Document:

Exhibit 10.1

 

Execution Version

 

 

AMENDED AND RESTATED TAX RECEIVABLE AGREEMENT

 

by and among

 

ABERDEEN ASSET MANAGEMENT INC.

 

ABERDEEN ASSET MANAGEMENT PLC

 

ARTIO GLOBAL INVESTORS INC.

 

ARTIO GLOBAL HOLDINGS LLC

 

RICHARD C. PELL

 

and

 

RUDOLPH-RIAD YOUNES

 

dated as of February 13, 2013

 

 

  

  

  

 

 

TABLE OF CONTENTS

 

	 	  	 	  	
PAGE

	 	 	 	 	 
	ARTICLE 1     DEFINITIONS	
2

	 	 	 	 	 
	 	
Section 1.01

	 	
Definitions

	
2

	 	
Section 1.02

	 	
Other Definitional and Interpretative Provisions

	
7

	 	
ARTICLE 2

	 	
DETERMINATION OF CUMULATIVE REALIZED TAX BENEFIT

	
7

	 	
Section 2.01

	 	
Basis Adjustment

	
7

	 	
Section 2.02

	 	
Exchange Basis Schedule

	
8

	 	
Section 2.03

	 	
Tax Benefit Schedule

	
8

	 	
Section 2.04

	 	
Procedures, Amendments

	
8

	 	 	 	 	 
	ARTICLE 3     TAX BENEFIT PAYMENTS	
9

	 	 	 	 	 
	 	
Section 3.01

	 	
Payments for Taxable Years Beginning on or after January 1, 2014

	
9

	 	
Section 3.02

	 	
Payment for the 2012 Taxable Year and Taxable Year(s) in Calendar Year 2013

	
10

	 	
Section 3.03

	 	
No Duplicative Payments

	
10

	 	
Section 3.04

	 	
Pro Rata Payments

	
10

	 	 	 	 	 
	ARTICLE 4     TERMINATION	
11

	 	 	 	 	 
	 	
Section 4.01

	 	
Early Termination and Breach of Agreement

	
11

	 	
Section 4.02

	 	
Early Termination Notice

	
12

	 	
Section 4.03

	 	
Payment upon Early Termination

	
12

	 	 	 	 	 
	ARTICLE 5     SUBORDINATION AND LATE PAYMENTS	
12

	 	 	 	 	 
	 	
Section 5.01

	 	
Subordination

	
12

	 	
Section 5.02

	 	
Late Payments by the Corporation

	
12

	 	 	 	 	 
	ARTICLE 6     NO DISPUTES; CONSISTENCY; COOPERATION	
12

	 	 	 	 	 
	 	
Section 6.01

	 	
Principal Participation in the Corporation's Tax Matters

	
12

	 	
Section 6.02

	 	
Consistency

	
13

	 	
Section 6.03

	 	
Cooperation

	
13

	 	 	 	 	 
	ARTICLE 7     MISCELLANEOUS	
13

	 	 	 	 	 
	 	
Section 7.01

	 	
Notices

	
13

	 	
Section 7.02

	 	
Counterparts

	
15

	 	
Section 7.03

	 	
Entire Agreement; No Third-Party Beneficiaries

	
15

	 	
Section 7.04

	 	
Governing Law

	
15

	 	
Section 7.05

	 	
Severability

	
15

 

 

  

i

  

 

 

	 	
Section 7.06

	 	
Successors; Assignment; Amendments; and Waivers

	
15

	 	
Section 7.07

	 	
Titles and Subtitles

	
16

	 	
Section 7.08

	 	
Resolution of Disputes

	
16

	 	
Section 7.09

	 	
Reconciliation

	
18

	 	
Section 7.10

	 	
Withholding

	
18

	 	
Section 7.11

	 	
Admission of the Corporation into a Consolidated Group; Transfers of Corporate Assets

	
19

	 	
Section 7.12

	 	
Confidentiality

	
19

	 	
Section 7.13

	 	
Effect of Merger on Prior Agreement

	
20

	 	
Section 7.14

	 	
Effectiveness: Termination

	
20

	 	
Section 7.15

	 	
U.S. Subsidiaries

	
20

	 	
Section 7.16

	 	
Acknowledgment

	
20

	 	
Section 7.17

	 	
Good Faith and Fair Dealing

	
20

	 	
Section 7.18

	 	
Assumption Agreement

	
21

	 	
Section 7.19

	 	
Principals

	
21

 

  

ii

  

 

AMENDED AND RESTATED TAX RECEIVABLE AGREEMENT

 

This AMENDED AND RESTATED TAX RECEIVABLE AGREEMENT (as amended from time to time, this “Agreement”), dated as of February 13, 2013, is hereby entered into by and among Aberdeen Asset Management Inc., a Delaware corporation (the “Corporation”), Aberdeen Asset Management PLC, a public limited company organized and existing under the laws of the United Kingdom, solely for purposes of the guarantee provision above its signature line and Section 7.15, (“Guarantor”), Artio Global Investors Inc., a Delaware corporation (“AGI”), Artio Global Holdings LLC, a Delaware limited liability company (“AGH”), Richard C. Pell and Rudolph-Riad Younes.

 

RECITALS

 

WHEREAS, the Principals (as defined below) held Class A Units (“Units”) in AGH, which was treated as a partnership for U.S. federal income tax purposes;

 

WHEREAS, the Principals have exchanged their Units (an “Exchange”, and each such date an Exchange occurs, an “Exchange Date”) pursuant to the Exchange Agreement (as defined below) with AGI for shares of Class A common stock of AGI, par value $0.001 per share (“Class A Shares”), with the concurrent cancellation of an equal number of shares of Class B common stock of AGI, par value $0.001 per share (“Class B Shares”), and AGI now owns 100% of the outstanding Units of AGH which is, therefore, treated as an entity that is disregarded as separate from its owner for Tax purposes;

 

WHEREAS, the assets of AGI and AGH have an increased tax basis for U.S. federal income tax purposes as a result of the Exchanges;

 

WHEREAS, pursuant to, and subject to the terms and conditions of, the Agreement and Plan of Merger among Guarantor, Guardian Acquisition Corporation and AGI, dated as of February 13, 2013 (as the same may be amended, the “Merger Agreement”), AGI will become a wholly-owned subsidiary of the Corporation;

 

WHEREAS, AGI, AGH and the Principals have entered into the Tax Receivable Agreement, dated as of September 29, 2009 (the “Original Agreement”) which they desire to amend and restate in its entirety as provided herein, with such amendment and restatement to become effective upon the Effective Time (as defined in the Merger Agreement); and

 

WHEREAS, the parties to this Agreement desire to make certain arrangements to share any tax benefits realized by the Corporation and AGI, in the case of a separate state or local income tax return filed by AGI, as a result of the Exchanges.

 

NOW, THEREFORE, in consideration of the foregoing and the respective covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows:

 

  

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ARTICLE 1

DEFINITIONS

 

Section 1.01  Definitions.  As used in this Agreement, the terms set forth in this Article 1 shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

 

“Advisory Firm” means KPMG LLP, or any other accounting firm that is nationally recognized as being expert in Tax matters and that is appointed by the Board and is reasonably acceptable to the Principals.

 

“Advisory Firm Letter” means a letter from the Advisory Firm stating that the relevant schedule, notice or other information to be provided by the Corporation to the Applicable Principal and all supporting schedules and work papers were prepared by the Corporation in good faith.

 

“Affiliate” means, with respect to any Person, any other Person that directly or indirectly, through one or more intermediaries, Controls (as defined below), is Controlled by, or is under common Control with, such first Person.

 

“Agreed Rate” means LIBOR plus 100 basis points.

 

“Agreement” is defined in the preamble of this Agreement.

 

“Amended Schedule” is defined in Section 2.04(b).

 

“Applicable Principal” means in respect of that portion of any Tax Benefit Payment that arises from an Exchange or a deemed Exchange pursuant to clause (v) of the definition of “Valuation Assumptions”, the Exchanging Principal or Principal deemed to Exchange, as applicable.

 

“Basis Adjustment” means the adjustment to the Tax basis of an Exchange Asset as a result of an Exchange and the payments made pursuant to this Agreement, as calculated under Section 2.01, under Section 732(b) of the Code or Sections 743(b) and 754 of the Code or otherwise, as applicable, and, in each case, comparable sections of state, local and foreign Tax laws.

 

A “Beneficial Owner” of a security means a Person who directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares: (i) voting power, which includes the power to vote, or to direct the voting of, such security and/or (ii) investment power, which includes the power to dispose of, or to direct the disposition of, such security.  The terms “Beneficially Own” and “Beneficial Ownership” shall have correlative meanings.

 

“Board” means the board of directors of the Corporation.

 

  

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“Business Day” means Monday through Friday of each week, except that a legal holiday recognized as such by the government of the United States of America or the State of New York shall not be regarded as a Business Day.

 

“Class A Shares” is defined in the Recitals of this Agreement.

 

“Code” means the U.S. Internal Revenue Code of 1986, as amended.

 

“Control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.

 

“Corporation” is defined in the Preamble of this Agreement.

 

“Corporation Return” means the U.S. federal, state, local and/or foreign Tax Return, as applicable, of the Corporation or AGI, in the case of a separate state or local income tax return filed by AGI, filed with respect to Taxes for any Taxable Year.

 

“Cumulative Net Realized Tax Benefit” for a Taxable Year means the cumulative amount of Realized Tax Benefits for all Taxable Years of the Corporation or AGI, in the case of a separate state or local income tax return filed by AGI, up to and including such Taxable Year, net of the cumulative amount of Realized Tax Detriments for the same period.  The Realized Tax Benefit and Realized Tax Detriment for each Taxable Year shall be determined based on the most recent Tax Benefit Schedule or Amended Schedule, if any, in existence at the time of such determination.

 

“Default Rate” means LIBOR plus 300 basis points.

 

“Determination” shall have the meaning ascribed to such term in Section 1313(a) of the Code or similar provision of state, local and foreign Tax law, as applicable, or any other event (including the execution of a Form 870-AD) that finally and conclusively establishes the amount of any liability for Tax.

 

“Dispute” is defined in Section 7.08(a).

 

“Early Termination Date” means the date of an Early Termination Notice for purposes of determining the Early Termination Payment.

 

“Early Termination Notice” is defined in Section 4.02.

 

“Early Termination Schedule” is defined in Section 4.02.

 

“Early Termination Payment” is defined in Section 4.03(b).

 

“Early Termination Rate” means the long-term Treasury rate in effect on the applicable date.

 

  

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“Exchange” is defined in the Recitals of this Agreement; “Exchanged” and “Exchanging” shall have correlative meanings.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Exchange Agreement” means the exchange agreement by and among AGI, the Principals and the other parties thereto dated September 29, 2009, as the same may be amended from time to time in accordance with the terms thereof.

 

“Exchange Assets” means each asset that is held by AGH, or by any of its direct or indirect subsidiaries that is treated as a partnership or disregarded entity for purposes of the applicable Tax, at the time of an Exchange.

 

“Exchange Basis Schedule” is defined in Section 2.02.

 

“Exchange Date” is defined in the Recitals of this Agreement.

 

“Exchange Payment” is defined in Section 5.01.

 

“Expert” is defined in Section 7.09.

 

“Hypothetical Tax Liability” means, with respect to any Taxable Year, the liability for Taxes of the Corporation or AGI, in the case of a separate state or local income tax return filed by AGI, but using the Non-Stepped Up Tax Basis instead of the Tax basis of the Exchange Assets and excluding any deduction attributable to Imputed Interest.

 

“Imputed Interest” shall mean any interest imputed under Section 1272, 1274 or 483 or other provision of the Code and any similar provision of state, local and foreign Tax law with respect to AGI’s payments prior to the Effective Time and the Corporation’s payment obligations, in each case under this Agreement.

 

“Initiating Party” is defined in Section 7.08(a).

 

“IPO” means the initial public offering of the Class A Shares of AGI.

 

“IRS” means the U.S. Internal Revenue Service.

 

“LIBOR” means for each month (or portion thereof) during any period, an interest rate per annum equal to the rate per annum reported, on the date two days prior to the first day of such month, as published by Reuters (or other commercially available source providing quotations of LIBOR) for London interbank offered rates for U.S. dollar deposits for such month (or portion thereof).

 

“LLC Agreement” means, with respect to AGH, the Amended and Restated Limited Liability Company Agreement dated September 29, 2009, among AGI, the Principals and the other parties thereto, as the same may be amended from time to time in accordance with the terms thereof.

 

  

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“Market Value” means, with respect to the Class A Shares, on any given date: (i) if the Class A Shares are listed for trading on the New York Stock Exchange, the closing sale price per share of the Class A Shares on the New York Stock Exchange on that date (or, if no closing sale price is reported, the last reported sale price), (ii) if the Class A Shares are not listed for trading on the New York Stock Exchange, the closing sale price (or, if no closing sale price is reported, the last reported sale price) as reported on that date in composite transactions for the principal national securities exchange registered pursuant to Section 6(g) of the Exchange Act, on which the Class A Shares are listed, (iii) if the Class A Shares are not so listed on a national securities exchange, the last quoted bid price for the Class A Shares on that date in the over-the-counter market as reported by Pink Sheets LLC or a similar organization, or (iv) if the Class A Shares are not so quoted by Pink Sheets LLC or a similar organization such value as the Board, in its sole discretion, shall determine in good faith.

 

“Material Objection Notice” has the meaning set forth in Section 4.02.

 

“Non-Stepped Up Tax Basis” means, with respect to any asset at any time, the Tax basis that such asset would have had at such time if no Basis Adjustment had been made.

 

“Notice” is defined in Section 7.01.

 

“Objection Notice” is defined in Section 2.04(a).

 

 “Panel” is defined in Section 7.08(a).

 

“Payment Date” means any date on which a payment is required to be made pursuant to this Agreement.

 

“Permitted Transferee” shall mean any of the Permitted Transferees (as defined in the LLC Agreement).

 

“Person” means any individual, corporation, firm, partnership, joint venture, limited liability company, estate, trust, business association, organization, governmental entity or other entity.

 

“Principal” means each of Richard C. Pell and Rudolph-Riad Younes, and any other Person that becomes a Principal pursuant to Section 7.06.

 

“Realized Tax Benefit” means, for a Taxable Year and for all Taxes collectively, the net excess, if any, of the Hypothetical Tax Liability over the actual liability for Taxes of the Corporation or AGI, in the case of a separate state or local income tax return filed by AGI, determined, for the avoidance of doubt, using the “with or without” methodology.  If all or a portion of the actual liability for Taxes of the Corporation or AGI, in the case of a separate state or local income tax return filed by AGI, for the Taxable Year arises as a result of an audit by a Taxing Authority of any Taxable Year, such liability shall not be included in determining the Realized Tax Benefit unless and until there has been a Determination.  Notwithstanding anything to the contrary in this Agreement, the calculation of Realized Tax Benefit shall not reflect any Basis Adjustment with respect to an Exchange Asset which was amortized or depreciated (whether or not utilized) in any taxable year ending on or before December 31, 2013.

