Document:

mstx-ex101_6.htm

 

Exhibit 10.1

 

 

SUB-SUBLEASE AGREEMENT

 

THIS SUB-SUBLEASE AGREEMENT (this “Sublease”) is made as of this 23rd day of March, 2017 (the “Effective Date”), by and between MAST THERAPEUTICS, INC. (“Sub-Sublessor”), a Delaware corporation, and MEI PHARMA, INC. (“Sub-Sublessee”), a Delaware corporation.

 

WITNESSETH:

 

WHEREAS, on October 5, 2012, Santarus, Inc. (“Sublessor”), a Delaware corporation and subsidiary of Valeant Pharmaceuticals International, Inc., a British Columbia corporation, entered into an Office Lease (the “Master Lease”), as Tenant, with Kilroy Realty, L.P. (“Master Lessor”), a Delaware limited partnership, as Landlord, which Master Lease concerns approximately 47,188 square feet of rentable space in the building known as Building 2 (the “Building”) of Kilroy Center Del Mar located at 3611 Valley Centre Drive, San Diego, California 92130 (the “Premises”); 

 

WHEREAS, on June 19, 2014, Sub-Sublessor and Sublessor entered into a Sublease Agreement (the “Prime Sublease”), which Prime Sublease concerns a portion of the Premises  consisting of approximately 13,707 rentable square feet of space located on the fifth (5th) floor of the Building and commonly known as Suite 500, as shown on the sketch attached hereto as Exhibit A and incorporated herein by reference (the “Subleased Premises”); 

 

WHEREAS, on July 14, 2014, Sublessor, Sub-Sublessor and Master Lessor entered into a Consent to Sublease (the “Consent”), in which Master Lessor consented to the Prime Sublease; and

 

WHEREAS, Sub-Sublessee desires to sublease the Subleased Premises from Sub-Sublessor, and Sub-Sublessor desires to sublease the Subleased Premises to Sub-Sublessee.

 

NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties agree as follows: 

 

1.SUBLEASE.  Sub-Sublessor does hereby demise, lease and let unto Sub-Sublessee, and Sub-Sublessee does hereby lease and take from Sub-Sublessor, upon the terms and conditions hereinafter set forth, the Subleased Premises.

 

2.RELATIONSHIP TO MASTER LEASE AND PRIME SUBLEASE.  This Sublease and all its terms, covenants and provisions are and each of them is subject and subordinate to (i) the Master Lease (a copy of which is attached hereto as Exhibit B and incorporated herein by reference) under which Sublessor is in control of the Premises of which the Subleased Premises are a part; (ii) the Prime Sublease (a copy of which is attached hereto as Exhibit C and incorporated herein by reference) and the Consent; (iii) the rights as contained in the Master Lease of the owner or owners of the Premises and/or the land and building of which the Subleased Premises are a part; (iv) all rights of Master Lessor as contained in the Master Lease; (v) all rights of Sublessor and Sub-Sublessor as contained in the Prime Sublease, including the right of recapture by Sublessor; and (vii) any and all mortgages or encumbrances now or hereafter affecting the Subleased Premises to which the Master Lease and/or Prime Sublease would be subordinated.  Sub-Sublessee expressly agrees that, if Sublessor’s tenancy, control or right to possession of the Subleased Premises shall terminate by expiration of the Master Lease or any other cause not due to the fault of Sub-Sublessor, or if Sub-Sublessor’s tenancy, control or right to possession of the Subleased Premises shall terminate by expiration of the Prime Sublease or any other cause not due to the fault of Sub-Sublessee, this Sublease shall thereupon immediately cease and terminate and Sub-Sublessee shall give immediate possession to Sub-Sublessor; provided however, that the liability of the Sub-Sublessee to the Sub-Sublessor or the liability of the Sub-Sublessor to the Sub-Sublessee for termination caused by the applicable party’s default under this Sublease shall not be discharged by reason of such termination.  Capitalized terms used, but not defined, herein shall have the meanings given to them in the Master Lease.

 

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3.PERFORMANCE OF MASTER LEASE AND PRIME SUBLEASE TERMS.  

 

	
 
	
a.
	
Sub-Sublessee shall have the benefit of all rights, waivers, remedies and limitations of liability of Sublessor under the Master Lease as it relates to the Subleased Premises and Common Areas, including, without limitation, all rights to use and access the Subleased Premises and Common Areas as set forth in the Master Lease and all rights to the services and utilities to be provided by Master Lessor for the Subleased Premises and Common Areas; provided however, Sub-Sublessee shall not have and hereby waives the following rights of Sub-Sublessor (a) rights of first refusal, (b) the return of Sub-Sublessor’s security deposit, and (c) any other rights or options of renewal, must take or expansion under the Master Lease, Prime Sublease or elsewhere.  Effective as of the Commencement Date or the occupancy of the Subleased Premises by Sub-Sublessee, whichever is earlier, Sub-Sublessee agrees to assume the obligations for performance of all of Sublessor’s responsibilities and indemnifications as Tenant under the Master Lease with respect to the Subleased Premises, and Sub-Sublessor’s responsibilities and indemnifications as sub-tenant under the Prime Sublease and, during the Sublease Term, to be subject to and bound by, and to timely perform and comply with all of the covenants, conditions, stipulations, restrictions and agreements contained therein except as expressly excluded herein, subject to Section 16 with respect to conflicts between agreements; provided, however, that Sub-Sublessee shall have no obligation or responsibility for any breach of default of Sublessor or Sub-Sublessor arising or accruing prior to the Commencement Date.  Sub-Sublessee hereby agrees to indemnify and hold harmless Sub-Sublessor and Sublesssor from and against any loss, claim, damage, expense or injury (including reasonable attorney’s fees and court costs) first arising or accruing on or after the Commencement Date or the occupancy of the Subleased Premises by Sub-Sublessee, if earlier, which Sub-Sublessor or Sublessor may incur as a result of Sub-Sublessee’s failure to perform such obligations, except to the extent caused by Sublessor or Sub-Sublessor’s negligence or willful misconduct.  Except as expressly set forth in this Sublease, the Consent or as Sub-Sublessee may have agreed in a separate “Consent to Sublease” or similar agreement required by Master Lessor (the “Consent to Sublease”), Sub-Sublessee shall not be obligated to make any payments directly to Master Lessor.  

 

	
 
	
b.
	
Sub-Sublessor covenants and agrees that if and so long as Sub-Sublessee pays the Rent (as defined below) required of Sub-Sublessee to be paid hereunder and Sublessee otherwise timely observes the covenants and conditions hereof and of the Master Lease,the Prime Sublease, the Consent or the Consent to Sublease, Sub-Sublessee shall quietly enjoy the Subleased Premises without interference from anyone claiming by or through Sub-Sublessor.  So long as Sub-Sublessee in not in default hereunder after any applicable notice and cure periods, Sub-Sublessor further covenants (a) to pay, as and when due, all Rent and other charges payable by Sub-Sublessor to Sublessor under the Prime Sublease; (b) not to voluntarily terminate the Prime Sublease (other than pursuant to an express right to do so under the Prime Sublease); (c) to timely perform those of its covenants and obligations under the Prime Sublease that do not require for their performance possession of the Subleased Premises and that are not otherwise to be performed hereunder by Sub-Sublessee; (d) not to amend the Prime Sublease in any manner that materially adversely affects Sub-Sublessee’s rights under this Sublease; and (e) not to do or permit to be done any act which may constitute a breach or violation of any term of the Prime Sublease or Master Lease that is not cured within any applicable notice and cure period thereunder.  

 

	
 
	
c.
	
Notwithstanding any other provision of this Sublease, Sub-Sublessor, as sub-sublandlord under this Sublease, shall have the benefit of all rights, waivers, remedies and limitations of liability enjoyed by Master Lessor, as the Landlord under the Master Lease and Sublessor, as sub-landlord under the Prime Sublease, but (i) Sub-Sublessor shall have no obligation under this Sublease to perform the obligations of Master Lessor, as Landlord under the Master Lease or of Sublessor, as sub-landlord under the Prime Sublease, including without limitation any obligation to provide services required to be provided by Master Lessor or maintain insurance required to be maintained by Master Lessor with respect to the Subleased Premises; (ii) Sub-Sublessor shall not be bound by any representations or warranties of the Master Lessor under the Master Lease or of Sublessor, as sub-landlord under the Prime Sublease; (iii) in any instance where the consent of Master Lessor is 

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required under the terms of the Master Lease, the consent of Sub-Sublessor, Sublessor and Master Lessor shall be required, and (iv) Sub-Sublessor shall not be liable to Sub-Sublessee for any failure or delay in Master Lessor’s or Sublessor’s performance of their respective obligations under the Master Lease or Prime Sublease, as applicable; provided, however, in the event Master Lessor or Sublessor fails to perform any such obligations, then, promptly following Sub-Sublessee’s written request, Sub-Sublessor shall take reasonable, appropriate action against Master Lessor and/or Sublessor, as applicable, as permitted by law or by the terms of the Master Lease and/or Prime Sublease, as applicable, to enforce such obligations of Master Landlord and/or Sublessor, as applicable; further provided however, Sub-Sublessor shall not be required to institute legal proceedings in a court of law or in arbitration.

