Document:

ex42.htm

Exhibit 4.2

 

Warrant Certificate No. ___

 

NEITHER THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS, AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) AN EXEMPTION FROM SUCH REGISTRATION EXISTS AND THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH COUNSEL AND OPINION ARE SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS.

 

	Effective Date: September 2, 2010	  Void After: September 2, 2015

 

YOUBLAST GLOBAL, INC.

 

WARRANT TO PURCHASE COMMON STOCK

 

YouBlast Global, Inc., a Delaware corporation (the “Company”), for value received on September 2, 2010 (the “Effective Date”), hereby issues to Philmore Anderson IV (the “Holder”) this Warrant (the “Warrant”) to purchase, One Million (1,000,000) shares (each such share as from time to time adjusted as hereinafter provided being a “Warrant Share” and all such shares being the “Warrant Shares”) of the Company’s Common Stock (as defined below), at the Exercise Price (as defined below), as adjusted from time to time as provided herein, on or before September 2, 2015 (the “Expiration Date”), all subject to the following terms and conditions. Unless otherwise defined in this Warrant, terms appearing in initial capitalized form shall have the meaning ascribed to them in that certain 16% Debenture due November 1, 2010, with an original issue date of September 2, 2010 in the aggregate principal amount of $175,000, to be sold and issued by the Company to the Holder (the “Debenture”).

 

As used in this Warrant, (i) “Business Day” means any day other than Saturday, Sunday or any other day on which commercial banks in the City of Houston, Texas, are authorized or required by law or executive order to close; (ii) “Common Stock” means the common stock of the Company, par value $0.003 per share, including any securities issued or issuable with respect thereto or into which or for which such shares may be exchanged for, or converted into, pursuant to any stock dividend, stock split, stock combination, recapitalization, reclassification, reorganization or other similar event; (iii) “Exercise Price” means $0.50 per share of Common Stock, subject to adjustment as provided herein; (iv) “Trading Day” means any day on which the Common Stock is traded on the primary national or regional stock exchange on which the Common Stock is listed, or if not so listed, the OTC Bulletin Board, if quoted thereon, is open for the transaction of business; and (v) “Affiliate” means any person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, a person, as such terms are used and construed in Rule 144 promulgated under the Securities Act of 1933, as amended (the “Securities Act”).

 

1.   DURATION AND EXERCISE OF WARRANTS

 

(a) Exercise Period. The Holder may exercise this Warrant in whole or in part on any Business Day on or before 5:00 P.M., Central Time, on the Expiration Date, at which time this Warrant shall become void and of no value.

 

(b) Exercise Procedures.

 

(i)    While this Warrant remains outstanding and exercisable in accordance with Section 1(a), in addition to the manner set forth in Section 1(b)(ii)below, the Holder may exercise this Warrant in whole or in part at any time and from time to time by:

 

(A) delivery to the Company of a duly executed copy of the Notice of Exercise attached as Exhibit A;

 

(B) surrender of this Warrant to the Secretary of the Company at its principal offices or at such other office or agency as the Company may specify in writing to the Holder; and

 

(C) payment of the then-applicable Exercise Price per share multiplied by the number of Warrant Shares being purchased upon exercise of the Warrant (such amount, the “Aggregate Exercise Price”) made in the form of cash, or by certified check, bank draft or money order payable in lawful money of the United States of America or in the form of a Cashless Exercise to the extent permitted in Section 1(b)(ii) below.

 

 

  

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(ii)                   At any time when a registration statement covering the resale of the Warrant Shares by the Holder is not available after the first anniversary of the Effective Date, the Holder may, in its sole discretion, exercise all or any part of the Warrant in a “cashless” or “net-issue” exercise (a “Cashless Exercise”) by delivering to the Company (1) the Notice of Exercise and (2) the original Warrant, pursuant to which the Holder shall surrender the right to receive upon exercise of this Warrant, a number of Warrant Shares having a value (as determined below) equal to the Aggregate Exercise Price, in which case, the number of Warrant Shares to be issued to the Holder upon such exercise shall be calculated using the following formula:

 

	 X	= 	Y * (A - B)
	 	 	A

 

with:

	
 

	
X =the number of Warrant Shares to be issued to the Holder

 

	 	
Y =the number of Warrant Shares with respect to which the Warrant is being exercised

 

	 	A =the fair value per share of Common Stock on the date of exercise of this Warrant

 

	 	B =the then-current Exercise Price of the Warrant

 

Solely for the purposes of this paragraph, “fair value” per share of Common Stock shall mean the average of the closing sales prices, as quoted on the primary national or regional stock exchange on which the Common Stock is listed, or, if not listed, the OTC Bulletin Board if quoted thereon, on the twenty (20) Trading Days immediately preceding the date on which the Notice of Exercise is deemed to have been sent to the Company.

 

Notwithstanding the foregoing provisions of this Section 1(b)(ii), the Holder may not make a Cashless Exercise if and to the extent that such exercise would require the Company to issue a number of shares of Common Stock in excess of its authorized but unissued shares of Common Stock, less all amounts of Common Stock that have been reserved for issue upon the conversion of all outstanding securities convertible into shares of Common Stock and the exercise of all outstanding options, warrants and other rights exercisable for shares of Common Stock. If the Company does not have the requisite number of authorized but unissued shares of Common Stock to permit the Holder to make a Cashless Exercise, the Company shall use commercially reasonable efforts to obtain the necessary stockholder consent to increase the authorized number of shares of Common Stock to permit such Holder to make a Cashless Exercise pursuant to this Section 1(b)(ii).

 

                    (iii)    Upon the exercise of this Warrant in compliance with the provisions of this Section 1(b), and except as limited pursuant to the last paragraph of Section 1(b)(ii), the Company shall promptly issue and cause to be delivered to the Holder a certificate for the Warrant Shares purchased by the Holder. Each exercise of this Warrant shall be effective immediately prior to the close of business on the date (the “Date of Exercise”) that the conditions set forth in Section 1(b) have been satisfied, as the case may be. On the first Business Day following the date on which the Company has received each of the Notice of Exercise and the Aggregate Exercise Price (or notice of a Cashless Exercise in accordance with Section 1(b)(ii)) (the “Exercise Delivery Documents”), the Company shall transmit an acknowledgment of receipt of the Exercise Delivery Documents to the Company’s transfer agent (the “Transfer Agent”). On or before the third Business Day following the date on which the Company has received all of the Exercise Delivery Documents (the “Share Delivery Date”), the Company shall (X) provided that the Transfer Agent is participating in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program, upon the request of the Holder, credit such aggregate number of shares of Common Stock to which the Holder is entitled pursuant to such exercise to the Holder’s or its designee’s balance account with DTC through its Deposit Withdrawal Agent Commission system, or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and dispatch by overnight courier to the address as specified in the Notice of Exercise, a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder is entitled pursuant to such exercise. Upon delivery of the Exercise Delivery Documents, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the certificates evidencing such Warrant Shares. If this Warrant is submitted in connection with any exercise pursuant to Section 1(a) and the number of Warrant Shares represented by this Warrant submitted for exercise is greater than the actual number of Warrant Shares being acquired upon such an exercise, then the Company shall as soon as practicable and in no event later than three (3) Business Days after any exercise and at its own expense, issue a new Warrant of like tenor representing the right to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised.

(iv)    If the Company shall fail for any reason or for no reason to issue to the Holder, within three (3) Business Days of receipt of the Exercise Delivery Documents, a certificate for the number of shares of Common Stock to which the Holder is entitled and register such shares of Common Stock on the Company’s share register or to credit the Holder’s balance account with DTC for such number of shares of Common Stock to which the Holder is entitled upon the Holder’s exercise of this Warrant, and if on or after such Business Day the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of shares of Common Stock issuable upon such exercise that the Holder anticipated receiving from the Company (a “Buy-In”), then the Company shall, within three (3) Business Days after the Holder’s request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased (the “Buy-In Price”), at which point the Company’s obligation to deliver such certificate (and to issue such shares of Common Stock) shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such shares of Common Stock and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) the closing bid price on the date of exercise.

 

 

  

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(c) Partial Exercise. This Warrant shall be exercisable, either in its entirety or, from time to time, for part only of the number of Warrant Shares referenced by this Warrant. If this Warrant is exercised in part, the Company shall issue, at its expense, a new Warrant, in substantially the form of this Warrant, referencing such reduced number of Warrant Shares that remain subject to this Warrant.

 

(d) Disputes. In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the Company shall promptly issue to the Holder the number of Warrant Shares that are not disputed and resolve such dispute in accordance with Section 15.

 

2.   ISSUANCE OF WARRANT SHARES

 

(a) The Company covenants that all Warrant Shares will, upon issuance in accordance with the terms of this Warrant, be (i) duly authorized, fully paid and non-assessable, and (ii) free from all liens, charges and security interests, with the exception of claims arising through the acts or omissions of any Holder and except as arising from applicable Federal and state securities laws.

 

(b) The Company shall register this Warrant upon records to be maintained by the Company for that purpose in the name of the record holder of such Warrant from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner thereof for the purpose of any exercise thereof, any distribution to the Holder thereof and for all other purposes.

 

(c) The Company will not, by amendment of its certificate of formation, by-laws or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all action necessary or appropriate in order to protect the rights of the Holder to exercise this Warrant, or against impairment of such rights.

 

3.   ADJUSTMENTS OF EXERCISE PRICE, NUMBER AND TYPE OF WARRANT SHARES

 

(a) The Exercise Price and the number of shares purchasable upon the exercise of this Warrant shall be subject to adjustment from time to time upon the occurrence of certain events described in this Section 3(a); provided, that notwithstanding the provisions of this Section 3, the Company shall not be required to make any adjustment if and to the extent that such adjustment would require the Company to issue a number of shares of Common Stock in excess of its authorized but unissued shares of Common Stock, less all amounts of Common Stock that have been reserved for issue upon the conversion of all outstanding securities convertible into shares of Common Stock and the exercise of all outstanding options, warrants and other rights exercisable for shares of Common Stock. If the Company does not have the requisite number of authorized but unissued shares of Common Stock to make any adjustment, the Company shall use its commercially best efforts to obtain the necessary stockholder consent to increase the authorized number of shares of Common Stock to make such an adjustment pursuant to this Section 3(a).

 

(i)   Subdivision or Combination of Stock. In case the Company shall at any time subdivide (whether by way of stock dividend, stock split or otherwise) its outstanding shares of Common Stock into a greater number of shares, the Exercise Price in effect immediately prior to such subdivision shall be proportionately reduced and the number of Warrant Shares shall be proportionately increased, and conversely, in case the outstanding shares of Common Stock of the Company shall be combined (whether by way of stock combination, reverse stock split or otherwise) into a smaller number of shares, the Exercise Price in effect immediately prior to such combination shall be proportionately increased and the number of Warrant Shares shall be proportionately decreased. The Exercise Price and the Warrant Shares, as so adjusted, shall be readjusted in the same manner upon the happening of any successive event or events described in this Section 3(a)(i).

 

(ii)   Dividends in Stock, Property, Reclassification. If at any time, or from time to time, all of the holders of Common Stock (or any shares of stock or other securities at the time receivable upon the exercise of this Warrant) shall have received or become entitled to receive, without payment therefore:

 

(A) any shares of stock or other securities that are at any time directly or indirectly convertible into or exchangeable for Common Stock, or any rights or options to subscribe for, purchase or otherwise acquire any of the foregoing by way of dividend or other distribution, or

 

(B) additional stock or other securities or property (including cash) by way of spin-off, split-up, reclassification, combination of shares or similar corporate rearrangement (other than shares of Common Stock issued as a stock split or adjustments in respect of which shall be covered by the terms of Section 3(a)(i) above),

 

then and in each such case, the Exercise Price and the number of Warrant Shares to be obtained upon exercise of this Warrant shall be adjusted proportionately, and the Holder hereof shall, upon the exercise of this Warrant, be entitled to receive, in addition to the number of shares of Common Stock receivable thereupon, and without payment of any additional consideration therefor, the amount of stock and other securities and property (including cash in the cases referred to above) that such Holder would hold on the date of such exercise had such Holder been the holder of record of such Common Stock as of the date on which holders of Common Stock received or became entitled to receive such shares or all other additional stock and other securities and property. The Exercise Price and the Warrant Shares, as so adjusted, shall be readjusted in the same manner upon the happening of any successive event or events described in this Section 3(a)(ii).

 

  

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(iii)     Reorganization, Reclassification, Consolidation, Merger or Sale. If any recapitalization, reclassification or reorganization of the capital stock of the Company, or any consolidation or merger of the Company with another corporation, or the sale of all or substantially all of its assets or other transaction shall be effected in such a way that holders of Common Stock shall be entitled to receive stock, securities, or other assets or property (an “Organic Change”), then, as a condition of such Organic Change, lawful and adequate provisions shall be made by the Company whereby the Holder hereof shall thereafter have the right to purchase and receive (in lieu of the shares of the Common Stock of the Company immediately theretofore purchasable and receivable upon the exercise of the rights represented by this Warrant) such shares of stock, securities or other assets or property as may be issued or payable with respect to or in exchange for a number of outstanding shares of such Common Stock equal to the number of shares of such stock immediately theretofore purchasable and receivable assuming the full exercise of the rights represented by this Warrant. In the event of any Organic Change, appropriate provision shall be made by the Company with respect to the rights and interests of the Holder of this Warrant to the end that the provisions hereof (including, without limitation, provisions for adjustments of the Exercise Price and of the number of shares purchasable and receivable upon the exercise of this Warrant) shall thereafter be applicable, in relation to any shares of stock, securities or assets thereafter deliverable upon the exercise hereof. The Company will not effect any such consolidation, merger or sale unless, prior to the consummation thereof, the successor corporation (if other than the Company) resulting from such consolidation or merger or the corporation purchasing such assets shall assume by written instrument reasonably satisfactory in form and substance to the Holder executed and mailed or delivered to the registered Holder hereof at the last address of such Holder appearing on the books of the Company, the obligation to deliver to such Holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, such Holder may be entitled to purchase. If there is an Organic Change, then the Company shall cause to be mailed to the Holder at its last address as it shall appear on the books and records of the Company, at least 10 calendar days before the effective date of the Organic Change, a notice stating the date on which such Organic Change is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares for securities, cash, or other property delivered upon such Organic Change; provided, that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. The Holder is entitled to exercise this Warrant during the 10-day period commencing on the date of such notice to the effective date of the event triggering such notice. In any event, the successor corporation (if other than the Company) resulting from such consolidation or merger or the corporation purchasing such assets shall be deemed to assume such obligation to deliver to such Holder such shares of stock, securities or assets even in the absence of a written instrument assuming such obligation to the extent such assumption occurs by operation of law.

