dollars by wire transfer to the account designated by Ember from time to time.

 

6.21Record Retention. Ember will maintain complete and accurate books, records,
and accounts used for the determination of expenses, deductions, credits, or
other relevant factors in connection with the calculation of Cost of Goods, in
sufficient detail to confirm the accuracy of any payments required under this
Agreement, which books, records, and accounts will be retained until three (3)
years after the end of the period to which such books, records, and accounts
pertain. Knight will maintain complete and accurate books, records, and accounts
used for the determination of invoiced amounts and expenses, deductions,
credits, or other relevant factors in connection with the calculation of Net
Sales, in sufficient detail to confirm the accuracy of any payments required
under this Agreement, which books, records, and accounts will be retained until
three (3) years after the end of the period to which such books, records, and
accounts pertain.

 

6.22Audit. During the Term of this Agreement and for three (3) years thereafter,
each Party will have the right to have an independent certified public
accounting firm of internationally recognized standing access during normal
business hours, and upon reasonable prior written notice, to such records of the
other Party as may be reasonably necessary to verify such other Party's
compliance with the terms of this Agreement for any particular period. The
accounting firm will disclose to the Parties only whether the audited Party has
or has not complied with the terms of this Agreement (and in particular but not
limited to, the Net Sales and other amounts reported by Knight are correct or
incorrect and the Cost of Goods and other amounts reported by Ember are correct
or incorrect) and the specific details concerning any discrepancies. The
auditing Party will bear all costs of such audit, unless the audit reveals a
discrepancy in the auditing Party's favor for payments due of more than five
percent (5%) or a material breach of this Agreement by audited Party, in which
case the audited Party will bear the cost of the audit. Each Party will treat
all information subject to review under this Sections 6.22 as confidential
information and will cause its accounting firm to enter into a reasonably
acceptable confidentiality agreement obligating such firm to maintain all such
financial information in confidence pursuant to such confidentiality agreement.

 

6.23Payment of Additional Amounts. If, based on the results of any audit under
Sections 6.22, payments are owed by a Party to the other Party under this
Agreement, then such payment shall be made promptly after the accounting firm's
written report is delivered by courier or registered mail to both Parties.

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7.INTELLECTUAL PROPERTY

 

7.1Notification of Third Party Infringement. Each Party shall promptly disclose
to the other in writing within ten (10) Business Days, any actual, alleged, or
threatened Third Party infringement or misappropriation in the Territory of any
Ember Patent and any actual, alleged or threatened infringement or passing off
in the Territory of any Ember Mark, of which such Party becomes aware.

 

7.2           Response to Third Party Infringement. Ember shall have the first
right, but not any obligation, to respond to any actual or threatened
infringement of an Ember Patent, Ember Mark or of any unfair trade practices,
trade dress imitation, passing off of counterfeit goods, or like offenses in the
Territory relating to the Licensed Products. If Ember elects to respond to any
actual or threatened infringement by initiating a proceeding, Ember shall use
legal counsel of its choice at its expense and shall have full control over the
conduct of such proceeding. Ember may settle or compromise any such proceeding
without the consent of Knight; provided, however, that if such settlement
affects Knight's rights under this Agreement, or Knight's ability to
Commercialize the Licensed Products within the Territory, or otherwise requires
Knight to admit wrongdoing, fault, or liability, Ember will not settle or
compromise any such proceeding without the consent of Knight, such consent not
to be unreasonably withheld, conditioned, or delayed. If Ember elects not to
respond to any actual or threatened infringement of a Ember Patent, Ember Mark
or of any unfair trade practices, trade dress imitation, passing off of
counterfeit goods, or like offenses in any Territory relating to the Licensed
Products, then Knight shall have the right, but not the obligation, to take
action, at its sole expense, in which case Knight shall have full control over
the conduct of such proceeding and Knight may settle or compromise any such
proceeding without the consent of Ember; provided, however, that if such
settlement affects Ember's intellectual property rights or its rights under this
Agreement, or Ember's ability to Commercialize the Licensed Products outside the
Territory or outside the Field in the Territory, or otherwise requires Ember to
admit wrongdoing, fault, or liability, Knight will not settle or compromise any
such proceeding without the consent of Ember, such consent not to be
unreasonably withheld, conditioned, or delayed. Knight shall be solely
responsible for any legal costs or damages awards made in any proceeding that is
initiated by Knight in the event that Ember elects not to respond to any actual
or threatened infringement.

