Document:

EMPLOYMENT AGREEMENT

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

 

This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of this 19th day of April 2010, by and between CHROMADEX, INC., a California corporation ("Employer"), and FRANK L JAKSCH, JR. ("Employee").

R E C I T A L S

A.Employer and Employee are parties to that certain Employment Agreement dated April 14, 2008, as amended by a First Amendment to Employment Agreement dated August 21, 2008 (as amended, the "Prior Employment Agreement").

B.Employer and Employee desire to amend and restate the Prior Employment Agreement, effective as of April 19th, 2010 (the "Effective Date"), as set forth in this Agreement.

A G R E E M E N T

In consideration of the foregoing recitals and of the mutual covenants and conditions contained herein, the parties, intending to be legally bound, agree as follows:

1.Term.  Employer agrees to continue to employ Employee, and Employee agrees to continue to serve Employer, in accordance with the terms of this Agreement, for a term (the "Initial Term") beginning on the Effective Date and continuing for a period of three years thereafter unless earlier terminated in accordance with the provisions hereof.  Unless previously terminated pursuant to Section 7, below, this Agreement shall automatically be renewed on the third anniversary of the Effective Date and each one-year anniversary thereafter (each, a "Renewal Date") for an additional term of one year (each, a "Renewal Term"), with each Renewal Term being subject to the termination provisions hereof.

2.Employment of Employee.

(a)Specific Positions.  Employer and Employee hereby agree that, subject to the provisions of this Agreement, Employer will continue to employ Employee and Employee will continue to serve Employer as the Chief Executive Officer of Employer.  Employee shall report to, and perform such usual and customary duties of such office and as may be delegated to Employee from time to time by, the Board of Directors of Employer (the "Board"), including, without limitation, those specific duties set forth on Exhibit A attached hereto, subject always to the policies as determined from time to time by Employer.  The Board may and reserves the right to change Employee's position and reporting relationship subject to the needs of its business.  

(b)Promotion of Employer's Business.  During the term of this Agreement, Employee shall not engage in any business competitive with Employer.  Employee agrees to devote his full business time, attention, knowledge, skill and energy to the business, affairs and interests of Employer and matters related thereto, and shall use his best efforts and abilities to promote Employer's interests; provided, however, that Employee is not precluded from devoting reasonable periods of time required: (i) for serving as a director or committee member of any organization that does not compete with Employer or that does not involve a conflict of interest with Employer; or (ii) for managing his personal investments; so long as in either case, such activities do not materially interfere with the regular performance of his duties under this Agreement.

(c)Principal Office.  Employee's principal office and normal place of work shall be at Employer's executive offices in Southern California or as otherwise assigned by Employer consistent with the needs of its business.  Employee's normal place of work shall be defined as any office where Employee is consistently requested by Employer to commute to more than one day per week. 

3.Salary.  Employer shall pay to Employee during the term of this Agreement a base salary ("Base Salary") of $225,000 per year payable in accordance with Employer's normal payroll.  In addition, the then applicable Base Salary shall be increased by $50,000 upon such time that Employer shall have publicly traded shares on either the Nasdaq Stock Market, the American Stock Exchange or the New York Stock Exchange.  The Base Salary may be reviewed annually thereafter and may be increased (but not decreased) at Employer's sole discretion in accordance with Employer's normal review process.

4.Bonus.  In addition to the Base Salary set forth in Section 3, above, Employer shall pay to Employee an annual cash bonus (each, an "Annual Bonus") in an amount equal to up to 40% of the Base Salary in effect as of the last day of the immediately preceding fiscal year based upon the achievement of performance targets with respect to Employer's business to be mutually agreed upon by Employee and the Board (the "Bonus Target"); provided, however, that in the event that Employer's business performance for any fiscal year is greater than 75%, but less than 100% of the applicable Bonus Target, Employee shall be paid the percentage of the maximum Annual Bonus determined by linear interpolation (i.e., 87.5% of the applicable Bonus Target would result in an Annual Bonus under this Section 4 of 20% of such Base Salary); provided further, however, that in the event the parties are unable to agree to a mutually acceptable Bonus Target at any time during the term of this Agreement, Employee shall be paid an Annual Bonus for any such fiscal year of not less than 15% of such Base Salary.  Each Annual Bonus payment shall be paid on or before March 15 of the fiscal year following the fiscal year for which the Annual Bonus is payable.

5.Option Grant.  At the next meeting of Employer's Compensation Committee after the Effective Date, Employer shall grant to Employee, (a) an option to purchase 400,000 shares of Employer's common stock (the "First Option"), and (b) an additional option to purchase up to 400,000 additional shares of Employer's common stock (the "Second Option").  The First Option and the Second Option are hereinafter collectively referred to as the "Options."  To the maximum extent possible, the Options shall be "incentive stock options" as such term is defined in Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").  The Options will be governed by a separate Stock Option Agreement and Employer's Second Amended and Restated 2007 Equity Incentive Plan, as it may be amended through the date of grant (as amended, the "Plan").  The exercise price of the Options will be equal to the fair market value of the common stock of Employer on the date of the grant, as determined by Employer's Compensation Committee in a manner consistent with Sections 409A and 422 of the Code.  Each of the Options will vest as determined by Employer's Compensation Committee.

6.Benefits.

(a)Welfare and Retirement Benefits.  During Employee's employment by Employer under this Agreement, Employee shall be eligible for participation in and shall be covered by any and all such medical, dental, life and other voluntary insurance plans, retirement and profit sharing plans, and such other similar benefits generally available to other employees of Employer in similar employment positions, on the same terms as such employees, subject to meeting applicable eligibility requirements.  Employee shall also be covered by long-term disability insurance, to the extent that such insurance is available to Employer on commercially reasonable terms and conditions, such that, upon a termination of Employee by Employer under Section 7(c) as a result of a disability, Employee shall be entitled to receive disability insurance coverage in an amount and for a duration at least equal to that made generally available to officers of Employer under Employer's long-term disability insurance in effect as of the date of this Agreement.

(b)Reimbursements.  During Employee's employment with Employer under this Agreement, Employee shall be entitled to receive prompt reimbursement of all reasonable expenses incurred by Employee in performing services hereunder, including all expenses of travel at the request of, or in the service of, Employer provided that such expenses are incurred and accounted for in accordance with the policies and procedures established by Employer. 

(c)Automobile.  Subject to the approval of the Board, Employer may elect to reimburse Employee for certain costs incurred by Employee in leasing, maintaining, operating and insuring an automobile for use by Employee in the performance of Employee's duties hereunder.  The extent by which such costs are reimbursed by Employer to Employee shall be determined in accordance with Employer's automobile reimbursement policy then in effect, which policy shall have been approved by the Board.

(d)Indemnification.  Employee and Employer are concurrently entering into Employer's standard form of Indemnification Agreement, providing indemnification to Employee to the maximum extent permitted by law, and in accordance therewith, Employer will agree to advance any expenses for which indemnification is available to the extent allowed by applicable law.  Employer shall procure directors and officers insurance with coverage of not less than $5 million, and shall maintain such insurance in full force and effect during the term of this Agreement and for a period of seven years thereafter.

7.Termination.  

(a)Termination for Cause.  Employer shall have the right, exercisable immediately upon written notice, to terminate Employee's employment for "Cause."

(i)Definition of Cause.  As used herein, "Cause" means any of the following:  (A) Employee is convicted by a court of competent jurisdiction, pleads "no contest" to a felony or any other conduct of a criminal nature involving moral turpitude (other than minor traffic violations); (B) Employee intentionally engages in fraud, embezzlement or any other illegal conduct substantially detrimental to the business or reputation of Employer, regardless of whether such conduct is designed to defraud Employer or others; or (C) Employee refuses to perform his duties hereunder or otherwise breaches any material covenant, warranty or representation of this Agreement, or Employee's Non-Disclosure and Confidentiality Agreement with Employer, and fails to cure such breach (if such breach is then capable of being cured) within 10 business days following written notice thereof specifying in reasonable detail the nature of such breach, or if such breach is not capable of being cured in such time, a cure shall not have been diligently initiated within such 10 business day period; provided, however, that the termination shall not be effective if (1) such termination is as a result of clause (C) of this subparagraph (i), (2) such notice is the first such notice of termination delivered by Employer to Employee with respect to the particular terms or provisions that Employee is alleged to have failed to observe or perform hereunder, (3) within 30 days following the date of such notice Employee shall use his best efforts to perform such duties and responsibilities, and (4) Employee is given reasonable notice of the board meeting at which the determination of "Cause" is to be taken and has had an opportunity to appear before the Board, together with Employee's counsel, and be heard.