 

  

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“Realized Tax Detriment” means, for a Taxable Year and for all Taxes collectively, the net excess, if any, of the actual liability for Taxes of the Corporation or AGI, in the case of a separate state or local income tax return filed by AGI, over the Hypothetical Tax Liability for such Taxable Year determined, for the avoidance of doubt, using the “with or without” methodology.  If all or a portion of the actual liability for Taxes of the Corporation or AGI, in the case of a separate state or local income tax return filed by AGI, for the Taxable Year arises as a result of an audit by a Taxing Authority of any Taxable Year, such liability shall not be included in determining the Realized Tax Detriment unless and until there has been a Determination.

 

“Reconciliation Dispute” has the meaning set forth in Section 7.09.

 

“Reconciliation Procedures” means those procedures set forth in Section 7.09.

 

“Responding Party” is defined in Section 7.08(a).

 

“Schedule” means any Exchange Basis Schedule or Tax Benefit Schedule and the Early Termination Schedule.

 

“Senior Obligations” is defined in Section 5.01.

 

“Subsidiaries” means, with respect to any Person, as of any date of determination, any other Person as to which such Person, owns, directly or indirectly, or otherwise controls more than 50% of the voting shares or other similar interests or the sole general partner interest or managing member or similar interest of such Person.

 

“Tax” means any and all U.S. federal, state, local and foreign tax, assessments or similar charges that are based on or measured with respect to net income or profits, whether as an exclusive or on an alternative basis, and any interest related to such tax.

 

“Tax Benefit Payment” is defined in Section 3.01(b).

 

“Tax Benefit Schedule” is defined in Section 2.03.

 

“Tax Return” means any return, declaration, report or similar statement required to be filed with respect to Taxes (including any attached schedules), including any information return, claim for refund, amended return and declaration of estimated Tax.

 

“Taxable Year” means a Taxable year as defined in Section 441(b) of the Code or comparable section of state, local or foreign Tax law, as applicable (and, therefore, for the avoidance of doubt, may include a period of less than 12 months for which a Tax Return is prepared) of the Corporation or AGI, in the case of a separate state or local income tax return filed by AGI, beginning on or after January 1, 2014, in which there is a Basis Adjustment or increased depreciation, amortization or interest deductions attributable to an Exchange.

 

“Taxing Authority” means any domestic, foreign, federal, national, state, county or municipal or other local government, any subdivision, agency, commission or authority thereof, or any quasi-governmental body exercising any Taxing authority or any other authority exercising Tax regulatory authority.

 

  

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“Treasury Regulations” means the final, temporary and proposed regulations under the Code promulgated from time to time (including corresponding provisions and succeeding provisions) as in effect for the relevant Taxable period.

 

“Units” is defined in the Recitals of this Agreement.

 

“Valuation Assumptions” means, as of an Early Termination Date, the assumptions that (i) in each Taxable Year ending on or after such Early Termination Date, the Corporation or AGI, in the case of a separate state or local income tax return filed by AGI, will have sufficient Taxable income to fully offset the deductions in such Taxable Year attributable to any Basis Adjustment, increased depreciation or amortization deductions attributable to an Exchange, and Imputed Interest, subject, in each case, to any limitations on the utilization of such Tax items under applicable law, including any such limitations that arise as a result of the Merger (as defined in the Merger Agreement), (ii) the U.S. federal income Tax rates and state, local and foreign income Tax rates that will be in effect for each such Taxable Year will be those specified for each such Taxable Year by the Code and other law as in effect on the Early Termination Date, (iii) any loss carryovers generated by any Basis Adjustment or Imputed Interest and available as of the date of the Early Termination Schedule will be used by the Corporation or AGI, in the case of a separate state or local income tax return filed by AGI, on a pro rata basis from the date of the Early Termination Schedule through the scheduled expiration date of such loss carryovers, (iv) any non- amortizable assets will be disposed of on the fifteenth anniversary of the Early Termination Date.

 

Section 1.02  Other Definitional and Interpretative Provisions.  The words “hereof”, “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  References to Articles, Sections, Exhibits and Schedules are to Articles, Sections, Exhibits and Schedules of this Agreement unless otherwise specified.  All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein.  Any capitalized terms used in any Exhibit or Schedule but not otherwise defined therein, shall have the meaning as defined in this Agreement.  Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular.  Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”, whether or not they are in fact followed by those words or words of like import.  “Writing”, “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form.  References to any agreement or contract are to that agreement or contract as amended, modified or supplemented from time to time in accordance with the terms thereof.  References to any Person include the successors and permitted assigns of that Person.  References from or through any date mean, unless otherwise specified, from and including or through and including, respectively.

 

ARTICLE 2

DETERMINATION OF CUMULATIVE REALIZED TAX BENEFIT

 

Section 2.01  Basis Adjustment.

 

  

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(a)  Exchange Assets.  For purposes of this Agreement, as a result of the Exchanges, AGI is entitled to a Basis Adjustment for each Exchange Asset, the amount of which Basis Adjustment is the excess, if any, of (i) the sum of (x) the Market Value of the Class A Shares, cash or the amount of any other consideration transferred to the Applicable Principal pursuant to the Exchange as payment for the exchanged Units, to the extent attributable to such Exchange Assets, plus (y) the amount of payments made pursuant to this Agreement with respect to such Exchange, to the extent attributable to such Exchange Assets, plus (z) the amount of debt and other liabilities allocated to the Units acquired pursuant to such Exchange, to the extent attributable to such Exchange Assets; over (ii) AGI’s share of AGH’s (or such subsidiary partnership’s) basis for such Exchange Assets immediately after the Exchange, attributable to the Units exchanged, determined as if (x) AGH (or such subsidiary partnership) were to remain in existence as an entity for Tax purposes and (y) AGH (or such subsidiary partnership) had not made the election provided by Section 754 of the Code.

 

(b)  Imputed Interest.  For the avoidance of doubt, payments made under this Agreement shall not be treated as resulting in a Basis Adjustment to the extent such payments are treated as Imputed Interest.

 

Section 2.02  Exchange Basis Schedule.  Within 45 calendar days after the filing of the U.S. federal income Tax return of the Corporation for each Taxable Year, the Corporation shall deliver to each Principal a schedule (the “Exchange Basis Schedule”) that shows, in reasonable detail, for purposes of federal income Taxes, (a) the actual unadjusted Tax basis of the Exchange Assets as of each applicable Exchange Date, (b) the Basis Adjustment with respect to the Exchange Assets as a result of the Exchanges effected in such Taxable Year, calculated in the aggregate, (c) the period or periods, if any, over which the Exchange Assets are amortizable and/or depreciable and (d) the period or periods, if any, over which each Basis Adjustment is amortizable and/or depreciable (which, for non-amortizable assets, shall be based on the Valuation Assumptions).  The parties expect that all or substantially all of the Basis Adjustment with respect to the Exchange Assets will relate to good will and/or going concern value, which adjustment will be amortized over 15 years for U.S. federal income tax purposes.

 

Section 2.03  Tax Benefit Schedule.  Within 45 calendar days after the filing of the U.S. federal income Tax return of the Corporation for any Taxable Year, the Corporation shall provide to each Principal a schedule showing, in reasonable detail, the calculation of the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year or, if applicable, a schedule showing, in reasonable detail, that there is no Realized Tax Benefit or Realized Tax Detriment (a “Tax Benefit Schedule”).  The Tax Benefit Schedule will become final as provided in Section 2.04(a) and may be amended as provided in Section 2.04(b) (subject to the procedures set forth in Section 2.04(b)).  Notwithstanding any other provision of this Agreement, the Corporation may seek, at its own expense, an opinion from a nationally recognized law firm or accounting firm regarding whether any Basis Adjustment with respect to Exchange Assets will result in any amortization or depreciation being available to the Corporation or AGI, in the case of a separate state or local income tax return filed by AGI, and the Corporation or AGI, in the case of a separate state or local income tax return filed by AGI, shall be permitted to rely on such opinion in creating any Tax Benefit Schedule.

 

Section 2.04  Procedures, Amendments.

 

  

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(a)  Procedure.  Every time the Corporation delivers to the Applicable Principal an applicable Schedule under this Agreement, including any Amended Schedule delivered pursuant to Section 2.04(b), but excluding any Early Termination Schedule or amended Early Termination Schedule, the Corporation shall also (i) deliver to the Applicable Principal schedules and work papers providing reasonable detail regarding the preparation of such Schedule and an Advisory Firm Letter supporting such Schedule and (ii) allow the Applicable Principal reasonable access, at no cost to the Applicable Principal, to the appropriate representatives at the Corporation and the Advisory Firm in connection with a review of such Schedule.  The applicable Schedule shall become final and binding on all parties unless the Applicable Principal, within 30 calendar days after receiving an Exchange Basis Schedule or amendment thereto or a Tax Benefit Schedule or amendment thereto, provides the Corporation with notice of a material objection to such Schedule (“Objection Notice”) made in good faith.  If the parties, for any reason, are unable to successfully resolve the issues raised in such notice within 30 calendar days of receipt by the Corporation of an Objection Notice with respect to such Exchange Basis Schedule or Tax Benefit Schedule, the Corporation and the Applicable Principal shall employ the reconciliation procedures as described in Section 7.09 (the “Reconciliation Procedures”).

 

(b)  Amended Schedule.  The applicable Schedule for any Taxable Year may be amended from time to time by the Corporation (i) in connection with a Determination affecting such Schedule, (ii) to correct material inaccuracies in the Schedule identified as a result of the receipt of additional factual information relating to a Taxable Year after the date the Schedule was provided to the Applicable Principal, (iii) to comply with the Expert’s determination under the Reconciliation Procedures, (iv) to reflect a material change in the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year attributable to a carryback or carryforward of a loss or other Tax item to such Taxable Year, (v) to reflect a material change in the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year attributable to an amended Tax Return filed for such Taxable Year, or (vi) to adjust the Exchange Basis Schedule to take into account payments made pursuant to this Agreement (such Schedule, an “Amended Schedule”).

 

ARTICLE 3

TAX BENEFIT PAYMENTS

 

Section 3.01  Payments for Taxable Years Beginning on or after January 1, 2014.

 

(a)  Within ten business days of a Tax Benefit Schedule that was delivered to an Applicable Principal becoming final in accordance with Section 2.04(a), the Corporation shall pay to the Applicable Principal for such Taxable Year the Tax Benefit Payment determined pursuant to Section 3.01(b).  Each such Tax Benefit Payment shall be made by wire transfer of immediately available funds to a bank account of the Applicable Principal previously designated by such Principal to the Corporation.  For the avoidance of doubt, no Tax Benefit Payment shall be made in respect of estimated Tax payments, including U.S. federal income Tax payments.

 

(b)  A “Tax Benefit Payment” means an amount, not less than zero, equal to (i) 100% of the Net Tax Benefit and the Interest Amount until the Principals have received 85% of the Cumulative Net Realized Tax Benefit, then (ii) 0% of the Net Tax Benefit and the Interest Amount, until the Corporation has received 15% of the Cumulative Net Realized Tax Benefit and, thereafter, (iii) 85% of the sum of the Net Tax Benefit and the Interest Amount.  The “Net 

 

  

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Tax Benefit” for each Taxable Year shall be an amount equal to the excess, if any, of the Cumulative Net Realized Tax Benefit as of the end of such Taxable Year over the total amount of payments previously made under this Section 3.01, excluding payments attributable to the Interest Amount; provided, however, that for the avoidance of doubt, no Principal shall be required to return any portion of any previously received Tax Benefit Payment under any circumstances.  The “Interest Amount” for a given Taxable Year shall equal the interest on the Net Tax Benefit for such Taxable Year calculated at the Agreed Rate from the due date (without regard to extensions) for filing the Corporation Return with respect to Taxes for the most recently ended Taxable Year until the Payment Date.

 

Section 3.02  Payment for the 2012 Taxable Year and Taxable Year(s) in Calendar Year 2013.

 

(a)  Any amounts due and owing to the Principals pursuant to the Original Agreement with respect to Imputed Interest and the Basis Adjustment that is amortizable or depreciable for the 2012 taxable year which have not been paid on or prior to the Closing Date (as defined in the Merger Agreement) shall be paid (i) within 30 days of the filing of AGI’s 2012 tax returns, with respect to tax savings related to the 2012 taxable year, and (ii) within 10 days of the filing of AGI’s 2012 U.S. federal income tax return, with respect to tax refunds from the carryback of the 2012 net operating loss to the 2011 taxable year.  For the avoidance of doubt, the Principals will be paid 95% of the amount due to them with respect to the 2012 taxable year on March 15, 2013, this amount is estimated to be $4.9 million, and the amount to be paid to them with respect to the tax refund from the 2011 taxable year is estimated to be $2.4 million.

 

(b)  Solely for purposes of the taxable years of AGI that begin on or after January 1, 2013 and end on or prior to December 31, 2013, the Corporation shall pay to the Principals on the Closing Date (as defined in the Merger Agreement) 85% of 35% of the amount of the Imputed Interest and the Basis Adjustment that is amortizable or depreciable for such taxable years pursuant to U.S. federal income tax law.  For the avoidance of doubt, the estimated amount of such amortizable amount and Imputed Interest is, in the aggregate, $19.8 million and the estimated amount of the payment to be made to the Principals is, therefore, $7.0 million in the aggregate.

 

Section 3.03  No Duplicative Payments.  It is intended that the provisions of this Agreement will not result in duplicative payment of any amount (including interest) required under this Agreement.  Subject to the priority set forth in Section 3.01(b), it is also intended that the provisions of this Agreement will result in 85% of the Corporation’s Cumulative Net Realized Tax Benefit, or AGI’s Cumulative Net Realized Tax Benefit, as applicable, and the Interest Amount thereon, being paid to the Principals pursuant to this Agreement.  The provisions of this Agreement shall be construed in the appropriate manner to achieve these fundamental results.

 

Section 3.04  Pro Rata Payments.  For the avoidance of doubt, to the extent that (i) the Corporation’s deductions or AGI’s deductions, as applicable, with respect to any Basis Adjustment are limited in a particular Taxable Year or (ii) the Corporation lacks sufficient funds to satisfy or is prevented under any credit agreement or other arrangement from satisfying its obligations to make all Tax Benefit Payments due in a particular Taxable Year, the limitation on 

 

  

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the deduction, or the Tax Benefit Payments that may be made, as the case may be, shall be taken into account or made for the Applicable Principal in the same proportion as Tax Benefit Payments would have been made absent the limitations in clauses (i) and (ii) of this Section 3.04, as applicable.

 

ARTICLE 4

TERMINATION

 

Section 4.01  Early Termination and Breach of Agreement.

 

(a)  The Corporation may terminate this Agreement at any time by paying to the Principals the Early Termination Payment; provided, however, that this Agreement shall terminate only upon the receipt of the Early Termination Payment by all Principals, and provided, further, that the Corporation may withdraw any notice to execute its termination rights under this Section 4.01(a) prior to the time at which any Early Termination Payment has been paid.  Upon payment of the Early Termination Payments by the Corporation, neither the Principals nor the Corporation shall have any further payment obligations under this Agreement, other than for any (i) Tax Benefit Payment agreed by the Corporation acting in good faith and the Applicable Principal to be due and payable but unpaid as of the Early Termination Notice and (ii) Tax Benefit Payment due for the Taxable Year ending with or including the date of the Early Termination Notice (except to the extent that the amount described in clause (ii) is included in the Early Termination Payment).