 

7.3Cooperation. Each Party shall cooperate reasonably, at its expense, in any
enforcement effort initiated by the other Party. Neither the Parties nor their
Affiliates shall contest any joinder in any proceeding sought to be brought by
the other Party if such joinder is required by Law.

 

7.4Recovery. Except as otherwise agreed to by the Parties as part of a
cost-sharing arrangement, any monetary award recovered from a Third Party in
connection with any proceeding initiated to protect, maintain, defend, or
enforce any intellectual property in

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the Territory or recovered from a Third Party in connection with any proceeding
initiated for infringement or misappropriation of intellectual property shall
first be used to reimburse the Parties for any out-of-pocket legal expenses
relating to such proceeding and the balance being retained by the Party that
brought and controlled such litigation.

 

7.5Infringement of Third Party IP. If either Party becomes aware that its
activities performed hereunder may constitute actual or alleged infringement or
misappropriation of the intellectual property rights of a Third Party, it shall
promptly notify the other Party and the Parties shall discuss a strategy to
defend or mitigate against any actual or alleged infringement.

 

8.REPRESENTATION AND WARRANTIES

 

8.1Ember Covenants, Representations and Warranties. Ember covenants, represents
and warrants (as the case may be) to Knight that:

 

(a)Ember is a company duly formed and is organised and existing as a company
under the laws of the State of Delaware.

 

(b)Ember has the legal right and authority to enter into this Agreement.

 

(c)Ember has taken all necessary actions to authorize the execution, delivery
and performance of this Agreement.

 

(d)Ember has obtained all consents, licenses and authorizations that are
necessary to perform its obligations under this Agreement.

 

(e)Upon the execution and delivery of this Agreement, this Agreement shall
constitute a valid and binding obligation of Ember, enforceable against Ember in
accordance with its terms.

 

(f)The performance of Ember's obligations under this Agreement will not conflict
with its constitutional documents or result in a breach of any material
agreements or contracts to which it is a party.

 

(g)Ember has not and will not, during the term of this Agreement enter into any
material agreements or contracts that would conflict with its obligations under
this Agreement.

 

(h)Ember owns or licenses all of the Ember Patents licensed to Knight pursuant
to this Agreement and, to the knowledge of Ember, the Ember Patents licensed to
Knight pursuant to this Agreement are all of the patents owned or licensed by
Ember that are reasonably necessary for Knight to carry out its obligations and
exercise its rights under this Agreement.

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(i)Ember has not received any notice that the manufacture, sale, or use of the
Licensed Products in the Territory infringes upon any intellectual property
rights of any Third Parties in the Territory.

 

(j)Ember has not received any notice from a Third Party that any issued Ember
Patent is invalid or unenforceable for any reason.

 

(k)To the knowledge of Ember, there are no activities being carried out by Third
Parties in the Territory that would constitute infringement or misappropriation
of the Ember Patents or the Ember Marks.

 

(1)Licensed Products manufactured by Ember and provided to Knight pursuant to
this Agreement will meet the Specifications at the time of delivery to Knight
and will have been manufactured, handled, stored and labelled in accordance with
the requirements of GMP and all Applicable Laws.

 

8.2Knight Representations and Warranties. Knight covenants, represents and
warrants to Ember (as the case may be) as follows:

 

(a)Knight is a company duly formed and is organised and existing under the laws
of Canada.

 

(b)Knight has the legal right, authority, and power to enter into this
Agreement.

 

(c)Knight has taken all necessary action to authorize the execution, delivery,
and performance of this Agreement.

 

(d)Upon the execution and delivery of this Agreement, this Agreement shall
constitute a valid and binding obligation of Knight, enforceable against Knight
in accordance with its terms.