(ii)Effect of Termination.  Upon termination in accordance with this Section 7(a), Employee shall be entitled to no further payments from Employer under this Agreement, except for the payments, of cash and in-kind, provided for under Sections 3 and 6 of this Agreement accrued hereunder through, but not including, the effective date of such termination.  Employer's exercise of its right to terminate for Cause shall be without prejudice to any other remedy to which it may be entitled at law, in equity or under this Agreement.

(b)Voluntary Termination.  Employee may terminate his employment at any time by giving no less than 30 days' written notice to Employer.  Employer reserves the right to accept Employee's voluntary termination immediately, without notice and without any further payment obligation except as described below.

(i)No Reason.  Upon termination in accordance with this Section 7(b), except as otherwise provided in Section 7(b)(ii), below, Employee shall be entitled to no further payments from Employer under this Agreement, except for (A) the payments, of cash and in-kind, provided for under Sections 3 and 6 of this Agreement accrued hereunder through, but not including, the effective date of such termination, and (B) a pro rated portion of the maximum Annual Bonus payable to Employee for the year of termination (the "Pro Rated Annual Bonus") which shall be deemed to be an amount equal to 40% of the Base Salary then in effect multiplied by a fraction, the numerator of which is the number of full calendar days between the first day of the calendar year in which such termination occurs and the date of such termination and the denominator of which is 365.

(ii)Good Reason.  Notwithstanding anything to the contrary in Section 7(b)(i), above, if Employee terminates his employment under this Section 7(b) for Good Reason (as defined below), Employee shall be entitled to receive from Employer all of the compensation and benefits provided for in Section 7(e), below plus the maximum Annual Bonus Employee would have been otherwise entitled to for the year in which such termination occurs, and, for purposes thereof, Employee shall be deemed to have been employed for the entirety of such year (the "Maximum Annual Bonus").  As used herein, "Good Reason" means any of the following:  (A) the assignment to Employee of duties materially inconsistent with those of other employees of Employer in similar employment positions, and Employee provides written notice to Employer within 60 days of such assignment that such duties are materially inconsistent with those duties of such similarly-situated employees, and Employer fails to release Employee from his obligation to perform such inconsistent duties and to re-assign Employee to his customary duties within 30 days after Employer's receipt of such notice; or (B) if, without the consent of Employee, Employee's normal place of work is or becomes situated more than 50 linear miles from Employee's personal residence as of the Effective Date (which distance on the Effective Date is 10 linear miles), or (C) a failure by Employer to comply with any other material provision of this Agreement which has not been cured within 60 days after notice of such noncompliance has been given by Employee to Employer, or if such failure is not capable of being cured in such time, a cure shall not have been diligently initiated by Employer within such 60 day period.

(c)Termination Due to Death or Disability.  This Agreement shall automatically terminate upon the death of Employee.  In addition, if any disability or incapacity of Employee to perform his duties as the result of any injury, sickness or physical, mental or emotional condition continues for a period of 70 consecutive days or a total of 70 days in any 90-day period, Employer may terminate Employee's employment upon written notice to Employee.  Upon termination in accordance with this Section 7(c), Employee (or Employee's estate, as the case may be) shall be entitled to those payments, of cash and in-kind, provided for under Sections 3 through 6, inclusive, of this Agreement accrued hereunder through, but not including, the date of death or, in the case of disability, the date of termination.  Notwithstanding any policy of Employer to the contrary, any Annual Bonus that would be due to Employee for the fiscal year in which termination pursuant to this Section 7(c) occurs will, at the option of the Board, be paid to Employee (or Employee's estate, as the case may be) in an amount no less than the Pro Rated Annual Bonus, not to exceed the Maximum Annual Bonus.  During such time that Employee is unable to perform his duties as a result of any injury, sickness or physical, mental or emotional condition, Employer, at its option, may reduce the Base Salary by the amount, if any, of the disability insurance or similar benefits for which Employee receives as a result of such injury, sickness or physical, mental or emotional condition.  Such reductions to the Base Salary, if any, shall be limited to benefits actually received by Employee (including any withholding taxes paid on Employee's behalf) from disability insurance plans paid for by Employer or from state or federal government mandated disability plans.  The Base Salary shall not be reduced by any disability insurance benefits received by Employee, if any, from plans purchased by Employee.

(d)Termination Upon Cessation of Business.  Employer shall have the right to immediately terminate Employee's employment under this Agreement upon a "Cessation of Business."  For purposes of this Agreement, a "Cessation of Business" shall mean Employer's ceasing to operate in the ordinary course of business, whether by dissolution, liquidation, sale of assets, consolidation, merger or otherwise, in connection with, pursuant to or arising out of a good faith determination by Employer that the continuing operation of the business in its ordinary course is reasonably likely to render Employer unable to meet its liabilities as they mature.  If Employee is so terminated by Employer pursuant to this Section 7(d) during the Term, Employer shall pay to Employee (i) the Base Salary until the last to occur of (A) the expiration of the remaining portion of the Initial Term or the then applicable Renewal Term, as the case may be, or (B) the expiration of the 12-month period commencing on the date Employee is terminated, and (ii) the Maximum Annual Bonus.  Employer shall make payment of such Base Salary and the Maximum Annual Bonus in a single lump sum payment at termination.

(e)Termination Without Cause.  Employer shall have the right, exercisable upon written notice, to terminate Employee's employment under this Agreement for any reason other than set forth in Sections 7(a), (c) and (d), above, at any time during the term of this Agreement.  If Employee is so terminated by Employer pursuant to this Section 7(e) during the Term, Employer shall pay Employee two weeks of Base Salary for each full year of service to a maximum of eight (8) weeks of the Base Salary.  Should Employee, at Employee's sole and exclusive option, provide Employer with Employer's then standard form of separation, waiver and release agreement of all claims against Employer, then (i) Employer agrees to (A) pay to Employee the Base Salary, and (B) provide or reimburse Employee for the same medical, dental, long-term disability and life insurance pursuant to Section 6(a) to which Employee was entitled hereunder as of the date of termination provided, however, that in the case of such medical and dental insurance, that Employee makes a timely election for continuation coverage under COBRA, in each case (i.e., the Base Salary and insurance), until the last to occur (the "Severance Period") of (1) the expiration of the remaining portion of the Initial Term or the then applicable Renewal Term, as the case may be, or (2) the 24-month period commencing on the date Employee is terminated, (ii) pay Employee an amount equal to the product obtained by multiplying (A) the Maximum Annual Bonus for which Employee would have been otherwise entitled to receive by (B) the fraction in which the numerator is the number of calendar months in the Severance Period and the denominator of which is 24, and (iii) the vesting of all outstanding stock awards in favor of Employee shall immediately vest in full.  Employer shall make such payments in accordance with its regular payroll schedule.  If any such payments are due Employee upon a Cessation of Business, all remaining payments shall become immediately due and payable upon the occurrence of such Cessation of Business.

(f)Exclusive Remedy.  The payments contemplated by this Agreement shall constitute Employee's exclusive and sole remedy for any claim that Employee might otherwise have against Employer under this Agreement which, but for Employee's termination of employment hereunder, might otherwise be due and payable by Employer to Employee.  Employee covenants not to assert or pursue any such remedies, other than an action to enforce the payments due to Employee under this Agreement.  Nothing in this Section 7(f), however, shall be construed to bar, preclude or otherwise limit Employee's right to bring an action against Employer if Employee's termination of employment with Employer was otherwise unlawful or in violation of public policy.

8.Prior Employment Agreement.  Employee hereby agrees to the termination, effective as of the Effective Date, of the Prior Employment Agreement.  In consideration of his employment by Employer hereunder, except for accrued but unpaid salary and bonus and any previously granted stock options, Employee hereby waives all rights, benefits and privileges under the Prior Employment Agreement, including, without limitation, any right to severance or similar payments.

9.Miscellaneous.