 

4.TERM.  The term of this Sublease shall be thirty-five (35) months, commencing July 1, 2017 (the “Commencement Date”) (subject to the terms below) and expiring on May 31, 2020 (the “Sublease Term”).  Notwithstanding the Commencement Date, subject to the Sub-Sublessee having obtained the insurance required hereunder and under the Master Lease (except for the insurance under Section 10.3.2, which shall be carried by Sublessor with respect to the FFE), and subject to the consent of Master Lessor and Sublessor to this Sublease, Sub-Sublessee shall be given access to entire Subleased Premises on June 1, 2017 (the “Sublease Delivery Date”) to begin the move-in of furniture and equipment. Notwithstanding the foregoing, in the event that Sub-Sublessee completes the move-in of its furniture and equipment and begins operating its business in the Subleased Premises on a date prior to July 1, 2017, the “Commencement Date” shall be such earlier date, with the expiration date remaining the same as set forth in this Section 4.  Any access, entry or occupancy by Sub-Sublessee and/or Sub-Sublessee’s contractors and other agents pursuant to this paragraph prior to the Commencement Date shall be deemed to be under all of the terms, covenants, provisions and conditions of this Sublease except the covenant to pay Rent, which shall commence as provided in Section 5 of this Sublease.  In that regard, Sub-Sublessee and Sub-Sublessee’s contractors and other agents shall provide Sub-Sublessor evidence, in form and substance reasonably satisfactory to Sub-Sublessor, that each is covered under such workers' compensation, public liability, builder's risk and property damage insurance as Sub-Sublessor, Sublessor or Master Lessor may reasonably request for the protection of such parties and the Building prior to any such entry.  Except to the extent caused by or arising out of the negligence or willful misconduct of Sub-Sublessor or Sub-Sublessor's contractors, agents, employees or invitees, Sub-Sublessor shall not be liable for any injury, loss or damage which may occur to any person or property or to any of the furniture or equipment by virtue of any such access or entry to the Subleased Premises by Sub-Sublessee or Sub-Sublessee's contractors or agents, pursuant to this paragraph or otherwise, and Sub-Sublessee shall indemnify, defend and hold harmless Sub-Sublessor and Sublessor from and against any and all costs, expenses, claims, liabilities and causes of action now or hereafter arising out of or in connection with any loss, injury or damage caused by or resulting from any work performed or other activities by or on behalf of Sub-Sublessee.

 

5.RENT.  Commencing on the Commencement Date, during the first twelve-months of the Sublease Term, Sub-Sublessee covenants to pay Sub-Sublessor as annual base rent the sum of $526,348.80 (“Base Rent”), in monthly installments of $43,862.40 each (“Monthly Base Rent”).  Base Rent shall increase by three percent (3%) on each anniversary of the Commencement Date on a cumulative compounding basis.  

 

In addition to the Security Deposit required under Section 23 hereof, Sub-Sublessee shall pay Monthly Base Rent for the first month of the Sublease Term at the time of its execution of this Sublease; and if the first month is a partial month, then Sub-Sublessee shall pay Monthly Base Rent for a prorata portion of the partial first month (such portion based on the number of days remaining in such month divided by 30) plus for the first full calendar month.  Notwithstanding the foregoing, Monthly Base Rent for the entire calendar month 2 of the Sublease Term shall be abated.  Subject to the foregoing, Sub-Sublessee shall pay Sub-Sublessor the Monthly Base Rent, without offset or deduction, prior notice or demand, in advance on the first day of each calendar month during which such Monthly Base Rent is due pursuant to the terms hereof.  

 

In addition to Base Rent, during the Sublease Term, Sub-Sublessee shall pay 100% of electricity used in the Subleased Premises, which shall be separately metered and paid for by Sub-Sublessee directly to the utility company.  In addition, beginning on July 1, 2018 and continuing thereafter during the Sublease Term, Sub-Sublessee shall pay to Sub-Sublessor as additional rent an amount equal to Sub-Sublessee’s share (“Sub-Sublessee’s Share”) of real estate taxes and Operating Expenses (collectively, “Expenses”) for the Premises for each Expense Year that are in excess of the total amount of Expenses for the Premises incurred by Sublessor pursuant to the terms 

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and conditions of the Master Lease during calendar year 2017 (the “Base Year”).  Sub-Sublessee’s Share is a percentage that reflects the ratio of the rentable square feet in the Subleased Premises (13,707 rentable square feet) to the rentable square feet in the Premises (47,188 rentable square feet), which as of the Effective Date is equal to 29%.  For clarity and by way of example only, if at any time, Sub-Sublessor receives a notice that the Expenses for the Premises incurred by Sublessor for the 2018 Expense Year were $25,000 in excess of the amount of Expenses for the Premises incurred by Sublessor for the Base Year, then Sub-Sublessee would be responsible for the last six months of 2018 for the Sub-Sublessee’s Share, or the product of $25,000 multiplied by 29% multiplied by 50% (i.e., ($25,000 x 0.29) x 0.50), which is $3,625.  And, if Sub-Sublessor should receive notice that the Expenses for the Premises incurred by Sublessor for the 2019 Expense Year were $25,000 in excess of the amount of Expenses for the Premises incurred by Sublessor for the Base Year, then Sub-Sublessee shall be responsible for $7,250.  Sub-Sublessee’s obligation to pay Sub-Sublessee’s Share of Expenses as set forth herein shall be referred to herein as “Additional Rent.”  “Additional Rent” and “Base Rent” shall be referred to collectively herein as “Rent.”  In no event shall Sub-Sublessee be obligated to pay any Expenses pursuant to this Section 5 unless and until Sub-Sublessee has received the corresponding Estimate Statement from Sub-Sublessor pursuant to the terms and conditions of the Master Lease, which Sub-Sublessor shall provide after Sub-Sublessor has received the same from Sublessor, and which shall set forth the estimate of Sub-Sublessee’s Share of Expenses for the applicable Expense Year that are in excess of the total amount of Expenses for the Premises incurred by Sublessor during the Base Year (the “Estimate”).  Sub-Sublessee will pay the Estimate by the later of (a) February 1 of the Expense Year to which such Estimate Statement relates, or (b) thirty (30) days following Sub-Sublessee’s receipt of such Estimate Statement.  When the actual Expenses and the amount paid by Sublessor to Master Lessor pursuant to the Estimate Statement are reconciled between the Master Lessor and Sublessor for the previous Expense Year pursuant to Article 4 of the Master Lease, and in turn between Sublessor and Sub-Sublessor pursuant to the Prime Sublease, Sub-Sublessor and Sub-Sublessee will conduct a similar reconciliation of the amount paid by Sub-Sublessee pursuant to the Estimate Statement versus the actual Expenses with any overpayment paid by Sub-Sublessee to be credited to Sub-Sublessee’s future Expenses obligations and any underpayment to be paid by Sub-Sublessee to Sub-Sublessor within thirty (30) days of the completion of such reconciliation.  In the event Sub-Sublessor receives an Estimate Notice after the expiration of the Sublease Term, then Sub-Sublessor and Sub-Sublesse shall reconcile the 2020 Expense Year in the manner provided above and this obligation shall survive expiration of this Sublease.  In the final calendar year of the Sublease Term, any such Expenses overpayment or underpayment will be paid directly to the party to which such overpayment or underpayment is due by check in the amount of such overpayment or underpayment within thirty (30) days of the completion of such reconciliation.  If the Commencement Date is a day other than the first day of a month, Rent for the month in which the Commencement Date occurs shall be prorated on a daily basis, as provided above.  Sub-Sublessee’s obligation to pay Additional Rent for the final calendar year of the Sublease Term shall be prorated on a monthly basis based upon the number of months remaining in the Sublease Term during such calendar year.  Rent shall be paid to Sub-Sublessor as follows: prior to the Commencement Date (unless a different address is provided by Sub-Sublessor in writing): 3611 Valley Centre Drive, Suite 500, San Diego, CA 92130, Attn: Chief Financial Officer; after the Commencement Date (unless a different address is provided by Sub-Sublessor in writing): c/o Savara, Inc., 900 South Capital of Texas Highway, Number 150, Austin, TX 78746; Attn: Chief Financial Officer.  Where permitted by applicable law, if any payment of Rent is not paid when due, Sub-Sublessee shall pay Sub-Sublessor upon demand, as a late charge, an amount equal to five percent (5%) of each Rent installment, or any part thereof, which is overdue for more than ten (10) days.

 

So long as Sub-Sublessee is not in default hereunder after the expiration of any applicable notice and cure period, Sub-Sublessor shall make commercially reasonable efforts to cause Sublessor and/or Master Lessor, as applicable, to provide to and for the benefit of the Subleased Premises each and all of the services which Sublessor and/or Master Lessor, as applicable, is required to provide to and for the benefit of the Sub-Subleased Premises pursuant to the terms and provisions of the Master Lease and/or Primes Sublease, as applicable.

