Document:

a50455617ex10_1.htm

Exhibit 10.1

 

Private & Confidential                                           

 

CONFIDENTIAL TREATMENT

 

Dyax Corp. has requested that portions of this document be accorded confidential treatment pursuant to Rule 24b-2 promulgated under the Securities Exchange Act of 1934, as amended.

DATED JULY 26, 2012

­­­­­­­­­­­­­­______________________________________________

MEDIMMUNE LIMITED (1)

and

DYAX CORP. (2)

­­­­­­­­­­­­­­______________________________________________

2012

AMENDED AND RESTATED LICENSE AGREEMENT

­­­­­­­­­­­­­­______________________________________________

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

  

  

THIS AGREEMENT is made as of July 26, 2012 (“Effective Date”)

 

BETWEEN:

 

	
(1)

	
MEDIMMUNE LIMITED (Registered in England No. 2451177) whose registered office is at Milstein Building, Granta Park, Cambridge, CB21 6GH, UK ("MedImmune").

 

	
(2)

	
DYAX CORP. a corporation organised and existing under the laws of the State of Delaware having its principal place of business at 55 Network Drive, Burlington, Massachusetts  01803 USA ("Dyax").

 

BACKGROUND:

 

	
(a)

	
The Parties entered into the Original Agreements; an Amendment Agreement, a Second Amendment Agreement which agreements were consolidated in the 2006 Amended and Restated Agreement (as defined below) and then into the 2007 Amended and Restated Agreement (as defined below); all regarding the use of their respective rights in (b) and (c) below.

 

	
(b)

	
MedImmune is the owner or exclusive licensee (pursuant to an agreement dated 7 January 1997 between MedImmune and the Medical Research Council ("MRC")) of the MedImmune Antibody Phage Display Patents (as defined below).

 

	
(c)

	
Dyax has the right to grant licenses to certain technology described and claimed in US Patent No. 5,223,409 entitled "Directed Evolution of Novel Binding Proteins", US Patent No. 5,403,484 entitled "Viruses Expressing Chimeric Binding Proteins", US Patent No. 5,571,698 entitled "Directed Evolution of Novel Binding Proteins", and other Dyax Base Phage Display Patent Rights (as defined below).

 

	
(d)

	
Dyax also has the right to grant licenses to use the Dyax Antibody Library (as defined below) and related technology described in the Dyax Library-Related Patent Rights.

 

In consideration of the mutual covenants and undertakings set out below, THE PARTIES AGREE as follows:

1.            Definitions

 

	
1.1

	
In this Agreement, the terms defined in this Clause shall have the meanings specified below:

 

"2006 Amended and Restated Agreement" means the agreement made between MedImmune and Dyax, dated 21 June 2006.

 

"2007 Amended and Restated Agreement" means the agreement made between MedImmune and Dyax, dated 30 July 2007.

 

"Abbott Agreement" means the Agreement dated 20 January 1994 between MedImmune and Knoll AG (now known as Abbott Laboratories Inc) and relating to D2E7.

 

"Acceptance Fee" means the payment to MedImmune by Dyax or a Dyax Sublicensee, as appropriate, under Clauses 8.1.1, 8.2.1, and 8.3.1 hereof.

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 1

  

"Additional Diagnostic Licences" means the Dyax Product Licences detailed in Clause 3.7.

 

"Affiliate" means any company, partnership or other entity which directly or indirectly Controls, is Controlled by or is under common Control with any other entity.

 

"Affimed License" means that certain Patent Cross-License Agreement dated August 4, 2003 by and between Affimed Therapeutics AG ("Affimed") and Dyax, a redacted copy of which has been provided to MedImmune.

 

"Affimed Patent Rights" has the meaning set forth in Schedule 9-A.

 

"Agreement" means this agreement and any and all Schedules, appendices and other addenda to it as may be amended from time to time in accordance with the provisions of this agreement.

 

"Amendment Agreement" means the agreement made between MedImmune and Dyax, dated 3 January 2003, to amend the Original Agreements.

 

"Antibody" means a molecule or a gene encoding such a molecule comprising or containing one or more immunoglobulin variable domains or parts of such domains or any existing or future fragments, variants, modifications or derivatives thereof.

 

"Antibody Diagnostic License Agreement" means the License Agreement between Dyax and MedImmune dated 31 December 1997 relating to antibody diagnostic products.

 

"Antibody Library" means any Antibody library constructed using processes which are covered by a claim of an issued and unexpired patent included within the MedImmune Antibody Phage Display Patents which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise.

 

"Antibody Services" means the provision of research and/or development services for the identification, generation, derivation or development of one or more Antibody Libraries or Antibodies derived therefrom.

 

"Biosite License" means the license agreement effective March 28, 2002 between Biosite Incorporated ("Biosite") and Dyax, a redacted copy of which has been provided to MedImmune.

"Biosite Patent Rights" has the meaning set forth in Schedule 9-B.

"Bi-Specific Antibody" means an Antibody directed to two Nominated Targets as described in Clause 4.6.

 

"Business Day" means a day (other than a Saturday or Sunday) on which the banks are ordinarily open for business in the City of London and the Commonwealth of Massachusetts.

 

"Catalytic Antibodies" means solely those Antibodies which bind to and catalyze the chemical transformation of a substrate and in which an Antibody binding region is involved in said catalysis.

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 2

  

"Commencement Date" means 3 January 2003.

 

"Commercial Party" shall mean any party, other than an Affiliate of MedImmune, which has been authorized by MedImmune to make, have made, use, sell or have sold Licensed Products and (i) to which MedImmune (or any of its Affiliates), sells, transfers, or otherwise makes available any Licensed Intermediate or (ii) for which MedImmune (or any of its Affiliates) performs services or provides proprietary information, with respect to any Licensed Intermediate.

 

"Competent Authority" means any national or local agency, authority, department, inspectorate, minister, ministry official, parliament or public or statutory person (whether autonomous or not) of any government of any country having jurisdiction over either any of the activities contemplated by this Agreement or the Parties including the European Commission, the Court of First Instance and the European Court of Justice.

 

"Controls" means the ownership, directly or indirectly, of more than fifty percent (50%) of the outstanding equity securities of a corporation which are entitled to vote in the election of directors or a more than fifty percent (50%) interest in the net assets or profits of an entity which is not a corporation.

 

"Development and Licence Agreement" means the agreement referred to in Clause 8.7 of this Agreement.

 

"Development Licence" means a licence as described in Clause 10.1.

 

"Development Licence Option" means the option for MedImmune to enter into a Development Licence with Dyax for any Dyax Therapeutic Antibody Product as described in Clause 10.1;

 

"Development Licence Option Notice" means the notice described in Clause 10.2;

 

"Diagnostic Antibody Product" means any preparation in the form of a device, compound, kit or service with utility in the diagnosis, prognosis, prediction or disease management of a disorder for any indication which contains, comprises or the process of development or manufacture of which utilises a MedImmune Licensable Antibody.  The term "Diagnostic Antibody Product" shall not include any Research Product.

 

"Diagnostic Collaboration Licences" means the Dyax Product Licences detailed in Clause 3.6.

 

"Disclosing Party" means a Party which discloses Confidential Information to the other Party.

 

"Domantis License" means that certain Cross License Agreement dated April 6, 2006 by and between Domantis Limited ("Domantis") and Dyax, a redacted copy of which has been provided to MedImmune.

 

"Domantis Patent Rights" has the meaning set forth in Schedule 9-C.

 

"Dyax Antibody Library" means Dyax's proprietary phagemid-based Fab libraries and phage-based Fab libraries of human antibody sequences as identified in Schedule 6.

 

"Dyax Antibody Library Improvements" means the improvements described in Clause 11.7(f).

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 3

  

"Dyax Know-How" means the Confidential Information of Dyax which constitutes unpatented know how, technical and other information related to the subject matter of the Dyax Patent Rights and Dyax Antibody Libraries, as identified in Schedule 6 as updated from time to time in accordance with Clause 11.5.

 

"Dyax Licensable Antibody" means any Antibody (including a Bi–Specific or Poly- Specific Antibody) to a Target which Antibody has been selected by MedImmune from the Dyax Antibody Library.

 

"Dyax Materials" means the materials which comprise or relate to the Dyax Antibody Library as described in Schedule 6 together with any materials which comprise or relate to any improved version of the Dyax Antibody Library and made available to MedImmune by Dyax in accordance with Clause 11.4.

 

"Dyax Partner" means (a) any person or entity with whom Dyax has entered into a written agreement for the performance of Antibody Services or other services related to the commercialization of any Product, or (b) any other Third Party to which Dyax is selling or licensing in good faith in accordance with its normal business practice MedImmune Antibody Libraries or Antibodies derived therefrom; provided, that in no event shall the term "Dyax Partner" include any Third Party which is a bare licensee under the Dyax Patent Rights.

 

"Dyax Patent Rights" means all Valid Claims of the patents and patent applications listed in Schedule 5, as well as any and all, reissues, reexaminations, renewals and extensions thereof, and any and all continuations, continuations-in-part and divisionals of the applications for such patents in the United States and all counterparts thereto in countries outside the United States but shall not include (i) Valid Claims in US Patent No. 5,233,409 to the extent they cover single chain antibodies, nor (ii) Valid Claims of any continuation, continuation-in-part or divisional applications of the US Patents or any counterparts of the US Patents in countries outside of the United States, that cover particular protein or peptide sequences, or nucleic acids thereof, that bind to a specific biological or molecular target.  Dyax Patent Rights include the Dyax Base Phage Display Patent Rights (the patents and patent applications listed in Schedule 5A) and the Dyax Library-Related Patent Rights (the patents and patent applications listed in Schedule 5B).

 

"Dyax Product Licence" means each license granted to Dyax pursuant to Clause 5.1.

 

"Dyax Therapeutic Antibody Product" means any Therapeutic Antibody Product identified, generated or derived by Dyax for itself or its Affiliates but not a Therapeutic Antibody Product identified, generated or derived by Dyax for, or on behalf of, a Third Party.

 

"Dyax Sublicensee" means any (a) Dyax Partner to which Dyax grants a sublicense in accordance with the terms of this Agreement, and/or (b) any sublicensee of Dyax under a Dyax Product Licence.

 

"Dyax Target Option Notice" means the notice described in Clause 4.1.

 

"D2E7" means any Antibody directed against the Target TNF alpha.

 

"End User" shall mean a person or entity whose use of a product results in its destruction, loss of activity and/or loss of value.

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 4

  

"Exploit" means to make, have made, use, sell or import.

 

"Extension Fee" means the fee described in Clause 4.2.

 

"FDA" means the United States Food and Drug Administration, the equivalent Competent Authority in any country of the Territory or any successor bodies thereto.

 

"Field of Use" means research and development of human or non-human therapeutics and human or non-human in vitro diagnostic or research reagent uses only and not any in vivo diagnostics, purifications or separations, or other industrial purposes.

 

"First Additional Licence Allocation" means the Dyax Product Licences referenced in Clause 3.5(a).

 

"First Commercial Sale" means the first commercial sale of (a) any Product, or Other Product by Dyax or a Dyax Sublicensee (or its sublicensee) or (b) any MedImmune Product by MedImmune or a MedImmune Sublicensee  (or its Sublicensee) in each case in any country after grant of a Marketing Authorisation.

 

"Force Majeure" means any event outside the reasonable control of either Party affecting its ability to perform any of its obligations (other than payment) under this Agreement, including Act of God, fire, flood, lightning, war, revolution, act of terrorism, riot or civil commotion, but excluding strikes, lock-outs or other industrial action, whether of the affected Party's own employees or others, failure of supplies of power, fuel, transport, equipment, raw materials or other goods or services.

 

"GAAP" means United States generally accepted accounting principles, consistently applied.

 

"Genentech License" means the license agreement effective September 19, 2002 between Dyax and Genentech, Inc. ("Genentech"), a redacted copy of which has been provided to MedImmune.

"Genentech Patent Rights" have the meaning set forth in Schedule 9-D.

"IDE" means an Investigational Device Exemption application, as defined in Title 21 of the United States Code of Federal Regulations, filed with the FDA or an equivalent foreign filing.

 

"IND" means an Investigational New Drug Application, as defined in Title 21 of the United States Code of Federal Regulations, that is required to be filed with the FDA before beginning Phase I Clinical Trials of any Therapeutic Antibody Product in human subjects, or an equivalent foreign filing.

 

"Initial Licence Allocation" means the [*****] Dyax Product Licences in Clause 3.2, the [*****] additional Dyax Product Licences in Clause 3.3, and the [*****] additional Dyax Product Licences in Clause 3.4.

 

"Licensed Intermediate" means any fusion protein (including without limitation any chimeric binding protein), genetic package (including without limitation any virus, spore or cell) or other intermediate compound, or any compound derived form any of the foregoing, that is (i) discovered, made or developed by MedImmune using a method covered in whole or in part by Dyax Base Phage Display Patent Rights or (ii) is otherwise covered by Dyax Base Phage Display Patent Rights.

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 5

  

"Licensed Product" means any product intended for sale to an End User as a human or non-human therapeutic or in vitro diagnostic or research reagent (and in the case of a diagnostic or research reagent contains one or more antibodies as a binding moiety) that prior to or after December 31, 1997 (the effective date of the Original Agreements) is discovered, made or developed, whether by MedImmune, its Affiliates or any Commercial Party, using a Licensed Intermediate or a method covered in whole or in part by the Dyax Base Phage Display Patent Rights.

 

"Major Market" means any one of the following: (i) the United States of America, (ii) any country in Europe which is subject to the Marketing Authorisation procedure of the European Medicines Evaluation Agency, or (iii) Japan.

 

"Marketing Authorisation" means any approval (including all applicable pricing and governmental reimbursement approvals) required from the FDA or relevant Competent Authority to market and sell a Product in a particular country.

 

"MedImmune Antibody Phage Display Patents" means: (a) the patents and patent applications listed in Schedule 1 and any patents issuing from such patent applications, together with any divisions, registrations, confirmations, reissues, extensions, renewals, continuations, continuations-in-part, revalidations, additions, substitutions, renewals or supplementary protection certificates thereof throughout the world; and (b) any Patent Rights which claim or cover any invention or discovery which is developed by MedImmune or its Affiliates at any time during the term of this Agreement directly related to Antibody phage display or Antibody Services; provided, however, that MedImmune Antibody Phage Display Patents shall always exclude (i) MedImmune Diabodies Patent Rights, (ii) any Patent Rights owned or controlled by MedImmune which claim or cover Catalytic Antibodies, (iii) any Patent Rights owned or controlled by MedImmune which claim ribosome display technology, (iv) any Patent Rights which claim Single Domain Antibodies, (v) any Patent Rights acquired by MedImmune after 3 January 2003 from any Third Party for consideration or as a result of MedImmune's acquisition of or merger with such Third Party, and (vi) any use of the said Patent Rights in the field of Research Products.

 

"MedImmune Diabodies Patent Rights" means (a) the Patent Rights entitled "Diabodies – multivalent and multispecific binding proteins, their manufacture and use", PCT/GB93/02492 and (b) the Patent Rights entitled "Retargeting antibodies and diabodies", PCT/GB94/02019.

 

"MedImmune Gatekeeping Procedure" means the procedure set out in Schedule 2 which MedImmune shall carry out in respect of a Nominated Target prior to the grant of any Dyax Product Licence.

 

"MedImmune Know-How" means any Confidential Information of MedImmune which constitutes unpatented know-how, technical and other information related to the subject matter of the MedImmune Antibody Phage Display Patents as identified in Schedule 3 and as amended from time to time in accordance with Schedule 3;

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 6

  

"MedImmune Licensable Antibody" means any Antibody (including a Bi–Specific Antibody or a Poly-Specific Antibody) to a Target (a) where such Antibody has been identified, generated, developed, produced or derived by Dyax or a Dyax Sublicensee or its sublicensees and (b) the identification, generation, development, production or derivation of such Antibody uses any of the processes claimed or covered by a claim of an issued and unexpired patent included within the MedImmune Antibody Phage Display Patents (which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise) or uses the MedImmune Know-How and (c) which is potentially useful for the development of any Diagnostic Antibody Product and/or any Therapeutic Antibody Product.

 

"MedImmune Product" means (a) any preparation for the treatment or prevention of disease, infection, or other condition in humans for any indication which contains, comprises, or the process of development or manufacture of which utilises a Dyax Licensable Antibody or (b) any preparation in the form of a device, compound, kit or service with utility in the diagnosis, prognosis, prediction, or disease management of a disorder for any indication which contains, comprises or the process of development or manufacture of which utilises a Dyax Licensable Antibody.

 

"MedImmune Product Licences" means each licence granted to MedImmune pursuant to Clause 12.

 

"MedImmune Site" means the MedImmune premises described in Clause 11.3.

 

"MedImmune Status Report" means the report described in Clause 12.4.

 

"MedImmune Sublicensee" means any Third Party to which MedImmune grants a sublicense in accordance with the terms of this Agreement, under a MedImmune Product Licence.

 

"Net Sales" means, with respect to a Product sold by Dyax, its Affiliate or a Dyax Sublicensee (or its sublicensees) or an Other Product sold by Dyax , its Affiliate or its sublicensee or with respect to a MedImmune Product sold by MedImmune, its Affiliate or a MedImmune Sublicensee (or its sublicensee), the price invoiced by that party to the relevant purchaser (or in the case of a sale or other disposal otherwise than at arm's length, the price which would have been invoiced in a bona fide arm's length contract or sale) but deducting the costs of packing, transport and insurance, customs duties, any credits actually given for returned or defective Products, Other Products, MedImmune Products, normal trade discounts actually given, and sales taxes, VAT or other similar tax charged on and included in the invoice price to the purchaser.

 

"Nominated Target" has the meaning set forth in Clause 4.1(a).

 

"Original Agreements" means the Therapeutic Product License Agreement and the Antibody Diagnostic License Agreement.

 

"Other Product" has the meaning set forth in Clause 7.1.

 

"Other Purposes" has the meaning set forth in Clause 7.1.

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 7

  

"Party" means MedImmune or Dyax.

 

"Patent Rights" means any patent applications and any patents issuing from such patent applications, author certificates, inventor certificates, utility certificates, improvement patents and models, and certificates of addition and all counterparts of them throughout the Territory, including any divisional applications and patents, filings, renewals, continuations, continuations-in-part, patents of addition, extensions, reissues, substitutions, confirmations, registrations, revalidation and additions of or to any of them, as well as any supplementary protection certificates and equivalent protection rights in respect of any of them.

 

"Pharmacia Agreement" means the agreement between MedImmune and Pharmacia P-L Biochemicals Inc. dated 11 September 1991.

 

"Pharmacia P-L Biochemicals Inc." means Pharmacia P-L Biochemicals Inc (now known as Amersham Biosciences).

 

"Phase I Clinical Trial" means a human clinical trial in any country that is intended to initially evaluate the safety of an investigational Product in volunteer subjects or patients that would satisfy the requirements of 21 CFR 312.21(a), or its foreign equivalent and may evaluate the Product's therapeutic or antigenic effects.

 

"Phase II Clinical Trial" means studies in humans of the safety, dose ranging and efficacy of a Product that would satisfy the requirements of 21 CFR 312.21(b).

 

"Phase III Clinical Trial" means a pivotal human clinical trial in any country the results of which could be used to establish safety and efficacy of a Product as a basis for a marketing application that would satisfy the requirements of 21 CFR 312.21(c).

 

"Product" means a Diagnostic Antibody Product or a Therapeutic Antibody Product.

 

"Quarter" means each period of three (3) months ending on March 31, June 30, September 30, or December 31 and "Quarterly" shall be construed accordingly.

 

"Research Products" means any product in relation to which Pharmacia P-L has an exclusive licence from MedImmune pursuant to the Pharmacia Agreement.

 

"Reservation Period" means the period described in Clause 4.2.

 

"Restatement Date" means the date of this Agreement first written above.

 

"Second Additional Licence Allocation" means the Dyax Product Licences referenced in Clause 3.5(b).

 

"Second Amendment Agreement" means the agreement to amend the Amendment Agreement made between MedImmune and Dyax dated 18 September 2003.

 

"Single Domain Antibodies" means an Antibody containing only a single domain (heavy or light).

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 8

  

"Specified Diagnostic Agreements" means (i) the Collaboration and License Agreement [*****], and (ii) the Collaboration and License Agreement [*****],  and (iii) the Technology Transfer and License Agreement [*****], as such agreements may be amended from time to time.

 

"Supporting Information" means the information described in Clause 10.3.

 

"Target" shall mean:

 

	
  

	
(a)

	
a polynucleotide sequence corresponding to a sequence identified in a publicly available curated database such as GenBank® by means of an accession number or similar sequence information that uniquely identifies that sequence; together with:

 

	
  

	
(i)

	
all variants of the identified sequence in man and other species known and demonstrated to MedImmune or Dyax (as the case may be) at the time of submission to the MedImmune Gatekeeping Procedure or to Dyax (as the case may be) to have functional equivalence to (a); and

 

	
  

	
(ii)

	
all post-transcriptional material encoded by (a) and (i) (including splice variants); and

 

	
  

	
(iii)

	
all post-translational material encoded by such post-transcriptional material; and

 

	
  

	
(iv)

	
all multimeric forms of (iii) irrespective of whether homomeric or heteromeric; and

 

	
  

	
(v)

	
where any of (iii) or (iv) is known to form a heteromeric complex with one or more non-identical subunits, that heteromeric complex must be identified in its entirety at he time of submission to the MedImmune Gatekeeping Procedure or to Dyax (as the case may be) using such accession numbers of a publicly available curated database entry as correspond to each of the component subunits; or

 

	
  

	
(b)

	
a non-proteinaceous antigen that is uniquely identifiable in a routine manner using publicly available curated databases and/or such other suitable written material as is available.

 

"Territory" means all countries of the world.

 

"Therapeutic Antibody Product" means any preparation for the treatment or prevention of disease, infection or other condition in humans for any indication which contains, comprises, or the process of development or manufacture of which utilises, a MedImmune Licensable Antibody.  The term "Therapeutic Antibody Product" shall not include any Research Product.

 

"Therapeutic Product License Agreement" means the License Agreement between Dyax and MedImmune dated 31 December 1997 relating to therapeutic products.

 

"Third Party" means any entity or person other than Dyax, MedImmune or their respective Affiliates.

 

"Updates" means the updates described in Clause 11.5.

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 9

  

"Valid Claim" means a claim of an issued and unexpired patent included within either (i) the MedImmune Antibody Phage Display Patents which have been licensed to MedImmune by the MRC; or (ii) the Dyax Patent Rights (as the case may be) which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise.

 

"XOMA Covenant" has the meaning set forth in Clause11.2(b).

"XOMA License" means that certain Amended and Restated License Agreement dated October 27, 2006 by and between XOMA Ireland Limited ("XOMA") and Dyax, a redacted copy of which has been provided to MedImmune.

"XOMA Know How" has the meaning set forth in the XOMA License.

"XOMA Patent Rights" has the meaning set forth in Schedule 9-E.

 

"Year" means initially the period from the Commencement Date to the end of that calendar year, and subsequently a calendar year.

 

	
1.2

	
The headings to clauses are inserted for convenience only and shall not affect the interpretation or construction of this Agreement.

 

	
1.3

	
Words imparting the singular shall include the plural and vice versa. References to persons include an individual, company, corporation, firm or partnership.

 

	
1.4

	
The words and phrases "other", "including" and "in particular" shall not limit the generality of any preceding words or be construed as being limited to the same class as any preceding words where a wider construction is possible.

 

	
1.5

	
References to any statute or statutory provisions of the United Kingdom shall include (i) any subordinate legislation made under it, (ii) any provision which it has superseded or re-enacted (whether with or without modification), and (iii) any provision which subsequently supersedes it or re-enacts it (whether with or without modification. References to any statute or regulation of the United States of America means that statute or regulation as it may be amended, supplemented or otherwise modified from time to time, and any successor statute or regulation. 

 

2.            Amended and Restated Licence Agreement and MedImmune Patent Licence from Dyax

 

	
2.1

	
This Agreement consolidates and replaces the Original Agreements, the Amendment Agreement the Second Amendment Agreement, the 2006 Amended and Restated Agreement and the 2007 Amended and Restated Agreement.

 

	
2.2

	
Subject to the terms and conditions set out in this Agreement, Dyax grants MedImmune and its Affiliates a world-wide, non-exclusive, royalty free licence (sub-licensable in accordance with the provisions of Clause 2.4) under the Dyax Base Phage Display Patent Rights (i) to research develop, make, have made, use, import, sell and have sold Licensed Products in the Field of Use, and (ii) to research, develop, make, and use Licensed Intermediates in the Field of Use (a) for sale or transfer to any Commercial Party, or (b) for transfer to any third party who is not permitted by MedImmune or its Affiliates to commercialize such Licensed Intermediates of any Licensed Product.

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 10

  

	
2.3

	
MedImmune acknowledges that the value of the Dyax Base Phage Display Patent Rights is measured in part by the value of products resulting from any Licensed Intermediate.  MedImmune agrees, therefore, that it will not sell, transfer, or otherwise make available a Licensed Intermediate to any Commercial Party and will not provide services or proprietary information with respect to any Licensed Intermediate solely within the Field of Use to any Commercial Party, unless such Commercial Party executes an agreement with MedImmune in which such Commercial Party agrees to use any Licensed Intermediate solely in the Field of Use.

 

	
2.4

	
Subject to Clause 12.3, MedImmune shall have no right to grant sublicences under the licence to Dyax Base Phage Display Patent Rights granted to MedImmune in this Clause 2, except MedImmune may grant a sublicence under the Dyax Base Phage Display Patent Rights to any Third Party to which MedImmune is licensing, selling or otherwise transferring Antibodies or Antibody Libraries solely for use by such Third Party with the Antibodies (including Antibodies which are supplied to MedImmune by the Third Party and in relation to which MedImmune provides services to optimize that Antibody before handing the Antibody back to the Third Party in its optimized form) or Antibody Libraries licensed, sold or otherwise transferred from MedImmune and solely for the purpose of developing therapeutic Antibody products or diagnostic Antibody products; provided that as a condition to any such sublicense, MedImmune shall require any such sublicensee to be bound by the terms of this Clause 2 and Clause 16.  For the avoidance of doubt, in no event shall MedImmune have the right to sublicense the Dyax Base Phage Display Patent Rights to any Third Party which is a bare licensee under the MedImmune Antibody Phage Display Patents.  Any Third Party which is granted a sublicense under the Dyax Base Phage Display Patent Rights by MedImmune shall have no right to grant further sublicenses.

 

	
2.5

	
MedImmune or its sublicensees shall indemnify Dyax and its Affiliates and their directors, officers, employees and agents and their respective successors, heirs and assigns (the "Dyax Indemnitees") against any liability, damage, loss or expense (including attorneys fees and expenses of litigation) incurred by or imposed upon the Dyax Indemnitees or any one of them in connection with any claims, suits, actions, demands or judgments by or in favour of any Third Party concerning any manufacture, use or sale of any Licensed Product or Licensed Intermediate by MedImmune or its sublicensee.

 

	
2.6

	
In partial consideration for the grant of rights set out above MedImmune agrees not to enforce against Dyax or its Affiliates the MedImmune Antibody Phage Display Patents during the term of this Agreement that Dyax or its Affiliates may infringe in practicing the inventions claimed in the Dyax Patent Rights.

 

3.            Dyax Option for Dyax Product Licences from MedImmune

 

	
3.1

	
Numbers of Options.  In accordance with this Clause 3, MedImmune grants to Dyax the following options to obtain Dyax Product Licences which may be exercised by Dyax for itself and for Dyax Sublicensees:

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 11

  

	
  

	
(a)

	
an Initial Licence Allocation of [*****] Dyax Product Licences for Therapeutic Antibody Products and/or Diagnostic Antibody Products shall be available from the Commencement Date as set out in Clauses 3.2, 3.3 and 3.4;

 

	
  

	
(b)

	
a First Additional Licence Allocation of [*****] Dyax Product Licences for Therapeutic Antibody Products and Diagnostic Antibody Products shall be available from the Commencement Date as set out in Clause 3.5(a).

 

	
  

	
(c)

	
[*****] Diagnostic Collaboration Licences for Diagnostic Antibody Products shall be available from the Commencement Date as set out in Clause 3.6;

 

	
  

	
(d)

	
[*****] Additional Diagnostic Licences for Diagnostic Antibody Products shall be available from the Commencement Date as set out in Clause 3.7; and

 

	
  

	
(e)

	
a Second Additional Licence Allocation of an unlimited number of Dyax Product Licences for Therapeutic Antibody Products and/or Diagnostic Antibody Products shall be available from the Effective Date of this Agreement as set out in Clause 3.5(b).

 

	
3.2

	
Subject to Clauses 3.3 and 3.4, MedImmune hereby grants to Dyax the option for Dyax to obtain [*****] Dyax Product Licences for both Therapeutic Antibody Products and Diagnostic Antibody Products, which may be exercised by Dyax only on a cumulative basis in accordance with the following schedule:

 

	
  

	
(a)

	
[*****] Dyax Product Licences on or before 31 December 2003;

 

	
  

	
(b)

	
[*****] additional Dyax Product Licences on or before 31 December 2004;

 

	
  

	
(c)

	
[*****] additional Dyax Product Licences on or before 31 December 2005;

 

	
  

	
(d)

	
[*****] additional Dyax Product Licences on or before 31 December 2006.

 

If the option for any particular Dyax Product Licence set out in clauses (a) through (d) above has not been exercised by Dyax by the relevant date, then such unexercised options will be carried over into the next allocation period, and so on; provided that if any option for a Dyax Product Licence in this Clause 3.2 has not been exercised by Dyax on or before 31 December 2017, then the option for such Dyax Product Licence will lapse irrevocably.

	
3.3

	
If any option for a Dyax Product Licence under Clause 3.2 is exercised and a Dyax Product Licence is granted to Dyax, then for each Product under any such Dyax Product Licence which enters a Phase III Clinical Trial, MedImmune hereby grants to Dyax an additional option for one Dyax Product Licence, up to a maximum of [*****] additional Dyax Product Licences under this Clause 3.3; provided that if any option for a Dyax Product Licence granted in this Clause 3.3 has not been exercised by Dyax on or before 31 December 2017, then the option for such Dyax Product Licence will lapse irrevocably.

 

	
3.4

	
If any option for a Dyax Product Licence under Clause 3.2 is exercised and a Dyax Product Licence is granted to Dyax, then for each Product under any such Dyax Product Licence which fails in development or for which Dyax decides to terminate its program of development, MedImmune hereby grants to Dyax an additional option for one Dyax Product Licence, up to a maximum of [*****] additional Dyax Product Licences under this Clause 3.4; provided that if any option for a Dyax Product Licence granted in this Clause 3.4 has not been exercised by Dyax on or before 31 December 2017, then the option for such Dyax Product Licence will lapse irrevocably.

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 12

  

	
3.5

	
In addition to the options for Dyax Product Licences granted by MedImmune to Dyax in Clauses 3.2 to  3.4, MedImmune hereby grants to Dyax:

 

	
  

	
(a)

	
the option for a total of an additional [*****] Dyax Product Licences for both Diagnostic Antibody Products and Therapeutic Antibody Products to be granted to Dyax (the "First Additional Licence Allocation"); and

 

	
  

	
(b)

	
the option for an unlimited number of Dyax Product Licences for both Diagnostic Antibody Products and Therapeutic Antibody Products to be granted to Dyax in connection with Diagnostic Antibody Products and/or Therapeutic Antibody Products identified by or on behalf of a Dyax Partner pursuant to an agreement entered into after the Effective Date of this Agreement (the "Second Additional Licence Allocation");

 

provided that if any option for a Dyax Product Licence in this Clause 3.5 has not been exercised and granted to Dyax on or before 31 December 2017, then the option for such Dyax Product Licence will lapse irrevocably.

	
3.6

	
In addition to the options for Dyax Product Licences granted by MedImmune to Dyax in Clauses 3.2 through 3.5, MedImmune hereby grants to Dyax the option for a total of an additional [*****] Dyax Product Licences for Diagnostic Antibody Products developed by Dyax under the Specified Diagnostic Agreements (the "Diagnostic Collaboration Licences"); provided that if any option for a Diagnostic Collaboration Licence in this Clause 3.6 has not been exercised by Dyax on or before 31 December 2017, then the option for such Dyax Product Licence will lapse irrevocably.

 

	
3.7

	
In addition to the options for Dyax Product Licences granted by MedImmune to Dyax in Clauses 3.2 through 3.6, MedImmune hereby grants to Dyax the option for a total of an additional [*****] Dyax Product Licences for Diagnostic Antibody Products (the "Additional Diagnostic Licences"); provided that if any option for an Additional Diagnostic Licences has not been exercised by Dyax on or before 31 December 2017, then the option for such Dyax Product Licences will lapse irrevocably.

 

	
3.8

	
MedImmune agrees that, commencing with effect from 3 January 2003, it will not enter into any  agreement or arrangement with any Third Party whereby a field of use under the MedImmune Antibody Phage Display Patents is exclusively licensed to, reserved for, or otherwise committed to such Third Party.  If MedImmune does enter into such an agreement or arrangement it will ensure that such agreement or arrangement does not restrict the activities or rights of Dyax (or any potential Dyax Sublicensee or its sublicensee) contemplated by this Agreement.  For the purposes of this Clause, a "field of use" means one or more particular clinical diseases or medical conditions and not one or more uniquely identified Targets.

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 13

  

	
3.9

	
Except as set forth in Clause 18, the options granted in this Agreement shall not be assigned or otherwise transferred to any Third Party.

 

	
3.10

	
Prior to [*****], and provided that Dyax obtains a Dyax Product Licence for such Product [*****], MedImmune grants to Dyax, its Affiliates, and Dyax Sublicensees (and their sublicensees) a non-exclusive, royalty free licence in the Territory during the term of this Agreement to use the MedImmune Antibody Phage Display Patents and the MedImmune Know-How for the purposes of carrying out research and development activities in relation to identifying MedImmune Licensable Antibodies or potential Products.

 

4.            Target Option Notice and Gatekeeping Procedure

 

	
4.1

	
If Dyax wishes to develop and commercialise Diagnostic Antibody Products and/or Therapeutic Antibody Products to a particular Target and provided that Dyax Product Licences are available to Dyax under Clause 3, Dyax may, at any time, in a written notice to MedImmune (each a "Dyax Target Option Notice") request that MedImmune grant Dyax a Dyax Product Licence in relation to such identified Target.  In such Target Option Notice, Dyax will:

 

	
  

	
(a)

	
identify the relevant Target against which such MedImmune Licensable Antibodies are directed ("Nominated Target"); and

 

	
  

	
(b)

	
state whether Dyax or the Dyax Sublicensee wishes to develop such MedImmune Licensable Antibodies as Diagnostic Antibody Products and/or Therapeutic Antibody Products.

 

	
4.2

	
If MedImmune notifies Dyax that the Nominated Target has passed the MedImmune Gatekeeping Procedure in accordance with Clause 4.4.1 below, then, unless otherwise notified by Dyax, MedImmune will reserve such Nominated Target for Dyax and Dyax Sublicensee for a period of [*****] from the date of such MedImmune notice ("Reservation Period").    Up to and including [*****] Nominated Targets may be reserved in accordance with the following procedure at any time without charge.  For each additional reservation above and beyond [*****] Nominated Targets, Dyax will pay MedImmune a reservation fee of [*****] for the next [*****] Nominated Targets provided that no more [*****] Nominated Targets may be reserved at any one time.  [*****].  Dyax may, at any time prior to the expiry of the Reservation Period, request in writing that MedImmune extend the Reservation Period by a period of [*****].  Such request for an extension shall be accompanied by payment of a fee of [*****] (the "Extension Fee").  Upon receipt by MedImmune of the Extension Fee the Reservation Period for the Nominated Target in question will be so extended.  [*****].  For the purposes of this Clause 4.2 "reserved for" means that a Dyax Product Licence will continue to be available to Dyax and Dyax Sublicensees during that [*****] period (or [*****] month period if the Reservation Period is extended).  Dyax may not (a) have more than [*****] Nominated Targets reserved at any one time and (b) exercise the right to reserve Nominated Targets pursuant to this Clause in relation to more Targets than there are Dyax Product Licences remaining available at the relevant time pursuant to Clause 3.  In the event that, at any time during which a Nominated Target is reserved for Dyax in accordance with this Clause 4.2, a Third Party request from MedImmune an exclusive license in respect of the relevant Nominated Target, MedImmune will promptly notify Dyax in writing.  Dyax will then have a period of [*****] days from the date of MedImmune's notice to decide whether or not it wishes to take a Dyax Product Licence for that Nominated Target.  If Dyax notifies MedImmune within that period that it does not wish to take such a Dyax Product Licence or fails to notify MedImmune at all then such Nominated Target shall no longer be reserved for Dyax and MedImmune may grant an exclusive license in respect of such Nominated Target to the Third Party.

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 14

  

	
4.3

	
Upon receipt of a Dyax Target Option Notice from Dyax under Clause 4.1, MedImmune shall have [*****] days to make a determination whether the Nominated Target passes MedImmune's Gatekeeping Procedure.  MedImmune shall:

 

	
  

	
(a)

	
[*****]; and

 

	
  

	
(b)

	
[*****].