(a)Withholdings.  All payments to Employee hereunder shall be made after reduction for all federal, state and local withholding and payroll taxes, all as determined under applicable law and regulations, and Employer shall make all reports and similar filings required by such law and regulations with respect to such payments, withholdings and taxes.

(b)Succession.  This Agreement shall inure to the benefit of and shall be binding upon Employer, its successors and assigns.  The obligations and duties of Employee hereunder shall be personal and not assignable.

(c)Notices.  Any and all notices, demands, requests or other communications hereunder shall be in writing and shall be deemed duly given when personally delivered to or transmitted by overnight express delivery or by facsimile to and received by the party to whom such notice is intended (provided the original thereof is sent by mail, in the manner set forth below, on the next business day after the facsimile transmission is sent), or in lieu of such personal delivery or overnight express delivery or facsimile transmission, on receipt when deposited in the United States mail, first-class, certified or registered, postage prepaid, return receipt requested, addressed to the applicable party at the address set forth below such party's signature to this Agreement.  The parties may change their respective addresses for the purpose of this Section 9(c) by giving notice of such change to the other parties in the manner which is provided in this Section 9(c).

(d)Entire Agreement.  This Agreement contains the entire agreement of the parties relating to the subject matter hereof, and it replaces and supersedes any prior agreements, whether oral or written, between the parties relating to said subject matter, including, without limitation, the Prior Employment Agreement.

(e)Headings.  The headings of Sections herein are used for convenience only and shall not affect the meaning or contents hereof.

(f)Waiver; Amendment.  No provision hereof may be waived except by a written agreement signed by the waiving party.  The waiver of any term or of any condition of this Agreement shall not be deemed to constitute the waiver of any other term or condition.  This Agreement may be amended only by a written agreement signed by the parties hereto.

(g)Severability.  If any of the provisions of this Agreement shall be held unenforceable by the final determination of a court of competent jurisdiction and all appeals therefrom shall have failed or the time for such appeals shall have expired, such provision or provisions shall be deemed eliminated from this Agreement but the remaining provisions shall nevertheless be given full effect.  In the event this Agreement or any portion hereof is more restrictive than permitted by the law of the jurisdiction in which enforcement is sought, this Agreement or such portion shall be limited in that jurisdiction only to the extent required by the law of that jurisdiction.

(h)Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of California.

(i)Application of Section 409A.  Notwithstanding anything to the contrary in this Agreement, solely to the extent that such delay is required in order to avoid the imposition of an additional tax under Section 409A of the Code, if Employee is a "specified employee" for purposes of Section 409A(a)(2)(B) of the Code, any payments to be made pursuant to this Agreement that are considered to be non-qualified deferred compensation distributable in connection with the Employee's separation from service with Employer for purposes of Section 409A of the Code, and which otherwise would have been payable at any time during the six-month period immediately following Employee's separation from service with Employer, shall not be paid prior to, and shall instead be payable in a lump sum within ten (10) business days following the end of such six-month period.  Each payment of Base Salary, Annual Bonus or other compensation under this Agreement, including, without limitation, each payment to be made following termination of employment, shall be treated as a separate payment for purposes of Section 409A of the Code.  If any payment that is to be made as a lump sum upon a Cessation of Business under Section 7(d) or Section 7(e) (or any other section referring to Section 7(e)) is considered to be non-qualified deferred compensation for purposes of Section 409A of the Code, then such payment shall be made as a lump sum payment of all obligations remaining under this Agreement (rather than continuing to be paid in installments on previously scheduled payment dates) only if one or more of the following conditions are satisfied:  (A) the Cessation of Business includes the corporate dissolution of the Employer taxable under Section 331 of the Code and the lump sum payment is made and taxable to the Employee within 12 months following the corporate dissolution, or (B) the payment of the lump sum is approved by a bankruptcy court pursuant to 11 U.S.C. Section 503(b)(1)(A), or (C) the Cessation of Business constitutes a "change in control event" as defined for purposes of Section 409A of the Code, the lump sum payment is made within the 30 days preceding or 12 months following such change in control event, and all deferred compensation agreements, methods, programs, and other arrangements sponsored by the Employer or its successor immediately after the change in control event with respect to each individual that experienced the change in control event are similarly terminated and liquidated, or (D) any other event or condition has occurred or exists that allows for the acceleration of such payment without resulting in the imposition of an additional tax under Section 409A of the Code.  The parties agree that in the event the Internal Revenue Service issues additional guidance to the effect that any of the payments provided for in this Agreement would not be in compliance with Section 409A of the Code, the parties will negotiate in good faith to address such guidance so that such payments are compliant with Section 409A of the Code to the extent reasonably practicable.

(j)Parachute Payments.  Any other provisions of this Agreement or of any other agreement between Employee and Employer to the contrary notwithstanding, if any payment or benefit Employee would receive from Employer or otherwise in connection with a change of control of Employer ("Payment") would (i) constitute a "parachute payment" within the meaning of Section 280G of the Code and (ii) be subject to the excise tax imposed by Section 4999 of the Code (the "Excise Tax"), then the Employer shall pay the Employee an additional payment (a "Gross-Up Payment").  The Gross-Up Payment shall equal an amount such that after payment by the Employee of all taxes (and any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, but excluding any income taxes, interest and penalties imposed pursuant to Section 409A of the Code, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.  Notwithstanding the foregoing provisions of this Section 9(j), if it is determined that the Employee would be entitled to a Gross-Up Payment, but that the Parachute Value (as defined below) of all Payments does not exceed 110% of an amount equal to 2.99 times the Employee's "base amount" within the meaning of Section 280G(b)(3) of the Code (the "Safe Harbor Amount"), then no Gross-Up Payment shall be made to the Employee and the amounts payable in cash under Section 7 of this Agreement shall be reduced so that the Parachute Value of all Payments, in the aggregate, equals the Safe Harbor Amount.  For purposes of reducing the Payments to the Safe Harbor Amount, each payment to be made in cash under Section 7 of this Agreement shall be reduced on a pro rata basis, and no other Payments shall be reduced.  If the reduction of the amounts payable in cash under Section 7 of this Agreement would not result in a reduction of the Parachute Value of all Payments to the Safe Harbor Amount, then no amounts payable under the Agreement shall be reduced pursuant to this Section 9(j) and the Employee shall be paid the Gross-Up Payment.  For purposes of this Section 9(j), "Parachute Value" means the present value of a Payment as of the date of a change of control for purposes of Section 280G of the Code of the portion of such Payment that constitutes a "parachute payment" under Section 280G(b)(2), as determined by the Accounting Firm (as defined below).  All determinations required to be made under this Section 9(j), including whether and when a Gross-Up Payment is required and the amount of any such Gross-Up Payment and the assumptions to be utilized in arriving at such determinations, shall be made by a nationally recognized accounting firm selected in the discretion of the Employer immediately prior to the change of control (the "Accounting Firm") which shall provide detailed supporting calculations both to the Employer and the Employee within 15 business days of the receipt of notice from the Employee that there has been a Payment, or such earlier time as is requested by the Employer.  Except as provided below, any determination by the Accounting Firm shall be binding upon the Employer and the Employee.  If, as a result of a claim made by the Internal Revenue Service or any other applicable taxing authority, it is determined that the amount of the Excise Tax payable by the Employee is greater than the amount initially determined by the Accounting Firm, then the Employer (or its successor) shall pay to the Employee an additional Gross-Up Payment (determined as set forth above) with respect to such additional Excise Tax.  All fees and expenses of the Accounting Firm and of responding to any claim made by the Internal Revenue Service or any other applicable taxing authority shall be borne solely by the Employer; and, in that regard, (i) the Employer shall pay such fees and expenses not later than the end of the calendar year following the calendar year in which the related work is performed or the expenses are incurred, (ii) the amount of fees and expenses that the Employer is obligated to pay in any given calendar year shall not affect any amounts that the Employer is obligated to pay in any other calendar year, and (iii) the Employee's right to have the Employer pay such fees and expenses may not be liquidated or exchanged for any other benefit.  Any Gross-Up Payment, as determined pursuant to this Section 9(j), shall be paid by the Employer to the Employee within fifteen business days of the receipt of the Accounting Firm's determination or the final resolution of any claim made by the Internal Revenue Service or any other applicable taxing authority; provided that, the Gross-Up Payment shall in all events be paid no later than the end of the Employee's taxable year next following the Employee's taxable year in which the Excise Tax (and any income or other related taxes or interest or penalties thereon) on a Payment are remitted to the Internal Revenue Service or any other applicable taxing authority or, in the case of amounts relating to a claim that does not result in the remittance of any federal, state, local and foreign income, excise, social security and other taxes, the calendar year in which the claim is finally settled or otherwise resolved.  The Employer may, in its sole discretion, withhold and pay over to the Internal Revenue Service or any other applicable taxing authority, for the benefit of the Employee, all or any portion of any Gross-Up Payment, and the Employee hereby consents to such withholding.