 

(e)The performance of Knight's obligations under this Agreement will not
conflict with its constitutional documents or result in a breach of any material
agreements or contracts to which any is a party.

 

(f)Knight has not and will not, during the term of this Agreement enter into any
material agreements or contracts that would be inconsistent with its obligations
under this Agreement.

 

(g)Neither Knight nor its Affiliates will initiate a proceeding to challenge the
validity or enforceability of any Ember Patent or the Ember Marks, or directly
or indirectly assist any Third Party with respect to any such proceeding.

 

8.3Warranty disclaimer. Except as expressly set forth in this Agreement, neither
Party makes any representations or extends any warranties of any kind, either
express or implied, including any express or implied warranties of
merchantability or fitness for a particular purpose with respect to the Licensed
Products or any technology or any license

 

 20 

   

  

granted by either party hereunder. Ember does not warrant or represent that any
of the Ember Patents are valid or enforceable.

 

8.4Limitations of liability. Without limiting the Parties' obligations regarding
indemnification, neither Party shall be liable to the other Party or to any
Third Party who may benefit from any provision of this Agreement for special,
indirect, incidental or punitive or consequential damages (including damages
resulting from loss of use, loss of profits, interruption or loss of business or
other economic loss) arising out of this Agreement or with respect to a Party's
performance or non-performance hereunder.

 

8.5Indemnification by Ember. Ember hereby agrees to defend, indemnify, and hold
Knight, its Affiliates and their respective officers, directors, employees and
agents, (each a "Knight Indemnified Party") harmless from and against any Third
Party's claims for loss, damage, or liability resulting from: (i) any breach of
this Agreement or any warranty or covenant provided in this Agreement by Ember
or an Affiliate of Ember; (ii) any violation of Applicable Law by Ember or its
Affiliates; and (iii) any negligent act or omission or willful misconduct of
Ember or its Affiliates; (iv) any claim that the sale by Knight or its
Affiliates, of the Licensed Products in compliance with this Agreement infringes
on intellectual property rights in the Territory of any other person; (v) any
claim arising from any use, within the approved labeling, made by any person of
any of the Licensed Products; in all cases, except to the extent such Third
Party's claim for loss, damage or liability is the result of: (i) any breach of
this Agreement by Knight or a Knight Indemnified Party, (ii) any violation of
Applicable Law by Knight or a Knight Indemnified Party, or (iii) any negligent
act or omission or willful misconduct of Knight or a Knight Indemnified Party.

 

8.6Indemnification by Knight. Knight hereby agrees to defend, indemnify, and
hold Ember, its Affiliates and their respective officers, directors, employees
and agents, (each a "Ember Indemnified Party") harmless from and against any
Third Party's claims for loss, damage, or liability resulting from: (i) any
breach of this Agreement or any warranty or covenant provided in this Agreement
by Knight or an Affiliate of Knight; (ii) any violation of Applicable Law by
Knight or its Affiliates; and (iii) any negligent act or omission or willful
misconduct of Knight or its Affiliates; in all cases, except to the extent such
Third Party's claim for loss, damage or liability is the result of: (i) any
breach of this Agreement by Ember or a Ember Indemnified Party, (ii) any
violation of Applicable Law by Ember or a Ember Indemnified Party, or (iii) any
negligent act or omission or willful misconduct of Ember or a Ember Indemnified
Party.

 

8.7Indemnification Procedure. If an indemnified Party intends to claim
indemnification under this Section 8, such Party shall promptly notify the other
Party of any loss, claim, damage, liability or action in respect of which the
indemnified Party intends to claim such indemnification, and the indemnifying
Party shall have a first opportunity to assume the sole defense thereof with
counsel selected by the indemnifying Party and approved by the indemnified Party
acting reasonably; provided, however, that an indemnified Party shall have the
right to retain its own counsel and participate fully in the defense, with the
fees and expenses to be paid by the indemnified Party. The failure or delay to
deliver

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notice to the indemnifying Party, within a reasonable time after the
commencement of any such proceeding, if irreparably prejudicial to the
indemnifying Party's ability to defend such proceeding, shall relieve the
indemnifying Party of any and all liability to the indemnified Party under this
Section 8. The indemnified Party shall cooperate fully with the indemnifying
Party and their legal representatives in the investigation of any loss, claim,
damage, or liability covered by this indemnification, and shall mitigate such
loss and damages. Any amount payable in order to satisfy an indemnity hereunder
shall be paid as soon as reasonably possible after the indemnified Party has
incurred an indemnified expense and notified the indemnifying Party thereof.