 

	
4.4

	
Before the expiry of the [*****] days referred to in Clause 4.3, MedImmune shall either;

 

	
  

	
4.4.1

	
notify Dyax in writing that the Nominated Target has passed the MedImmune Gatekeeping Procedure, in which case (subject to the payment of the applicable Acceptance Fee for Dyax Product Licenses taken from the Initial Licence Allocation or the First Additional Licence Allocation), grant to Dyax a Dyax Product Licence to Exploit Products against such Nominated Target in the Territory; or

 

	
  

	
4.4.2

	
notify Dyax in writing that the Nominated Target has not passed the MedImmune Gatekeeping Procedure, in which case Dyax shall have no right to obtain a Dyax Product Licence to Exploit Products against such Nominated Target in the Territory.

 

	
4.5

	
MedImmune agrees that:

 

	
  

	
(a)

	
MedImmune will treat Dyax in the same way as MedImmune treats its other customers, collaborators and licensees when applying the procedure described in this Clause 4; and

 

	
  

	
(b)

	
MedImmune will only disclose information received by it from Dyax in relation to a Nominated Target to those MedImmune employees who need to know such information for the purposes of this Clause 4.  Any such information will be deemed to be Confidential Information of Dyax

 

	
4.6

	
In the case where a MedImmune Licensable Antibody is directed to two Targets (a "Bi-Specific Antibody"), or more than two Targets (a "Poly-Specific Antibody") the Target Option Notice shall identify each relevant Target against which such Bi-Specific Antibody or Poly-Specific Antibody is directed, and each such Target shall be considered a Nominated Target.  If MedImmune notifies Dyax that each Nominated Target to which such Bi-Specific Antibody or Poly-Specific Antibody is directed has passed the MedImmune Gatekeeping Procedure, Dyax shall have the right to obtain a Dyax Product Licence with respect to each such Nominated Target; provided however, that such Dyax Product Licence shall be limited so as to allow Dyax to Exploit only Products to such Nominated Targets that comprise or contain the Bi-Specific Antibody or Poly-Specific Antibody, which shall be clearly identified in the Dyax Product Licence.  For the avoidance of doubt, the parties acknowledge that:

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 15

  

	
  

	
(a)

	
Dyax may obtain a Dyax Product Licence for Therapeutic Antibody Products and Diagnostic Antibody Products containing or comprising such Bi-Specific Antibodies against two Nominated Targets or Poly-Specific Antibodies against more than two Nominated Targets by exercising only one (1) option from among the Initial Licence Allocation under Clauses 3.2 to 3.4 and the First and Second Additional Licence Allocations under Clause 3.5;

 

	
  

	
(b)

	
in the event that Dyax requests that MedImmune reserve such Nominated Targets for the Reservation Period all such Nominated Targets will count towards the maximum of [*****] Nominated Targets which may be reserved by Dyax at one time pursuant to Clause 4.2; and

 

	
  

	
(c)

	
in the event that Dyax request that the Reservation Period for any such Nominated Targets be extended for [*****] then Dyax will pay an Extension Fee for each such Nominated Target.

 

5.            Grant of Dyax Product Licence by MedImmune

 

	
5.1

	
To Dyax.  In the event MedImmune notifies Dyax under Clause 4.4.1 above that a Nominated Target has passed the MedImmune Gatekeeping Procedure, then (upon receipt of the applicable Acceptance Fee for Dyax Product Licenses taken from the Initial Licence Allocation or the First Additional Licence Allocation), MedImmune agrees to grant and hereby grants to Dyax and its Affiliates a non-exclusive, royalty-bearing license, with the right to sublicense, under the MedImmune Antibody Phage Display Patents and MedImmune Know-How to Exploit Products against such Nominated Target in the Territory ("Dyax Product Licence").  Any Dyax Product Licence granted to Dyax shall be consistent with the terms of this Clause 5 and Clauses 6, 8, 9, 17 and 19 of this Agreement and shall be negotiated by the Parties in good faith; provided, however, that the Parties agree that the terms and conditions and the form of any Dyax Product Licence executed after the Effective Date of this Agreement (i) from the Initial Licence Allocation or the First Additional Licence Allocation shall be substantially similar to the form attached hereto as Schedule 7-A, and (ii) from the Second Additional Licence Allocation shall be substantially similar to the form attached hereto as Schedule 7-B.

 

	
5.2

	
The Parties agree that Dyax may obtain a Dyax Product Licence for Therapeutic Antibody Products and Diagnostic Antibody Products against the same Nominated Target by exercising only one (1) option from among the Initial Licence Allocation under Clauses 3.2 to 3.4 and the First and Second Additional Licence Allocations under Clause 3.5.

 

	
5.3

	
Nothing herein shall prevent MedImmune from meeting any obligations it has to Third Parties under any agreements in respect of any Nominated Target for which Dyax submits a Target Option Notice under Clause 4.1 where such Nominated Target is determined by MedImmune under Clause 4 not to pass the MedImmune Gatekeeping Procedure, provided that such obligation does not involve any use or disclosure of any Confidential Information belonging to Dyax.

 

	
5.4

	
Dyax must request, and be granted, a Dyax Product Licence;

 

	
  

	
5.4.1

	
in relation to a Therapeutic Antibody Product prior to [*****]; or

 

	
  

	
5.4.2

	
in relation to a Diagnostic Antibody Product prior to [*****].

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 16

  

For the avoidance of doubt, the parties acknowledge and agree that a Dyax Partner or Dyax Sublicensee may obtain rights under the MedImmune Antibody Phage Display Patents and MedImmune Know-How to Exploit Products against a Target in the Territory without obtaining rights under a Product License if such Dyax Partner or Dyax Sublicensee obtains such rights under a written agreement directly with MedImmune.

	
5.5

	
Any Dyax Product Licence which may be granted by MedImmune to Dyax from the Initial Licence Allocation or the First Additional Licence Allocation shall not be effective until the receipt by MedImmune of the relevant Acceptance Fee, which shall not be refundable or creditable against any other sums which may be payable by Dyax or a Dyax Sublicensee to MedImmune pursuant to this Agreement.

 

	
5.6

	
Dyax will, if requested by MedImmune, inform MedImmune of the identity of all Dyax Sublicensees (and their sublicensees) in relation to each Dyax Product Licence.  Upon execution of a Dyax Product Licence from the Second Additional Licence Allocation, Dyax shall provide to MedImmune details of the consideration that is, or could be, payable by such Dyax Sublicensee to Dyax pursuant to the sublicence granted to such Dyax Sublicensee.

 

	
5.7

	
Dyax (and where relevant each Dyax Sublicensee) will ensure that any sublicensee (to which it sublicences its rights in accordance with the terms of this Agreement) executes a written agreement (a) which requires the sublicensee to abide by the terms of one or more specified Dyax Product Licences or (b) which is consistent with the terms of Clauses 3.10 or 7, and Clauses 4, 5.5, and 5.8 of this Agreement and for the purposes of sublicences relating to Other Products only Clauses 8.4, 8.6, 8.8, 8.9, 8.10 and 9.2 through to 9.7.

 

	
5.8

	
Dyax shall be entitled to sublicense its rights under a Dyax Product Licence to one or more Dyax Sublicensees.  Furthermore, each Dyax Sublicensee may also sublicense to any Third Party and so on provided each such sublicence is granted in accordance with Clause 5.7 above.  [*****].

 

6.            Terms of the Dyax Product Licences

 

Each Dyax Product Licence granted to Dyax by MedImmune shall include the following terms:

 

	
6.1

	
The Dyax Product Licence shall grant rights under the MedImmune Antibody Phage Display Patents and MedImmune Know-How and, for the avoidance of doubt, no rights shall be granted by MedImmune in any Dyax Product Licence to any MedImmune Diabodies Patent Rights, and any Patent Rights owned or controlled by MedImmune which claim Catalytic Antibodies, ribosome display technology, any Patent Rights which claim Single Domain Antibodies and no rights shall be granted by MedImmune in any Dyax Product Licence under the Antibody Phage Display Patents to Exploit Research Products;

 

	
6.2

	
The Dyax Product Licence shall come into effect upon the date that the Acceptance Fee is paid, except for any Dyax Product Licence taken from the Second Additional License Allocation which shall come into effect upon execution by both Parties.  All Dyax Product Licence shall be subject to the applicable terms of Clause 8;

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 17

  

	
6.3

	
Unless terminated under Clause 6.10, Clause 6.11 or Clause 6.12, the Dyax Product Licence shall continue, on a country-by-country and Product-by-Product basis until the last Valid Claim of the MedImmune Antibody Phage Display Patents expires, or [*****] years after First Commercial Sale of such Product in the country of sale, whichever occurs later;

 

	
6.4

	
Dyax and each Dyax Sublicensee (or its sublicensee) shall indemnify MedImmune and its Affiliates and their directors, officers, employees and agents and their respective successors, heirs and assigns (the "MedImmune Indemnitees") against any liability, damage, loss or expense (including attorneys fees and expenses of litigation) incurred by or imposed upon the MedImmune Indemnitees or any one of them in connection with any claims, suits, actions, demands or judgments by or in favour of any Third Party concerning any manufacture, use or sale of any Product by Dyax or such Dyax Sublicensee (or its sublicensee);

 

	
6.5

	
MedImmune shall not be liable to any Dyax and Dyax Sublicensee (or its sublicensee) in respect of any liability, loss, damage or expense (including attorneys fees and expenses of litigation) incurred or suffered by Dyax and any Dyax Sublicensees (or its sublicensee) in connection with the manufacture, use or sale of any Products by Dyax and Dyax Sublicensees (or its sublicensee);

 

	
6.6

	
MedImmune provides no warranty or representation from MedImmune that the MedImmune Antibody Phage Display Patents are, or will be, valid or that the exercise of the rights granted under the Dyax Product Licence will not result in the infringement of patents of Third Parties;

 

	
6.7

	
Dyax shall notify MedImmune promptly of any proceedings or applications for revocation of any of the MedImmune Antibody Phage Display Patents emanating from a Third Party that comes to its notice or if a Third Party takes or threatens to take any proceedings for infringement of any patents of that Third Party by reason of Dyax's use or operation of the MedImmune Antibody Phage Display Patents or manufacture, use or sale of the Products.  Dyax shall notify MedImmune promptly of any infringement of the MedImmune Antibody Phage Display Patents by a Third Party which may come to its attention during the term of the Dyax Product Licence, except Dyax shall have no obligation to so notify MedImmune with respect to any infringement by an academic or not-for-profit entity which occurs by reason of such entity carrying out research activities provided such activities are, as far as Dyax is aware, not being carried out with a view to commercialising a product or otherwise for profit;

 

	
6.8

	
MedImmune shall have the sole right and responsibility, at its sole discretion and cost and with reasonable assistance from Dyax, to file, prosecute and maintain the MedImmune Antibody Phage Display Patents and for the conduct of any lawsuits, claims or proceedings challenging the validity or enforceability thereof including, without limitation, any interference or opposition proceeding relating thereto in all countries.  For the avoidance of doubt, Dyax and Dyax Sublicensees will have the right to conduct any proceedings relating to its Product including any proceedings relating to product liability;

 

	
6.9

	
Dyax and any Dyax Sublicensee may assign the benefit and/or burden of any Dyax Product Licence to any Affiliate or Third Party, provided that such Affiliate or Third Party undertakes to MedImmune to be bound by the terms of the Dyax Product Licence;

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 18

  

	
6.10

	
MedImmune shall have the right to terminate any Dyax Product Licence in the event that:

 

	
  

	
6.10.1

	
Dyax or a Dyax Sublicensee (or its sublicensee) has not filed an IND for a Therapeutic Antibody Product, or a 510(k) or IDE for a Diagnostic Antibody Product within [*****] after the grant of that Dyax Product Licence; provided however, that Dyax shall have the right to extend such period in annual increments by up to [*****], upon the following terms:

 

	
[*****]

	
$[*****]

	
[*****]

	
$[*****]

In order for Dyax to be granted an extension under this Clause 6.10.1, the foregoing amounts must be received by MedImmune prior to the date of expiration.  All amounts received by MedImmune under this Clause 6.10.1 will be credited against any amounts that would otherwise be due to MedImmune under the terms of the Dyax Product License; or

 

	
  

	
6.10.2

	
Dyax or a Dyax Sublicensee (or its sublicensee) directly or indirectly opposes or assists any Third Party to oppose the grant of letters patent or any patent application within the MedImmune Antibody Phage Display Patents, or disputes or directly or indirectly assists any Third Party to dispute the validity of any patent within the MedImmune Antibody Phage Display Patents or any of the claims thereof.

 

	
6.11

	
In the event that either Party commits a material breach of any of its obligations with respect to a Dyax Product Licence, and such Party fails to remedy that breach within ninety (90) days after receiving written notice thereof from the other Party, that other Party may immediately terminate the Dyax Product Licence upon written notice to the breaching Party.

 

	
6.12

	
Either Party may terminate a Dyax Product Licence in its entirety by giving notice in writing to the other Party if any one or more of the following events happens:

 

	
  

	
(a)

	
the other Party has any distress or execution levied on the major portion of its assets (as determined by its balance sheet in accordance with GAAP) which is not paid out within thirty (30) days of its being levied;

 

	
  

	
(b)

	
the other Party calls a meeting for the purpose of passing a resolution to wind it up, or such a resolution is passed, or the other Party presents, or has presented, a petition for a winding up order, or presents, or has presented, a petition to appoint an administrator, or has an administrative receiver, or receiver, liquidator or other insolvency practitioner appointed over all or any substantial part of its business, undertaking, property or assets;

 

	
  

	
(c)

	
the other Party stops or suspends making payments (whether of principal or interest) with respect to substantially all of its debts or announces an intention to do so or the other Party suspends or ceases to carry on its business;

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 19

  

	
  

	
(d)

	
a secured lender to the other Party holding a security interest over the major portion of the tangible assets (as determined by its balance sheet in accordance with GAAP) of such other Party takes any steps to obtain possession of the property on which it has security or otherwise to enforce its security; or

 

	
  

	
(e)

	
the other Party suffers or undergoes any procedure analogous to any of those specified in Clause 6.12(a) - (d) above or any other procedure available in the country in which the other Party is constituted, established or domiciled against or to an insolvent debtor or available to the creditors of such a debtor.

 

7.            Grant of Other Licences

 

	
7.1

	
Other Products. MedImmune hereby grants with effect from 3 January 2003 to Dyax a non-exclusive licence in the Territory, with the right to sublicence, under the MedImmune Antibody Phage Display Patents and the MedImmune Know-How for any purpose not already covered by the provisions of this Agreement ("Other Purposes") including to Exploit any product, other than a Therapeutic Antibody Product, Diagnostic Antibody Product or Research Product, whose development, manufacture, use or sale would, absent the license hereunder, infringe Valid Claims of the MedImmune Antibody Phage Display Patents or utilize the MedImmune Know-How ("Other Product").  The license granted under this Clause 7.1 shall be subject to the terms and conditions applicable under Clauses 5.6, 5.7, 5.8, 6.1, 6.3 through 6.11, 7.3, 7.4, 7.5, 8.5 through 8.7, 9.2 through 9.7, 15.4(c)-(g) and 19.

 

	
7.2

	
The licence granted in Clause 7.1 does not include any grant by MedImmune of rights to MedImmune Diabodies Patent Rights, or Patent Rights owned or controlled by MedImmune which claim Catalytic Antibodies, or ribosome display technology or Patent Rights which claim Single Domain Antibodies or any use of the said Patent Rights in the field of Research Products.  Dyax's rights under the licence granted in Clause 7.1 are expressly subject to any rights which MedImmune has granted to any Third Party prior to 3 January 2003 or may grant to any Third Party after 3 January 2003 provided that any rights granted by MedImmune to any Third Party after 3 January 2003 shall not restrict the freedom of Dyax or Dyax Sublicensees (or their sublicensees) to operate under any agreement entered into by them prior to the date MedImmune grants such Third Party rights.

 

	
7.3

	
In the event that either Party commits a material breach of any of its obligations with respect to the licence granted in Clause 7.1, and such Party fails to remedy that breach within ninety (90) days after receiving written notice thereof from the other Party, that other Party may immediately terminate the licence upon written notice to the breaching Party.

 

	
7.4

	
Either Party may terminate a licence set out in Clause 7.1 above in its entirety by giving notice in writing to the other Party if any one or more of the following events happens:

 

	
  

	
(a)

	
the other Party has any distress or execution levied on the major portion of its assets (as determined by its balance sheet in accordance with GAAP) which is not paid out within thirty (30) days of its being levied;

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 20

  

	
  

	
(b)

	
the other Party calls a meeting for the purpose of passing a resolution to wind it up, or such a resolution is passed, or the other Party presents, or has presented, a petition for a winding up order, or presents, or has presented, a petition to appoint an administrator, or has an administrative receiver, or receiver, liquidator or other insolvency practitioner appointed over all or any substantial part of its business, undertaking, property or assets;

 

	
  

	
(c)

	
the other Party stops or suspends making payments (whether of principal or interest) with respect to substantially all of its debts or announces an intention to do so or the other Party suspends or ceases to carry on its business;

 

	
  

	
(d)

	
a secured lender to the other Party holding a security interest over the major portion of the tangible assets (as determined by its balance sheet in accordance with GAAP) of such other Party takes any steps to obtain possession of the property on which it has security or otherwise to enforce its security;

 

	
  

	
(e)

	
the other Party suffers or undergoes any procedure analogous to any of those specified in Clause 7.4(a) – (d) above or any other procedure available in the country in which the other Party is constituted, established or domiciled against or to an insolvent debtor or available to the creditors of such a debtor;

 

8.            Consideration Payable by Dyax

 

	
8.1

	
Initial Licence Allocation for Therapeutic Antibody Products.

 

	
  

	
8.1.1

	
With respect to each Dyax Product Licence from the Initial Licence Allocation for Therapeutic Antibody Products for a Nominated Target, Dyax shall pay to MedImmune the following payments upon achievement of the specified milestones by Dyax or a Dyax Sublicensee (or its sublicensee) for the first Therapeutic Antibody Product directed against such Nominated Target to achieve the relevant milestone:

 

	
Acceptance Fee [*****]

	
US $[*****]

	
Initiation of first Phase I Clinical Trial

	
US $[*****]

	
Initiation of first Phase III Clinical Trial

	
US $[*****]

	
First filing for Marketing Authorisation in one Major Market country

	
US $[*****]

	
Marketing Authorisation granted in the United States

	
US $[*****]

 

	
  

	
8.1.2

	

With respect to Dyax Product Licences for a Therapeutic Antibody Product from the Initial Licence Allocation, Dyax shall pay MedImmune royalties in an amount equal to [*****] of Net Sales of the Therapeutic Antibody Product sold by or on behalf of Dyax or the Dyax Sublicensee.

 

	
8.2

	
Dyax Product Licenses from First Additional Licence Allocation and Second Additional Licence Allocation.

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 21

  

8.2.1           Dyax Product Licenses from First Additional Licence Allocation.

 

	
  

	
(a)

	
With respect to each Dyax Product Licence from the First Additional Licence Allocation set forth in Clause 3.5(a) for Therapeutic Antibody Products for a Nominated Target, Dyax shall pay to MedImmune:

 

	
  

	
(i)

	
the following payments upon achievement of the specified milestones by Dyax or a Dyax Sublicensee (or its sublicensee) for the first Therapeutic Antibody Product directed against such Nominated Target to achieve the relevant milestone:

 

	
Acceptance Fee [*****]

	
US $[*****]

	
Initiation of first Phase I Clinical Trial

	
US $[*****]

	
Initiation of first Phase III Clinical Trial

	
US $[*****]

	
First filing for Marketing Authorisation in one Major Market country

	
US $[*****]

	
First Marketing Authorisation granted in one Major Market country

	
US $[*****]

and

	
  

	
(ii)

	
royalties in an amount equal to [*****] of Net Sales of the Therapeutic Antibody Product sold by or on behalf of Dyax or the Dyax Sublicensee.  Such royalty rate shall apply to the four Dyax Product Licences which MedImmune and Dyax have already executed before the effective date of the Original Agreement and which were taken from the [*****].

 

	
  

	
(b)

	
With respect to each Dyax Product Licence from the Additional Licence Allocation set forth in Clause 3.5(a) for Diagnostic Antibody Products, Dyax will pay MedImmune the amounts set forth in Clause 8.3.

 

	
  

	
8.2.2

	
Dyax Product Licenses from Second Additional Licence Allocation.

 

	
  

	
(a)

	
With respect to each Dyax Product Licence from the Second Additional Licence Allocation set forth in Clause 3.5(b) for Therapeutic Antibody Products or Diagnostic Antibody Products for a Nominated Target, Dyax shall pay to MedImmune:

 

	
  

	
(i)

	
royalties in an amount equal to [*****] of Net Sales of any Therapeutic Antibody Product sold by or on behalf of Dyax or the Dyax Sublicensee; and

 

	
  

	
(ii)

	
[*****] of all other net proceeds paid or payable to Dyax arising pursuant to such Dyax Product Licence.

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 22

  

	
8.3

	
Dyax Product Licences for Diagnostic Products.

 

	
  

	
8.3.1

	
Subject to Clause 8.2.2, with respect to each Dyax Product Licence for Diagnostic Antibody Products, Dyax shall pay to MedImmune the following payments upon achievement by Dyax or a Dyax Sublicensee (or its sublicensee) of the milestones set out below.  For the avoidance of doubt the milestone payments shall be payable in respect of the first Diagnostic Antibody Product directed against each Nominated Target to achieve the relevant milestone:

 

	
Acceptance Fee [*****]

	
US $[*****]

	
First filing for Marketing Authorisation in one Major Market country

	
US $[*****]

	
Marketing Authorisation granted in each Major Market Country

	
US $[*****]

	
  

	
8.3.2

	
Notwithstanding the foregoing, the parties acknowledge and agree that no milestone payments will be payable by Dyax Sublicensee to MedImmune in respect of Diagnostic Antibody Products developed under the Specified Diagnostic Agreements.

 

	
  

	
8.3.3

	
With respect to each Dyax Product Licence for a Diagnostic Antibody Product, Dyax shall pay MedImmune royalties on a country-by-country basis in an amount equal to [*****] of Net Sales of Diagnostic Antibody Products sold by or on behalf of Dyax or any Dyax Sublicensee.

 

	
8.4

	
Other Products.  With respect to each Other Product developed by Dyax or one of its sublicensees under Clause 7, Dyax or its sublicensee, as the case may be, shall pay MedImmune royalties on a country-by-country basis in an amount equal to [*****] of Net Sales of each Other Product sold by or on behalf of Dyax or the Dyax Sublicensee in the Territory.

 

	
8.5

	
In addition to the royalty payments in Clause 8.4, and subject to Clause 8.7.3, Dyax will pay to MedImmune [*****] of all other sums received by Dyax in relation to Other Products or any Other Purposes under sublicense agreements executed after the Commencement Date.  For the avoidance of doubt, the sums payable by Dyax shall include [*****] of any sums that Dyax receives from a sublicensee from any further sublicensing but MedImmune shall not receive [*****] of the sum actually received by such a sublicensee from such further sublicensing.  Dyax shall be entitled to retain all amounts that it receives from sublicensees in payment for the provision of support services relating to the supply of MedImmune Antibody Libraries or Antibodies derived therefrom as reasonably calculated based on the use of Full Time Equivalents, machine hours, other comparable cost based measures or any combination of the foregoing.

 

	
8.6

	
For the further avoidance of doubt, Dyax or its sublicensee will retain all non-royalty payments made to Dyax by sublicensees of Other Products under agreements executed prior to 3 January 2003.

 

	
8.7

	
The Parties hereby agree that, notwithstanding any provision of this Agreement (including without limitation Clauses 8.4, 8.5 and 8.6 of this Agreement), with respect to any [*****] used for [*****] that is developed under that certain Development and License Agreement between Dyax and a Third Party dated [*****] (the "Development and License Agreement"), Dyax's sole obligation to MedImmune is to pay to MedImmune [*****] of all royalties, milestones and other sums (including any consideration in kind) received by Dyax in relation to [*****], except that Dyax shall not pay to MedImmune any percentage of Full Time Equivalent based funded research payments received by Dyax under the Development and License Agreement.

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 23

  

	
8.8

	
Dyax Antibody Libraries and Funded Discovery Activities.

 

	
  

	
8.8.1

	
In respect of any agreements concluded between Dyax and any Dyax Partner before 3 January 2003 under which MedImmune Antibody Libraries or Antibodies derived therefrom are made available to such Dyax Partner, the Parties agree that: (a) Dyax will retain all amounts (including without limitation all Antibody Library transfer fees) that it receives in payment from such Dyax Partner prior to the grant of a Dyax Product Licence; (b) Dyax will retain all amounts that it receives in payment from such Dyax Partner after the grant of a Dyax Product Licence hereunder, exclusive of any amounts payable on account of such Dyax Partner's obligation to pay any milestone payments or royalties to MedImmune for any Therapeutic Antibody Product or Diagnostic Antibody Product under the terms of such Dyax Product Licence.

 

	
  

	
8.8.2

	
In respect of any agreements concluded between Dyax and any Dyax Partner after 3 January 2003 of this Agreement under which MedImmune Antibody Libraries or Antibodies derived therefrom are made available to such Dyax Partner, the Parties agree that: (a) Dyax shall be entitled to retain all amounts that it receives from such Dyax Partner in payment for the provision of support services relating to the supply of the MedImmune Antibody Libraries or Antibodies derived therefrom as reasonably calculated based on the use of Full Time Equivalents, machine hours, other comparable cost-based measures or any combination of the foregoing; and (b) all other amounts (including without limitation all Antibody Library transfer fees) that Dyax receives in payment from such Dyax Partner with respect to development of a Product during the period before the grant of a Dyax Product Licence hereunder will be divided in the proportion [*****] to Dyax and [*****] to MedImmune.  After the grant of a Dyax Product Licence for a Product MedImmune shall only be entitled to payments under the Dyax Product Licence for such Product and no further amounts shall be payable under this Clause 8.8.2.

 

	
  

	
8.8.3

	
The provisions of this Clause 8.8 shall not apply to Other Products, which shall be handled solely in accordance with Clauses 8.4, 8.5 and 8.6 above.

 

	
8.9

	
All royalties due to MedImmune under Clauses 8.1.2, 8.2.2, 8.3.2, 8.4 or sums due to MedImmune in respect of any Other Product or any Other Purpose under Clause 8.5 or any other sums due to MedImmune under Clause 8.8.2 shall be payable on a country-by-country basis until the last Valid Claim of a MedImmune Antibody Phage Display Patent expires or ten (10) years from the date of First Commercial Sale of such Product or Other Product or Other Purpose, whichever occurs later.

 

	
8.10

	
Dyax agrees that it will not, without the prior written consent of MedImmune, receive shares or any other non-cash consideration in return for granting any sublicence to a Dyax Sublicensee.  Dyax will ensure that each Dyax Sublicensee will also not receive any shares or any other non-cash consideration when granting a sublicence pursuant to the terms of its sublicence agreement.

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 24

  

	
8.11

	
Dyax shall be free to make MedImmune Antibody Libraries and Antibodies derived from MedImmune Antibody Libraries available to any Dyax Sublicensee and the latter will be free to use the foregoing without any further licence from MedImmune under the MedImmune Antibody Phage Display Patents; provided that (i) any amounts paid to Dyax from any such Dyax Sublicensee will be dealt with in accordance with Clause 8.5 or 8.8, and (ii) such Dyax Sublicensees will only be able to Exploit any Product derived from such MedImmune Antibody Libraries or such Antibodies if a Dyax Product Licence has been sublicensed to them by Dyax.

 

	
8.12

	
The Parties agree that any payments already made by Dyax to MedImmune under the terms of the Amendment Agreement are not affected by the terms of this Agreement.

 

9.            Provisions relating to Payment of Consideration by Dyax

 

	
9.1

	
(a)

	
Subject to 9.1(b), all milestone payments shall be paid by Dyax within [*****] days of the applicable milestone being achieved and no milestone payments shall be refundable or creditable against any other sum payable by Dyax hereunder for any reason.

 

	
  

	
(b)

	
All amounts payable by Dyax under a Dyax Product License taken from the Second License Allocation shall:

 

	
  

	
(i)

	
in the event the payment is a milestone payment, be paid by Dyax within [*****] days of the applicable milestone being achieved;

 

	
  

	
(ii)

	
in the event the payment is not a milestone payment or royalty, be paid by Dyax within [*****] days of the requisite sum (in respect of which the payment to MedImmune arises) becoming payable to Dyax.

 

	
9.2

	
Dyax shall make the payments due to MedImmune under Clause 8 above in United States dollars (if Dyax in turn receives payment in dollars) or in pounds sterling (if Dyax in turn receives payment in pound sterling), or Euros (if Dyax in turn receives payment in Euros).  Where Dyax receives payment in a currency other than United States dollars, pounds sterling or Euros, Dyax will convert the relevant sum into pounds sterling (or Euros if Euros have replaced pounds sterling at the time of payment).  Dyax will use the conversion rate reported in the Financial Times two (2) Business Days before the day on which Dyax pays MedImmune.  Such payment will be made without deduction of exchange, collection or other charges.  All payments will be made at Quarterly intervals.  Within [*****] of the end of each Quarter after the First Commercial Sale of each Product, or Other Product in any country, Dyax shall prepare a statement which shall show on a country-by-country basis for the previous Quarter Net Sales of each Product, or Other Product by Dyax or its Affiliates and all monies due to MedImmune based on such Net Sales.  That statement shall include details of Net Sales broken down to show the country of the sales and the total Net Sales by Dyax or its Affiliates in such country and shall be submitted to MedImmune within such [*****] day period together with remittance of the monies due.  With respect to Net Sales of a Product or Other Product by a Dyax Sublicensee (or its sublicensee) Dyax shall prepare a statement which will include the same information and remit that statement and any monies due within the same period except with regard to any Dyax Sublicensee with which Dyax has a licence agreement relating to the technology of Antibody phage display as of or prior to the Commencement Date where the remittance will be made at Quarterly intervals within [*****] days of the date royalties are due to Dyax from such existing Dyax Sublicensees.  With respect to any other sums received by Dyax in accordance with Clauses 8.5 and 8.7.2 Dyax  shall within [*****] days of the end of the first Quarter in which Dyax receives such sums prepare and submit to MedImmune a statement, which shall include details of all such sums received by Dyax on a country by country basis in the previous Quarter,  together with remittance of any monies due.

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 25

  

	
9.3

	
All payments shall be made free and clear of and without deduction or deferment in respect of any disputes or claims whatsoever and/or as far as is legally possible in respect of any taxes imposed by or under the authority of any government or public authority.  [*****].

 

	
9.4

	
Dyax shall keep and shall procure that its Affiliates and Dyax Sublicensees keep true and accurate records and books of account containing all data necessary for the calculation of the amounts payable by it to MedImmune pursuant to this Agreement.  Those records and books of account shall be kept for seven (7) years following the end of the Year to which they relate.  Upon MedImmune's written request, a firm of accountants appointed by agreement between the Parties or, failing such agreement within ten (10) Business Days of the initiation of discussions between them on this point MedImmune shall have the right to cause an international firm of independent certified public accountants that has not performed auditing or other services for either Party or their Affiliates (or, if applicable, any Dyax Sublicensee with rights to the Product in question) acceptable to Dyax or the Dyax Sublicensee such acceptance not to be unreasonably withheld to inspect such records and books of account.  In particular such firm:

 

	
  

	
9.4.1

	
shall be given access to and shall be permitted to examine and copy such books and records of Dyax and its Affiliates and Dyax Sublicensees upon twenty (20) Business Days notice having been given by MedImmune and at all reasonable times on Business Days for the purpose of certifying that the Net Sales or other relevant sums calculated by Dyax and its Affiliates and Dyax Sublicensees during any Year were reasonably calculated, true and accurate or, if this is not their opinion, certify the Net Sales figure or other relevant sums for such period which in their judgment is true and correct;

 

	
  

	
9.4.2

	
prior to any such examination taking place, such firm of accountants shall undertake to Dyax that they shall keep all information and data contained in such books and records, strictly confidential and shall not disclose such information or copies of such books and records to any third person including MedImmune, but shall only use the same for the purpose of calculations which they need to perform in order to issue the certificate to which this Clause envisages;

 

	
  

	
9.4.3

	
any such access examination and certification shall occur no more than once per Year and will not go back over records more than two (2) years old;

 

	
  

	
9.4.4

	
Dyax and its Affiliates and Dyax Sublicensees shall make available personnel to answer queries on all books and records required for the purpose of that certification; and

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 26

  

 

	
  

	
9.4.5

	
the cost of the accountant shall be the responsibility of Dyax if the certification shows it to have underpaid monies to MedImmune by more than [*****] and the responsibility of MedImmune otherwise.

 

	
9.5

	
All payments due to MedImmune under the terms of this Agreement are expressed to be exclusive of value added tax (VAT) howsoever arising.  [*****].

 

	
9.6

	
All payments made to MedImmune under this Agreement shall be made to the bank account of MedImmune as notified by MedImmune to Dyax from time to time.

 

	
9.7

	
If Dyax fails to make any payment to MedImmune hereunder on the due date for payment, without prejudice to any other right or remedy available to MedImmune it shall be entitled to charge Dyax interest (both before and after judgment) of the amount unpaid at the annual rate of LIBOR (London Interbank Offering Rate) plus [*****] calculated on a daily basis until payment in full is made without prejudice to MedImmune's right to receive payment on the due date.

 

10.          MedImmune Development License for Dyax Therapeutic Antibody Products

 

	
10.1

	
Right of First Offer; Development License Option.

 

	
  

	

10.1.1.

	

In the event that Dyax undertakes development of any Dyax Therapeutic Antibody Product on its own and then subsequently decides to fully licence-out the further development and commercialisation of such Dyax Therapeutic Antibody Product to a Third Party prior to the filing of the first IND for such Dyax Therapeutic Antibody Product ("Development Licence"), then before granting such license to such Third Party, Dyax shall first offer MedImmune in writing the option to obtain a license to continue the development and commercialisation of such Dyax Therapeutic Antibody Product in the Territory (a "Development Licence Option").  As used in this Clause 10.1.1, the term "licence-out" shall apply only to Third Party license agreements in which Dyax will not retain any operational control or funding obligations with respect to the ongoing development and commercialisation of such Dyax Therapeutic Antibody Product.

 

	
  

	

10.1.2.

	

For the avoidance of doubt, if Dyax decides to licence the further development and commercialisation of any Dyax Therapeutic Antibody Product to a Third Party after the filing of the first IND for such Dyax Therapeutic Antibody Product, it shall give MedImmune the option to participate in the bidding process for such a licence but Dyax shall have no obligation to offer MedImmune a Development Licence with respect thereto.

 

	
10.2

	
MedImmune acknowledges and agrees that, from time to time, the license out by Dyax of a Dyax Therapeutic Antibody Product may be strategically combined with one or more other Dyax Therapeutic Antibody Products or with products and services offered by Dyax, and that in such cases, MedImmune's Development Licence Option may only be exercised by agreeing to all of the terms relevant to such strategic combination.  If (i) any Development Licence Option offered to MedImmune contains such a combination; and (ii) MedImmune and Dyax do not enter into a Development Licence pursuant to such Development Licence Option in accordance with the provisions of Clause 10.5 below; and (iii) Dyax subsequently decide to alter the combination (for example add or take away a product or service) which is to be the subject of the Development Licence, such altered combination must be offered to MedImmune in accordance with Clause 10.1.1 above and Clauses 10.2 to 10.6 below shall apply. 

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 27

  

	
10.3

	
The written notification by Dyax to MedImmune of a Development Licence Option (a "Development Licence Option Notice") shall set out the general terms upon which Dyax is willing to grant a Development Licence, and it shall be accompanied by all reasonable and relevant scientific, regulatory and technical information relating to the Dyax Therapeutic Antibody Product that is the subject of the Development Licence Option Notice (the "Supporting Information") so that MedImmune can reasonably determine in its sole discretion whether to enter into a Development Licence.

 

	
10.4

	
MedImmune shall notify Dyax within [*****] days of receipt of the Development Licence Option Notice and all Supporting Information (or such other longer period as the Parties agree) whether or not it wishes to enter into a Development Licence.  If MedImmune notifies Dyax that it does not wish to enter into a Development Licence, or MedImmune does not respond to Dyax within the foregoing period, then Dyax shall be free to develop and commercialise the Dyax Therapeutic Antibody Product that was the subject of the Development Licence Option Notice with any Third Party; provided that Dyax shall not enter into such a Development Licence on terms which, taken as a whole, are more favourable to the Third Party then those set out in the Development Licence Option Notice without first offering such more favourable terms to MedImmune.

 

	
10.5

	
If MedImmune wishes to enter into a Development Licence, the Parties shall forthwith negotiate the terms of such Development Licence in good faith.  If the Parties acting reasonably and in good faith are unable to agree the heads of terms of the Development Licence within [*****]  months of commencing negotiations, then  Dyax shall be free to enter into a Development Licence with any Third Party for the Dyax Therapeutic Antibody that was the subject of the Development Licence Option Notice; provided that Dyax shall not enter into such a Development Licence on terms which, taken as a whole, are more favourable to the Third Party then those set out in the Development Licence Option Notice without first offering such more favourable terms to MedImmune.

 

	
10.6

	
The provisions of this Clause 10 shall apply to all Dyax Therapeutic Antibody Products.