 

[ signature page follows ]

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above.

	
"EMPLOYER":

CHROMADEX, INC.,

a California corporation

 

By: /s/ Stephen A. Block

       _______________________

      Stephen A. Block,

      Director, Chairman of Compensation Committee

Address:

 

Street Address

City          State         Zip Code

Facsimile No.

"EMPLOYEE":

 

 

 

 

By: /s/ Frank L. Jaksch, Jr.

      _____________________

      FRANK L JAKSCH, JR.

 

Address:

 
______

Street Address

City          State         Zip Code

Facsimile No.

EXHIBIT A

Responsibilities

 

Responsible for all aspects of Employer's ongoing management.Sublicense Agreement, by and between Sangamo and Johnson & Johnson

 Exhibit 10.3 

SUBLICENSE AGREEMENT 

AGREEMENT made effective this 9th day of May, 1996 BY AND BETWEEN: 

JOHNSON & JOHNSON, a company organized under the laws of the State of New Jersey, U.S.A., and having executive offices at One Johnson &
Johnson Plaza, New Brunswick, New Jersey 08933-5501 (hereinafter called “LICENSOR”) 
 ON THE ONE HAND, 

AND: 
 SANGAMO BIOSCIENCES, INCORPORATED, a
company organized under Delaware law, having an address at 950 Marina Village Parkway, Suite 100, Alameda, CA 94501 
 (hereinafter called
“LICENSEE”) 
 ON THE OTHER HAND, 

WITNESSETH: 
  

	A.	WHEREAS, pursuant to Research and License Agreements dated May 1, 1982 and January 1, 1987 (hereinafter collectively the “SCRIPPS AGREEMENTS”)
between LICENSOR and SCRIPPS CLINIC AND RESEARCH FOUNDATION (hereinafter “SCRIPPS”), SCRIPPS granted LICENSOR an exclusive option to obtain an exclusive worldwide license (including the right to grant sublicenses) to certain technology,
including certain technology in the field of Zinc Finger Protein Derivatives (hereinafter the “INVENTIONS”), and LICENSOR has exercised its option thereunder; 

 

	B.	WHEREAS, patent applications have been filed in the United States and other territories in the name of SCRIPPS for the granting of letters patent relating to the said
INVENTIONS, further described in Appendix 1 hereto; and 

  

	C.	WHEREAS, LICENSOR desires that the INVENTIONS be developed and made available to the public; and 

 

	D.	WHEREAS, LICENSEE represents that it is presently engaged, or intends to be engaged in the business of research, development, manufacturing and selling products in
fields related to the INVENTIONS; and 

  

	E.	WHEREAS, LICENSEE wishes to make use of the INVENTIONS for the research, development, manufacturing and selling of products and wishes to obtain certain rights to the
INVENTIONS under the terms and conditions hereinafter set forth; 

  

	F.	WHEREAS, LICENSOR is willing and able to grant such rights to LICENSEE; 

 

 1 

 NOW, THEREFORE, in consideration of the premises and the performance of the covenants herein contained, IT
IS AGREED AS FOLLOWS: 
  

	1.	DEFINITIONS 

 For the purposes of this agreement
(hereinafter called the “SUBLICENSE AGREEMENT”), and solely for such purposes, the terms hereinafter set forth shall have the following respective meanings: 
  

	 	(a)	“AFFILIATE” or “AFFILIATES” shall mean any corporation(s) or organization(s) which CONTROLS, is(are) directly or indirectly CONTROLLED by, or under
common control with LICENSEE. 

  

	 	(b)	“CONTROL”, “CONTROL(S)” or “CONTROLLED” shall refer to direct or indirect beneficial ownership of at least fifty percent (50%) of the
voting stock of a corporation or other business entity, or a fifty percent (50%) or greater interest in the income of such corporation or other business entity, or the power to direct or cause the direction of the management or policies of such
corporation or other business entity or policies of such corporation or other business entity whether by ownership of voting securities by contract or otherwise, or such other relationship as, in fact, constitutes actual control.

  

	 	(c)	“EFFECTIVE DATE” shall mean the date at the head of this SUBLICENSE AGREEMENT. 

 

	 	(d)	“FDA” shall mean the United States Food and Drug Administration. 

 

	 	(e)	“FIELD” shall mean the diagnoses, therapy or preventive treatment of diseases in humans or animals. 

 

	 	(f)	“IND” shall mean an Investigational New Drug Application filed pursuant to the requirements of the FDA as more fully defined in 21 C.F.R. Section 312.3
or its equivalent in any country of the European Economic Community. 

  

	 	(g)	“LICENSED PRODUCT” shall mean any product the manufacture, USE or SALE of which is covered by a VALID CLAIM of the PATENT RIGHTS or that is SOLD by LICENSEE
or an AFFILIATE under conditions or circumstances which, if unlicensed, would amount to infringement or contributory infringement or inducement of infringement of the PATENT RIGHTS. 

 

	 	(h)	“NDA” shall mean a New Drug Application filed with the United States Food and Drug Administration under 21 USC 355(b)(FDCA Section 505(b)) or its
equivalent filed with the Health Regulatory Authorities in other countries or jurisdictions. 

  

	 	(i)	 “NET SALES VALUE” shall mean that sum determined by deducting from the gross amount billed and collected by the SELLER (LICENSEE, SUBLICENSEE
or AFFILIATE) in an arms length transaction to customers that are not AFFILIATES of the SELLER; transportation charges or allowances, including freight pickup allowances, and packaging costs, if any; trade, quantity or cash discounts, service
allowances and independent broker’s or agent’s commissions, 

  

 2 

	 	
if any, allowed or paid; credits or allowances for the LICENSED PRODUCT, if any, given or made on account of price adjustments, returns, bad debts, off-invoice promotional discounts, rebates,
chargebacks, any and all federal, state or local government rebates or discounts whether in existence now or enacted at any time during the term of this SUBLICENSE AGREEMENT, volume reimbursements, the gross amount billed and collected for rejected
LICENSED PRODUCT or LICENSED PRODUCT subject to recall or destruction (voluntarily made or requested or made by an appropriate government agency, sub-division or department); and any tax, excise or other governmental charge upon or measured by the
production, sale, transportation, delivery or use of the LICENSED PRODUCT; in each case determined in accordance with generally accepted accounting practices. 

 

	 	(j)	“PATENT RIGHTS” shall mean the patents and patent applications identified in Appendix 1 hereof, and in respect of such letters patent, and patent
applications, all corresponding national patents and patent applications, European Patent Convention applications or applications under similar administrative international conventions, patent applications in the listed or designated countries,
together with any divisional, continuation, continuation-in-part, substitution, reissue, extension, supplementary protection certificate or other application based thereon. 

 

	 	(k)	“SELLER” shall mean one who SELLS. 

  

	 	(l)	“SOLD”, “SALE”, “SALES”, “SELL”, “SELLING”, and “SELLS” shall refer to the act of selling or disposing of
for value. 

  

	 	(m)	“SUBLICENSEE” shall mean a third party other than an AFFILIATE to whom LICENSEE has extended a further sublicense in accordance with Article 2(b) hereunder.

  

	 	(n)	“USE”, “USES” and “USED” shall refer to the act of using for any commercial purposes whatsoever. 

 

	 	(o)	“VALID CLAIM” shall mean a claim of an unexpired patent within the PATENT RIGHTS which has matured into an issued patent or a claim being prosecuted in a
pending application within the PATENT RIGHTS. In each case a claim shall be presumed to be valid unless and until it has been held to be invalid by a final judgement of a court of competent jurisdiction from which no appeal can be or is taken. For
the purposes of royalty determination and payment under Article 4 hereof, any claim being prosecuted in a pending patent application, including applications involved in interference or opposition proceedings, shall be deemed to be the equivalent of
a valid claim of an issued, unexpired patent. 