 

8.8Compliance with Law. Each Party shall comply, and shall require their
Affiliates and permitted sublicensees to comply, with all Applicable Laws
relative to their obligations hereunder.

 

8.9Insurance. The Parties shall maintain insurance, including product liability
insurance, that is adequate to cover their obligations hereunder and that is
consistent with normal business practices of prudent corporations engaged in the
same or a similar business. The Parties acknowledge and agree that such
insurance shall not be construed to create a limit with respect to their
indemnification obligations.

 

9.TERM AND TERMINATION

 

9.1Term

 

(a)This Agreement will take effect from the Effective Date and, unless earlier
terminated in accordance with the terms herein, will continue in full force and
effect in respect of each Licensed Product for a period of ten (10) years from
the Launch of that Licensed Product (the "Initial Term").

 

(b)This Agreement shall automatically renew in respect of each Licensed Product
for successive ten (10) year periods (each a "Renewal Term") unless, at least
three (3) months prior to the expiry of the relevant Initial Term or Renewal
Term, either Party provides the other with written notice of its intention not
to renew the Agreement with respect to that Licensed Product in the Territory or
specific jurisdiction(s) within the Territory (a "Non-Renewal Notice") at the
end of the applicable period, and further provided that if the notifying Party
is Ember, it shall be obliged to pay to Knight the Non-Renewal Fee set out in
Section 9.7 below.

 

9.2Termination for Breach. Either Party may terminate this Agreement by written
notice to the other Party with immediate effect in the following cases:

 

(a)In the event of a petition in bankruptcy or insolvency of the other Party
(which is not withdrawn or dismissed within 28 days of issue), or in case of the
filing by the other Party of any petition or answer seeking reorganization,
readjustment, or rearrangement of its business under any law or any government
regulation relating to bankruptcy or insolvency, or in case of the institution
by the other

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Party of any proceedings for the liquidation or winding up of its business, or
for the termination of its corporate charter.

 

(b)If the other Party is otherwise in material default or breach of this
Agreement and such default or breach is not cured within (i) sixty (60) days
after written notice thereof is delivered to the defaulting or breaching Party
(thirty (30) days in the case of Knight's failure to pay any amounts due
hereunder), or (ii) in the case of a breach that cannot be cured within sixty
(60) days, within a reasonable period not exceeding one hundred twenty (120)
days after written notice thereof is delivered to the defaulting or breaching
Party.

 

(c)For the purposes of Section 9.2(b), and for the avoidance of doubt, a breach
by Knight of Section 8.2(g) will be a "material default or breach" of this
Agreement.

 

9.3Effect of Termination. Upon expiry or termination of this Agreement with
respect to a Licensed Product in the Territory or specific jurisdiction(s)
within the Territory, all licenses and rights granted by Ember hereunder which
are applicable to that Licensed Product for the Territory or specific
jurisdiction(s) within the Territory shall terminate and Knight undertakes to:

 

(a)except as provided for in Section 9.6, cease any Commercialization of that
Licensed Product in the Territory or applicable jurisdiction(s) within the
Territory; and

 

(b)within thirty (30) days of expiry or termination, initiate the transfer of
title to the applicable current and pending Regulatory Approvals for that
Licensed Product in the relevant jurisdiction(s) within the Territory to Ember
and assist Ember, at Ember's cost, in submitting appropriate documents to
transfer the applicable Regulatory Approvals for that Licensed Product to Ember
or its designee.