 

6.USE.  Sub-Sublessee shall use the Subleased Premises only for the Permitted Use under the Master Lease and at all times in compliance with the Master Lease.

 

7.CONDITION OF PREMISES.  SUBJECT TO (a) SUB-SUBLESSOR’S REPRESENTATIONS AND WARRANTIES UNDER SECTION 17(b) AND (b) SUB-SUBLESSOR’S OBLIGATIONS UNDER THIS SUBLEASE, SUB-SUBLESSEE (i) ACCEPTS THE SUBLEASED PREMISES IN THEIR “AS IS” CONDITION ON THE COMMENCEMENT DATE HEREOF, AND (ii) ACKNOWLEDGES THAT SUB-SUBLESSOR HAS MADE AND MAKES NO OTHER REPRESENTATIONS OR WARRANTIES CONCERNING THE 

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CONDITION OF THE SUBLEASED PREMISES OR THEIR FITNESS FOR THE USE INTENDED BY SUB-SUBLESSEE AND SUB-SUBLESSEE WAIVES ANY CLAIM IT MAY HAVE OR OUGHT TO HAVE HAD AGAINST THE SUBLESSOR AND SUB-SUBLESSOR BASED ON OR ARISING OUT OF THE CONDITION OF THE SUBLEASED PREMISES.  Sub-Sublessor shall deliver the Subleased Premises to Sub-Sublessee with professionally steam-cleaned carpeting and walls free of prominent marks and smudges.  Sub-Sublessee shall, at all times during the Sublease Term, keep and maintain the Subleased Premises in good condition and repair as required by the Master Lease and the Prime Sublease. 

 

8.INSURANCE AND INDEMNIFICATIONS.  From the date on which Sub-Sublessee first enters the Premises to move in furniture and equipment or the Commencement Date, whichever is earlier, and thereafter during the Sublease Term, Sub-Sublessee shall, at Sub-Sublessee’s expense, keep in effect (i) a policy of comprehensive general liability insurance applicable to the Subleased Premises with a company and in amounts as required under the Master Lease, which policy shall name Sub-Sublessor, Sublessor and Master Lessor as additional insureds; (ii) a policy of Workers’ Compensation insurance in at least the statutory amounts; and (iii) insurance covering loss to Sub-Sublessee’s personal property by fire or other casualty in accordance with the provisions of the Master Lease.  Sub-Sublessee shall indemnify, defend and hold harmless Sublessor and Sub-Sublessor from and against any loss, claim, damage, expense or injury to persons or property caused by or arising out of (i) use and occupancy by Sub-Sublessee, its agents, employees, contractors, licensees, or invitees, of the Subleased Premises; (ii) Sub-Sublessee’s default in the performance of its obligations hereunder or under the terms of the Master Lease, Prime Sublease, the Consent or any other consent executed in connection herewith; or (iii) any negligent or willful misconduct Sub-Sublessee, its agents, employees, contractors, licensees or invitees (each a, “Sub-Sublessee Party”), except to the extent caused by or arising out of Sublessor’s or Sub-Sublessor’s negligence or willful misconduct. Notwithstanding Section 9 of the Prime Sublease, Sub-Sublessee is obligated to maintain Broad Form contractual liability coverage, as provided in in the Master Lease.  Except to the extent caused by or arising out of Sub-Sublessee’s or a Sub-Sublessee Party’s negligence or willful misconduct, Sub-Sublessor shall indemnify, defend and hold harmless Sub-Sublessee from and against any loss, claim, damage, expense or injury to persons or property caused by or arising out of Sub-Sublessor’s negligence, intentional misconduct or default in the performance of its obligations hereunder or under the terms of the Master Lease or the Prime Sublease.  Notwithstanding anything in this Sublease to the contrary (i) the provisions of Section 10.3.3 of the Master Lease shall apply as between Sub-Sublessor and Sub-Sublessee and (ii) neither party shall be responsible to the other hereunder for any special, indirect, or consequential damages.

 

9.SURRENDER.  At the expiration or earlier termination of this Sublease, Sub-Sublessee shall surrender the Subleased Premises to Sub-Sublessor in broom clean condition in the same condition as on the Commencement Date hereof, ordinary wear and tear excepted. Sub-Sublessee warrants and covenants that it will pay the full cost of any repairs or maintenance necessary to restore the Subleased Premises to the same condition as on the Commencement Date hereof, ordinary wear and tear excepted, and subject to Master Lessor’s or Sublessor’s requirements that Sub-Sublessee remove any of its later- approved alterations and restore the Subleased Premises, provided such requirements shall have been communicated to Sub-Sublessee in writing along with Master Lessor’s or Sublessor’s consent to the plans for the alterations; provided that Sub-Sublessee requests in writing at the time of its submission of its plans for the alterations a decision from Master Lessor and Sublessor regarding restoration.  Sub-Sublessee shall be responsible for Sub-Sublessor’s obligations to restore under the Prime Sublease; provided, however, Sub-Sublessee shall have no obligation to remove any alterations made to the Sublease Premises by Sub-Sublessor prior to the Commencement Date nor shall Sub-Sublessee have any obligation to return the Subleased Premises to a better condition than existed on the Commencement Date.

 

10.ASSIGNMENT AND SUBLETTING.  Sub-Sublessee may not assign this Sublease or further sublet all or any part of the Subleased Premises without the prior written consent of Sub-Sublessor, Sublessor and Master Lessor, subject to the terms and conditions of Section 14.8 of the Master Lease.  A change in control of Sub-Sublessee shall be an assignment hereunder.  Sub-Sublessor reserves the right to recapture the Subleased Premises in the event Sub-Sublessee intends to further sublease or to assign its rights hereunder on the same terms applicable to Master Lessor under the Master Lease.  In the event Sub-Sublessor desires to exercise such right of recapture, it will provide notice of recapture to Sub-Sublessee within thirty (30) days of Sub-Sublessor’s receipt of notice from Sub-Sublessee of its request for consent to an assignment or sublease.  Notwithstanding anything contained herein or in the Master Lease or the Prime Sublease to the contrary, Sub-Sublessor may condition its consent to any further subleasing of the Subleased Premises (or assignment) on (i) Sub-Sublessee and its sub-sub-sublessee agreeing that 

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such sub-sub-sublessee shall pay its rent under any sub-sub-sublease directly to Sub-Sublessor; (ii) Sub-Sublessee being responsible for paying any actual out-of pocket costs, expenses and fees of Sub-Sublessor, Sublessor and Master Lessor, respectively, in connection with evaluating Sub-Sublessee’s request (including, without limitation, attorneys’, accountants’, engineers’ and consultants’ fees and expenses), in no event to exceed $5,000.00 in the aggregate for each of Sub-Sublessor, Sublessor and Master Lessor; and (iii) Sub-Sublessee paying over to Sub-Sublessor the Transfer Premium as defined in Section 14.3 of the Master Lease.   

 

11.DEFAULT.  If Sub-Sublessee shall default (i) in the payment of Rent as required hereunder, when and as due, unless such default is cured within three (3) business days after receipt of written notice that the same was not paid when due, or (ii) if Sub-Sublessee shall default in the performance of any of the other terms, covenants and conditions of this Sublease which default remains uncured for twenty (20) days after Sub-Sublessee’s receipt of written notice; provided, that if the nature of such default is such that the same cannot reasonably be cured within a twenty-day period, Sub-Sublessee shall not be deemed to be in default if it diligently commences such cure within such period and thereafter diligently proceeds to rectify and cure such default, or (iii) if any act or omission of Sub-Sublessee would be a default with respect to a provision of the Master Lease were Sub-Sublessee the tenant thereunder, except where such provision conflicts with a provision of this Sublease, then Sub-Sublessor may (aa) avail itself of any remedy available to the Master Lessor under the Master Lease; (bb) avail itself of any statutory remedy provided by the laws of the state in which the Subleased Premises are situated; (cc) re‐enter, retake and repossess the Premises with or without notice or summary process; and/or (dd) terminate this Sublease but such termination must be in writing by Sub-Sublessor.

 

12.ACCESS.  Sub-Sublessor and Sublessor shall be permitted access to the Subleased Premises at all reasonable times upon reasonable advance notice (at least twenty-four (24) hours), or at any time in case of emergency, to inspect the Subleased Premises or, during the last six months of the Sublease Term, to show the Subleased Premises to other potential subtenants.  Sub-Sublessor shall use commercially reasonable efforts to conduct all of its activities permitted under this paragraph in a manner which will not unreasonably inconvenience, annoy or disturb the Sub-Sublessee in its use and occupancy of the Subleased Premises.  Master Lessor shall have all rights of access as allowed by the Master Lease.