  

	2.	LICENSE 

  

	 	(a)	LICENSOR hereby grants to LICENSEE, and LICENSEE hereby accepts from LICENSOR, upon the terms and conditions herein specified, a worldwide exclusive sublicense under
the PATENT RIGHTS to make, to have made, to USE and to SELL LICENSED PRODUCTS in the FIELD. 

  

 3 

	 	(b)	LICENSEE acknowledges and agrees that the exclusive rights granted pursuant to this Agreement shall be subject to: 

 

	 	(i)	SCRIPPS’ rights pursuant to the SCRIPPS AGREEMENT to use the LICENSED PATENTS for educational and research purposes; and 

 

	 	(ii)	the rights of the United States Government pursuant to 35 U.S.C. 202 et seq. and 37 C.F.R. 401.1 et seq. which may have arisen or resulted form federal funding of
SCRIPPS research relating to the LICENSED PATENTS, including the non-exclusive right of the United States Government to practice the inventions covered by the LICENSED PATENTS. Subject to the foregoing, J&J intends to grant to LICENSEE the
maximum rights allowable under 35 U.S.C. Sec. 202 et seq. and 37 C.F.R. 401.1 et seq. 

  

	 	(c)	Each party hereunder represents and warrants that it will make good faith efforts to comply in all respects with the applicable provisions of any applicable law,
regulation, or requirement by any Government relating to the LICENSED PATENTS. Each party agrees that it will make good faith efforts to ensure that all necessary steps are taken to comply with the requirements of 35 U.S.C. 202 et seq. and 37 C.F.R.
401.1 et seq. to retain the maximum rights under the LICENSED PATENTS allowable by law. LICENSEE agrees that it will provide SCRIPPS with the necessary reports and information required for SCRIPPS to comply with 35 U.S.C. Sec. 202 et seq. and 37
C.F.R. 401.1 et seq., including periodic reports on utilization or efforts at utilization of the inventions covered by the LICENSED PATENTS. 

  

	 	(d)	The sublicenses granted hereunder shall include the right to grant further sub-licenses to AFFILIATES or third party SUBLICENSEES, provided that LICENSEE agrees to be
responsible for the performance hereunder by its AFFILIATES and SUBLICENSEES to which the license and rights shall have been extended. 

  

	 	(e)	For the purposes of reporting and making payments of earned royalties under this SUBLICENSE AGREEMENT, the manufacture, SALE or USE of LICENSED PRODUCTS by any
AFFILIATE or SUBLICENSEE to which the license and rights shall have been extended shall be considered the manufacture, SALE or USE of such LICENSED PRODUCT by LICENSEE and any such AFFILIATE or SUBLICENSEE may make the pertinent reports and royalty
payments specified in Article 4 hereof directly to LICENSOR on behalf of LICENSEE; otherwise, such reports and payments on account of SALES or USE of LICENSED PRODUCTS by each AFFILIATE or SUBLICENSEE shall be made by LICENSEE; and, in any event,
the SALES and USES of LICENSED PRODUCT by each such AFFILIATE or SUBLICENSEE shall be separately shown in the reports to LICENSOR if such information is readily available to LICENSEE. 

 

 4 

	 	(f)	The LICENSEE shall be responsible to the LICENSOR for the enforcement of the terms of the sub-license and for inspecting the accounts and records kept by the
SUBLICENSEE. The LICENSEE shall at the request of the LICENSOR appoint a qualified person jointly with the LICENSOR to inspect the records of the SUBLICENSEE on behalf of both and both shall be entitled to a full report thereon.

  

	 	(g)	No other, further or different license or right and, except as expressly provided in Article 2 hereof, is hereby granted or implied. 

 

	3.	LICENSE FEES 

  

	 	(a)	In consideration of the Licenses granted hereunder, LICENSEE shall pay to LICENSOR License Fees of FORTY THOUSAND DOLLARS ($40,000) at times and amounts as follows:

  

	 	(i)	Ten Thousand Dollars ($10,000) within ten days of execution of this LICENSE AGREEMENT by both parties; 

 

	 	(ii)	Ten Thousand Dollars ($10,000) per year for three years, due on each of the first three anniversary dates of the EFFECTIVE DATE. 

The obligation to pay the foregoing License Fees shall be a non-cancelable commitment by LICENSEE and such payments shall be due and
payable at the times specified regardless of whether this LICENSE AGREEMENT is still in effect. 
  

	 	(b)	In addition, LICENSEE shall pay LICENSOR the following Milestone License Fees at times and amounts as follows as long as this LICENSE AGREEMENT is still in effect:

  

	 	(i)	Twenty Five Thousand Dollars ($25,000) upon the filing of the first IND for a LICENSED PRODUCT, due thirty (30) calendar days after said event; and

  

	 	(ii)	One Hundred Thousand Dollars ($100,000) upon the approval of the first NDA for a LICENSED PRODUCT, due thirty (30) calendar days after said event.

  

	4.	ROYALTIES, RECORDS AND REPORTS 

  

	 	(a)	For the rights and privileges granted under this SUBLICENSE AGREEMENT, LICENSEE shall pay to LICENSOR earned royalties equal to One percent (1%) of the NET SALES
VALUE of LICENSED PRODUCT sold by LICENSEE, AFFILIATES or SUBLICENSEES. 

  

 5 

	 	(b)	Earned royalty shall be paid in the manner provided herein, to the end of the term or terms of the last to expire of the issued patents within the PATENT RIGHTS, or
until this SUBLICENSE AGREEMENT is terminated as hereinafter provided. Earned royalty shall be paid in respect of pending patent applications within the PATENT RIGHTS during such time as the application is actively being prosecuted and has not been
abandoned or finally rejected and appellate procedures are unsuccessfully exhausted or the time for perfecting any further appeals has expired. 

  

	 	(c)	Earned royalty shall be paid pursuant to Article 4(a) hereof on all LICENSED PRODUCTS SOLD under this SUBLICENSE AGREEMENT; however, earned royalty shall be payable
hereunder as to a given LICENSED PRODUCT only when a license or an immunity granted under Article 2 hereof is utilized in the manufacture or SALE thereof, and the earned royalty payable on a given LICENSED PRODUCT made hereunder shall not become due
and owing until such LICENSED PRODUCT is SOLD. 

 Any LICENSED PRODUCT made under a license granted pursuant to
this SUBLICENSE AGREEMENT prior to the termination or expiration of the applicable PATENT RIGHTS and not SOLD prior to the termination or expiration of such PATENT RIGHTS shall be subject to the payment of royalties hereunder when SOLD, even though
such SALE occurs after the termination or expiration of all pertinent licenses or rights granted hereunder. 
 The earned royalty
for any particular LICENSED PRODUCT shall be due upon the first bona fide arm’s length SALE thereof by LICENSEE, AFFILIATE or SUBLICENSEE, and any subsequent SALE of such LICENSED PRODUCT by other than LICENSEE, AFFILIATE, or SUBLICENSEE shall
be royalty free. 
  

	 	(d)	Notwithstanding the provisions of Article 4(b) hereof, in the case of transfers or SALES of any LICENSED PRODUCT between LICENSEE and an AFFILIATE, between AFFILIATES,
or between LICENSEE or AFFILIATE and SUBLICENSEES, one and only one royalty shall be payable thereon and such royalty shall become payable upon the final SALE thereof to a third party other than LICENSEE, AFFILIATE or SUBLICENSEE.

  

	 	(e)	 LICENSEE shall keep full, true and accurate books of account containing all particulars which may be necessary for the purpose of showing the amount
payable to LICENSOR by way of royalty as aforesaid or by way of any other provision hereunder. Said books of account shall be kept at LICENSEE’s principal place of business. Said books and the supporting data shall be maintained and kept open
at all reasonable times, for three (3) years following the end of the calendar year to which they pertain (and access shall not be denied thereafter, if reasonably available), to the inspection of an independent certified public accountant
retained by LICENSOR and reasonably acceptable to LICENSEE for the purpose of verifying LICENSEE’s royalty statements, or LICENSEE’s compliance in other respects with this SUBLICENSE

  

 6 

	 	
AGREEMENT. Names of customers and other confidential information shall not be disclosed to LICENSOR by such independent accountant. Such accountant shall be retained at LICENSOR’s sole
expense, unless during any such inspection a deficiency in payments to LICENSOR of one percent (1%) or more is determined to exist in which event LICENSEE shall within thirty (30) days reimburse LICENSOR for the full expense of retaining
such accountant, including but not limited to professional and administrative fees, travel and subsistence costs. 