 

(b)  In the event that the Corporation breaches any of its material obligations under this Agreement, whether as a result of failure to make any payment when due, failure to honor any other material obligation required hereunder or by operation of law as a result of the rejection of this Agreement in a case commenced under the Bankruptcy Code, Title 11, U.S.C., or otherwise, then all obligations hereunder shall be accelerated and such obligations shall be calculated as if an Early Termination Notice had been delivered on the date of such breach and shall include, but shall not be limited to, (i) the Early Termination Payment calculated as if an Early Termination Notice had been delivered on the date of a breach, (ii) any Tax Benefit Payment agreed by the Corporation acting in good faith and any Applicable Principal to be due and payable but unpaid as of the date of a breach, and (iii) any Tax Benefit Payment due for the Taxable Year ending with or including the date of a breach.  Notwithstanding the foregoing, in the event that the Corporation breaches this Agreement, the Principals shall be entitled to elect to receive the amounts set forth in clauses (i), (ii) and (iii) above or to seek specific performance of the terms hereof.  The parties agree that the failure to make any payment due pursuant to this Agreement within three months of the date such payment is due shall be deemed to be a breach of a material obligation under this Agreement for all purposes of this Agreement, and that it shall not be considered to be a breach of a material obligation under this Agreement to make a payment due pursuant to this Agreement within three months of the date such payment is due.

 

(c)  The Corporation, AGH and each of the Principals hereby acknowledge that, as of the date of this Agreement, the aggregate value of the Tax Benefit Payments cannot reasonably be ascertained for U.S. federal income Tax or other applicable Tax purposes.

 

  

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Section 4.02  Early Termination Notice.  If the Corporation chooses to exercise its right of early termination under Section 4.01 above, the Corporation shall deliver to each present or former Principal a notice of such intention to exercise such right (“Early Termination Notice”) and a schedule (the “Early Termination Schedule”) specifying the Corporation’s intention to exercise such right and showing in reasonable detail the calculation of the Early Termination Payment.  The Early Termination Schedule shall become final and binding on all parties unless an Applicable Principal, within 30 calendar days after receiving the Early Termination Schedule, provides the Corporation with notice of a material objection to such Schedule made in good faith (“Material Objection Notice”).  If the parties, for any reason, are unable to successfully resolve the issues raised in such notice within 30 calendar days after receipt by the Corporation of the Material Objection Notice, the Corporation and the relevant Principal shall employ the Reconciliation Procedures as described in Section 7.09 of this Agreement.

 

Section 4.03  Payment upon Early Termination.

 

(a)  Within ten Business Days after the Early Termination Schedule has become final and binding, the Corporation shall pay to each Applicable Principal an amount equal to the Early Termination Payment.  Such payment shall be made by wire transfer of immediately available funds to a bank account designated by the Applicable Principal.

 

(b)  The “Early Termination Payment” as of the date of the delivery of an Early Termination Schedule shall equal with respect to the Applicable Principal the present value, discounted at the Early Termination Rate as of such date, of all Tax Benefit Payments that would be required to be paid by the Corporation to the Applicable Principal beginning from the Early Termination Date and assuming that the Valuation Assumptions are applied.

 

ARTICLE 5

SUBORDINATION AND LATE PAYMENTS

 

Section 5.01  Subordination.  Notwithstanding any other provision of this Agreement to the contrary, any Tax Benefit Payment or Early Termination Payment required to be made by the Corporation to the Principals under this Agreement (an “Exchange Payment”) shall rank subordinate and junior in right of payment to any principal, interest or other amounts due and payable in respect of any obligations in respect of indebtedness for borrowed money of the Corporation and its Subsidiaries (“Senior Obligations”) and shall rank pari passu with all current or future unsecured obligations of the Corporation that are not Senior Obligations.

 

Section 5.02  Late Payments by the Corporation.  The amount of all or any portion of any Exchange Payment not made to any Principal when due (without regard to Section 5.01) under the terms of this Agreement shall be payable together with any interest thereon, computed at the Default Rate and commencing from the date on which such Exchange Payment was due and payable.

 

ARTICLE 6

NO DISPUTES; CONSISTENCY; COOPERATION

 

Section 6.01  Principal Participation in the Corporation’s Tax Matters.  Except as otherwise provided herein, the Corporation shall have full responsibility for, and sole discretion 

 

  

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over, all Tax matters concerning the Corporation and its subsidiaries, including the preparation, filing or amending of any Tax Return and defending, contesting or settling any issue pertaining to Taxes.  Notwithstanding the foregoing, the Corporation shall notify each relevant Principal of, and keep such Principal reasonably informed with respect to the portion of any audit of the Corporation and its subsidiaries by a Taxing Authority the outcome of which is reasonably expected to affect the amount of any Basis Adjustment and shall provide to such Principal reasonable opportunity to provide information and other input to the Corporation, its subsidiaries and their respective advisors concerning the conduct of any such portion of such audit.

 

Section 6.02  Consistency.  Except upon the written advice of an Advisory Firm or except to the extent the Corporation’s reporting as described herein may cause the gain recognized by an Applicable Principal from an Exchange to be treated as ordinary income or short-term capital gain, the Corporation and the Applicable Principal agree to report and cause to be reported for all purposes, including U.S. federal, state, local and foreign Tax purposes and financial reporting purposes, all Tax-related items (including the Basis Adjustment and each Tax Benefit Payment) in a manner consistent with that specified by the Corporation in any Schedule required to be provided by or on behalf of the Corporation under this Agreement.  Any Dispute concerning such advice shall be subject to the terms of Section 7.09.  In the event that an Advisory Firm is replaced, such replacement Advisory Firm shall be required to perform its services under this Agreement using procedures and methodologies consistent with the previous Advisory Firm, unless (a) otherwise required by law or (b) the Corporation and the Applicable Principal agree to the use of other procedures and methodologies.

 

Section 6.03  Cooperation.  The Applicable Principal shall (a) furnish to the Corporation in a timely manner such information, documents and other materials as the Corporation may reasonably request for purposes of making any determination or computation necessary or appropriate under this Agreement, preparing any Tax Return or contesting or defending any audit, examination or controversy with any Taxing Authority, (b) make itself available to the Corporation and its representatives to provide explanations of documents and materials and such other information as the Corporation or its representatives may reasonably request in connection with any of the matters described in clause (a) above, and (c) reasonably cooperate in connection with any such matter described in clause (a) above.  The Corporation shall reimburse the Applicable Principal for any reasonable third-party costs and expenses incurred pursuant to this Section 6.03.

 

ARTICLE 7

MISCELLANEOUS

 

Section 7.01  Notices.  Any notice, request, claim, demand, approval, consent, waiver or other communication required or permitted to be given to any party in connection with this Agreement (each, a “Notice”) shall be in writing and shall be (a) delivered in person, (b) sent by facsimile transmission (with the original thereof also contemporaneously given by another method specified in this Section 7.01), (c) sent by a nationally-recognized overnight courier service, or (d) sent by certified or registered mail (postage prepaid, return receipt requested), at the following locations (or at such other location for a party as shall be specified to the other parties by like Notice).  Any Notice shall only be duly given and effective upon receipt (or refusal of receipt).

 

  

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If to the Corporation, to:

 

Aberdeen Asset Management Inc.

1735 Market Street

32nd Floor

Philadelphia, PA 19103

Attention:  Legal Department

with a copy to:

Willkie Farr & Gallagher LLP

787 Seventh Avenue

New York, NY 10019-6099

Facsimile: (212) 728-8111

Attention: Christopher J. Peters, Esq.

David K. Boston, Esq.

if to Richard C. Pell, to:

Richard C. Pell

c/o Artio Global Holdings, LLC

330 Madison Avenue

New York, NY 10017

with a copy to:

Proskauer Rose LLP

1585 Broadway

New York, New York 10036

Facsimile: (212) 969-3459

Attention: Alan P. Parnes, Esq.

James P. Gerkis, Esq.

if to Rudolph-Riad Younes, to:

Rudolph-Riad Younes

c/o Artio Global Holdings, LLC

330 Madison Avenue

New York, NY 10017

with a copy to:

Proskauer Rose LLP

1585 Broadway

New York, New York 10036

Facsimile: (212) 969-3459

Attention: Alan P. Parnes, Esq.

James P. Gerkis, Esq.

 

  

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Section 7.02  Counterparts.  This Agreement may be executed (including by facsimile transmission) with counterpart signature pages or in any number of counterparts, each of which shall be deemed to be an original and all of which shall, taken together, be deemed to be one and the same instrument.

 

Section 7.03  Entire Agreement; No Third-Party Beneficiaries.  This Agreement constitutes the entire agreement among the parties hereto and upon its effectiveness as provided in Section 7.14 supersedes all other prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof.  Nothing in this Agreement, express or implied, is intended to or shall confer upon any Person other than the parties hereto and their respective heirs, successors, legal representatives and permitted assigns, any rights or remedies hereunder.

 

Section 7.04  Governing Law.  This Agreement shall be governed by, construed and enforced in accordance with, the laws of the State of New York, without regard to the conflict of laws principles thereof that would mandate the application of the laws of another jurisdiction.

 

Section 7.05  Severability.  If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, all other terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party.  Upon such a determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.

 

Section 7.06  Successors; Assignment; Amendments; and Waivers.

 

(a)  No Principal may assign this Agreement to any person without the prior written consent of the Corporation; provided, however, that once an Exchange has occurred, any and all payments that may become payable to a Principal pursuant to this Agreement with respect to the Exchanged Units may be assigned to any Person or Persons as long as any such Person has executed and delivered, or, in connection with such assignment, executes and delivers, a joinder to this Agreement, in form and substance substantially similar to Exhibit A to this Agreement, agreeing to be bound by Section 7.12 and acknowledging specifically the terms of Section 7.06(b).

 

(b)  Notwithstanding the foregoing provisions of this Section 7.06, no assignee described in the proviso of Section 7.06(a) shall have any rights under this Agreement except for the right to enforce its right to receive payments under this Agreement.

 

(c)  Except with respect to Section 7.19, no provision of this Agreement may be amended unless such amendment is approved in writing by each of the Corporation and by 

 

  

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Principals who would be entitled to receive at least two-thirds of the Early Termination Payments payable to all Principals hereunder if the Corporation had exercised its right of early termination on the date of the most recent Exchange prior to such amendment (excluding, for purposes of this sentence, all payments made to any Principal pursuant to this Agreement since the date of such most recent Exchange); provided, however, that no such amendment shall be effective if such amendment would have a disproportionate effect on the payments certain Principals will or may receive under this Agreement unless all such Principals disproportionately effected consent in writing to such amendment.  No provision of this Agreement may be waived unless such waiver is in writing and signed by the party against whom the waiver is to be effective.

 

(d)  Except as otherwise specifically provided herein, all of the terms and provisions of this Agreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the parties hereto and their respective successors, permitted assigns, heirs, executors, administrators and legal representatives.  The Corporation shall require and cause any direct or indirect successor (whether by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Corporation, by written agreement, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Corporation would be required to perform if no such succession had taken place.

 

Section 7.07  Titles and Subtitles.  The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

 

Section 7.08  Resolution of Disputes.

 

(a)  Any and all claims, disputes and other disagreements arising hereunder (each, a “Dispute”) which are not governed by Section 7.09, including any ancillary claims of any party, arising out of, relating to or in connection with the validity, negotiation, execution, interpretation, performance or non- performance of this Agreement (including the validity, scope and enforceability of this Section 7.08 and Section 7.09) shall be governed by this Section 7.08.  The parties hereto shall attempt in good faith to resolve all Disputes by negotiation.  If a Dispute between the parties hereto cannot be resolved in such manner, such Dispute shall, at the request of any party, after providing written notice to the other party or parties to the Dispute, be submitted to arbitration in New York in accordance with the Commercial Arbitration Rules of the American Arbitration Association then in effect.  The proceeding shall be confidential.  The party initially asserting the Dispute (the “Initiating Party”) shall notify the other party (the “Responding Party”) of the name and address of the arbitrator chosen by the Initiating Party and shall specifically describe the Dispute in issue to be submitted to arbitration.  Within 30 days of receipt of such notification, the Responding Party shall notify the Initiating Party of its answer to the Dispute, any counterclaim which it wishes to assert in the arbitration and the name and address of the arbitrator chosen by the Responding Party.  If the Responding Party does not appoint an arbitrator during such 30-day period, appointment of the second arbitrator shall be made by the American Arbitration Association upon request of the Initiating Party.  The two arbitrators so chosen or appointed shall choose a third arbitrator, who shall serve as president of the panel of arbitrators (the “Panel”) thus composed.  If the two arbitrators so chosen or appointed fail to agree upon the choice of a third arbitrator within 30 days from the appointment 

 

  

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of the second arbitrator, the third arbitrator will be appointed by the American Arbitration Association upon the request of the arbitrators or either of the parties.  In all cases, the arbitrators must be persons who have substantial experience in tax matters and are lawyers admitted to the practice of law in the State of New York.  The arbitrators will act by majority decisions.  Any decision of the arbitrators shall (i) be rendered in writing and shall bear the signatures of at least two arbitrators, and (ii) identify the members of the Panel, and the time and place of the award granted.  Absent fraud or manifest error, any such decision of the Panel shall be final, conclusive and binding on the parties to the arbitration and enforceable by a court of competent jurisdiction.  The expenses of the arbitration shall be borne equally by the parties to the arbitration; provided, however, that each party shall pay for and bear the costs of its own experts, evidence and legal counsel, unless the arbitrator rules otherwise in the arbitration.  The parties shall complete all discovery within 30 days after the Panel is composed, shall complete the presentation of evidence to the Panel within 15 days after the completion of discovery, and a final decision with respect to the matter submitted to arbitration shall be rendered within 15 days after the completion of presentation of evidence.  The parties hereto shall cause to be kept a record of the proceedings of any matter submitted to arbitration hereunder.  Performance under this Agreement shall continue if reasonably possible during any arbitration proceedings.  In addition to monetary damages, the arbitrator shall be empowered to award equitable relief, including an injunction and specific performance of any obligation under this Agreement.  The arbitrator is not empowered to award damages in excess of compensatory damages, and each party hereby irrevocably waives any right to recover punitive, exemplary or similar damages with respect to any Dispute.  The award shall be the sole and exclusive remedy between the parties regarding any claims, counterclaims, issues, or accounting presented to the arbitral tribunal.  Judgment upon any award may be entered and enforced in any court having jurisdiction over a party or any of its assets.

 

(b)  Notwithstanding the provisions of Section 7.08(a), the Corporation may bring an action or special proceeding in any court of competent jurisdiction for the purpose of compelling a party to arbitrate, seeking temporary or preliminary relief in aid of an arbitration hereunder, and/or enforcing an arbitration award and, for the purposes of this Section 7.08(b), each Principal (i) expressly consents to the application of Section 7.08(c) to any such action or proceeding, (ii) agrees that proof shall not be required that monetary damages for breach of the provisions of this Agreement would be difficult to calculate and that remedies at law would be inadequate, and (iii) irrevocably appoints the Corporation as such Principal’s agent for service of process in connection with any such action or proceeding and agrees that service of process upon such agent, who shall promptly advise such Principal in writing of any such service of process, shall be deemed in every respect effective service of process upon the Principal in any such action or proceeding.