 

13.NOTICE.  Any notice required or permitted to be sent pursuant to this Sublease shall be sent by facsimile or certified mail, return receipt requested, postage prepaid (“Mail”) to the parties at the following addresses or facsimile numbers and to such other addresses or facsimile numbers as they shall from time to time indicate: 

 

		
	
Sub-Sublessor:
	
Sub-Sublessee:

	
Prior to the Commencement Date:

3611 Valley Centre Drive, Suite 500
San Diego, CA 92130

Attention: Legal

Phone: 858-552-0866

Fax: 858-552-0876

 

After the Commencement Date:

900 South Capital of Texas Highway

Number 150

Austin, TX 78746

Attention: Chief Financial Officer

Phone: 512-614-1848

Fax: 855-298-2020

 
	
Prior to the Commencement Date:

11975 El Camino Real, Suite 101
San Diego, CA 92130

Attention: General Counsel

Phone: 858-369-7126

Fax: 858-792-5406

 

After the Commencement Date:

3611 Valley Centre Drive, Suite 500
San Diego, CA 92130

Attention: General Counsel

Phone:858-369-7126

Fax: 858-792-5406

 

	
 
	
 

Notice shall be deemed given on the date received, if sent by facsimile, or three days after the date it is posted, if sent by Mail.

  

14.SUB-SUBLESSOR RELEASED FROM LIABILITY IN CERTAIN EVENTS.   Sub-Sublessor shall not be responsible to Sub-Sublessee, at any time or in any event, for deterioration or change in the condition of 

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the Subleased Premises during the Sublease Term, except to the extent such change or deterioration is caused by the negligence or willful misconduct of Sub-Sublessor or its agents, employees or contractors.  Sub-Sublessor shall also not be responsible for any damage to Sub-Sublessee’s property or FFE contained therein, including injury to persons whether caused by riot or civil commotion, fire or earthquake damage, or overflow or leakage upon or into the Subleased Premises, of water, steam, gas or electricity, or by any breakage in pipes or plumbing, or breakage, leakage or obstruction of sewer pipes or other damage occasioned by water being upon or coming through the roof, skylight, trapdoors, walls, basement or otherwise, nor for failure of the heating (steam) plant, nor for loss of property or FFE by theft or otherwise, nor for any damage arising from any act or neglect of any co‐tenant or other occupant of the Premises, or for that of any owner or occupants of adjoining or contiguous property unless said damage, loss or injury results from the negligence or willful misconduct of Sub-Sublessor or its agents, employees or contractors.

 

15.CONSENT OF MASTER LESSOR; SUBLESSOR.  This Sublease is 

Subject to and conditioned upon the consent of the Master Lessor and Sublessor and Sublessor’s waiver of the right of recapture.  If such consents to this Sublease and waiver are not both obtained within twenty (20) business days following the Effective Date, either party may terminate this Sublease, in which case Sub-Sublessor shall refund to Sub-Sublessee all amounts paid by Sub-Sublessee to Sub-Sublessor as of the date of such termination (including, without limitation, the Security Deposit, as defined below).  Upon execution of this Sublease, Sub-Sublessor shall promptly ask Master Lessor and Sublessor for consent and waiver, which consent and/or waiver may be documented on a counterpart signature page to this Sublease or in a separate “Consent to Sublease” (or similarly styled) document or agreement and/or a separate waiver, in Master Lessor’s and Sublessor’s respective discretion.  Sub-Sublessor and Sub-Sublessee shall reasonably cooperate to seek Master Lessor’s and Sublessor’s consent to this Sublease (including, without limitation, Sub-Sublessee’s delivery of financial information required under Section 14.1(iv) of the Master Lease), at no cost to Sub-Sublessor or Sublessor, to any other matter under the Master Lease as may be reasonably requested by Sub-Sublessee.  

 

16.ENTIRE AGREEMENT.  This Sublease (including the provisions of the Master Lease, and the Prime Sublease, the Consent and any other consent executed in connection herewith and all other exhibits hereto) contains the entire agreement between the parties and any agreement hereafter made shall be ineffective to change, modify or discharge it in whole or in part unless such agreement is in writing and signed by the parties hereto.  In the event of a conflict between the terms of this Sublease and the terms of the Master Lease or the Prime Sublease, the terms of this Sublease shall control, as between Sub-Sublessee and Sub-Sublessor.  

 

17.REPRESENTATIONS AND WARRANTIES.  

 

	
 
	
a.
	
SUB-SUBLESSEE’S REPRESENTATIONS AND WARRANTIES.  Sub-Sublessee represents and warrants that (i) Sub-Sublessee is a corporation existing and in good standing under the laws of the State of Delaware, and Sub-Sublessee is duly authorized to enter into this Sublease; (ii) the officer executing this Sublease on behalf of Sub-Sublessee is duly authorized to do so and to bind Sub-Sublessee hereto; and (iii) Sub-Sublessee shall provide Sub-Sublessor, upon request, with financial information pertaining to Sub-Sublessee reasonably satisfactory to Sub-Sublessor, including, without limitation, an Income Statement, a Balance Sheet, a Statement of Cash Flows, and Notes to Financial Statements.  

	
 
	
b.
	
SUB-SUBLESSOR’S REPRESENTATIONS AND WARRANTIES.  Sub-Sublessor represents and warrants that, as of the Effective Date, (i) the Prime Sublease is in full force and effect; (ii) the Prime Sublease is scheduled to expire on May 31, 2020; (iii) Sub-Sublessor has neither given nor received notice of default pursuant to the Prime Sublease that remains uncured, nor is Sub-Sublessor aware of any event involving Sublessor or Sub-Sublessor that might constitute an event of default under the Prime Sublease or Master Lease; (iv) Sub-Sublessor has not received written notice of any non-compliance of the Subleased Premises with applicable laws or codes affecting the Subleased Premises, the Premises, the Building or the Project; (v) to the best of Sub-Sublessor’s knowledge, the copy of the Master Lease attached hereto as Exhibit B is a true and complete copy of the Master Lease, and there are no other agreements between Master Lessor and Sublessor with respect to the Subleased Premises that would materially adversely affect Sub-Sublessee’s use and occupancy of the Subleased Premises or Sub-Sublessee’s rights under this Sublease; (vi) the copy of the Prime Sublease attached hereto as Exhibit C is a true and complete copy of the Prime Sublease and the copy of the Consent attached hereto as Exhibit C-1 is a true 

7

 

 

	
 
		
and correct copy of the Consent, and there are no other agreements between Sublessor and Sub-Sublessor with respect to the Subleased Premises that would materially adversely affect Sub-Sublessee’s use and occupancy of the Subleased Premises or Sub-Sublessee’s rights under this Sublease and (vii) on the Sublease Delivery Date, subject to Master Lessor’s maintenance obligations under the Master Lease, the mechanical and electrical components, HVAC, lighting, plumbing, doors and electronic and audiovisual equipment within the Subleased Premises shall be in good working condition.  

 

18.MISCELLANEOUS.

 

a.If any term, covenant or condition of this Sublease or the application thereof to any circumstances or to any person, corporation or other entity shall be invalid or unenforceable to any extent, the remaining terms, covenants and conditions of this Sublease shall not be affected thereby and shall be valid and enforceable to the fullest extent permitted by law.

 

b.The paragraph headings contained in this Sublease have been included for convenience only and shall not be used in the construction or interpretation of this Sublease.

 

c.This Sublease shall be governed by and construed in accordance with the laws of the State of California.

 

d.Where consent is required pursuant to this Sublease, such consent shall not be unreasonably withheld, conditioned or delayed.

 

e.If either party requests that the other provide any information that such other party has not made publicly available through its filings with the Securities and Exchange Commission, the provision of such information to the requesting party shall be conditioned upon the requesting party’s execution of a confidentiality agreement reasonably acceptable to the other party.

 

f.In any instance where Master Lessor, as Landlord under the Master Lease, has a certain period of time in which to notify Sublessor, as Tenant under the Master Lease, whether Master Lessor will or will not take any particular action, Sub-Sublessor shall have a five (5) day period after receiving a corresponding notice from Sublessor in which to notify Sub-Sublessee as to whether Master Lessor will or will not take such action; provided, however, for clarity, that this provision shall not apply where Sub-Sublessor is obligated to notify Sub-Sublessee whether Sub-Sublessor, independently of Master Lessor, will or will not take any particular action. In any instance where Sublessor, as Tenant under the Master Lease, has a certain period of time in which to notify Master Lessor as Landlord under the Master Lease, whether Sublessor or any sublessee will or will not take any particular action relating to the Subleased Premises, Sub-Sublessee, as tenant under this Sublease, must notify Sub-Sublessor, as landlord under this Sublease, at least five (5) days before the end of such period as to whether Sub-Sublessee will or will not take such action, but in no event shall Sub-Sublessee have a period of less than five (5) days in which so to notify Sub-Sublessor unless the relevant period under the Master Lease is five (5) days or less, in which case the period under this Sublease shall be no less than two (2) days.

 

19.ATTORNEYS’ FEES.  In the event that any action or proceeding shall be brought by any party hereto against the other with respect to any matter arising under this Sublease, the prevailing party shall be entitled to recover from the other costs of suit and reasonable attorneys’ fees actually incurred.

 

20.SUCCESSORS AND ASSIGNS.  This Sublease shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

 

21.HOLDOVER. Sub-Sublessee shall not be permitted to holdover after the expiration or earlier termination of the Prime Sublease, and Sub-Sublessee shall indemnify Sub-Sublessor from and against any loss, cost or damage incurred by Sub-Sublessor as a result of such holdover.