  

	 	(f)	LICENSEE, within sixty (60) days after the first day of January, April, July and October of each year (the “Reporting Date”), shall deliver to LICENSOR a
true and accurate report, giving such particulars of the LICENSED PRODUCTS SOLD by LICENSEE, AFFILIATES and SUBLICENSEES during the preceding three (3) months (“Accounting Period”) under this SUBLICENSE AGREEMENT as are pertinent to
an accounting for royalty under this SUBLICENSE AGREEMENT. These shall include at least the following, separately stated as to the LICENSED PRODUCTS: 

  

	 	(i)	the quantity of LICENSED PRODUCTS invoiced by LICENSEE, AFFILIATES and SUBLICENSEES during those three (3) months and the billings therefor;

  

	 	(ii)	the allowable deductions therefrom; 

  

	 	(iii)	the calculation of royalties thereon; 

Simultaneously with the delivery of each such report, LICENSEE shall pay to LICENSOR the royalty and any other payments due under this
SUBLICENSE AGREEMENT for the period covered by such report. If no royalties are due, it shall be so reported. Royalties shall be paid to LICENSOR in United States Dollars at LICENSOR’s office specified for the purposes of giving notice in
Article 14(b) hereof. 
  

	 	(g)	All amounts payable hereunder by LICENSEE to LICENSOR shall be payable in United States Dollars. In the event any LICENSED PRODUCT shall be SOLD by LICENSEE,
SUBLICENSEE or an AFFILIATE for currency other than United States Dollars, the earned royalty payable as to such LICENSED PRODUCT under Article 4(a) hereof shall first be determined in the currency for which the LICENSED PRODUCT was SOLD and then
converted into its equivalent in United States Dollars at the official rate of exchange of the currency of the country from which royalties are payable as quoted by the Wall Street Journal, New York Edition, for the last business day prior to the
Reporting Date for which the royalty payment is made. 

  

	 	(h)	 In the event that any taxes, withholding or otherwise, are levied by any taking authority in connection with accrual or payment of any royalties
payable to LICENSOR under this SUBLICENSE AGREEMENT, LICENSEE or its 

  

 7 

	 	
AFFILIATES and/or SUBLICENSEES shall have the right to pay such taxes to the local tax authorities on behalf of LICENSOR (or, in the case of SUBLICENSEE SALES, on behalf of LICENSEE), and the
payment to LICENSOR of the net amount due after reduction by the amount of such taxes, together with evidence of payment of such taxes, shall fully satisfy LICENSEE’s royalty obligations under this SUBLICENSE AGREEMENT. LICENSEE agrees to make
a good faith effort to obtain a refund of any such taxes for LICENSOR if LICENSOR informs LICENSEE that it believes such taxes have been improperly levied. 

 

	 	(i)	In the event that any payment required under this SUBLICENSE AGREEMENT shall be overdue, LICENSEE shall pay interest thereon at an annual rate of TWO percent
(2%) over the United States Clearing Bank Base Lending Rate computed from the date when the payment became due; provided that if such rate shall be in excess of that allowed by applicable law, then the highest rate allowable shall apply.
Payment shall be deemed to have been made when received by LICENSOR. 

  

	5.	CONFIDENTIALITY 

 Disclosures of
confidential and proprietary information hereunder by either party to the other shall be made in writing (or promptly confirmed in writing if made in another form), and shall be clearly marked “Confidential”. Such confidential information
shall be safeguarded by the recipient, shall not be disclosed to third parties and shall be made available only to recipient’s employees or independent contractors who agree in writing to equivalent conditions and who have a need to know the
information for the purposes specified under this Agreement. All confidential information shall remain the property of and be returned to the disclosing party within thirty (30) days of receipt of a written request by the disclosing party, or
within thirty (30) days of termination of this Agreement. These mutual obligations of confidentiality shall apply for a period of 3 (three) years after the termination of this Agreement, but such obligations shall not apply to any information
that: 
  

	 	(i)	is or hereafter becomes generally available to the public other than by reason of any default with respect to a confidentiality obligation under this Agreement; or

  

	 	(ii)	was already known to the recipient as evidenced by prior written documents in its possession; or 

 

	 	(iii)	is disclosed to the recipient by a third party who is not in default of any confidentiality obligation to the disclosing party hereunder; or 

 

	 	(iv)	is developed by or on behalf of the receiving party, without reliance on confidential information received hereunder; or 

 

	 	(v)	is provided to third parties under appropriate terms and conditions including confidentiality provisions equivalent to those in this Agreement for consulting,
manufacturing development, manufacturing, external testing and marketing trials with respect to the products covered by this Agreement; or 

  

 8 

	 	(vi)	is used with the consent of the disclosing party (which consent shall not be reasonably withheld) in applications for patents or copyrights under the terms of this
Agreement; or 

  

	 	(vii)	has been approved in writing for publication by each of the parties; 

  

	 	(viii)	or is required to be disclosed in compliance with applicable laws or regulations in connection with the manufacture or sale of products covered by this Agreement; or

  

	 	(ix)	is otherwise required to be disclosed in compliance with applicable laws or regulations or order by a court or other regulatory body having competent jurisdiction; or

  

	 	(x)	is product-related information which is reasonably required to be disclosed in connection with marketing of products covered by this Agreement.

  

	6.	DEVELOPMENT and COMMERCIALIZATION 

  

	 	(a)	LICENSEE agrees to diligently attempt to exploit the LICENSED PATENTS and will diligently exert efforts to create a demand for the LICENSED PRODUCTS in at least those
countries where PATENT RIGHTS exist. Within sixty (60) days after the end of each semi-annual period (June 30 and December 31) prior to first commercial sale of LICENSED PRODUCT, LICENSEE shall submit a summary report to LICENSOR reporting
the progress it, or its SUBLICENSEES, have made towards commercialization in the preceding semi-annual period. This report will include a summary of the work done in the development of LICENSED PRODUCTS. Non-performance of this Article 7 shall be a
breach or default under this SUBLICENSE AGREEMENT, entitling the LICENSOR, in addition to other remedies LICENSOR may have, to terminate this SUBLICENSE AGREEMENT under Article 7(c) hereunder. 

 

	 	(b)	Promptly following Health Regulatory Approval to market LICENSED PRODUCTS in such countries where approval is sought, LICENSEE agrees to use diligent efforts to promote
and sell LICENSED PRODUCTS at a level which is consistent with those marketing efforts normally used for similar products in the pharmaceutical industry. 

  

	7.	TERMINATION 

  

	 	(a)	LICENSEE may terminate this LICENSE AGREEMENT at any time upon sixty (60) days written notice to LICENSOR, but such termination shall not relieve LICENSEE of its
obligation to pay the license fees due under Article 3(a) hereunder. 

  

 9 

	 	(b)	If LICENSEE shall become bankrupt or insolvent and/or if the business of LICENSEE shall be place in the hands of a Receiver, Assignee, or Trustee, whether by the
voluntary act of LICENSEE or otherwise, this SUBLICENSE AGREEMENT shall immediately terminate. 

  

	 	(c)	Upon any breach of or default under this SUBLICENSE AGREEMENT by LICENSEE, LICENSOR may terminate this SUBLICENSE AGREEMENT by forty-five (45) days written notice
to LICENSEE. Said notice shall become effective at the end of said period, unless during said period LICENSEE shall cure such breach or default. 

  

	 	(d)	Upon termination of this SUBLICENSE AGREEMENT for any reason, other then by expiry of the PATENT RIGHTS, all rights granted hereunder shall revert to LICENSOR for the
benefit of LICENSOR. 

  

	 	(e)	LICENSEE’s obligations to report to LICENSOR and to pay royalties to LICENSOR as to any LICENSED PRODUCT made or USED under a license or an immunity granted
pursuant to this SUBLICENSE AGREEMENT prior to termination or expiration of this SUBLICENSE AGREEMENT shall survive such termination or expiration and any termination of this SUBLICENSE AGREEMENT shall be subject to this Article 7(d).