 

(b) Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment pursuant to this Section 3, the Company at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each Holder of this Warrant a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall promptly furnish or cause to be furnished to such Holder a like certificate setting forth: (i) such adjustments and readjustments; and (ii) the number of shares and the amount, if any, of other property which at the time would be received upon the exercise of the Warrant.

 

(c) Certain Events. If any event occurs as to which the other provisions of this Section 3 are not strictly applicable but the lack of any adjustment would not fairly protect the purchase rights of the Holder under this Warrant in accordance with the basic intent and principles of such provisions, or if strictly applicable would not fairly protect the purchase rights of the Holder under this Warrant in accordance with the basic intent and principles of such provisions, then the Company's Board of Directors will, in good faith, make an appropriate adjustment to protect the rights of the Holder; provided, that no such adjustment pursuant to this Section 3(c) will increase the Exercise Price or decrease the number of Warrant Shares as otherwise determined pursuant to this Section 3.

 

(d) Adjustment of Exercise Price Upon Issuance of Additional Shares of Common Stock. If within one year of the Effective Date the Company issues Additional Shares of Common Stock, as defined below, without consideration or for a consideration per share less than a price (the “Applicable Price”) equal to the Exercise Price in effect immediately prior to such issuance, then immediately after such issuance the Exercise Price then in effect shall be reduced to an amount equal to such consideration per share, provided that in no event shall the Exercise Price be reduced below $0.003. In the event the Company shall at any time after one year from the Effective Date and prior to the Expiration Date issue Additional Shares of Common Stock, as defined below, without consideration or for a consideration per share less than the Exercise Price in effect immediately prior to such issue, then the Exercise Price shall be reduced, concurrently with such issue, to a price (calculated to the nearest cent) determined by multiplying such Exercise Price by a fraction, (A) the numerator of which shall be (1) the number of shares of Common Stock outstanding immediately prior to such issue plus (2) the number of shares of Common Stock which the aggregate consideration received or to be received by the Company for the total number of Additional Shares of Common Stock so issued would purchase at such Exercise Price; and (B) the denominator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue plus the number of such Additional Shares of Common Stock so issued; provided that, (i) for the purpose of this Section 3(d), all shares of Common Stock issuable upon conversion or exchange of convertible securities outstanding immediately prior to such issue shall be deemed to be outstanding, and (ii) the number of shares of Common Stock deemed issuable upon conversion or exchange of such outstanding convertible securities shall be determined without giving effect to any adjustments to the conversion or exchange price or conversion or exchange rate of such convertible securities resulting from the issuance of Additional Shares of Common Stock that is the subject of this calculation. For purposes of this Warrant, “Additional Shares of Common Stock” shall mean all shares of Common Stock issued by the Company after the Effective Date (including without limitation any shares of Common Stock issuable upon conversion or exchange of any convertible securities or upon exercise of any option or warrant, on an as-converted basis), other than: (i) shares of Common Stock issued or issuable upon conversion or exchange of any convertible securities or exercise of any options or warrants outstanding on the Effective Date; (ii) shares of Common Stock issued or issuable by reason of a dividend, stock split, split-up or other distribution on shares of Common Stock that is covered by Sections 3(a)(i) through 3(a)(iii) above; (iii) shares of Common Stock (or options with respect thereto) issued or issuable to employees or directors of, or consultants to, the Company or any of its subsidiaries pursuant to a plan, agreement or arrangement approved by the Board of Directors of the Company (individual issuances pursuant to this subsection in an aggregate amount not to exceed 10% of the number of shares of Common Stock issued and outstanding as of the date hereof); (iv) any shares of Common stock and or securities exercisable, issuable or exchangeable for or convertible into Common Stock issued in connection with a private placement of up to $10,000,000 of the shares of Series A convertible Preferred Stock of the Company; and (v) securities issued pursuant to acquisitions or strategic transactions approved by a majority of disinterested directors of the Company, provided that any such issuance shall only be to a person which is, itself or through its subsidiaries, an operating Company in a business synergistic with the business of the Company and in which the Company receives benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities. The provisions of this Section 3(d) shall not operate to increase the Exercise Price.

 

(e) Adjustment of Exercise Price Upon Event of Default. If at any time this Warrant is outstanding, there is an Event of Default (as defined in the Debenture) in the payment of the principal amount or interest due under the Debenture pursuant to Sections 3(a)(i) or 3(a)(ii) thereof, then immediately after such Event of Default, the Exercise Price then in effect shall be reduced to an amount equal to $0.01 per share.

 

  

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4.    TRANSFERS AND EXCHANGES OF WARRANT AND WARRANT SHARES

 

(a) Registration of Transfers and Exchanges. Subject to Section 4(c), upon the Holder’s surrender of this Warrant, with a duly executed copy of the Form of Assignment attached as Exhibit B, to the Secretary of the Company at its principal offices or at such other office or agency as the Company may specify in writing to the Holder, the Company shall register the transfer of all or any portion of this Warrant. Upon such registration of transfer, the Company shall issue a new Warrant, in substantially the form of this Warrant, evidencing the acquisition rights transferred to the transferee and a new Warrant, in similar form, evidencing the remaining acquisition rights not transferred, to the Holder requesting the transfer.

 

(b) Warrant Exchangeable for Different Denominations. The Holder may exchange this Warrant for a new Warrant or Warrants, in substantially the form of this Warrant, evidencing in the aggregate the right to purchase the number of Warrant Shares which may then be purchased hereunder, each of such new Warrants to be dated the date of such exchange and to represent the right to purchase such number of Warrant Shares as shall be designated by the Holder. The Holder shall surrender this Warrant with duly executed instructions regarding such re-certification of this Warrant to the Secretary of the Company at its principal offices or at such other office or agency as the Company may specify in writing to the Holder.

 

(c) Restrictions on Transfers. This Warrant may not be transferred at any time without (i) registration under the Securities Act or (ii) an exemption from such registration and a written opinion of legal counsel addressed to the Company that the proposed transfer of the Warrant may be effected without registration under the Securities Act, which opinion will be in form and from counsel reasonably satisfactory to the Company.

 

(d) Permitted Transfers and Assignments. Notwithstanding any provision to the contrary in this Section 4, the Holder may transfer, with or without consideration, this Warrant or any of the Warrant Shares (or a portion thereof) to the Holder’s Affiliates (as such term is defined under Rule 144 of the Securities Act) without obtaining the opinion from counsel that may be required by Section 4(c)(ii), provided, that the Holder delivers to the Company and its counsel certification, documentation, and other assurances reasonably required by the Company’s counsel to enable the Company’s counsel to render an opinion to the Company’s Transfer Agent that such transfer does not violate applicable securities laws.

 

5.    MUTILATED OR MISSING WARRANT CERTIFICATE

 

If this Warrant is mutilated, lost, stolen or destroyed, upon request by the Holder, the Company will, at its expense, issue, in exchange for and upon cancellation of the mutilated Warrant, or in substitution for the lost, stolen or destroyed Warrant, a new Warrant, in substantially the form of this Warrant, representing the right to acquire the equivalent number of Warrant Shares; provided, that, as a prerequisite to the issuance of a substitute Warrant, the Company may require satisfactory evidence of loss, theft or destruction as well as an indemnity from the Holder of a lost, stolen or destroyed Warrant.

 

6.   PAYMENT OF TAXES

 

The Company will pay all transfer and stock issuance taxes attributable to the preparation, issuance and delivery of this Warrant and the Warrant Shares (and replacement Warrants) including, without limitation, all documentary and stamp taxes; provided, however, that the Company shall not be required to pay any tax in respect of the transfer of this Warrant, or the issuance or delivery of certificates for Warrant Shares or other securities in respect of the Warrant Shares to any person or entity other than to the Holder.

 

7.   FRACTIONAL WARRANT SHARES

 

No fractional Warrant Shares shall be issued upon exercise of this Warrant. The Company, in lieu of issuing any fractional Warrant Share, shall round up the number of Warrant Shares issuable to nearest whole share.

 

  

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8.   NO STOCK RIGHTS AND LEGEND

 

No holder of this Warrant, as such, shall be entitled to vote or be deemed the holder of any other securities of the Company that may at any time be issuable on the exercise hereof, nor shall anything contained herein be construed to confer upon the holder of this Warrant, as such, the rights of a stockholder of the Company or the right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or give or withhold consent to any corporate action or to receive notice of meetings or other actions affecting stockholders (except as provided herein), or to receive dividends or subscription rights or otherwise (except as provide herein).

 

Each certificate for Warrant Shares initially issued upon the exercise of this Warrant, and each certificate for Warrant Shares issued to any subsequent transferee of any such certificate, shall be stamped or otherwise imprinted with a legend in substantially the following form:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS, AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) AN EXEMPTION FROM SUCH REGISTRATION EXISTS AND THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS.”

 

9.   REGISTRATION UNDER THE SECURITIES ACT OF 1933

 

The Company agrees to provide registration rights for the resale of the Warrant Shares under the Securities Act on the terms and subject to the conditions set forth in the Registration Rights Agreement, dated as of the date hereof, by and between the Company and Holder.

 

10.   NOTICES

 

All notices, consents, waivers, and other communications under this Warrant must be in writing and will be deemed given to a party when (a) delivered to the appropriate address by hand or by nationally recognized overnight courier service (costs prepaid); (b) sent by facsimile or e-mail with confirmation of transmission by the transmitting equipment; (c) received or rejected by the addressee, if sent by certified mail, return receipt requested, if to the registered Holder hereof; or (d) seven days after the placement of the notice into the mails (first class postage prepaid), to the Holder at the address, facsimile number, or e-mail address furnished by the registered Holder to the Company in accordance with the Debenture by and between the Company and the Holder, or if to the Company, to it at 81 Greene St., 4th Floor, New York, New York 10013, Attention: Chief Executive Officer (or to such other address, facsimile number, or e-mail address as the Holder or the Company as a party may designate by notice the other party) with a copy to Sichenzia Ross Friedman Ference LLP, 61 Broadway, New York, New York, 10006, Attention: Marc Ross, Esq.

 

11.   SEVERABILITY

 

If a court of competent jurisdiction holds any provision of this Warrant invalid or unenforceable, the other provisions of this Warrant will remain in full force and effect. Any provision of this Warrant held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.

 

12.   BINDING EFFECT

 

This Warrant shall be binding upon and inure to the sole and exclusive benefit of the Company, its successors and assigns, the registered Holder or Holders from time to time of this Warrant and the Warrant Shares.

 

13.   SURVIVAL OF RIGHTS AND DUTIES

 

This Warrant shall terminate and be of no further force and effect on the earlier of 5:00 P.M., Central Time, on the Expiration Date or the date on which this Warrant has been exercised in full.

 

14.   GOVERNING LAW

 

This Warrant will be governed by and construed under the laws of the State of Texas without regard to conflicts of laws principles that would require the application of any other law.

 

15.   DISPUTE RESOLUTION

 

In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the Company shall submit the disputed determinations or arithmetic calculations via facsimile within two Business Days of receipt of the Notice of Exercise giving rise to such dispute, as the case may be, to the Holder. If the Holder and the Company are unable to agree upon such determination or calculation of the Exercise Price or the Warrant Shares within three Business Days of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall, within two Business Days, submit via facsimile (a) the disputed determination of the Exercise Price to an independent, reputable investment bank selected by the Company and approved by the Holder or (b) the disputed arithmetic calculation of the Warrant Shares to the Company’s independent, outside accountant. The Company shall cause at its expense the investment bank or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and the Holder of the results no later than ten (10) Business Days from the time it receives the disputed determinations or calculations. Such investment bank’s or accountant’s determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error.

 

  

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16.   NOTICES OF RECORD DATE

 

Upon (a) any establishment by the Company of a record date of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or right or option to acquire securities of the Company, or any other right, or (b) any capital reorganization, reclassification, recapitalization, merger or consolidation of the Company with or into any other corporation, any transfer of all or substantially all the assets of the Company, or any voluntary or involuntary dissolution, liquidation or winding up of the Company, or the sale, in a single transaction, of a majority of the Company’s voting stock (whether newly issued, or from treasury, or previously issued and then outstanding, or any combination thereof), the Company shall mail to the Holder at least ten (10) Business Days, or such longer period as may be required by law, prior to the record date specified therein, a notice specifying (i) the date established as the record date for the purpose of such dividend, distribution, option or right and a description of such dividend, option or right, (ii) the date on which any such reorganization, reclassification, transfer, consolidation, merger, dissolution, liquidation or winding up, or sale is expected to become effective and (iii) the date, if any, fixed as to when the holders of record of Common Stock shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reorganization, reclassification, transfer, consolation, merger, dissolution, liquidation or winding up.

 

17.   RESERVATION OF SHARES

 

The Company shall reserve and keep available out of its authorized but unissued shares of Common Stock for issuance upon the exercise of this Warrant, free from pre-emptive rights, such number of shares of Common Stock for which this Warrant shall from time to time be exercisable. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation. Without limiting the generality of the foregoing, the Company covenants that it will use commercially reasonable efforts to take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and use commercially reasonable efforts to obtain all such authorizations, exemptions or consents, including but not limited to consents from the Company’s stockholders or Board of Directors or any public regulatory body, as may be necessary to enable the Company to perform its obligations under this Warrant.

 

18.   NO THIRD PARTY RIGHTS

 

This Warrant is not intended, and will not be construed, to create any rights in any parties other than the Company and the Holder, and no person or entity may assert any rights as third-party beneficiary hereunder.

 

[remainder of page intentionally left blank]

 

  

7

  

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as of the date first set forth above.

 

	 	YOUBLAST GLOBAL, INC.	 
	 	 	 	 