 

(c)  The parties hereto agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby that is brought in accordance with Section 7.08(b) shall be brought and maintained exclusively in the United States District Court for the Southern District of New York or the Supreme Court of the State of New York located in the County of New York.  Each of the parties irrevocably consents to submit to the personal jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding.  Process in any such suit, action or proceeding in such courts may be served, and shall be 

 

  

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effective, on any party anywhere in the world, whether within or without the jurisdiction of any such court, by any of the methods specified for the giving of Notices pursuant to Section 7.01.  Each of the parties irrevocably waives, to the fullest extent permitted by law, any objection or defense that it may now or hereafter have based on venue, inconvenience of forum, the lack of personal jurisdiction and the adequacy of service of process (as long as the party was provided Notice in accordance with the methods specified in Section 7.01) in any suit action or proceeding brought in such courts.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING SEEKING TO ENFORCE ANY PROVISION OF, OR BASED ON ANY MATTER ARISING OUT OF OR IN CONNECTION WITH, THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

Section 7.09  Reconciliation.  In the event that the Corporation and the relevant Principal are unable to resolve a disagreement with respect to the matters governed by Sections 2.04, 4.02 and 6.02 within the relevant period designated in this Agreement (“Reconciliation Dispute”), the Reconciliation Dispute shall be submitted for determination to a nationally recognized expert (the “Expert”) in the particular area of disagreement mutually acceptable to both parties.  The Expert shall be a partner in a nationally recognized accounting firm or a law firm (other than the Advisory Firm), and the Expert shall not, and the firm that employs the Expert shall not, have any material relationship with either the Corporation or the relevant Principal or other actual or potential conflict of interest.  If the parties are unable to agree on an Expert within 15 days of receipt by the respondent(s) of written notice of a Reconciliation Dispute, the Expert shall be appointed by the International Chamber of Commerce Centre for Expertise.  The Expert shall resolve any matter relating to the Exchange Basis Schedule or an amendment thereto or the Early Termination Schedule or an amendment thereto within 30 calendar days and shall resolve any matter relating to a Tax Benefit Schedule or an amendment thereto within 15 calendar days or as soon thereafter as is reasonably practicable, in each case after the matter has been submitted to the Expert for resolution.  Notwithstanding the preceding sentence, if the matter is not resolved before any payment that is the subject of a disagreement would be due (in the absence of such disagreement) or any Tax Return reflecting the subject of a disagreement is due, the undisputed amount shall be paid on such date and such Tax Return may be filed as prepared by the Corporation, subject to adjustment or amendment upon resolution.  In the event that this reconciliation provision is utilized, the fees of the Expert shall be paid in proportion to the manner in which the dispute is resolved, such that, for example, if the entire dispute is resolved in favor of the Corporation, the relevant Principal shall pay all of the fees, or if the items in dispute are resolved 50% in favor of the Corporation and 50% in favor of the relevant Principal, each of the Corporation and the relevant Principal shall pay 50% of the fees of the Expert.  Any Dispute as to whether a Dispute is a Reconciliation Dispute within the meaning of this Section 7.09 shall be decided by the Expert.  The Expert shall finally determine any Reconciliation Dispute and the determinations of the Expert pursuant to this Section 7.09 shall be binding on the Corporation and the relevant Principal and may be entered and enforced in any court having jurisdiction.

 

Section 7.10  Withholding.  The Corporation shall be entitled to deduct and withhold from any payment payable pursuant to this Agreement such amounts as the Corporation is required to deduct and withhold with respect to the making of such payment under the Code or any provision of state, local or foreign Tax law.  To the extent that amounts are so withheld and 

 

  

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paid over to the appropriate Taxing Authority by the Corporation, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Applicable Principal.

 

Section 7.11  Admission of the Corporation into a Consolidated Group; Transfers of Corporate Assets.

 

(a)  For the avoidance of doubt, the parties acknowledge that the Corporation is a member and parent of one or more affiliated or consolidated groups of corporations that file a consolidated income tax return pursuant to Sections 1501, et. seq. of the Code and corresponding provisions of state and local law and that  (i) the provisions of this Agreement shall be applied with respect to each group as a whole and (ii) Tax Benefit Payments, Early Termination Payments and other applicable items hereunder shall be computed with reference to the consolidated Taxable income of each group as a whole.

 

(b)  If the Corporation or AGI becomes a member of another affiliated or consolidated group of corporations that files a consolidated income Tax return pursuant to Sections 1501, et seq. of the Code or any corresponding provisions of state, local or foreign law, then: (i) the provisions of this Agreement shall be applied with respect to such group as a whole; and (ii) Tax Benefit Payments, Early Termination Payments and other applicable items hereunder shall be computed with reference to the consolidated Taxable income of such group as a whole.

 

(c)  If any entity that is obligated to make an Exchange Payment hereunder transfers one or more assets to a corporation with which such entity does not file a consolidated Tax return pursuant to Section 1501 of the Code, such entity, for purposes of calculating the amount of any Exchange Payment (e.g., calculating the gross income of the entity and determining the Realized Tax Benefit of such entity) due hereunder, shall be treated as having disposed of such asset in a fully Taxable transaction on the date of such contribution.  The consideration deemed to be received by such entity shall be equal to the fair market value of the contributed asset, plus (i) the amount of debt to which such asset is subject, in the case of a contribution of an encumbered asset or (ii) the amount of debt allocated to such asset, in the case of a contribution of a partnership interest.

 

Section 7.12  Confidentiality.

 

(a)  Each Principal and assignee acknowledges and agrees that the information of the Corporation and of its Affiliates is confidential and, except in the course of performing any duties as necessary for the Corporation and its Affiliates, as required by law or legal process or to enforce the terms of this Agreement, such person shall keep and retain in the strictest confidence and not disclose to any Person any confidential matters, acquired pursuant to this Agreement, of the Corporation and its Affiliates and successors, concerning AGH and its Affiliates and successors or the other Principals, learned by the Principal heretofore or hereafter.  This Section 7.12(a) shall not apply to (i) any information that has been made publicly available by the Corporation or any of its Affiliates, becomes public knowledge (except as a result of an act of such Principal in violation of this Agreement) or is generally known to the business community and (ii) the disclosure of information to the extent necessary for a Principal to prepare and file his or her Tax returns, to respond to any inquiries regarding the same from any Taxing authority or to prosecute or defend any action, proceeding or audit by any Taxing authority with respect to 

 

  

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such returns.  Notwithstanding anything to the contrary herein, each Principal and assignee (and each employee, representative or other agent of such Principal or assignee, as applicable) may disclose to any and all Persons, without limitation of any kind, the Tax treatment and Tax structure of the Corporation, AGH, the Principals and their Affiliates, and any of their transactions, and all materials of any kind (including opinions or other Tax analyses) that are provided to the Principals relating to such Tax treatment and Tax structure.

 

(b)  If a Principal or assignee commits a breach, or threatens to commit a breach, of any of the provisions of Section 7.12(a), the Corporation shall have the right and remedy to have the provisions of Section 7.12(a) specifically enforced by injunctive relief or otherwise by any court of competent jurisdiction without the need to post any bond or other security, it being acknowledged and agreed that any such breach or threatened breach shall cause irreparable injury to the Corporation or any of its Subsidiaries or the other Principals and the accounts and funds managed by the Corporation and that money damages alone shall not provide an adequate remedy to such Persons.  Such rights and remedies shall be in addition to, and not in lieu of, any other rights and remedies available at law or in equity.

 

Section 7.13  Effect of Merger on Prior Agreement.  For the avoidance of doubt, the parties hereto agree that the transactions contemplated by the Merger Agreement shall not constitute a Change of Control under the provisions of the Original Agreement.

 

Section 7.14  Effectiveness: Termination.  Except for Section 7.19, this Agreement shall become effective upon the Effective Time (as defined in the Merger Agreement).  Section 7.19 of this Agreement shall become effective on the date hereof.  This Agreement shall terminate upon the termination of the Merger Agreement in accordance with its terms.

 

Section 7.15  U.S. Subsidiaries.  For so long as Guarantor owns, directly or indirectly, 50% or more of the voting stock of the Corporation, Guarantor hereby agrees and covenants, subject to Section 7.11, that any corporation or other entity taxable as a corporation for U.S. federal income tax purposes (i) which is created or organized in or under the laws of the United States, any state thereof or the District of Columbia and (ii) of which Guarantor owns or hereinafter shall own, directly or indirectly, stock meeting the stock ownership requirements described in Section 1504(a)(2) of the Code shall be included in the U.S. consolidated federal income tax group of which the Corporation is the parent.

 

Section 7.16  Acknowledgment.  The Principals acknowledge that the Corporation has made available to the Principals or their representatives information regarding the U.S. tax attributes (including net operating losses) of the Corporation.

 

Section 7.17  Good Faith and Fair Dealing.  This Agreement imposes upon each party a duty of good faith and fair dealing in such party’s performance of its obligations under this Agreement that is co-extensive with the implicit duties of good faith and fair dealing under applicable New York law.  In furtherance of the foregoing, the Corporation shall not take any action a principal intended purpose of which is to avoid or seek to avoid the Corporation’s performance of its obligations under this Agreement.  The foregoing is not intended in any way to limit the ability of the Corporation to acquire or dispose of any entities or assets, unless a 

 

  

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principal intended purpose of such acquisition or disposition is to avoid or seek to avoid the Corporation’s performance of its obligations under this Agreement.

 

Section 7.18  Assumption Agreement.  If the Corporation or AGI (or any direct or indirect parent entity of the Corporation or AGI for which the Corporation or AGI constitutes a majority of such parent entity’s assets (other than in any case the ultimate parent entity of the Corporation or AGI), hereinafter “Holdco”) shall consolidate with or merge into another Person or shall transfer, convey, sell, lease or otherwise dispose of all or substantially all of its properties and assets (whether in one transaction or a series of transactions) to another Person, or stock or other equity interests of the Corporation or AGI or Holdco shall be sold, transferred or otherwise conveyed to another Person (each of the foregoing, a “Transaction”), then the Corporation shall cause the Person formed by such consolidation or into which the Corporation, AGI or Holdco is merged (unless the Corporation or AGI or Holdco is the surviving entity in such consolidation or merger) or the Person which acquires by transfer, conveyance, sale, lease or other disposition of all or substantially all of the properties and assets of the Corporation or AGI or Holdco or acquires stock or other equity interests of the Corporation or AGI or Holdco (for purposes of this section, a “Successor Company”) to be a corporation or partnership that shall expressly assume, prior to or concurrently with (and as a condition to) the Transaction, by an assumption agreement executed and delivered to the Principals, in form and substance reasonably satisfactory to the Principals, the due and punctual payments of all amounts hereunder and the due and punctual performance of every covenant and agreement herein on the part of the Corporation or AGI or Holdco to be performed or observed.  Additionally, if at the time of the consummation of the Transaction the Successor Company would not be reasonably capable of satisfying the then remaining likely payment obligations to the Principals under this Agreement when and as such obligations become due, then, prior to or concurrently with (and as a condition to) the Transaction, the Corporation or AGI or Holdco shall provide, or cause the Successor Company to provide, credit support as of the consummation of the Transaction such that, after taking into account such credit support, such then remaining likely payment obligations to the Principals under this Agreement would be, as of the consummation of the Transaction, reasonably capable of being satisfied when they become due.

 

Section 7.19  Principals.

 

(a)  Track Record.  Notwithstanding any confidentiality or other provisions contained elsewhere in this Agreement or in any other agreement, effective as of the Effective Time (as defined in the Merger Agreement), AGI agrees that it shall not object to the use or disclosure by the Principals, either together or individually, for marketing or any other purpose, subject to and in a manner consistent with any applicable laws, of the historic performance data and track record in its entirety relating to any publicly or privately offered pooled investment funds, separately managed accounts or other investment partnerships, vehicles or accounts, or any combination thereof, which are (or were) managed by AGI or any of its subsidiaries and with respect to which either Principal had significant management, executive or investment responsibilities.  Subject to the Principals’ compliance with any confidentiality or data privacy requirements reasonably requested by AGI, which requirements shall be consistent with the provisions hereof, upon reasonable prior notice, AGI shall provide the Principals with access to such historical data (and any related back up data and records, including without limitation brokerage statements and financial statements) then in the possession of AGI and commercially 

 

  

- 21 -

  

 

reasonably retrievable in order to permit the Principals, or their duly authorized agents, to calculate, prepare and verify past performance results for such accounts in a manner and format compliant with applicable law and Global Investment Professional Standards (to the extent such data has been reported by AGI consistent with GIPS).  The Principals shall be responsible for the incremental costs, if any, of maintaining and providing access to such data.

 

(b)  Non-Solicitation.  Any provision of the Exchange Agreement or an employment agreement governing the employment of a Principal to the contrary notwithstanding, each Principal agrees and covenants, that he shall not, either individually or acting through a jointly controlled corporation or partnership, directly or indirectly, solicit the institutional clients listed in Exhibit B of either the Artio International Equity Fund or the Artio International Equity II Fund (collectively, the “Funds”) for a period of one (1) year from the Effective Time (as defined in the Merger Agreement), including without limitation, soliciting intermediaries or affiliates in an effort to solicit the clients listed in Exhibit B or targeted marketing of the Funds’ retail or institutional clients; provided that, the Principals shall not be prohibited from (x) generalized marketing and advertising or (y) providing investment management services to clients or investors who were not solicited in violation of the foregoing and have contacted the Principals.  In the event that AGI terminates a Principal’s employment without “Cause” (as defined in such Principal’s employment agreement) or if a Principal terminates his employment with Good Reason (as defined in such Principal’s employment agreement) prior to the Closing, then such Principal shall no longer be subject to the restrictions set forth in this Section 7.19(b).  Notwithstanding the foregoing, the parties agree that the non-solicitation and non-compete restrictions imposed on the Principals pursuant to the Exchange Agreement shall be waived solely to the extent necessary to permit the Principals, acting individually or through a jointly controlled partnership or corporation, to operate a registered investment adviser offering mutual funds, privately offered funds and separately managed accounts to institutional and retail clients subject to compliance with the restrictions contained herein.

 

(c)  Good Reason.  Each Principal represents and warrants that (i) to such Principal’s knowledge, no event or circumstance has occurred that has given rise to “Good Reason” (as defined in the Exchange Agreement) with respect to the Principal and (ii) the transactions contemplated by the Merger Agreement do not, and will not, give rise to “Good Reason” (as defined in the Exchange Agreement) with respect to the Principal.

 

(d)  Other Agreements.  Guarantor hereby agrees that Richard C. Pell will not be identified by Guarantor as a Section 2.2(a)(iii) Employee for purposes of Section 2.2 of the Merger Agreement.

 

 

 

 

[Signature page follows.]

 

  

- 22 -

  

 

 

IN WITNESS WHEREOF, the Corporation, AGI, AGH and each Principal have duly executed this Agreement as of the date first written above.

 

 

	 	
ABERDEEN ASSET MANAGEMENT INC.

	 
	 	 	 	 
	 	 	 	 
	 	
By: 

	/s/ Andrew A. Smith	 
	 	 	Name:	Andrew A. Smith	 
	 	 	Title:	Director and Chief Operating Officer	 
	 	 	 	 

 

	 	

ARTIO GLOBAL INVESTORS INC.