  

	 	(f)	Upon any termination of this SUBLICENSE AGREEMENT its provisions shall continue in force and effect to the extent necessary to effectuate any provision which by its
terms clearly shall continue beyond such termination. 

  

	 	(g)	Upon termination of this SUBLICENSE AGREEMENT other than by expiry of the PATENT RIGHTS, LICENSEE shall have no right under the PATENT RIGHTS to make, have made, USE or
SELL LICENSED PRODUCTS. 

  

	8.	ASSIGNMENT 

 This Agreement or
any interest herein shall not be assigned or transferred, in whole of in part, by either party hereto without the prior written consent of the other party hereto. However, without securing such prior written consent, either party may assign this
Agreement to an AFFILIATE or a successor of all or substantially all of its business to which this Agreement relates (except a successor under a reorganization pursuant to 11 U.S.C. Sec. 365) provided, that no such assignment shall be binding and
valid until and unless the assignee shall have assumed in a writing, delivered to the non-assigning party, all of the duties and obligations of the assignor, and, provided, further, that the assignor shall remain liable and responsible to the
non-assigning party hereto for the performance and observance of all such duties and obligations. 
  

	9.	INFRINGEMENT 

  

	 	(a)	LICENSOR agrees to enforce its patents within the PATENT RIGHTS from infringement and sue infringers when in its sole judgement such action may be reasonably necessary,
proper and justified. 

  

 10 

	 	(b)	Notwithstanding the provisions of Article 9(a) above, provided LICENSEE shall have supplied LICENSOR with evidence comprising a prima facie case of infringement of the
PATENT RIGHTS by a third party hereto SELLING significant quantities of products in competition with LICENSEE’s, an AFFILIATE’s, or SUBLICENSEE’s SALE of LICENSED PRODUCTS hereunder, LICENSEE shall be entitled to notify LICENSOR in
writing requesting LICENSOR to take steps to enforce the PATENT RIGHTS and LICENSOR shall within three (3) months of the receipt of such written request either: 

 

	 	(i)	cause said infringement to terminate (including termination for whatever cause); or 

 

	 	(ii)	initiate legal proceedings against the infringer; or 

  

	 	(iii)	grant LICENSEE the right, at LICENSEE’s sole expense, to bring suit against the infringer for infringement of the PATENT RIGHTS. 

 

	 	(c)	In no event shall LICENSEE be entitled to invoke Article 9(b) above with respect to more than one alleged infringer in any one country listed with the PATENT RIGHTS at
any given time even though there be more than one such infringer in such country and the provisions of Article 9(b) hereof shall not come into effect or continue in effect as to such country while LICENSOR is carrying on any such legal proceeding
therein. 

  

	 	(d)	In the event either party hereto shall initiate or carry on legal proceedings to enforce the PATENT RIGHTS against an alleged infringer, as provided herein, the other
party hereto shall fully co-operate with the party initiating or carrying on such proceedings. 

  

	 	(e)	In the event LICENSOR shall institute suit or other legal proceedings to enforce the PATENT RIGHTS, it shall have sole control of such suit. 

 

	 	(f)	In the event LICENSEE shall institute suite or other legal proceedings under Article 9(b) above to enforce the PATENT RIGHTS, LICENSOR shall be entitled to be
represented by counsel of its choosing, at its sole expense, and LICENSEE shall be entitled to retain for it as damages, an amount corresponding to its actual out-of-pocket legal expenses paid to third parties for conducting such suit or other legal
proceedings and shall pay to LICENSOR TWENTY-FIVE PERCENT (25%) of the balance of such recovery. LICENSEE shall not discontinue or settle any such proceedings brought by it without obtaining the concurrence of LICENSOR and giving LICENSOR a
timely opportunity to continue such proceedings in its own name, under its sole control, and at its sole expense. In the event LICENSOR does not concur in such settlement, it must continue such proceeding in its own name, under its sole control and
expense within three (3) months of being given notice by LICENSEE of its desire to settle or LICENSEE shall be entitled to settle without LICENSOR’s concurrence. 

 

 11 

	10.	STATUS OF THE PATENT RIGHTS 

  

	 	(a)	Pursuant to the SCRIPPS AGREEMENT, SCRIPPS agreed, with the advice of LICENSOR, to diligently prepare, file and prosecute the patent applications filed within the
PATENT RIGHTS and LICENSOR agreed to reimburse SCRIPPS for the reasonable expenses associated therewith. Upon execution of this SUBLICENSE AGREEMENT, LICENSEE agrees to assume LICENSOR’s obligation to reimburse SCRIPPS for patent expenses under
the SCRIPPS AGREEMENT for patent expenses incurred after the EFFECTIVE DATE. LICENSOR shall instruct SCRIPPS to forward invoices for such patent expenses directly to LICENSEE and LICENSEE agrees to promptly pay such expenses. LICENSOR agrees to
assure that SCRIPPS performs its obligations to maintain and prosecute the PATENT RIGHTS under the SCRIPPS AGREEMENT and LICENSOR agrees to enforce its rights vis-a-vis SCRIPPS in this regard on LICENSEE’s behalf if necessary. LICENSOR does not
however represent or warrant that any patent within the PATENT RIGHTS will be obtained or that any such patent so obtained will be valid and enforceable. 

  

	 	(b)	LICENSEE shall also be responsible for expenses associated with maintaining the patents obtained on the patent applications referred to in Article 10(a) hereof.

  

	 	(c)	Upon request by LICENSEE, LICENSOR will advise, or ensure that SCRIPPS advises, LICENSEE of the status of all patent applications and patents within the PATENT RIGHTS.

  

	 	(d)	Should LICENSEE elect not to continue paying the expenses for the maintenance or prosecution of any patent or patent application under the PATENT RIGHTS, it shall give
LICENSOR thirty (30) days written notice thereof and LICENSOR may thereafter assume payment of such expenses at its own cost. In the event LICENSEE ceases to pay the expenses of prosecution of maintenance of any particular patent application or
patent, then LICENSEE shall cease to have license rights with respect to such patent application or patent and LICENSOR shall be free to license such rights to a third party. 

 

	11.	NON-USE OF NAMES 

  

	 	(a)	LICENSEE shall not use the name of any inventor of the PATENT RIGHTS, or of any institution with which he has been or is connected, or of LICENSOR, or any adaptation of
any of them, in any advertising, promotional or sales literature, without prior written consent obtained from LICENSOR in each case. LICENSEE shall require its AFFILIATES to comply with this Article 11 to the same extent that it applies to LICENSEE.

  

	 	(b)	LICENSOR shall not use the name of LICENSEE or its AFFILIATES or any adaptation thereof, in any advertising, promotional or sales literature or in any press release
without prior written consent of LICENSEE in each case. 

  

 12 

	12.	WARRANTIES AND REPRESENTATIONS 

  

	 	(a)	LICENSOR warrants that it has exclusive rights by agreement, assignment or license to the PATENT RIGHTS, except with respect to the United States Government, and that
it has full power and authority to execute, deliver and perform this SUBLICENSE AGREEMENT and the obligations hereunder. 

  

	 	(b)	Each party hereby warrants that the execution, delivery and performance of this SUBLICENSE AGREEMENT has been duly approved and authorized by all necessary corporate
actions of both parties; do not require any shareholder approval which has not been obtained or the approval and consent of any trustee or the holders of any indebtedness of either party; do not contravene any law, regulation, rules or order binding
on either Party, and do not contravene the provisions of or constitute a default under any indenture, mortgage contract or other agreement or instrument to which either party is a signatory. 

 

	 	(c)	Nothing in this SUBLICENSE AGREEMENT shall be construed as a representation or a warranty by LICENSOR as to the validity or scope of any patent within the PATENT RIGHTS
or that any process practiced or anything made, USED or SOLD under any license or immunity granted under this SUBLICENSE AGREEMENT is or will be free from infringement of patents of third parties. 