 

	
10.7

	
For the avoidance of doubt Dyax shall be free to enter into co-development agreements with any Third Party with respect to any Therapeutic Antibody Product without first offering any rights to such product to MedImmune.  If however any proposed co-development agreement changes in nature during negotiations between Dyax and the relevant Third Party to being one of a licence-out the provisions of 10.1 to 10.5 above will apply.  In addition, if having entered into a co-development agreement with a Third Party with respect to any Therapeutic Antibody Product, such agreement is terminated and Dyax decides to out license the further development and commercialisation of such product, the provisions of Clauses 10.1 to 10.5 above will apply.

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 28

  

11.          Dyax Library Licence

 

	
11.1

	
Dyax grants to MedImmune and its Affiliates a non-exclusive, non-sublicensable licence to use the Dyax Antibody Library, Dyax Materials, Dyax Know-How and the inventions claimed in the Dyax Patent Rights for the purposes of carrying out research and development activities in relation to identifying Dyax Licensable Antibodies or potential MedImmune Products from the Dyax Antibody Library.  Such licence shall commence on the date the Dyax Materials are received by MedImmune pursuant to Clause 11.3 below and continue until [*****]. 

[*****].

	
11.2

	
Dyax also grants to MedImmune and its Affiliates the following rights to Third Party intellectual property:

	
  

	
(a)

	
Affimed Sublicense.   Upon the terms and conditions set forth in Schedule 10-A, MedImmune shall have a sublicense under the Affimed Patent Rights (the "Affimed Sublicense") for use with the Dyax Antibody Library as permitted by the license granted in Clause 11.1.

	
  

	
(b)

	
Biosite Sublicense.   Upon the terms and conditions set forth in Schedule 10-B, MedImmune shall have a sublicense under the Biosite Patent Rights (the "Biosite Sublicense") for use with the Dyax Antibody Library as permitted by the license granted in Clause 11.1.

	
  

	
(c)

	
Domantis Sublicense.   Upon the terms and conditions set forth in Schedule 10-C, MedImmune shall have a sublicense under the Domantis Patent Rights and the Domantis Know How (the "Domantis Sublicense") for use with the Dyax Antibody Library as permitted by the license granted in Clause 11.1.

	
  

	
(d)

	
Genentech Sublicense.   Upon the terms and conditions set forth in Schedule 10-D, MedImmune shall have a sublicense under the Genentech Patent Rights (the "Genentech Sublicense") for use with the Dyax Antibody Library as permitted by the license granted in Clause 11.1.

	
  

	
(e)

	
XOMA Covenant.  Upon the terms and conditions set forth in Schedule 10-E,  MedImmune shall have the benefit of the covenant not to sue conferred pursuant to the XOMA License with regard to infringement of the XOMA Patent Rights or misappropriation of the XOMA Know-How (the "XOMA Covenant") solely to the extent reasonably necessary to permit the use by MedImmune of the Dyax Antibody Library as permitted by the license granted in Clause 11.1; but the benefit of the covenant shall expressly exclude the use and practice of the XOMA Patent Rights or XOMA Know-How for commercial or industrial manufacture or any activities solely directed to the creation of such manufacturing capabilities.

	
11.3

	
As soon as possible following the date of this Agreement Dyax will transfer to MedImmune at its own expense the Dyax Materials and will disclose the Dyax Know-How to MedImmune.  Prior to the shipment of the Dyax Materials Dyax and MedImmune shall agree on appropriate specifications for the shipment and delivery of the Dyax Materials.  Dyax shall be responsible for obtaining all import and export licences and approvals required in order to transfer the Dyax Materials and Dyax Know-How to MedImmune at its site on Granta Park, Cambridge, England (the "MedImmune Site").

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 29

  

	
11.4

	
Within thirty (30) days after the execution of this Agreement, Dyax shall transfer the Dyax Antibody Libraries (sufficient for [*****] selections), Dyax Materials and Dyax Know-How to MedImmune for use by MedImmune and its Affiliates in accordance with the terms and conditions of this Agreement.   Following the [*****], Dyax shall make additional transfers of the Dyax Antibody Libraries at least sufficient for [*****] selections at no additional cost or expense to MedImmune.

 

	
11.5

	
In the event of any loss of the Dyax Antibody Library by MedImmune, Dyax will provide MedImmune with a new copy of the Dyax Materials as soon as possible following such loss, provided that (i) MedImmune shall not be entitled to request such a new copy more than once in any one hundred and eighty (180) day period, and (ii) MedImmune shall reimburse Dyax for any reasonable costs incurred in connection with the production and delivery of such Dyax Materials.    On [*****], Dyax shall provide MedImmune with all material updates and improvements made or controlled by Dyax to the Dyax Antibody Libraries, Dyax Materials and all related Dyax Know-How ("Updates") at no additional cost to MedImmune and such Updates shall thereafter be deemed to be included in the license granted to MedImmune under Clause 11.1.

 

	
11.6

	
At MedImmune's request, Dyax shall provide on-site training to MedImmune in the use of the Dyax Antibody Libraries and Dyax Materials at mutually acceptable times and locations.  Such training shall be provided by [*****].  Such training shall be provided at no cost to MedImmune other than Dyax's reasonable, out-of-pocket, invoiced and documented travel, lodging and other similar expenses.  After such [*****] of training, Dyax will provide additional training to MedImmune at mutually acceptable times and locations at a cost of [*****] per employee per day, plus reimbursement for Dyax's reasonable, out-of-pocket, invoiced and documented travel, lodging and other similar expenses

 

	
11.7

	
MedImmune acknowledges that its rights with respect to the Dyax Patent Rights, Dyax Antibody Libraries, Dyax Materials or Dyax Know-How are limited to those expressly granted in this Clause 11 and Clause 2.  Each Party agrees that, except as expressly set forth in this Agreement, no other rights or licenses, express or implied, are granted to any patents, Patent Rights,  inventions, trademarks, trade secrets or other intellectual property, or to any materials, information, data or know-how, of the other Party.  Without in any way limiting the scope of the foregoing, MedImmune also acknowledges and agrees that:

 

	
  

	
(a)

	
no rights are granted to MedImmune by Dyax to use the Dyax Antibody Libraries, Dyax Materials or Dyax Know-How except for the purposes of carrying out research and development activities in relation to identifying Dyax Licensable Antibodies or potential MedImmune Products;

 

	
  

	
(b)

	
the use of the Dyax Antibody Libraries, Dyax Materials, or Dyax Know-How are solely for internal research and development purposes.  MedImmune shall not transfer the Dyax Antibody Libraries, Dyax Materials, or Dyax Know-How to any Third Party and shall not perform services or enter co-development lead discovery agreements with or on behalf of a Third Party under which any of the Dyax Antibody Libraries, Dyax Materials or Dyax Know-How are utilized;

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 30

  

	
  

	
(c)

	
Dyax has previously licensed and will continue to license use of the Dyax Antibody Libraries to Third Parties and as such it may be possible that Third Parties may generate the same Antibodies as MedImmune and therefore have access and rights to the same, and nothing contained in this Agreement shall be deemed to prohibit or restrict Dyax from continuing to supply Dyax Antibody Libraries to Third Parties, or serve as the basis for any claim of liability against Dyax as a result of such activities;

 

	
  

	
(d)

	
Dyax has used and will continue to use the Dyax Antibody Libraries and Dyax Patent Rights in connection with Dyax's own internal research and development activities to discover Antibodies and as such it may be possible for Dyax to generate Antibodies or products that are the same or similar to Licensed Antibodies or Products developed by MedImmune;

 

	
  

	
(e)

	
the Dyax Materials that are provided by Dyax to MedImmune are to be used for research and development purposes only in accordance with Section 11.1; and

	
  

	
(f)

	
Dyax is and shall remain the owner of the Dyax Antibody Libraries, including without limitation any improvements to the Dyax Antibody Library that are developed by MedImmune or its Affiliates as a result of exercising the rights granted pursuant to this Agreement ("Dyax Antibody Library Improvements").  MedImmune shall execute and deliver to Dyax, without charge, irrevocable assignments of its right, title and interest in and to any and all Dyax Antibody Library Improvements and any intellectual property rights thereto to Dyax and shall take all other actions as may reasonably be requested by Dyax to vest in Dyax all right, title and interest in such Dyax Antibody Library Improvements and intellectual property rights.  Dyax shall have the sole right to prepare, file, prosecute, maintain and enforce patent applications and patents arising therefrom claiming inventions made by Dyax or its employees or otherwise relating to the Dyax Antibody Libraries and Dyax Antibody Library Improvements.  MedImmune shall have a licence to use any Dyax Antibody Library Improvements on the same terms as set out in Clause 11.1 above and in Clause 12.2 below except that, in the case of the licence granted pursuant to Clause 12.2, such licence shall be [*****].

	
11.8

	
MedImmune shall indemnify the Dyax Indemnitees against any liability, damage, loss or expense (including attorneys fees and expenses of litigation) incurred by or imposed upon the Dyax Indemnitees or any one of them in connection with any claims, suits, actions, demands or judgments by or in favour of any Third Party concerning any use by MedImmune of the Dyax Antibody Library or Dyax Materials.

 

12.          MedImmune Option for MedImmune Product Licences from Dyax

 

	
12.1

	
Number of Options: In accordance with this Clause 12 Dyax grants to MedImmune and its Affiliates an option to obtain [*****] MedImmune Product Licences for MedImmune Products.

 

	
12.2

	
If MedImmune or its Affiliate wishes to develop and commercialise a MedImmune Product to a particular Target, MedImmune may at any time [*****], by written notice to Dyax ("MedImmune Target Option Notice") require that Dyax grant MedImmune or its Affiliate a MedImmune Product Licence in relation to such Target.  Provided that MedImmune has at least one option remaining from its allocation set out in Clause 12.1 above, Dyax will be deemed to have granted to MedImmune or its Affiliate a non-exclusive, royalty bearing license, with the right to sublicense under the Dyax Patent Rights and Dyax Know-How to research, develop and Exploit MedImmune Products against such Target in the Territory ("MedImmune Product Licence").

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 31

  

	
12.3

	
MedImmune or its Affiliate shall be entitled to sublicense its rights under any MedImmune Product Licence to one or more MedImmune Sublicensees.  Furthermore each MedImmune Sublicensee may also sublicense to any Third Party and so on provided that in each case any sublicensee executes a written agreement (a) which requires sublicensee to abide by the terms of the MedImmune Product Licence and which (b) is consistent with the terms of Clause 11 of this Agreement, this Clause 12 and Clause 13 below.  MedImmune (and where relevant each MedImmune Sublicensee) will be liable for any breach of this Agreement by a sublicense.

 

	
12.4

	
Commencing with the first calendar year following the year in which MedImmune or its Affiliate has obtained rights under its first MedImmune Product Licence, MedImmune will provide to Dyax a brief summary of the status of all outstanding MedImmune Products with respect to which MedImmune has obtained rights under a MedImmune Product Licence ("MedImmune Status Report").  MedImmune will prepare and provide to Dyax the MedImmune Status Report on an annual basis by [*****] of each year, which will summarize the status of each MedImmune Product in the preceding calendar year.

 

	
12.5

	
Unless terminated under Clause 12.12, Clause 12.13 or Clause 12.14, each MedImmune Product Licence shall continue, on a country-by-country and MedImmune Product-by-MedImmune Product basis until [*****] after First Commercial Sale of such MedImmune Product, after which period the licence will become fully paid up.

 

	
12.6

	
MedImmune and each MedImmune Sublicensee (or its sublicensee) shall indemnify the Dyax Indemnitees against any liability, damage, loss or expense (including attorneys fees and expenses of litigation) incurred by or imposed upon the Dyax Indemnitees or any one of them in connection with any claims, suits, actions, demands or judgments by or in favour of any Third Party concerning any manufacture, use or sale of any MedImmune Product by MedImmune or such MedImmune Sublicensee (or its sublicensee).

 

	
12.7

	
Dyax shall not be liable to MedImmune or any MedImmune Sublicensee (or its sublicensee) in respect of any liability, loss, damage or expense (including attorneys fees and expenses of litigation) incurred or suffered by MedImmune and any MedImmune Sublicensee (or its sublicensee) in connection with the manufacture, use or sale of any MedImmune Products by MedImmune or such MedImmune Sublicensee (or its sublicensee).

 

	
12.8

	
No warranty or representation is given by Dyax that the Dyax Patent Rights are, or will be, valid or that the exercise by MedImmune of the rights granted to MedImmune by Dyax under this Agreement will result in any Dyax Licensable Antibodies or MedImmune Products or as a warranty or representation by Dyax that the exploitation of the Dyax Patent Rights, Dyax Antibody Libraries, Dyax Materials or Dyax Know-How any Licensable Antibodies or MedImmune Product will be free from infringement of patents of third parties.  FURTHERMORE, DYAX DISCLAIMS ANY AND ALL WARRANTIES OF ANY KIND WITH REGARD TO THE DYAX PATENT RIGHTS, DYAX ANTIBODY LIBRARIES, DYAX MATERIALS AND DYAX KNOW-HOW, WHETHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, ANY WARRANTIES ARISING FROM COURSE OF DEALING OR USAGE OF TRADE OR THE WARRANTY OF NONINFRINGEMENT.

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

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12.9

	
MedImmune shall notify Dyax promptly of any proceedings or applications for revocation of any of the Dyax Patent Rights emanating from a Third Party that comes to its notice or if a Third Party takes or threatens to take any proceedings for infringement of any patents of that Third Party by reason of MedImmune's use or operation of the Dyax Patent Rights or manufacture, use or sale of the MedImmune Products.  MedImmune shall notify Dyax  promptly of any infringement of the Dyax Patent Rights by a Third Party which may come to its attention during the term of the MedImmune Product Licence, except MedImmune shall have no obligation to so notify Dyax with respect to any infringement by an academic or not-for-profit entity which occurs by reason of such entity carrying out research activities provided such activities are, as far as MedImmune is aware, not being carried out with a view to commercialising a product or otherwise for profit.

 

	
12.10

	
Dyax shall have the sole right and responsibility, at its sole discretion and cost and with reasonable assistance from MedImmune, to file, prosecute and maintain the Dyax Patent Rights and for the conduct of any lawsuits, claims or proceedings challenging the validity or enforceability thereof including, without limitation, any interference or opposition proceeding relating thereto in all countries.  For the avoidance of doubt, MedImmune and MedImmune Sublicensee (or its sublicensee) will have the right to conduct any proceedings relating to a MedImmune Product including any proceedings relating to product liability.

 

	
12.11

	
MedImmune and any MedImmune Sublicensee (or its sublicensee) may assign the benefit and/or burden of any MedImmune Product Licence to any Affiliate or Third Party, provided that such Affiliate or Third Party undertakes to Dyax to be bound by the terms of the MedImmune Product Licence.

 

	
12.12

	
Dyax shall have the right to terminate any MedImmune Product Licence in the event MedImmune or a MedImmune Sublicensee (or its sublicensee) directly or indirectly opposes or assists any Third Party to oppose the grant of letters patent or any patent application within the Dyax Patent Rights, or disputes or directly or indirectly assists any Third Party to dispute the validity of any patent within the Dyax Patent Rights or any of the claims thereof.

 

	
12.13

	
In the event that either Party commits a material breach of any of its obligations with respect to a MedImmune Product Licence, and such Party fails to remedy that breach within [*****] days after receiving written notice thereof from the other Party, that other Party may immediately terminate the MedImmune Product Licence upon written notice to the breaching Party.

 

	
12.14

	
Either Party may terminate a MedImmune Product Licence in its entirety by giving notice in writing to the other Party if any one or more of the following events happens:

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

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(a)

	
the other Party has any distress or execution levied on the major portion of its assets (as determined by its balance sheet in accordance with GAAP) which is not paid out within [*****] days of its being levied;

 

	
  

	
(b)

	
the other Party calls a meeting for the purpose of passing a resolution to wind it up, or such a resolution is passed, or the other Party presents, or has presented, a petition for a winding up order, or presents, or has presented, a petition to appoint an administrator, or has an administrative receiver, or receiver, liquidator or other insolvency practitioner appointed over all or any substantial part of its business, undertaking, property or assets;

 

	
  

	
(c)

	
the other Party stops or suspends making payments (whether of principal or interest) with respect to substantially all of its debts or announces an intention to do so or the other Party suspends or ceases to carry on its business;

 

	
  

	
(d)

	
a secured lender to the other Party holding a security interest over the major portion of the tangible assets (as determined by its balance sheet in accordance with GAAP) of such other Party takes any steps to obtain possession of the property on which it has security or otherwise to enforce its security; or

 

	
  

	
(e)

	
the other Party suffers or undergoes any procedure analogous to any of those specified in Clause 12.14(a) - (d) above or any other procedure available in the country in which the other Party is constituted, established or domiciled against or to an insolvent debtor or available to the creditors of such a debtor.

 

13.          Sums Payable by MedImmune

 

	
13.1

	
MedImmune will have no obligation whatsoever to make any payments to Dyax for the rights granted to MedImmune under Clause 2 above including by way of royalty, milestone, payment of maintenance fee.

 

	
13.2

	
Without prejudice to Clause 13.1 above, Dyax agrees that MedImmune will have no obligations whatsoever to make any payments (whether by way of royalty, milestone or otherwise) to Dyax for any reason in relation to the sums MedImmune may have received or will receive in respect of the D2E7 product developed by MedImmune under the Abbott Agreement or any agreement which replaces or amends the Abbott Agreement in the future.  Dyax, on behalf of itself and its assigns and successors (each a "Dyax Entity"), hereby releases and forever discharges MedImmune, its Affiliates, assignees, successors and licensees and predecessors and any directors and officers of the foregoing (each a "MedImmune Entity") from any and all actions, courses of action, claims, demands, damages and expenses and any other thing in law, equity or otherwise whether now known or unknown or which have ever existed, now exist or which may exist in the future which any Dyax Entity may have against any MedImmune Entity arising out of or relating to any agreements, events or conduct relating to the D2E7 product developed by MedImmune under the Abbott Agreement.

 

	
13.3

	
MedImmune will pay to Dyax a royalty of [*****] on Net Sales of MedImmune Products by MedImmune, its Affiliates or a MedImmune Sublicensee (or its sublicensees).  All royalties due to Dyax under this Clause 13.3 shall be payable on a country by country basis for [*****] years from the date of First Commercial Sale of such MedImmune Product.

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

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13.4

	
MedImmune shall make the payments due to Dyax under this Clause 13 in United States dollars (if MedImmune in turn receives payment in dollars) or in pounds sterling (if MedImmune in turn receives payment in pound sterling), or Euros (if MedImmune in turn receives payment in Euros).  Where MedImmune receives payment in a currency other than United States dollars, pounds sterling or Euros, MedImmune will convert the relevant sum into pounds sterling (or Euros if Euros have replaced pounds sterling at the time of payment).  MedImmune will use the conversion rate reported in the Financial Times two (2) Business Days before the day on which MedImmune pays Dyax.  Such payment will be made without deduction of exchange, collection or other charges.  All payments will be made at Quarterly intervals.  Within [*****] days of the end of each Quarter after the First Commercial Sale of each MedImmune Product, in any country, MedImmune shall prepare a statement which shall show on a country-by-country basis for the previous Quarter Net Sales of each MedImmune Product, by MedImmune or its Affiliates and all monies due to Dyax based on such Net Sales.  That statement shall include details of Net Sales broken down to show the country of the sales and the total Net Sales by MedImmune or its Affiliates in such country and shall be submitted to Dyax within such [*****] day period together with remittance of the monies due.  With respect to Net Sales of a Product, by a MedImmune Sublicensee (or its sublicensee) MedImmune shall prepare a statement which will include the same information and remit that statement and any monies due within the same period.

 

	
13.5

	
All payments shall be made free and clear of and without deduction or deferment in respect of any disputes or claims whatsoever and/or as far as is legally possible in respect of any taxes imposed by or under the authority of any government or public authority.  Any tax (other than VAT) which MedImmune is required to pay or withhold with respect of the payments to be made to Dyax hereunder shall be deducted from the amount otherwise due provided that, in regard to any such deduction, MedImmune shall give Dyax such assistance, which shall include the provision of such documentation as may be required by any revenue authority and other revenue services, as may reasonably be necessary to enable Dyax to claim exemption therefrom or obtain a repayment thereof or a reduction thereof and shall upon request provide such additional documentation from time to time as is needed to confirm the payment of tax.  If by law, regulation or fiscal policy of a particular country, a remittance of royalties in the currency stipulated in Clause 13.5 above, as the case may be, is restricted or forbidden, notice thereof will be promptly given to Dyax, and payment of the royalty shall be made by the deposit thereof in local currency to the credit of Dyax in a recognized banking institution designated by Dyax or its Affiliates.  When in any country a law or regulation that prohibits both the transmittal and deposit of such payments ceases to be in effect, all royalties that MedImmune would have been under obligation to transmit or deposit but for the prohibition, shall forthwith be deposited or transmitted promptly to the extent allowable.

 

	
13.6

	
MedImmune shall keep and shall procure that its Affiliates and MedImmune Sublicensees keep true and accurate records and books of account containing all data necessary for the calculation of the amounts payable by it to Dyax pursuant to this Agreement.  Those records and books of account shall be kept for seven (7) years following the end of the Year to which they relate.  Upon Dyax's written request, a firm of accountants appointed by agreement between the Parties or, failing such agreement within ten (10) Business Days of the initiation of discussions between them on this point Dyax shall have the right to cause an international firm of independent certified public accountants that has not performed auditing or other services for either Party or their Affiliates (or, if applicable, any MedImmune Sublicensee with rights to the MedImmune Product in question) acceptable to MedImmune or the MedImmune Sublicensee such acceptance not to be unreasonably withheld to inspect such records and books of account.  In particular such firm:

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

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13.6.1

	
shall be given access to and shall be permitted to examine and copy such books and records of MedImmune and its Affiliates and MedImmune Sublicensees upon twenty (20) Business Days notice having been given by Dyax and at all reasonable times on Business Days for the purpose of certifying that the Net Sales or other relevant sums calculated by MedImmune and its Affiliates and MedImmune Sublicensees during any Year were reasonably calculated, true and accurate or, if this is not their opinion, certify the Net Sales figure or other relevant sums for such period which in their judgment is true and correct;

 

	
  

	
13.6.2

	
prior to any such examination taking place, such firm of accountants shall undertake to MedImmune that they shall keep all information and data contained in such books and records, strictly confidential and shall not disclose such information or copies of such books and records to any third person including Dyax, but shall only use the same for the purpose of calculations which they need to perform in order to issue the certificate to which this Clause envisages;

 

	
  

	
13.6.3

	
any such access examination and certification shall occur no more than once per Year and will not go back over records more than two (2) years old;

 

	
  

	
13.6.4

	
MedImmune and its Affiliates and MedImmune Sublicensee shall make available personnel to answer queries on all books and records required for the purpose of that certification; and

 

	
  

	
13.6.5

	
the cost of the accountant shall be the responsibility of MedImmune if the certification shows it to have underpaid monies to Dyax by more than [*****] and the responsibility of Dyax otherwise.

 

	
13.7

	
All payments due to Dyax under the terms of this Agreement are expressed to be exclusive of value added tax (VAT) howsoever arising.  If Dyax is required to charge VAT on any such payment, Dyax will notify MedImmune.  MedImmune will then use all commercially reasonable endeavours to obtain a VAT registration as soon as reasonably possible in order to allow it to reclaim any VAT so chargeable.  If MedImmune does obtain a VAT registration then VAT will be added to any relevant payment at the applicable rate.  If having used all commercially reasonable endeavours MedImmune is not able to reclaim the VAT (in whole or in part) the parties agree that the amount of any VAT payable will be shared between them equally.

 

	
13.8

	
All payments made to Dyax under this Agreement shall be made to the bank account of Dyax as notified by Dyax to MedImmune from time to time.

 

	
13.9

	
If MedImmune fails to make any payment to Dyax hereunder on the due date for payment, without prejudice to any other right or remedy available to Dyax it shall be entitled to charge  MedImmune interest (both before and after judgment) of the amount unpaid at the annual rate of LIBOR (London Interbank Offering Rate) plus [*****] calculated on a daily basis until payment in full is made without prejudice to Dyax's right to receive payment on the due date.

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

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14.          Representations and Warranties

 

	
14.1

	
Each Party represents, warrants, undertakes and agrees for the benefit of the other Party that:

 

	
  

	
14.1.1

	
it has full power to enter into and perform this Agreement;

 

	
  

	
14.1.2

	
so far as it is aware the execution and delivery of this Agreement and the performance of and compliance with its terms and provisions will not:

 

	
  

	
(a)

	
conflict with or result in a breach of, or constitute a default under, any agreement or instrument to which it is a party or by which it is bound or with its memorandum and articles of association;

 

	
  

	
(b)

	
conflict with or result in a breach of any law, regulation or order of any court;

 

	
14.2

	
MedImmune represents, warrants and undertakes for the benefit of Dyax as at 3 January 2003:

 

	
  

	
14.2.1

	
MedImmune has provided to Dyax a complete and accurate description of MedImmune's Gatekeeping Procedure;

 

	
  

	
14.2.2

	
MedImmune will keep the agreement between it and the Medical Research Council dated 7 January 1997 in force;

 

	
  

	
14.2.3

	
the patents and applications listed in Schedule 1 are all the Patent Rights relating to the technology of Antibody phage display owned or controlled by MedImmune (including Patent Rights sublicensed by MedImmune from the Medical Research Council), except as specifically excluded in this Agreement.  If MedImmune has inadvertently excluded any such Patent Right from Schedule 1, such omission shall not be considered a breach of this representation and warranty but rather any missing Patent Right shall be deemed to be so included in Schedule 1;

 

	
14.3

	
Dyax represents, warrants and undertakes for the benefit of MedImmune that:

 

	
  

	
14.3.1

	
as at 31 December 1997 it possessed the exclusive right, title and interest in and to the Dyax Patent Rights and that it had the full legal right and power to enter into the obligations and grant the rights and licences set forth in this Agreement;

 

	
  

	
14.3.2

	
as at the date of this Agreement the patents and applications listed in Schedule 5 are all the Patent Rights relating to the technology of creating and using the Dyax Antibody Library owned or controlled by Dyax, except as specifically excluded in this Agreement.  If Dyax has inadvertently excluded any such Patent Right from Schedule 5, such omission shall not be considered a breach of this representation and warranty but rather any missing Patent Right shall be deemed to be so included in Schedule 5; and

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

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14.3.3

	
as at the date of this Agreement neither Dyax nor any Dyax Affiliate has received any written notice or other communication from a Third Party alleging that the practice of the Dyax Patent Rights infringes the rights of such Third Party.

 

	
14.4

	
Nothing in this Agreement shall be construed as:

 

	
  

	
14.4.1

	
a warranty or representation by Dyax or MedImmune as to the validity or scope of any patent included within any Patent Rights licensed pursuant to this Agreement.

 

	
  

	
14.4.2

	
a warranty or representation that the exploitation of any Patent Rights or the manufacture, use or sale of a Licensed Intermediate or a Licensed Products or a Product, or Other Product  is or will be free from infringement of patents of Third Parties;

 

	
  

	
14.4.3

	
an obligation of either Party to bring or prosecute actions or suits against Third Parties for infringement;

 

	
  

	
14.4.4

	
an obligation of MedImmune or Dyax to maintain any patent or to continue to prosecute any patent application included within the Patent Rights licensed pursuant to this Agreement in any country;

 

	
  

	
14.4.5

	
creating any agency, partnership, joint venture or similar relationship between MedImmune and Dyax ; or

 

	
  

	
14.4.6

	
conferring by implication, estoppel or otherwise any license, immunity or right under any patent of Dyax or MedImmune other than those specified in the Dyax Patent Rights or the MedImmune Antibody Phage Display Patent Rights.

 

15.          Duration and Termination

 

	
15.1

	
The options granted by MedImmune in Clause 3 will continue until (a) 31 December 2017; or (b) the termination of this Agreement in accordance with Clause 15.3 below.

 

	
15.2

	
The term of this Agreement shall commence upon the Restatement Date save for those provisions which are expressed to have an effect from the Commencement Date (in which case the relevant term will be deemed to have commenced as of the Commencement Date and be subject to the remaining terms of this Agreement) and shall terminate upon (a) the last-to-expire of claims of an issued and unexpired patent within the MedImmune Antibody Phage Display Patents or the Dyax Patent Rights (as the case may be) (which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise) or (b) the date upon which no payments are due to MedImmune under Clause 8 of this Agreement and no payments are due to Dyax under Clause 13 of this Agreement, whichever event occurs last.

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

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15.3

	
Either Party may terminate this Agreement in its entirety by giving notice in writing to the other Party if any one or more of the following events happens:

 

	
  

	
(a)

	
the other Party commits a material breach of any of its obligations under this Agreement which is incapable of remedy;

 

	
  

	
(b)

	
the other Party fails to remedy, where it is capable of remedy, or persists in any breach of any of its obligations under this Agreement after having been required in writing to remedy or desist from such breach within a period of [*****] days;

 

	
  

	
(c)

	
the other Party has any distress or execution levied on the major portion of its assets (as determined by its balance sheet in accordance with GAAP) which is not paid out within [*****] days of its being levied;

 

	
  

	
(d)

	
the other Party calls a meeting for the purpose of passing a resolution to wind it up, or such a resolution is passed, or the other Party presents, or has presented, a petition for a winding up order, or presents, or has presented, a petition to appoint an administrator, or has an administrative receiver, or receiver, liquidator or other insolvency practitioner appointed over all or any substantial part of its business, undertaking, property or assets;

 

	
  

	
(e)

	
the other Party stops or suspends making payments (whether of principal or interest) with respect to substantially all of its debts or announces an intention to do so or the other Party suspends or ceases to carry on its business;

 

	
  

	
(f)

	
a secured lender to the other Party holding a security interest over the major portion of the tangible assets (as determined by its balance sheet in accordance with GAAP) of such other Party takes any steps to obtain possession of the property on which it has security or otherwise to enforce its security;

 

	
  

	
(g)

	
the other Party suffers or undergoes any procedure analogous to any of those specified in Clause 15.3(c) - (f) above or any other procedure available in the country in which the other Party is constituted, established or domiciled against or to an insolvent debtor or available to the creditors of such a debtor;

 

	
15.4

	
Upon termination of this Agreement for any reason whatsoever:

 

	
  

	
(a)

	
the relationship of the Parties hereunder shall cease save as (and to the extent) expressly provided for in this Clause 15.4;

 

	
  

	
(b)

	
any unexercised options for Dyax Product Licences granted to Dyax under this Agreement shall terminate;

 

	
  

	
(c)

	
any unexercised options for MedImmune Product Licences granted to MedImmune under this Agreement shall terminate;

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

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(d)

	
any Dyax Product Licence granted to Dyax before the date of termination shall continue and the Parties will continue to be bound by the terms of this Agreement in relation to any such Dyax Product Licences;

 

	
  

	
(e)

	
any MedImmune Product Licence granted to MedImmune before the date of termination shall continue and the Parties will continue to be bound by the terms of this Agreement in relation to any such MedImmune Product Licences;

 

	
  

	
(f)

	
the licence granted to Dyax for Other Purposes shall continue with respect to any Other Products commercialised prior to the date of termination of this Agreement and the Parties will continue to be bound by the terms of this Agreement in relation to any such Other Product;

 

	
  

	
(g)

	
any sublicences granted by Dyax in accordance with the terms of this Agreement will continue in force provided that such sublicensees are not in breach of the relevant sublicence and that each sublicensee agrees to enter into a direct agreement with MedImmune upon the terms of this Agreement;

 

	
  

	
(h)

	
the Parties acknowledge and agree that Dyax Sublicensees, as well as sublicensees of the foregoing to the extent permitted under this Agreement, each derive independent and significant value from the agreements set forth herein and may rely thereon and to that extent only shall each have the right to enforce the provisions of Clause 15.4 (g) of this Agreement and be a third party beneficiary for that purpose only;

 

	
  

	
(i)

	
Dyax shall immediately return or procure to be returned to MedImmune at such place as it directs and at the expense of Dyax (or if MedImmune so requires by notice to Dyax in writing, destroy) all MedImmune Know-How together with all copies of such MedImmune Know-How in its possession or under its control;

 

	
  

	
(j)

	
MedImmune shall immediately return or procure to be returned to Dyax at such place as it directs and at the expense of MedImmune (or if Dyax so requires by notice to MedImmune in writing, destroy) all Dyax Antibody Libraries, Dyax Materials and Dyax Know-How together with all copies, where applicable, in its possession or under its control;

 

	
  

	
(k)

	
the rights of any Commercial Party shall not be affected by the termination or expiration of this Agreement provided that the Commercial Party continues to perform the obligations of MedImmune pursuant to Clause 2.  MedImmune's rights and obligations, with respect to Licensed Products developed using the Dyax Base Phage Display Patent Rights, or developed as a result of Licensed Intermediates, during the term of this Agreement will survive termination or expiration of this Agreement;

 

	
  

	
(l)

	
any sublicences granted by MedImmune with respect to the rights granted to MedImmune under Clause 2 of this Agreement will continue in force provided that such sublicensees are not in breach of the relevant sublicence and that each sublicensee agrees to enter into a direct agreement with Dyax upon the terms of this Agreement;

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

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(m)

	
the Parties acknowledge and agree that MedImmune sublicensees each derive independent and significant value from the agreements set forth herein and may rely thereon and to that extent only shall each have the right to enforce the provisions of Clause 15.4 (l) of this Agreement and be a third party beneficiary for that purpose only;

 

16.          Confidentiality and Publicity

 

	
16.1

	
With respect to any confidential information received from the other Party ("Confidential Information"), each Party undertakes and agrees to:

 

	
  

	
16.1.1

	
only use the Confidential Information for the purposes envisaged under this Agreement and not to use the same for any other purpose whatsoever;

 

	
  

	
16.1.2

	
ensure that only those of its officers and employees who are directly concerned with the carrying of this Agreement have access to the Confidential Information on a strictly "need to know" basis and are informed of the secret and confidential nature of it;

 

	
  

	
16.1.3

	
keep the Confidential Information secret, confidential, safe and secure and shall not directly or indirectly disclose or permit to be disclosed the same to any Third Party, including any consultants or other advisors, without the prior written consent of the disclosing party except to the extent disclosure is necessary in connection with its use as envisaged under this Agreement;

 

	
  

	
16.1.4

	
ensure that the Confidential Information will not be covered by any lien or other encumbrance in any way; and

 

	
  

	
16.1.5

	
not copy, reproduce or otherwise replicate for any purpose or in any manner whatsoever any documents containing the Confidential Information except to the extent necessary in connection with its use as envisaged under this Agreement.

 

	
16.2

	
The obligations referred to in Clause 16.1 above shall not extend to any Confidential Information which:

 

	
  

	
16.2.1

	
is or becomes generally available to the public otherwise than be reason of breach by a recipient Party of the provision of Clause 16.1;

 

	
  

	
16.2.2

	
is known to the recipient Party and is at its free disposal (having been generated independently by the recipient Party or a Third Party in circumstances where it has not been derived directly or indirectly from the disclosing Party's Confidential Information prior to its receipt from the disclosing Party), provided that evidence of such knowledge is furnished by the recipient Party to the disclosing Party within twenty eight (28) days of recipient of that Confidential Information;

 

	
  

	
16.2.3

	
is subsequently disclosed to the recipient Party without obligations of confidence by a Third Party owing no such obligations to the disclosing Party in respect of that Confidential Information;

 

	
  

	
16.2.4

	
is required by law to be disclosed (including as part of any regulatory submission or approval process) and then only when prompt written notice of this requirement has been given to the disclosing Party so that it may, if so advised, seek appropriate relief to prevent such disclosure, provided always that in such circumstances such disclosure shall be only to the extent so required and shall be subject to prior consultation with the disclosing Party with a view to agreeing on the timing and content of such disclosure.

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

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16.3

	
No public announcement or other disclosures to Third Parties concerning the terms of this Agreement shall be made, whether directly or indirectly, by any Party to this Agreement (except confidential disclosures to professional advisors) without first obtaining the approval of the other Party and agreement upon the nature and text of such announcement or disclosure provided that:

 

	
  

	
16.3.1

	
a Party may disclose those terms which it is required by regulation or law to disclose, provided that it takes advantage of all provisions to keep confidential as many terms of this Agreement as possible; and

 

	
  

	
16.3.2

	
the Party desiring to make any such public announcement or other disclosure shall inform the other Party of the proposed announcement or disclosure in reasonably sufficient time prior to public release, and shall provide the other Party with a written copy thereof, in order to allow such Party to comment upon such announcement or disclosure in reasonably sufficient time prior to public release, and shall provide the other Party with a written copy thereof, in order to allow such Party to comment upon such announcement or disclosure.  Each Party agrees that it shall cooperate fully with the other with respect to all disclosures regarding this Agreement to the US Securities Exchange Commission, the UK Stock Exchange and any other comparable body including requests for confidential information or proprietary information of either party included in any such disclosure.  The Parties agree that each shall be entitled from time to time to include the name of other within a list of licensees under the respective Patent Rights in a public announcement.

 

17.          Governing Law and Jurisdiction

 

	
17.1

	
This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts.