	
 

	
By: 

	/s/ Jeffrey Foster	 
	 	 	Name: Jeffrey Foster	 
	 	 	Title: President and Chief Executive Officer	 
	 	 	 	 

 

 

 

 

 

 

  

8

  

 

 

 

EXHIBIT A

 

NOTICE OF EXERCISE

 

(To be executed by the Holder of Warrant if such Holder desires to exercise Warrant)

 

To YouBlast Global, Inc.:

 

The undersigned hereby irrevocably elects to exercise this Warrant and to purchase thereunder, _______________________________________ full shares of YouBlast Global, Inc. common stock issuable upon exercise of the Warrant and delivery of:

 

    (1) $_________ (in cash as provided for in the foregoing Warrant) and any applicable taxes payable by the undersigned pursuant to such Warrant;

 

and

 

    (2) __________shares of Common Stock (pursuant to a Cashless Exercise in accordance with Section 1(b)(ii) of the Warrant) (check here if the undersigned desires to deliver an unspecified number of shares equal the number sufficient to effect a Cashless Exercise [ ]).

 

The undersigned requests that certificates for                                                      such shares be issued in the name of:

 

 

	 	 (Please print name, address and social security or	 	 federal employer
	 	 identification number (if applicable))	 	 
	 	 	 	 
	 	 	 	 
	 	 	
 

 

	 

 

If the shares issuable upon this exercise of the _________________________________________ Warrant are not all of the Warrant Shares which the Holder is entitled to acquire upon the exercise of the Warrant, the undersigned requests that a new Warrant evidencing the rights not so exercised be issued in the name of and delivered to:

 

 

	 	 (Please print name, address and social security or	 	 federal employer
	 	 identification number (if applicable))	 	 
	 	 	 	 
	 	 	 	 
	 	 	
 

 

	 
	 	 	 (print):	 
	 	 	 	 

 

Name of Holder (print):

(Signature): ______________________

(By:) ___________________________

(Title:) __________________________

Dated: __________________________

  

9

  

 

EXHIBIT B

 

FORM OF ASSIGNMENT

 

FOR VALUE RECEIVED, _____________________________________________hereby sells, assigns and transfers to each assignee set forth below all of the rights of the undersigned under the Warrant (as defined in and evidenced by the attached Warrant) to acquire the number of Warrant Shares set opposite the name of such assignee below and in and to the foregoing Warrant with respect to said acquisition rights and the shares issuable upon exercise of the Warrant:

 

	Name of Assignee	Address	Number of Shares
	 	 	 
	 	 	 
	 	 	 
	 	 	 

 

If the total of the Warrant Shares are not all of the Warrant Shares evidenced by the foregoing Warrant, the undersigned requests that a new Warrant evidencing the right to acquire the Warrant Shares not so assigned be issued in the name of and delivered to the undersigned.

 

Name of Holder (print):

(Signature): ______________________

(By:) ___________________________

(Title:) __________________________

Dated: __________________________

 

 

10peregrine_10q-ex1026.htm

Exhibit 10.26

 

LICENSE AGREEMENT

 

This LICENSE AGREEMENT (this “Agreement”) is made and entered into as of this 3rd day of May, 2010 (“Effective Date”) by and between Peregrine Pharmaceuticals, Inc., organized under the laws of Delaware, having its principal place of business at 14282 Franklin Avenue, Tustin, CA 92780 (“Licensor”), and Stason Pharmaceuticals, Inc., organized under the laws of California, having its principal place of business at 11 Morgan, Irvine, California  92618-4327 (“Licensee”).  Licensor and Licensee may each be referred to herein individually as a “Party” and collectively as the “Parties.”

 

BACKGROUND

 

WHEREAS, concurrently herewith, the Parties are entering into that certain Assignment Agreement dated May 3, 2010 (the “Assignment Agreement”), whereby Licensee is acquiring from Licensor certain intellectual property, including patent rights, in certain countries that corresponds to the intellectual property used by Licensor in connection with Licensor’s Cotara® product; and

 

WHEREAS, Licensee desires to obtain, and Licensor desires to provide, a license to certain radiolabeling and NHS76 intellectual property rights in accordance with the terms of this Agreement but subject to certain pre-existing rights as described herein;

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises and covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, do hereby agree as follows:

 

ARTICLE 1.

DEFINITIONS

 

As used in this Agreement, the following terms shall have the meanings indicated:

 

1.1  “Affiliate” means, with respect to a subject entity, another entity that, directly or indirectly, controls, is controlled by, or is under common control with such subject entity, for so long as such control exists.  For purposes of this definition only, “control” means ownership, directly or indirectly, of at least 50% of the equity securities of the entity entitled to vote in the election of directors (or, in the case of an entity that is not a corporation, in the election of the corresponding managing authority, or in the case of a partnership, the status as a general partner), or, if not meeting the preceding, the maximum voting right that may be held under the laws of the country where such entity exists, or any other arrangement whereby an entity controls or has the right to control the board of directors or equivalent governing body or management of a corporation or other entity.

 

1.2  “cGMP” means current Good Manufacturing Practices as defined under the rules and regulations of the United States Food and Drug Administration, as the same may be amended from time to time.

 

  

1

  

 

1.3    “Control” means with respect to the Retained Technology, Licensed Patents, or Licensed Know-How, the ownership thereof, or the possession of the ability to grant licenses or sublicenses thereto without violating the terms of any agreement or other arrangement with, or the rights of, any third party and without being required to make any payments or royalties to such third party.

 

1.4    “Field” means the treatment, palliation and imaging of cancer.

 

1.5    “Fully-Burdened Cost” means all direct costs (including all direct material, labor, and services costs) plus an allocated portion of overhead and general and administrative costs.

 

1.6    “Group A Countries” means the United States of America, Canada, Mexico, member countries of the European Union, Switzerland, Norway, South Africa, Israel, India, Australia, and New Zealand.

 

1.7    “Group B Countries” means the member nations of the Asia Pacific Economic Cooperation (APEC), but excluding those APEC countries included in the Group A Countries.

 

1.8    “Group C Countries” means all countries of the world other than those countries included in the Group A Countries or the Group B Countries.

 

1.9    “Licensed Know-How” means, collectively, the NHS76 Licensed Know-How and the Radiolabeling Licensed Know-How.

 

1.10  “Licensed Patents” means, collectively, the NHS76 Licensed Patents and the Radiolabeling Licensed Patents.

 

1.11  “Licensed Technology” means, collectively, the NHS76 Licensed Technology and the Radiolabeling Licensed Technology.

 

1.12  “Licensed Product” means a Radiolabeled Product or a NHS76 Product.

 

1.13  “Lonza” means, collectively, Lonza Biologics plc or its Affiliates.

 

1.14  “Lonza Technology” means any technology or intellectual property of Lonza, including Lonza’s glutamine synthetase gene expression system technology.

 

1.15  “Materials” means biological materials that are in Licensor’s or its Affiliates’ possession as of the Effective Date in the form of that certain proprietary NS0 cell line of Seller deposited with American Type Culture Collection (ATCC) under the safe deposit number SD-3815 that produces the NHS76 Antibody.

 

1.16  “Net Sales” means the aggregate gross invoice price of Licensee, its Affiliates, or Sublicensees for the marketing and sale of Licensed Products, less the following to the extent actually allowed or expressly allocated to the Licensed Products:

 

(a)  rebates, credits and cash, trade and quantity discounts, actually taken;

 

  

2

  

 

(b)  excise taxes, sales, use, value added, and other consumption taxes and other compulsory payments to governmental authorities, actually paid;

 

(c)  the cost of shipping packages and packing, if billed separately;

 

(d)  insurance costs and outbound transportation charges prepaid or allowed;

 

(e)  import or export duties and tariffs actually paid; and

 

(f)  amounts allowed or credited due to returns.

 

If a Licensed Product is invoiced for a discounted price substantially lower than customary in the trade, Net Sales shall be based on the customary amount received for such Licensed Products; provided that the foregoing shall not apply in the case of shipments made by Licensee to third parties at no or low cost in connection with compassionate sales or indigent programs, for which no amounts shall be due to Licensor.

 

Notwithstanding the foregoing, if a Licensed Product is sold in conjunction with another active component so as to be a combination product (whether packaged together or in the same therapeutic formulation) (a “Combination Product”), Net Sales shall be calculated by multiplying the Net Sales of the Combination Product by the fraction A/(A+B), where A is the gross invoice price of the Licensed Product if sold separately in a country and B is the gross invoice price of the other product(s) included in the Combination Product if sold separately in such country.  If no such separate sales are made by Licensee, its Affiliates, or Sublicensees in a country, Net Sales of the Combination Product shall be calculated in a manner to be negotiated and agreed upon by the Parties, reasonably and in good faith, prior to any sale of such Combination Product, which shall be based upon the respective cost of goods sold of the active components of such Combination Product.

 

1.17  “New Research” means any research for any medical, therapeutic, or diagnostic application or use that is conducted by or on behalf of a Party, in the Territory, after the Effective Date using the Licensed Technology or the Retained Technology with respect to NHS76 Products or derivatives thereof.

 

1.18  “NHS76 Antibody” means the antibody having the amino acid sequence set forth on Schedule 1.18.

 

1.19  “NHS76 Licensed Know-How” means the following non-patented proprietary technology and information to the extent Controlled by Licensor as of the Effective Date and for the NHS76 Antibody: the manufacturing protocols for the NHS76 Antibody and ancillary standard operating procedures that are set forth on Schedule 1.19; provided that NHS76 Licensed Know-How will not include any Lonza Technology.  For the avoidance of doubt, the NHS76 Licensed Know-How shall not include any technology or information developed, acquired, or otherwise Controlled by Licensor after the Effective Date.

 

 

  

3

  

 

1.20  “NHS76 Licensed Patents” means

 

(a)  all the patents and patent applications that are Controlled by Licensor as of the Effective Date that are listed on Exhibit A;

 

(b)  all divisions, continuations, foreign counterparts, patents of addition, and substitutions of, and all patents issuing on, any of such patents and patent applications described in paragraph (a) above; and

 

(c)  all registrations, reissues, reexaminations, or extensions with respect to any of such patents described in paragraphs (a) and (b) above.

 

For the avoidance of doubt, the NHS76 Licensed Patents shall not include any patents or patent applications developed, acquired, or otherwise Controlled by Licensor after the Effective Date, except as expressly provided in paragraphs (b) and (c) above.

 

1.21  “NHS76 Licensed Technology” means, collectively, the NHS76 Licensed Patents and the NHS76 Licensed Know-How.

 

1.22  “NHS76 Product” means a product containing NHS76 Antibody that:

 

(a)  is covered by or would infringe (but for this Agreement) one or more Valid Claims of the NHS76 Licensed Patents in the country of manufacture, sale, offer for sale, use, or importation; or

 

(b)  is produced, processed, or otherwise manufactured by a process or method within the scope of one or more Valid Claims of the NHS76 Licensed Patents in the country of manufacture, sale, offer for sale, use, or importation;

 

(c)  is used in a process or method within the scope of one or more Valid Claims of the NHS76 Licensed Patents; or

 

(d)  uses, incorporates, or is based upon NHS76 Licensed Know-How.

 

Notwithstanding the foregoing, NHS76 Product shall exclude any antibody-cytokine fusion protein or any antibody and its DNA encoding sequence for use in the construction and expression of antibody-cytokine fusion proteins.

 

1.23  “Prosecution” means the preparation, filing, prosecution, issuance, and maintenance of any patent applications and patents within the Licensed Patents.

 

1.24  “Purchased Assets” has the meaning ascribed to that term in the Assignment Agreement.

 

1.25  “Purchased Know-How” has the meaning ascribed to that term in the Assignment Agreement.

 

  

4

  

 

1.26  “Purchased Patents” has the meaning ascribed to that term in the Assignment Agreement.

 

1.27  “Radiolabeled Product” means a product containing a NHS76 Product or a TNT Product that:

 

(a)  is covered by or would infringe (but for this Agreement) one or more Valid Claims of the Radiolabeling Licensed Patents in the country of manufacture, sale, offer for sale, use, or importation; or

 

(b)  is produced, processed, or otherwise manufactured by a process or method within the scope of one or more Valid Claims of the Radiolabeling Licensed Patents in the country of manufacture, sale, offer for sale, use, or importation;

 

(c)  is used in a process or method within the scope of one or more Valid Claims of the Radiolabeling Licensed Patents; or

 

(d)  uses, incorporates, or is based upon Radiolabeling Licensed Know-How.

 

1.28  “Radiolabeling Licensed Know-How” means the following non-patented proprietary technology and information to the extent Controlled by Licensor as of the Effective Date:  radiolabeling protocols and ancillary standard operating procedures that are necessary or useful for the research, development, manufacture, offer for sale, sale, importation, or use of radiolabeling technology.  For the avoidance of doubt, the Radiolabeling Licensed Know-How shall not include any technology or information developed, acquired, or otherwise Controlled by Licensor after the Effective Date.

 

1.29  “Radiolabeling Licensed Patents” means

 

(a)  all the patents and patent applications that are Controlled by Licensor as of the Effective Date that are listed on Exhibit B;

 

(b)  all divisions, continuations, foreign-counterparts, patents of addition, and substitutions of, and all patents issuing on, any of such patents and patent applications described in paragraph (a) above; and

 

(c)  all registrations, reissues, reexaminations, or extensions with respect to any of such patents described in paragraphs (a) and (b) above.

 

For the avoidance of doubt, the Radiolabeling Licensed Patents shall not include any patents or patent applications developed, acquired, or otherwise Controlled by Licensor after the Effective Date, except as expressly provided in paragraphs (b) and (c) above.

 

1.30  “Radiolabeling Licensed Technology” means, collectively, the Radiolabeling Licensed Patents and the Radiolabeling Licensed Know-How.  For the avoidance of doubt, the Radiolabeling Licensed Technology shall not include any patents, patent application, technology, or information developed, acquired, or otherwise Controlled by Licensor after the Effective Date.

 

  

5

  

 

1.31  “Retained Technology” means any of the following that is Controlled by Licensor as of the Effective Date: (i) any patent or patent applications in the Group A Countries or Group C Countries that are counterparts of the Licensed Patents, correspond to the Licensed Patents, or cover or claim the same invention(s) as those covered or claimed in the Licensed Patents and (ii) any non-patented proprietary technology and information in the Group A Countries or Group C Countries that are counterparts of the Licensed Know-How, correspond to the Licensed Know-How, or cover the same invention(s) as those covered in the Licensed Know-How.

 

1.32  “Sublicensee” means any third party to whom Licensee has granted a sublicense in accordance with Section 2.3.