 

9.4Termination of Knight. Knight may terminate this Agreement in whole or in
part (with respect to a particular Licensed Product and/or specific
jurisdiction(s) within the Territory) by notice in writing given no less than
one hundred and eighty (180) days prior to the intended termination date.

 

9.5Survival. In the event of the termination of this Agreement for any reason,
the following provisions of this Agreement shall survive Sections 1, 7, 8.4,
8.5, 8.6, 8.7, 9, 10, 11 and 12 and any other terms which, by their nature,
require or contemplate performance by the Parties after expiry or termination.
In any event, termination of this Agreement shall not relieve the Parties of any
liability which accrued hereunder prior to the effective date of such
termination.

 

9.6Sell-Off of Inventory. Upon termination of this Agreement, Knight shall be
entitled to sell off any inventory of the Licensed Products in Knight's
possession or control or which are subject to binding purchase orders on the
date such termination is effective.

  

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9.7Non-Renewal Fee. In the event that Ember issues a Non-Renewal Notice with
respect to a Licensed Product in the Territory or specific jurisdiction(s)
within the Territory, it shall be obliged to pay to Knight an amount equal to
three (3) times the Net Sales of that Licensed Product as achieved by Knight in
the Territory or applicable jurisdiction(s) within the Territory during the
twelve (12) months preceding the date of such notice (the "Non-Renewal Fee").
Within sixty (60) days of its receipt of the Non-Renewal Notice, Knight shall
issue an invoice for the payment of the Non-Renewal Fee which shall include
reasonable details as to the calculation of the said amount. Subject to Section
10.1 in the case of a disputed invoice, the Non-Renewal Fee shall be payable by
Ember within thirty (30) days of the issuance of the said invoice.

 

10.DISPUTE RESOLUTION

 

10.1Arbitration. Except as otherwise expressly provided herein, any dispute or
claim arising out of or relating to this Agreement, or to the breach,
termination, or validity of this Agreement, will be resolved as follows: each
Party shall discuss the matter and make reasonable efforts to attempt to resolve
the dispute. If the Parties are unable to resolve the dispute, a CEO or
President (or other senior executive) of each Party will meet within thirty days
(30) of a request to attempt to resolve such dispute being made by a Party. If
the CEOs or Presidents or other senior executives (as the case may be) cannot
resolve the dispute through good faith negotiations within sixty (60) days after
a Party requests such meeting, then the Parties shall resort to binding
arbitration before a single arbitrator using the arbitration procedures set
forth under the Rules of Arbitration of the International Chamber of Commerce.
Any hearing in the course of the arbitration shall be held in New York in the
English language. The decision of the arbitrator shall be final and not subject
to appeal and the arbitrator may apportion the costs of the arbitration,
including the reasonable fees and disbursements of the Parties, between or among
the Parties in such manner as the arbitrator considers reasonable. All matters
in relation to the arbitration shall be kept confidential to the full extent
permitted by law, and no individual shall be appointed as an arbitrator unless
he or she agrees in writing to be bound by this provision.

 

10.2Irreparable Harm. Notwithstanding anything to the contrary in Section 10.1,
if either Party in its sole judgment, acting reasonably, believes that any such
dispute could cause it irreparable harm, such Party (i) will be entitled to seek
equitable relief in order to avoid such irreparable harm and (ii) will not be
required to follow the procedures set forth in Section 10.1.

 

11.CONFIDENTIALITY

 

11.1Non-Disclosure and Non-Use Obligations. Each Party shall keep (and shall
require that its Affiliates keep) in confidence all Proprietary Information of
the other Party, and may not disclose to any Third Party (other than
sublicensees, distributors or other parties who, pursuant to Section 2.3, are
subject to a confidentiality agreement with provisions comparable to those set
forth herein) or use such Proprietary Information for any purposes other than
those set forth in this Agreement without the prior written consent of the Party
that disclosed the Proprietary Information to the other Party. The
confidentiality

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obligations shall, however not be applied to the extent that such Proprietary
Information, (a)    is or becomes generally available or otherwise public
through no fault of the receiving Party, (b) was received from a Third Party, as
documented by business records, without any obligation of confidentiality, (c)
was in the possession of the receiving Party prior to receipt of same from the
other Party without any obligation of confidentiality related thereto, (d) has
been independently developed, as documented by business records, without using
Proprietary Information received from the other Party, or (e) is required to be
disclosed by law, the rules of any relevant stock exchange, applicable
Regulatory Authority or court order, provided that notice is promptly delivered
to the non-disclosing Party in order to provide an opportunity to challenge or
limit the disclosure.