 

	
17.2

	
Any dispute, controversy or claim arising under, out of or relating to this agreement and any subsequent amendments of this contract, including, without limitation, its formation, validity, binding effect, interpretation, performance, breach or termination, as well as non-contractual claims, shall be referred to and finally determined by arbitration in accordance with the World Intellectual Property Organization Arbitration Rules. The arbitral tribunal shall consist of three arbitrators. The place of arbitration shall be Boston, Massachusetts if the arbitration is initiated by MedImmune, and it shall be London, England if the arbitration is initiated by Dyax.  The language to be used in the arbitral proceedings shall be English.  The dispute, controversy or claim shall be decided in accordance with the law of the Commonwealth of Massachusetts, U.S.A.

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

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18.          Assignment

 

	
18.1

	
Subject to Clause 6.9, this Agreement may not be assigned by either Party without the prior written consent of the other Party, except that either Party may assign the Agreement to any of its Affiliates or either Party may assign this Agreement to a successor in connection with the merger, consolidation or sale of all or substantially all of its assets or the portion of its business pertaining to the subject matter of this Agreement with prompt notice to the other Party of such assignment.  This Agreement shall inure for the benefit of and be binding on the Parties and their respective lawful successors and assignees.

 

19.          Miscellaneous

 

	
19.1

	
Acknowledgement Regarding Royalties.  Dyax and MedImmune each acknowledge and agree that the amount of royalties due from one Party to the other under this Agreement and the duration of such royalty payments have been chosen for the convenience of the Parties as payment for use of the other Party's proprietary technology to identify, generate, develop, produce or optimize Antibodies Products and MedImmune Products including in the case of patented technology, for use thereof during the life of such patents.

 

	
19.2

	
Notices - All notices, requests, demands and other communications required or permitted to be given pursuant to this Agreement shall be in writing and shall be deemed to have been duly given upon the date of receipt if delivered by hand, recognized international overnight courier, confirmed facsimile transmission, or registered or certified mail, return receipt requested, postage prepaid to the following addresses or facsimile numbers:

 

	
If to Dyax:

	
If to MedImmune:

	
Dyax Corp.

	
MedImmune Limited

	
55 Network Drive

	
Milstein Building, Granta Park

	
Burlington, MA 01803

	
Cambridge, CB21 6GH

	
USA

	
UK

	
Attention:  General Counsel

	
Attention:  Company Secretary

	
Facsimile: [*****]

	
Facsimile:  [*****]

 

	
19.3

	
Compliance with Law - Nothing in this Agreement shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision of this Agreement and any statute, law, ordinance or treaty, the latter shall prevail, but in such event the affected provisions of the Agreement shall be conformed and limited only to the extent necessary to bring it within the applicable legal requirements.

 

	
19.4

	
Amendment and Waiver - This Agreement may be amended, supplemented, or otherwise modified only by means of a written instrument signed by both parties.  Any waiver of any rights or failure to act in a specific instance shall relate only to such instance and shall not be construed as an agreement to waive any rights or fail to act in any other instance, whether or not similar.

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 43

  

	
19.5

	
Severability - In the event that any provision of this Agreement shall, for any reason, be held to be invalid or unenforceable in any respect, such invalidity or unenforceability shall not affect any other provision hereof, and the parties shall negotiate in good faith to modify the Agreement to preserve (to the extent possible) their original intent.

 

	
19.6

	
Entire Agreement - This Agreement, together with (i) [*****] and (iii) that [*****], constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements or understandings between the parties relating to the subject matter hereof.   [*****].

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 44

  

 

IN WITNESS OF THE ABOVE the Parties have signed this Agreement on the date written at the head of this Agreement.

 

	
SIGNED by

	
)

	  	  
	  	
)

	  	  
	 	
)

	 	 
	  	 
)   /s/ AndrewWilliams                                                                                     

	
 

	
for and on behalf of

	
)

	
Authorised Signatory

	  
	
MEDIMMUNE LIMITED

	
)

	 	 
	
 

	
 

	  	  
	  	  	  	  
	  	  	  	  
	
SIGNED by

	
)

	  	  
	  	
)

	  	  
	 	
)

	 	 
	  	
)   /s/ Kia Motesharei                                               

	
 

	

for and on behalf of

	
)

	Authorised Signatory	  
	

DYAX CORP.

	
)

	 	 
	
 

	
)

	  	  
	  	
 

	  	  

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 45

  

 

Schedule 1

 

Antibody Phage Display Patents

	
Family 1 (includes PCT/GB89/01344)

	
Patent or Publication No.

	
Title

 

	
AU 634186 B2

	
Single domain ligands, receptors comprising said ligands, methods for their production and use of said ligands and receptors

 

	
CA 2002868 C

	
Single domain ligands, receptors comprising said ligands, methods for their production, and use of said ligands and receptors

 

	
DK 175392 B1

	
Enkelt-domaene-ligander, receptorer omfattende disse lignader, fremgangsmaader til fremstilling af dem og anvendelse af disse ligander og receptorer (Danish)

 

	
EP 368684 B2

	
Cloning immunoglobulin variable domain sequences

 

	
GB 8826444 A0

	
Cloning immunoglobulin variable domains for expression by polymerase

 

	
GB 8906034 A0

	
Recombinant DNA method

 

	
GB 8911047 A0

	
Antibody binding

 

	
GB 8912652 A0

	
Antibody binding

 

	
GB 8913900 A0

	
Antibody binding

 

	
GB 8918543 A0

	
Antibody binding

 

	
GB 899217 A0

	
Antibody binding

 

	
JP 2919890 B2

	
  

 

	
JP 3502801 T2

	
  

 

	
KR 184860 B1

	
Single domain ligands, receptors comprising said ligands, methods for their production and use of said ligands and receptors

 

	
US 6248516

	
Single domain ligands, receptors comprising said ligands, methods for their production and use of said ligands and receptors

 

	
US 6545142

	
Single domain ligands, receptors comprising said ligands, methods for their production and use of said ligands and receptors

 

	
US 20030114659

	
Single domain ligands, receptors comprising said ligands, methods for their production and use of said ligands and receptors

 

	
US 20030130496

	
Single domain ligands, receptors comprising said ligands, methods for their production and use of said ligands and receptors

 

	
US 20040110941

	
Single domain ligands, receptors comprising said ligands, methods for their production and use of said ligands and receptors

 

	
WO 9005144

	
Single domain ligands, receptors comprising said ligands, methods for their production, and use of said ligands and receptors

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 46

  

 

	  	  
	
Family 2 (includes  PCT/US90/02890, PCT/US90/02835, PCT/US90/02836)

 

	
Patent or Publication No.

	
Title

 

	
AU 643948 B2

	
A new method for tapping the immunological repertoire

 

	
AU 651065 B2

	
Method for isolating receptors having a preselected specificity

 

	
AU 652539 B2

	
Co-expression of heteromeric receptors

 

	
CA 2016841 C

	
A method for producing polymers having a preselected activity

 

	
EP 425661 B1

	
A new method for tapping the immunological repertoire

 

	
EP 472638 B1

	
Method for isolating receptors having a preselected specificity

 

	
EP 478627 A1 (wd)

	
Co-expression of heteromeric receptors

 

	
EP 1026239 A2/A3

	
A new method for tapping the immunological repertoire

 

	
GR 1002149 B

	
Method for producing polymers having a preselected activity

 

	
GR 1002158 B

	
Method for tapping the immunological repertoire

 

	
JP 3321159 B2

	
  

 

	
JP 4500607 T2

	
  

 

	
JP 4506600 T2

	
  

 

	
JP 5501348 T2

	
  

 

	
PT 94065 B

	
Processo de producao de um acido nucleico conservado e de um receptor codificado pelo referido acido

 

	
PT 94066 B

	
Processo para a producao de vectores de and de cadeia dupla e de um sistema de clonacao compreendendo os referidos vectores

 

	
US 6291158

	
Method for tapping the immunological repertoire

 

	
US 6291159

	
Method for producing polymers having a preselected activity

 

	
US 6291160

	
Method for producing polymers having a preselected activity

 

	
US 6291161

	
Method for tapping the immunological repertoire

 

	
US 6680192

	
Method for producing polymers having a preselected activity

 

	
US 6969586

	
Method for tapping the immunological repertoire

 

	
US 7189841

	
Method for tapping the immunological repertoire

 

	
US 20060019260

	
Method for tapping the immunological repertoire

 

	
WO 9014424

	
Method for isolating receptors having a preselected specificity

 

	
WO 9014430

	
A new method for tapping the immunological repertoire

 

	
WO 9014443

	
Co-expression of heteromeric receptors

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 47

  

 

	  	  
	
Family 3 (includes PCT/GB92/00883, PCT/GB91/01134, PCT/GB92/01755, PCT/GB92/02240, PCT/GB93/00605)

 

	
Patent or Publication No.

	
Title

 

	
AU 664155 B2

	
Methods for producing members of specific binding pairs

 

	
AU 665025 B2

	
Production of chimeric antibodies - a combinatorial approach

 

	
AU 665190 B2

	
Methods for producing members of specific binding pairs

 

	
AU 665221 B2

	
Production of anti-self antibodies from antibody segment repertoires and displayed on phage

 

	
AU 673515 B2

	
Methods for producing members of specific binding pairs

 

	
AU 703319 B2

	
Specific binding members for human carcinoembryonic antigen, materials and methods

 

	
CA 2086936 C

	
Method for producing members of specific binding pairs

 

	
CA 2109602 C

	
Methods for producing members of specific binding pairs

 

	
CA 2119930 C

	
Production of chimeric antibodies - a combinatorial approach

 

	
EP 585287 B1

	
Methods for producing members of specific binding pairs

 

	
EP 589877 B2

	
Methods for producing members of specific binding pairs

 

	
EP 605522 B1

	
Production of chimeric antibodies - a combinatorial approach

 

	
EP 616640 B1

	
Production of anti-self antibodies from antibody seqment repertoires and displayed on phage

 

	
EP 656941 B1

	
Methods for producing members of specific binding pairs

 

	
EP 774511 B1

	
Phagemid-based method of producing filamentous bacteriophage particles displaying antibody molecules and the corresponding bacteriophage paricles

 

	
EP 844306 B1

	
Methods of producing members of specific binding pairs

 

	
EP 865492 B1

	
Specific binding members for human carcinoembryonic antigen, materials and methods

 

	
EP 1433846 B1

	
Phagemid-based method of producing filamentous bacteriophage particles displaying antibody molecules and the corresponding bacteriophage paricles

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 48

  

 

	
EP 1024191 A2/A3

	
Production of chimeric antibodies from antibody segment repertoires and displayed on phage

 

	
EP 1754787 A2

	
Methods for producing members of specific binding pairs

 

	
GB 9015198 A0

	
Binding substance

 

	
GB 9022845 A0

	
Antibodies

 

	
GB 9024503 A0

	
Binding substances

 

	
GB 9104744 A0

	
Binding substances

 

	
GB 9110549 A0

	
Binding substances

 

	
GB 9120252 A0

	
Improvement binding substances

 

	
GB 9120377 A0

	
Improved binding substances

 

	
GB 9125579 A0

	
Binding molecules 1

 

	
GB 9125582 A0

	
Binding molecules 2

 

	
GB 9206318 A0

	
Binding substances

 

	
GB 9206372 A0

	
Binding substances

 

	
GB 9525004 A0

	
Specific binding members, materials and methods

 

	
GB 9610824 A0

	
Specific binding members, materials and methods

 

	
GB 9621295 A0

	
Specific binding members, materials and methods

 

	
JP 3176917 B2

	
  

 

	
JP 3507073 B2

	
  

 

	
JP 3540315 B2

	
  

 

	
JP 5508076 T2

	
  

 

	
JP 6508511 T2

	
  

 

	
JP 6510671 T2

	
  

 

	
JP 7502167 T2

	
  

 

	
JP 7505055 T2

	
  

 

	
JP 2000504204 T2

	
  

 

	
KR 222326 B1

	
Method for producing members of specific binding pairs

 

	
US 5565332

	
Production of chimeric antibodies - a combinatorial approach

 

	
US 5733743

	
Methods for producing members of specific binding pairs

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 49

  

 

	
US 5858657

	
Methods for producing members of specific binding pairs

 

	
US 5871907

	
Methods for producing members of specific binding pairs

 

	
US 5872215

	
Specific binding members, materials and methods

 

	
US 5885793

	
Production of anti-self antibodies from antibody segment repertoires and displayed on phage

 

	
US 5962255

	
Methods for producing recombinant vectors

 

	
US 5969108

	
Methods for producing members of specific binding pairs

 

	
US 6140471

	
Methods for producing members of specific binding pairs

 

	
US 6172197

	
Methods for producing members of specific binding pairs

 

	
US 6225447

	
Methods for producing members of specific binding pairs

 

	
US 6291650

	
Methods for producing members of specific binding pairs

 

	
US 6492160

	
Methods for producing members of specific binding pairs

 

	
US 6521404

	
Production of anti-self antibodies from antibody segment repertoires and displayed on phage

 

	
US 6544731

	
Production of anti-self antibodies from antibody segment repertoires and displayed on phage

 

	
US 6555313

	
Production of anti-self antibodies from antibody segment repertoires and displayed on phage

 

	
US 6582915

	
Production of anti-self antibodies from antibody segment repertoires and displayed on phage

 

	
US 6593081

	
Production of anti-self antibodies from antibody segment repertoires and displayed on phage

 

	
US 6806079

	
Methods for producing members of specific binding pairs

 

	
US 6916605

	
Methods for producing members of specific binding pairs

 

	
US 7063943

	
Methods for producing members of specific binding pairs

 

	
US 20030190674

	
Production of anti-self antibodies from antibody segment repertoires and displayed on phage

 

	
US 20040157214

	
Methods for producing members of specific binding pairs

 

	
US 20040157215

	
Methods for producing members of specific binding pairs

 

	
WO 9201047

	
Methods for producing members of specific binding pairs

 

	
WO 9220791

	
Methods for producing members of specific binding pairs

 

	
WO 9306213

	
Production of chimeric antibodies - a combinatorial approach

 

	
WO 9311236

	
Production of anti-self antibodies from antibody segment repertoires and displayed on phage

 

	
WO 9319172

	
Methods for producing members of specific binding pairs

 

	
WO 9720932

	
Specific binding members for human carcinoembryonic antigen, materials and methods

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 50

  

 

	  	  
	
Family 4 (includes PCT/GB92/01483)

 

	
Patent or Publication No.

	
Title

 

	
AU 665365 B2

	
Treatment of cell populations

 

	
EP 597960 B1

	
Treatment of cell populations

 

	
GB 9117352 A0

	
Recombinant DNA method

 

	
GB 9212419 A0

	
Recombinant DNA method

 

	
JP 6509473 T2

	
  

 

	
US 5830663

	
In situ recombinant PCR within single cells

 

	
WO 9303151

	
Treatment of cell populations

	  	  
	
Family 5 (includes PCT/GB94/01422)

 

	
Patent or Publication No.

	
Title

 

	
AU 691817 B2

	
SBP members with a chemical moiety covalently bound within the binding site; production and selection thereof

 

	
EP 706569 B1

	
SBP members with a chemical moiety covalently bound within the binding site; production and selection thereof

 

	
GB 9313509 A0

	
Chemisynthetic libraries

 

	
JP 9500016 T2

	
  

 

	
US 6017732

	
Bacteriophage library displaying immunoglobulin repertoires with a chemical moiety covalently bound within the binding site: production and selection thereof

 

	
WO 9501438

	
SBP members with a chemical moiety covalently bound within the binding site; production and selection thereof

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 51

  

 

	  	  
	
Family 6 (includes PCT/GB94/02662)

 

	
Patent or Publication No.

	
Title

 

	
AU 674568 B2

	
Improved method for the refolding of proteins

 

	
AU 680685 B2

	
Retargeting antibodies

 

	
AU 690171 B2

	
Recombinant binding proteins and peptides

 

	
AU 690528 B2

	
Multivalent and multispecific binding proteins, their manufacture and use

 

	
CA 2155335 C

	
Improved method for the refolding of proteins

 

	
EP 672142 B1

	
Multivalent and multispecific binding proteins, their manufacture and use

 

	
EP 686162 B1

	
Improved method for the refolding of proteins

 

	
EP 720624 B1

	
Retargeting antibodies

 

	
EP 731842 A1

	
Recombinant binding proteins and peptides

 

	
FI 113272 B1

	
Parannettu proteiinien laskostamismenetelma forbattrat forfarande for veckning av proteiner (Swedish)

 

	
GB 9225453 A0

	
Binding proteins

 

	
GB 9300816 A0

	
Improvements in or relating to binding proteins

 

	
GB 9319969 A0

	
Binding proteins IV

 

	
GB 9412147 A0

	
Recombinant binding proteins and peptides

 

	
GB 9412166 A0

	
Retargeting antibodies

 

	
JP 3695467 B2

	
  

 

	
JP 3720353 B2

	
  

 

	
JP 8504100 T2

	
  

 

	
JP 8506243 T2

	
  

 

	
JP 9503759 T2

	
  

 

	
JP 9506508 T2

	
  

 

	
NO 316274 B1

	
Fremgangsmate til refolding av proteiner (Norwegian)

 

	
US 5739281

	
Interative method of at least three cycles for the refolding of proteins

 

	
US 5837242

	
Multivalent and multispecific binding proteins, their manufacture and use

 

	
US 5917018

	
Interative method of at least five cycles for the refolding of proteins

 

	
US 6010884

	
Recombinant binding proteins and peptides

 

	
US 6492123

	
Multivalent and multispecific binding proteins, their manufacture and use

 

	
US 6589527

	
Retargeting antibodies

 

	
WO 9413804

	
Multivalent and multispecific binding proteins, their manufacture and use

 

	
WO 9418227

	
Improved method for the refolding of proteins

 

	
WO 9508577

	
Retargeting antibodies

 

	
WO 9515388

	
Recombinant binding proteins and peptides

 

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 52

  

 

	  	  
	
Family 7 (includes PCT/GB97/01835)

 

	
Patent or Publication No.

	
Title

 

	
AU 715796 B2

	
Labelling and selection of molecules

 

	
EP 906571 B1

	
Labelling and selection of molecules

 

	
EP 1353180 B1

	
Labelling and selection of molecules

 

	
GB 9614292 A0

	
Labelling and selection of specific binding molecules

 

	
GB 9624880 A0

	
Labelling and selection of specific binding molecules

 

	
GB 9712818 A0

	
Labelling and selection of specific binding molecules

 

	
GB 9714397 A0

	
Labelling and selection of molecules

 

	
GB 9900205 A0

	
Labelling and selection of molecules

 

	
GB 2330909 B2

	
Labelling and selection of molecules

 

	
GB 2315125 B2

	
Labelling and selection of molecules

 

	
JP 2000517046 T2

	
  

 

	
US 5994519

	
Labelling and selection of molecules

 

	
US 6180336

	
Labelling and selection of molecules

 

	
US 6342588

	
Labelling and selection of molecules

 

	
US 6489123

	
Labelling and selection of molecules

 

	
US 20020004215

	
Labelling and selection of molecules

 

	
WO 9801757

	
Labelling and selection of molecules

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

  

Page 53

  

 

Schedule 2

 

MedImmune Gatekeeping Procedure

 

For each Nominated Target (which must be accompanied by a GenBank® accession number or similar information which uniquely identifies that Nominated Target) submitted by Dyax under Clause 4.1, MedImmune will, on a Nominated -Target-by-Nominated -Target basis, not grant a Dyax Product Licence to Dyax, if MedImmune is, at the date of submission of the Target Option Notice by Dyax, contractually obligated on an exclusive basis in respect of that Nominated Target with a Third Party pursuant to an agreement with that Third Party which was entered into prior to 3 January 2003.

 

NOTES

 

	
1.

	
For the avoidance of doubt, MedImmune will not subject any Nominated Target to the MedImmune Gatekeeping Procedure unless and until Dyax supplies MedImmune with a GenBank® accession number or similar information which uniquely identifies that Nominated Target.

 

	
2.

	
If Dyax supplies MedImmune with an incorrect GenBank® accession number for a Nominated Target or otherwise incorrectly identifies a Nominated Target which is then subjected to the MedImmune Gatekeeping Procedure, the result of the MedImmune Gatekeeping Procedure in respect of such Nominated Target shall prevail even if it is subsequently discovered that such incorrect GenBank® accession number or identifying information had been provided by Dyax.

 

	
3.

	
Within one (1) month after notice is given to Dyax of a refusal by MedImmune to grant a Dyax Product Licence in respect of any Nominated Target, Dyax may notify MedImmune that it wishes to appoint an Expert to make such enquiries of MedImmune as may be reasonably necessary for the Expert to be able to confirm to Dyax that the MedImmune Gatekeeping Procedure had been correctly applied by MedImmune in respect of such Nominated Target.  MedImmune shall provide such information to the Expert as the Expert may reasonably determine is required in order to make such confirmation.  For the avoidance of doubt the Expert shall not be entitled (unless MedImmune consents) to enter MedImmune premises in order to carry out its enquiries, shall only provide the confirmation to Dyax on a "Yes/No" basis and shall not give or be obliged to give to Dyax any other information obtained from MedImmune in respect of the MedImmune Gatekeeping Procedure or the relevant Nominated Target.  The Expert shall, prior to making any enquiries of MedImmune, enter into a confidential disclosure agreement with MedImmune.  Notwithstanding the foregoing, MedImmune shall not be obliged to respond to the enquiries of the Expert if to do so would, or would reasonably be expected to, cause a breach in terms of any agreement MedImmune may have with any other Third Parties; provided, however, that such disclosure subject to the confidential disclosure agreement shall be treated by MedImmune in the same manner as disclosure in its normal business operations. The Expert shall complete its investigations and provide the confirmation to Dyax (with a copy to MedImmune) within thirty (30) days after appointment by Dyax, and payment of the Expert's fee shall be conditioned on such delivery being timely made.  If such written confirmation is not made within such thirty (30) days period, then a replacement Expert shall be appointed within 10 days thereafter, subject to same terms and conditions stated above.  If an Expert provides notice that he or she cannot complete the analysis because MedImmune has failed without good reason to provide any information requested as provided above, then MedImmune shall have no more than 30 days to provide the information and the Expert shall then have no more than 15 days after the information is provided to the Expert to evaluate the information and make a determination.  Failure of the second Expert to provide such written confirmation to Dyax on a "Yes/No" basis within thirty (30) days after appointment shall be irrevocably deemed to be confirmation that MedImmune correctly applied the MedImmune Gatekeeping Procedure to the Nominated Target in question, provided, however that until (i) MedImmune provides all information that it is required to provide in accordance with this Schedule 2 and (ii) the expiration of any extension required for the Expert to evaluate such information, there shall not be deemed to be any such confirmation that MedImmune correctly applied the MedImmune Gatekeeping Procedure to the Nominated Target in question.

 

  

Schedule 2 - Page 1

  

 

If the Expert appointed by Dyax hereunder decides that MedImmune correctly applied, or is deemed to have correctly applied, the MedImmune Gatekeeping Procedure, Dyax shall be responsible for the Expert's fees and MedImmune shall thereafter have no obligations to Dyax in respect of such Nominated Target.  If the Expert decides that MedImmune did not correctly apply the MedImmune Gatekeeping Procedure Dyax shall be granted a Dyax Product Licence in relation to the Nominated Target in question (provided that MedImmune is not restricted by obligations to any Third Party in relation to the Nominated Target in question in which case the Dyax Product Licence will be subject to those restrictions) and MedImmune shall be responsible for the Expert's fees.  "Expert" shall mean a patent agent who is independent of MedImmune and all of the other parties with an interest in the outcome of a determination regarding a Nominated Target, who has suitable knowledge and experience in the reasonable opinion of Dyax to perform the above activities, subject to MedImmune's consent, which consent shall not be unreasonably withheld or delayed.

 

  

Schedule 2 - Page 2

  

Schedule 3

MedImmune Know-How

[*****]

 

  

Schedule 3 - Page 1

  

 

Schedule 4

[RESERVED]

 

 

  

  

  

 

Schedule 5

Dyax Patent Rights

 

A.  Dyax Base Phage Display Patent Rights

 

	
COUNTRY

	
SERIAL NO.

	
TITLE

	 	
PUB. NO.

	
PATENT NO.

 

	
AT

	
92908799.7

	
IMPROVED EPITOPE DISPLAYING PHAGE

	 	
0573611

	
E262036

 

	
CA

	
610176

	
GENERATION AND SELECTION OF NOVEL DNA-BINDING PROTEINS AND POLYPEPTIDES

	 	  	
1340288

 

	
CA

	
2105300

	
PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS

	 	  	
  

 

	
CH

	
92908799.7

	
IMPROVED EPITOPE DISPLAYING PHAGE

	 	  	
0573611

 

	
DE

	
92908799.7

	
IMPROVED EPITOPE DISPLAYING PHAGE

	 	
DE 69233325T2

	
69233325.8-08

 

	
DK

	
92908799.7

	
IMPROVED EPITOPE DISPLAYING PHAGE

	 	
0573611

	
0573611

 

	
EP

	
89910702.3

	
GENERATION AND SELECTION OF RECOMBINANT VARIED BINDING PROTEINS

	 	
EP0436597

	
0436597

 

	
EP

	
02015673.3

	
PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS

	 	
EP1279731

	
  

 

	
EP

	
92908799.7

	
IMPROVED EPITOPE DISPLAYING PHAGE

	 	
EP0573611

	
0573611

 

	
EP

	
04006079.0

	
IMPROVED EPITOPE DISPLAYING PHAGE

	 	
1452599

	
  

 

	
EP

	
05000796.2

	
GENERATION AND SELECTION OF RECOMBINANT VARIED BINDING PROTEINS

	 	
EP1541682

	
  

 

	
ES

	
92908799.7

	
IMPROVED EPITOPE DISPLAYING PHAGE

	 	
0573611

	
0573611

 

	
FR

	
92908799.7

	
IMPROVED EPITOPE DISPLAYING PHAGE

	 	  	
0573611

 

	
GR

	
92908799.7

	
IMPROVED EPITOPE DISPLAYING PHAGE

	 	  	
3049248

 

	
IE

	
2834/89

	
GENERATION AND SELECTION OF RECOMBINANT VARIED BINDING PROTEINS

	 	  	
  

 

	
IL

	
91501

	
GENERATION AND SELECTION OF RECOMBINANT VARIED BINDING PROTEINS

	 	  	
91501

 

	
IL

	
120941

	
CHIMERIC BINDING PROTEIN

	 	
120941

	
120941

 

	
IL

	
120940

	
FUSION PROTEINS DISPLAYED DISPLAYABLE ON THE SURFACE OF FILAMENTOUS PHAGE AND A RECOMBINANT FILAMENTOUS PHAGE BEARING SAME

	 	  	
120940

 

 

	
IL

	
120939

	
METHOD FOR OBTAINING NUCLEIC ACID ENCODING A PROTEINACOUS BINDING DOMAIN

	 	  	
120939

 

  

Schedule 5 - Page 1

  

 

	
IT

	
92908799.7

	
IMPROVED EPITOPE DISPLAYING PHAGE

	 	  	
0573611

 

	
JP

	
510087/1989

	
GENERATION AND SELECTION OF RECOMBINANT VARIED BINDING PROTEINS

	 	  	
3771253

 

	
JP

	
507558/1992

	
PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS

	 	  	
  

 

	
JP

	
508216/1992

	
IMPROVED EPITOPE DISPLAYING PHAGE

	 	  	
3447731

 

	
JP

	
130929/2003

	
IMPROVED EPITOPE DISPLAYING PHAGE

	 	
2004-221

	
  

 

	
NL

	
92908799.7

	
IMPROVED EPITOPE DISPLAYING PHAGE

	 	
0573611

	
0573611

 

	
SE

	
92908799.7

	
IMPROVED EPITOPE DISPLAYING PHAGE

	 	  	
0573611

 

	
US

	
07/664,989

	
DIRECTED EVOLUTION OF NOVEL BINDING PROTEINS

	 	  	
5,223,409

 

	
US

	
08/009,319

	
VIRUSES EXPRESSING CHIMERIC BINDING PROTEINS

	 	  	
5,403,484

 

	
US

	
08/057,667

	
DIRECTED EVOLUTION OF NOVEL BINDING PROTEINS

	 	  	
5,571,698

 

	
US

	
08/415,922

	
DIRECTED EVOLUTION OF NOVEL BINDING PROTEINS

	 	  	
5,837,500

 

	
US

	
09/781,988

	
DIRECTED EVOLUTION OF NOVEL BINDING PROTEINS

	 	
US-2002-0150881 A1

	
6,979,538

 

	
US

	
09/893,878

	
DIRECTED EVOLUTION OF NOVEL BINDING PROTEINS

	 	
US-2003-0113717 A1

	
7,208,293

 

	
US

	
10/126,544

	
METHOD OF RECOVERING A NUCLEIC ACID ENCODING A PROTEINACEOUS BINDING DOMAIN WHICH BINDS A TARGET MATERIAL

	 	
US-2004-0023205a1

	
7,118,879

 

 

	
US

	
10/207,797

	
DIRECTED EVOLUTION OF DISULFIDE BONDED MICROPROTEINS

	 	
US-2006-0084113-A1

	
  

 

	
WO

	
PCT/US92/01456

	
PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS

	 	
WO9215677

	
  

 

	
WO

	
PCT/US92/01539

	
IMPROVED DISPLAY PHAGE

	 	
WO92/15679

	
  

 

	
WO

	
PCT/US89/03731

	
GENERATION AND SELECTION OF RECOMBINANT VARIED BINDING PROTEINS

	 	
WO9002809

	
  

 

 

  

Schedule 5 - Page 2

  

B.    Dyax Library-Related Patent Rights

	
COUNTRY

	
SERIAL NO.

	
TITLE

	 	
PUB. NO.

	
PATENT NO.

 

	
AU

	
2002249854

	
FOCUSED LIBRARIES OF GENETIC PACKAGES

	 	
WO02/061071 A2

	
  

 

	
CA

	
2432377

	
FOCUSED LIBRARIES OF GENETIC PACKAGES

	 	  	
  

 

	
EP

	
01998098.6

	
FOCUSED LIBRARIES OF GENETIC PACKAGES

	 	
EP1360288

	
  

 

	
JP

	
2002-561628

	
FOCUSED LIBRARIES OF GENETIC PACKAGES

	 	  	
  

 

	
US

	
11/416,460

	
FOCUSED LIBRARIES OF GENETIC PACKAGES

	 	
US-2006-0257937-A1

	
  

 

	
WO

	
PCT/US01/50297

	
FOCUSED LIBRARIES OF GENETIC PACKAGES

	 	  	
  

 

	
AU

	
2001253589

	
NOVEL METHODS OF CONSTRUCTIONG LIBRARIES OF HUMAN FAB ANTIBODY FRAGMENTS DISPLAYED ON FILAMENTOUS PHAGE (CJ Library)

	 	  	
 

 

 

	
AU

	
2002307422

	
NOVEL METHODS OF CONSTRUCTIONG LIBRARIES COMPRISING DISPLAYED AND/OR EXPRESSED MEMBERS OF A DIVERSE FAMILY OF PEPTIDES, POLYPEPTIDES OR PROTEINS AND THE NOVEL LIBRARIES

	 	  	
 

 

 

 

	
CA

	
2406236

	
NOVEL METHODS OF CONSTRUCTIONG LIBRARIES OF HUMAN FAB ANTIBODY FRAGMENTS DISPLAYED ON FILAMENTOUS PHAGE

	 	  	
  

 

 

	
CA

	
2458462

	
NOVEL METHODS OF CONSTRUCTIONG LIBRARIES COMPRISING DISPLAYED AND/OR EXPRESSED MEMBERS OF A DIVERSE FAMILY OF PEPTIDES, POLYPEPTIDES OR PROTEINS AND THE NOVEL LIBRARIES

	 	  	
  

 

 

 

	
EP

	
01927108.9

	
NOVEL METHODS OF CONSTRUCTIONG LIBRARIES OF HUMAN FAB ANTIBODY FRAGMENTS DISPLAYED ON FILAMENTOUS PHAGE

	 	
EP1276855

	
  

 

 

	
EP

	
02762148.1

	
NOVEL METHODS OF CONSTRUCTIONG LIBRARIES COMPRISING DISPLAYED AND/OR EXPRESSED MEMBERS OF A DIVERSE FAMILY OF PEPTIDES, POLYPEPTIDES OR PROTEINS AND THE NOVEL LIBRARIES

	 	
EP1578903

	
  

 

 

 

	
JP

	
2001-577464

	
NOVEL METHODS OF CONSTRUCTIONG LIBRARIES OF HUMAN FAB ANTIBODY FRAGMENTS DISPLAYED ON FILAMENTOUS PHAGE

	 	  	
  

 

 

	
JP

	
PCT/US02/12405

	
NOVEL METHODS OF CONSTRUCTIONG LIBRARIES COMPRISING DISPLAYED AND/OR EXPRESSED MEMBERS OF A DIVERSE FAMILY OF PEPTIDES, POLYPEPTIDES OR PROTEINS AND THE NOVEL LIBRARIES

	 	  	
  

 

 

 

	
US

	
10/045,674

	
NOVEL METHODS OF CONSTRUCTIONG LIBRARIES COMPRISING DISPLAYED AND/OR EXPRESSED MEMBERS OF A DIVERSE FAMILY OF PEPTIDES, POLYPEPTIDES OR PROTEINS AND THE NOVEL LIBRARIES

	 	
US 2003-0232333 A1

	  

 

  

Schedule 5 - Page 3

  

 

	
US

	
11/365,556

	
NOVEL METHODS OF CONSTRUCTING LIBRARES COMPRISING DISPLAYED AND/OR EXPRESSED MEMBERS OF A DIVERSE FAMILY OF PEPTIDES, POLYPEPTIDES OR PROTEINS AND NOVEL LIBRARIES

	 	
US-2006-0166252-A1

 

 

 

	  
	
WO

	
PCT/US01/12454

	
NOVEL METHODS OF CONSTRUCTIONG LIBRARIES OF HUMAN FAB ANTIBODY FRAGMENTS DISPLAYED ON FILAMENTOUS PHAGE

	 	
2003-530853

 

 

	  
	
WO

	
PCT/US02/12405

	
NOVEL METHODS OF CONSTRUCTIONG LIBRARIES COMPRISING DISPLAYED AND/OR EXPRESSED MEMBERS OF A DIVERSE FAMILY OF PEPTIDES, POLYPEPTIDES OR PROTEINS AND THE NOVEL LIBRARIES

	 	
WO02083872

 

 

 

	  
	
US

	
10/383,902

	
LIGAND SCREENING AND DISCOVERY

	 	
US 2003-0224408 A1

	
  

 

	
AU

	
51422/00

	
NOVEL FAB FRAGMENT LIBRARIES AND METHODS FOR THEIR USE

	 	  	
780145

 

	
CA

	
2372582

	
NOVEL FAB FRAGMENT LIBRARIES AND METHODS FOR THEIR USE

	 	  	
  

 

	
EP

	
99201558.6

	
NOVEL FAB FRAGMENT LIBRARIES AND METHODS FOR THEIR USE

	 	
EP1054018

	
  

 

	
JP

	
2000-618429

	
NOVEL FAB FRAGMENT LIBRARIES AND METHODS FOR THEIR USE

	 	  	
  

 

	
US

	
09/988,899

	
NOVEL FAB FRAGMENT LIBRARIES AND METHODS FOR THEIR USE

	 	
US 2002-0102613 A1

	
  

 

	
WO

	
PCT/US00/13682

	
NOVEL FAB FRAGMENT LIBRARIES AND METHODS FOR THEIR USE

	 	
WO00/70023

	  

 

  

Schedule 5 - Page 4

  

 

Schedule 6

Dyax Antibody Libraries,  Dyax Materials and Dyax Know-How

 

[*****]

 

  

Schedule 6 - Page 1

  

 

Schedule 7-A

Private & Confidential

 

 

 

 

 

DATED AS OF ________________, 20__

 

____________________________________

 

 

 

MEDIMMUNE LIMITED   (1)

and

DYAX CORP.   (2)

 

 

____________________________________

 

 

 

DYAX PRODUCT LICENCE FOR [    ]

 

 

_____________________________________

 

 

 

 

 

 

Schedule 7-A

  

Page 1

  

 

THIS AGREEMENT is made as of ____________________, 20___

 

BETWEEN:

 

	
(1)

	
MEDIMMUNE LIMITED (Registered in England No. 2451177) whose registered office is at Milstein Building, Granta Park, Cambridge, CB21 6GH, UK ("MedImmune").

 

	
(2)

	
DYAX CORP. a corporation organised and existing under the laws of the State of Delaware having its principal place of business at 55 Network Drive, Burlington, Massachusetts  01803 USA ("Dyax").

 

BACKGROUND:

 

	
(a)

	
By the terms of the Amended Agreement (as defined below), MedImmune granted Dyax certain options to be granted Dyax Product Licences under the Antibody Phage Display Patents and MedImmune Know How (all as defined below).

 

	
(b)

	
Dyax has nominated the Target, and this Target has passed the MedImmune Gatekeeping Procedure (each as defined below).

 

	
(c)

	
By this Agreement MedImmune wishes to grant to Dyax a Dyax Product Licence in respect of Diagnostic Antibody Products and Therapeutic Antibody Products against the Target.

 

In consideration of the mutual covenants and undertakings set out below, THE PARTIES AGREE as follows:

 

1.            Definitions

 

	
1.1

	
In this Agreement, the terms defined in this Clause shall have the meanings specified below:

 

	
  

	
"Acceptance Fee" means [*****].

