Exhibit 10.5

SECOND SUPPLEMENTAL AGREEMENT

TO LICENSE Agreement DATED DECEMBER 12, 2019

 

This SECOND SUPPLEMENTAL AGREEMENT (this “Supplement”) is made and entered into
effective as of June 30, 2020 (the “Effective Date”), by and among ATHENEX,
INC., a corporation organized and existing under the laws of the State of
Delaware USA and having its principal office at Conventus Building, 1001 Main
Street, Suite 600, Buffalo, New York 14203, USA (“Athenex”), Chongqing Taihao
Pharmaceutical Co. Ltd., a company organized and existing under the laws of
China and having its principal office at C-5 #105 C-5, Er Lang Chuang Ye Road,
Jiulongpo District, Chongqing, China (“Taihao”), and GUANGZHOU XIANGXUE
PHARMACEUTICAL CO., LTD., a company organized and existing under the laws of
China and having its principal office at 2 Jinfengyuan Road, Guangzhou, China
(“XPH”)  Athenex, Taihao, and XPH are sometimes referred to herein individually
as a “Party”, and collectively as the “Parties.”

 

RECITALS

 

A.Athenex and XPH entered into a License Agreement, dated as of December 12,
2019, as supplemented by a supplemental agreement dated as of March 31, 2020 by
and among Athenex, Taihao and XPH (collectively, the “License
Agreement”).  Capitalized terms used but not defined in this Supplement have the
meanings given to them in the License Agreement.

 

B.Taihao is a wholly-owned subsidiary of Athenex, which is incorporated and has
an office and business operations in China, and Athenex has determined that it
is in the best interests of Athenex and its subsidiaries for Taihao, under the
framework of the License Agreement, to assist Athenex by providing oversight and
management of such license arrangement in the Territory. Athenex acknowledges
that Taihao has assisted Athenex in fulfilling its obligations in transferring
the relevant license to XPH, and exercising its rights, as licensor under the
License Agreement. Taihao shall collect the relevant License Payments (as
defined below) from XPH, and make the payments to Athenex as set out in this
Supplement.

 

NOW, THEREFORE, the Parties hereby agree as follows:

 

1.Purpose.  The Parties are entering into this Supplement for purposes of (a)
facilitating the settlement of License Payments (as defined below) by XPH
pursuant to the terms of the License Agreement, and (b) clarifying certain
matters relating to the payment of License Payments and the Parties respective
obligations for Taxes with respect thereto.  As used in this Supplement,
“License Payments” means all payments due from XPH to Athenex under the License
Agreement including, without limitation, all upfront fees, regulatory milestone
fees, sales milestone fees, royalties, Change of Control Payments.  Except as
specifically modified or supplemented pursuant to this Supplement, the License
Agreement shall continue in full force and effect in accordance with its terms,
with XPH and Athenex being the key parties to the license arrangement set forth
in the License Agreement

 

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2.Taihao’s Services. Athenex hereby retains Taihao to provide, and Taihao hereby
agrees to provide to Athenex, services in connection with the management and
administration of the license arrangement in China as assigned from time to time
by Athenex.  As part of its services, Taihao (a) has assisted Athenex in
fulfilling its obligations in transferring the relevant license to XPH, and
exercising its rights, as licensor under the License Agreement; (b) collects all
License Payments from XPH; (c) shall provide management and oversight for the
license arrangement in accordance with the License Agreement; and (d) according
to the License Agreement, shall remit the License Payments (less (i) any Taxes
required to be withheld by Taihao pursuant to the provisions of Section 3
(Payment of License Payments) of this Supplement and (ii) any fees and other
amounts that Athenex agrees to pay to Taihao for performing its services) to
Athenex, as directed by Athenex, by wire transfer of United States Dollars in
immediately available funds to an account designated by Athenex.  Except as
otherwise agreed upon by Athenex and Taihao, in consideration for services
performed by Taihao pursuant to this Supplement, Taihao shall remit 97% of the
License Payments received from XPH (less any Taxes required to be withheld by
Taihao) to Athenex.