 

1.33  “Sublicensing Revenue” means any amounts (other than royalties on Net Sales) received by Licensee from the grant to any Sublicensee of any rights under this Agreement by Licensee, its Affiliates, or any other Sublicensee (including any up front fees, milestone payments, and annual maintenance payments).

 

1.34  “Territory” means the Group A Countries, the Group B Countries, and the Group C Countries.

 

1.35  “TNT Product” means a product containing a chTNT-1 Antibody or chTNT-3 Antibody (as each such term is defined in the Assignment Agreement) that:

 

(a)  is covered by or would infringe (but for this Agreement) one or more Valid Claims of the Purchased Patents in the country of manufacture, sale, offer for sale, use, or importation; or

 

(b)  is produced, processed, or otherwise manufactured by a process or method within the scope of one or more Valid Claims of the Purchased Patents in the country of manufacture, sale, offer for sale, use, or importation;

 

(c)  is used in a process or method within the scope of one or more Valid Claims of the Purchased Patents; or

 

(d)  uses, incorporates, or is based upon Purchased Know-How.

 

Notwithstanding the foregoing, TNT Product shall exclude any antibody-cytokine fusion protein or any antibody and its DNA encoding sequence for use in the construction and expression of antibody-cytokine fusion proteins.

 

1.36  “Valid Claim” means a claim of an issued and unexpired patent or a claim of a pending patent application that has not been held unpatentable, invalid, or unenforceable by a court or other government agency of competent jurisdiction and has not been admitted to be invalid or unenforceable through reissue, re-examination, disclaimer, or otherwise; provided, however, that, if any holding of invalidity, unenforceability or unpatentability is later reversed by a court or agency with overriding authority, the relevant claim shall be reinstated as a Valid Claim hereunder with respect to sales made after the date of such reversal.

 

  

6

  

 

1.37  The following terms have the meanings specified in the indicated Sections:

 

	
Term

	
Section

	
“AAA”

	
12.2(a)

	
“Action”

	
8.4.1

	
“Agreement”

	
Preamble

	
“Assignment Agreement”

	
Recitals

	
“China Regulatory Approval Date”

	
2.2(b)

	
“Confidential Information”

	
7.1

	
“Effective Date”

	
Preamble

	
“Indemnified Party”

	
9.3

	
“Licensee”

	
Preamble

	
“Licensee Indemnitees”

	
9.2

	
“Licensee Improvements”

	
2.4

	
“Licensor”

	
Preamble

	
“Licensor Indemnitees”

	
9.1

	
“Lonza License Date”

	
2.9

	
“Merck”

	
2.10

	
“Merck License”

	
2.10

	
“Party” or “Parties”

	
Preamble

	
“Receiving Party”

	
5.1.1

	
“Researching Party”

	
5.1.1

	
“Third Party Liabilities”

	
9.1

ARTICLE 2.

LICENSE

 

2.1    Grant.  Subject to the terms and conditions of this Agreement, including Sections 2.2 and 2.7, Licensor hereby grants to Licensee:

 

(a)  an exclusive, royalty-bearing license under the NHS76 Licensed Technology to make, have made, use, sell, offer for sale, and import NHS76 Products in the Group B Countries for the Field;

 

(b)  a non-exclusive, royalty-bearing license under the Radiolabeling Licensed Technology to make, have made, use, sell, offer for sale, and import Radiolabeled Products in the Group B Countries for the Field; and

 

(c)  a non-exclusive license under the Retained Technology to conduct research outside the Group B Countries to develop Licensed Products for the Group B Countries in the Field; provided that such research shall not include clinical development that competes with ongoing clinical trials of Licensor, its affiliates or strategic partners.

 

  

7

  

 

Notwithstanding the foregoing grant of an exclusive license under paragraph (a), Licensor retains the right under the Licensed Technology to conduct research in the Group B Countries to develop products for the Group A Countries and Group C Countries; provided that such research shall not include clinical development that competes with Licensee’s ongoing clinical trials.

 

2.2    Effectiveness of Grants.  The license grants described in Section 2.1 will only be effective as follows:

 

(a)  The license to the Radiolabeling Licensed Technology with respect to Radiolabeled Products containing TNT Products will be effective on the Effective Date.

 

(b)  The license to the NHS76 Licensed Technology and the license to the Radiolabeling Licensed Technology with respect to Radiolabeled Products containing NHS76 Products will be effective on the date (the “China Regulatory Approval Date”) that Licensee has received approval from the State Food and Drug Administration of the People’s Republic of China (the “sFDA”) to begin conducting a clinical trial in humans with respect to NHS76 Products in the Field in the People’s Republic of China; provided, however, that, if Licensee is required to provide some of the information included in the Licensed Technology to the sFDA in order to receive such approval, Licensor will use reasonable efforts to provide such information to Licensee at such time, and Licensee’s license to such information will become effective at such time for such limited purpose.

 

(c)  The license to the Retained Technology will be effective at the same time as the effectiveness of the license to the Licensed Technology to which the Retained Technology corresponds.

 

2.3    Sublicenses.  Licensee may grant sublicenses within the scope of the licenses granted to Licensee under Section 2.1 as follows:

 

2.3.1.  Each sublicense grant by Licensee is subject to the prior written approval of Licensor, which approval shall not be unreasonably withheld.  Approval or rejection of such sublicense grant shall be provided by Licensor within 30 days from Licensor’s receipt of written request for approval from Licensee.  Following such approval of Licensor, Licensee shall provide Licensor with a copy of any such sublicense and any modification or termination thereof within 30 days of execution, modification, or termination of any such sublicense.  Sublicensees shall have no further right to sublicense.

 

2.3.2.  Any sublicense of Radiolabeling Licensed Technology must be in conjunction with a license of the Purchased Assets or the NHS76 Licensed Technology.

 

2.3.3.  Each sublicense granted by Licensee shall be subject and subordinate to the terms and conditions of this Agreement and shall contain terms and conditions consistent with those in this Agreement.  Without limiting the foregoing, each sublicense shall contain the following provisions:  (a) a requirement that the applicable Sublicensee submit applicable sales or other reports consistent with those required hereunder; (b) an audit requirement similar to the requirement set forth in Section 4.8; (c) a requirement that the applicable Sublicensee grant the license described in Section 2.4 and comply with the confidentiality and non-use provisions of Article 7; and (d) an obligation that the Sublicensee grant Licensor a right of first negotiation on New Research of the Sublicensee in accordance with the terms of Section 5.1.

 

 

  

8

  

 

2.3.4.  Licensee shall, and shall cause its Sublicensees to, ensure that each sublicense agreement includes an obligation on the Sublicensee to comply with the terms and conditions of this Agreement.  Licensee also shall be responsible for the compliance of each Sublicensee with the terms of this Agreement and the applicable sublicense agreement(s), and any breach or default of this Agreement or the sublicense agreement by a Sublicensee shall be deemed to be a breach or default of this Agreement by Licensee.  To the extent that a breach or default by a Sublicensee is not cured, the timely termination of the breached or defaulted sublicense agreement shall be a cure of such breach or default with respect to Licensee only.

 

2.3.5.  Except as otherwise provided in the sublicense agreement, if this Agreement terminates pursuant to Article 11, then, upon Licensor’s written election, any Sublicensee shall, from the effective date of such termination, automatically become a direct licensee of Licensor with respect to the rights originally sublicensed to the Sublicensee by Licensee; provided, however, that such Sublicensee is not in breach of its sublicense agreement and continues to perform thereunder.  Notwithstanding the foregoing, Licensor shall not assume, and shall not be responsible to any Sublicensees for, any representations, warranties, or obligations of Licensee to any Sublicensee.

 

2.4    Improvements.  All improvements to the Licensed Technology or the Retained Technology made solely by or for Licensee, its Affiliates, or Sublicensees (the “Licensee Improvements”) shall be owned by Licensee.  Licensee shall promptly disclose in writing to Licensor any Licensee Improvements.  Licensee hereby grants to Licensor a non-exclusive, worldwide (but excluding the Group B Countries during the term of this Agreement), irrevocable, perpetual, transferable, fully paid-up, royalty-free license, with the right to grant sublicenses (including granting sublicenses to Merck under the Merck License), under any Licensee Improvements, including any patents issued, or patent applications filed, with respect to such improvements on such improvements.  Such written disclosures on Licensee Improvements shall set forth sufficient data to allow Licensor to understand and practice the Licensee Improvements.  Licensee hereby grants to Licensor an exclusive option to negotiate for an exclusive license to the Licensee Improvements as follows:

 

2.4.1.  Prior to offering any license for Licensee Improvements to any third party, Licensee will notify Licensor that Licensee is considering granting such rights to third parties.  Licensor will have 90 days (or such longer period agreed upon by the Parties) from receipt of such notice to notify Licensee that Licensor desires to initiate good faith negotiations with respect to exclusively licensing the Licensee Improvements described in Licensee’s notice.  Upon Licensee’s receipt of Licensor’s notice, the Parties will negotiate in good faith for a period of 90 days with respect to the terms and conditions of the exclusive license, including financial terms (such as upfront fees, milestones, annual fees, or other financial conditions).

 

2.4.2.  If Licensor does not notify Licensee within 90 days of receiving Licensee’s notice or if the Parties are unable to agree upon the terms of a license within 90 days of Licensee’s receipt of Licensor’s notice (as each such time period may be extended by the Parties), then Licensee shall be entitled to non-exclusively license the Licensee Improvements covered by the applicable notice to any third party.

 

 

 

  

9

  

 

2.4.3.  Licensee agrees that Licensor may assign the foregoing option in whole or in part to Merck.

 

2.5    Materials.  As soon as practicable following the later of (a) the China Regulatory Approval Date and (b) the Lonza License Date, Licensor shall provide to Licensee 5 vials of master cell bank of the Materials along with a Certificate of Analysis for such Materials.  Licensee acknowledges and agrees that the Materials, together with any and all progeny, derivatives, and any genetically engineered modification thereof, may only be used in connection with the license granted pursuant to Section 2.1 and in accordance with the license procured from Lonza, as described in Section 2.6.  In addition, Licensee agrees as follows:

 

2.5.1.  Licensee shall retain control over the Materials, together with any and all progeny, derivatives, and any genetically engineered modification thereof, and shall not transfer any of the foregoing to any third party (including Sublicensees) without the prior written approval of Licensor (and Lonza, if necessary).  The Materials, together with any and all progeny, derivatives, and any genetically engineered modification thereof, shall remain the property of, and title to all of the foregoing shall remain in, Licensor.

 

2.5.2.  No right or license in or to the Materials or any patents or other intellectual property rights of Licensor, other than as expressly provided by this Agreement, is granted or implied as a result of the transfer of the Materials.

 

2.5.3.  Licensee shall not obtain, and shall not attempt to obtain, patent coverage on the Materials in the form provided by Licensor without the express written consent of Licensor.

 

2.5.4.  Licensee acknowledges that the Materials are not intended for use in humans.  Licensor is not making any warranty or representation that the use of the Materials or any product or process derived therefrom will not infringe any patent, copyright, or other rights of third parties.

 

2.6    Lonza.  Licensee acknowledges and agrees that (a) notwithstanding anything herein to the contrary, Licensor is not granting Licensee any rights with respect to any Lonza Technology; (b) the Materials contain Lonza’s gene expression system technology and, as such, Licensor’s transfer of the Materials to Licensee under this Agreement requires Lonza’s prior written consent, and Licensee’s use of the Materials requires a license from Lonza; and (c) upon Licensor’s transfer of the Materials to Licensee, Licensee’s rights in the Materials shall be subject to the terms and conditions of this Agreement and to any rights of Lonza in its intellectual property or other rights contained in the Materials.  Licensee must procure a direct license from Lonza to use any necessary Lonza Technology required in connection with making, having made, using, selling, offering for sale, and importing Licensed Products in the Group B Countries for the Field, which license must expressly grant Licensor permission to provide the Materials to Licensee.  Licensee shall provide to Licensor a copy of such license from Lonza, which copy may be redacted so long as the redactions do not prevent Licensor for confirming that it may provide the Materials to Licensee (the date that Licensee provides such copy to Licensor, the “Lonza License Date”).  If Licensee is unable to obtain a license from Lonza or obtain Lonza’s consent to the transfer of Materials from Licensor to Licensee, then (i) Licensor shall not be required to provide the Materials to Licensee (and Licensor’s failure to provide the Materials shall not be deemed a breach of this Agreement); (ii) the Materials shall no longer be deemed part of the license under this Agreement; and (iii) the other provisions of this Agreement shall not be affected by the foregoing.  Licensee agrees to abide by its obligations under its license with Lonza with respect to the Materials, and Licensee agrees to indemnify Seller for any failure to do so or for any breach of this Section 2.6.

 

  

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2.7    Retained Merck Rights/Cytokine Fusion Proteins.  Licensee acknowledges that Licensor is a party to that certain License Agreement with Merck KGaA (“Merck”), dated October 14, 2000, as amended from time to time (the “Merck License”).

 

2.7.1.  Notwithstanding the licenses in Section 2.1 or anything herein to the contrary, Licensee acknowledges and agrees that (a) Licensee is not granted any rights under the Licensed Technology or Retained Technology to make, use, sell, offer for sale, or import an antibody-cytokine fusion protein or any antibody and its DNA encoding sequence for use in the construction and expression of antibody-cytokine fusion proteins; and (b) without limiting the foregoing, the rights granted to Merck under the Merck License are expressly excluded from the rights granted to Licensee hereunder.  Upon termination of the Merck License, such rights shall be retained by Licensor and shall not be included in the rights granted to Licensee hereunder.

 

2.7.2.  Licensee agrees not to take any action that would cause Licensor to be in breach of the Merck License.  In the event of any conflict between this Agreement and the Merck License, the Merck License shall control.  Licensee agrees to indemnify Licensor for any actions or inactions of Licensee that cause Licensor to breach the Merck License and for any other breach of this Section 2.7.