 

22.BROKERAGE.  Sub-Sublessee represents and warrants that it has dealt with no real estate broker or agent other than Colliers International (“Colliers”), and Sub-Sublessor warrants that it has dealt with no real 

8

 

 

estate broker or agent other than RE:Align Tenant Strategies (together with Colliers, “Brokers”), with respect to this transaction.  Each party shall indemnify and hold harmless the other from and against all claims of any broker or agent other than Brokers claiming to have represented Sub-Sublessee or Sub-Sublessor as the case may be in this matter.  Brokers will be paid their fees or commissions in accordance with the terms of separate brokerage agreements; provided, however, that fees and commissions payable to Brokers shall not to exceed four percent (4%) of the total Sublease consideration.  Sub-Sublessee shall not be responsible for any brokerage fees or commissions payable to Brokers in connection with this Sublease.

 

23.SECURITY DEPOSIT.  Upon execution of this Sublease, Sub-Sublessee shall deposit with Sub-Sublessor the sum of $46,533.62 (hereinafter referred to as the “Security Deposit”) as security for the full performance of every provision of this Sublease by Sub-Sublessee.  If Sub-Sublessee shall fully perform each provision of this Sublease, that portion of the Security Deposit which has not been used by Sub-Sublessor to apply to any costs, charges or payments owing by Sub-Sublessee to Sub-Sublessor hereunder shall be returned to Sub-Sublessee without interest within thirty (30) days after the expiration or earlier termination (except where such termination is pursuant to Section 11) of the Sublease.  Sub-Sublessor may deliver the funds deposited hereunder by Sub-Sublessee to the purchaser or transferee of Sub-Sublessor’s interest in the Premises in the event that such interest be sold or transferred, and, in the event the purchaser or transferee agrees in writing to assume all of the obligations of Sub-Sublessor under this Sublease, thereupon Sub-Sublessor shall be discharged from any further liability with respect to such Security Deposit.  If an event of default under the Sublease shall occur and continue beyond the applicable notice and cure period, Sub-Sublessee shall, upon receipt of written notice from Sub-Sublessor, promptly pay and restore any amounts of the Security Deposit that have been credited against Base Rent or Additional Rent hereunder.   If Master Lessor or Sublessor terminates or revokes its consent to this Sublease for any reason other than the default by Sub-Sublessee, and this Sublease terminates as a result, so long as Sub-Sublessee is not in default hereunder beyond any applicable notice and cure period and Sub-Sublessee timely vacates the Subleased Premises without any damage thereto, Sub-Sublessor shall return the Security Deposit to Sub-Sublessee within fifteen (15) days following such termination or revocation.

 

24.PARKING; SIGNAGE.  Sub-Sublessee shall have the same parking rights with respect to the Subleased Premises as Sub-Sublessor under the terms of the Prime Sublease (pro rated to reflect the square footage of the Subleased Premises as compared to the Premises under the Master Lease), and no more. Subject to Master Lessor’s and Sublessor’s approval, Sub-Sublessee, at Sub-Sublessee’s sole cost and expense, shall be entitled to have Sub-Sublessee’s name listed on the directory sign in the main lobby of the Building and shall be provided Building standard suite entry signage.  Sub-Sublessee shall not be permitted to include its name on the Building/Project monument sign.   

 

25.FURNITURE AND PERSONAL PROPERTY.  Sub-Sublessor grants to Sub-Sublessee at no cost and for the Sublease Term a sub-license to use the furniture, fixtures and data cabling existing in the Subleased Premises as of the Commencement Date and owned and/or sub-licensed by Sub-Sublessor (the “FFE”), including, without limitation, such FFE as is more particularly shown on the floor plan attached as Exhibit D and the inventory of furniture and personal property listed on Exhibit E attached and made a part hereof.  Sub-Sublessor represents and warrants that, to its knowledge, the FFE described in Exhibit D and Exhibit E, reflects, as accurately as reasonably practicable, the FFE that will be owned and/or sub-licensed by Sub-Sublessor and physically located in the Subleased Premises as of the Sublease Delivery Date.  Sub-Sublessee accepts the FFE in its “AS IS,” “WHERE-IS” condition, with no representation or warranty of any kind, express or implied, from Sublessor, Sub-Sublessor or Brokers with respect to the same.  At the expiration or earlier termination of the Sublease Term, Sub-Sublessee agrees that it will accept ownership of the FFE by Bill of Sale directly from Sublessor, and to the extent any FFE is owned by Sub-Sublessor by Bill of Sale from Sub-Sublessor, pursuant to which the amount payable by Sub-Sublessee for such FFE shall be $1, and that Sub-Sublessee shall be responsible for removing all FFE from the Subleased Premises as required hereunder and under the Master Lease and the Prime Sublease and for repairing any damage to the Subleased Premises caused by such removal.  Sub-Sublessee shall be responsible for obtaining the Bill of Sale from Sublessor.  Sub-Sublessor hereby discloses and Sub-Sublessee hereby acknowledges that Sub-Sublessor does not own title to most of the FFE as of the Sublease Delivery Date, but merely has a sub-license to use such FFE with a right to acquire ownership of such FFE for $1 at the expiration or earlier termination of the Sublease Term.  Sub-Sublessor hereby assigns its rights to acquire the sub-licensed FFE under the Prime Sublease.

 

[The following page is the signature page.]

9

 

 

IN WITNESS WHEREOF, Sub-Sublessor and Sub-Sublessee have duly executed this Sub-Sublease Agreement effective as of the day and year first‐above written.

 

 

							
	
SUB-SUBLESSOR:
	
 
	
SUB-SUBLESSEE:

	
MAST THERAPEUTICS, INC.
	
 
	
MEI PHARMA, INC.

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
By:
	
 
	
/s/ Brandi Roberts
	
 
	
By:
	
 
	
/s/ Daniel P. Gold

	
Name:
	
 
	
Brandi Roberts
	
 
	
Name:
	
 
	
Daniel P. Gold

	
Title:
	
 
	
CFO
	
 
	
Title:
	
 
	
President & CEO

	
Date:
	
 
	
3/21/2017
	
 
	
Date:
	
 
	
March 23, 2017

 

 

 

By executing below, Master Lessor hereby agrees and consents to the terms of this Sub-Sublease Agreement and waives its right to recapture the Subleased Premises.  

 

 

MASTER LESSOR:

 

Kilroy Realty, L.P.

 

		
	
By:
	
 

	
Name:
	
 

	
Title:
	
 

	
Date:
	
 

 

 

 

By executing below, Sublessor hereby agrees and consents to the terms of this Sub-Sublease Agreement and waives its right to recapture the Subleased Premises.  

 

 

SUBLESSOR:

 

Santarus, Inc.

 

		
	
By:
	
 

	
Name:
	
 

	
Title:
	
 

	
Date:
	
 

 

 

 

10Exhibit

EXHIBIT 10.1

LICENSE AGREEMENT

This License Agreement (this “Agreement”), effective as of April 1, 2017, is by and between Ultimark Products, Inc., a Delaware corporation, having its principal office at 1 Belmont Avenue, Suite 602, Bala Cynwood, Pennsylvania 19004 ("Licensor") and CCA Industries, Inc., a Delaware corporation, having its principal office at 65 Challenger Road, Suite 340, Ridgefield Park, New Jersey 07660 ("Licensee").
WITNESSETH:
WHEREAS, Licensor is the sole and exclusive owner of and holds the exclusive right to the Porcelana brand, formulas, packaging designs and trademarks (together hereinafter collectively or individually as the context requires, “Porcelana”) more particularly described on Schedule A hereto; and
WHEREAS, Licensee has requested Licensor to grant Licensee the right to use Porcelana in the Territory (as defined in Section 6) in connection with the Products (as defined in Section 1) and Licensor is willing to grant to Licensee a license to use Porcelana on the terms and conditions set out in this Agreement;
NOW THEREFORE, in consideration of the mutual covenants, terms and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
		
	1.
	LICENSE AND GRANT

		
	(a)
	Licensor hereby grants to Licensee an exclusive (even as to Licensor and its Affiliates (as defined below), royalty-bearing, sublicensable, right and license throughout the Territory to use Porcelana in connection with the design, development, manufacture, advertising, marketing, promotion, offering for sale, sale and distribution of products based upon or using Porcelana (hereinafter known as “Products”) within the Territory.  Licensor covenants and agrees with Licensee that during the Term, Licensor shall not grant any license or similar right with respect to the Porcelana to any Affiliate or third party in the Territory. For purposes of this Agreement, the term “Affiliate” means any person or entity that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such first person or entity.  As used in this definition of Affiliate, “control” and, with correlative meanings, the terms “controlled by” and “under common control with,” shall mean to possess the power to direct the management or policies of an entity, whether through: (a) direct or indirect beneficial ownership of fifty percent (50%) or more of the voting interest in such entity; (b) the right to appoint fifty percent (50%) or more of the directors or equivalent of such entity; or (c) by contract or otherwise.