 

	13.	INDEMNITY 

 LICENSEE agrees to
indemnify and hold harmless INVENTORS, SCRIPPS, LICENSOR, its AFFILIATES and their respective officers, directors, employees and agents from and against any and all claims, damages and liabilities, including reasonable attorney’s fees and
expenses, asserted by third parties, both government and private, arising from LICENSEE’s and AFFILIATES’ manufacture, USE or SALE of LICENSED PRODUCTS or the USE thereof by others including ultimate consumers. LICENSEE hereby agrees to
maintain in full force and effect general liability and product liability insurance with a commercial insurance carrier, which policy shall have individual and aggregate limits appropriate to the conduct of LICENSEE’s business covering the sale
and distribution of LICENSED PRODUCTS. LICENSOR shall be named as an additional insured in such insurance policy. LICENSEE shall provide a certificate of insurance to LICENSOR evidencing such insurance policy and providing that such insurance will
not be cancelled, modified or subject to non-renewal without thirty (30) days’ written notice to LICENSOR. This insurance will remain in effect until three (3) years from termination of this Agreement. 

 

	14.	GENERAL 

  

	 	(a)	This SUBLICENSE AGREEMENT, including the Appendix hereto attached, constitutes the entire agreement and understanding between the parties as to the PATENT RIGHTS. All
prior negotiations, representations, agreements, contracts, offers and earlier understandings of whatsoever kind, whether written or oral between LICENSOR and LICENSEE in respect of the PATENT RIGHTS, are superseded by, merged into, extinguished by
and completely expressed by this SUBLICENSE AGREEMENT. 

  

 13 

 No aspect, part or wording of this SUBLICENSE AGREEMENT may be modified except by mutual agreement between
the LICENSOR and LICENSEE taking the form of an instrument in writing signed and dated by duly authorized representatives of both LICENSOR and LICENSEE. 
  

	 	(b)	Any notice required or permitted to be given by this SUBLICENSE AGREEMENT shall be given by post-paid, first class, registered or certified mail addressed to:

 General Counsel 

Johnson & Johnson 

One Johnson & Johnson Plaza 

New Brunswick, New Jersey 08903-5501 

and 
 Chairman

 R.W. Johnson Pharmaceutical Research Institute 

Route 202 

Raritan, New Jersey 08869 

or 
 SANGAMO
BIOSCIENCES, INCORPORATED 
 950 MARINA VILLAGE PARKWAY 

SUITE 100 

ALAMEDA, CA 94501 

Such addresses may be altered by notice so given. If no time limit is specified for a notice required or permitted to be given by this
SUBLICENSE AGREEMENT, the time limit therefor shall be ten (10) full business days, not including the day of mailing. Notice shall be considered made as of the date of deposit with the United States Post Office. 

 

	 	(c)	This SUBLICENSE AGREEMENT and its effect are subject to and shall be construed and enforced in accordance with the laws of the State of New Jersey, United States,
except as to any issue which depends upon the validity, scope or enforceability of any patent within the PATENT RIGHTS, which issue shall be determined in accordance with the applicable patent laws of the country of such patent.

  

	 	(d)	 Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, including any dispute relating to patent validity or
infringement arising under this agreement, shall be settled by arbitration. Such arbitration shall be conducted at New York, New York, in accordance with the rules then 

 

 14 

	 	
pertaining to the American Arbitration Association with a panel of three (3) arbitrators. One arbitrator shall be appointed by LICENSOR; one shall be appointed by LICENSEE; and the third
shall be appointed by the American Arbitration Association. The law of the State of New York shall apply to the arbitration proceedings. The arbitrators shall have the authority to grant specific performance. The judgment and award of the
arbitrators shall be final and binding and may be entered in any court having jurisdiction thereof, or application may be made to such court for judicial acceptance of any award or an order of enforcement, as the case may be. Each party shall bear
its own costs and expenses, including attorney’s fees and fees and expenses of the arbitrator it selects, and shall share equally the fees and expenses of the arbitrator selected by the American Arbitration Association.

  

	 	(e)	Nothing in this SUBLICENSE AGREEMENT shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any
provision of this SUBLICENSE AGREEMENT or concerning the legal right of the parties to contract and any statute, law, ordinance or treaty, the latter shall prevail, but in such event the affected provisions of this SUBLICENSE AGREEMENT shall be
curtailed and limited only to the extent necessary to bring it within the applicable legal requirements. 

  

	 	(f)	LICENSEE shall take all reasonable and necessary steps to register this SUBLICENSE AGREEMENT in any country where such is required to permit the transfer of funds
and/or payment of royalties to LICENSOR hereunder or is otherwise required by the government or law of such country to effectuate or carry out this SUBLICENSE AGREEMENT. Notwithstanding anything contained herein, but subject to Article 13(e) hereof,
LICENSEE shall not be relieved of any of its obligations under this SUBLICENSE AGREEMENT by any failure to register this SUBLICENSE AGREEMENT in any country, and, specifically, LICENSEE shall not be relieved of its obligation to make any payment due
to LICENSOR hereunder at LICENSOR’s address specified in Article 14(b) hereof, where such payment is blocked due to any failure to register this SUBLICENSE AGREEMENT. 

 

	 	(g)	As used in this SUBLICENSE AGREEMENT, singular includes the plural and plural includes the singular, wherever so required by the context. The headings appearing at the
beginning of the numbered Articles hereof have been inserted for convenience only and do not constitute a part of this SUBLICENSE AGREEMENT. 

  

	 	(h)	Nothing herein shall be deemed to create an agency, joint venture or partnership between the parties hereto. 

 

	 	(i)	 Notwithstanding any other provisions of this SUBLICENSE AGREEMENT, neither of the parties hereto shall be liable in damages or have the right to
terminate this SUBLICENSE AGREEMENT for any delay or default in performing hereunder if such delay or default is caused by conditions beyond its 

 

 15 

	 	
control including, but not limited to acts of God, governmental restrictions, wars, or insurrections, strikes, floods, work stoppages and/or lack of materials; provided, however, that the party
suffering such delay or default shall notify the other party in writing of the reasons for the delay or default. If such reasons for delay or default continuously exist for six (6) months, this SUBLICENSE AGREEMENT may be terminated by either
party. 

  

	15.	EFFECTIVE DATE AND TERM 

 This
SUBLICENSE AGREEMENT shall become effective on the day and year first above written and shall, unless terminated earlier by one of the parties in accord with its terms, expire concurrently with the expiration, invalidation or lapsing of all issued
patents within the PATENT RIGHTS and/or the abandonment of all pending patent applications within the PATENT RIGHTS. 
  

	16.	GOVERNMENT RIGHTS 

  

	 	(a)	LICENSEE acknowledges and agrees that its respective rights and obligations pursuant to this SUBLICENSE AGREEMENT shall be subject to SCRIPPS’ rights and
SCRIPPS’ obligations and the rights of the United States Government, if any, which arose or resulted from SCRIPPS’ receipt of research support from the United States Government. 

 

	 	(b)	LICENSEE shall comply in all respects with the applicable provisions of any applicable law, requirement, regulation or determination by any Government relating to the
PATENT RIGHTS and shall provide LICENSOR with any information or report required to comply with any such law, requirement, regulation or determination. 

  

	 	(c)	Any inconsistency between this SUBLICENSE AGREEMENT and the pertinent provisions of any law, requirement, regulation or determination by a Government shall be resolved
by conforming this SUBLICENSE AGREEMENT to such provisions of any such law, requirement, regulation or determination. 

  

	 	(d)	Any agreement or arrangement relating to the PATENT RIGHTS between LICENSEE and any third party hereto shall be made expressly subject to the terms and conditions of
this Article 16 and LICENSEE shall require such other party to comply therewith to the same extent that LICENSEE is required to comply. 

  

	 	(e)	Any license or other right granted or to be granted pursuant to this SUBLICENSE AGREEMENT shall be subject to any and all applicable governmental laws and regulations
relating to compulsory licensing. 

  

 16 

 IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and duly executed this SUBLICENSE
AGREEMENT on the date(s) indicated below, to be effective the day and year first above written. 
 For and on Behalf of LICENSOR,
JOHNSON & JOHNSON 
  

			
	By:	 	 /s/ RONALD G. GELBMAN

	Name:	 	Ronald G. Gelbman
	Title:	 	 Worldwide Chairman Pharmaceuticals

& Diagnostics Group

		
	Date:	 	April 15, 1996

 For and on Behalf of LICENSEE, SANGAMO
BIOSCIENCES, INCORPORATED 
  

			
	By:	 	 /s/ EDWARD LANPHIER

	Name:	 	Edward Lanphier
	Title:	 	President

  

 17

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