 

2.8    Restrictions.  Licensee acknowledges that Licensor is a party to the following agreements (collectively, the “CTL/Medipharm Agreements”):  (i) that certain Settlement Agreement and Mutual General Release among Licensor, Cancer Therapeutics Laboratories, Alan Epstein, Clive Taylor, and Peisheng Hu, effective April 24, 2009, as amended (the “CTL Settlement Agreement”), (ii) that certain Settlement Agreement among Licensor, Medibiotech, Inc., and Shanghai Medipharm Biotech Co., Ltd., dated April 17, 2009, as amended (the “Medipharm Settlement Agreement”), (iii) that certain License Agreement between Licensor and Cancer Therapeutics, Inc., dated September 20, 1995, as amended (the “CTL License”), and (iv) that certain License Agreement between Licensor and Alan Epstein, dated September 20, 1995, as amended.  Furthermore, Licensee acknowledges that Licensor attempted to terminate the CTL License by written notice to Cancer Therapeutics, Inc. dated December 15, 2006, which resulted in the litigation that ended in the CTL Settlement Agreement and the Medipharm Settlement Agreement.  Licensor makes no representations or warranties as to the status of any of the CTL/Medipharm Agreements or the obligations thereunder, including whether the termination notice sent under the CTL License was effective.  Licensee acknowledges and agrees to abide by all obligations of Licensor under the CTL/Medipharm Agreements to the extent applicable to the Licensed Technology, Retained Technology, and Licensed Products, including the prohibition in the Medipharm Settlement Agreement on selling radiolabelled TNT Products (as defined by the Medipharm Settlement Agreement) within the PRC (as defined in the Medipharm Settlement Agreement) until December 31, 2016.  Licensee acknowledges and agrees that it shall have no right to give the 30-day termination notice under the Medipharm Settlement Agreement with respect to such obligation and that Licensor shall be under no obligation to provide such notice.  Licensee agrees to indemnify Licensor for any failure to abide by the CTL/Medipharm Agreements or any breach of this Section 2.8.  Licensee acknowledges and agrees that Licensor is not responsible for the activities of any of the parties to the CTL/Medipharm Agreements and Licensor shall not indemnify Licensee for any such parties’ activities in the Group B Countries.  In the event of any conflict between this Agreement and the CTL/Medipharm Agreements, the CTL/Medipharm Agreements shall control.

 

 

 

 

  

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2.9    No Unauthorized Sales.  Licensee acknowledges and agrees that it has no right to, and shall not, and shall not grant any right or license to any of its Affiliates or third parties, directly or indirectly, to make, use, sell, offer for sale, or import the Licensed Product, or otherwise use or practice the Licensed Technology or Retained Technology, outside the Group B Countries.  Licensee shall prevent the manufacture, use, sale, offer for sale, and importation of the Licensed Product, and the use and practice of the Licensed Technology or Retained Technology, outside the Group B Countries by Licensee or any of its Affiliates and shall use commercially reasonable efforts to prevent such manufacture, use, sale, offer for sale, and importation of the Licensed Product, or such use and practice of the Licensed Technology or Retained Technology, outside the Group B Countries, including by not selling, offering for sale, or exporting the Licensed Product to any person if Licensee or any of its Affiliates has actual knowledge or a reasonable belief that such person is making, using, selling, offering for sale, and importing (or intends to do) such Licensed Product outside the Group B Countries.

 

2.10  No Implied Licenses.  Only the licenses granted expressly herein shall be of legal force and effect.  No license rights shall be created hereunder by implication, estoppel, or otherwise.

 

ARTICLE 3.

DUE DILIGENCE REQUIREMENTS

 

3.1    Due Diligence.  Licensee shall use commercially reasonable efforts to proceed with the development and commercialization of Licensed Products.  Without limiting the foregoing, Licensee shall meet the following milestones:

 

(a)  By the 5th anniversary of the Effective Date, Licensee shall begin conducting clinical trials for the purpose of supporting regulatory approval of the Licensed Product in one or more countries of the Group B Countries where local clinical trials are required.

 

(b)  By the 8th anniversary of the Effective Date, Licensee shall have obtained regulatory approval of the Licensed Product in one or more countries of the Group B Countries.

 

(c)  Licensee shall use commercially reasonable efforts to begin commercial sale of Licensed Product shortly after Licensee receives regulatory approval for the Licensed Product in such country of the Group B Countries.

 

 

 

  

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3.2    Reports.  No later than each anniversary of the Effective Date, or as requested by Licensor in writing 60 days in advance, but no more than four times a year, Licensee shall provide Licensor a written report evidencing the efforts and accomplishments of Licensee and Sublicensees during the preceding one year period in developing and commercializing Licensed Products and their development and commercialization plans for the subsequent one year period.  Such reports shall include scientific data obtained in furtherance of Licensee’s attempts to develop and commercialize Licensed Products and a showing of compliance with Section 3.1 above.

 

3.3    Failure to Report.  If Licensee fails to provide the reports set forth in Section 3.2 or if such reports do not show satisfactory compliance with Section 3.1 above, as reasonably determined by Licensor, Licensor shall have the right to terminate this Agreement as set forth in Section 11.2.

 

ARTICLE 4.

PAYMENTS AND REPORTS

 

4.1    Up Front Fee.  Licensee shall pay to Licensor a one-time, non-refundable, up-front fee of [****] on or before June 30, 2010.

 

4.2    Royalties.  On a country-by-country, Licensed Product-by-Licensed Product basis, Licensee shall pay to Licensor royalties equal to [****] of Net Sales of Licensee or its Affiliates in the Group B Countries.

 

4.3    Sublicense Fees and Sublicensee Royalties. Licensee shall pay to Licensor the following amounts in connection with any sublicenses by Licensee of the rights granted hereunder:

 

4.3.1.  On a country-by-country, Licensed Product-by-Licensed Product basis, royalties equal to the greater of (a) [****] of Net Sales of the applicable Sublicensee and (b) [****] of the royalties paid by such Sublicensee to Licensee on the Net Sales of such Sublicensee; and

 

4.3.2.  [****] of any Sublicensing Revenues.

 

4.4    Royalty & Payment Term.  The obligation of Licensee to make payments under Sections 4.1 and 4.2 shall continue, on a Licensed Product-by-Licensed Product and country-by-country basis, until the later of (i) the date on which the offering for sale, selling, making, having made, using, or importing such Licensed Product is no longer covered by a Valid Claim of a Licensed Patent in such country and (ii) the 15th anniversary of the first commercial sale of such Licensed Product in such country.

 

 

[****] The following portion has been omitted pursuant to a Confidential Treatment Request under Rule 24b-2 of the Securities Exchange Act of 1934 and has been filed separately with the Securities and Exchange Commission.

 

  

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4.5    Reports and Payments.  After the first commercial sale of a Licensed Product by Licensee, any of its Affiliates, or any Sublicensees, Licensee shall make quarterly written reports to Licensor within 30 days after the end of each calendar quarter, stating in each such report with respect to such calendar quarter (a) the number of Licensed Products manufactured and sold, segregating Licensee’s and its Affiliates’ sales and sales by each Sublicensee; (b) gross amounts billed for Licensed Products sold on a country-by-country basis, segregating Licensee’s and its Affiliates’ sales and sales by each Sublicensee; (c) deductions applicable to Net Sales; (d) the royalties paid by any Sublicensee to Licensee on the Net Sales of such Sublicensee; (e) total royalties due; (f) the amount of any Sublicensing Revenues received; and (g) total amount due to Licensee with respect to such Sublicensing Revenue.  Simultaneously with the delivery of each such report, Licensee shall pay to Licensor the royalties and Sublicensing Revenue fees, if any, due to Licensor for the period of such report.  If no amounts are due, Licensee shall so report.

 

4.6    Payment Method.  Unless otherwise specified by this Agreement or requested in writing by Licensor, all amounts payable under this Agreement shall be made by check or wire drawn on a United States bank account and delivered to Licensor at the address set forth in Section 13.4 or such other business address as Licensor may designate in writing.  All payments hereunder shall be made in U.S. dollars.  Any failure by Licensee to make a payment when due shall obligate Licensee to pay Licensor interest on the sum outstanding at a rate per annum equal to the prime rate as quoted in the Wall Street Journal, New York edition, on the day such payment is due, plus a premium of 3%, calculated on the basis of a 365 day year, the interest period commencing on the due date and ending on the payment date.  Interest shall be compounded and the interest rate shall be adjusted each month in arrears, such interest being also due and payable on the payment date.

 

4.7    Currency Conversion.  If any currency conversion shall be required in connection with the calculation of payments hereunder, such conversion shall be made using the selling exchange rate for conversion of the foreign currency into U.S. dollars, quoted for current transactions reported in The Wall Street Journal, New York edition, for the last business day of the calendar quarter to which such payment pertains.

 

4.8    Taxes.  All payments hereunder shall be made free and clear of and without deduction or deferment in respect of any demand, set-off, counterclaim, or other dispute, and so far as is legally possible, such payment shall be made free and clear of any taxes imposed by or under the authority of government or any public authority and in particular, but without limitation, where any sums due to be paid to Licensor hereunder are subject to any withholding or similar tax, Licensee shall pay such additional amount as shall be required to ensure that the net amount received by Licensor hereunder shall equal the full amount that would have been due to Licensor hereunder had no such tax been imposed or required by law to be withheld unless said tax is withheld for the benefit of Licensor.  Without prejudice to the foregoing, Licensor agrees to provide reasonable assistance to Licensee in order for Licensee to take advantage of any applicable legal provision or any double taxation treaty with the object of paying the sums due to Licensor without imposing or withholding any tax.

 

 

 

  

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4.9    Inspection of Books and Records.  Licensee shall maintain accurate books and records that enable the calculation of royalties and other amounts payable hereunder to be verified.  Licensee shall retain the books and records for each quarterly period for three years after the submission of the corresponding report under Section 4.4 hereof.  Upon 30 days’ prior notice to Licensee, Licensor or its designee may have access to the books and records of Licensee to conduct a review or audit once per calendar year, for the sole purpose of verifying the accuracy of Licensee’s payments and compliance with this Agreement.  Licensor’s failure to audit shall not be considered a waiver of any objection to the amounts paid by Licensee.  Such access shall be permitted during Licensee’s normal business hours during the term of this Agreement and for three years after the expiration or termination of this Agreement.  Any such inspection or audit shall be at Licensor’s expense, except that, if the audit results show that for any calendar quarter examined there has been an underpayment by Licensee of more than 5%, then Licensee will pay for reasonable audit expenses incurred by Licensee unless such underpayment is a result of currency exchange fluctuations.  In all cases, Licensee shall pay to Licensor any underpaid amounts promptly and with interest at the rate on the terms set forth in Section 4.5 above.  Any overpayments by Licensee revealed in such inspection and audit shall be refunded to Licensee or credited to future payments owed by Licensee hereunder, at Licensor’s election.

 

ARTICLE 5.

RESEARCH & DEVELOPMENT

 

5.1    Right of First Negotiation for Research Results.  From the Effective Date until the fifth anniversary of the Effective Date (the “Restricted Period”), each Party agrees to offer the other Party a right of first negotiation to acquire rights to research, develop, and commercialize products and methods under technology and intellectual property resulting from New Research in such other Party’s portion of the Territory, meaning Group B Countries for Licensee and the Group A Countries and Group C Countries for Licensor.  Such right of first negotiation shall be as follows:

 

5.1.1.  During the Restricted Period, prior to offering any commercialization rights for New Research to any third party in the other Party’s portion of the Territory, each Party (the “Researching Party”) will provide the other Party (the “Receiving Party”) with reports on any New Research, setting forth sufficient data and results obtained from any New Research to allow the Receiving Party to evaluate its interest in obtaining rights.  All such reports will be deemed Confidential Information of the Researching Party providing the report.  The Receiving Party is not granted any license to the report or any information or results contained therein.  The Receiving Party may not use the results of the Researching Party’s New Research without the Researching Party’s explicit permission following the execution of a written agreement defining the terms and conditions of such use.

 

5.1.2.  The Receiving Party will have 90 days (or such longer period agreed upon by the Parties) from receipt of such report to notify the Researching Party that the Receiving Party desires to initiate good faith negotiations with respect to licensing, in the Receiving Party’s portion of the Territory, the New Research described in such report.  Upon the Researching Party’s receipt of such notice, the Parties will negotiate in good faith for a period of 90 days with respect to the terms and conditions of the license, including financial terms (such as upfront fees, milestones, annual fees, or other financial conditions); provided, however, the Parties agree that the terms of such license will include the obligation of the Receiving Party to pay to the Researching Party a royalty of [****] of Net Sales of products covered by the license.

 

 

[****] The following portion has been omitted pursuant to a Confidential Treatment Request under Rule 24b-2 of the Securities Exchange Act of 1934 and has been filed separately with the Securities and Exchange Commission.

 

  

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5.1.3.  If the Receiving Party does not notify the Researching Party within 90 days of receiving a report or if the Parties are unable to agree upon the terms of a license within 90 days of the Researching Party’s receipt of the Receiving Party’s notice (as each such time period may be extended by the Parties), then the Researching Party shall be entitled to license the New Research covered by the applicable report to any third party.

 

5.1.4.  Notwithstanding the foregoing, Licensee acknowledges that Licensee’s rights of first negotiation under this Section 5.1 are subordinate to any rights of first negotiation or first refusal granted to Merck under the Merck License.

 

5.2    Clinical Trial Data.  Each Party agrees to consider sharing with the other Party clinical trial and regulatory data with respect to the Product developed or obtained by the first Party.  The foregoing shall not create an obligation of either Party to share data with the other Party, and the specific terms for any agreement to share data must be agreed upon by the Parties in writing, including the terms for compensation, data to be shared, and the scope of the other Party’s right to use the data.  Either Party may notify the other if it desires to obtain clinical and regulatory data from the other or desires to share clinical and regulatory data with the other Party.

 

ARTICLE 6.

SUPPLY

 

6.1    Supply of NHS76 Antibody.  Upon Licensee’s written request, Licensor agrees to supply (or cause to be supplied) for Licensee NHS76 Antibody as follows:

 

6.1.1.  Subject to Section 6.1.3 below, upon Licensee’s written request, Licensor agrees to supply, [****], up to 100 mg of cGMP NHS76 Antibody along with a Certificate of Analysis for such antibody.  Such NHS76 Antibody will be delivered within a reasonable time following Licensee’s request if Licensor has a readily available supply of such antibody; otherwise, Licensor agrees to provide such NHS76 Antibody within a reasonable time following Licensor’s next scheduled cGMP production run for NHS76 Antibody; provided that Licensor will provide such NHS76 Antibody no later than 9 months after Licensee’s request.

 

6.1.2.  Subject to Section 6.1.3 below, upon Licensee’s written request, Licensor agrees to supply up to five 100-liter batches of cGMP NHS76 Antibody at Licensor’s Fully-Burdened Cost of each batch plus [****].  Following Licensee’s request, Licensor will schedule a cGMP product run for the NHS76 Antibody in Licensor’s next available slot in Licensor’s 100L bioreactor for producing such antibody.