		
	(b)
	Except as set forth in this Agreement, Licensee shall not acquire any license or other intellectual property interest or other property right, by implication or otherwise, under or to any intellectual property or other property owned or controlled by Licensor or its Affiliates.

		
	(c)
	Licensor represents and warrants that: (i) Licensor is the exclusive owner of all right, title and interest in and to Porcelana, including, without limitation, the Porcelana trademarks listed on Schedule A (the “Licensed Marks”); (ii) Licensor owns Porcelana free and clear of any: (a) liens, charges, security interests, and encumbrances or licenses that would conflict with or limit the scope of any of the rights or licenses granted to Licensee hereunder; and (b) claims or covenants that would conflict with or limit the scope of any of the rights or licenses granted to Licensee hereunder; (iii) Licensor has the full and exclusive right and authority to grant the license herein to Licensee; (iv) Licensor has not received any notice from any third party asserting or alleging 

that Porcelana or any product based upon or using Porcelana would infringe or misappropriate, the intellectual property rights of any third party; and (v) neither Licensor nor any of its Affiliates has entered into any other agreement granting any right, interest or claim in or to Porcelana and the grant of the license pursuant to this Agreement does not in any way constitute an infringement of any trademark or intellectual property rights of any third party.

		
	(d)
	Any and all goodwill arising from Licensee’s use of the Licensed Marks shall inure solely to the benefit of Licensor, and, except to the extent the Purchase Option Closing occurs, neither during or after the termination of this Agreement shall Licensee assert any claim to such Licensed Marks or such goodwill.  Licensee shall not take any action that could be detrimental to the goodwill associated with the Licensed Marks or Licensor.

		
	2.
	TECHNICAL  ASSISTANCE

Licensor shall generally consult with Licensee concerning the design, manufacture, merchandising and promotion of the Products.
		
	3.
	TERM

This Agreement shall be effective April 1, 2017 and shall be for a term of one year ending on March 31, 2018. This Agreement may be renewed, at Licensee’s option upon written notice delivered to Licensor prior to the end of the then current term, for up to two (2) additional one year terms (the initial term of this Agreement, together with any renewal terms, the “Term”) This Agreement shall immediately terminate upon the Purchase Option Closing (as defined in Section 5). 
		
	4.
	MANUFACTURE AND QUALITY CONTROL

The nature and quality of the Products shall be subject to the approval of the Licensor, which approval shall not be unreasonably withheld and in connection therewith:
		
	(a)
	The Products shall be of quality and shall manufactured according to the prevailing standards of the health and beauty aids industry.

		
	(b)
	The Products sold by Licensee here under shall be manufactured only by quality manufacturers selected by Licensee.  Licensee, and not Licensor, shall be solely responsible for the manufacture and production of Licensee's requirements thereof and for the marketing, sale and delivery of the Products.  

		
	(c)
	Prior to commercial production of any Product, Licensee shall deliver to Licensor for its inspection and approval, free of charge, one prototype sample of each such Product proposed to be manufactured and sold by Licensee and thereafter, upon Licensor's request, Licensee shall submit to Licensor, free of charge, a reasonable quantity of production samples of the Products.  Licensor may disapprove of any samples submitted by Licensee which in the Licensor's reasonable opinion, do not conform to the quality standards and specifications established by Licensor or which are reasonably deemed by Licensor not to be consistent with the quality and reputation associated with Porcelana.  Licensor shall not unreasonably disapprove of any samples.  In the event Licensor disapproves of any samples, Licensee shall not manufacture market, advertise, promote, sell or distribute any of the Products that were rejected until Licensee makes such modifications in the manufacturing process, methods of manufacture and material and components used, as Licensor shall reasonably and specifically request.  Licensor may disapprove of any samples required to be delivered to it hereunder upon notice received by Licensee within ten (10) days after such delivery to Licensor and if Licensee does not receive notice of approval or disapproval within such period, such samples shall be deemed approved.

		
	(d)
	Licensee shall furnish to Licensor proposed product packaging for each Product that Licensee proposes to manufacture, sell and distribute.  Licensor shall not disapprove of any such proposed product packaging unreasonably, and if Licensee does not receive notice of such approval or disapproval within ten (10) days after receipt of such product packaging by Licensor, such product and packaging shall be deemed approved.  Licensee may not use any product or packaging unless Licensor has approved such use or has been deemed to have done so hereunder.

		
	(e)
	All Products shall be manufactured, packaged, labeled, distributed, marketed, advertised and sold in accordance with all applicable governmental regulations in the Territory.

		
	(f)
	Licensee will be responsible, at its own cost and expense, for all sample making and the development and manufacture of the Products.

		
	5.
	OPTION TO PURCHASE

Licensee shall have the option to purchase all assets and rights comprising Porcelana, including all goodwill relating thereto, from the Licensor during the Term for an amount not to exceed U.S. $3,200,000, subject to the negotiation of a definitive purchase and sale agreement containing terms customary for transactions of such nature.  Upon closing of the purchase (the “Purchase Option Closing”), all payment obligations between the parties shall be trued up, this Agreement shall terminate, and no further royalties or other compensation from Licensee will be due hereunder.
		
	6.
	TERRITORY

“Territory” means worldwide.
		
	7.
	PERCENTAGE ROYALTY; EXISTING INVENTORY

		
	(a)
	In consideration of the License and rights granted herein, Licensee shall pay to Licensor a royalty of ten percent (10%) (the “Percentage Royalty”) on the amount of the Licensee's Gross Factory Sales (as hereinafter defined) of Products manufactured and sold under this Agreement.  There shall be no minimum royalty for any period under this Agreement.

		
	(b)
	The term "Gross Factory Sales" shall mean the gross sales price for all sales, shipments or transfers of Products manufactured and sold hereunder by or for Licensee or any of its Affiliates (exclusive of sales or value added tax) after the effective date of this Agreement. Gross Factory Sales shall be deemed to have been made when invoiced by Licensee.

		
	(c)
	Licensee shall pay the Percentage Royalty each fiscal quarter commencing the fiscal quarter beginning with the first sales of the Product.  Payments shall be made within forty-five (45) days after the end of each fiscal quarter.  The fiscal quarter shall be based on the fiscal quarters of the Licensee.

		
	(d)
	The parties agree that Licensee shall purchase from Licensor all good and saleable inventory of Products in Licensor’s possession or control as of April 1, 2017 at Licensor’s cost, without mark-up. Licensor shall invoice Licensee for such Products upon delivery and all such good and saleable Product shall be paid for by Licensee no later than September 30, 2017.

		
	(e)
	Licensee shall not be responsible for any returns for Products sold by the Licensor, co-operative advertising deductions for advertising that occurred prior to the effective date of this Agreement, or any other deductions that pertain to Product sales that occurred prior to the effective date of this Agreement (together hereinafter known as “Licensor Deductions”).  Licensor shall promptly 

reimburse Licensee for any Licensor Deductions within ten (10) days after Licensee gives notice thereof to the Licensor.  Licensee shall have the rights to offset and deduct any unreimbursed Licensor Deductions from any royalty or inventory payments due under this Agreement. 

		
	(f)
	All payments to a party hereunder shall be timely paid in the full amount and, except as expressly set forth in this Agreement, without any deduction or offset therefrom, at such place as the party entitled to receive such payment may specify. In the event payments due under this Agreement are not received by the party entitled to receive such payment by the due date, the party obligated to make such payment shall pay to receiving party interest on the overdue payment from the date such payment was due to the date of actual payment at a rate of 1% per month, or if lower, the maximum amount permitted under law. 

		
	(g)
	Unless otherwise agreed by the parties, all payments under this Agreement shall be made in U.S. Dollars.

		
	8.
	BOOKS AND RECORDS

		
	(a)
	Licensee shall keep and maintain in the regular course of its business, in accordance with generally accepted accounting principles, complete and accurate books and records covering all transactions relating to the license granted herein including the amount of Gross Factory Sales of the Products manufactured and sold hereunder, the amount of Percentage Royalty payable here under by Licensee and the manner in which such royalty was computed.  Licensee shall preserve and keep available all such books and records for at least three (3) years after the year to which they relate.

		
	(b)
	Licensor agrees and acknowledges that all books, records, correspondence,    customer lists and data of Licensee pertaining to transactions relating to the license granted herein are the exclusive property of Licensee. Licensor acknowledges that customer lists compiled by Licensee for the Products constitute trade secrets and are the exclusive property of Licensee and that at no time during the Term, if any, or upon termination of the license, shall Licensor utilize said customer lists for any purpose except to verify and confirm the amount of Gross Factory Sales of the Products, the royalties due Licensor, or in connection with collection of any amount due hereunder of the enforcement of any other rights hereunder.

		
	(c)
	Licensor shall have the right during the Term and for one (1) year thereafter, at its cost and expense during regular business hours, to inspect and copy and make extracts from said books and records and to designate an authorized representative, including without limitation, a certified public accounting firm, to audit Licensee's books and records and to conduct such further investigation as Licensor shall deem necessary to verify Licensee's performance of all its obligations hereunder including, without limitation, payments of Percentage Royalty.