3.Payment of License Payments.  

a.Payments to Taihao.  Unless and until Athenex otherwise directs XPH in
writing, Athenex hereby authorizes and directs XPH to pay the License Payments
to Taihao (on behalf of Athenex), pursuant to wire instructions that Athenex and
Taihao delivers to XPH for such purposes.  Upon XPH’s payment of any License
Payment to Taihao, XPH shall have satisfied in full its obligation to pay such
License Payment to Athenex pursuant to the License Agreement.

b.Currency.  Notwithstanding the provisions of Section 5.7(a) of the License
Agreement (which requires payments in United States Dollars), XPH may make
License Payments to Taihao, for the benefit of Athenex, in Renminbi (“RMB”). The
amount of the License Payment payable in RMB shall be determined based on an
exchange rate agreed upon by Athenex and XPH at the time the applicable License
Payment becomes due.

c.Withholding. Notwithstanding the provisions of Section 5.7(c) of the License
Agreement, XPH will not withhold from any License Payments any income Taxes or
other Taxes. If and to the extent that any Taxes are required to be withheld
from the License Payments under applicable Laws upon Taihao’s remittance of
payment to Athenex, Taihao shall withhold such amounts from the License Payments
and shall pay such amounts to the proper Tax Authorities.  If any Tax Authority
notifies XPH that it should have withheld Taxes from the License Payments, or
demands payment of any such Taxes from XPH, XPH shall notify Athenex in writing
of such notification or demand, and XPH and Athenex shall coordinate efforts to
pay, reduce or eliminate required withholding Taxes, in accordance with the
provisions of Section 5.7(c) of the License Agreement.  If, following demand by
a Tax Authority (and following such efforts to reduce or eliminate such
withholding Taxes), XPH is required to pay and does pay to any Tax Authority any
withholding Taxes that were required to be withheld from the License Payments
under applicable Law (and for which Athenex is responsible under Section 5.7(c)
of the License Agreement, as modified by this Supplement), Athenex shall
reimburse XPH for the amount of such payment within 30 days after receipt of
evidence of such payment. If Athenex does not reimburse XPH for such payment,
XPH shall have the right to deduct the corresponding amount from future License
Payments.

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d.Indirect Taxes.  Notwithstanding the provisions of Section 5.7(c) of the
License Agreement, Athenex and XPH agree that all Indirect Taxes in connection
with License Payments under the License Agreement shall be borne by Athenex,
rather than XPH; provided, however, that XPH shall be responsible for and shall
pay all import duties and import fees arising as a result of the transactions
contemplated by the License Agreement, which shall not constitute “Indirect
Taxes” under the License Agreement.  

4.Binding Effect.  This Supplement shall be binding upon and inure to the
benefit of the Parties hereto and their successors and permitted assigns.

5.Governing law This Supplement shall be governed by and construed and enforced
in accordance with the laws of Singapore without reference to any choice of law
principles thereof that would cause the application of the laws of a different
jurisdiction.  

6.Counterparts. The Supplement may be executed in two or more counterparts, all
of which shall be considered one and the same instrument and shall become
effective when one or more counterparts have been signed by each of the Parties
and delivered to the other Parties. This Supplement may be executed by facsimile
or .pdf signature and a facsimile or .pdf signature shall constitute an original
for all purposes.  

7.Modifications.  No modification or amendment of this Supplement shall be
effective unless in writing and signed by all Parties.

8.Severability.  If any term or provision of this Supplement shall to any extent
be invalid or unenforceable, the remainder of this Supplement shall not be
affected thereby and each provision of this Supplement shall be valid and
enforceable to the fullest extent permitted by law.

[signature page follows]

 

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IN WITNESS WHEREOF, the Parties have executed this Supplement as of the
Effective Date.

 

Athenex, inc.

 

 

By:

/s/ Randoll Sze

Name:

Randoll Sze

Title:

Chief Financial Officer

 

CHONGQING TAIHAO PHARMACEUTICAL CO. LTD.

 

 

By:

/s/ William Zuo

Name:

William Zuo

Title:

President

 

GUANGZHOU XIANGXUE PHARMACEUTICAL CO., LTD.

 

 

By:

/s/ YongHui Wang

Name:

YongHui Wang

Title:

Chief Executive Officer

 

[signature page to Second Supplemental Agreement]