 

	
  

	
"Affiliate" means any company, partnership or other entity which directly or indirectly Controls, is Controlled by or is under common Control with any other entity.

 

	
  

	
"Agreement" means this Dyax Product Licence and any and all Schedules, appendices and other addenda to it as may be amended from time to time in accordance with the provisions of this agreement.

 

	
  

	
"Amended Agreement" means the Amended and Restated Agreement executed by Dyax and MedImmune on July ___, 2012.

 

	
  

	
"Antibody" means a molecule or a gene encoding such a molecule comprising or containing one or more immunoglobulin variable domains or parts of such domains or any existing or future fragments, variants, modifications or derivatives thereof.

 

Schedule 7-A

  

Page 2

  

	
  

	
"Antibody Library" means any antibody library constructed using processes which are covered by a claim of an issued and unexpired patent included within the Antibody Phage Display Patents which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise.

 

	
  

	
"Antibody Phage Display Patents" means:  (a) the patents and patent applications listed in Schedule 1 and any patents issuing from such patent applications, together with any divisions, registrations, confirmations, reissues, extensions, renewals, continuations, continuations-in-part, revalidations, additions, substitutions, renewals or supplementary protection certificates thereof throughout the world; and (b) any Patent Rights which claim or cover any invention or discovery which is developed by MedImmune or its Affiliates at any time during the term of this Agreement directly related to Antibody phage display or Antibody Services; provided, however, that Antibody Phage Display Patents shall always exclude (i) MedImmune Diabodies Patent Rights, (ii) any Patent Rights owned or controlled by MedImmune which claim or cover Catalytic Antibodies, (iii) any Patent Rights owned or controlled by MedImmune which claim ribosome display technology, (iv) any Patent Rights which claim Single Domain Antibodies, and (v) any Patent Rights acquired by MedImmune after the Commencement Date from any Third Party for consideration or as a result of MedImmune's acquisition of or merger with such Third Party.

 

	
  

	
"Antibody Services" means the provision of research and/or development services for the identification, generation, derivation or development of one or more MedImmune Antibody Libraries or Antibodies derived therefrom.

 

	
  

	
"Business Day" means a day (other than a Saturday or Sunday) on which the banks are ordinarily open for business in the City of London and the Commonwealth of Massachusetts.

 

	
  

	
"Catalytic Antibodies" means solely those Antibodies which bind to and catalyze the chemical transformation of a substrate and in which an Antibody binding region is involved in said catalysis.

 

	
  

	
"Commencement Date" means the date of this Agreement first written above.

 

	
  

	
"Competent Authority" means any national or local agency, authority, department, inspectorate, minister, ministry official, parliament or public or statutory person (whether autonomous or not) of any government of any country having jurisdiction over either any of the activities contemplated by this Agreement or the Parties including the European Commission, the Court of First Instance and the European Court of Justice.

 

	
  

	
"Controls" means the ownership, directly or indirectly, of more than fifty percent (50%) of the outstanding equity securities of a corporation which are entitled to vote in the election of directors or a more than fifty percent (50%) interest in the net assets or profits of an entity which is not a corporation.

 

	
  

	
"Diagnostic Antibody Product" means any preparation in the form of a device, compound, kit or service with utility in the diagnosis, prognosis, prediction or disease management of a disorder for any indication which contains, comprises or the process of development or manufacture of which utilises a MedImmune Licensable Antibody.  The term "Diagnostic Antibody Product" shall not include any Research Product,

 

Schedule 7-A

  

Page 3

  

	
  

	
"Dyax Product Licence" means the licence granted to Dyax pursuant to Clause 2 of this Agreement.

 

	
  

	
"Dyax Therapeutic Antibody Product" means any Therapeutic Antibody Product identified, generated or derived by Dyax for itself or its Affiliates but not a Therapeutic Antibody Product identified, generated or derived by Dyax for, or on behalf of, a Third Party.

 

"Dyax Sublicensee" means any Third Party who is granted a sublicense under Clause 3.4 of this Agreement to Exploit Products against the Target in the Territory.

 

	
  

	
"Exploit" means to make, have made, use, sell or import.

 

	
  

	
"FDA" means the United States Food and Drug Administration, the equivalent Competent Authority in any country of the Territory or any successor bodies thereto.

 

	
  

	
"First Additional Licence Allocation" means the options for licences granted pursuant to Clause 3.5(a) of the Amended Agreement.

 

	
  

	
"First Commercial Sale" means the first commercial sale of any Product by Dyax or a Dyax Sublicensee (or its sublicensee) in any country after grant of a Marketing Authorisation.

 

	
  

	
"GAAP" means United States generally accepted accounting principles, consistently applied.

 

	
  

	
"IDE" means an Investigational Device Exemption application, as defined in Title 21 of the United States Code of Federal Regulations, filed with the FDA or an equivalent foreign filing.

 

	
  

	
"IND" means an Investigational New Drug Application, as defined in Title 21 of the United States Code of Federal Regulations, that is required to be filed with the FDA before beginning Phase I Clinical Trials of any Therapeutic Antibody Product in human subjects, or an equivalent foreign filing.

 

"Initial Licence Allocation" means the [*****] Dyax Product Licences in Clause 3.2, the up to [*****] additional Dyax Product Licences in Clause 3.3, and the up to [*****] additional Dyax Product Licences in Clause 3.4.

 

	
  

	
"Major Market" means any one of the following:  (i) the United States of America, (ii) any country in Europe which is subject to the Marketing Authorisation procedure of the European Medicines Evaluation Agency, or (iii) Japan.

 

	
  

	
"Marketing Authorisation" means any approval (including all applicable pricing and governmental reimbursement approvals) required from the FDA or relevant Competent Authority to market and sell a Product in a particular country.

 

	
  

	
"MedImmune Diabodies Patent Rights" means (a) the Patent Rights entitled "Diabodies – multivalent and multispecific binding proteins, their manufacture and use", PCT/GB93/02492 and (b) the Patent Rights entitled "Retargeting antibodies and diabodies", PCT/GB94/02019.

 

Schedule 7-A

  

Page 4

  

	
  

	
"MedImmune Gatekeeping Procedure" means the procedure set out in Schedule 2 of the Amended Agreement which MedImmune has carried out in respect of the Target prior to the grant of this Dyax Product Licence.

 

	
  

	
"MedImmune Know-How" means any Confidential Information of MedImmune which constitutes unpatented know-how, technical and other information related to the subject matter of the Antibody Phage Display Patents as identified in Schedule 2 and as amended from time to time in accordance with Schedule 2.

 

	
  

	
"MedImmune Licensable Antibody" means any Antibody (including any Bi-Specific or Poly-Specific Antibody) to the Target (a) where such Antibody has been identified, generated, developed, produced or derived by Dyax or a Dyax Sublicensee or its sublicensees and (b) the identification, generation, development, production or derivation of such Antibody uses any of the processes claimed or covered by a claim of an issued and unexpired patent included within the Antibody Phage Display Patents (which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise) or uses the MedImmune Know-How and (c) which is potentially useful for the development of any Diagnostic Antibody Product and/or any Therapeutic Antibody Product.

 

	
  

	
"Net Sales" means, with respect to a Product sold by Dyax or a Dyax Sublicensee (or its sublicensees), the price invoiced by that party to the relevant purchaser (or in the case of a sale or other disposal otherwise than at arm's length, the price which would have been invoiced in a bona fide arm's length contract or sale) but deducting the costs of packing, transport and insurance, customs duties, any credits actually given for returned or defective Products, normal trade discounts actually given, and sales taxes, VAT or other similar tax charged on and included in the invoice price to the purchaser.

 

	
  

	
"Party" means MedImmune or Dyax.

 

	
  

	
"Patent Rights" means any patent applications and any patents issuing from such patent applications, author certificates, inventor certificates, utility certificates, improvement patents and models, and certificates of addition and all counterparts of them throughout the Territory, including any divisional applications and patents, filings, renewals, continuations, continuations-in-part, patents of addition, extensions, reissues, substitutions, confirmations, registrations, revalidation and additions of or to any of them, as well as any supplementary protection certificates and equivalent protection rights in respect of any of them.

 

	
  

	
"Pharmacia Agreement" means the agreement between MedImmune and Pharmacia P-L Biochemicals Inc.  dated 11 September 1991.

 

	
  

	
"Pharmacia P-L Biochemicals Inc." means Pharmacia P-L Biochemicals Inc (now known as Amersham Biosciences).

 

Schedule 7-A

  

Page 5

  

	
  

	
"Phase I Clinical Trial" means a human clinical trial in any country that is intended to initially evaluate the safety of an investigational Product in volunteer subjects or patients that would satisfy the requirements of 21 CFR 312.21(a), or its foreign equivalent and may evaluate the Product's therapeutic or antigenic effects.

 

	
  

	
"Phase III Clinical Trial" means a pivotal human clinical trial in any country the results of which could be used to establish safety and efficacy of a Product as a basis for a marketing application that would satisfy the requirements of 21 CFR 312.21(c).

 

	
  

	
"Product" means a Diagnostic Antibody Product or a Therapeutic Antibody Product.

 

	
  

	
"Quarter" means each period of three (3) months ending on March 31, June 30, September 30, or December 31 and "Quarterly" shall be construed accordingly.

 

	
  

	
"Research Products" means any product in relation to which Pharmacia P-L has an exclusive licence from MedImmune pursuant to the Pharmacia Agreement.

 

	
  

	
"Single Domain Antibodies" means an Antibody containing only a single domain (heavy or light).

 

	
  

	
"Status Report" has the meaning set forth in Clause 4.1.

 

	
  

	
"Target" means [        ], as set out in Schedule 3.

 

	
  

	
"Territory" means all countries of the world.

 

	
  

	
"Therapeutic Antibody Product" means any preparation for the treatment or prevention of disease, infection or other condition in humans for any indication which contains, comprises, or the process of development or manufacture of which utilises, a MedImmune Licensable Antibody.  The term "Therapeutic Antibody Product" shall not include any Research Product, "Third Party" means any entity or person other than Dyax, MedImmune or their respective Affiliates.

 

	
  

	
"Valid Claim" means a claim of an issued and unexpired patent included within the Antibody Phage Display Patents which have been licensed to MedImmune by the MRC which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise.

 

	
  

	
"Year" means initially the period from the Commencement Date to the end of that calendar year, and subsequently a calendar year.

 

	
1.2

	
The headings to clauses are inserted for convenience only and shall not affect the interpretation or construction of this Agreement.

 

	
1.3

	
Words imparting the singular shall include the plural and vice versa.  References to persons include an individual, company, corporation, firm or partnership.

 

Schedule 7-A

  

Page 6

  

	
1.4

	
The words and phrases "other", "including" and "in particular" shall not limit the generality of any preceding words or be construed as being limited to the same class as any preceding words where a wider construction is possible.

 

	
1.5

	
References to any statute or statutory provisions of the United Kingdom shall include (i) any subordinate legislation made under it, (ii) any provision which it has superseded or re-enacted (whether with or without modification), and (iii) any provision which subsequently supersedes it or re-enacts it (whether with or without modification.  References to any statute or regulation of the United States of America means that statute or regulation as it may be amended, supplemented or otherwise modified from time to time, and any successor statute or regulation.

 

2.            Grant of Dyax Product Licence

 

	
2.1

	
Subject to Clause 2.4 below, MedImmune hereby grants to Dyax and its Affiliates a non-exclusive, royalty-bearing licence (on the terms of this Agreement) with the right to sublicense (on the terms of Clause 3) under the Antibody Phage Display Patents and MedImmune Know-How to Exploit Products against the Target in the Territory.

 

	
2.2

	
The Dyax Product Licence granted under this Agreement is pursuant to Dyax's exercise of one (1) option from the [*****] under the Amended Agreement.

 

	
2.3

	
For the avoidance of doubt, no rights are granted by MedImmune under this Agreement to any MedImmune Diabodies Patent Rights, and any Patent Rights owned or controlled by MedImmune which claim Catalytic Antibodies, ribosome display technology, any Patent Rights which claim Single Domain Antibodies and no rights are granted by MedImmune in this Agreement under the Antibody Phage Display Patents to Exploit Research Products.

 

	
2.4

	
This Dyax Product Licence shall come into effect upon the date that the Acceptance Fee is received by MedImmune.  The Acceptance Fee of three hundred and twenty-five thousand dollars (US $325,000) will be due upon execution of this Product Licence.  The Acceptance Fee shall not be refundable or creditable against any other sums which may be payable by Dyax or a Dyax Sublicensee to MedImmune pursuant to this Agreement.

 

3.            Sub-Licensing

 

	
3.1

	
Dyax will, if requested by MedImmune, inform MedImmune of the identity of all Dyax Sublicensees (and their sublicensees) in relation to this Agreement.

 

	
3.2

	
Dyax will ensure that any Third Party which receives a sublicence of its rights in accordance with the terms of this Agreement executes a written agreement which requires the Third Party to abide by the terms of this Agreement.

 

	
3.3

	
Dyax will be liable for any breach of the sublicences granted in accordance with Clause 3.2.

 

Schedule 7-A

  

Page 7

  

	
3.4

	
For the avoidance of doubt, the rights granted to Dyax to Exploit Products against the Target in the Territory may be sublicensed to one or more Third Parties (and further sublicensed by any such Third Party), provided that any such sublicense would remain subject to the terms and conditions of this Agreement.

 

4.            Status Report

 

	
4.1

	
Dyax will provide to MedImmune a brief summary of the status of each Product against the Target that Dyax or Dyax Sublicensees desire to Exploit under this Agreement ("Status Report").  During the Term, Dyax will submit such Status Report to MedImmune for a particular Product prior to the time Dyax or Dyax Sublicensees begin the first human clinical trial with respect to such Product. [*****].

 

5.            Gatekeeping

 

The Parties acknowledge that, as of the Commencement Date, the Target has passed MedImmune's Gatekeeping Procedure under the Amended Agreement.

 

6.            Consideration

 

	
6.1

	
Therapeutic Antibody Products

 

	
  

	
6.1.1

	
With respect to Therapeutic Antibody Products, Dyax shall pay to MedImmune the following payments upon achievement of the specified milestones by Dyax or a Dyax Sublicensee (or its sublicensee) for the first Therapeutic Antibody Product to achieve the relevant milestone:

 

	
Initiation of first Phase I Clinical Trial

	
US $[*****]

	
Initiation of first Phase III Clinical Trial

	
US $[*****]

	
First filing for Marketing Authorisation in one Major Market country

	
US $[*****]

	
Marketing Authorisation granted in the United States

	
US $[*****]

	
  

	
6.1.2

	
With respect to Therapeutic Antibody Products, Dyax shall pay MedImmune royalties in an amount equal to [*****] percent [*****] of Net Sales of the Therapeutic Antibody Product sold by or on behalf of Dyax or the Dyax Sublicensee.

 

	
6.2

	
Diagnostic Products

 

	
  

	
6.2.1

	
With respect to Diagnostic Antibody Products, Dyax shall pay to MedImmune the following payments upon achievement by Dyax or a Dyax Sublicensee (or its sublicensee) of the milestones set out below.  For the avoidance of doubt the milestone payments shall be payable in respect of the first Diagnostic Antibody Product to achieve the relevant milestone:

 

	
First filing for Marketing Authorisation in one Major Market country

	
US $[*****]

	
Marketing Authorisation granted in each Major Market Country

	
US $[*****]

Schedule 7-A

  

Page 8

  

	
  

	
6.2.2

	
With respect to Diagnostic Antibody Products, Dyax shall pay MedImmune royalties on a country-by-country basis in an amount equal to [*****] of Net Sales of Diagnostic Antibody Products sold by or on behalf of Dyax or any Dyax Sublicensee.

 

	
6.3

	
All royalties due to MedImmune pursuant to Clauses 6.1.2 and 6.2.2 shall be payable on a country-by-country basis until the last Valid Claim expires or ten (10) years from the date of First Commercial Sale of such Product, whichever occurs later.

 

7.            Provisions Relating to Payment of Consideration

 

	
7.1

	
All milestone payments shall be paid by Dyax within [*****] days of the applicable milestone being achieved and no milestone payments shall be refundable or creditable against any other sum payable by Dyax hereunder for any reason.

 

	
7.2

	
Dyax shall make the payments due to MedImmune under Clause 6 above in United States dollars (if Dyax in turn receives payment in dollars) or in pounds sterling (if Dyax in turn receives payment in pound sterling), or Euros (if Dyax in turn receives payment in Euros).  Where Dyax receives payment in a currency other than United States dollars, pounds sterling or Euros, Dyax will convert the relevant sum into pounds sterling (or Euros if Euros have replaced pounds sterling at the time of payment).  Dyax will use the conversion rate reported in the Financial Times two (2) Business Days before the day on which Dyax pays MedImmune.  Such payment will be made without deduction of exchange, collection or other charges.  All payments will be made at Quarterly intervals.  Within [*****] days of the end of each Quarter after the First Commercial Sale of each Product in any country, Dyax shall prepare a statement which shall show on a country-by-country basis for the previous Quarter Net Sales of each Product by Dyax or its Affiliates and all monies due to MedImmune based on such Net Sales.  That statement shall include details of Net Sales broken down to show the country of the sales and the total Net Sales by Dyax or its Affiliates in such country and shall be submitted to MedImmune within such [*****] day period together with remittance of the monies due.  With respect to Net Sales of a Product by a Dyax Sublicensee (or its sublicensee) Dyax shall prepare a statement which will include the same information and remit that statement and any monies due within the same period except with regard to any Dyax Sublicensee with which Dyax has a licence agreement relating to the technology of Antibody phage display as of the Commencement Date where the remittance will be made at Quarterly intervals within [*****] days of the date royalties are due to Dyax from such existing Dyax Sublicensees.

 

	
7.3

	
All payments shall be made free and clear of and without deduction or deferment in respect of any disputes or claims whatsoever and/or as far as is legally possible in respect of any taxes imposed by or under the authority of any government or public authority.  [*****].

 

	
7.4

	
Dyax shall keep and shall procure that its Affiliates and Dyax Sublicensees keep true and accurate records and books of account containing all data necessary for the calculation of the amounts payable by it to MedImmune pursuant to this Agreement.  Those records and books of account shall be kept for seven (7) years following the end of the Year to which they relate.  Upon MedImmune's written request, a firm of accountants appointed by agreement between the Parties or, failing such agreement within ten (10) Business Days of the initiation of discussions between them on this point MedImmune shall have the right to cause an international firm of independent certified public accountants that has not performed auditing or other services for either Party or their Affiliates (or, if applicable, any Dyax Sublicensee with rights to the Product in question) acceptable to Dyax or the Dyax Sublicensee such acceptance not to be unreasonably withheld to inspect such records and books of account.  In particular such firm:

 

Schedule 7-A

  

Page 9

  

	
  

	
7.4.1

	
shall be given access to and shall be permitted to examine and copy such books and records of Dyax and its Affiliates and Dyax Sublicensees upon twenty (20) Business Days notice having been given by MedImmune and at all reasonable times on Business Days for the purpose of certifying that the Net Sales or other relevant sums calculated by Dyax and its Affiliates and Dyax Sublicensees during any Year were reasonably calculated, true and accurate or, if this is not their opinion, certify the Net Sales figure or other relevant sums for such period which in their judgment is true and correct;

 

	
  

	
7.4.2

	
prior to any such examination taking place, such firm of accountants shall undertake to Dyax and its Affiliates and Dyax' Sublicensees that they shall keep all information and data contained in such books and records, strictly confidential and shall not disclose such information or copies of such books and records to any third person including MedImmune, but shall only use the same for the purpose of calculations which they need to perform in order to issue the certificate to which this Clause envisages;

 

	
  

	
7.4.3

	
any such access examination and certification shall occur no more than once per Year and will not go back over records more than two (2) years old;

 

	
  

	
7.4.4

	
Dyax and its Affiliates and Dyax Sublicensees shall make available personnel to answer queries on all books and records required for the purpose of that certification; and

 

	
  

	
7.4.5

	
the cost of the accountant shall be the responsibility of Dyax if the certification shows it to have underpaid monies to MedImmune by more than [*****] and the responsibility of MedImmune otherwise.

 

	
7.5

	
All payments due to MedImmune under the terms of this Agreement are expressed to be exclusive of value added tax (VAT) howsoever arising.  [*****].

 

	
7.6

	
All payments made to MedImmune under this Agreement shall be made to the bank account of MedImmune as notified by MedImmune to Dyax from time to time.

 

	
7.7

	
If Dyax fails to make any payment to MedImmune hereunder on the due date for payment, without prejudice to any other right or remedy available to MedImmune it shall be entitled to charge  Dyax interest (both before and after judgment) of the amount unpaid at the annual rate of LIBOR (London Interbank Offering Rate) plus [*****] calculated on a daily basis until payment in full is made without prejudice to MedImmune's right to receive payment on the due date.

 

Schedule 7-A

  

Page 10

  

8.            Confidentiality

 

	
8.1

	
With respect to any confidential information received from the other Party ("Confidential Information"), each Party undertakes and agrees to:

 

	
  

	
(a)

	
only use the Confidential Information for the purposes envisaged under this Agreement and not to use the same for any other purpose whatsoever;

 

	
  

	
(b)

	
ensure that only those of its officers and employees who are directly concerned with the carrying of this Agreement have access to the Confidential Information on a strictly "need to know" basis and are informed of the secret and confidential nature of it;

 

	
  

	
(c)

	
keep the Confidential Information secret, confidential, safe and secure and shall not directly or indirectly disclose or permit to be disclosed the same to any Third Party, including any consultants or other advisors, without the prior written consent of the disclosing Party except to the extent disclosure is necessary in connection with its use as envisaged under this Agreement;

 

	
  

	
(d)

	
ensure that the Confidential Information will not be covered by any lien or other encumbrance in any way, and

 

	
  

	
(e)

	
not copy, reproduce or otherwise replicate for any purpose or in any manner whatsoever any documents containing the Confidential Information except to the extent necessary in connection with its use as envisaged under this Agreement.

 

For the avoidance of doubt, the Parties agree that the identity of the Target, any information related to the Target provided to MedImmune by Dyax, and the Status Report is the Confidential Information of Dyax.

 

	
8.2

	
The obligations referred to in Clause 8.1 above shall not extend to any Confidential Information which:

 

	
  

	
(a)

	
is or becomes generally available to the public otherwise than be reason of breach by a recipient Party of the provision of Clause 8.1;

 

	
  

	
(b)

	
is known to the recipient Party and is at its free disposal (having been generated independently by the recipient Party or a Third Party in circumstances where it has not been derived directly or indirectly from the disclosing Party's Confidential Information prior to its receipt from the disclosing Party), provided that evidence of such knowledge is furnished by the recipient Party to the disclosing Party within twenty-eight (28) days of recipient of that Confidential Information;

 

	
  

	
(c)

	
is subsequently disclosed to the recipient Party without obligations of confidence by a Third Party owing no such obligations to the disclosing Party in respect of that Confidential Information;

 

	
  

	
(d)

	
is required by law to be disclosed (including as part of any regulatory submission or approval process) and then only when prompt written notice of this requirement has been given to the disclosing Party so that it may, if so advised, seek appropriate relief to prevent such disclosure, provided always that in such circumstances such disclosure shall be only to the extent so required and shall be subject to prior consultation with the disclosing Party with a view to agreeing on the timing and content of such disclosure.

 

Schedule 7-A

  

Page 11

  

	
8.3

	
No public announcement or other disclosures to Third Parties concerning the terms of this Agreement shall be made, whether directly or indirectly, by either Party (except confidential disclosures to professional advisors) without first obtaining the approval of the other Party and agreement upon the nature and text of such announcement or disclosure with the exceptions that:

 

	
  

	
(a)

	
a Party may disclose those terms which it is required by regulation or law to disclose, provided that it takes advantage of all provisions to keep confidential as many terms of this Agreement as possible; and

 

	
  

	
(b)

	
the Party desiring to make any such public announcement or other disclosure shall inform the other Party of the proposed announcement or disclosure in reasonably sufficient time prior to public release, and shall provide the other Party with a written copy thereof in order to allow such Party to comment upon such announcement or disclosure.  Each Party agrees that it shall cooperate fully with the other with respect to all disclosures regarding this Agreement to the U.S. Securities Exchange Commission, the UK Stock Exchange and any other comparable body including requests for confidential information or proprietary information of either Party included in any such disclosure.

 

9.            Indemnification

 

	
9.1

	
Dyax hereby indemnifies MedImmune and its Affiliates and their directors, officers, employees and agents and their respective successors, heirs and assigns (the "MedImmune Indemnitees") against any liability, damage, loss or expense (including attorneys fees and expenses of litigation) incurred by or imposed upon the MedImmune Indemnitees or any one of them in connection with any claims, suits, actions, demands or judgments by or in favour of any Third Party concerning any manufacture, use or sale of any Product by Dyax or any Dyax Sublicensee (or their sublicensee). In addition, each Dyax Sublicensee (or their sublicensee) shall indemnify the MedImmune Indemnitees against any liability, damage, loss or expense (including attorneys fees and expenses of litigation) incurred by or imposed upon the MedImmune Indemnitees or any one of them in connection with any claims, suits, actions, demands or judgments by or in favour of any Third Party concerning any manufacture, use or sale of any Product by such Dyax Sublicensee (or their sublicensee).

 

	
9.2

	
MedImmune shall not be liable to Dyax and Dyax Sublicensee (or its sublicensee) in respect of any liability, loss, damage or expense (including attorneys fees and expenses of litigation) incurred or suffered by Dyax and Dyax Sublicensees (or its sublicensee) in connection with the manufacture, use or sale of any Products by Dyax and Dyax Sublicensees (or its sublicensee).

 

	
9.3

	
MedImmune gives no warranty or representation that the Antibody Phage Display Patents are, or will be, valid or that the exercise of the rights granted under this Agreement will not result in the infringement of patents of Third Parties.

 

Schedule 7-A

  

Page 12

  

10.          Infringement and Patent Prosecution

 

	
10.1

	
Dyax shall notify MedImmune promptly of any proceedings or applications for revocation of any of the Antibody Phage Display Patents emanating from a Third Party that comes to its notice or if a Third Party takes or threatens to take any proceedings for infringement of any patents of that Third Party by reason of Dyax's use or operation of the Antibody Phage Display Patents or manufacture, use or sale of the Products.  Dyax shall notify MedImmune promptly of any infringement of the Antibody Phage Display Patents by a Third Party which may come to its attention during the term of the Dyax Product Licence, except Dyax shall have no obligation to so notify MedImmune with respect to any infringement by an academic or not-for-profit entity which occurs by reason of such entity carrying out research activities provided such activities are, as far as Dyax is aware, not being carried out with a view to commercialising a product or otherwise for profit.

 

	
10.2

	
MedImmune shall have the sole right and responsibility, at its sole discretion and cost and with reasonable assistance from Dyax, to file, prosecute and maintain the Antibody Phage Display Patents and for the conduct of any lawsuits, claims or proceedings challenging the validity or enforceability thereof including, without limitation, any interference or opposition proceeding relating thereto in all countries.  For the avoidance of doubt, Dyax and Dyax Sublicensees will have the right to conduct any proceedings relating to its Product including any proceedings relating to product liability.

 

11.          Termination

 

	
11.1

	
Unless terminated under this Clause 11, this Agreement shall commence on the Commencement Date and shall terminate, on a country-by-country and Product-by-Product basis upon the last to expire of claims of an issued and unexpired patent within the Antibody Phage Display Patents (which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise) or (b) the date upon which no payments are due to MedImmune under Clause 6 of this Agreement, whichever occurs later.

 

	
11.2

	
MedImmune shall have the right to terminate this Agreement in the event that:

 

	
  

	
11.2.1

	
Dyax or a Dyax Sublicensee (or its sublicensee) has not filed an IND for a Therapeutic Antibody Product, or a 510(k) or IDE for a Diagnostic Antibody Product within [*****] after the Commencement Date; provided however, that Dyax shall have the right to extend such period in annual increments by up to [*****], upon the following terms:

 

	
First Annual Extension

	
$[*****]

	
Second Annual Extension

	
$[*****]

In order for Dyax to be granted an extension under this Clause 11.2.1, the foregoing amounts must be received by MedImmune prior to the date of expiration.  All amounts received by MedImmune under this Clause 11.2.1 will be credited against any milestones and royalties that would otherwise be due to MedImmune under the terms of the Product License; or

 

Schedule 7-A

  

Page 13

  

	
  

	
11.2.2

	
Dyax or a Dyax Sublicensee (or its sublicensee) directly or indirectly opposes or assists any Third Party to oppose the grant of letters patent or any patent application within the Antibody Phage Display Patents, or disputes or directly or indirectly assists any Third Party to dispute the validity of any patent within the Antibody Phage Display Patents or any of the claims thereof.

 

	
11.3

	
In the event that either Party commits a material breach of any of its material obligations with respect to this Agreement, and such Party fails to remedy that breach within ninety (90) days after receiving written notice thereof from the other Party, that other Party may immediately terminate this Agreement upon written notice to the breaching Party.

 

	
11.4

	
Either Party may terminate this Agreement in its entirety by giving notice in writing to the other Party if any one or more of the following events happens:

 

	
  

	
(a)

	
the other Party has any distress or execution levied on the major portion of its assets (as determined by its balance sheet in accordance with GAAP) which is not paid out within thirty (30) days of its being levied;

 

	
  

	
(b)

	
the other Party calls a meeting for the purpose of passing a resolution to wind it up, or such a resolution is passed, or the other Party presents, or has presented, a petition for a winding up order, or presents, or has presented, a petition to appoint an administrator, or has an administrative receiver, or receiver, liquidator or other insolvency practitioner appointed over all or any substantial part of its business, undertaking, property or assets;

 

	
  

	
(c)

	
the other Party stops or suspends making payments (whether of principal or interest) with respect to substantially all of its debts or announces an intention to do so or the other Party suspends or ceases to carry on its business;

 

	
  

	
(d)

	
a secured lender to the other Party holding a security interest over the major portion of the tangible assets (as determined by its balance sheet in accordance with GAAP) of such other Party takes any steps to obtain possession of the property on which it has security or otherwise to enforce its security;

 

	
  

	
(e)

	
the other Party suffers or undergoes any procedure analogous to any of those specified in Clause 11.4(a)-(d) above or any other procedure available in the country in which the other Party is constituted, established or domiciled against or to an insolvent debtor or available to the creditors of such a debtor.

 

12.          Consequences of Termination

 

	
12.1

	
Upon termination of this Agreement for any reason whatsoever:

 

Schedule 7-A

  

Page 14

  

	
  

	
(a)

	
the relationship of the Parties hereunder shall cease save as (and to the extent) expressly provided for in this Clause 12;

 

	
  

	
(b)

	
any sublicenses granted by Dyax in accordance with the terms of this Agreement will continue in force provided that such sublicensees are not in breach of the relevant sublicense and that each sublicensee agrees to enter into a direct agreement with MedImmune upon the terms of this Agreement;

 

	
  

	
(c)

	
Dyax shall immediately return or procure to be returned to MedImmune at such place as it directs and at the expense of Dyax (or if MedImmune so requires by notice to Dyax in writing, destroy) all MedImmune Know-How together with all copies of such MedImmune Know-How in its possession or under its control;

 

	
  

	
(d)

	
The following provisions shall survive expiration or termination of this Agreement: Clauses 7 (in relation to any accrued payment obligations of Dyax prior to termination or expiry), 8, 9, 12, 13 and 15; and

 

	
  

	
(e)

	
Expiry or termination of this Agreement shall not affect the rights and obligations of the Parties accrued prior to such expiry or termination including any accrued obligation for Dyax to make any payments under Clause 6.

 

13.          Dispute Resolution

 

	
13.1

	
Any dispute arising between the Parties relating to, arising out of or in any way connected with this Agreement or any term or condition thereof, or the performance by either Party of its obligations hereunder, whether before or after termination of this Agreement, shall be referred to the Chief Executive Officers of each of the Parties.  The Chief Executive Officers shall meet to resolve such deadlock within thirty (30) days of the date that the dispute is referred to them, at a time and place mutually acceptable to them.  Any dispute that has not been resolved following good faith negotiations of the Chief Executive Officers for a period of thirty (30) days shall be referred to and finally settled by binding arbitration in accordance with the then current Commercial Arbitration Rules of the American Arbitration Association.  There shall be three (3) arbitrators, each Party to designate one arbitrator and the two Party-designated arbitrators to select the third arbitrator.  The Party initiating recourse to arbitration shall include in its notice of arbitration its appointment of an arbitrator.  The appointing authority, in the event a Party does not or the Parties do not appoint arbitrator(s), shall be the American Arbitration Association in [*****].  The place of arbitration shall be [*****]. The language to be used in the arbitration shall be English.  Any determination by the arbitration panel shall be final and conclusively binding.  Judgement on any arbitration award may be entered in any court having jurisdiction thereof.  Each Party shall bear its own costs and expenses incurred in the arbitration; provided that the arbitration panel may assess the costs and expenses of the prevailing Party, including reasonable attorneys fees, against the non-prevailing Party.

 

 

Schedule 7-A

  

Page 15

  

 

14.           Notices

 

	
14.1

	
All notices, requests, demands and other communications required or permitted to be given pursuant to this Agreement shall be in writing and shall be deemed to have been duly given upon the date of receipt if delivered by hand, recognized international overnight courier, confirmed facsimile transmission, or registered or certified mail, return receipt requested, postage prepaid to the following addresses or facsimile numbers:

 

	
If to Dyax:

	
If to MedImmune:

	
Dyax Corp.

	
MedImmune Limited

	
55 Network Drive

	
Milstein Building, Granta Park

	
Burlington, MA 01803

	
Cambridge, CB21 6GH

	
USA

	
UK

	
Attention:  General Counsel

	
Attention:  Company Secretary

	
Facsimile: [*****]

	
Facsimile: [*****]

 

Either party may change its designated address and facsimile number by notice to the other party in the manner provided in this Clause.

 

15.          Governing Law

 

	
15.1

	
This Agreement shall be governed by and construed in accordance with the laws of the [*****].

 

	
15.2

	
Save as provided in this Clause, the United Kingdom Legislation entitled the Contracts (Rights of Third Parties) Act 1999 will not apply to this Agreement.  No person, other than a MedImmune Indemnitee (as defined in Clause 9.1), who is not a Party to this Agreement (including any employee, officer, agent, representative or subcontractor of either Party) will have the right (whether under the Contracts (Rights of Third Parties) Act 1999 or otherwise) to enforce any term of this Agreement which expressly or by implication confers a benefit on that person without the express prior agreement in writing of the Parties which agreement must refer to this Clause, except that any Dyax Sublicensee shall have the right to enforce the provisions of Clause 12.1(b) of this Agreement and shall be a third party beneficiary for that purpose only.

 

16.          Specific Performance

 

	
16.1

	
The parties agree that irreparable damage will occur in the event that the provisions of Clause 8 are not specifically enforced.  In the event of a breach or threatened breach of any such provisions, each Party agrees that the other Party shall, in addition to all other remedies, be entitled to temporary or permanent injunction, without showing any actual damage or that monetary damages would not provide an adequate remedy and without the necessity of posting any bond, and/or a decree for specific performance, in accordance with the provisions hereof.

 

17.          Assignment

 

	
17.1

	
This Agreement may not be assigned by either party without the prior written consent of the other party, except that either Party may assign the benefit and/or burden of this Agreement to any Affiliate of it or any Third Party, provided that such Affiliate or Third Party undertakes to the other Party to be bound by the terms of this Agreement. This Agreement shall inure to the benefit of and be binding upon the parties and their respective lawful successors and assigns.

 

Schedule 7-A

  

Page 16

  

18.          Compliance With Law

 

	
18.1

	
Nothing in this Agreement shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision of this Agreement and any statute, law, ordinance, or treaty, the latter shall prevail, but in, such event the affected provisions of the Agreement shall be conformed and limited only to the extent necessary to bring it within the applicable legal requirements.

 

19.          Amendment and Waiver

 

	
19.1

	
This Agreement may be amended, supplemented, or otherwise modified only by means of a written instrument signed by both parties.  Any waiver of any rights or failure to act in a specific instance shall relate only to such instance and shall not be construed as an agreement to waive any rights or fail to act in any other instance, whether or not similar.

 

20.          Severabi1ity

 

	
20.1

	
In the event that any provision of this Agreement shall, for any reason, be held to be invalid or unenforceable in any respect, such invalidity or unenforceability shall not affect any other provision hereof and the parties shall negotiate in good faith to modify the Agreement to preserve (to the extent possible) their original intent.

 

21.          Entire Agreement

 

	
21.1

	
This Agreement and the Amendment Agreement constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all prior agreements or understandings between the parties relating to the subject matter hereof.

 

 

IN WITNESS OF THE ABOVE the Parties have signed this Agreement on the date written at the head of this Agreement.

 

 

	
SIGNED by

	
)

	  	  
	  	
)

	  	  
	 	)	 	 
	  	____________________________________________	
 

	

for and on behalf of

	
)

	
Authorised Signatory

	  
	

MEDIMMUNE LIMITED

	)	 	 
	
 

	
 

	  	  
	  	  	  	  

 

Schedule 7-A

  

Page 17

  

 

	  	  	  	  
	
SIGNED by

	
)

	  	  
	  	
)

	  	  
	 	)	 	 
	  	____________________________________________	
 

	

for and on behalf of

	
)

	Authorised Signatory	  
	
DYAX CORP.