	 
	 	 	 	 
	 	 	 	 
	 	
By: 

	/s/ Frank Harte	 
	 	 	Name:	Frank Harte	 
	 	 	Title:	Chief Financial Officer	 
	 	 	 	 

 

	 	

ARTIO GLOBAL HOLDINGS LLC

	 
	 	 	 	 
	 	 	 	 
	 	
By: 

	/s/ Frank Harte	 
	 	 	Name:	Frank Harte	 
	 	 	Title:	Chief Financial Officer	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	/s/ Richard C. Pell	 
	 	 	Richard C. Pell	 
	 	 	 	 
	 	 	/s/ Rudolph-Riad Younes	 
	 	 	Rudolph-Riad Younes	 

Solely for the purpose of Section 7.15 hereof and the following guarantee:

 

For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, for so long as Guarantor owns, directly or indirectly, 50% or more of the voting stock of the Corporation, Guarantor hereby unconditionally guarantees the due and punctual payment and performance of all of the Corporation’s obligations to the Principals under this Agreement.  This guaranty is an irrevocable guaranty of payment and performance (and not just of collection) and shall continue in effect notwithstanding any extension or modification of the terms of the Agreement or any assumption of any such guaranteed obligation by any other party.

 

	 	

ABERDEEN ASSET MANAGEMENT PLC

	 
	 	 	 	 
	 	 	 	 
	 	
By: 

	/s/ Gary R. Marshall	 
	 	 	Name:	Gary R. Marshall	 
	 	 	Title:	Authorized Signatory	 
	 	 	 	 

 

 

  

 

  

 

 

EXHIBIT A

JOINDER

 

This JOINDER (this “Joinder”) to the Tax Receivable Agreement (as defined below), dated as of _________________, by and among Aberdeen Asset Management Inc., a Delaware corporation (the “Corporation”), Artio Global Holdings LLC, a Delaware limited liability company (“AGH”) and ________________ (“Permitted Transferee”).

 

WHEREAS, the Permitted Transferee is required to execute and deliver this Joinder pursuant to Section 7.06 of the Tax Receivable Agreement;

 

NOW, THEREFORE, in consideration of the foregoing and the respective covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, Permitted Transferee hereby agrees as follows:

 

Section 1.1.  Definitions.  To the extent capitalized words used in this Joinder are not defined in this Joinder, such words shall have the respective meanings set forth in the Tax Receivable Agreement.

 

Section 1.2.  Joinder.  Permitted Transferee hereby acknowledges and agrees to become a “Principal” (as defined in the Tax Receivable Agreement) for all purposes of the Tax Receivable Agreement.

 

Section 1.3.  Notice.  Any notice, request, consent, claim, demand, approval, waiver or other communication hereunder to Permitted Transferee shall be delivered or sent to Permitted Transferee at the address set forth on the signature page hereto in accordance with Section 7.01 of the Tax Receivable Agreement.

 

Section 1.4.  Governing Law.  THIS JOINDER SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF THAT WOULD MANDATE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.

 

 

[Signature page follows.]

 

  

 

  

 

IN WITNESS WHEREOF, this Joinder has been duly executed and delivered by Permitted Transferee as of the date first above written.

 

 

	 	 	[PERMITTED TRANSFEREE]	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	Name 	 	 
	 	 	Title 	 	 
	 	 	 	 
	 	 	
Address for Notices:

	 

 

 

 

 

 

 

Signature Page for Joinder by _______________

 

to the Tax Receivable AgreementExclusive License Agreement

 Exhibit 10.10 
 ***Text Omitted and Filed Separately 
 with the Securities and Exchange
Commission. 
 Confidential Treatment Requested 
 Under 17 C.F.R. Sections 200.80(b)(4) 
 and 240.24b-2. 

EXCLUSIVE LICENSE AGREEMENT 
 This Exclusive License Agreement (the “Agreement”) is 
 BETWEEN:

 UNIVERSITY OF VICTORIA INNOVATION AND DEVELOPMENT CORPORATION 

a corporation owned by the University of Victoria and having its principle office at R-Hut, 

McKenzie Ave, Victoria, BC, Canada, V8W 3W2 
 (hereinafter referred to as “IDC”) 
 AND 

THE JOHNS HOPKINS UNIVERSITY 
 a non-profit corporation duly incorporated under the laws of Maryland and having an office at 
 3400 N. Charles Street, Baltimore, Maryland 21218 USA 
 (hereinafter referred to as
“JHU”) 
 (and where IDC and JHU are hereinafter collectively referred to as the “Licensor”)

 OF THE FIRST PART 
 AND 
 PROTOX THERAPEUTICS INC 

a corporation having its principal office at 1400-1055 West Hastings St, 

Vancouver, BC, Canada, V6E 2E9 
 (hereinafter referred to as the “Licensee”) 
 OF THE SECOND PART

 (and where all three parties are hereinafter collectively together referred to as the “Parties”) 

 INDEX 

 

					
	 RECITALS
	  	 	3	  
		
	 ARTICLE I - DEFINITIONS
	  	 	3	  
		
	 ARTICLE II - LICENSE GRANT
	  	 	5	  
		
	 ARTICLE III - LICENSE FEES, ROYALTIES AND OTHER CONSIDERATION
	  	 	6	  
		
	 Article IV - LICENSEE’S PERFORMANCE
	  	 	8	  
		
	 Article V - AUDIT AND INSPECTION OF RECORDS
	  	 	9	  
		
	 Article VI - CONFIDENTIAL INFORMATION
	  	 	9	  
		
	 Article VII - WARRANTIES
	  	 	10	  
		
	 Article VIII - INDEMNIFICATION, LIMITATION OF LIABILITY AND INSURANCE
	  	 	12	  
		
	 Article IX - ASSIGNMENT/CHANGE OF OWNERSHIP
	  	 	13	  
		
	 Article X - TERMINATION AND EXPIRATION
	  	 	13	  
		
	 Article XI - PATENT PROSECUTION AND LICENSEE COVENANTS
	  	 	15	  
		
	 Article XII - GENERAL TERMS AND CONDITIONS
	  	 	16	  
		
	 Schedule A - CURRENT PENDING PATENTS
	  	 	19	  
		
	 Schedule B - PERFORMANCE REQUIREMENTS
	  	 	20	  

  
 Page 2 of 20

 RECITALS 
 WHEREAS, IDC is the University of Victoria’s (UVic’s) corporation for commercialization of intellectual property and discoveries; and 

WHEREAS, as a center for research and education, JHU is engaged in a wide variety of research and development activities related to new drug
technologies, but is without capacity to commercially develop, manufacture, and distribute any products or processes based on such technologies; and 
 WHEREAS, the Licensee is a British Columbia company engaged in the commercialization of drug related technologies; and 
 WHEREAS, IDC (and UVic), through its faculty member Dr. J. Thomas Buckley, and JHU, through its faculty members Drs. Samuel Denmeade and John Isaacs (Drs. Buckley, Denmeade and Isaacs shall be
collectively referred to as the “Inventors”), have engaged in research during the course of which they have developed a valuable invention entitled “Use of Proaerolysin Toxins Modified to Contain Tissue Specific Protease Activation
Sequences as Targeted Therapy for Cancer” (JHU-Ref. No.: 3887) (the “Technology”) and related know-how (the “Know-How”) which may be useful for the treatment, prevention and/or diagnosis of prostate cancer; and

 WHEREAS, IDC and JHU have entered into an Inter-Institutional Agreement, dated April 16, 2002 (the “Inter-Institutional
Agreement”), pursuant to which IDC, on behalf of IDC and JHU, has responsibility to administer the filing and prosecution of patent applications for the Technology and take the lead to identify a licensee and negotiate a license agreement
on behalf of the Licensors (and where the agreement states JHU shall be made party to any license agreement, and that such a license shall only be by mutual agreement of the Licensors); and 
 WHEREAS, the Licensee is desirous of obtaining an exclusive license for the Technology for the development of prostate cancer therapeutics and wishes to make, have made, use, and sell products and
services based upon or embodying said Technology; and 
 WHEREAS the Recitals form a part of this Agreement. 

NOW, THEREFORE, in consideration of the premises and the mutual promises and covenants hereinafter set forth, the Parties hereby agree as follows:

 ARTICLE I - DEFINITIONS 
  

	1.1	As used in this Agreement, the following terms shall have the definitions respectively assigned to them hereunder unless specified elsewhere in the Agreement or where
the subject matter or context otherwise requires: 

  

	 	(a)	“Accounting” means an accounting statement setting out in detail how the amount of Gross Revenue was determined. 

 

	 	(b)	“Agreement” means this entire document and all Schedules attached hereto, which shall be read with and form a part of this Agreement including any
amendments made as described in Article 12.5 hereof. 

  

	 	(c)	“Inter-Institutional Agreement” means the agreement dated April 16, 2002 between IDC and JHU, pursuant to which IDC, on behalf of IDC and JHU, has
responsibility to administer the filing and prosecution of patent applications for the Technology as relates to the treatment of prostate cancer and, also, take the lead to identify a licensee and negotiate a license agreement on behalf of the
Licensors. 

  

	 	(d)	“Licensor” means IDC, JHU and any Affiliates of IDC and JHU. 

  
 Page 3 of 20

	 	(e)	“Licensee” means Protox Therapeutics Inc and any Affiliates 

 

	 	(f)	“Confidential Information” means information of a confidential or proprietary nature provided by disclosing Party to recipient Party that has been
clearly identified by the disclosing Party as being confidential or proprietary at the time of disclosure by way of a marking, or if disclosed verbally, was reduced to writing by providing Party and marked confidential within thirty (30) days
of disclosure. 

  

	 	(g)	“Effective Date” means the date the last Party hereto has executed this Agreement 

 

	 	(h)	“herein”, “hereby”, “hereof”, “hereunder”, and similar expressions, when used in any Article, shall
be understood to relate to this Agreement as a whole and not merely to the Article in which they appear; 

  

	 	(i)	“Royalty and Other Consideration Payment Due Dates” means the last working day of March, June, September and December of each year during the
term of this Agreement. 

  

	 	(j)	“Patent Rights” means the PCT patent application based on Provisional # 60/314,613, filed on August 23, 2002, and assigned to IDC and JHU entitled
“Use of Proaerolysin Toxins Modified to Contain Tissue Specific Protease Activation Sequences as Targeted Therapy for Cancer” and the invention disclosed and claimed therein (“Invention”), and all continuations,
continuations in part (as they claim the Invention), divisions and reissues based thereof, and any corresponding US, Canadian or foreign patent applications, and any patents, or other equivalent foreign patent rights issuing, granted or registered
thereon (and as are listed in Schedule A). 

  

	 	(k)	“Licensed Application” means the use of the Patent Rights within the field of prostate cancer therapy. 

 

	 	(l)	“Licensed Processes” means any processes claimed in the Patent Rights. 

 

	 	(m)	“Licensed Products” means any material, compositions, drug, gene therapy preparation or other product the manufacture, import, use or sale of which
would constitute, but for the license granted to Licensee pursuant to this Agreement, an infringement of a valid claim of the Patent Rights. 

  

	 	(n)	“Licensed Services” means the performance on behalf of a third party of any method or the manufacture of any product or the use of any product or
composition which would constitute, but for the license granted to Licensee pursuant to this Agreement, an infringement of a valid claim of the Patent Rights. 

 

	 	(o)	“Affiliate” of a Party means any corporation, company, partnership, joint venture or other entity, which controls, is controlled by or is under common
control with such Party. For purposes hereof, “control” shall mean the direct or indirect ownership of at least 50%. 

  

	 	(p)	“Sublicensee” shall mean any person or entity other than an Affiliate to which the Licensee has granted a sublicense under the terms of this Agreement.

  

	 	(q)	“Gross Sales” shall mean all sales, revenues, receipts, monies, and the fair market value of any shares or other securities and all other consideration
directly or indirectly collected or received by way of cash, credit or other value received by the Licensee or an Affiliate derived from marketing, selling, distributing any Licensed Products, Licensed Processes and/or Licensed Services, and from
any Sublicensee of the Licensee from marketing, selling, distributing any Licensed Products, Licensed Processes and/or Licensed Services, less sales taxes and custom duties applied to the sales of Licensed Product, Licensed Processes and/or Licensed
Services. Where any Gross Sales or revenues from an Affiliate or Sublicensee are derived from a country other than Canada it shall be converted to the equivalent in Canadian dollars on the date the Licensee is deemed to have received such Gross
Sales or revenues pursuant to the terms hereof at the rate of exchange set by the Bank of Montreal for buying such currency. The amount of Canadian dollars pursuant to such conversion shall be included in Gross Sales. 

 

	 	(r)	 “Other Consideration” shall mean any revenues or other consideration, excluding Gross Sales, received by the Licensee from any
Sublicensee, from any transaction, disposition or other dealing involving all or part of the Patent Rights or Licensed Products, Licensed Processes or Licensed Services, and where such revenues or other consideration may include, but are not limited
to license signing or other fees, milestone or bonus payments, consideration for equity, etc. Other Consideration also excludes monies and grants the Licensee receives from third parties to specifically conduct research and development (R&D)
activities to advance the Technology and to which the Licensee can demonstrate 

  
 Page 4 of 20

	 	 
were directly expended for this reason. Where any Other Consideration or revenues from an Affiliate or Sublicensee are derived from a country other than Canada it shall be converted to the
equivalent in Canadian dollars on the date the Licensee is deemed to have received such Other Consideration or revenues pursuant to the terms hereof at the rate of exchange set by the Bank of Montreal for buying such currency. The amount of Canadian
dollars pursuant to such conversion shall be included in Other Consideration. 

  

	 	(s)	“Party” means the Licensee or Licensor as the context requires, and the “Parties” means the Licensee and Licensor.

  

	1.2	For the purposes of this Agreement, any reference to the “sale” of Licensed Products, Licensed Services, and/or Licensed Processes shall be interpreted to
include the “lease” of Licensed Products, Licensed Services, and/or Licensed Processes. 

 ARTICLE II
- GRANT OF LICENSE 
  

	2.1	The Licensor hereby grants to the Licensee: (i) an exclusive right and license to the Patent Rights with the right to sublicense in accordance with Article 2,
subject to the rights retained by the U.S. government, if any, (see 35 U.S.C. § 200 et seq. including regulations pertaining thereto, 37 CFR Part 401, and federal policies governing the transfer of research materials), for the purposes
of developing, making, having made, using, having used, selling, having sold, offering for sale, importing and exporting Licensed Products, Licensed Processes and Licensed Services world-wide in the area of the Licensed Application; and (ii) a
non-exclusive license to conduct research on the Technology covered under the Patent Rights and to use Know-How for both (i) and (ii) for the term and in accordance with the terms and conditions of this Agreement, and further subject to
the retained right of Licensor to make, have made, provide and use for its and the Johns Hopkins Health Systems’ purposes Licensed Products, Licensed Processes and Licensed Services, including the ability to distribute any biological material
disclosed and/or claimed in Patent Rights for non-profit academic research to non-commercial entities as is customary in the scientific community. 

  

	2.2	Failure by the Licensee to make use of the Patent Rights in accordance with the terms and conditions of this Agreement, specifically the commercialization of the
Technology, may result in termination of this Agreement. 