 

6.1.3.  Notwithstanding Sections 6.1.1 and 6.1.2 above, if, at the time of Licensee’s request for supply, Licensor has not developed a process to manufacture NHS76 Antibody under cGMP, then the following will apply:

 

(a)  The NHS76 Antibody to be supplied under such sections shall be up to 5L batches of research grade antibody, not cGMP, unless Licensee pays for Licensor’s development of the cGMP manufacturing process or provides such a process to Licensor as described in Section 6.1.3(b) below.  If Licensee does pay for such development or provides such process, the time periods for supplying the NHS76 Antibody under Section 6.1.1 and 6.1.2 shall begin, not upon Licensee’s written request, but following successful implementation by Licensor of the cGMP process.

 

 

[****] The following portion has been omitted pursuant to a Confidential Treatment Request under Rule 24b-2 of the Securities Exchange Act of 1934 and has been filed separately with the Securities and Exchange Commission.

 

  

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(b)  Upon Licensee’s written request, Licensor agrees to develop the process to manufacture NHS76 Antibody under cGMP, and Licensee will pay Licensor for such development at Licensor’s Fully-Burdened Cost plus [****], which Fully-Burdened Cost is not expected to exceed [****].  Alternatively, Licensee may develop its own process, at its own cost, and provide such process to Licensor and Licensee will pay Licensor for all costs associated with process development work associated with scaling up the process at Licensor’s Fully-Burdened Cost plus [****].  All right, title, and interest in any intellectual property developed by Licensor in connection with developing the manufacturing process as described in this Section 6.1.3(b) shall be solely owned by Licensor; provided that such intellectual property shall be deemed part of the NHS76 Licensed Technology under this Agreement.

 

6.2    Term for Supply.  All requests for NHS76 Antibody under Section 6.1 must be submitted by Licensee in writing no later than the fifth anniversary of the Effective Date, and Licensor shall supply such antibody no later than the sixth anniversary.  All requests for Licensor to develop a cGMP process or to use Licensee’s cGMP process under Section 6.1.3(b) must be submitted by Licensee in writing no later than 18 months after the Effective Date.

 

ARTICLE 7.

CONFIDENTIALITY

 

7.1    Confidential Information.  Except as expressly provided in this Agreement, neither Party shall use for its own benefit or the benefit of any third party except in connection with the activities contemplated by this Agreement, or disclose to any third party, any confidential, proprietary, or trade secret information (the “Confidential Information”) received from the other Party hereto.  The terms and conditions of this Agreement shall be deemed the Confidential Information of both Parties.  The obligations of this Section 7.1 shall continue until five years after the expiration or termination of this Agreement; provided that (a) in the case of any Confidential Information that constitutes a “trade secret,” such obligations shall continue for the longer of such five-year period or for so long as such trade secret Confidential Information remains a trade secret; and (b) in the case of Confidential Information that consists of financial data, such obligations shall continue only for two years from the time of disclosure of such financial data to the receiving Party.  Licensee acknowledges and agrees that the protocols included within the Licensed Technology and Retained Technology are trade secrets of Licensee.

 

7.2    Permitted Disclosures.  Notwithstanding Section 7.1 above, Confidential Information shall not include any of the following information that the receiving Party can demonstrate by competent evidence:

 

(a)  was already known to the receiving Party, other than under an obligation of confidentiality, at the time of disclosure;

 

(b)  was generally available to the public or otherwise part of the public domain at the time of disclosure to the receiving Party;

 

 

[****] The following portion has been omitted pursuant to a Confidential Treatment Request under Rule 24b-2 of the Securities Exchange Act of 1934 and has been filed separately with the Securities and Exchange Commission.

 

  

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(c)  became generally available to the public or otherwise part of the public domain after its disclosure and other than through any act or omission of the receiving Party in breach of this Agreement;

 

(d)  was independently developed by the receiving Party without reference to any information or materials disclosed by the disclosing Party; or

 

(e)  was subsequently disclosed to the receiving Party by a person other than the disclosing Party without breach of any legal obligation to the disclosing Party.

 

In addition, either Party may disclose Confidential Information of the other to:

 

(i)  to such receiving Party’s and its Affiliates’ legal representatives, employees, consultants, and Sublicensees (and potential Sublicensees), to the extent such disclosure is reasonably necessary to achieve the purposes of this Agreement, and provided (a) such legal representatives and employees are informed of the confidential nature of the Confidential Information and the restrictions on disclosure and use contained herein and (b) such consultants and Sublicensees (and potential Sublicensees) have agreed in writing to obligations of confidentiality with respect to such information no less stringent than those set forth herein;

 

(ii)    to a potential sublicensee of Licensor of the Licensed Technology outside of the Field or of the Retained Technology outside the Group B Countries, provided such sublicensee has agreed in writing to obligations of confidentiality with respect to such information no less stringent than those set forth herein; or

 

(iii)   if disclosure is compelled to be disclosed by a court order or applicable law or regulation (including the rules and regulations of the Securities and Exchange Commission or any national securities exchange), provided that the Party compelled to make such disclosure (a) requests confidential treatment of such information, (b) provides the other Party with sufficient advance notice of the compelled disclosure to provide adequate time to seek a protective order, and (b) discloses only the minimum necessary to comply with the requirement to disclose.

 

The receiving Party shall be responsible for all breaches of this Agreement by the receiving Party’s and its Affiliates’ legal representatives and employees.

 

7.3    Press Release; Disclosure of Agreement.  The Parties agree that either Party may release the statement attached hereto as Exhibit C.  Except for such release, each Party agrees that there shall be no public announcement of the execution of this Agreement without the prior written consent of the other Party.  The text of any press release to be issued by Licensee or Licensor concerning this Agreement as well as the precise date and timing of the press release shall be agreed between the Parties in writing in advance, such agreement not to be unreasonably withheld or delayed.  Notwithstanding the foregoing, this restriction shall not apply to announcements required by law or regulation (including the Securities and Exchange Commission or any other national securities exchange), except that, in such event, the Parties shall coordinate to the extent possible with respect to the details of any such announcement.  This restriction shall not apply to disclosure of this Agreement to certain private third parties such as the shareholders of either Party, prospective acquirers, and sublicensees, investment bankers, attorneys, and other professional consultants, and prospective investors in either Party who have agreed in writing to obligations of confidentiality with respect to such information no less stringent than those set forth herein.  Once a particular disclosure has been approved, further disclosures that do not differ materially therefrom may be made without obtaining any further consent of the other Party.

 

 

  

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7.4    Publication.  Licensee shall not publicly present or publish results of studies carried out under this Agreement (each such presentation or publication, a “Publication”) without the opportunity for prior review by Licensor.  Licensee shall provide Licensor the opportunity to review any proposed Publication at least 30 days prior to the earlier of its presentation or intended submission for publication.  Licensee agrees, upon request by Licensor, not to submit or present any Publication until Licensor has had 30 days to comment on any material in such Publication.  Licensee shall consider the comments of Licensor in good faith but will retain the sole authority to submit the manuscript for Publication; provided that Licensee shall not have the right to publish or present Licensor’s Confidential Information without Licensor’s prior written consent.  Licensee shall provide Licensor a copy of the Publication at the time of the submission or presentation.

 

7.5    Publicity.  Neither Party shall use the name of the other Party in connection with any written publicity, news release, or other announcement or statement relating to this Agreement or to the performance hereunder or the existence of an arrangement between the Parties without prior written approval from such Party.

 

ARTICLE 8.

PATENT PROSECUTION, ENFORCEMENT, AND DEFENSE

 

8.1    Prosecution of Licensed Patents.

 

8.1.1.  Licensor’s Responsibilities.  Licensor shall have the right, but not the obligation, to control the Prosecution of the Licensed Patents, at Licensor’s cost.  During the term of this Agreement, no later than each anniversary of the Effective Date, or as requested by Licensee in writing 30 days in advance, but no more than twice a year, Licensor shall provide to Licensee a status report regarding the status of the Licensed Patents.  During the term of this Agreement, upon the written request by Licensee but not more than twice a year, and at Licensee’s sole cost, Licensor shall provide to Licensee, within 60 days of Licensee’s written request, a copy of any patent or patent application within the Licensed Patents and any material documents received from or sent to any patent office relating thereto that relate to the scope, term, maintenance, validity, or enforceability of any of the Licensed Patents, or any challenge to or change to any of the preceding.  Licensee shall cooperate with Licensor in the Prosecution of the Licensed Patents.

 

8.1.2.  Licensor’s Failure to Prosecute.  If Licensor decides not to Prosecute any of the patent applications or patents within the Licensed Patents, Licensor shall give Licensee written notice thereof at least 30 days prior to allowing such patent applications or patents to lapse or go abandoned.  Thereafter, during the term of this Agreement, Licensee shall have the right to Prosecute such patent applications or patents, at Licensee’s sole cost, using patent counsel acceptable to Licensor.  Licensor shall execute such further documents as may be reasonably necessary or appropriate, and provide reasonable assistance and cooperation, to implement the provisions of this Section 8.1.2.  In connection with Licensee’s Prosecution, Licensee shall consult with Licensor and provide Licensor with copies of all substantive documents.  Without limiting the foregoing, Licensee agrees as follows:

 

(a)  During the term of this Agreement, Licensee shall provide Licensor with copies of all substantive documents relating to any Licensed Patent that Licensee is Prosecuting received from or to be filed in any patent office within 30 days of receipt and at least 30 days prior to filing, respectively, including copies of each patent, patent application, notice, official action, rejection, objection, response to official action, declaration, information disclosure statement, request for terminal disclaimer, request for patent term extension, and request for reexamination.

 

  

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(b)  Licensor shall have the right to comment on the Prosecution of the Licensed Patents subject to this Section 8.1.2 and provide such comments to Licensee’s patent counsel, and Licensee shall require its patent counsel to implement Licensor’s comments.  If Licensor fails to provide its comments with respect to the Prosecution of a patent application or patent subject to this Section 8.1.2 at least 10 days prior to the deadline for filing or otherwise responding to the relevant paper in the relevant patent office, Licensee shall be free to act without consideration of Licensor’s comments.

 

8.2    Patent Term Extensions.  With respect to any patent within the Licensed Patents, any extension of such patent or governmental equivalent that extends the exclusivity of any of the patent subject matter where available in any country in the world shall be in Licensor’s sole discretion; provided that Licensor will give due consideration to any written requests of Licensee with respect to specific extensions.  Licensee shall provide reasonable assistance to facilitate Licensor’s efforts to obtain any extensions.

 

8.3    Enforcement.  If either Party hereto becomes aware that any Licensed Patents are being or have been infringed by any third party or are subject to a declaratory judgment action such Party shall promptly notify the other Party hereto in writing describing the facts relating thereto in reasonable detail.

 

8.4    Enforcement of Licensed Patents.  Subject to any rights of Merck under the Merck License, the following will apply:

 

8.4.1.  NHS76 Licensed Patents by Licensee.  Licensee shall have the initial right, but not the obligation, to institute, prosecute, and control any infringement or declaratory judgment action, suit, or proceeding (an “Action”) to the extent related to the NHS76 Licensed Patents with respect to any Licensed Products in the Field in the Group B Countries, at Licensee’s expense, using legal counsel acceptable to Licensor, and Licensor shall cooperate with Licensee in connection with any such Action, at Licensee’s expense.  Licensee may not enter into any settlement, consent, or other voluntary final disposition of such Action without Licensor’s prior written consent.  All expenses and all recovery for such Action shall be allocated as follows: (a) to reimburse each Party for all expenses of the suit, including attorneys’ fees and disbursements, court costs, and other litigation expenses; and (b) any remaining amount shall be retained by Licensee (but shall be included in the calculations of Net Sales).

 

8.4.2.  NHS76 Licensed Patents by Licensor.  In the event Licensee fails to initiate or defend any Action involving the NHS76 Licensed Patents with respect to a Licensed Product in the Field within 60 days of receiving written notice of any alleged infringement, or if Licensee elects not to continue prosecuting or defending any such Action, Licensor shall have the right, but not the obligation, to prosecute or defend such an Action, at Licensor’s expense, using legal counsel of its choice.  Licensor may join Licensee as a plaintiff in any such Action and Licensee shall otherwise cooperate with Licensor in connection with any such Action, each at Licensor’s expense.  All expenses and all recovery for such Action shall be allocated as follows: (a) to reimburse each Party for all expenses of the suit, including attorneys’ fees and disbursements, court costs, and other litigation expenses; and (b) any remaining amount shall be retained by Licensor.

 

 

 

  

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8.4.3.  Radiolabeling Licensed Patents.  Licensor shall have the sole right, but not the obligation, to institute, prosecute, and control any Action to the extent related to the Radiolabeling Licensed Patents, at Licensor’s expense, using legal counsel of its choice.  Licensor may join Licensee as a plaintiff in any such Action, and Licensee shall otherwise cooperate with Licensor in connection with any such Action, each at Licensor’s expense.  All expenses and all recovery for such Action shall be allocated as follows: (a) to reimburse each Party for all expenses of the suit, including attorneys’ fees and disbursements, court costs, and other litigation expenses; and (b) any remaining amount shall be retained by Licensor.

 

8.4.4.  Other Rights.  Except for the enforcement rights described in Section 8.4.1 above, Licensee shall have no rights to institute, prosecute, and control any Action or any other action, suit, or proceeding with respect to any intellectual property right licensed to Licensee hereunder.

 

8.5    Cooperation.  In any suit, action, or other proceeding brought or defended by one Party in connection with enforcement or defense of the Licensed Patents, the other Party shall cooperate fully, including by joining as a party plaintiff and executing such documents as the Party bringing or defending the suit, action, or other proceeding may reasonably request in writing.  Furthermore, upon the written request of the Party bringing the suit, action, or other proceeding, the other Party shall make available at reasonable times and under appropriate conditions all relevant records, papers, information, samples, and other similar materials in its possession.

 

8.6    Packaging.  Licensee agrees that all Licensed Products sold by Licensee and Sublicensees will be marked with the patent number of the applicable Licensed Patent hereunder or any other notice of patent rights, in each case, necessary or desirable under applicable law to enable the Licensed Patents to be enforced to their full extent in any country where Licensed Product are made, used, sold, or offered for sale.