	
)

	  	  
	  	
)

	  	  

Schedule 7-A

  

Page 18

  

Schedule 1 (to Dyax Product Licence, Schedule 7A)

Antibody Phage Display Patents

 

	
1.

	
“Single Domain Ligands, Receptors Comprising said Ligands, Methods for their Production and Use of Said Ligands and Receptors” PCT/GB89/01344, filed November 13, 1989.

	
2. 

	
“Co-expression of Heteromeric Receptors” PCT/US90/02890, filed May 16, 1990.

	
3.

	
“Method for Isolating Receptors Having a Preselected Specificity” PCT/US90/02835, filed May 16, 1990.

	
4.

	
“A new method for tapping the immunological repertoire” PCT/US90/02836, filed May 16, 1990.

	
5.

	
“Methods for producing members of specific binding pairs” PCT/GB91/01134, filed July 10, 1991.

	
6.

	
“Methods for producing members of specific binding pairs” PCT/GB92/00883, filed May 15, 1992.

	
7. 

	
“Treatment of Cell Populations” PCT/GB92/01483, filed August 10, 1992.

	
8.

	
“Production of chimeric antibodies – a combinational approach” PCT/GB92/01755, filed September 23, 1992.

	
9.

	
“Production of anti-self antibodies from antibody segment repertoires and displayed on phage” PCT/GB92/02240, filed December 2, 1992.

	
10.

	
“Methods for producing members of specific binding pairs” PCT/GB93/00605, filed March 24, 1993.

	
11.

	
“SBP members with a chemical moiety covalently bound within the binding site; production and selection thereof” PCT/GB94/01422, filed June 30, 1994.

	
12.

	
“Recombinant Binding Proteins and peptides” PCT/GB94/02662, filed December 5, 1994.

	
13.

	
“Labelling and selection of Specified Binding Molecules” PCT/GB97/01835, filed July 8, 1997.

 

Schedule 7-A

  

Page 19

  

 

Schedule 2 (to Dyax Product Licence, Schedule 7A)

MedImmune Know-How

 

MedImmune Training Manual “Antibody Phage Display” 2002.

MedImmune mammalian expression IgG vectors:

pEU1.2 (human gamma-1 heavy chain)

pEU3.2 (human kappa light chain)

pEU4.2 (human lambda light chain)

pEU8.2 (human gamma-4 heavy chain)

MedImmune may supplement the above with any revisions which it may make to the Training Manual or with any new vectors at its discretion from time to time (in each case accompanied by notice to Dyax under the Agreement) or with such additional know-how as the Parties may agree.

 

Schedule 7-A

  

Page 20

  

 

Schedule 3 (to Dyax Product Licence, Schedule 7A)

 

Identification of Target:

 

	
The Target is identified as follows:

	
[ ]

	  	  
	
GenBank accession number:

	
[ ]

 

 

Schedule 7-A

  

Page 21

  

 

Schedule 7-B

Private & Confidential

 

 

 

 

 

 

 

 

DATED AS OF ________________, 20__

 

____________________________________

 

 

 

 

MEDIMMUNE LIMITED   (1)

and

DYAX CORP.   (2)

 

 

 

____________________________________

 

 

 

DYAX PRODUCT LICENCE FOR [    ]

 

 

_____________________________________

 

 

 

 

 

  

  

  

THIS AGREEMENT is made as of XX 20___

 

BETWEEN:

 

	
(1)

	
MEDIMMUNE LIMITED (Registered in England No. 2451177) whose registered office is at Milstein Building, Granta Park, Cambridge, CB21 6GH, UK ("MedImmune").

 

	
(2)

	
DYAX CORP. a corporation organised and existing under the laws of the State of Delaware having its principal place of business 55 Network Drive, Burlington, Massachusetts  01803  USA ("Dyax").

 

BACKGROUND:

 

	
(a)

	
By the terms of the Amended Agreement (as defined below), MedImmune granted Dyax certain options to be granted Dyax Product Licences under the Antibody Phage Display Patents and MedImmune Know How (all as defined below).

 

	
(b)

	
Dyax has nominated the Target and this Target has passed the MedImmune Gatekeeping Procedure (each as defined below).

 

	
(c)

	
By this Agreement MedImmune wishes to grant to Dyax a Dyax Product Licence in respect of Diagnostic Antibody Products and Therapeutic Antibody Products against the Target.

 

In consideration of the mutual covenants and undertakings set out below, THE PARTIES AGREE as follows:

 

1.            Definitions

 

	
1.1

	
In this Agreement, the terms defined in this Clause shall have the meanings specified below:

 

	
  

	
"Affiliate" means any company, partnership or other entity which directly or indirectly Controls, is Controlled by or is under common Control with any other entity.

 

	
  

	
"Agreement" means this Dyax Product Licence and any and all Schedules, appendices and other addenda to it as may be amended from time to time in accordance with the provisions of this agreement.

 

	
  

	
"Amended Agreement" means the Amended and Restated Agreement executed by Dyax and MedImmune on July ___, 2012.

 

	
  

	
"Antibody" means a molecule or a gene encoding such a molecule comprising or containing one or more immunoglobulin variable domains or parts of such domains or any existing or future fragments, variants, modifications or derivatives thereof.

 

	
  

	
"Antibody Library" means any antibody library constructed using processes which are covered by a claim of an issued and unexpired patent included within the Antibody Phage Display Patents which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise.

 

  

2

  

	
  

	
"Antibody Phage Display Patents" means:  (a) the patents and patent applications listed in Schedule 1 and any patents issuing from such patent applications, together with any divisions, registrations, confirmations, reissues, extensions, renewals, continuations, continuations-in-part, revalidations, additions, substitutions, renewals or supplementary protection certificates thereof throughout the world; and (b) any Patent Rights which claim or cover any invention or discovery which is developed by MedImmune or its Affiliates at any time during the term of this Agreement directly related to Antibody phage display or Antibody Services; provided, however, that Antibody Phage Display Patents shall always exclude (i) MedImmune Diabodies Patent Rights, (ii) any Patent Rights owned or controlled by MedImmune which claim or cover Catalytic Antibodies, (iii) any Patent Rights owned or controlled by MedImmune which claim ribosome display technology, (iv) any Patent Rights which claim Single Domain Antibodies, and (v) any Patent Rights acquired by MedImmune after the Commencement Date from any Third Party for consideration or as a result of MedImmune's acquisition of or merger with such Third Party.

 

	
  

	
"Antibody Services" means the provision of research and/or development services for the identification, generation, derivation or development of one or more MedImmune Antibody Libraries or Antibodies derived therefrom.

 

	
  

	
"Business Day" means a day (other than a Saturday or Sunday) on which the banks are ordinarily open for business in the City of London and the Commonwealth of Massachusetts.

 

	
  

	
"Catalytic Antibodies" means solely those Antibodies which bind to and catalyze the chemical transformation of a substrate and in which an Antibody binding region is involved in said catalysis.

 

	
  

	
"Commencement Date" means the date of this Agreement first written above.

 

	
  

	
"Competent Authority" means any national or local agency, authority, department, inspectorate, minister, ministry official, parliament or public or statutory person (whether autonomous or not) of any government of any country having jurisdiction over either any of the activities contemplated by this Agreement or the Parties including the European Commission, the Court of First Instance and the European Court of Justice.

 

	
  

	
"Controls" means the ownership, directly or indirectly, of more than fifty percent (50%) of the outstanding equity securities of a corporation which are entitled to vote in the election of directors or a more than fifty percent (50%) interest in the net assets or profits of an entity which is not a corporation.

 

	
  

	
"Diagnostic Antibody Product" means any preparation in the form of a device, compound, kit or service with utility in the diagnosis, prognosis, prediction or disease management of a disorder for any indication which contains, comprises or the process of development or manufacture of which utilises a MedImmune Licensable Antibody.  The term "Diagnostic Antibody Product" shall not include any Research Product,

 

	
  

	
"Dyax Product Licence" means the licence granted to Dyax pursuant to Clause 2 of this Agreement.

 

  

3

  

	
  

	
"Dyax Therapeutic Antibody Product" means any Therapeutic Antibody Product identified, generated or derived by Dyax for itself or its Affiliates but not a Therapeutic Antibody Product identified, generated or derived by Dyax for, or on behalf of, a Third Party.

 

"Dyax Sublicensee" means any Third Party who is granted a sublicense under Clause 3.4 of this Agreement to Exploit Products against the Target in the Territory.

 

	
  

	
"Exploit" means to make, have made, use, sell or import.

 

	
  

	
"FDA" means the United States Food and Drug Administration, the equivalent Competent Authority in any country of the Territory or any successor bodies thereto.

 

	
  

	
"First Commercial Sale" means the first commercial sale of any Product by Dyax or a Dyax Sublicensee (or its sublicensee) in any country after grant of a Marketing Authorisation.

 

	
  

	
"GAAP" means United States generally accepted accounting principles, consistently applied.

 

	
  

	
"IDE" means an Investigational Device Exemption application, as defined in Title 21 of the United States Code of Federal Regulations, filed with the FDA or an equivalent foreign filing.

 

	
  

	
"IND" means an Investigational New Drug Application, as defined in Title 21 of the United States Code of Federal Regulations, that is required to be filed with the FDA before beginning Phase I Clinical Trials of any Therapeutic Antibody Product in human subjects, or an equivalent foreign filing.

	
  

	
"Second Additional Licence Allocation" means the options for licences granted pursuant to Clause 3.5(b) of the Amended Agreement.

	
  

	
"Marketing Authorisation" means any approval (including all applicable pricing and governmental reimbursement approvals) required from the FDA or relevant Competent Authority to market and sell a Product in a particular country.

 

	
  

	
"MedImmune Diabodies Patent Rights" means (a) the Patent Rights entitled "Diabodies – multivalent and multispecific binding proteins, their manufacture and use", PCT/GB93/02492 and (b) the Patent Rights entitled "Retargeting antibodies and diabodies", PCT/GB94/02019.

 

	
  

	
"MedImmune Gatekeeping Procedure" means the procedure set out in Schedule 2 of the Amended Agreement which MedImmune has carried out in respect of the Target prior to the grant of this Dyax Product Licence.

 

	
  

	
"MedImmune Know-How" means any Confidential Information of MedImmune which constitutes unpatented know-how, technical and other information related to the subject matter of the Antibody Phage Display Patents as identified in Schedule 2 and as amended from time to time in accordance with Schedule 2.

 

  

4

  

	
  

	
"MedImmune Licensable Antibody" means any Antibody (including any Bi-Specific or Poly-Specific Antibody) to the Target (a) where such Antibody has been identified, generated, developed, produced or derived by Dyax or a Dyax Sublicensee or its sublicensees and (b) the identification, generation, development, production or derivation of such Antibody uses any of the processes claimed or covered by a claim of an issued and unexpired patent included within the Antibody Phage Display Patents (which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise) or uses the MedImmune Know-How and (c) which is potentially useful for the development of any Diagnostic Antibody Product and/or any Therapeutic Antibody Product.

 

	
  

	
"Net Sales" means, with respect to a Product sold by Dyax or a Dyax Sublicensee (or its sublicensees), the price invoiced by that party to the relevant purchaser (or in the case of a sale or other disposal otherwise than at arm's length, the price which would have been invoiced in a bona fide arm's length contract or sale) but deducting the costs of packing, transport and insurance, customs duties, any credits actually given for returned or defective Products, normal trade discounts actually given, and sales taxes, VAT or other similar tax charged on and included in the invoice price to the purchaser.

 

	
  

	
"Party" means MedImmune or Dyax.

 

	
  

	
"Patent Rights" means any patent applications and any patents issuing from such patent applications, author certificates, inventor certificates, utility certificates, improvement patents and models, and certificates of addition and all counterparts of them throughout the Territory, including any divisional applications and patents, filings, renewals, continuations, continuations-in-part, patents of addition, extensions, reissues, substitutions, confirmations, registrations, revalidation and additions of or to any of them, as well as any supplementary protection certificates and equivalent protection rights in respect of any of them.

 

	
  

	
"Pharmacia Agreement" means the agreement between MedImmune and Pharmacia P-L Biochemicals Inc.  dated 11 September 1991.

 

	
  

	
"Pharmacia P-L Biochemicals Inc." means Pharmacia P-L Biochemicals Inc (now known as Amersham Biosciences).

 

	
  

	
"Product" means a Diagnostic Antibody Product or a Therapeutic Antibody Product.

 

	
  

	
"Quarter" means each period of three (3) months ending on March 31, June 30, September 30, or December 31 and "Quarterly" shall be construed accordingly.

 

	
  

	
"Research Products" means any product in relation to which Pharmacia P-L has an exclusive licence from MedImmune pursuant to the Pharmacia Agreement.

 

	
  

	
"Single Domain Antibodies" means an Antibody containing only a single domain (heavy or light).

 

	
  

	
"Status Report" has the meaning set forth in Clause 4.1.

 

  

5

  

	
  

	
"Target" means [   ], as set out in Schedule 3.

 

	
  

	
"Territory" means all countries of the world.

 

	
  

	
"Therapeutic Antibody Product" means any preparation for the treatment or prevention of disease, infection or other condition in humans for any indication which contains, comprises, or the process of development or manufacture of which utilises, a MedImmune Licensable Antibody.  The term "Therapeutic Antibody Product" shall not include any Research Product.

 

	
  

	
"Third Party" means any entity or person other than Dyax, MedImmune or their respective Affiliates.

 

	
  

	
"Valid Claim" means a claim of an issued and unexpired patent included within the Antibody Phage Display Patents which have been licensed to MedImmune by the MRC which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise.

 

	
  

	
"Year" means initially the period from the Commencement Date to the end of that calendar year, and subsequently a calendar year.

 

	
1.2

	
The headings to clauses are inserted for convenience only and shall not affect the interpretation or construction of this Agreement.

 

	
1.3

	
Words imparting the singular shall include the plural and vice versa.  References to persons include an individual, company, corporation, firm or partnership.

 

	
1.4

	
The words and phrases "other", "including" and "in particular" shall not limit the generality of any preceding words or be construed as being limited to the same class as any preceding words where a wider construction is possible.

 

	
1.5

	
References to any statute or statutory provisions of the United Kingdom shall include (i) any subordinate legislation made under it, (ii) any provision which it has superseded or re-enacted (whether with or without modification), and (iii) any provision which subsequently supersedes it or re-enacts it (whether with or without modification.  References to any statute or regulation of the United States of America means that statute or regulation as it may be amended, supplemented or otherwise modified from time to time, and any successor statute or regulation.

 

2.            Grant of Dyax Product Licence

 

	
2.1

	
Subject to Clause 2.4 below, MedImmune hereby grants to Dyax and its Affiliates a non-exclusive, royalty-bearing licence (on the terms of this Agreement) with the right to sublicense (on the terms of Clause 3) under the Antibody Phage Display Patents and MedImmune Know-How to Exploit Products against the Target in the Territory.

 

	
2.2

	
The Dyax Product Licence granted under this Agreement is pursuant to Dyax's exercise of one (1) option from the Second Additional Licence Allocation under the Amended Agreement.

 

  

6

  

	
2.3

	
For the avoidance of doubt, no rights are granted by MedImmune under this Agreement to any MedImmune Diabodies Patent Rights, and any Patent Rights owned or controlled by MedImmune which claim Catalytic Antibodies, ribosome display technology, any Patent Rights which claim Single Domain Antibodies and no rights are granted by MedImmune in this Agreement under the Antibody Phage Display Patents to Exploit Research Products.

 

3.            Sub-Licensing

 

	
3.1

	
Dyax will, if requested by MedImmune, inform MedImmune of the identity of all Dyax Sublicensees (and their sublicensees) in relation to this Agreement.

 

	
3.2

	
Dyax will ensure that any Third Party which receives a sublicence of its rights in accordance with the terms of this Agreement executes a written agreement which requires the Third Party to abide by the terms of this Agreement.

 

	
3.3

	
Dyax will be liable for any breach of the sublicences granted in accordance with Clause 3.2.

 

	
3.4

	
For the avoidance of doubt, the rights granted to Dyax to Exploit Products against the Target in the Territory may be sublicensed to one or more Third Parties (and further sublicensed by any such Third Party), provided that any such sublicense would remain subject to the terms and conditions of this Agreement.

 

4.            Status Report

 

	
4.1

	
Dyax will provide to MedImmune a brief summary of the status of each Product against the Target that Dyax or Dyax Sublicensees desire to Exploit under this Agreement ("Status Report").  During the Term, Dyax will submit such Status Report to MedImmune for a particular Product prior to the time Dyax or Dyax Sublicensees begin the first human clinical trial with respect to such Product. Dyax will prepare and provide to MedImmune an annual update to such Status Report by March 31st of each year which will summarize the status of the particular Product in the preceding calendar year.

 

5.            Gatekeeping

 

The Parties acknowledge that, as of the Commencement Date, the Target has passed MedImmune's Gatekeeping Procedure under the Amended Agreement.

 

6.            Consideration

 

	
6.1

	
With respect to each Therapeutic Antibody Products or Diagnostic Antibody Products, Dyax shall pay to MedImmune:

 

	
  

	
6.1.1.

	
royalties in an amount equal to [*****] of Net Sales of any Therapeutic Antibody Product sold by or on behalf of Dyax or a Dyax Sublicensee; and

 

  

7

  

	
  

	
6.1.2

	
[*****] of all other net paid or payable to Dyax arising pursuant to this Agreement.

 

	
6.2

	
All amounts due to MedImmune pursuant to this Clause 6 shall be payable on a country-by-country basis until the last Valid Claim expires or ten (10) years from the date of First Commercial Sale of such Product, whichever occurs later.

 

7.            Provisions Relating to Payment of Consideration

 

	
7.1

	
All milestone payments shall be paid by Dyax within [*****] days of the applicable milestone being achieved and no milestone payments shall be refundable or creditable against any other sum payable by Dyax hereunder for any reason.

 

	
7.2

	
All other payments that are not milestone payments or royalties, shall be paid by Dyax within [*****] of the requisite sum (in respect of which the payment to MedImmune arises) becoming payable to Dyax.

 

	
7.3

	
Dyax shall make the payments due to MedImmune under Clause 6 above in United States dollars (if Dyax in turn receives payment in dollars) or in pounds sterling (if Dyax in turn receives payment in pound sterling), or Euros (if Dyax in turn receives payment in Euros).  Where Dyax receives payment in a currency other than United States dollars, pounds sterling or Euros, Dyax will convert the relevant sum into pounds sterling (or Euros if Euros have replaced pounds sterling at the time of payment).  Dyax will use the conversion rate reported in the Financial Times two (2) Business Days before the day on which Dyax pays MedImmune.  Such payment will be made without deduction of exchange, collection or other charges.  All payments will be made at Quarterly intervals.  Within [*****] days of the end of each Quarter after the First Commercial Sale of each Product in any country, Dyax shall prepare a statement which shall show on a country-by-country basis for the previous Quarter Net Sales of each Product by Dyax or its Affiliates and all monies due to MedImmune based on such Net Sales.  That statement shall include details of Net Sales broken down to show the country of the sales and the total Net Sales by Dyax or its Affiliates in such country and shall be submitted to MedImmune within such [*****] day period together with remittance of the monies due.  With respect to Net Sales of a Product by a Dyax Sublicensee (or its sublicensee) Dyax shall prepare a statement which will include the same information and remit that statement and any monies due within the same period except with regard to any Dyax Sublicensee with which Dyax has a licence agreement relating to the technology of Antibody phage display as of the Commencement Date where the remittance will be made at Quarterly intervals within [*****] days of the date royalties are due to Dyax from such existing Dyax Sublicensees.

 

	
7.4

	
All payments shall be made free and clear of and without deduction or deferment in respect of any disputes or claims whatsoever and/or as far as is legally possible in respect of any taxes imposed by or under the authority of any government or public authority.  [*****].

 

	
7.5

	
Dyax shall keep and shall procure that its Affiliates and Dyax Sublicensees keep true and accurate records and books of account containing all data necessary for the calculation of the amounts payable by it to MedImmune pursuant to this Agreement.  Those records and books of account shall be kept for seven (7) years following the end of the Year to which they relate.  Upon MedImmune's written request, a firm of accountants appointed by agreement between the Parties or, failing such agreement within ten (10) Business Days of the initiation of discussions between them on this point MedImmune shall have the right to cause an international firm of independent certified public accountants that has not performed auditing or other services for either Party or their Affiliates (or, if applicable, any Dyax Sublicensee with rights to the Product in question) acceptable to Dyax or the Dyax Sublicensee such acceptance not to be unreasonably withheld to inspect such records and books of account.  In particular such firm:

 

  

8

  

	
  

	
7.5.1

	
shall be given access to and shall be permitted to examine and copy such books and records of Dyax and its Affiliates and Dyax Sublicensees upon twenty (20) Business Days notice having been given by MedImmune and at all reasonable times on Business Days for the purpose of certifying that the Net Sales or other relevant sums calculated by Dyax and its Affiliates and Dyax Sublicensees during any Year were reasonably calculated, true and accurate or, if this is not their opinion, certify the Net Sales figure or other relevant sums for such period which in their judgment is true and correct;

 

	
  

	
7.5.2

	
prior to any such examination taking place, such firm of accountants shall undertake to Dyax and its Affiliates and Dyax Sublicensees that they shall keep all information and data contained in such books and records, strictly confidential and shall not disclose such information or copies of such books and records to any third person including MedImmune, but shall only use the same for the purpose of calculations which they need to perform in order to issue the certificate to which this Clause envisages;

 

	
  

	
7.5.3

	
any such access examination and certification shall occur no more than once per Year and will not go back over records more than two (2) years old;

 

	
  

	
7.5.4

	
Dyax and its Affiliates and Dyax Sublicensees shall make available personnel to answer queries on all books and records required for the purpose of that certification; and

 

	
  

	
7.5.5

	
the cost of the accountant shall be the responsibility of Dyax if the certification shows it to have underpaid monies to MedImmune by more than [*****] and the responsibility of MedImmune otherwise.

 

	
7.6

	
All payments due to MedImmune under the terms of this Agreement are expressed to be exclusive of value added tax (VAT) howsoever arising.  [*****].

 

	
7.7

	
All payments made to MedImmune under this Agreement shall be made to the bank account of MedImmune as notified by MedImmune to Dyax from time to time.

 

	
7.8

	
If Dyax fails to make any payment to MedImmune hereunder on the due date for payment, without prejudice to any other right or remedy available to MedImmune, it shall be entitled to charge Dyax interest (both before and after judgment) of the amount unpaid at the annual rate of LIBOR (London Interbank Offering Rate) plus [*****] calculated on a daily basis until payment in full is made without prejudice to MedImmune's right to receive payment on the due date.

 

  

9

  

8.            Confidentiality

 

	
8.1

	
With respect to any confidential information received from the other Party ("Confidential Information"), each Party undertakes and agrees to:

 

	
  

	
(a)

	
only use the Confidential Information for the purposes envisaged under this Agreement and not to use the same for any other purpose whatsoever;

 

	
  

	
(b)

	
ensure that only those of its officers and employees who are directly concerned with the carrying of this Agreement have access to the Confidential Information on a strictly "need to know" basis and are informed of the secret and confidential nature of it;

 

	
  

	
(c)

	
keep the Confidential Information secret, confidential, safe and secure and shall not directly or indirectly disclose or permit to be disclosed the same to any Third Party, including any consultants or other advisors, without the prior written consent of the disclosing Party except to the extent disclosure is necessary in connection with its use as envisaged under this Agreement;

 

	
  

	
(d)

	
ensure that the Confidential Information will not be covered by any lien or other encumbrance in any way, and

 

	
  

	
(e)

	
not copy, reproduce or otherwise replicate for any purpose or in any manner whatsoever any documents containing the Confidential Information except to the extent necessary in connection with its use as envisaged under this Agreement.

 

For the avoidance of doubt, the Parties agree that the identity of the Target, any information related to the Target provided to MedImmune by Dyax, and the Status Report is the Confidential Information of Dyax.

	
8.2

	
The obligations referred to in Clause 8.1 above shall not extend to any Confidential Information which:

 

	
  

	
(a)

	
is or becomes generally available to the public otherwise than be reason of breach by a recipient Party of the provision of Clause 8.1;

 

	
  

	
(b)

	
is known to the recipient Party and is at its free disposal (having been generated independently by the recipient Party or a Third Party in circumstances where it has not been derived directly or indirectly from the disclosing Party's Confidential Information prior to its receipt from the disclosing Party), provided that evidence of such knowledge is furnished by the recipient Party to the disclosing Party within twenty-eight (28) days of recipient of that Confidential Information;

 

	
  

	
(c)

	
is subsequently disclosed to the recipient Party without obligations of confidence by a Third Party owing no such obligations to the disclosing Party in respect of that Confidential Information;

 

	
  

	
(d)

	
is required by law to be disclosed (including as part of any regulatory submission or approval process) and then only when prompt written notice of this requirement has been given to the disclosing Party so that it may, if so advised, seek appropriate relief to prevent such disclosure, provided always that in such circumstances such disclosure shall be only to the extent so required and shall be subject to prior consultation with the disclosing Party with a view to agreeing on the timing and content of such disclosure.

 

  

10

  

	
8.3

	
No public announcement or other disclosures to Third Parties concerning the terms of this Agreement shall be made, whether directly or indirectly, by either Party (except confidential disclosures to professional advisors) without first obtaining the approval of the other Party and agreement upon the nature and text of such announcement or disclosure with the exceptions that:

 

	
  

	
(a)

	
a Party may disclose those terms which it is required by regulation or law to disclose, provided that it takes advantage of all provisions to keep confidential as many terms of this Agreement as possible; and

 

	
  

	
(b)

	
the Party desiring to make any such public announcement or other disclosure shall inform the other Party of the proposed announcement or disclosure in reasonably sufficient time prior to public release, and shall provide the other Party with a written copy thereof in order to allow such Party to comment upon such announcement or disclosure.  Each Party agrees that it shall cooperate fully with the other with respect to all disclosures regarding this Agreement to the U.S. Securities Exchange Commission, the UK Stock Exchange and any other comparable body including requests for confidential information or proprietary information of either Party included in any such disclosure.

 

9.            Indemnification

 

	
9.1

	
Dyax hereby indemnifies MedImmune and its Affiliates and their directors, officers, employees and agents and their respective successors, heirs and assigns (the "MedImmune Indemnitees") against any liability, damage, loss or expense (including attorneys fees and expenses of litigation) incurred by or imposed upon the MedImmune Indemnitees or any one of them in connection with any claims, suits, actions, demands or judgments by or in favour of any Third Party concerning any manufacture, use or sale of any Product by Dyax or any Dyax Sublicensee (or their sublicensee). In addition, each Dyax Sublicensee (or their sublicensee) shall indemnify the MedImmune Indemnitees against any liability, damage, loss or expense (including attorneys fees and expenses of litigation) incurred by or imposed upon the MedImmune Indemnitees or any one of them in connection with any claims, suits, actions, demands or judgments by or in favour of any Third Party concerning any manufacture, use or sale of any Product by such Dyax Sublicensee (or their sublicensee).

 

	
9.2

	
MedImmune shall not be liable to Dyax and Dyax Sublicensee (or its sublicensee) in respect of any liability, loss, damage or expense (including attorneys fees and expenses of litigation) incurred or suffered by Dyax and Dyax Sublicensees (or its sublicensee) in connection with the manufacture, use or sale of any Products by Dyax and Dyax Sublicensees (or its sublicensee).

 

	
9.3

	
MedImmune gives no warranty or representation that the Antibody Phage Display Patents are, or will be, valid or that the exercise of the rights granted under this Agreement will not result in the infringement of patents of Third Parties.

 

  

11

  

10.          Infringement and Patent Prosecution

 

	
10.1

	
Dyax shall notify MedImmune promptly of any proceedings or applications for revocation of any of the Antibody Phage Display Patents emanating from a Third Party that comes to its notice or if a Third Party takes or threatens to take any proceedings for infringement of any patents of that Third Party by reason of Dyax's use or operation of the Antibody Phage Display Patents or manufacture, use or sale of the Products.  Dyax shall notify MedImmune promptly of any infringement of the Antibody Phage Display Patents by a Third Party which may come to its attention during the term of the Dyax Product Licence, except Dyax shall have no obligation to so notify MedImmune with respect to any infringement by an academic or not-for-profit entity which occurs by reason of such entity carrying out research activities provided such activities are, as far as Dyax is aware, not being carried out with a view to commercialising a product or otherwise for profit.

 

	
10.2

	
MedImmune shall have the sole right and responsibility, at its sole discretion and cost and with reasonable assistance from Dyax, to file, prosecute and maintain the Antibody Phage Display Patents and for the conduct of any lawsuits, claims or proceedings challenging the validity or enforceability thereof including, without limitation, any interference or opposition proceeding relating thereto in all countries.  For the avoidance of doubt, Dyax and Dyax Sublicensees will have the right to conduct any proceedings relating to its Product including any proceedings relating to product liability.

 

11.          Termination

 

	
11.1

	
Unless terminated under this Clause 11, this Agreement shall commence on the Commencement Date and shall terminate, on a country-by-country and Product-by-Product basis upon the last to expire of claims of an issued and unexpired patent within the Antibody Phage Display Patents (which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise) or (b) the date upon which no payments are due to MedImmune under Clause 6 of this Agreement, whichever occurs later.

 

	
11.2

	
MedImmune shall have the right to terminate this Agreement in the event that:

 

	
  

	
11.2.1

	
Dyax or a Dyax Sublicensee (or its sublicensee) has not filed an IND for a Therapeutic Antibody Product, or a 510(k) or IDE for a Diagnostic Antibody Product within [*****] after the Commencement Date; provided however, that Dyax shall have the right to extend such period in annual increments by up to [*****], upon the following terms:

 

	
First Annual Extension

	
$[*****]

	
Second Annual Extension

	
$[*****]

In order for Dyax to be granted an extension under this Clause 11.2.1, the foregoing amounts must be received by MedImmune prior to the date of expiration.  All amounts received by MedImmune under this Clause 11.2.1 will be credited against any milestones and royalties that would otherwise be due to MedImmune under the terms of the Product License; or

 

	
  

	
11.2.2

	
Dyax or a Dyax Sublicensee (or its sublicensee) directly or indirectly opposes or assists any Third Party to oppose the grant of letters patent or any patent application within the Antibody Phage Display Patents, or disputes or directly or indirectly assists any Third Party to dispute the validity of any patent within the Antibody Phage Display Patents or any of the claims thereof.

 

  

12

  

	
11.3

	
In the event that either Party commits a material breach of any of its material obligations with respect to this Agreement, and such Party fails to remedy that breach within ninety (90) days after receiving written notice thereof from the other Party, that other Party may immediately terminate this Agreement upon written notice to the breaching Party.

 

	
11.4

	
Either Party may terminate this Agreement in its entirety by giving notice in writing to the other Party if any one or more of the following events happens:

 

	
  

	
(a)

	
the other Party has any distress or execution levied on the major portion of its assets (as determined by its balance sheet in accordance with GAAP) which is not paid out within thirty (30) days of its being levied;

 

	
  

	
(b)

	
the other Party calls a meeting for the purpose of passing a resolution to wind it up, or such a resolution is passed, or the other Party presents, or has presented, a petition for a winding up order, or presents, or has presented, a petition to appoint an administrator, or has an administrative receiver, or receiver, liquidator or other insolvency practitioner appointed over all or any substantial part of its business, undertaking, property or assets;

 

	
  

	
(c)

	
the other Party stops or suspends making payments (whether of principal or interest) with respect to substantially all of its debts or announces an intention to do so or the other Party suspends or ceases to carry on its business;

 

	
  

	
(d)

	
a secured lender to the other Party holding a security interest over the major portion of the tangible assets (as determined by its balance sheet in accordance with GAAP) of such other Party takes any steps to obtain possession of the property on which it has security or otherwise to enforce its security;

 

	
  

	
(e)

	
the other Party suffers or undergoes any procedure analogous to any of those specified in Clause 11.4(a)-(d) above or any other procedure available in the country in which the other Party is constituted, established or domiciled against or to an insolvent debtor or available to the creditors of such a debtor.

 

12.          Consequences of Termination

 

	
12.1

	
Upon termination of this Agreement for any reason whatsoever:

 

	
  

	
(a)

	
the relationship of the Parties hereunder shall cease save as (and to the extent) expressly provided for in this Clause 12;

 

	
  

	
(b)

	
any sublicenses granted by Dyax in accordance with the terms of this Agreement will continue in force provided that such sublicensees are not in breach of the relevant sublicense and that each sublicensee agrees to enter into a direct agreement with MedImmune upon the terms of this Agreement;

 

  

13

  

	
  

	
(c)

	
Dyax shall immediately return or procure to be returned to MedImmune at such place as it directs and at the expense of Dyax (or if MedImmune so requires by notice to Dyax in writing, destroy) all MedImmune Know-How together with all copies of such MedImmune Know-How in its possession or under its control;

 

	
  

	
(d)

	
The following provisions shall survive expiration or termination of this Agreement: Clauses 7 (in relation to any accrued payment obligations of Dyax prior to termination or expiry), 8, 9, 12, 13 and 15; and

 

	
  

	
(e)

	
Expiry or termination of this Agreement shall not affect the rights and obligations of the Parties accrued prior to such expiry or termination including any accrued obligation for Dyax to make any payments under Clause 6.

 

13.          Dispute Resolution

 

	
13.1

	
Any dispute arising between the Parties relating to, arising out of or in any way connected with this Agreement or any term or condition thereof, or the performance by either Party of its obligations hereunder, whether before or after termination of this Agreement, shall be referred to the Chief Executive Officers of each of the Parties.  The Chief Executive Officers shall meet to resolve such deadlock within thirty (30) days of the date that the dispute is referred to them, at a time and place mutually acceptable to them.  Any dispute that has not been resolved following good faith negotiations of the Chief Executive Officers for a period of thirty (30) days shall be referred to and finally settled by binding arbitration in accordance with the then current Commercial Arbitration Rules of the American Arbitration Association.  There shall be three (3) arbitrators, each Party to designate one arbitrator and the two Party-designated arbitrators to select the third arbitrator.  The Party initiating recourse to arbitration shall include in its notice of arbitration its appointment of an arbitrator.  The appointing authority, in the event a Party does not or the Parties do not appoint arbitrator(s), shall be the American Arbitration Association in [*****].  The place of arbitration shall be [*****]. The language to be used in the arbitration shall be English.  Any determination by the arbitration panel shall be final and conclusively binding.  Judgement on any arbitration award may be entered in any court having jurisdiction thereof.  Each Party shall bear its own costs and expenses incurred in the arbitration; provided that the arbitration panel may assess the costs and expenses of the prevailing Party, including reasonable attorneys fees, against the non-prevailing Party.

 

14.          Notices

 

	
14.1

	
All notices, requests, demands and other communications required or permitted to be given pursuant to this Agreement shall be in writing and shall be deemed to have been duly given upon the date of receipt if delivered by hand, recognized international overnight courier, confirmed facsimile transmission, or registered or certified mail, return receipt requested, postage prepaid to the following addresses or facsimile numbers:

 

  

14

  

 

	
If to Dyax:

	
If to MedImmune:

	  
	
Dyax Corp.

	
MedImmune Limited

	  
	
55 Network Drive

	
Milstein Building, Granta Park

	  
	
Burlington, MA 01803

	
Cambridge, CB21 6GH

	  
	
USA

	
UK

	
 

	
Attention:  General Counsel

	
Attention:  Company Secretary

	  
	
Facsimile: [*****]

	
Facsimile:  [*****]

	  

Either party may change its designated address and facsimile number by notice to the other party in the manner provided in this Clause.

15.          Governing Law

 

	
15.1

	
This Agreement shall be governed by and construed in accordance with the laws of the [*****].

 

	
15.2

	
Save as provided in this Clause, the United Kingdom Legislation entitled the Contracts (Rights of Third Parties) Act 1999 will not apply to this Agreement.  No person, other than a MedImmune Indemnitee (as defined in Clause 9.1), who is not a Party to this Agreement (including any employee, officer, agent, representative or subcontractor of either Party) will have the right (whether under the Contracts (Rights of Third Parties) Act 1999 or otherwise) to enforce any term of this Agreement which expressly or by implication confers a benefit on that person without the express prior agreement in writing of the Parties which agreement must refer to this Clause, except that any Dyax Sublicensee shall have the right to enforce the provisions of Clause 12.1(b) of this Agreement and shall be a third party beneficiary for that purpose only.

 

16.          Specific Performance

 

	
16.1

	
The parties agree that irreparable damage will occur in the event that the provisions of Clause 8 are not specifically enforced.  In the event of a breach or threatened breach of any such provisions, each Party agrees that the other Party shall, in addition to all other remedies, be entitled to temporary or permanent injunction, without showing any actual damage or that monetary damages would not provide an adequate remedy and without the necessity of posting any bond, and/or a decree for specific performance, in accordance with the provisions hereof.

 

17.          Assignment

 

	
17.1

	
This Agreement may not be assigned by either party without the prior written consent of the other party, except that either Party may assign the benefit and/or burden of this Agreement to any Affiliate of it or any Third Party, provided that such Affiliate or Third Party undertakes to the other Party to be bound by the terms of this Agreement. This Agreement shall inure to the benefit of and be binding upon the parties and their respective lawful successors and assigns.