 

11.2Return of Proprietary Information. Upon termination or expiration of this
Agreement, each Party shall cease using Proprietary Information received from
the other Party and, unless the Parties separately agree on destruction of such
material and information, return the material and information in question,
including all copies thereof, within thirty (30) days; provided, however, that
each Party may keep one copy of such material and information for archival
purposes only.

 

11.3Survival. The rights and obligations under this Section 11 shall survive the
termination or expiration of this Agreement and shall remain in effect for a
period of five (5) years from the termination or expiration of this Agreement.

 

12.OTHER PROVISIONS

 

12.1Withholding Tax. Knight will make all payments to Ember under this Agreement
without deduction or withholding for taxes except to the extent that any such
deduction or withholding is required by law in effect at the time of payment.
Any tax required to be withheld on amounts payable by Knight under this
Agreement will be timely paid by Knight on behalf of Ember to the appropriate
Governmental Authority, and Knight will furnish Ember with the corresponding
proof of payment of such tax, as may be required in order to enable Ember to
request reimbursement or deduction of the withheld amount, or to otherwise
comply with its duties under Applicable Laws. Knight and Ember agree to
cooperate to legally minimize and reduce such withholding taxes and provide any
information or documentation required by any taxing authority.

 

12.2Further Assurances. Upon request by either Party and at such Party's
expense, the other Party shall do such further acts and execute such additional
agreements and instruments as may be reasonably necessary to give effect to the
purposes of this Agreement.

 

12.3Independent status. Each Party shall act as an independent contractor and
shall not bind nor attempt to bind the other Party to any contract, nor any
performance of obligations outside of this Agreement. Nothing contained or done
under this Agreement shall be interpreted as constituting either Party the agent
of the other in any sense of the term whatsoever or in the relationship of
partners or joint venturers.

 

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12.4Assignment. Except in connection with the acquisition of a Party or the sale
of all or substantially all of the assets of such Party, this Agreement may not
be, directly or indirectly, assigned or transferred, in whole or in part, by a
Party to a Third Party without the prior written consent of the other Party. The
rights and obligations contained herein shall enure to the benefit of each
Party's successors and permitted assigns, and shall be binding on and
enforceable against the relevant Party's successors and permitted assigns. Any
reference in this Agreement to any Party shall be construed accordingly.

 

12.5Compliance with law. Each Party shall comply with, and shall not be in
violation of any valid applicable international, national, provincial or local
statutes, laws, ordinances, rules, regulations, or other governmental orders of
the Territory.

 

12.6Force Majeure. Notwithstanding anything herein to the contrary, no Party
shall be responsible for a failure or delay in performance of any of the
obligations hereunder due to wars, insurrections, strikes, acts of God, power
outages, storms, or actions of regulatory agencies (such events being defined as
"Force Majeure"), provided that the Party seeking relief from its obligations
advises the other Party forthwith of the Force Majeure. A Party whose
performance of obligations has been delayed by force majeure shall use
commercially reasonable efforts to overcome the effect of the Force Majeure as
soon as possible. The other Party will have no right to demand indemnity for
damage or assert a breach against such Party, provided, however, that if the
event of Force Majeure preventing performance shall continue for more than six
(6) months and such underlying cause would not also prevent other parties from
performing such obligations, then the Party not subject to the event of Force
Majeure may terminate this Agreement with a written notice to the other without
any liability hereunder, except the obligation to make payments due to such
date.