		
	(d)
	If, as a result of any examination of Licensee's books and records, it appears that Licensee's royalty payments were  less than the amount which should have been paid, Licensee shall promptly pay the amount of discrepancy or shortage, which shall bear interest at of 1% per month, or if lower, the maximum amount permitted under law, and if the amount of such discrepancy or shortage shall be an amount equal to at least three percent (3%) of the Percentage Royalty actually paid during the period in question, Licensee shall reimburse Licensor for the cost of such examination.

 
		
	(e)
	The Licensor acknowledges that all information of Licensee which was or will come into its possession or knowledge in accordance with the provisions of this Section 8, consists of confidential and proprietary data whose disclosure to third parties or use by third parties would be damaging to the Licensee and accordingly, the Licensor undertakes to hold such material information in the strictest confidence and not to disclose same to any other party.

		
	9.
	SALES AND PROMOTION

		
	(a)
	Licensee shall use its commercially reasonable best efforts in its sole discretion, to promote and develop the sale of the Products and to exploit the rights granted hereunder in the Territory. 

		
	(b)
	Prior to the first use or appearance in any media, Licensee shall submit to Licensor for its inspection and approval, which approval shall not be unreasonably withheld, free of charge, specimens of all advertising, public relations and promotional materials for the Products.  All such materials shall be subject to Licensor's prior approval and shall be deemed approved if notice of rejection is not given to Licensee within ten (10) days after receipt by Licensor.

		
	10.
	TERMINATION

		
	(a)
	If either party shall otherwise fail to perform any of the terms, conditions, agreements or covenants in this Agreement, and such default shall continue uncured after written notice for a period of thirty (30) days after notice thereof to the party in default, the non­defaulting party shall have the right to terminate this Agreement upon written notice.

		
	(b)
	Either party may by written notice, terminate this Agreement immediately without incurring thereby any liability to the other, except as hereinafter set forth, in the event the other party shall: (A) be dissolved, be adjudicated, insolvent or bankrupt or cease operations, be unable to admit in writing its ability to pay its debts as they mature or make a general assignment for the benefit of, or enter into any composition or arrangement  with, creditors, or file for relief under any insolvency law (except that Licensor may not terminate this Agreement hereunder if Licensee is subject to any bankruptcy proceeding described above); (B) apply for, or consent (by admission of material allegations of a  petition or otherwise) to the appointment of a receiver, trustee or liquidator of all or substantial part of its assets or affairs, or authorize such applications or  consent, or permit any proceedings seeking such appointment to be commenced against it (whether voluntary or involuntary) which continues undismissed for a period of thirty (30) days; (C) be the subject of any other proceeding not defined above whereby any of the property or assets of Licensee is or may be distributed among its creditors (or any group of them).

		
	(c)
	Licensee shall have the right to terminate this Agreement for convenience at any time upon thirty (30) days’ prior written notice.

		
	(d)
	On the expiration or sooner termination of this Agreement:

		
	1)
	Unless in connection with a termination resulting from the Purchase Option Closing:

		
	(A)
	the rights and license granted to Licensee herein shall forthwith terminate and automatically revert to Licensor;

		
	(B)
	Licensee shall discontinue all use of the Licensed Marks; and

		
	(C)
	Licensor may, in its sole discretion, enter into such arrangements as it deems desirable, with any other party, for the manufacture, promotion and sale of the Products.

		
	2)
	All Percentage Royalties on sales of the Products to the date of expiration or termination shall become immediately due and payable.

		
	3)
	Licensor shall immediately reimburse Licensee for any unreimbursed Licensor Deductions.

Following expiration or termination of this Agreement, Licensee may manufacture no additional Products, but may, subject to the payment of Percentage Royalties herein, continue to distribute and sell its remaining inventory for a period not to exceed six (6) months following such termination or expiration, subject to payment of applicable royalties thereto.  Licensee shall deliver as soon as practicable to Licensor, following the expiration or termination of this Agreement a statement indicating the number and description of Products on hand.  Licensor shall have the right to conduct 

a physical inventory in order to ascertain or verify such inventory and/or statement. In the event Licensee refuses to permit Licensor to conduct such physical inventory, the Licensee shall forfeit their right hereunder to dispose of such inventory. Notwithstanding anything else in this Agreement to the contrary, the foregoing shall not apply in connection with a termination resulting from the Purchase Option Closing.
		
	(e)
	The termination or expiration of this Agreement shall not relieve either party of any obligation or claim for damages due to Licensor arising or accrued prior to or as of the date of such termination or expiration.

		
	11.
	INSURANCE

Licensee, at its own expense, shall procure from a responsible insurance carrier, and maintain in full force and effect at all times during which Products may be sold hereunder, a Products liability insurance policy with respect to the Products manufactured  and sold hereunder with a limit of liability of not less than One Million ($1,000,000) Dollars. Licensor and Licensee shall name each other as covered parties, as their interests shall appear, and such insurance policy shall provide for at least ten (10) days prior written notice to any cancellation or modification.  The parties shall deliver to each other, promptly upon issuance, a full and complete copy of said insurance policy and shall, from time to time upon request, promptly furnish to the other part ,evidence that said insurance policy is in full force and effect.
		
	12.
	GOVERNING LAW

This Agreement shall be deemed to have been entered into in the State of New Jersey, and shall be construed, interpreted and enforced in accordance with the laws of that State applicable to agreements made and to be performed in the State of New Jersey without giving effect to the conflict of laws principles thereof.
		
	13.
	ARBITRATION

Any and all disputes, controversies and claims arising out of or relating to this Agreement, or with respect to the interpretation of this Agreement, or the rights or obligations of the parties and their successors and permitted assigns, whether by operation of law or otherwise, shall be settled and determined exclusively by arbitration in New Jersey, by a single arbitrator, pursuant to the then existing rules of the American Arbitration Association for commercial arbitration (except disputes, controversies and claims relating to specific performance, as to which the parties hereby confer jurisdiction upon and consent to the jurisdiction of the courts of the State of New Jersey and the United States federal courts in said State.). The arbitrators shall have no power to award specific performance, rescission or injunctive relief, nor the power to modify, alter, enlarge upon or otherwise change any of the provisions or terms and conditions of this Agreement.  The arbitration shall be final and binding upon the parties and judgment there on may be entered in the courts of the State of New Jersey and the United States federal courts in said State, and the parties hereby consent to the jurisdiction of such courts for such purposes. Service of any notice, process, motion or other document in connection with any arbitration proceeding, any arbitration award or any other action or proceeding, maybe by personal service or by certified or registered mail return receipt requested, addressed to the party intended at its address for the receipt of notices as herein set forth.
		
	14.
	SUSPENSION

If Licensee suspends or discontinues its regular business operations with regard to the Products for any reason whatsoever, including force majeure, Licensor shall have the right to terminate this Agreement forthwith by giving six (6) months’ notice to Licensee unless prior to the expiration of the 

six (6) months period, Licensee resumes its regular business operations with regard to the Products without further suspension or discontinuance.
		
	15.
	INDEMNIFICATION

		
	(a)
	Licensee shall defend, indemnify and hold harmless Licensor and its Affiliates and each of their respective officers, directors, shareholders, employees, successors and assigns (“Licensor Indemnitees”) from and against all claims, allegations, suits, actions or proceedings asserted against any Licensor Indemnitee by any third parties, whether governmental or private (“Third Party Claims”), and all associated damages, awards, deficiencies, settlement amounts, defaults, assessments, fines, dues, penalties, costs, fees, liabilities, obligations, taxes, liens, losses, lost profits and expenses (including, without limitation, court costs, interest and reasonable fees of attorneys, accountants and other experts), together with all documented out-of-pocket costs and expenses incurred in complying with any judgments, orders, decrees, stipulations, investigations and injunctions that arise therefrom (“Losses”), to the extent arising out of or resulting from: (i) a material breach by Licensee or any of its Affiliates, subcontractors or agents of any of Licensee’s representations, warranties, covenants or agreements under this Agreement; or (ii) violation of applicable law by Licensee; provided, however, that in all cases referred to in this Section 15(a), Licensee shall not be liable to indemnify any Licensor Indemnitee for any Losses to the extent that such Losses were caused by (A) the negligence or greater standard of culpability of Licensor or any of its Affiliates, subcontractors or agents, (B) any breach by Licensor or any of its Affiliates, subcontractors or agents of Licensor’s representations, warranties, covenants or agreements under this Agreement, or (C) matters for which Licensor has an obligation to indemnify a Licensee Indemnitee pursuant to Section 15(b).

		
	(b)
	Licensor shall defend, indemnify and hold harmless Licensee and its Affiliates and each of their respective officers, directors, shareholders, employees, successors and assigns (“Licensee Indemnitees”) from and against all Third Party Claims, and all associated Losses, to the extent arising out of or resulting from: (i) a material breach by Licensor or any of its Affiliates, subcontractors or agents of any of its representations, warranties, covenants or agreements under this Agreement; (ii) a claim or demand by a Third Party that Porcelana in or for the Territory infringes any intellectual property or other proprietary rights of such third party; (iii) violation of applicable law by any Licensor Indemnitee; or (iv) any defect in any product supplied by Licensor to the Licensee; provided, however, that in all cases referred to in this Section 15(b), Licensor shall not be liable to indemnify any Licensee Indemnitee for any Losses to the extent that such Losses were caused by (A) the negligence or greater standard of culpability of Licensee or any of its Affiliates, subcontractors or agents, (B) any breach by Licensee or any of its Affiliates, subcontractors or agents of Licensee’s representations, warranties, covenants or agreements under this Agreement, or (C) matters for which Licensee has an obligation to indemnify any Licensor Indemnitee pursuant to Section 15(b).