 

8.7    Challenge of Patents.  Neither Licensee nor any of its Affiliates or Sublicensees, directly or indirectly, shall challenge the validity, scope, or enforceability of any patent or patent application within the Licensed Patents or the Retained Technology, including challenging by means of reexamination, opposition, interference, declaratory judgment proceeding, or invalidity or nullity proceeding, or shall procure, support, encourage, or assist a third party to take any such action.  Any breach of this Section 8.7 shall be deemed a material breach by Licensee, giving Licensor, at its option and in its sole discretion, a right to terminate this Agreement pursuant to Section 11.2; provided that Licensee’s cure period under Section 11.2 shall be limited to 15 days for any such breach.

 

 

 

 

  

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ARTICLE 9.

INDEMNIFICATION; INSURANCE

 

9.1    Licensee.  Licensee shall defend, indemnify, and hold harmless Licensor, its Affiliates, and their respective directors, officers, employees, and agents (collectively, the “Licensor Indemnitees”) from and against any and all third party claims, suits, losses, liabilities, damages, costs, fees, and expenses (including attorneys’ fees and expenses of litigation) (collectively, “Third Party Liabilities”) to the extent arising out of or resulting from (a) any breach of, or inaccuracy in, any representation or warranty made by Licensee in this Agreement, or any breach or violation of any covenant or agreement of Licensee in or pursuant to this Agreement, including any breach of the obligations of Section 2.6, 2.7, or 2.8; (b) the negligence or willful misconduct of Licensee, its Affiliates, Sublicensees, or their respective directors, officers, employees, and agents; and (c) the manufacture, sale, offer for sale, use, or importation by Licensee, its Affiliates, Sublicensees or their respective designees of Licensed Products, including any product liability claims (under any theory, including actions in the form of tort, warranty, or strict liability) relating to the Licensed Products.  Licensee shall have no obligation to indemnify the Licensor Indemnitees to the extent that the Third Party Liabilities arise out of or result from, directly or indirectly, any breach of, or inaccuracy in, any representation or warranty made by Licensor in this Agreement, or any breach or violation of any covenant or agreement of Licensor in or pursuant to this Agreement, or the negligence or willful misconduct by or of any of the Licensor Indemnitees.

 

9.2    Licensor.  Licensor shall defend, indemnify, and hold harmless Licensee, its Affiliates, and their respective directors, officers, employees, and agents (collectively, the “Licensee Indemnitees”) from and against any and all Third Party Liabilities to the extent arising out of or resulting from (a) any breach of, or inaccuracy in, any representation or warranty made by Licensor in this Agreement, or any breach or violation of any covenant or agreement of Licensor in or pursuant to this Agreement; and (b) the negligence or willful misconduct of Licensor, its Affiliates, or their respective directors, officers, employees, and agents.  Licensor shall have no obligation to indemnify the Licensee Indemnitees to the extent that the Third Party Liabilities arise out of or result from, directly or indirectly, any breach of, or inaccuracy in, any representation or warranty made by Licensee in this Agreement, or any breach or violation of any covenant or agreement of Licensee in or pursuant to this Agreement, or the negligence or willful misconduct by or of any of the Licensee Indemnitees.

 

9.3    Indemnification Procedure.  In the event of any such claim against any Licensee Indemnitee or Licensor Indemnitee (each an “Indemnified Party”), the Indemnified Party shall promptly notify the indemnifying Party in writing of the claim and the indemnifying Party shall manage and control, at its sole expense, the defense of the claim and its settlement.  The indemnifying Party shall have the right to solely direct and control the defense and settlement of any such proceeding and, if it so elects, shall retain counsel reasonably satisfactory to the Indemnified Party to represent the Indemnified Party and shall pay the fees and expenses of such counsel related to such proceeding.  In any such proceeding, the Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of the Indemnified Party unless (i) the indemnifying Party and the Indemnified Party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded 

 

 

  

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parties) include both the indemnifying Party and the Indemnified Party and representation of the parties by the same counsel would be inappropriate due to actual or potential differing interests between them.  All such reimbursable fees and expenses shall be reimbursed as they are incurred.  The indemnifying Party shall not be liable for any settlement of any proceeding initiated or pursued without its prior written consent, but, if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying Party shall indemnify the Indemnified Party from and against any loss or liability by reason of such settlement or judgment.  The indemnifying Party shall not, without the prior written consent of the Indemnified Party, effect any settlement of any pending or threatened proceeding in respect of which the Indemnified Party is, or arising out of the same set of facts could have been, a party and indemnity could have been sought hereunder by the Indemnified Party, unless such settlement includes an unconditional release of the Indemnified Party from all liability on claims to which the indemnity relates that are the subject matter of such proceeding.  The Indemnified Party shall cooperate with the indemnifying Party and may, at its option and expense, be represented in any such action or proceeding.

 

9.4    Insurance.

 

9.4.1.  Beginning upon the first dosing of a human patient in a clinical study with respect to a Licensed Product and thereafter during the term of this Agreement, Licensee shall, and shall cause each Sublicensee to, as applicable, at its sole cost and expense, procure and maintain comprehensive general liability insurance in amounts not less than $3,000,000 per incident and $2,000,000 annual aggregate naming Licensor as an additional insured.  Such comprehensive general liability insurance shall provide (i) product liability coverage and (ii) broad form contractual liability coverage for Licensee’s indemnification obligations under Section 9.1 above.  The minimum amount of insurance coverage required under this Section 9.4.  shall not be construed to create a limit of Licensee’s liability with respect to its indemnification obligations under Section 9.1 above.

 

9.4.2.  Licensee shall provide Licensor with written evidence of such insurance upon the written request of Licensor.  Licensee shall provide Licensor with written notice at least 15 days prior to the cancellation, non-renewal, or material change in such insurance; if Licensee does not obtain replacement insurance providing comparable coverage within such 15-day period, notwithstanding Section 11.2 of this Agreement, Licensor shall have the right to terminate this Agreement effective at the end of such 15-day period without notice or any additional waiting periods.

 

9.4.3.  Licensee shall maintain such comprehensive general liability insurance beyond the expiration or termination of this Agreement (i) during the period after the first dosing of a human patient in a clinical study with respect to a Licensed Product and throughout the term of this Agreement, and (ii) after termination or expiration, for a reasonable period, which in no event shall be less than 15 years.

 

 

 

  

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9.5    LIMITATION OF LIABILITY.  NEITHER PARTY HERETO SHALL BE LIABLE FOR INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT OR THE EXERCISE OF ITS RIGHTS HEREUNDER, INCLUDING LOST PROFITS ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF ANY NOTICE OF SUCH DAMAGES.  NOTHING IN THIS SECTION 9.5 IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF EITHER PARTY OR TO LIMIT A PARTY’S LIABILITY FOR BREACHES OF ITS OBLIGATION REGARDING CONFIDENTIALITY UNDER ARTICLE 7.

 

ARTICLE 10.

REPRESENTATIONS AND WARRANTIES

 

10.1  Licensor.  Licensor represents and warrants that, as of the Effective Date: (i) it is a corporation duly organized, validly existing, and in good standing under the laws of Delaware; (ii) the execution, delivery, and performance of this Agreement have been duly authorized by all necessary corporate action on the part of Licensor; (iii) Licensor has the right to grant the rights and licenses granted herein; and (iv) to the best of Licensor’s knowledge, there are no threatened or pending actions, suits, investigations, claims, or proceedings against Licensor relating to the Licensed Patents.

 

10.2  Licensee.  Licensee represents and warrants that, as of the Effective Date: (i) it is a corporation duly organized validly existing and in good standing under the laws of the State of California; and (ii) the execution, delivery, and performance of this Agreement have been duly authorized by all necessary corporate action on the part of Licensee

 

10.3  Disclaimer of Warranties.  EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE 10, NEITHER PARTY MAKES ANY REPRESENTATION OR EXTENDS ANY WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED, TO THE OTHER PARTY WITH RESPECT TO ANY LICENSED PRODUCTS, LICENSED PATENTS, OR OTHER SUBJECT MATTER OF THIS AGREEMENT, AND EACH PARTY HEREBY DISCLAIMS ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NONINFRINGEMENT WITH RESPECT TO ANY AND ALL OF THE FOREGOING.  WITHOUT LIMITING THE FOREGOING, EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE 10, THE LICENSED PATENTS ARE PROVIDED “AS IS,” AND LICENSOR MAKES NO REPRESENTATION OR WARRANTY WITH RESPECT TO THE PERFORMANCE OF LICENSED PRODUCT(S) INCLUDING THEIR SAFETY, EFFECTIVENESS, OR COMMERCIAL VIABILITY.

 

ARTICLE 11.

TERM AND TERMINATION

 

11.1  Term.  The term of this Agreement shall commence on the Effective Date, and unless earlier terminated as provided herein, shall continue in full force and effect on a country-by-country and Licensed Product-by-Licensed Product basis until there are no remaining payment obligations in a country pursuant to Article 4, at which time the Agreement shall expire in its entirety in such country.

 

  

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11.2  Termination for Cause.  If either Party materially breaches this Agreement, the nonbreaching Party may elect to terminate this Agreement by giving the breaching Party written notice describing the alleged breach.  If the breaching Party has not cured such breach within 60 days after receipt of such notice (or 30 days with respect to the payment of money), this Agreement shall terminate effective at the end of such 60-day period (or 30-day period, as applicable).

 

11.3  Termination for Bankruptcy.  Either Party may, subject to applicable law and to the provisions set forth herein, terminate this Agreement by giving the other Party written termination notice if, at any time, the other Party shall: (a) file in any court pursuant to any statute a petition for bankruptcy or insolvency, or for reorganization in bankruptcy, or for an arrangement or for the appointment of a receiver, trustee, or administrator of such Party or of its assets; (b) propose a written agreement of composition or extension of its debts; (c) be served with an involuntary petition against it, filed in any insolvency proceeding, and such petition shall not be dismissed within 60 days after the filing thereof; (d) propose or be a Party to any dissolution; or (e) make an assignment for the benefit of its creditors.

 

11.4  Termination At Will.  Licensee may terminate this Agreement in its entirety upon 6 months’ written notice to Licensor; provided that Licensee pays, simultaneously with the delivery of such notice, Licensor [****], as an early termination fee.

 

11.5  Notwithstanding the foregoing or anything to the contrary in this Agreement, if Licensee does not make the upfront payment of [****] under Section 4.1 by June 30, 2010, this Agreement shall automatically terminate.

 

11.6  Effect of Termination.

 

11.6.1.  Accrued Rights and Obligations.  Termination of this Agreement for any reason shall not release any Party hereto from any liability that, at the time of such termination, has already accrued to the other Party or that is attributable to a period prior to such termination, nor preclude either Party from pursuing any rights and remedies it may have hereunder or at law or in equity that accrued or are based upon any event occurring prior to such termination.

 

11.6.2.  Return of Confidential Information.  Upon any termination of this Agreement, each Party shall promptly return to the other Party, or destroy at the other Party’s option, all Confidential Information received from the other Party, including all reproductions and copies thereof in any medium, except one copy of which may be retained for archival purposes.

 

11.6.3.  Return of Materials.  Upon any termination of this Agreement, Licensee shall promptly return to Licensor all Materials received from Licensor, together with any and all progeny, derivatives, and any genetically engineered modification thereof.

 

 

[****] The following portion has been omitted pursuant to a Confidential Treatment Request under Rule 24b-2 of the Securities Exchange Act of 1934 and has been filed separately with the Securities and Exchange Commission.

 

  

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11.6.4.  Stock on Hand.  If this Agreement is terminated other than for a breach by Licensee, Licensee and Sublicensees shall have the right to sell or otherwise dispose of the stock of any Licensed Product subject to this Agreement then on hand, subject to compliance with the payment provisions of Article 4.

 

11.6.5.  Unpaid Amounts.  Termination of this Agreement shall not affect Licensor’s right to recover from Licensee any royalties, fees, or expenses that Licensee is obligated to pay to Licensor, which obligation accrued prior to the effective date of such termination (or after such termination with respect to payments owed pursuant to Section 11.5.4).

 

11.6.6.  Licenses.  Subject to Section 11.5.4, upon termination of this Agreement, the licenses granted herein shall terminate and the intellectual property rights granted herein shall revert to Licensor, at no cost to Licensor.

 

11.6.7.  Certain Events.  If this Agreement is terminated by Licensee under Section 11.4 or by Licensor under Section 11.2 or 11.3, then following shall apply:

 

(a)  Licensee hereby grants (effective only upon any such termination of this Agreement) to Licensor a worldwide, exclusive, royalty-free, transferable, perpetual license, with the right to sublicense, under the Licensee Technology to offer for sale, sell, make, have made, use, and import Licensed Products in the Field in the Group B Countries.  For this purpose, the “Licensee Technology” means Licensee’s patents, know-how (including all clinical and research data), and other intellectual property used by Licensee in the research, development, manufacture, and commercialization of the Licensed Product.  To effectuate such license, upon such termination of this Agreement, Licensee will promptly disclose to Licensor all Licensee Technology not already known to Licensor.

 

(b)  Licensee shall assign to Licensor all of Licensee’s right, title, and interest in trademarks used by Licensee on the Licensed Products (but excluding any house marks of Licensee).  Licensee shall assign or sublicense to Licensor, to the extent possible and as requested by Licensor, Licensee’s rights and obligations under any third party licenses entered into with respect to the Licensed Products.  Licensee shall transfer to Licensor ownership of any new drug applications or regulatory approvals in the Group C Countries then in Licensee’s name related to Licensed Products and notify the appropriate regulatory authorities and take any other action reasonably necessary to effect such transfer of ownership.  If ownership of an new drug application or regulatory approval cannot be transferred to Licensor in any country, Licensee hereby grants (effective only upon any such termination of this Agreement) to Licensor a permanent, exclusive (even as to Licensee) and irrevocable right of access and reference to such new drug applications and regulatory approvals for Licensed Products in such country in the Field.

 

(c)  Licensee shall provide Licensor with samples of the Licensed Product, if not already in Licensor’s possession.

 

(d)  If Licensee has begun manufacture of clinical or commercial supplies of the Licensed Product, then at Licensor’s request, Licensee shall continue to manufacture and supply Licensor with such clinical or commercial supplies, as applicable, at Licensee’s Fully-Burdened Cost plus [****], for one year after termination for clinical supplies and for two years after termination for commercial supplies.  If the clinical or commercial supplies are being manufactured by a third party under contract, to the extent permitted by the terms of such contract, Licensee shall assign such contracts to Licensor.