  

	2.3	The Licensee acknowledges and agrees that the Licensor retains all rights, title and interest in the Technology and Patent Rights, including all intellectual property
and intellectual property rights, such as any patents, pending patents, industrial design, trademarks, trade secrets, copyright, integrated circuit topography, plant breeder rights and further agrees that this Agreement does not give the Licensee
any rights to or interest in such Technology and Patent Rights except the right to use such Technology and Patent Rights in accordance with the terms of this Agreement. 

 

	2.4	The Licensor may register a financing statement regarding this Agreement under the Personal Property Security Act of British Columbia and/or under similar
legislation in those jurisdictions in which the Licensee carries on business and/or has its chief place of business. The Licensee will pay for all costs associated with such registrations. The Licensee shall give notice to the Licensor if it is
carrying on business and/or locates its chief place of business in a jurisdiction outside of British Columbia before starting business in that other jurisdiction. If the Licensor has registered a financing statement, the Licensee shall file within
15 days of any change in jurisdiction, the appropriate documents in the Personal Property Registries or similar registries outside of British Columbia to document the change in jurisdiction and shall provide the Licensor a copy of the verification
statement regarding such filing 15 days after receiving the verification statement. The Licensee shall pay for all costs associated with such registrations. 

 

	2.5	 The Licensee agrees that during the term of this Agreement and thereafter, it will not dispute

  
 Page 5 of 20

	 	 
or contest, directly or indirectly, the validity of the Licensor’s rights to the Patent Rights nor counsel or assist any other party to do the same, unless compelled by due process of law.

  

	2.6	The term of this Agreement shall commence on the Effective Date of the Agreement and continue, in each country, until the date of expiration of the last patent or
patent claim included within Patent Rights in that country or, if no patents issue, then for a term of twenty (20) years from the Effective Date of the Agreement. 

 

	2.7	In the event that the Licensee sublicenses its rights to the Patent Rights in whole or in part, the Licensee shall provide to the Licensor a copy of each sublicense
granted within 30 days of it being signed by all parties to the sublicense. As a condition of its validity and enforceability, each sublicense agreement shall (a) incorporate by reference the terms and conditions of this Agreement, (b) be
consistent with the terms and conditions and limitations of this Agreement, (c) prohibit Sublicensee’s further sublicense of the rights delivered hereunder, (d) name Licensor as an intended third party beneficiary of the obligations
of Sublicensee without imposition of obligation or liability on the part of Licensor or Inventors to the Sublicensee, (e) specifically incorporate Articles Representation by Licensor, Indemnification, Use of Name, Product Liability into the
body of the sublicense agreement, and cause the terms therein to have the same meaning as in the this Agreement. To the extent that any terms, conditions or limitations of any sublicense agreement are inconsistent with this Agreement, those terms,
conditions and limitations are null and void against Licensor. 

  

	2.8	All rights not expressly granted by the Licensor to the Licensee under this Agreement are reserved by the Licensor. This license granted under this Agreement is granted
only to the Licensee and its Affiliates. 

 ARTICLE III - LICENSE FEES, ROYALTIES AND OTHER CONSIDERATION

  

	3.1	In consideration of the grant of license under this Agreement, the Licensee shall pay an initial license fee of seventy-five thousand dollars (CAN $75,000) to the
Licensor. The licensee shall also reimburse the Licensor the amount of $27,597 CAN for all past reasonable expenses associated with the filing, maintenance, legal fees and other reasonable expenses (as per the exclusive option agreement) incurred
for Patent Rights (i.e. specifically, the expenses associated with the Provisional and PCT applications incurred for the Patent Rights, primarily before January 1, 2003, and to which the Licensor can provide invoices and/or copies of payments
to third parties and to which the Licensee has not already reimbursed the Licensor for). The license fee and reimbursement fees are to be paid to Licensor within 30 days of the Effective Date of this Agreement. 

 

	3.2	 The Licensee shall pay to the Licensor an annual maintenance fee of [*...***...] on each anniversary date of the Effective Date of this Agreement. 

 

	3.3	The Licensee shall pay the Licensor during the term of this Agreement, in the manner designated herein, milestone royalty payments for the development of each Licensed
Product for use in the Licensed Application by the Licensee, an Affiliate, or Sublicensee, as follows: 

  

	 	(a)	A milestone payment of [...***...] dollars (CAN $[...***...]) upon successful completion of [...***...]. 

 

	 	(b)	A milestone payment of [...***...] dollars (CAN $[...***...]) upon successful completion of [...***...]. 

 

	 	(c)	A milestone payment of [...***...] dollars (CAN $[...***...]) upon successful completion of [...***...]. 

 
  

* ***Confidential Treatment Requested 

  
 Page 6 of 20

	 	(d)	 A milestone payment of
[*...***...] dollars (CAN $[...***...]) upon
[...***...]. 

 Milestone payments shall not be credited against royalties on sales of
Licensed Products, Licensed Processes or Licensed Services and shall be due to Licensor within thirty (30) days of completing each milestone. 
  

	3.4	The Licensee shall pay to the Licensor a running royalty of [...***...] percent ([...***...]%) of Gross Sales made by the Licensee, an Affiliate, and/or
Sublicensees for each Licensed Product(s) or Licensed Process(es) sold, and for each Licensed Service(s) provided by the Licensee, an Affiliate, and/or Sublicensee during the term of this Agreement. 

 

	3.5	The payment of all running royalties are due and payable to Licensor within 45 days of each respective Royalty and Other Consideration Payment Due Date and are to be
calculated with respect to the Gross Sales in the three month period immediately preceding the applicable Royalty and Other Consideration Payment Due Date. 

 

	3.6	Any transaction, disposition or other dealing involving all or part of the Patent Rights or Licensed Products, Licensed Processes or Licensed Services or sublicensing,
between the Licensee and another person that is not made at fair market value is deemed to have been made at fair market value, and the fair market value of the transaction, disposition, or other dealing will be added to and deemed part of the Gross
Sales as the case may be and will be included in the calculation of royalties under this Agreement. 

  

	3.7	In addition to the running royalties payable with respect to Gross Sales under Article 3.4, the Licensee shall pay to the Licensor [...***...] percent
([...***...]%) of any Other Consideration received by the Licensee from a Sublicensee or an Affiliate. Other Consideration does not include revenues or consideration associated with Gross Sales (as identified in Article 3.4). Similar to
Article 3.5, the payment of any Other Consideration is due and payable to the Licensor within 45 days of each respective Royalty and Other Consideration Payment Due Date, and is to be calculated with respect to the three month period immediately
preceding the applicable Royalty and Other Consideration Payment Due Date. 

  

	3.8	Licensed Products, Licensed Processes and/or Licensed Services are deemed to have been sold or provided by the Licensee and included in Gross Sales when paid for. The
Licensee is deemed to have received Gross Sales or Other Consideration from Affiliates or Sublicensees when the Gross Sales or Other Consideration is received by the Licensee from an Affiliate or a Sublicensee. 

 

	3.9	In partial consideration for the rights granted to Licensee under this Agreement, the Licensee shall issue 177,864 common shares in the capital stock of the Licensee to
each of IDC and JHU. Said capital stock shall be issued in accordance with the terms of a separate Stock Agreement. 

  

	3.10	License signing, maintenance, and other fees, running royalties, milestone payments, equity, or Other Consideration received by the Licensor from the Licensee are not
refundable, in whole or in part, under any circumstances. 

  

	3.11	In the event that the Licensee or an Affiliate or Sublicensee is required to integrate other products or processes with the Licensed Products, Licensed Processes or
Licensed Services in order to effectively market, distribute, sell or resell Licensed Products, Licensed Processes or Licensed Services, for which it has to pay royalties to a third party, the Licensor agrees, on a case by case basis, as applicable,
to negotiate appropriate adjustments to the running royalty rate and to the any Other Consideration where such other products and processes form a substantial part of the Licensed Products, Licensed Processes or Licensed Services. If the combined
royalty rates of the additional technology licenses plus two percent exceeds [...***...] percent then the royalty rate of the Licensor will be reduced by one half of the amount in 

 
  

* ***Confidential Treatment Requested 

  
 Page 7 of 20

	 	 
excess of [*...***...] percent, though in no circumstances will the royalty rate of the Licensor be reduced to less than [...***...] percent ([...***...]%). As one example, if
the additional royalty rate of the additional technology license was [...***...]%, then the total potential royalty rate to the Licensee would be [...***...]% (i.e. Licensor at [...***...]); therefore, by the above terms, the
Licensor’s royalty rate for this integrated entity would be reduced to [...***...]% (based on: [...***...] x [...***...]). As a second example, if the additional royalty rate of two other additional technology licenses was
[...***...]%, then the total potential royalty rate to the Licensee would be [...***...]% (i.e. Licensor at [...***...]); therefore, by the above terms, the Licensor’s royalty rate for this second integrated entity would be
reduced to [...***...]% (based on: [...***...] x [...***...], but where the Licensor’s royalty rate cannot be reduced below [...***...]%). 

 

	3.12	The Licensee shall provide an Accounting to the Licensor within forty-five (45) days after each Royalty and Other Consideration Payment Due Date during the term of
this Agreement. All such statements shall include a calculation of the amount due to the Licensor for the running royalties, if any, payable under this Agreement (as described in Article 3.4), a calculation of the amount of any Other Consideration
(as described in Article 3.8), if any, to be paid to the Licensor and a remittance to the Licensor of the amounts shown to be payable. All such statements shall also include an Accounting setting out in detail how the amount of all Gross Sales and
of all Other Consideration were determined and identifying each Sublicensee and Affiliate and the location of the business of each Sublicensee and Affiliate. 

 

	3.13	The calculation of all Gross Sales and Other Consideration due to the Licensor will be carried out in accordance with generally accepted Canadian accounting principles
(“GAAP”), or the standards and principles adopted by the US Financial Accounting Standards Board (“FASB”) applied on a consistent basis. 

 

	3.14	All payments and statements to be submitted by the Licensee to the Licensor shall be sent to IDC and IDC shall apportion and distribute all payments received from the
Licensee between IDC and JHU in accordance with the terms and conditions of the Inter-Institutional Agreement. 

  

	3.15	All amounts payable to the Licensor in accordance with the terms of this Agreement shall be calculated and paid in Canadian dollars. 

 

	3.16	All overdue accounts shall bear an interest of 1.5% compounded for each thirty day period the account is overdue. 

ARTICLE IV - LICENSEE’S PERFORMANCE 
  

	4.1	The Licensee agrees to meet the performance development milestones attached as Schedule B hereto. The Licensee further agrees to use reasonable commercial efforts to
monitor on a worldwide basis patent infringement regarding any Patent Rights licensed under this Agreement; 

  

	4.2	The Licensee agrees that the Technology shall not be used to promote the sales of other products, processes or services in a manner that reduces or eliminates the
benefit to the Licensor, without the express written consent of the Licensor. 

  

	4.3	The Licensee represents and warrants to the Licensor that it has or shall acquire the infrastructure, expertise and resources to: 

 

	 	(a)	develop and commercialize the Technology; 

  

	 	(b)	track and monitor on an ongoing basis performance under the terms of each sublicense entered into by the Licensee; 

 

	 	(c)	handle the Technology, Licensed Products, Licensed Processes and Licensed Services with care and without danger to the Licensee, its employees, agents or the public and
in accordance with all applicable laws and regulations. 

  

 
 *
 ***Confidential Treatment Requested 

  
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	4.4	The Licensee represents and warrants to the Licensor that it will, throughout the term of this Agreement: 

 

	 	(a)	allocate to the development and commercialization of the Technology covered under the Patent Rights at least the same degree of diligence, expertise, infrastructure,
and resources as the Licensee is allocating to other products being developed and marketed by the Licensee; 

  

	 	(b)	use reasonable commercial efforts to develop and exploit the Technology covered under Patent Rights and promote, market and sell Licensed Products, Licensed Processes,
and Licensed Services to meet market demand for the Technology, Licensed Products, Licensed Processes and Licensed Services including without limitation putting in place an effective financing plan for commercialization and develop a business plan
that sets out the commercialization and marketing plans for the Technology, Licensed Products, Licensed Processes and Licensed Services. 

 ARTICLE V - AUDIT AND INSPECTION OF RECORDS 
  

	5.1	The Licensee shall keep proper and detailed records and accounts including invoices, receipts, and vouchers showing all information necessary for the accurate
determination of license and royalty payments hereunder and where such records and accounts shall be in sufficient detail and form acceptable to the Licensor. The Licensee shall cause its Sublicensees and Affiliates to keep similar accounts and
records. 

  

	5.2	During reasonable business hours, the Licensee shall make available such accounts and records and permit the Licensor or its authorized representatives to audit and
inspect such records, to take extracts therefrom and make copies thereof. Furthermore, the Licensee shall afford reasonable facilities for such audits and inspections and furnish the Licensor or its authorized representatives with all information
requisite to the understanding of the records. If an inspection of the Licensee’s records by the Licensor shows an under-reporting or underpayment by the Licensee of any amount to the Licensor, by more than 3% for any 12 month period, then the
Licensee agrees to reimburse the Licensor for the cost of the inspection as well as pay to the Licensor any amount found due including any interest within 30 days notice by the Licensor to the Licensee. 

 

	5.3	The Licensee shall keep and preserve the accounts and records referred to in this Article, relative to each year of the term of this Agreement, for a period of five
years thereafter. 

 ARTICLE VI - CONFIDENTIAL INFORMATION 

 

	6.1	 A Party receiving Confidential Information pursuant to this Agreement (hereinafter referred to as the “Receiving Party”) shall respect the
confidential nature of the Confidential Information as defined in this Agreement. A Receiving Party shall use a reasonable standard of care in 

  
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protecting the Confidential Information and at least the same precautions to protect the Confidential Information which it uses to protect its own proprietary or confidential information.

 A Receiving Party shall not, without the prior written consent of the other Party, disclose
or permit disclosure of such Confidential Information to any person, firm, corporation or other entity, other than business associates who have agreed in writing to keep Confidential Information confidential or to employees, agents or other
representatives of the Receiving Party on a need to know basis in order to carry out the purposes of this Agreement. The Receiving Party shall use reasonable efforts to ensure that such business associates employees, agents or representatives are
covered by the terms of these confidentiality provisions and do not further disclose such Confidential Information in violation of this Article. The obligations of this Paragraph shall also apply to Sublicensees(s) and Affiliates provided such
information by the Licensee. IDC’s, JHU’s, Licensee’s, Affiliates’, and Sublicensees’ obligations under this Paragraph shall extend until three (3) years after the termination of this Agreement. 

Exceptions: the Receiving Party’s obligations under Paragraph 6.1 shall not extend to any part of the information:

  

	 	a.	 that can be demonstrated to have been in the public domain or publicly known and readily available to the trade or the public prior to the date of
the disclosure; or 

  

	 	b.	 that can be demonstrated, from written records to have been in the recipient’s possession or readily available to the recipient from another
source not under obligation of secrecy to the disclosing party prior to the disclosure; or 

  

	 	c.	 that becomes part of the public domain or publicly known by publication or otherwise, not due to any unauthorized act by the recipient; or

  

	 	d.	 that is demonstrated from written records to have been developed by or for the receiving party without reference to the Confidential Information
disclosed by the disclosing party; or 

  

	 	e.	that is required to be disclosed by law, government regulation or court order. 