 

  

15

  

18.          Compliance With Law

 

	
18.1

	
Nothing in this Agreement shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision of this Agreement and any statute, law, ordinance, or treaty, the latter shall prevail, but in, such event the affected provisions of the Agreement shall be conformed and limited only to the extent necessary to bring it within the applicable legal requirements.

 

19.          Amendment and Waiver

 

	
19.1

	
This Agreement may be amended, supplemented, or otherwise modified only by means of a written instrument signed by both parties.  Any waiver of any rights or failure to act in a specific instance shall relate only to such instance and shall not be construed as an agreement to waive any rights or fail to act in any other instance, whether or not similar.

 

20.          Severabi1ity

 

	
20.1

	
In the event that any provision of this Agreement shall, for any reason, be held to be invalid or unenforceable in any respect, such invalidity or unenforceability shall not affect any other provision hereof and the parties shall negotiate in good faith to modify the Agreement to preserve (to the extent possible) their original intent.

 

21.          Entire Agreement

 

	
21.1

	
This Agreement and the Amendment Agreement constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all prior agreements or understandings between the parties relating to the subject matter hereof.

 

  

16

  

 

IN WITNESS OF THE ABOVE the Parties have signed this Agreement on the date written at the head of this Agreement.

 

	
SIGNED by

	
)

	  	  
	  	
)

	  	  
	 	)	 	 
	  	____________________________________________	
 

	

for and on behalf of

	)	Authorised Signatory	  
	
MEDIMMUNE LIMITED

	
)

	  	  
	  	  	  	  
	  	  	  	  
	
SIGNED by

	
)

	  	  
	  	
)

	  	  
	 	)	 	 
	  	____________________________________________	
 

	
for and on behalf of

	)	
Authorised Signatory

	  
	
DYAX CORP.

	
)

	  	  
	  	
)

	  	  

 

  

17

  

 

Schedule 1 (to Dyax Product Licence, Schedule 7B)

Antibody Phage Display Patents

 

	
1.

	
“Single Domain Ligands, Receptors Comprising said Ligands, Methods for their Production and Use of Said Ligands and Receptors” PCT/GB89/01344, filed November 13, 1989.

	
2. 

	
“Co-expression of Heteromeric Receptors” PCT/US90/02890, filed May 16, 1990.

	
3.

	
“Method for Isolating Receptors Having a Preselected Specificity” PCT/US90/02835, filed May 16, 1990.

	
4.

	
“A new method for tapping the immunological repertoire” PCT/US90/02836, filed May 16, 1990.

	
5.

	
“Methods for producing members of specific binding pairs” PCT/GB91/01134, filed July 10, 1991.

	
6.

	
“Methods for producing members of specific binding pairs” PCT/GB92/00883, filed May 15, 1992.

	
7. 

	
“Treatment of Cell Populations” PCT/GB92/01483, filed August 10, 1992.

	
8.

	
“Production of chimeric antibodies – a combinational approach” PCT/GB92/01755, filed September 23, 1992.

	
9.

	
“Production of anti-self antibodies from antibody segment repertoires and displayed on phage” PCT/GB92/02240, filed December 2, 1992.

	
10.

	
“Methods for producing members of specific binding pairs” PCT/GB93/00605, filed March 24, 1993.

	
11.

	
“SBP members with a chemical moiety covalently bound within the binding site; production and selection thereof” PCT/GB94/01422, filed June 30, 1994.

	
12.

	
“Recombinant Binding Proteins and peptides” PCT/GB94/02662, filed December 5, 1994.

	
13.

	
“Labelling and selection of Specified Binding Molecules” PCT/GB97/01835, filed July 8, 1997.

 

  

18

  

 

Schedule 2 (to Dyax Product Licence, Schedule 7B)

MedImmune Know-How

 

MedImmune Training Manual “Antibody Phage Display” 2002.

MedImmune mammalian expression IgG vectors:

pEU1.2 (human gamma-1 heavy chain)

pEU3.2 (human kappa light chain)

pEU4.2 (human lambda light chain)

pEU8.2 (human gamma-4 heavy chain)

MedImmune may supplement the above with any revisions which it may make to the Training Manual or with any new vectors at its discretion from time to time (in each case accompanied by notice to Dyax under the Agreement) or with such additional know-how as the Parties may agree.

 

  

19

  

 

Schedule 3 (to Dyax Product Licence, Schedule 7B)

 

Identification of Target:

 

 

	
The Target is identified as follows:

	
[ ]

	  	  
	
GenBank accession number:

	
[ ]

 

 

 

  

20

  

 

Schedule 8

[RESERVED]

 

  

21

  

 

Schedule 9-A

[*****]

 

 

  

Schedule 9-A - Page 1

  

 

Schedule 9-B

[*****]

  

Schedule 9-B - Page 1

  

 

Schedule 9-C

[*****]

 

 

 

  

Schedule 9-C - Page 1

  

 

Schedule 9-D

[*****]

 

 

 

  

Schedule 9-D - Page 1

  

 

Schedule 9-E

[*****]

 

 

  

Schedule 9-E - Page 1

  

 

Schedule 10-A

AFFIMED SUBLICENSE TERMS AND CONDITIONS

 

MedImmune hereby acknowledges and agrees that the Affimed Sublicense granted to MedImmune under Section 11.2(a) is subject to the following terms and conditions:

 

(a)           Nothing in this Agreement shall be deemed to grant MedImmune rights under the Affimed Patent Rights broader than the field and scope of the license granted to Dyax under the Affimed License; and nothing in this Agreement shall be deemed to grant MedImmune the right to (i) make, sell, offer for sale or import any composition of matter other than Products which would, but for the licenses granted herein, infringe a Valid Claim of the Affimed Patent Rights, or (ii) use any phage or phagemid library other than the Dyax Antibody Library;

 

(b)           The Affimed Sublicense shall be subject to the applicable terms and conditions of the Affimed License;

 

(c)           MedImmune agrees that, promptly after execution of this Agreement, Dyax shall deliver to Affimed only those relevant portions of this Agreement evidencing the sublicense granted hereunder is in compliance with the terms and conditions set forth in the Affimed License;

 

(d)           In the event that the Affimed License is terminated prior to its expiration for any reason, the Affimed Sublicense shall terminate; and

 

(e)           If MedImmune fails to comply with any terms and conditions set forth herein, the Affimed Sublicense shall automatically terminate.

 

  

Schedule 10-A - Page 1

  

 

Schedule 10-B

BIOSITE SUBLICENSE TERMS AND CONDITIONS

MedImmune hereby acknowledges and agrees that the Biosite Sublicense granted to MedImmune under Section 11.2(b) is subject to the following terms and conditions:

 

(a)           MedImmune shall comply with the restrictions imposed by Biosite on any potential sublicensee under Section 2.2 of the Biosite License;

(b)           Nothing in this Biosite Sublicense shall be deemed to grant MedImmune rights under the Biosite Patent Rights and Biosite Know-How Rights broader than the rights granted to the Dyax Antibody Library and the Dyax Patent Rights under this Agreement and such rights to the Biosite Patent Rights and Biosite Know-How are limited to use with the Dyax Antibody Library and Antibody Compounds as permitted by Clause 11.1 of the Agreement;

(c)           MedImmune and its Affiliates shall not enforce (or attempt or purport to enforce) against Biosite or its Affiliates any patent that claims (or purports to claim) any process of, any composition for or any use of (i) Biosite Know-How Rights, provided that such Biosite Know-How Rights have been disclosed to MedImmune by Dyax, (ii) creating, constructing or producing immune libraries from immunized rodents for the purpose of phage display therefrom of antibodies or binding fragments thereof, or (iii) phage display of antibodies or binding fragments thereof, or (iv) selecting or producing antibodies or binding fragments thereof derived from such libraries.  The Biosite Sublicense shall automatically terminate upon any breach of this covenant, which shall survive any termination of the Biosite Sublicense;

(d)           A signed copy of this Biosite Sublicense (with any provisions of the Agreement  reasonably deemed necessary by Dyax and Biosite) shall be provided to Biosite in order to confirm that Dyax has complied with Biosite’s restrictions on granting sublicenses contained in the Biosite License;

(e)           In the event that the Biosite License be terminated early, the Biosite Sublicense shall also terminate; and

(f)           The Biosite Sublicense shall not become effective until all of the conditions of this Schedule 10-B have been met.

 

The parties expressly acknowledge that the term of the Biosite Sublicense shall be coextensive with the term of the Agreement; provided, however, that the Biosite Sublicense is subject to early termination, upon written notice by Dyax to MedImmune, if the Biosite License terminates early for any reason.

  

Schedule 10-B - Page 1

  

Schedule 10-C

DOMANTIS SUBLICENSE TERMS AND CONDITIONS

 

 

MedImmune hereby acknowledges and agrees that the Domantis Sublicense granted to MedImmune under Section 11.2(c) is subject to the following terms and conditions:

 

(a)             Nothing in this Agreement shall be deemed to grant MedImmune rights under the Domantis Patent Rights broader than the field and scope of the license granted to Dyax under the Domantis License; and nothing in this Agreement shall be deemed to grant MedImmune the right to (i) make, sell, offer for sale or import any composition of matter other than Products which would, but for the licenses granted herein, infringe a Valid Claim of the Domantis Patent Rights, or (ii) use any phage or phagemid library other than the Dyax Antibody Library; and

 

(b)           MedImmune agrees that, promptly after execution of this Agreement, Dyax shall have the right to notify Domantis of this Agreement in compliance with the terms and conditions set forth in the Domantis License.

 

  

Schedule 10-C - Page 1

  

 

Schedule 10-D

GENENTECH SUBLICENSE TERMS AND CONDITIONS

 

MedImmune hereby acknowledges and agrees that the Genentech Sublicense granted to MedImmune under Section 11.2(d) is subject to the following terms and conditions:

 

(a)           MedImmune shall comply with the restrictions imposed by Genentech on any potential Genentech Sublicensee under Section 2.3 of the Genentech License;

(b)           Nothing in the Genentech Sublicense shall be deemed to grant MedImmune rights under the Genentech Patent Rights broader than the rights granted to the Dyax Antibody Library and the Dyax Patent Rights under the Agreement and such rights to the Genentech Patent Rights are limited to use with the Dyax Antibody Library and Antibody Compounds as permitted under Clause 11.1 of the Agreement;

(c)           A signed copy of this Genentech Sublicense (with any provisions of the Agreement reasonably deemed necessary by Dyax and Genentech) shall be provided to Genentech in order to confirm that Dyax has complied with Genentech’s restrictions on granting sublicenses contained in the Genentech License;

(d)           In the event that the Genentech License is terminated early, the Genentech Sublicense shall also terminate; and

(e)           The Genentech Sublicense shall not become effective until all of the conditions of this Schedule 10-D have been met.

 

The parties expressly acknowledge that the term of the Genentech Sublicense shall be coextensive with the term of the Agreement; provided, however, that the Genentech Sublicense is subject to early termination, upon written notice by Dyax to MedImmune, if the Genentech License terminates early for any reason.

  

Schedule 10-D - Page 1

  

 

Schedule 10-E

XOMA COVENANT TERMS AND CONDITIONS

 

As required by the XOMA Agreement, MedImmune acknowledge and agree that the XOMA Covenant is subject to the following provisions:

 

	
  

	
(a)

	
shall not extend to the use of the XOMA Expression Technology to make any amount of a Licensed Immunoglobulin or Product other than Research Quantities; provided, however, that this limitation shall not preclude the manufacture, in commercial quantities, of a Licensed Immunoglobulin discovered using the XOMA Expression Technology in accordance with this Agreement when produced in a production system other than a prokaryot;

 

	
  

	
(b)

	
MedImmune agrees that the "first sale" doctrine does not apply to any Disposition of Transferred Materials;

 

	
  

	
(c)

	
MedImmune shall Dispose of Transferred Materials only to a Third Party who otherwise meets the definition of a Dyax Collaborator under the XOMA Agreement and who executes a written agreement in which its undertakes all of the obligations set forth herein, provided, however, that this Section (c) shall not apply to the Disposition of any Licensed Immunoglobulin hereunder ;

 

	
  

	
(d)

	
If MedImmune or any person or entity controlled by MedImmune contests the validity or enforceability of any of the XOMA Patent Rights hereunder, XOMA shall have the right to terminate (or cause Dyax to terminate) all of the rights hereby granted to MedImmune under the XOMA Patent Rights;

 

	
  

	
(e)

	
MedImmune acknowledges and agrees that nothing in this Agreement or this Schedule 10-E shall be construed as a release or waiver of past, present or future infringement of the XOMA Patent Rights by MedImmune acting outside the scope of this Agreement nor as a release from Dyax from any claim of infringement of the XOMA Patent Rights nor as any right to release any Third Party from any claim of infringement under the XOMA Patent Rights;

 

	
  

	
(f)

	
MedImmune acknowledges and agrees that the XOMA Covenant shall not extend to infringement of the XOMA Patent Rights arising out of making or the means or methods used to make any amount of a Licensed Antibody or Product other than those quantities of Antibody reasonably required for Research and Development purposes; provided, however, that Dyax or MedImmune shall be permitted to make or have made any Licensed Antibody by any means of its selection other than those which otherwise infringe a Valid Claim of the XOMA Patent Rights;

 

	
  

	
(g)

	
MedImmune acknowledges and agrees that the XOMA Covenant shall become void and without effect as to MedImmune if MedImmune fails to materially discharge or comply with any terms of this Agreement with respect to the XOMA Patent Rights;

 

	
  

	
(h)

	
MedImmune acknowledges and agrees that the XOMA Covenant is personal to Dyax and MedImmune and cannot be assigned or transferred;

 

  

  

  

 

	
  

	
(i)

	
MedImmune agrees that Dyax shall have the right to deliver to XOMA a written report which shall specify the name, address and contact person for MedImmune; and

 

	
  

	
(j)

	
In the event of the termination of the XOMA Agreement by Dyax, the licenses and rights granted to Dyax and MedImmune under the XOMA Agreement shall survive.  In the event of the termination of the XOMA Agreement by XOMA, the licenses and rights granted to Dyax and MedImmune under the XOMA Agreement shall terminate; and

 

	
  

	
(k)

	
XOMA shall be an intended third party beneficiary with respect to the foregoing provisions..

 

MedImmune and Dyax agree that capitalized terms used in this Schedule 10-E that are not defined in the Agreement shall have the meanings given to them under the XOMA Agreement.

 

2ex4_1formnote.htm

[FORM OF CONVERTIBLE NOTE]

 

ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE, INCLUDING SECTIONS 3(c)(iii) AND 17(a) HEREOF. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND, ACCORDINGLY, THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 3(c)(iii) OF THIS NOTE.

 

Royale Energy, Inc.

 

Convertible Note

 

	
Issuance Date:  October [___], 2012

	
Original Principal Amount: U.S. $[_________]

FOR VALUE RECEIVED, Royale Energy, Inc., a California corporation (the “Company”), hereby promises to pay to the order of [____________] or its registered assigns (“Holder”) the amount set out above as the Original Principal Amount (as reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the “Principal”) when due, whether upon the Maturity Date (as defined below), on any Holder Optional Redemption Date (as defined below), acceleration, redemption or otherwise (in each case in accordance with the terms hereof) and to pay interest (“Interest”) on any outstanding Principal (as defined below) at the applicable Interest Rate (as defined below) from the date set out above as the Issuance Date (the “Issuance Date”) until the same becomes due and payable, whether upon any Holder Optional Redemption Date, the Maturity Date or acceleration, conversion, redemption or otherwise (in each case in accordance with the terms hereof). This Convertible Note (including all Convertible Notes issued in exchange, transfer or replacement hereof, the “Note”) is one of an issue of Convertible Notes issued pursuant to the Securities Purchase Agreement (as defined below) on the Closing Date (as defined in the Securities Purchase Agreement) (collectively, the “Notes” and such other Convertible Notes, the “Other Notes”). Certain capitalized terms used herein are defined in Section 28.

 

1.    PAYMENT AT MATURITY. On the Maturity Date, the Company shall pay to the Holder an amount in cash equal to all outstanding Principal, accrued and unpaid Interest and accrued and unpaid Late Charges on such Principal and Interest. Other than as specifically permitted by this Note, the Company may not prepay any portion of the outstanding Principal, accrued and unpaid Interest or accrued and unpaid Late Charges on Principal and Interest, if any.

 

2.    INTEREST; INTEREST RATE.  No Interest shall accrue on this Note prior to the occurrence of an Event of Default, in which case Interest on this Note shall commence accruing on the occurrence of such Event of Default, shall accrue daily at the Interest Rate on the outstanding Principal amount from time to time, shall be computed on the basis of a 360-day year comprised of twelve (12) thirty (30) day months, shall compound each Quarter and shall be payable in accordance with the terms of this Note. From and after the occurrence and during the continuance of any Event of Default, the Interest Rate shall automatically be increased to

 

  

  

  

eighteen percent (18%). In the event that such Event of Default is subsequently cured, the automatic increase referred to in the preceding sentence shall cease to be effective as of the date of such cure, provided that the Interest as calculated and unpaid at such increased rate during the continuance of such Event of Default shall continue to apply to the extent relating to the days after the occurrence of such Event of Default through and including the date of such cure of such Event of Default.

 

3.   CONVERSION OF NOTES. This Note shall be convertible into validly issued, fully paid and non-assessable shares of Common Stock (as defined below), on the terms and conditions set forth in this Section 3.

 

(a)  Conversion Right. Subject to the provisions of Section 3(d), at any time or times on or after the Issuance Date, the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into validly issued, fully paid and non-assessable shares of Common Stock in accordance with Section 3(c), at the Conversion Rate (as defined below).  The Company shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share. The Company shall pay any and all transfer, stamp, issuance and similar taxes that may be payable with respect to the issuance and delivery of Common Stock upon conversion of any Conversion Amount.

 

(b)  Conversion Rate. The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant to Section 3(a) shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price (the “Conversion Rate”).

 

(i)  “Conversion Amount” means the portion of the Principal to be converted, redeemed or otherwise with respect to which this determination is being made, plus all accrued and unpaid Interest with respect to such portion of the Principal amount and accrued and unpaid Late Charges with respect to such portion of such Principal and such Interest.

 

(ii)  “Conversion Price” means, as of any Conversion Date or other date of determination, $4.50, subject to adjustment as provided herein.

 

      (c)  Mechanics of Conversion.

 

(i)  Optional Conversion. To convert any Conversion Amount into shares of Common Stock on any date (a “Conversion Date”), the Holder shall deliver (whether via facsimile, e-mail or otherwise), for receipt on or prior to 11:59 p.m., New York time, on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit I (the “Conversion Notice”) to the Company. If required by Section 3(c)(iii), within three (3) Trading Days following a conversion of this Note as aforesaid, the Holder shall surrender this Note to a nationally recognized overnight delivery service for delivery to the Company (or an indemnification undertaking with

 

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respect to this Note in the case of its loss, theft or destruction as contemplated by Section 17(b)). On or before the first (1st) Trading Day following the date of receipt of a Conversion Notice, the Company shall transmit by facsimile or e-mail an acknowledgment of confirmation, in the form attached hereto as Exhibit II, of receipt of such Conversion Notice to the Holder and the Company’s transfer agent (the “Transfer Agent”). On or before the second (2nd) Trading Day following the date of receipt of a Conversion Notice, the Company shall (1) provided that the Transfer Agent is participating in The Depository Trust Company’s (“DTC”) Fast Automated Securities Transfer Program, credit such aggregate number of shares of Common Stock to which the Holder shall be entitled to the Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system or (2) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver (via reputable overnight courier) to the address as specified in the Conversion Notice, a certificate, registered in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder shall be entitled. If this Note is physically surrendered for conversion pursuant to Section 3(c)(iii) and the outstanding Principal of this Note is greater than the Principal portion of the Conversion Amount being converted, then the Company shall as soon as practicable and in no event later than three (3) Business Days after receipt of this Note and at its own expense, issue and deliver to the Holder (or its designee) a new Note (in accordance with Section 17(d)) representing the outstanding Principal not converted. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the record holder or holders of such shares of Common Stock on the Conversion Date.

 

(ii)  Company’s Failure to Timely Convert. If the Company shall fail, for any reason or for no reason, to issue to the Holder within three (3) Trading Days after the Company’s receipt of a Conversion Notice (whether via facsimile, e-mail or otherwise), a certificate for the number of shares of Common Stock to which the Holder is entitled and register such shares of Common Stock on the Company’s share register or to credit the Holder’s or its designee’s balance account with DTC for such number of shares of Common Stock to which the Holder is entitled upon the Holder’s conversion of any Conversion Amount (as the case may be) (a “Conversion Failure”), then, in addition to all other remedies available to the Holder, (1) the Company shall pay in cash to the Holder on each day after such third (3rd) Trading Day that the issuance of such shares of Common Stock is not timely effected an amount equal to 2% of the product of (A) the sum of the number of shares of Common Stock not issued to the Holder on a timely basis and to which the Holder is entitled multiplied by (B) the Closing Sale Price of the Common Stock on the Trading Day immediately preceding the last possible date which the Company could have issued such shares of Common Stock to the Holder without violating Section 3(c)(i) and (2) the Holder, upon written notice to the Company, may void its Conversion Notice with respect to, and retain or have returned (as the case may be) any portion of this Note that has not been converted pursuant to such Conversion Notice, provided that the voiding of a Conversion Notice shall not affect the Company’s obligations to make any payments which have accrued prior to the date of such notice pursuant to this Section 3(c)(ii) or otherwise. In addition to the foregoing, if within three (3)

 

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Trading Days after the Company’s receipt of a Conversion Notice (whether via facsimile, e-mail or otherwise), the Company shall fail to issue and deliver a certificate to the Holder and register such shares of Common Stock on the Company’s share register or credit the Holder’s or its designee’s balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon the Holder’s conversion hereunder (as the case may be), and if on or after such third (3rd) Trading Day the Holder (or any other Person in respect, or on behalf, of the Holder) purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of all or any portion of the number of shares of Common Stock, or a sale of a number of shares of Common Stock equal to all or any portion of the number of shares of Common Stock, issuable upon such conversion that the Holder so anticipated receiving from the Company, then, in addition to all other remedies available to the Holder, the Company shall, within three (3) Business Days after the Holder’s request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions and other out-of-pocket expenses, if any) for the shares of Common Stock so purchased (including, without limitation, by any other Person in respect, or on behalf, of the Holder) (the “Buy-In Price”), at which point the Company’s obligation to so issue and deliver such certificate or credit the Holder’s balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon the Holder’s conversion hereunder (as the case may be) (and to issue such shares of Common Stock) shall terminate, or (ii) promptly honor its obligation to so issue and deliver to the Holder a certificate or certificates representing such shares of Common Stock or credit the Holder’s balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon the Holder’s conversion hereunder (as the case may be) and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock multiplied by (B) the lowest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date of the applicable Conversion Notice and ending on the date of such issuance and payment under this clause (ii).

 

(iii)  Registration; Book-Entry. The Company shall maintain a register (the “Register”) for the recordation of the names and addresses of the holders of each Note and the principal amount of the Notes held by such holders (the “Registered Notes”). The entries in the Register shall be conclusive and binding for all purposes absent manifest error. The Company and the holders of the Notes shall treat each Person whose name is recorded in the Register as the owner of a Note for all purposes (including, without limitation, the right to receive payments of Principal and Interest hereunder) notwithstanding notice to the contrary. A Registered Note may be assigned, transferred or sold in whole or in part only by registration of such assignment or sale on the Register. Upon its receipt of a request to assign, transfer or sell all or part of any Registered Note by the holder thereof, the Company shall record the information contained therein in the Register and issue one or more new Registered Notes in the same aggregate principal amount as the principal amount of the surrendered Registered Note to the designated assignee or transferee pursuant to Section 17, provided that if the Company does not so record an assignment, transfer

 

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or sale (as the case may be) of all or part of any Registered Note within two (2) Business Days of such a request, then the Register shall be automatically updated to reflect such assignment, transfer or sale (as the case may be). Notwithstanding anything to the contrary set forth in this Section 3, following conversion of any portion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Company unless (A) the full Conversion Amount represented by this Note is being converted (in which event this Note shall be delivered to the Company following conversion thereof as contemplated by Section 3(c)(i)) or (B) the Holder has provided the Company with prior written notice (which notice may be included in a Conversion Notice) requesting reissuance of this Note upon physical surrender of this Note. The Holder and the Company shall maintain records showing the Principal, Interest and Late Charges converted and/or paid (as the case may be) and the dates of such conversions and/or payments (as the case may be) or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Note upon conversion.

 

(iv)  Pro Rata Conversion; Disputes. In the event that the Company receives a Conversion Notice from more than one holder of Notes for the same Conversion Date and the Company can convert some, but not all, of such portions of the Notes submitted for conversion, the Company, subject to Section 3(d), shall convert from each holder of Notes electing to have Notes converted on such date a pro rata amount of such holder’s portion of its Notes submitted for conversion based on the principal amount of Notes submitted for conversion on such date by such holder relative to the aggregate principal amount of all Notes submitted for conversion on such date. In the event of a dispute as to the number of shares of Common Stock issuable to the Holder in connection with a conversion of this Note, the Company shall issue to the Holder the number of shares of Common Stock not in dispute and resolve such dispute in accordance with Section 22.

 

(d)  Limitations on Conversions.

 

(i)  Beneficial Ownership. Notwithstanding anything to the contrary contained in this Note, this Note shall not be convertible by the Holder hereof, and no conversion shall be effected under this Note (including, without limitation, pursuant to Section 8), to the extent (but only to the extent) that the Holder or any of its affiliates would beneficially own in excess of 4.9% (the “Maximum Percentage”) of the Common Stock. To the extent the above limitation applies, the determination of whether this Note shall be convertible (vis-à-vis other convertible, exercisable or exchangeable securities owned by the Holder or any of its affiliates) and of which such securities shall be convertible, exercisable or exchangeable (as among all such securities owned by the Holder and its affiliates) shall, subject to such Maximum Percentage limitation, be determined on the basis of the first submission to the Company for conversion, exercise or exchange (as the case may be). No prior inability to convert this Note pursuant to this paragraph shall have any effect on the applicability of the provisions of this paragraph with respect to any subsequent determination of convertibility. For

 

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purposes of this paragraph, beneficial ownership and all determinations and calculations (including, without limitation, with respect to calculations of percentage ownership) shall be determined in accordance with Section 13(d) of the 1934 Act (as defined in the Securities Purchase Agreement) and the rules and regulations promulgated thereunder. The provisions of this paragraph shall be implemented in a manner otherwise than in strict conformity with the terms of this paragraph to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Maximum Percentage beneficial ownership limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such Maximum Percentage limitation. The limitations contained in this paragraph shall apply to a successor Holder of this Note. The holders of Common Stock shall be third party beneficiaries of this paragraph and the Company may not amend or waive this paragraph without the consent of holders of a majority of its Common Stock. For any reason at any time, upon the written or oral request of the Holder, the Company shall within one (1) Business Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding, including by virtue of any prior conversion or exercise of convertible or exercisable securities into Common Stock, including, without limitation, pursuant to this Note or securities issued pursuant to the Securities Purchase Agreement.

 

(ii)  Principal Market Regulation. The Company shall not issue any shares of Common Stock upon conversion of this Note (including, without limitation, pursuant to Section 8 hereof) if the issuance of such shares of Common Stock would exceed the aggregate number of shares of Common Stock which the Company may issue upon conversion of the Notes (including, without limitation, pursuant to Section 8 hereof) without breaching the Company’s obligations under the rules or regulations of the Principal Market (the number of shares which may be issued without violating such rules and regulations, the “Exchange Cap”), except that such limitation shall not apply in the event that the Company (A) obtains the approval of its stockholders as required by the applicable rules of the Principal Market for issuances of shares of Common Stock in excess of such amount (including, without limitation, obtaining Shareholder Approval (as defined in the Securities Purchase Agreement)) or (B) obtains a written opinion from outside counsel to the Company that such approval is not required, which opinion shall be reasonably satisfactory to the Holder. Until such approval or such written opinion is obtained, no Buyer (as defined in the Securities Purchase Agreement) shall be issued in the aggregate, upon conversion of any of the Notes (including, without limitation, pursuant to Section 8 hereof), shares of Common Stock in an amount greater than the product of (i) the Exchange Cap multiplied by (ii) the quotient of (1) the original principal amount of Notes issued to such Buyer pursuant to the Securities Purchase Agreement on the Closing Date divided by (2) the aggregate original principal amount of all Notes issued to all the Buyers pursuant to the Securities Purchase Agreement on the Closing Date (with respect to each Buyer, the “Exchange Cap Allocation”). Upon redemption or conversion in full of a Buyer’s Notes, the difference (if any) between such Buyer’s Exchange Cap Allocation and the number of shares of Common Stock actually issued to

 

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such Buyer upon such Buyer’s conversion in full of such Notes shall be allocated to the respective Exchange Cap Allocations of the remaining holders of Notes on a pro rata basis in proportion to the shares of Common Stock underlying the Notes then held by each such Buyer.

 

4.  RIGHTS UPON EVENT OF DEFAULT.

 

(a)  Event of Default.  Each of the following events shall constitute an “Event of Default”:

 

(i)  any shares of Common Stock issued pursuant to any of the Notes or upon exercise of any of the Warrants (as defined below) are not freely tradable under the 1933 Act (as defined in the Securities Purchase Agreement);

 

(ii)  the suspension (or threatened suspension) from trading or the failure (or threatened failure) of the Common Stock to be trading or listed (as applicable) on an Eligible Market for a period of five (5) consecutive days or for more than an aggregate of ten (10) days in any 365-day period;

 

(iii)   (A) the Company’s failure to cure a Conversion Failure or a Delivery Failure (as defined in the Warrants) by delivery of the required number of shares of Common Stock within five (5) Trading Days after the applicable Conversion Date or exercise date (as the case may be), (B) the Company’s notice, written or oral, to any holder of the Notes or Warrants, including, without limitation, by way of public announcement or through any of its agents, at any time, of its intention not to comply, as required, with a request for conversion of any Notes into shares of Common Stock that is requested in accordance with the provisions of the Notes, other than pursuant to Section 3(d)(i), or a request for exercise of any Warrants for Warrant Shares in accordance with the provisions of the Warrants or (C) the Company is not permitted by Section 3(d)(ii) to issue shares of Common Stock upon conversion of this Note (whether pursuant to Section 3 or 8);

 

(iv)  at any time following the tenth (10th) consecutive day that the Holder’s Authorized Share Allocation is less than the number of shares of Common Stock that the Holder would be entitled to receive upon a conversion of the full Conversion Amount of this Note (without regard to any limitations on conversion set forth in Section 3(d) or otherwise);

 

(v)  the Company’s failure to pay to the Holder any amount of Principal, Interest, Late Charges or other amounts when and as due under this Note (including, without limitation, the Company’s failure to pay any redemption payments or amounts hereunder) or any other Transaction Document (as defined in the Securities Purchase Agreement) or any other agreement, document, certificate or other instrument delivered in connection with the transactions contemplated hereby and thereby, except, in the case of a failure to pay Interest and Late Charges when and as due, in which case only if such failure remains uncured for a period of at least five (5) days;

 

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(vi)  the Company places (or fails to prohibit the placing of) any restrictive legend on any certificate or any shares of Common Stock issued to the Holder upon conversion or exercise (as the case may be) of any Securities acquired by the Holder under the Securities Purchase Agreement (including, without limitation, this Note), and any such failure remains uncured for at least five (5) days;

 

(vii)  the occurrence of any default under, redemption of or acceleration prior to maturity of any Indebtedness (as defined in the Securities Purchase Agreement) of the Company or any of its Subsidiaries, other than with respect to any Other Notes;

 

(viii)  bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for the relief of debtors shall be instituted by or against the Company or any Subsidiary and, if instituted against the Company or any Subsidiary by a third party, shall not be dismissed within thirty (30) days of their initiation;

 

(ix)  the commencement by the Company or any Subsidiary of a voluntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree, order, judgment or other similar document in respect of the Company or any Subsidiary in an involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable federal, state or foreign law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or any Subsidiary or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the execution of a composition of debts, or the occurrence of any other similar federal, state or foreign proceeding, or the admission by it in writing of its inability to pay its debts generally as they become due, the taking of corporate action by the Company or any Subsidiary in furtherance of any such action or the taking of any action by any Person to commence a Uniform Commercial Code foreclosure sale or any other similar action under federal, state or foreign law;

 

(x)  the entry by a court of (i) a decree, order, judgment or other similar document in respect of the Company or any Subsidiary of a voluntary or involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar law or (ii) a decree, order, judgment or other similar document adjudging the Company or any Subsidiary as bankrupt or insolvent, or approving as properly filed a petition seeking liquidation, reorganization, arrangement, adjustment or composition of or in respect of the Company or any Subsidiary under any applicable federal, state or foreign law or (iii) a decree, order, judgment or other similar document appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or

 

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any Subsidiary or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree, order, judgment or other similar document or any such other decree, order, judgment or other similar document unstayed and in effect for a period of thirty (30) consecutive days;

 

(xi)  a final judgment or judgments for the payment of money aggregating in excess of $100,000 are rendered against the Company and/or any of its Subsidiaries and which judgments are not, within thirty (30) days after the entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within thirty (30) days after the expiration of such stay; provided, however, any judgment which is covered by insurance or an indemnity from a credit worthy party shall not be included in calculating the $100,000 amount set forth above so long as the Company provides the Holder a written statement from such insurer or indemnity provider (which written statement shall be reasonably satisfactory to the Holder) to the effect that such judgment is covered by insurance or an indemnity and the Company or such Subsidiary (as the case may be) will receive the proceeds of such insurance or indemnity within thirty (30) days of the issuance of such judgment;

 

(xii)  the Company and/or any Subsidiary, individually or in the aggregate, either (i) fails to pay, when due, or within any applicable grace period, any payment with respect to any Indebtedness in excess of $100,000 due to any third party (other than, with respect to unsecured Indebtedness only, payments contested by the Company and/or such Subsidiary (as the case may be) in good faith by proper proceedings and with respect to which adequate reserves have been set aside for the payment thereof in accordance with GAAP) or is otherwise in breach or violation of any agreement for monies owed or owing in an amount in excess of $100,000, which breach or violation permits the other party thereto to declare a default or otherwise accelerate amounts due thereunder, or (ii) suffer to exist any other circumstance or event that would, with or without the passage of time or the giving of notice, result in a default or event of default under any agreement binding the Company or any Subsidiary, which default or event of default would or is likely to have a material adverse effect on the business, assets, operations (including results thereof), liabilities, properties, condition (including financial condition) or prospects of the Company or any of its Subsidiaries, individually or in the aggregate;

 

(xiii)  other than as specifically set forth in another clause of this Section 4(a), the Company breaches any representation, warranty, covenant or other term or condition of any Transaction Document, except, in the case of a breach of a covenant or other term or condition that is curable, only if such breach remains uncured for a period of three (3) days;

 

(xiv)  any breach or failure in any respect by the Company or any Subsidiary to comply with any provision of either of Sections 8 or 13 of this Note;

 

(xv)  a false or inaccurate certification (including a false or inaccurate deemed certification) by the Company that the Equity Conditions are satisfied, that

 

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there has been no Equity Conditions Failure or as to whether any Event of Default has occurred;

 

(xvi)  any Material Adverse Effect (as defined in the Securities Purchase Agreement) occurs;

 

(xvii)  any provision of any Transaction Document shall at any time for any reason (other than pursuant to the express terms thereof) cease to be valid and binding on or enforceable against the parties thereto, or the validity or enforceability thereof shall be contested by the Company or any Subsidiary, or a proceeding shall be commenced by the Company or any Subsidiary or any governmental authority having jurisdiction over any of them, seeking to establish the invalidity or unenforceability thereof, or the Company shall deny in writing that it has any liability or obligation purported to be created under any Transaction Document; or

 

(xviii)  any Event of Default (as defined in the Other Notes) occurs with respect to any Other Notes.

 

(b)  Notice of an Event of Default; Redemption Right. Upon the occurrence of an Event of Default with respect to this Note or any Other Note, the Company shall within one (1) Business Day deliver written notice thereof via facsimile or e-mail and overnight courier (with next day delivery specified) (an “Event of Default Notice”) to the Holder. At any time after the earlier of the Holder’s receipt of an Event of Default Notice and the Holder becoming aware of an Event of Default, the Holder may require the Company to redeem (regardless of whether such Event of Default has been cured) all or any portion of this Note (whether Principal, Interest, Late Charges or otherwise) by delivering written notice thereof (the “Event of Default Redemption Notice”) to the Company, which Event of Default Redemption Notice shall indicate the portion of this Note the Holder is electing to redeem. Each portion of this Note subject to redemption by the Company pursuant to this Section 4(b) shall be redeemed by the Company at a price equal to the greater of (i) the product of (A) the Conversion Amount to be redeemed multiplied by (B) the Redemption Premium (as defined below) and (ii) the product of (X) the Conversion Rate with respect to the Conversion Amount in effect at such time as the Holder delivers the applicable Event of Default Redemption Notice multiplied by (Y) the product of (1) the Equity Value Redemption Premium multiplied by (2) the greatest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date immediately preceding such Event of Default and ending on the date the Company makes the entire payment required to be made under this Section 4(b) (the “Event of Default Redemption Price”). Redemptions required by this Section 4(b) shall be made in accordance with the provisions of Section 11. To the extent redemptions required by this Section 4(b) are deemed or determined by a court of competent jurisdiction to be prepayments of this Note by the Company, such redemptions shall be deemed to be voluntary prepayments. Notwithstanding anything to the contrary in this Section 4, but subject to Section 3(d), until the applicable Event of Default Redemption Price (together with any Late Charges thereon) is paid in full, the Conversion Amount submitted for redemption under this Section 4(b) (together with any Late Charges thereon) may be converted, in whole or in part, by the Holder into Common Stock pursuant to the

 

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terms of this Note. In the event of the Company’s redemption of any portion of this Note under this Section 4(b), the Holder’s damages would be uncertain and difficult to estimate because of the parties’ inability to predict future interest rates and the uncertainty of the availability of a suitable substitute investment opportunity for the Holder. Accordingly, any redemption premium due under this Section 4(b) is intended by the parties to be, and shall be deemed, a reasonable estimate of the Holder’s actual loss of its investment opportunity and not as a penalty.