 

 

  

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11.7  Survival.  Articles 1, 4 (with respect to any outstanding payment obligation and an obligation to provide a final report), 7, 9, 11, 12, and 13, and Sections 2.3.5, 2.4, 2.5.1, 2.5.3, 2.8, 4.8, and 10.3 shall survive expiration or termination of this Agreement for any reason.

 

ARTICLE 12.

ARBITRATION

 

12.1  Procedure.  The Parties shall make diligent and reasonable efforts to amicably settle all disputes, controversies, or differences that may arise between the Parties hereto out of or in relation to or in connection with this Agreement.  Upon the occurrence of a dispute between the Parties, including any breach of this Agreement or any obligation relating thereto, the matter shall be referred to the chief executive officers of Licensor and Licensee, or their designees.  The chief executive officers, or their designees, as the case may be, shall negotiate in good faith to resolve such dispute in a mutually satisfactory manner for a period of ten days, or such longer period of time to which the chief executive officers may agree.  If such efforts do not result in a mutually satisfactory resolution, the dispute shall be finally settled by arbitration, held in Orange County, California, USA.

 

12.2  Choice of Arbitrators and Governing Rules.

 

(a)  Any arbitration conducted pursuant to this Article 12 shall be in accordance with the Commercial Arbitration Rules of the American Arbitration Association (“AAA”) in effect on the date of commencement of the arbitration, subject to the provisions of this Article 12.

 

(b)  In its demand for arbitration, the Party initiating the arbitration shall provide a statement setting forth the nature of the dispute, the names and addresses of all other parties, an estimate of the amount involved (if any), the remedy sought, otherwise specifying the issue to be resolved.  The responding Party shall file its answering statement within 15 days after confirmation of the notice of filing of the demand is sent by the AAA.

 

(c)  The Parties shall use reasonable efforts to mutually agree upon one arbitrator; provided, however, that, if the Parties have not done so within ten days after initiation of arbitration hereunder, or such longer period of time as the Parties have agreed to in writing, then there shall be three arbitrators as follows (i) one neutral nominee of each of Licensor and Licensee, each to be selected within twenty days after confirmation of the notice of filing of the demand is sent by the AAA, and (ii) one neutral nominee to serve as chairman and to be selected by the first two nominees within 15 days from the date that Licensor’s and Licensee’s nominees are selected.  If a Party fails to make the appointment of an arbitrator as provided in this Section 12.2(c), the AAA shall make the appointment.  If the appointed arbitrators fail to appoint a chairperson within the time specified in this Section 12.2(c) and there is no agreed extension of time, the AAA may appoint the chairperson.  Each arbitrator will by training, education, or experience have knowledge of the research, development, and commercialization of biological pharmaceutical products in the United States.

 

 

  

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(d)  The Parties shall use their reasonable efforts to conduct all dispute resolution procedures under this Agreement as expeditiously, efficiently, and cost-effectively as possible.  The arbitrator(s) shall determine what discovery will be permitted, based on the principle of limiting the cost and time that the Parties must expend on discovery; provided the arbitrator(s) shall permit such discovery as it (they) deem necessary to achieve an equitable resolution of the dispute.

 

(e)  The decision or award rendered by the arbitrator(s) shall be written, final, and non-appealable and may be entered in any court of competent jurisdiction.

 

(f)  The costs of any arbitration, including administrative fees and fees of the arbitrator(s), shall be shared equally by the Parties, and each Party shall bear the cost of its own attorney and expert fees; provided that the arbitrator(s), in their discretion, will have the authority to award the prevailing Party reasonable attorneys’ fees and costs in amounts fixed by the arbitrator(s).  The arbitrator(s) will have the authority to grant specific performance.  The arbitrator(s) will have no authority to award damages in contravention of this Agreement, and each Party irrevocably waives any claim to such damages in contravention of this Agreement.

 

(g)  Notwithstanding anything herein to the contrary, nothing in this Agreement shall restrict either Party at any time from seeking equitable relief to prevent irreparable harm that may be caused by the other Party’s actual or threatened breach of this Agreement.

 

ARTICLE 13.

GENERAL

 

13.1  Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of California, without reference to principles of conflicts of laws.  Each Party hereby submits itself for the purpose of this Agreement and, subject to Article 12, any controversy arising hereunder to the exclusive jurisdiction of the state and federal courts located in the Central District of California, and any courts of appeal therefrom, and waives any objection on the grounds of lack of jurisdiction (including venue) to the exercise of such jurisdiction over it by any such courts.

 

13.2  Independent Contractors.  The relationship of the Parties hereto is that of independent contractors.  The Parties hereto are not deemed to be agents, partners, or joint ventures of the other for any purpose as a result of this Agreement or the transactions contemplated thereby.

 

13.3  Assignment.  Except as expressly set forth herein, this Agreement shall not be assignable by Licensee without Licensor’s prior written consent, which shall not be unreasonably withheld.  If Licensor consents to any such assignment, the assignee must agree in writing to assume all obligations, and acknowledge all of Licensor’s rights, under this Agreement.  This Agreement is assignable by Licensor.  This Agreement shall be binding upon and inure to the benefit of the Parties and their successors and assigns.

 

  

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13.4  Notices.  Any notices required or permitted to be given under this Agreement shall be deemed given if delivered to the Party to be notified at its address shown below or at such other address as may be furnished from time to time by such Party to the other Party in writing.  Each notice shall be given (a) by registered air mail, postage prepaid, which notice shall be effective when received, (b) by hand delivery or in person, which notice shall be effective when received, (c) by telefax (with proof of transmission and confirmation by first-class mail postage paid), which notice shall be effective when sent, or (d) by overnight courier, which notice shall be effective on the Business Day immediately following the date of delivery to the courier.

 

	
If to Licensor:

 

Peregrine Pharmaceuticals, Inc.

14282 Franklin Avenue

Tustin, California  92780-7071

Attention:  Chief Executive Officer

Telephone:  714-508-6000

Facsimile:  714-838-5817

	
With a copy (which shall not constitute notice) to:

 

Jones Day

222 East 41st Street

New York, NY 10017-6702

U.S.A.

Attention:  Ann L. Gisolfi, Esq.

Telephone:  (212) 326-3495

Facsimile:  (212) 755-7306

 

	
If to Licensee:

 

Stason Pharmaceuticals, Inc.

11 Morgan

Irvine, California  92618-4327

Attention:  Chief Executive Officer

Telephone:  (949) 380-4327

Facsimile:  (949) 380-4345

	  

13.5  Force Majeure.  Neither Party shall lose any rights hereunder or be liable to the other Party for damages or losses (except for payment obligations) on account of failure of performance by the defaulting Party, if the failure is occasioned by war, strike, fire, Act of God, earthquake, flood, lockout, embargo, governmental acts or orders or restrictions, failure of suppliers, or any other reason where failure to perform is beyond the reasonable control and not caused by the negligence, intentional conduct, or misconduct of the nonperforming Party and the nonperforming Party has exerted all reasonable efforts to avoid or remedy such force majeure; provided, however, that in no event shall a Party be required to settle any labor dispute or disturbance.  Each Party shall (a) promptly notify the other Party in writing of any such event of force majeure, the expected duration thereof, and its anticipated effect on the ability of such Party to perform its obligations hereunder, and (b) make reasonable efforts to remedy any such event of force majeure.  If a suspension of performance pursuant to a force majeure event continues for 180 days, and such failure to perform would constitute a material breach of this Agreement in the absence of such force majeure event, the non-affected Party may terminate this Agreement immediately by written notice to the affected Party.

 

 

  

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13.6  Compliance with Laws.  Licensee shall comply with and shall ensure that Sublicensees comply with all government statutes and regulations that relate to Licensed Products, including Food and Drug Administration statues and regulations and the Export Administration Act of 1979, as amended, codified in 50 App. U.S.C. § 2041 et seq., and the regulations promulgated thereunder or any other applicable export statute or regulation.

 

13.7  Further Assurances.  At any time or from time to time on and after the date of this Agreement, each Party shall at the written request of the other Party (i) deliver to the other Party such records, data, or other documents consistent with the provisions of this Agreement, (ii) execute, and deliver or cause to be delivered, all such consents, documents, or further instruments of transfer or license, and (iii) take or cause to be taken all such actions, as the other Party may reasonably deem necessary or desirable in order for the other Party to obtain the full benefits of this Agreement and the transactions contemplated hereby.

 

13.8  Severability.  If any provision hereof should be held invalid, illegal, or unenforceable in any respect in any jurisdiction, the Parties hereto shall substitute, by mutual consent, valid provisions for such invalid, illegal, or unenforceable provisions, which valid provisions in their economic effect are sufficiently similar to the invalid, illegal, or unenforceable provisions that it can be reasonably assumed that the Parties would have entered into this Agreement with such valid provisions.  In case such valid provisions cannot be agreed upon, the invalid, illegal, or unenforceable of one or several provisions of this Agreement shall not affect the validity of this Agreement as a whole, unless the invalid, illegal, or unenforceable provisions are of such essential importance to this Agreement that it is to be reasonably assumed that the Parties would not have entered into this Agreement without the invalid, illegal, or unenforceable provisions.

 

13.9  Waiver.  The failure of a Party to enforce any provision of the Agreement shall not be construed to be a waiver of the right of such Party to thereafter enforce that provision or any other provision or right.

 

13.10    Entire Agreement; Amendment.  This Agreement, together with the Assignment Agreement, sets forth the entire agreement and understanding of the Parties with respect to the subject matter hereof and supersedes all prior discussions, agreements, and writings relating thereto.  This Agreement may not be altered, amended, or modified in any way except by a writing signed by both Parties.

 

13.11    Equitable Relief.  Each Party acknowledges that a breach by it of the provisions of this Agreement may not reasonably or adequately be compensated in damages in an action at law and that such a breach may cause the other Party irreparable injury and damage.  By reason thereof, each Party agrees that the other Party is entitled to seek, in addition to any other remedies it may have under this Agreement or otherwise, preliminary and permanent injunctive and other equitable relief to prevent or curtail any breach of this Agreement by the other Party; provided, however, that no specification in this Agreement of a specific legal or equitable remedy will be construed as a waiver or prohibition against the pursuing of other legal or equitable remedies in the event of such a breach.

 

 

 

  

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13.12     Interpretation.  Except as otherwise explicitly specified to the contrary, (a) references to a Section, Article, Exhibit or Schedule means a Section or Article of, or Schedule or Exhibit to this Agreement, unless another agreement is specified, (b) the word “including” will be construed as “including without limitation,” (c) references to a particular statute or regulation include all rules and regulations thereunder and any predecessor or successor statute, rules or regulations, in each case, as amended or otherwise modified from time to time, (d) words in the singular or plural form include the plural and singular form, respectively, (e) words of any gender include each other gender, (f) “or” is disjunctive but not necessarily exclusive, (g) the word “will” shall be construed to have the same meaning and effect as the word “shall,” (h) whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified, and (i) references to a particular person include such person’s successors and assigns to the extent not prohibited by this Agreement.  This Agreement has been prepared jointly and shall not be strictly construed against either Party.  Ambiguities, if any, in this Agreement shall not be construed against any Party, irrespective of which Party may be deemed to have authored the ambiguous provision.  The headings of each Article and Section in this Agreement have been inserted for convenience of reference only and are not intended to limit or expand on the meaning of the language contained in the particular Article or Section.

 

13.13     Counterparts.  This Agreement may be executed in two counterparts, each of which shall be deemed an original and which together shall constitute one instrument.

 

 

 

 

 

 

 

 

 

 

 

 

  

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IN WITNESS WHEREOF, Licensor and Licensee have caused this License Agreement to be executed by their respective duly authorized representatives.

 

	
PEREGRINE PHARMACEUTICALS, INC. 

(“Licensor”)

	 	
STASON PHARMACEUTICALS, INC. 

(“Licensee”)

	 
	 	 	 	 	 	 
	By:  	/s/ Steven King 

	 	By:	/s/ Harry T. Fan 

	 
	Name: 	Steven King 

	 	Name: 	Harry T. Fan 

	 
	Title:  	
President and CEO

	 	Title:  	CEO

	 

 

 

 

 

 

  

  

  

Exhibit A

 

NHS76 Licensed Patents

 

	
1.  

	
Hong Kong Patent No. 1086598, Issued on October 30, 2009, based upon Hong Kong Application No. 06108478.8, entitled “Specific binding proteins including antibodies which bind to the necrotic centre of tumours, and uses thereof” (Peregrine file references CAT1 0409(GB)EPD1HK).

 

	
2.  

	
Japan Patent Application No. 2000-558212, entitled “Specific binding proteins including antibodies which bind to the necrotic centre of tumours, and uses thereof” (Peregrine file references CAT1 9905(GB)JP).

 

 

 

 

 

 

 

 

 

 

 

  

  

  

 

Exhibit B

 

Radiolabeling Licensed Patents

 

	
1.  

	
Chinese Patent No. ZL 200480017742.X, Issued on March 25, 2009, based upon Chinese Application No. 200480017742.X, entitled “Method and Apparatus for Continuous Large-Scale Radiolabeling of Proteins” (Peregrine file references 4015.000512, PPHM.04RADIOL:02CN01J); and

 

	
2.  

	
Hong Kong Patent No. 1087417, Issued on October 24, 2008, based upon Hong Kong Application No. 06109573.0, entitled “Method and Apparatus for Continuous Large-Scale Radiolabeling of Proteins” (Peregrine file references 4015.000565, PPHM.04RADIOL:02E1HKJ).

 

 

 

 

 

 

 

 

 

 

  

  

  

 

Exhibit C

 

Press Release

 

 

 

 

 

 

 

 

 

  

  

  

 

Schedule 1.18

 

NHS76 Antibody Amino Acid Sequence

 

[****]

 

 

 

 

 

[****]The following portion has been omitted pursuant to a Confidential Treatment Request under Rule 24b-2 of the Securities Exchange Act of 1934 and has been filed separately with the Securities and Exchange Commission.

 

  

  

  

 

Schedule 1.19

 

NHS76 Licensed Know-How

 

1.           Information directly relating to the NHS76 cell line

2.           Research (5L) scale manufacturing procedures and other NHS76 related SOP’s

3.           Biological materials in the form of existing NHS76 cell line

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