 

	6.2	A Receiving Party shall not use or permit use of such Confidential Information in any manner not specified or permitted under the terms of this Agreement.

  

	6.3	Any copy or reproduction of the Confidential Information shall be identified with the same marking as is found on the original and shall be subject to the same
restrictions as to disclosure and use as apply to the original thereof. 

 ARTICLE VII - WARRANTIES

  

	7.1	IDC (and the University of Victoria) and JHU are not commercial organizations. They are institutions of research and education. Therefore, the Licensor has no ability
to evaluate the commercial potential of any Patent Rights, the Technology, Licensed Products, Licensed Processes and Licensed Services or the license or rights granted in this Agreement. It is therefore incumbent upon the Licensee to evaluate the
rights and products in question, to examine the materials and information provided by JHU or IDC, and to determine for itself the validity of any Patent Rights, its freedom to operate, and the value of the Technology any Licensed Products, Licensed
Processes, Licensed Services or other rights granted. 

  
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	7.2	The Licensor warrants that it has good and marketable title to its interest in the inventions claimed under the Patent Rights, with the exception of certain retained
rights of the United States Government which may apply if any part of the JHU research was funded in whole or in part by the United States Government. 

  

	7.3	Nothing in this Agreement shall be construed as a representation, warranty or covenant by or on behalf of the Licensor: 

 

	 	(a)	of the validity of any pending patent applications or issued patents for the Technology; 

 

	 	(b)	that any Licensed Product or Licensed Processes which are manufactured, used or sold or any Licensed Service which are provided pursuant to the license granted under
this Agreement, is, or will be, free from infringement of any copyright, patent, industrial design, or trademark, or is not, or will not be, in breach of a trade secret; 

 

	 	(c)	to bring or prosecute any action or suit of any nature against any third party with respect to such third party’s infringement or alleged infringement of the
Technology; or 

  

	 	(d)	to defend any action or suit of any nature brought by any third party in which it is alleged that use of the Technology has infringed or will infringe such third
party’s rights. 

  

	7.4	EXCEPT AS EXPRESSLY SET FORTH IN ARTICLE 7.2, THE LICENSEE, AFFILIATED COMPANIES AND SUBLICENSEE(S) AGREE THAT THE TECHNOLOGY IS PROVIDED “AS IS”, AND THAT
THE LICENSOR MAKES NO REPRESENTATION OR WARRANTY WITH RESPECT TO THE PERFORMANCE OF THE TECHNOLOGY, LICENSED PRODUCT(S), LICESENSED PROCESS(ES), AND LICENSED SERVICE(S) INCLUDING THEIR SAFETY, EFFECTIVENESS, OR COMMERCIAL VIABILITY. EXCEPT AS
EXPRESSLY SET FORTH IN ARTICLE 7.2 THE LICENSOR DISCLAIMS ALL WARRANTIES WITH REGARD TO THE TECHNOLOGY, LICENSED PRODUCT(S), LICENSED PROCESS(ES) AND LICENSED SERVICE(S) LICENSED UNDER THIS AGREEMENT, INCLUDING, BUT NOT LIMITED TO, ALL WARRANTIES,
EXPRESSED OR IMPLIED, OF MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE. NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, THE LICENSOR ADDITIONALLY DISCLAIMS ALL OBLIGATIONS AND LIABILITIES ON THE PART OF LICENSOR AND INVENTORS, FOR
DAMAGES, INCLUDING, BUT NOT LIMITED TO, DIRECT, INDIRECT, SPECIAL, AND CONSEQUENTIAL DAMAGES, ATTORNEYS’ AND EXPERTS’ FEES, AND COURT COSTS (EVEN IF LICENSOR HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, FEES OR COSTS), ARISING OUT
OF OR IN CONNECTION WITH THE MANUFACTURE, USE, OR SALE OF THE LICENSED PRODUCT(S), LICENSED PROCESS(ES) AND LICENSED SERVICE(S) LICENSED UNDER THIS AGREEMENT. THE LICENSEE, AFFILIATED COMPANIES AND SUBLICENSEE(S) ASSUME ALL RESPONSIBILITY AND
LIABILITY FOR LOSS OR DAMAGE CAUSED BY A PRODUCT AND/OR SERVICE MANUFACTURED, USED, OR SOLD BY LICENSEE, ITS SUBLICENSEE(S) AND AFFILIATED COMPANIES WHICH IS A LICENSED PRODUCT(S), LICENSED PROCESS(ES) OR LICENSED SERVICE(S) AS DEFINED IN THIS
AGREEMENT. 

  

	7.5	(a) The Licensor shall have no obligation whatsoever to reimburse the Licensee for any expenses or costs incurred by the Licensee in the performance of this Agreement,
even if incurred as the Licensor’s suggestion. The Licensee’s incurring of costs or expenses under this Agreement is at the Licensee’s sole risk and upon the Licensee’s independent business judgment that such costs and expenses
are justifiable. 

  

	 	(b)	In the event that there is a lawsuit, claim, demand or other action brought (collectively and individually a “Claim”) at all from or out of the use or as a
consequence of the practice of the Patent Rights, Technology, Licensed Products, Licensed Processes and Licensed Services licensed under this Agreement by the Licensee, an Affiliate, or its Sublicensees customers or end-users , the Licensor agrees,
on a case by case basis, as applicable, to negotiate appropriate adjustments to the running royalty rate and to the any Other Consideration until such time as the Claim is settled. 

  
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	7.6	Notwithstanding Article 7.3 (c) and (d) above, if there is an alleged infringement of the Patent Rights, the Licensee may, on receiving the prior written
consent of the Licensor, prosecute litigation designed to enjoin infringers of the Patent Rights. Provided it has first granted its prior written consent, the Licensor agrees to reasonably cooperate to the extent of signing all necessary documents
and to vest the Licensee with the right to institute litigation, provided that all direct and indirect costs and expenses of bringing and conducting the litigation or settlement are paid by the Licensee and in this case all recoveries are for the
benefit of the Licensee. 

  

	7.7	If any complaint alleging infringement of any patent or other proprietary rights is made against the Licensee, and Affiliate, or a Sublicensee of the Licensee regarding
the use of the Patent Rights or the manufacture, use or sale of the Licensed Products, Licensed Processes or Licensed Services, the following procedure shall be followed: 

 

	 	(a)	the Licensee will promptly notify the Licensor on receipt of the complaint and will keep the Licensor fully informed of the actions and positions taken by the
complainant and taken or proposed to be taken by the Licensee on behalf of itself, an Affiliate, or a Sublicensee. 

  

	 	(b)	Except as provided in Article 7.7(d), all costs and expenses incurred by the Licensee, an Affiliate, or any Sublicensee of the Licensee in investigating, resisting,
litigating and settling the complaint, including the payment of any award of damages and/or costs to any third party, will be paid by the Licensee, the Affiliate, or the Sublicensee as the case may be. 

 

	 	(c)	No decision or action concerning or governing any final disposition of the complaint will be taken without full consultation with the Licensor.

  

	 	(d)	The Licensor may elect to participate as a party in any litigation involving the complaint to the extent that the court may permit, but any additional expenses
generated by such participation will be paid by the Licensor subject to the possibility of recovery of some or all of the additional expenses from the complainant. 

ARTICLE VIII - INDEMNIFICATION, LIMITATION OF LIABILITY AND INSURANCE 

 

	8.1	The Licensee indemnifies, holds harmless and defends with counsel reasonably acceptable to Licensor, the Licensor, the Inventors, the University of Victoria’s and
IDC’s Boards, officers, employees, faculty, students, agents and JHU’s present and former trustees, officers, faculty and students against any and all claims or judgments, including all associated legal fees, expenses and disbursements
actually incurred, arising out of the exercise of any rights under this Agreement, including without limitation any damages, losses, consequential or otherwise, arising in any manner (including arising from or incidental to any product liability or
other lawsuit, claim, demand or other action brought) at all from or out of the use or as a consequence of the practice of the Patent Rights, Technology, Licensed Products, Licensed Processes and Licensed Services licensed under this Agreement by
the Licensee, an Affiliate, or its Sublicensees, customers or end-users whether or not Licensor or said Inventors, either jointly or severally, is named as a party defendant in any such lawsuit and whether or not Licensor or the Inventors are
alleged to be negligent or otherwise responsible for any injuries to persons or property. The obligation of the Licensee to defend and indemnify as set out in this Article shall survive the termination of this Agreement, shall continue even after
assignment of rights and responsibilities to an Affiliate or Sublicensee, and shall not be limited by any other limitation of liability elsewhere in this Agreement. 

  
 Page 12 of 20

	8.2	The Licensor shall not be liable for any breach or breaches of this Agreement or loss, whether direct, consequential, incidental or special, which the Licensee,
Affiliates, Sublicenses or other third parties suffer arising from any defect, error or fault of the Patent Rights, Technology, Licensed Products, Licensed Processes or Licensed Services, or their failure to perform, even if the Licensor has been
advised of the possibility of the defect, error, fault or failure. The Licensee acknowledges that it has been advised by the Licensor to undertake its own due diligence regarding the Patent Rights, Technology, Licensed Products, Licensed Processes
and Licensed Services. 

  

	8.3	Prior to initial human testing or first commercial sale of any Licensed Product(s), Licensed Process(es), or Licensed Service(s) as the case may be in any particular
country, Licensee shall establish and maintain, in each country in which Licensee, an Affiliate or Sublicensee(s) shall test or sell Licensed Product(s), Licensed Process(es), and Licensed Service(s), product liability or other appropriate insurance
coverage in the minimum amount of five million dollars ($5,000,000) per claim and will annually present evidence to Licensor that such coverage is being maintained. 

 

	8.4	Upon Licensor’s request, Licensee will furnish Licensor with a Certificate of Insurance of each product liability insurance policy obtained. Licensor shall be
listed as an additional insured party in Licensee’s said insurance policies. If such Product Liability insurance is underwritten on a ‘claims made’ basis, Licensee agrees that any change in underwriters during the term of this
Agreement will require the purchase of ‘prior acts’ coverage to ensure that coverage will be continuous throughout the term of this Agreement. 

  

	8.5	Upon request, the Licensee will provide to the Licensor the terms and amount of the insurance in place including any certificates of insurance evidencing coverage and
the Licensee agrees: 

  

	 	(a)	not to use the Technology, Licensed Products, Licensed Processes or Licensed Services before insurance is in effect; 

 

	 	(b)	not to sell any Licensed Products, Licensed Processes or Licensed. Services at any time unless insurance is in effect. 

ARTICLE IX - ASSIGNMENT/CHANGE OF OWNERSHIP 
  

	9.1	Except to an Affiliate, the Licensee will not assign, transfer, mortgage, pledge, financially encumber, grant a security interest, permit a lien to be created, change
or otherwise dispose of any or all of the rights granted to it under this Agreement without the prior written consent of the Licensor, subject to the right of the Licensee to execute sublicenses (as defined in Article 2.1). 

 

	9.2	Successors and Assigns. Neither this Agreement nor any of the rights or obligations created herein, except for the right to receive any remuneration hereunder, may be
assigned by either party, in whole or in part, without the prior written consent of the other party, except that either party shall be free to assign this Agreement in connection with any sale of substantially all of its assets without the consent
of the other. Such assignment shall be subject to Licensor approval, which approval shall not be unreasonably withheld. This Agreement shall bind and inure to the benefit of the successors and permitted assigns of the parties hereto.

 ARTICLE X - TERMINATION AND EXPIRATION 

  
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	10.1	This Agreement automatically and immediately terminates without notice to the Licensee if any proceeding under the Bankruptcy and Insolvency Act of Canada, or any other
statute or similar purpose, is started by or against the Licensee. 

  

	10.2	The Licensor shall be entitled to terminate this Agreement immediately with notice upon the occurrence of any of the following events: 

 

	 	(a)	the Licensee becomes insolvent or makes an assignment for the benefit of creditors or passes a resolution for winding up and the orderly payment of debts, unless a
trustee or other representative of the Licensee is willing and able to complete the Licensee’s obligations under this Agreement; or 

  

	 	(b)	the Licensee ceases or threatens to cease carrying out business; 

  

	 	(c)	the Technology becomes the subject to any security interest, charge or encumbrance of any third party claiming through the Licensee; or 

 

	 	(d)	the Licensee is in breach of any of its obligations under this Agreement and fails to remedy such breach within sixty (60) days after written notice of such
failure has been given to the Licensee by the Licensor, or, the necessary period where such breach would take more than sixty (60) days to remedy, to commence and proceed diligently to remedy such breach provided such period is not greater than
ninety (90) days or as otherwise agreed in writing by the Parties.; 

  

	10.3	Termination pursuant to Article 10.2 shall be effected by a thirty (30) day written notice which shall, as of the date stated therein, terminate the license
granted hereunder, together with all rights of the Licensee under this Agreement, without prejudice to the right of the Licensor to sue for and recover any damages or benefit due to the Licensor, and without prejudice to the remedy that either Party
may have in respect of any previous breach of this Agreement. 

  

	10.4	Upon termination for whatever reason or expiry of this Agreement the Licensee shall pay all license fees and royalties due and owing as of the date of termination or
expiry and shall provide a final Accounting of all royalties due and owing up to the date of termination within 30 days of the date of termination or expiry. 

 

	10.5	In the event of termination of the Agreement in accordance with Articles 10.1 and 10.2: 

 

	 	(a)	all rights to the Patent Rights shall revert to the Licensor and the Licensee thereafter shall cease to use the Patent Rights or the Technology in any manner or for any
purpose whatsoever; and 

  

	 	(b)	the Licensee shall deliver up to the Licensor all Technology in its possession and control and the Licensee shall have no further right of any nature at all in the
Patent Rights or the Technology; and 

  

	 	(c)	the Licensee may sell all stocks of the Licensed Products and Licensed Processes which remain unsold at the date of termination, and may complete all Licensed Services
which are in the course of being provided at the date of termination, provided that within thirty (30) days after the date of such sale of Licensed Products or Licensed Processes, or the completion of such Licensed Services, the Licensee
submits royalties to the Licensor with respect thereto, computed in accordance with royalty provisions of the Agreement hereof; and 

  

	 	(d)	in the event that any stock of Licensed Products and Licensed Processes remain unsold or any Licensed Services remain uncompleted within six months of the date of
termination, the Licensee shall at the sole discretion of the Licensor require all unsold Licensed Products and Licensed Processes to remain unsold or be destroyed and the Licensed Services remain uncompleted; and 

 

	 	(e)	the Licensor and any of its assignees or licensees shall have the right, without payment of any compensation, fee, indemnity, or other remuneration, to sell Licensed
Products or Licensed Processes and to provide Licensed Services to any of the Licensee’s customers. 