 

12.7Notices and Amendments . Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be given by
facsimile or other means of electronic communication or by hand delivery as
hereinafter provided. Any such notice, if sent by fax or other means of
electronic communication, shall be deemed to have been received on the day of
sending, or if delivered by hand shall be deemed to have been received at the
time it is delivered to the applicable address noted below. Notices of change of
address shall also be governed by this Section 12.7. Notices and other
communications shall be addressed as follows:

 

(a)In the case of Ember:

 

Ember Therapeutics Inc.

135 East 57th Street

24th Floor

New York, NY 10022

 

Attn: Joseph Hernandez

E-mail: hernandez_joe@yahoo.com

 

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(b)In the case of Knight:

Knight Therapeutics Inc.

376 Victoria Avenue, Suite 220,

Westmount, Quebec, H3Z l CS

 

Attention: Jeffrey Kadanoff

E-mail: jkadanoff@gud-knight.com

  

12.8Complete Agreement. This Agreement embodies all of the understandings and
obligations between the Parties with respect to the Licensed Products and
supersedes any prior or contemporaneous agreements and understandings, whether
written or oral, between the Parties with respect to the subject matter hereof.
Any amendments or supplements to this Agreement shall not be valid unless
executed in writing by duly authorized officers of both parties.

 

12.9Waiver. No failure to exercise and no delay in exercising any right or
remedy hereunder shall operate as a waiver thereof. Any waiver granted hereunder
shall only be applicable the specific acts covered thereby and shall not apply
to any subsequent events, acts, or circumstances.

 

12.10Severability. In the event any portion of this Agreement shall be held
illegal, void or ineffective, the remaining portion hereof shall remain in full
force and effect. If any of the terms or provisions of this Agreement are in
conflict with any applicable statute or rule of law, then such terms or
provisions shall be deemed inoperative to the extent that they may conflict
therewith and shall be deemed to be modified to conform with such statute or
rule of law.

 

12.11Governing Law. This Agreement all disputes arising out of or relating to
this Agreement, or the performance, enforcement, breach or termination hereof or
thereof, and any remedies relating thereto, shall be construed, governed by and
interpreted in accordance with the laws of the State of New York, United States.

 

12.12Public Announcements. Neither Party shall originate any publicity, news
release, or public announcements relating to this Agreement (including, without
limitation, its existence, its subject matter, the Parties' performance, any
amendment hereto, or performance hereunder), whether to the public or press,
stockholders, or otherwise, without the prior written consent of the other
Party, save only such announcements (including the public disclosure of the
contents of this Agreement) that are required by law or the rules of any
relevant stock exchange to be made or that are otherwise agreed to by the
Parties. If a Party decides to make an announcement, whether required by law or
otherwise, it shall give the other Party reasonable notice of the text of the
announcement so that the other Party shall have an opportunity to comment upon
the announcement. To the extent that the receiving Party reasonably requests the
deletion of any information in any such announcement, the disclosing Party shall
delete such information unless, in the

 

 27 

   

  

opinion of the disclosing Party's legal counsel, such information is required by
law or the rules of any relevant stock exchange to be disclosed. The timing and
content of the initial press release relating to this Agreement, if any,
including its existence, the subject matter to which it relates and the
transactions contemplated herein will, except as otherwise required by law or
any stock exchange rules, be determined jointly by the Parties.

 

12.13Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be considered one and the same Agreement and shall become
effective when a counterpart hereof has been signed by each of the Parties and
delivered to the other Party.

 

12.14English Language. At the request of the parties, this Agreement has been
negotiated in the English language and will be or have been executed in the
English language. Les soussignes ont expressement demande que ce document et
tous les documents annexes soient rediges en langue anglaise.

 

[Signature page follows ]

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IN WITNESS WHEREOF, the parties have signed this Agreement

 

EMBER THERAPEUTICS INC. KNIGHT THERAPEUTICS INC.    

Per: /s/ Joseph Hernandez

Name: Joseph Hernandez

Title: Chairman

Per: /s/ Jeffrey Kadanoff

Name: Jeffrey Kadanoff

Title: Chief Financial Officer

 

Signature Page to Distribution, License and Supply Agreement

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SCHEDULE

 

EMBER MARKS

 

Ember Therapeutics, Inc.

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