		
	(c)
	In the case of a Third Party Claim as to which a party (the “Indemnitor”) may be obligated to provide indemnification pursuant to this Agreement, such party seeking indemnification hereunder (“Indemnitee”) will notify the Indemnitor in writing of the Third Party Claim (and specifying in reasonable detail the factual basis for the Third Party Claim and to the extent known, the amount of the Third Party Claim) reasonably promptly after becoming aware of such Third Party Claim; provided, however, that failure to give such notification will not affect the indemnification provided hereunder except to the extent the Indemnitor shall have been actually materially prejudiced as a result of such failure.   The Indemitee shall afford the Indemnitor thirty (30) days following notification of a Third Party Claim for which indemnification will be sought acknowledge in writing its obligation and agreement to defend, contest, negotiate and compromise or settle such Third Party Claim in the Indemnitee’s name and in such event, the Indemnitor shall not compromise or settle any such Third Party Claim prior written consent of the Indemnitee. If the Indemnitor does not elect to assume control by written acknowledgement of the defense of any Third Party Claim within the thirty (30) 

day period set forth above, or if such good faith and diligent defense is not being or ceases to be conducted by the Indemnitor, the Indemnitee shall have the right, at the expense of the Indemnitor, after five (5) business days’ written notice to the Indemnitor of its intent to do so, to undertake the defense of the Third Party Claim for the account of the Indemnitor (with counsel selected by the Indemnitee), and to compromise or settle such Third Party Claim, exercising reasonable business judgment.

		
	16.
	ASSIGNMENT

This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns.  Neither Licensor nor License may assign any of its rights or delegate any of its liabilities or obligations hereunder without the prior written consent of the other party, except that without the prior consent of the other party (but with prior written notice to): (a) either party may assign this Agreement to any purchaser of all or substantially all of its assets or business to which this Agreement relates; (b) either party may assign this Agreement and/or its rights and obligations under this Agreement, in whole or in part, to any of its Affiliates; and (c) either party may assign any of its rights to payments of royalties or any other amounts due under this Agreement to any of its Affiliates or any third party.  No assignment hereunder shall relieve the assigning party of its responsibilities or obligations hereunder; provided, further that any assignee (other than an assignee under clause (b) of this Section 16) shall agree in writing to be bound by all of the obligations of the assigning Party hereunder.  Any purported assignment or transfer in violation of this Section 16 will be void ab initio and of no force or effect.
		
	17.
	NOTICES

All notices, approvals, requests or consents permitted or required under this Agreement shall be in writing and shall be deemed given when so delivered in person, by overnight courier, or two (2) business days after being sent by registered or certified mail (postage prepaid, return receipt requested), to the parties at their respective addresses set forth above. Notices to Licensor as well as deliveries of all materials or articles to be approved, including but not limited to samples, packaging and advertising shall be directed to the attention of the Chief Executive Officer of Licensor and notices to Licensee shall be directed to the attention of the Chief Financial Officer of Licensee.  By a notice hereunder either party may change the address hereunder or the person to whom any notice or delivery shall be directed.
		
	18.
	REMEDIES AND WAIVERS

The failure of either party to claim or assert a right under this Agreement will not be deemed a waiver there of unless a time limit is provided for this Agreement for the exercise of such rights.  Any waiver, whether express or implied of any provisions of this Agreement shall not constitute a continuing waiver of such or any other provision of the Agreement.  All remedies specified herein or otherwise available shall be cumulative and in addition to any and every other remedy provided herein or now or herein after available.
		
	19.
	NO AGENCY RELATION

Nothing herein contained shall create or be deemed to create any agency, partnership or joint venture between the parties thereto, and Licensee shall have no power or authority to obligate or bind Licensor in any manner whatsoever.

		
	20.
	INTERPRETATION AND CONSTRUCTION

The headings of Sections in this Agreement are provided for convenience only and shall not affect its construction or interpretation.  All references to “Section” or “Sections” refer to the corresponding Section or Sections of this Agreement.  All words used in this Agreement shall be construed to be of such gender or number as the circumstances require.  Unless otherwise expressly provided in this Agreement, the word “including” does not limit the preceding words or terms and shall be deemed to be followed by the words “without limitation.” Unless otherwise expressly provided in this Agreement, the terms “shall have responsibility for”, “shall be responsible for” or the like, shall be deemed to be followed by “and shall be obligated to duly carry out such responsibility.”
		
	21.
	THIRD PARTY BENEFICIARIES  

None of the provisions of this Agreement, express or implied, is intended to be or shall be for the benefit of or enforceable by any person or entity (including, without limitation, any creditor of either party hereto) other than Licensor and Licensee, their respective Indemnitees, successors and permitted assigns.  No such person or entity shall obtain any right under any provision of this Agreement or shall by reasons of any such provision make any claim in respect of any debt, liability or obligation (or otherwise) against either party hereto.
21.COUNTERPARTS; SIGNATURES
This Agreement may be executed in multiple counterparts, all of which, when executed, shall be deemed to be an original and all of which together shall constitute one and the same document.  Signatures provided by facsimile or e-mail transmission shall be deemed to be original signatures.
		
	22.
	SEVERABILITY

The invalidity or unenforceability of any provision of this Agreement shall not affect the other provisions or parts here of and this Agreement shall be construed in all respects as if such in valid or unenforceable provision or parts thereof were omitted.
		
	23.
	No IMPLIED WAIVERS; RIGHTS CUMULATIVE 

No failure on the part of Licensor or Licensee to exercise and no delay in exercising any right, power, remedy or privilege under this Agreement, or provided by statute or at law or in equity or otherwise, including the right or power to terminate this Agreement, shall impair, prejudice or constitute a waiver of any such right, power, remedy or privilege or be construed as a waiver of any breach of this Agreement or as an acquiescence therein, nor shall any single or partial exercise of any such right, power, remedy or privilege preclude any other or further exercise thereof or the exercise of any other right, power, remedy or privilege.
		
	24.
	AMENDMENT

This Agreement may not be amended and no provision hereof may be modified or waived, except by an instrument in writing duly executed by each of the parties hereto.
		
	25.
	COMPLETE AGREEMENT

This Agreement constitutes the entire Agreement between the parties relating to the subject matter hereof and supersedes all prior agreements and undertakings, whether oral or written, between the parties hereto.  This Agreement may be amended only by a writing executed by the parties.  No finders' fees or other compensation is payable in connection with the execution of the Agreement.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives, effective as of the date first set forth above.

ULTIMARK PRODUCTS, INC.
Licensor

By        /s/ Lance Funston                                   
Lance T. Funston, Chief Executive Officer

CCA INDUSTRIES, INC.
Licensee

By        /s/ Stephen A. Heit                                  
Stephen A. Heit
Executive Vice President and 
Chief Financial Officer    

SCHEDULE A
PORCELANA

	
					
	Trademark
	Client/Matter #/Subcase
Country Name
	Status
Class(es)
	Application
Number/Date
	Registration
Number/Date

	PORCELANA
	688211.0108/ Australia
	Registered
05 Int.
	405923
28-Mar-1984
	A405923
28-Mar-1984

	PORCELANA
	688211.0141/ Australia
	Registered
03 Int.
	 
	591876

	PORCELANA
	688211.0113/ Canada
	Registered
00 National
	450275
19-Feb-1980
	279528
13-May-1983

	PORCELANA
	688211.0118/ Ecuador
	Registered
05 Int.
	35866
09-Dec-1992
	59/94
01-Feb-1994

	PORCELANA
	688211.0105/
	Registered
	10197002
	10197002

	 
	European Union (Community)
	03 Int., 05 Int., 44 Int.
	15-Aug-2011
	15-Mar-2012

	PORCELANA
	688211.0132/
	Registered
	1086/88
	1086/88

	 
	Singapore
	05 Int.
	12-Mar-1988
	12-Mar-1988

	PORCELANA
	688211.0135/
	Registered
	20498
	20498

	 
	Trinidad and Tobago
	03 Int.
	28-Feb-1992
	03-Oct-1994

	PORCELANA
	688211.0136/
	Registered
	4801
	5118

	 
	United Arab Emirates
	05 Int.
	01-Feb-1994
	01-Feb-1994

	PORCELANA
	688211.0093/
	Registered
	77/182,705
	4,035,214

	 
	United States of America
	03 Int.
	16-May-2007
	04-Oct-2011

	PORCELANA
	688211.0096/
	Registered
	73/091,120
	1,119,493

	 
	United States of America
	05 Int.
	21-Jun-1976
	05-Jun-1979

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