  
 Page 14 of 20

 ARTICLE XI - PATENT PROSECUTION AND LICENSEE COVENANTS 

 

	11.1	Licensor, at the Licensee’s expense, shall file, prosecute and maintain all patents and patent applications specified under Patent Rights and, subject to the terms
and conditions of this Agreement, all such patents and patent applications shall be licensed to the Licensee hereunder. Title to all such patents and patent applications shall reside in Licensor. Licensor shall have full and complete control over
all patent matters in connection therewith under the Patent Rights, provided however, that Licensor shall (a) cause its patent counsel to timely copy Licensee on all official actions and written correspondence with any patent office, and
(b) allow Licensee an opportunity to comment and advise Licensor. Licensor shall consider and reasonably incorporate all comments and advice. By concurrent written notification to Licensor and its patent counsel at least thirty (30) days
in advance (or later at Licensor’s discretion) of any filing or response deadline, or fee due date, Licensee may elect not to have a patent application filed in any particular country or not to pay expenses associated with prosecuting or
maintaining any patent application or patent, provided that Licensee pays for all costs incurred up to Licensor’s receipt of such notification. Failure to provide such notification can be considered by Licensor to be Licensee’s
authorization to proceed at Licensee’s expense. Upon such notification, Licensor may file, prosecute, and/or maintain such patent applications or patent at its own expense and for its own benefit, and any rights or license granted hereunder
held by Licensee, Affiliates or Sublicensee(s) relating to the Patent Rights which comprise the subject of such patent applications or patent and/or apply to the particular country, shall terminate. The Licensee shall reimburse the Licensor within
thirty (30) days of the receipt of an invoice from the Licensor, for all costs associated with the preparation, filing, maintenance and prosecution of the Patent Rights as described in Article 11.1. 

 

	11.2	The Licensee shall have the right but not the obligation to identify any process, use or products arising out of the Patent Rights or out of improvements, variations,
updates, modifications, and enhancements to the Patent Rights, made by Dr. J. Thomas Buckley, Department of Biochemistry and Microbiology, University of Victoria, University of Victoria., subsequent to the Effective Date of this Agreement which
may be patentable and IDC shall, upon the request of the Licensee, take all reasonable steps to apply for a patent in the name of IDC/University of Victoria provided that the Licensee pays all costs of applying for, registering, and maintaining the
patent in those jurisdictions in which the Licensee might designate that a patent is required, and where the intent is for Protox and IDC to move to licensing these improvements to Protox as per Article 11.3 of this Agreement.

  

	11.3	For the term of this Agreement, IDC shall also grant to Protox an exclusive first option to obtain an exclusive license for future improvements to the Patent Rights
made by Dr. J. Thomas Buckley, Department of Biochemistry and Microbiology, University of Victoria, and where the term of this exclusive first option shall be six (6) months from the date of disclosure of the improvements to Protox by IDC,
and where the terms and conditions of such future licenses will be the subject of future negotiation between Protox and IDC, but where the parameters for royalties and other compensation shall not exceed industry licensing norms and, also, be
reflective of the stage of development of the improvements. 

  

	11.4	 Subject only to the rights of JHU to use Licensed Products, Licensed Processes and Licensed Services, including the ability to distribute any
biological material disclosed and/or claimed in Patent Rights for non-profit academic research to non-commercial entities as is customary in the scientific community (the “Non-commercial Uses”) which are granted to JHU under Section 2 .1,
JHU agrees that it will not use the Patent Rights, Licensed Products, Licensed Processes and Licensed Services, including the ability to distribute any biological material disclosed and/or claimed in Patent Rights for any use other than the
Non-commercial Uses. JHU at its discretion may inform Protox in confidence of any improvements made by JHU and its 

  
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affiliated researchers to the Technology which are disclosed to the Office of Licensing and Technology Development and assigned to JHU. 

 

	11.5	The Licensee represents and warrants to the Licensor that is a corporation duly organized, existing and in good standing under the laws of the Province of British
Columbia and has the power, authority and capacity to enter into this Agreement and to carry out the transactions contemplated by this Agreement, all which have been duly and validly authorized the all the requisite corporate proceedings.

  

	11.6	The Licensee will comply with all laws, regulations and ordinances, whether Federal, State, Provincial, County or Municipal or otherwise, with respect to the rights
granted herein. 

  

	11.7	The Licensee will pay all taxes and any related interest and penalty designated in any manner at all and imposed as a result of the existence or operation of this
Agreement, including without limitation tax which the Licensee is required to withhold or deduct from payments to the Licensor. The Licensee will provide upon request evidence as may be required by Canadian or US tax authorities to establish that
tax has been paid. The royalties specified in this Agreement are exclusive of taxes. If the Licensor is required to collect a tax to be paid by the Licensee, an Affiliate, or its Sublicensees, the Licensee will pay the tax to the Licensor on demand.

 ARTICLE XII - GENERAL TERMS AND CONDITIONS 

 

	12.1	Time shall be of essence in this Agreement. 

  

	12.2	The failure of a Party to enforce, at any time, any of the provisions of this Agreement or any of its rights hereunder, or to insist upon strict adherence to any
conditions of this Agreement shall not be considered to be a waiver of such provision or right or condition, nor shall it deprive that Party of the right thereafter to enforce any such provision or right or insist upon such strict adherence. Where a
party waives any of its rights under this Agreement, such waiver will be valid only where it is expressed in writing and only where it is signed by the Party for whose benefit such right was granted. 

 

	12.3	Formal notices required or permitted by this Agreement shall be in writing and shall be delivered by hand, by facsimile, or by double registered mail as follows:

 To the Licensor: 
 IDC 
 Innovation and Development Corporation 

PO Box 3075, STN CSC 
 R-Hut, McKenzie Ave 
 Victoria, BC, Canada, V8W 3W2 

Attention: Dr. Doug Tolson, Vice President 
 Phone: (250) 721-6500 
 Fax: (250) 721-6497 

A copy of all official correspondence shall be sent at the same time to: 

Office of Licensing and Technology Development 
 The Johns Hopkins University 
 100 North Charles Street,
5th Floor 

Baltimore, MD 21201 
 Tel: (410) 516-8300 
 Fax: (410) 516-4411 

Attention: Director 

  
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 To the Licensee: 

Protox Pharmaceuticals Inc. 
 1400-1055 West Hastings St 
 Vancouver, BC, Canada, V6E 2E9 

Phone: (604) 688-0199 
 Fax: (604) 688-0173 
 Attention: President or CEO 

 

	12.4	The Parties hereto agree that the exclusive jurisdiction and venue for any claim or law suit under this Agreement if brought by Licensee shall be the state, province
and federal courts sitting in JHU’s state or IDC’s province, as appropriate, and if brought by Licensor shall be the province and federal courts sitting in Licensee’s province, and each of the Parties hereby agrees and submits itself
to the exclusive jurisdiction and venue of such courts for such purpose. 

  

	12.5	This Agreement constitutes the entire agreement between the Parties relating to the subject matter herein and supercedes any and all prior written or oral agreements,
negotiations, representations and understandings between the parties; and this Agreement may not be amended except in writing signed by all Parties. 

  

	12.6	No party shall be liable to another party for any failure to comply with or any delay in the performance of the terms of this Agreement where such failure or delay,
directly or indirectly or in whole or in part, arises from: 

  

	 	(a)	accident, fire, flood, earthquake, or explosion as defined in the business insurance documentation of the Licensee; 

 

	 	(b)	hostile or warlike action in time of peace or war as defined in the business insurance documentation of the Licensee; 

 

	 	(c)	insurrection, rebellion, revolution, civil war, acts of terrorism, sabotage, civil disobedience, usurped power, or action taken by governmental authority in hindering,
combating or defending against such occurrence as defined in the business insurance documentation of the Licensee; 

  

	 	(d)	strikes, slowdowns, lockouts or other labour or employee interruptions or disturbances initiated and as defined in accordance with labour laws of the jurisdiction in
which the Technology is being manufactured, whether involving employees of that party or of any other person over which that party has no reasonable control; or 

 

	 	(e)	acts, regulations or directives of governmental authority of competent jurisdiction. 

Any party seeking to rely on these provisions may only do so if notice in writing identifying the event relied on and the
date of its occurrence is given to the other party within ten (10) days of the occurrence of the event. 
  

	12.7	If any provision hereof is held or declared invalid, illegal or unenforceable by a court of competent jurisdiction, this Agreement shall continue in full force and
effect with respect to the remaining provisions, and all rights and remedies accrued under the enforceable provisions shall survive such a declaration. 

  

	12.8	The provisions of this Agreement relating to ownership of the Patent Rights, Technology, Confidential Information, Warranties, and Indemnification and Limitation of
Liabilities and Insurance, shall survive the early termination or expiration of this Agreement. 

  
 Page 17 of 20

	12.9	Licensee, Affiliates and Sublicensee(s) shall not use the name of Licensor, The University of Victoria, the University of Victoria Innovation and Development
Corporation, The Johns Hopkins University or The Johns Hopkins Health System or any of its constituent parts, such as the Johns Hopkins Hospital or any contraction thereof or the name of Inventors in any advertising, promotional, sales literature or
fundraising documents without prior written consent from an authorized representative of Licensor. Licensee, Affiliates and Sublicensee(s) shall allow at least seven (7) business days notice of any proposed public disclosure for Licensor’s
review and comment or to provide written consent. 

  

	12.10	Subject to the terms and conditions of this Agreement, this Agreement is binding on the Parties and their respective successors and permitted assigns.

  

	12.11	Headings in this Agreement are for reference only and do not form part of this Agreement and are not to be used in the interpretation of this Agreement.

  

	12.12	This Agreement may be executed in counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument.

 IN WITNESS WHEREOF, the parties hereto have caused this instrument to be signed in triplicate by their duly authorized
officers. 
  

									
	UNIVERSITY OF VICTORIA	 		 		 	
	 INNOVATION AND DEVELOPMENT
 CORPORATION
	 		 		 	
	PER:	 		 	WITNESS
			
	 /s/ Doug Tolson
	 		 	 /s/ E. A. Wharf

	Print Name:	 	Doug Tolson	 		 	Print Name:	 	E. A. Wharf
		 	Vice-President	 		 		 	
	
	THE JOHNS HOPKINS UNIVERSITY
				
	PER:	 		 		 	WITNESS
			
	 /s/ Keith Baker
	 		 	 /s/ Sigrid G. Volico

	Print Name:	 	Keith Baker	 		 	Print Name:	 	Sigrid G. Volico
	09/30/2004	 	Senior Director of Licensing	 		 	09/30/2004	 	
				
	PROTOX PHARMACEUTICALS	 		 		 	
	PER:	 		 		 	WITNESS	 	
			
	 /s/ Tazdin Esmail
	 		 	  

	Print Name:	 	Tazdin Esmail	 		 	Print Name:	 	[Name illegible]
		 	President and CEO	 		 		 	

  
 Page 18 of 20

 SCHEDULE A - CURRENT PENDING PATENTS 

The Patent Rights are the subject of US Provisional Application # 60/314,613, filed on August 24, 2001, which was subsequently converted to
PCT Patent Application No. PCT/US02/27061, filed on August 23, 2002, entitled “Proaerolysin Containing Protease Activation Sequences and Methods of Use for Treatment of Prostate Cancer”. 

The Patent Rights are currently the subject of multiple national patent applications, as outlined below for the indicated jurisdictions: 

Canadian Patent Application No. 2457903, filed 8/23/2002, titled: PROAEROLYSIN CONTAINING PROTEASE ACTIVATION SEQUENCES AND METHODS OF USE
FOR TREATMENT OF PROSTATE CANCER 
 United States Patent Application No. 10/487,115, filed 2/18/2004, titled: PROAEROLYSIN
CONTAINING PROTEASE ACTIVATION SEQUENCES AND METHODS OF USE FOR TREATMENT OF PROSTATE CANCER 
 Japanese Patent Application
No. 2003-523270, filed February 24, 2004, titled: PROAEROLYSIN CONTAINING PROTEASE ACTIVATION SEQUENCES AND METHODS OF USE FOR TREATMENT OF PROSTATE CANCER 
 Chinese Patent Application No. 02816622.1 filed 8/23/2002, titled: PROAEROLYSIN CONTAINING PROTEASE ACTIVATION SEQUENCES AND METHODS OF USE FOR TREATMENT OF PROSTATE CANCER 

European Union Patent Application No. 02768702.9 filed 8/23/2002, titled: PROAEROLYSIN CONTAINING PROTEASE ACTIVATION SEQUENCES AND METHODS
OF USE FOR TREATMENT OF PROSTATE CANCER 
 South African Patent Application No. 2004/2319 filed 8/23/2002, titled: PROAEROLYSIN
CONTAINING PROTEASE ACTIVATION SEQUENCES AND METHODS OF USE FOR TREATMENT OF PROSTATE CANCER 
 Australian Patent Application
No. 2002331720 filed 8/23/2002, titled: PROAEROLYSIN CONTAINING PROTEASE ACTIVATION SEQUENCES AND METHODS OF USE FOR TREATMENT OF PROSTATE CANCER 
 Indian Patent Application No. 379/KOLNP/2004 filed March 22, 2004, titled: PROAEROLYSIN CONTAINING PROTEASE ACTIVATION SEQUENCES AND METHODS OF USE FOR TREATMENT OF PROSTATE CANCER

  
 Page 19 of 20

 SCHEDULE B - PERFORMANCE REQUIREMENTS 

 

	1.	 Protox will have raised
$[*...***...] in financing by December 31,
2004. 

  

	2.	Protox will have hired an expert in clinical regulatory affairs to assist Protox in preparing PSA- PA1 (a therapeutic candidates being developed by Protox based on the
Technology), or other product based on the Technology, for submission of an Investigational New Drug Application (“IND”) by June 30, 2004. 

  

	3.	Protox will have engaged a manufacturer to produce PSA-PA1 to the standards required for an IND submission by September 30, 2004. 

 

	4.	Protox will have engaged a contractor to conduct pre-clinical studies on PSA-PA1 in preparation for an IND submission by September 30, 2004.

  

	5.	Upon IND approval, Protox will begin Phase I studies within one year of IND approval if there is a reasonable business case for continuing to pursue the further
development of the Technology. 

  

	6.	Upon successful completion of Phase I studies, wherein the results of the studies demonstrate the safety of PSA-PAI, or other product based on the Technology, Protox
will use reasonable efforts to acquire the resources and expertise necessary to begin and complete Phase II studies, within a reasonable time frame, and provided that there is a reasonable business case for continuing to pursue the further
development of the Technology. 

  

	7.	Upon successful completion of Phase II studies, wherein the results of the studies demonstrate the safety and efficacy of PSA-PAI, or other product based on the
Technology, Protox will use reasonable efforts to acquire the resources and expertise necessary to begin and complete Phase III studies, within a reasonable time frame, and provided that there is a reasonable business case for continuing to pursue
the further development of the Technology. 

  

	8.	Upon successful completion of Phase III studies, wherein the results of the studies demonstrate the safety and efficacy of PSA-PAI, or other product based on the
Technology, Protox will use reasonable efforts to acquire the resources and expertise necessary to begin and complete FDA approval, within a reasonable time frame, and provided that there is a reasonable business case for continuing to pursue the
further development of the Technology. 

  

	9.	Upon FDA approval, wherein the results of the studies demonstrate the safety and efficacy of PSA-PAI, or other product based on the Technology, Protox will use
reasonable efforts to acquire the resources and expertise necessary to bring the new drug to market, within a reasonable time frame, and provided that there is a reasonable business case for continuing to pursue the further development of the
Technology. 

  
  

* ***Confidential Treatment Requested 

  
 Page 20 of 20

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