 

5.  RIGHTS UPON FUNDAMENTAL TRANSACTION.

 

(a)  Assumption. The Company shall not enter into or be party to a Fundamental Transaction unless (i) the Successor Entity assumes in writing all of the obligations of the Company under this Note and the other Transaction Documents in accordance with the provisions of this Section 5(a) pursuant to written agreements in form and substance satisfactory to the Holder and approved by the Holder prior to such Fundamental Transaction, including agreements to deliver to each holder of Notes in exchange for such Notes a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to the Notes, including, without limitation, having a principal amount and interest rate equal to the principal amounts then outstanding and the interest rates of the Notes held by such holder, having similar conversion rights as the Notes and having similar ranking to the Notes, and satisfactory to the Holder and (ii) the Successor Entity (including its Parent Entity) is a publicly traded corporation whose common stock is quoted on or listed for trading on an Eligible Market. Upon the occurrence of any Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Note and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Note and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein immediately following the applicable Fundamental Transaction. In addition to the foregoing, upon consummation of a Fundamental Transaction, the Successor Entity shall deliver to the Holder confirmation that there shall also be issued upon conversion or redemption of this Note at any time after the consummation of such Fundamental Transaction, in lieu of the shares of Common Stock or other securities, cash, assets or other property (except such items still issuable under Sections 6 and 14, which shall continue to be receivable thereafter) issuable upon the conversion or redemption of the Notes prior to such Fundamental Transaction, such shares of the publicly traded common stock (or their equivalent) of the Successor Entity (including its Parent Entity) which the Holder would have been entitled to receive upon the happening of such Fundamental Transaction had this Note been converted immediately prior to such Fundamental Transaction (without regard to any limitations on the conversion of this Note), as adjusted in accordance with the provisions of this Note. The provisions of this Section 5 shall apply similarly and equally to successive Fundamental Transactions and shall be applied without regard to any limitations on the conversion of this Note.

 

(b)  Notice of a Fundamental Transaction; Redemption Right. No sooner than twenty (20) Trading Days nor later than ten (10) Trading Days prior to the consummation of a

 

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Fundamental Transaction, but not prior to the public announcement of such Fundamental Transaction, the Company shall deliver written notice thereof via facsimile or e-mail and overnight courier to the Holder (a “Fundamental Transaction Notice”). At any time during the period beginning after the Holder’s receipt of a Fundamental Transaction Notice or the Holder becoming aware of a Fundamental Transaction if a Fundamental Transaction Notice is not delivered to the Holder in accordance with the immediately preceding sentence (as applicable) and ending on the later of twenty (20) Trading Days after (A) the public announcement on a Current Report on Form 8-K of the consummation of such Fundamental Transaction or (B) the date of receipt of such Fundamental Transaction Notice, the Holder may require the Company to redeem all or any portion of this Note (whether Principal, Interest, Late Charges or otherwise) by delivering written notice thereof (“Fundamental Transaction Redemption Notice”) to the Company, which Fundamental Transaction Redemption Notice shall indicate the Conversion Amount the Holder is electing to redeem. The portion of this Note subject to redemption pursuant to this Section 5 shall be redeemed by the Company in cash at a price equal to the greatest of (i) the product of (w) the Fundamental Transaction Redemption Premium (as defined below) multiplied by (x) the Conversion Amount being redeemed, (ii) the product of (X) the Equity Value Redemption Premium multiplied by (Y) the product of (A) the Conversion Amount being redeemed multiplied by (B) the quotient determined by dividing (1) the greatest Closing Sale Price of the shares of Common Stock during the period beginning on the date immediately preceding the earlier to occur of (x) the consummation of the applicable Fundamental Transaction and (y) the public announcement of such Fundamental Transaction and ending on the date the Holder delivers the Fundamental Transaction Redemption Notice by (2) the Conversion Price in effect at the time of delivery by the Holder of the Fundamental Transaction Redemption Notice and (iii) the product of (y) the Equity Value Redemption Premium multiplied by (z) the product of (1) the Conversion Amount being redeemed multiplied by (2) the quotient of (A) the aggregate cash consideration and the aggregate cash value of any non-cash consideration per share of Common Stock to be paid to the holders of the shares of Common Stock upon consummation of such Fundamental Transaction (any such non-cash consideration constituting publicly-traded securities shall be valued at the highest of the Closing Sale Price of such securities as of the Trading Day immediately prior to the consummation of such Fundamental Transaction, the Closing Sale Price of such securities on the Trading Day immediately following the public announcement of such proposed Fundamental Transaction and the Closing Sale Price of such securities on the Trading Day immediately prior to the public announcement of such proposed Fundamental Transaction) divided by (B) the Conversion Price then in effect (the “Fundamental Transaction Redemption Price”). Redemptions required by this Section 5 shall be made in accordance with the provisions of Section 11 and shall have priority to payments to stockholders in connection with such Fundamental Transaction. To the extent redemptions required by this Section 5(b) are deemed or determined by a court of competent jurisdiction to be prepayments of this Note by the Company, such redemptions shall be deemed to be voluntary prepayments. Notwithstanding anything to the contrary in this Section 5, but subject to Section 3(d), until the applicable Fundamental

 

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Transaction Redemption Price (together with any Late Charges thereon) is paid in full, the Conversion Amount submitted for redemption under this Section 5(b) (together with any Late Charges thereon) may be converted, in whole or in part, by the Holder into Common Stock pursuant to Section 3. In the event of the Company’s redemption of any portion of this Note under this Section 5(b), the Holder’s damages would be uncertain and difficult to estimate because of the parties’ inability to predict future interest rates and the uncertainty of the availability of a suitable substitute investment opportunity for the Holder. Accordingly, any redemption premium due under this Section 5(b) is intended by the parties to be, and shall be deemed, a reasonable estimate of the Holder’s actual loss of its investment opportunity and not as a penalty.

 

6.  RIGHTS UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER CORPORATE EVENTS.

 

(a)  Purchase Rights. In addition to any adjustments pursuant to Section 7 below, if at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to all or substantially all of the record holders of any class of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note (without taking into account any limitations or restrictions on the convertibility of this Note) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Maximum Percentage).

 

(b)  Other Corporate Events. In addition to and not in substitution for any other rights hereunder, prior to the consummation of any Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares of Common Stock (a “Corporate Event”), the Company shall make appropriate provision to insure that the Holder will thereafter have the right to receive upon a conversion of this Note (i) in addition to the shares of Common Stock receivable upon such conversion, such securities or other assets to which the Holder would have been entitled with respect to such shares of Common Stock had such shares of Common Stock been held by the Holder upon the consummation of such Corporate Event (without taking into account any limitations or restrictions on the convertibility of this Note) or (ii) in lieu of the shares of Common Stock otherwise receivable upon such conversion, such securities or other assets received by the holders of shares of Common Stock in connection with the consummation of such Corporate Event in such amounts as the Holder would have been entitled to receive had this Note

 

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initially been issued with conversion rights for the form of such consideration (as opposed to shares of Common Stock) at a conversion rate for such consideration commensurate with the Conversion Rate. Provision made pursuant to the preceding sentence shall be in a form and substance satisfactory to the Holder. The provisions of this Section 6 shall apply similarly and equally to successive Corporate Events and shall be applied without regard to any limitations on the conversion or redemption of this Note.

 

7.  RIGHTS UPON ISSUANCE OF OTHER SECURITIES.

 

(a)  Adjustment of Conversion Price upon Issuance of Common Stock.  If and whenever on or after the Subscription Date the Company issues or sells, or in accordance with this Section 7(a) is deemed to have issued or sold, any shares of Common Stock (including the issuance or sale of shares of Common Stock owned or held by or for the account of the Company, but excluding any Excluded Securities (as defined in the Securities Purchase Agreement) issued or sold or deemed to have been issued or sold) for a consideration per share (the “New Issuance Price”) less than a price equal to the Conversion Price in effect immediately prior to such issue or sale or deemed issuance or sale (such Conversion Price then in effect is referred to herein as the “Applicable Price”) (the foregoing a “Dilutive Issuance”), then, immediately after such Dilutive Issuance, the Conversion Price then in effect shall be reduced to an amount equal to the New Issuance Price. For all purposes of the foregoing (including, without limitation, determining the adjusted Conversion Price and consideration per share under this Section 7(a)), the following shall be applicable:

 

(i)  Issuance of Options.  If the Company in any manner grants or sells any Options and the lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share. For purposes of this Section 7(a)(i), the “lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the granting or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option and (y) the lowest exercise price set forth in such Option for which one share of Common Stock is issuable upon the exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option minus (2) the sum of all amounts paid or payable to the holder of such Option (or any other Person) upon the granting or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of

 

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such Option (or any other Person). Except as contemplated below, no further adjustment of the Conversion Price shall be made upon the actual issuance of such share of Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such share of Common Stock upon conversion, exercise or exchange of such Convertible Securities.

 

(ii)  Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this Section 7(a)(ii), the “lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to one share of Common Stock upon the issuance or sale of the Convertible Security and upon conversion, exercise or exchange of such Convertible Security and (y) the lowest conversion price set forth in such Convertible Security for which one share of Common Stock is issuable upon conversion, exercise or exchange thereof minus (2) the sum of all amounts paid or payable to the holder of such Convertible Security (or any other Person) upon the issuance or sale of such Convertible Security plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Convertible Security (or any other Person). Except as contemplated below, no further adjustment of the Conversion Price shall be made upon the actual issuance of such share of Common Stock upon conversion, exercise or exchange of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of the Conversion Price has been or is to be made pursuant to other provisions of this Section 7(a), except as contemplated below, no further adjustment of the Conversion Price shall be made by reason of such issue or sale.

 

(iii)  Change in Option Price or Rate of Conversion. If the purchase or exercise price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time, the Conversion Price in effect at the time of such increase or decrease shall be adjusted to the Conversion Price which would have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased purchase price, additional consideration or increased or decreased conversion rate (as the case may be) at the time initially granted, issued or sold. For purposes of this Section 7(a)(iii), if the terms of any Option or Convertible Security that was outstanding as of the Subscription Date are increased or decreased in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such

 

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increase or decrease. No adjustment pursuant to this Section 7(a) shall be made if such adjustment would result in an increase of the Conversion Price then in effect.

 

(iv)  Calculation of Consideration Received. If any Option or Convertible Security is issued or deemed issued in connection with the issuance or sale or deemed issuance or sale of any other securities of the Company, together comprising one integrated transaction, (x) such Option or Convertible Security (as applicable) will be deemed to have been issued for consideration equal to the Black Scholes Consideration Value thereof and (y) the other securities issued or sold or deemed to have been issued or sold in such integrated transaction shall be deemed to have been issued for consideration equal to the difference of (I) the aggregate consideration received by the Company minus (II) the Black Scholes Consideration Value of each such Option or Convertible Security (as applicable).  If any shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount received by the Company therefor. If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration received by the Company will be the fair value of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company for such securities will be the average VWAP of such security for the five (5) Trading Day period immediately preceding the date of receipt. If any shares of Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities (as the case may be). The fair value of any consideration other than cash or publicly traded securities will be determined jointly by the Company and the Holder. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined within five (5) Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Holder. The determination of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.

 

(v)  Record Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in Common Stock, Options or in Convertible Securities or (B) to subscribe for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase (as the case may be).

 

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        (b)         Adjustment of Conversion Price upon Subdivision or Combination of Common Stock. Without limiting any provision of Section 5 or Section 7(a), if the Company at any time on or after the Subscription Date subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision will be proportionately reduced. Without limiting any provision of Section 5 or Section 7(a), if the Company at any time on or after the Subscription Date combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior to such combination will be proportionately increased. Any adjustment pursuant to this Section 7(b) shall become effective immediately after the effective date of such subdivision or combination. If any event requiring an adjustment under this Section 7(b) occurs during the period that a Conversion Price is calculated hereunder, then the calculation of such Conversion Price shall be adjusted appropriately to reflect such event.

 

(c)  Other Events. In the event that the Company (or any Subsidiary) shall take any action to which the provisions hereof are not strictly applicable, or, if applicable, would not operate to protect the Holder from dilution or if any event occurs of the type contemplated by the provisions of this Section 7 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company’s board of directors shall in good faith determine and implement an appropriate adjustment in the Conversion Price so as to protect the rights of the Holder, provided that no such adjustment pursuant to this Section 7(c) will increase the Conversion Price as otherwise determined pursuant to this Section 7, provided further that if the Holder does not accept such adjustments as appropriately protecting its interests hereunder against such dilution, then the Company’s board of directors and the Holder shall agree, in good faith, upon an independent investment bank of nationally recognized standing to make such appropriate adjustments, whose determination shall be final and binding and whose fees and expenses shall be borne by the Company.

 

8.  OPTIONAL REDEMPTION BY HOLDER.

 

(a)  Right to Cause Voluntary Redemption. During each Holder Optional Redemption Period (as defined below), the Holder shall have the right, in its sole discretion, to require that the Company redeem (each a “Holder Optional Redemption”) up to 25% of the original Principal amount of this Note by delivering written notice thereof (each a “Holder Optional Redemption Notice”) at any time and from time to time during such Holder Optional Redemption Period (but in no event later than 5:00 p.m. (New York time) on the last day of such Holder Optional Redemption Period). Each Holder Optional Redemption Notice shall indicate the portion of the original Principal amount of this Note that the Holder is electing to redeem (but in no event shall such indicated Principal amount (together with the aggregate Principal amount indicated in all other Holder Optional Redemption Notices delivered by the Holder during such Holder Optional Redemption Period) exceed 25% of the original Principal amount of this Note)

 

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(such indicated original Principal amount is referred to herein as the “Holder Optional Redemption Amount”).

 

(b)  Payment of Holder Optional Redemption Amount. Unless the Company delivers a valid Automatic Conversion Notice (as defined below) to the Holder on or prior to the applicable Automatic Conversion Notice Due Date (as defined below) in accordance with Section 8(c) below, the Company shall redeem the applicable Holder Optional Redemption Amount on the third (3rd) Trading Day immediately following delivery to the Company of the applicable Holder Optional Redemption Notice (a “Holder Optional Redemption Date”) by paying to the Holder in cash, by wire transfer of immediately available funds, an amount equal to the product of (i) 102.5% multiplied by (ii) the sum of (x) the Holder Optional Redemption Amount plus (y) all accrued and unpaid Interest and Late Charges on such Holder Optional Redemption Amount (such product is referred to herein as a “Holder Optional Redemption Price”).

 

(c)  Company Election for an Automatic Conversion. Upon delivery by the Holder to the Company of a Holder Optional Redemption Notice, the Company may elect, in its sole discretion, for an automatic conversion (an “Automatic Conversion”) to occur with respect to the applicable Holder Optional Redemption Amount and Holder Optional Redemption Price in lieu of paying the applicable Holder Optional Redemption Price in cash in accordance with Section 8(b) by delivering written notice of such election to the Holder via facsimile or e-mail (each an “Automatic Conversion Notice”) within two (2) Trading Days of the Holder’s delivery to the Company of such Holder Optional Redemption Notice (each an “Automatic Conversion Notice Due Date”); provided, however, the Company shall not be entitled to elect or effect an Automatic Conversion or to deliver an Automatic Conversion Notice with respect to any Holder Optional Redemption Notice, and shall instead be required to pay to the Holder the applicable Holder Optional Redemption Price in cash pursuant to Section 8(b) above, if there is an Equity Conditions Failure on (x) the date the applicable Holder Optional Redemption Notice is delivered to the Company, (y) the date on which the applicable Automatic Conversion Notice is delivered to the Holder or (z) the applicable Automatic Conversion Notice Due Date. Each Automatic Conversion Notice shall be irrevocable, may not be revoked by the Company and shall (1) state that the Company has elected (and is entitled to elect) an Automatic Conversion to occur with respect to the applicable Holder Optional Redemption Notice, Holder Optional Redemption Amount and Holder Optional Redemption Price and (2) contain a certification from the Company’s chief executive officer that an Equity Conditions Failure does not exist as of the date of the applicable Automatic Conversion Notice. No later than one (1) Trading Day after the timely delivery of a valid Automatic Conversion Notice, the Company shall deliver to the Holder’s account with DTC such number of shares of Common Stock (the “Pre-Automatic Conversion Shares”) equal to the quotient of (x) the applicable Holder Optional Redemption Price divided by (y) the Pre-Automatic Conversion Price, and as to which the Holder shall be the owner thereof as of such time of delivery of the applicable Automatic Conversion Notice. The applicable Holder Optional Redemption Price shall be automatically converted in accordance with Section 8(d).

 

(d)  Mechanics of Company Conversion. If the Company timely delivers a valid Automatic Conversion Notice electing (and the Company is entitled to elect) an Automatic

 

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Conversion in accordance with Section 8(a), then the remainder of this Section 8(d) shall apply. The applicable Automatic Conversion shall occur on twenty-first (21st) Trading Day immediately following the date on which the applicable valid Automatic Conversion Notice is delivered by the Company to the Holder (each such twenty-first (21st) Trading Day is referred to herein as the “Automatic Conversion Date”). On the applicable Automatic Conversion Date, (i) the applicable Holder Optional Redemption Price shall be automatically converted into shares of Common Stock at the applicable Automatic Conversion Price and (ii) the Company shall deliver to the Holder’s account with DTC such shares of Common Stock issued upon such Automatic Conversion (subject to the reduction contemplated by the immediately following sentence and, if applicable, the last sentence of this Section 8(d)), provided that there is no Equity Conditions Failure as of such Automatic Conversion Date and an Automatic Conversion is not otherwise prohibited under any other provision of this Note. The number of shares of Common Stock to be delivered upon such Automatic Conversion shall be reduced by the number of any Pre-Automatic Conversion Shares delivered in connection with such Automatic Conversion. If an Event of Default occurs during any applicable Automatic Conversion Measuring Period, then either (i) the Holder shall return any Pre-Automatic Conversion Shares delivered in connection with the applicable Automatic Conversion or (ii) the Holder shall keep the Pre-Automatic Conversion Shares and the Event of Default Redemption Price shall be reduced by the product of (x) the applicable Holder Optional Redemption Amount multiplied by (y) the Conversion Share Ratio (as defined below). If there is an Equity Conditions Failure as of such Automatic Conversion Date or an Automatic Conversion is not otherwise permitted under any other provision of this Note, then, at the option of the Holder designated in writing to the Company, the Holder may require the Company to do any one or more of the following: (i) the Company shall redeem all or any part designated in writing by the Holder of the unconverted Holder Optional Redemption Price (such designated amount is referred to as the “Designated Redemption Amount”) and the Company shall pay to the Holder within one (1) Business Day immediately following the Holder’s delivery to the Company of such designation, by wire transfer of immediately available funds, an amount in cash equal to 135% of such Designated Redemption Amount and/or (ii) such Automatic Conversion shall be null and void with respect to all or any part designated in writing by the Holder of the unconverted Holder Optional Redemption Price and the Holder shall be entitled to all the rights of a holder of this Note with respect to such designated part of the Holder Optional Redemption Price. In addition, if there is an Equity Conditions Failure as of such Automatic Conversion Date or an Automatic Conversion is not otherwise permitted under any other provision of this Note, then, at the Holder’s option, either (I) the Holder shall return any Pre-Automatic Conversion Shares delivered in connection with the applicable Automatic Conversion or (II) the applicable Designated Redemption Amount shall be reduced by the product of (X) the applicable Holder Optional Redemption Amount multiplied by (Y) the Conversion Share Ratio. If the Company fails to redeem any Designated Redemption Amount by the first (1st) Business Day immediately following the Holder’s delivery to the Company of such designation, then the Holder shall have the rights set forth in Section 11(a) as if the Company failed to pay the applicable Holder Optional Redemption Price and all other rights under this Note

 

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(including, without limitation, such failure constituting an Event of Default described in Section 4(a)(xiv)). If, with respect to an Automatic Conversion Date, the number of Pre-Automatic Conversion Shares delivered to the Holder exceeds the number of Post-Automatic Conversion Shares with respect to such Automatic Conversion Date, then the number of shares of Common Stock equal to such excess shall constitute a credit against the number of shares of Common Stock to be issued to the Holder pursuant to Sections 3 and 8 hereof and shall reduce the number of shares of Common Stock required to be actually issued by the Company to the Holder under such sections on a share-for-share basis until such time as the number of shares that would have been issued by the Company to such Holder (not taking account of such credit) equals the amount of such excess.

 

(e)  Miscellaneous. The Company shall not issue any fraction of a share of Common Stock upon any Automatic Conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share. The Company shall pay any and all transfer, stamp, issuance and similar taxes that may be payable with respect to the issuance and delivery of Common Stock upon each Automatic Conversion. To the extent redemptions required by this Section 8 are deemed or determined by a court of competent jurisdiction to be prepayments of this Note by the Company, such redemptions shall be deemed to be voluntary prepayments. In the event of the Company’s redemption of any portion of this Note under this Section 8, the Holder’s damages would be uncertain and difficult to estimate because of the parties’ inability to predict future interest rates and the uncertainty of the availability of a suitable substitute investment opportunity for the Holder. Accordingly, any redemption premium due under this Section 8 is intended by the parties to be, and shall be deemed, a reasonable estimate of the Holder’s actual loss of its investment opportunity and not as a penalty. Notwithstanding anything to the contrary in this Section 8, but subject to Section 3(d), until the applicable Holder Optional Redemption Price (together with any Late Charges thereon) is paid in full, the Holder Optional Redemption Amount submitted for redemption under this Section 8 (together with any Late Charges thereon) may be converted, in whole or in part, by the Holder into Common Stock pursuant to Section 3.

 

9.  NONCIRCUMVENTION.  The Company hereby covenants and agrees that the Company will not, by amendment of its Charter (as defined in the Securities Purchase Agreement), Bylaws (as defined in the Securities Purchase Agreement) or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Note, and will at all times in good faith carry out all of the provisions of this Note and take all action as may be required to protect the rights of the Holder of this Note. Without limiting the generality of the foregoing or any other provision of this Note or the other Transaction Documents, the Company (i) shall not increase the par value of any shares of Common Stock receivable upon conversion of this Note above the Conversion Price then in effect, (ii) shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable shares of Common Stock upon the conversion of this Note, and (iii) shall, so long as any of the Notes are outstanding, take all action necessary to reserve and keep available out of its authorized and unissued shares of Common Stock, solely for the purpose of effecting the conversion of the Notes, the maximum number of shares of Common Stock as shall from time to time be necessary to effect the conversion of the Notes then outstanding (without regard to any limitations on conversion).

 

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    10.  RESERVATION OF AUTHORIZED SHARES.

 

(a)  Reservation. The Company shall initially reserve out of its authorized and unissued Common Stock a number of shares of Common Stock for each of the Notes equal to the entire Conversion Rate with respect to the entire Conversion Amount of each such Note as of the Issuance Date.  So long as any of the Notes are outstanding, the Company shall take all action necessary to reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose of effecting the conversion of the Notes, the number of shares of Common Stock as shall from time to time be necessary to effect the conversion of all of the Notes then outstanding, provided that at no time shall the number of shares of Common Stock so reserved be less than the number of shares required to be reserved by the previous sentence (without regard to any limitations on conversions) (the “Required Reserve Amount”). The initial number of shares of Common Stock reserved for conversions of the Notes and each increase in the number of shares so reserved shall be allocated pro rata among the holders of the Notes based on the original principal amount of the Notes held by each holder on the Closing Date or increase in the number of reserved shares (as the case may be) (the “Authorized Share Allocation”). In the event that a holder shall sell or otherwise transfer any of such holder’s Notes, each transferee shall be allocated a pro rata portion of such holder’s Authorized Share Allocation. Any shares of Common Stock reserved and allocated to any Person which ceases to hold any Notes shall be allocated to the remaining holders of Notes, pro rata based on the principal amount of the Notes then held by such holders.

 

(b)  Insufficient Authorized Shares. If, notwithstanding Section 10(a), and not in limitation thereof, at any time while any of the Notes remain outstanding the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation to reserve for issuance upon conversion of the Notes at least a number of shares of Common Stock equal to the Required Reserve Amount (an “Authorized Share Failure”), then the Company shall immediately take all action necessary to increase the Company’s authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for the Notes then outstanding. Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event later than sixty (60) days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its stockholders for the approval of an increase in the number of authorized shares of Common Stock.  In connection with such meeting, the Company shall provide each stockholder with a proxy statement and shall use its best efforts to solicit its stockholders’ approval of such increase in authorized shares of Common Stock and to cause its board of directors to recommend to the stockholders that they approve such proposal.

 

11.  HOLDER’S REDEMPTIONS.

 

      (a)    Mechanics. The Company shall deliver the applicable Event of Default Redemption Price to the Holder in cash within one (1) Business Day after the Company’s receipt of the Holder’s Event of Default Redemption Notice. If the Holder has submitted a Fundamental Transaction Redemption Notice in accordance with Section 5(b), the Company shall deliver the applicable 

 

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Fundamental Transaction Redemption Price to the Holder in cash concurrently with the consummation of such Fundamental Transaction if such notice is received prior to the consummation of such Fundamental Transaction and within one (1) Business Day after the Company’s receipt of such notice otherwise. The Company shall deliver the applicable Holder Optional Redemption Price to the Holder in cash on the applicable Holder Optional Redemption Date in accordance with Section 8(b). In the event of a redemption of less than all of the amounts then-outstanding under this Note, the Company shall promptly cause to be issued and delivered to the Holder a new Note (in accordance with Section 17(d)) representing the outstanding Principal which has not been redeemed. In the event that the Company does not pay the applicable Redemption Price to the Holder by the date required (as the case may be) (each date on which the Company was required to have paid the applicable Redemption Price and failed to pay it by such date is referred to herein as a “Redemption Payment Failure Date”), at any time thereafter and until the Company pays such unpaid Redemption Price in full (the entire amount of each such unpaid Redemption Price is referred to herein as an “Unpaid Redemption Price”), the Holder shall have the option, in lieu of redemption, to (i) require the Company to promptly return to the Holder all or any portion of this Note representing the Principal amount of this Note that was submitted for redemption and for which the applicable Unpaid Redemption Price (together with any Late Charges thereon) has not been paid and/or (ii) convert the applicable Unpaid Redemption Price in accordance with Section 3 above. Upon the Holder’s delivery to the Company of a notice voiding a Redemption Notice (as defined below), (x) the applicable Redemption Notice shall be null and void with respect to the applicable Unpaid Redemption Price, (y) the Company shall immediately return this Note, or issue a new Note (in accordance with Section 17(d)), to the Holder, and the Principal amount of this Note or such new Note (as the case may be) shall be increased by an amount equal to the difference between (1) the applicable Unpaid Redemption Price minus (2) the portion of the Unpaid Redemption Price constituting Principal and (z) the Conversion Price of this Note or such new Notes (as the case may be) shall be automatically adjusted with respect to each conversion effected thereafter by the Holder to the lowest of (A) the Conversion Price as in effect on the date on which the applicable Redemption Notice is voided, (B) 75% of the lowest Closing Bid Price of the Common Stock during the period beginning on and including the date on which the applicable Redemption Notice is delivered to the Company and ending on and including the Trading Day immediately preceding the applicable Conversion Date and (C) 75% of the quotient of (I) the sum of each daily VWAP of the Common Stock for each of the five (5) consecutive Trading Days immediately preceding the applicable Conversion Date divided by (II) five (5) (it being understood and agreed that all such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period). The Holder’s delivery of a notice voiding a Redemption Notice and exercise of its rights following such notice shall not affect the Company’s obligations to make any payments of Late Charges which have accrued prior to the date of such voiding notice with respect to the Unpaid Redemption Price subject to such notice.

 

(b)  Redemption by Other Holders. Upon the Company’s receipt of notice from any of the holders of the Other Notes for redemption or repayment as a result of an

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event or occurrence substantially similar to the events or occurrences described in Section 4(b) or Section 5(b) (each, an “Other Redemption Notice”), the Company shall immediately, but no later than one (1) Business Day of its receipt thereof, forward to the Holder by facsimile a copy of such notice. If the Company receives a Redemption Notice and one or more Other Redemption Notices, during the seven (7) Business Day period beginning on and including the date which is three (3) Business Days prior to the Company’s receipt of the Holder’s applicable Redemption Notice and ending on and including the date which is three (3) Business Days after the Company’s receipt of the Holder’s applicable Redemption Notice and the Company is unable to redeem all principal, interest and other amounts designated in such Redemption Notice and such Other Redemption Notices received during such seven (7) Business Day period, then the Company shall redeem a pro rata amount from each holder of the Notes (including the Holder) based on the principal amount of the Notes submitted for redemption pursuant to such Redemption Notice and such Other Redemption Notices received by the Company during such seven (7) Business Day period.

 

12.  VOTING RIGHTS. The Holder shall have no voting rights as the holder of this Note, except as required by law (including, without limitation, the California Corporations Code) and as expressly provided in this Note.

 

13.  COVENANTS. Until all of the Notes have been converted, redeemed or otherwise satisfied in accordance with their terms:

 

(a)  Rank. All payments due under this Note shall rank pari passu with all Other Notes.

 

(b)  Incurrence of Indebtedness. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, incur or guarantee, assume or suffer to exist any Indebtedness (other than (i) the Indebtedness evidenced by this Note and the Other Notes and (ii) Permitted Indebtedness (as defined below)).

 

(c)  Existence of Liens. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, allow or suffer to exist any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by the Company or any of its Subsidiaries (collectively, “Liens”) other than Permitted Liens (as defined below).

 

(d)  Restricted Payments. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, redeem, defease, repurchase, repay or make any payments in respect of, by the payment of cash or cash equivalents (in whole or in part, whether by way of open market purchases, tender offers, private transactions or otherwise), all or any portion of any Indebtedness, whether by way of payment in respect of principal of (or premium, if any) or interest on, such Indebtedness if at the time such payment is due or is otherwise made or, after giving effect to such payment, (i) an event constituting an Event of Default has occurred and is continuing or (ii) an event that with the passage of time and without being cured would constitute an Event of Default has occurred and is continuing.

 

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(e)  Restriction on Redemption and Cash Dividends. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, redeem, repurchase or declare or pay any cash dividend or distribution on any of its capital stock.

 

(f)  Restriction on Transfer of Assets. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, sell, lease, license, assign, transfer, convey or otherwise dispose of any assets or rights of the Company or any Subsidiary owned or hereafter acquired whether in a single transaction or a series of related transactions, other than (i) sales, leases, licenses, assignments, transfers, conveyances and other dispositions of such assets or rights by the Company and its Subsidiaries that, in the aggregate, do not have a fair market value in excess of $100,000 in any twelve (12) month period and (ii) sales of inventory in the ordinary course of business.

 

(g)  Maturity of Indebtedness. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, permit any Indebtedness of the Company or any of its Subsidiaries to mature or accelerate prior to the Maturity Date.

 

(h)  Change in Nature of Business. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, engage in any material line of business substantially different from those lines of business conducted by the Company and each of its Subsidiaries on the Issuance Date or any business substantially related or incidental thereto.  The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, modify its or their corporate structure or purpose.

 

14.  PARTICIPATION.  In addition to any adjustments pursuant to Section 7, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Note, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note (without regard to any limitations on conversion hereof, including without limitation, the Maximum Percentage) immediately before the date on which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, to the extent that the Holder’s right to participate in any such Distributions would result in the Holder exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Distribution to such extent (or the beneficial ownership of any such shares of Common Stock as a result of such Distribution to such extent) and such Distribution to such extent shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Maximum Percentage).

 

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15.  AMENDING THE TERMS OF THIS NOTE. Provisions of this Note may be amended only with the written consent of the Company and the Required Buyers (as defined in the Securities Purchase Agreement). Any amendment effected in accordance with this Section 15 shall be binding upon the Holder and the Company, provided that no such amendment shall be effective to the extent that it (1) applies to less than all of the holders of Notes, (2) imposes any obligation or liability on the Holder without the Holder’s prior written consent (which may be granted or withheld in the Holder’s sole discretion) or (3) applies retroactively. Notwithstanding the foregoing, nothing contained in this Section 15 shall permit any amendment to be made to any provision of Section 3(d)(i).

 

16.  TRANSFER. This Note and any shares of Common Stock issued upon conversion of this Note may be offered, sold, assigned or transferred by the Holder without the consent of the Company.

 

17.  REISSUANCE OF THIS NOTE.

 

(a)  Transfer. If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Note (in accordance with Section 17(d)), registered as the Holder may request, representing the outstanding Principal being transferred by the Holder and, if less than the entire outstanding Principal is being transferred, a new Note (in accordance with Section 17(d)) to the Holder representing the outstanding Principal not being transferred. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of Section 3(c)(iii) following conversion or redemption of any portion of this Note, the outstanding Principal represented by this Note may be less than the Principal stated on the face of this Note.

 

(b)  Lost, Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note (as to which a written certification and the indemnification contemplated below shall suffice as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver to the Holder a new Note (in accordance with Section 17(d)) representing the outstanding Principal.

 

(c)  Note Exchangeable for Different Denominations. This Note is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Note or Notes (in accordance with Section 17(d) and in principal amounts of at least $1,000) representing in the aggregate the outstanding Principal of this Note, and each such new Note will represent such portion of such outstanding Principal as is designated by the Holder at the time of such surrender.

 

(d)  Issuance of New Notes. Whenever the Company is required to issue a new Note pursuant to the terms of this Note, such new Note (i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal remaining outstanding (or in the case of a new Note being issued pursuant to Section 17(a) or Section 17(c), the Principal designated by the Holder which, when added to the principal represented by the other new Notes issued in connection with such issuance, does not exceed the Principal remaining outstanding under this Note immediately prior to such issuance of new Notes), (iii) shall have an issuance date, as indicated on the face of such new Note, which is the same as the Issuance Date of this Note, (iv) shall have the same rights and conditions as this Note, and (v) shall represent accrued and unpaid Interest and Late Charges on the Principal and Interest of this Note, from the Issuance Date.

 

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18.  REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note and any of the other Transaction Documents at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s right to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Note.  The Company covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies, to an injunction restraining any such breach or any such threatened breach, without the necessity of showing economic loss and without any bond or other security being required. The Company shall provide all information and documentation to the Holder that is requested by the Holder to enable the Holder to confirm the Company’s compliance with the terms and conditions of this Note (including, without limitation, compliance with Section 7).

 

19.  PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS.  If (a) this Note is placed in the hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding or the Holder otherwise takes action to collect amounts due under this Note or to enforce the provisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership of the Company or other proceedings affecting Company creditors’ rights and involving a claim under this Note, then the Company shall pay the costs incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding, including, without limitation, attorneys’ fees and disbursements. The Company expressly acknowledges and agrees that no amounts due under this Note shall be affected, or limited, by the fact that the Purchase Price paid for this Note was less than the original Principal amount hereof.

 

20. CONSTRUCTION; HEADINGS.  This Note shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against any Person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form part of, or affect the interpretation of, this Note. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include” and words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire Agreement instead of just the provision in which they are found. Unless expressly indicated otherwise, all section references are to sections of this Note. Terms used in this Note but defined in the other Transaction Documents shall have the meanings ascribed to such terms on the Closing Date in such other Transaction Documents unless otherwise consented to in writing by the Required Buyers.

 

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21.  FAILURE OR INDULGENCE NOT WAIVER; WAIVER. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party, provided that the Required Buyers (in one or more writings signed by all of the Required Buyers) may waive any provision of this Note, and any waiver of any provision of this Agreement made in conformity with the provisions of this Section 21 shall be binding on the Holder, provided that no such waiver shall be effective to the extent that it (a) applies to less than all the holders of all Notes (unless a party gives a waiver as to itself only) or (b) imposes any obligation or liability on any the holder of any of the Notes without such holder’s prior written consent (which may be granted or withheld in such holder’s sole discretion). Notwithstanding the foregoing, nothing contained in this Section 21 shall permit any waiver of any provision of Section 3(d)(i).

 

22.  DISPUTE RESOLUTION.

 

(a)  Disputes Over Automatic Conversion Price, Closing Bid Price, Closing Sale Price, Conversion Price, Pre-Automatic Conversion Price, VWAP or Fair Market Value.

 

(i)  In the case of a dispute relating to an Automatic Conversion Price, a Closing Bid Price, a Closing Sale Price, a Conversion Price, a Pre-Automatic Conversion Price, a VWAP or fair market value (as the case may be) (including, without limitation, a dispute relating to the determination of any of the foregoing), the Company or the Holder (as the case may be) shall submit the dispute via facsimile (I) within two (2) Business Days after delivery of the applicable notice giving rise to such dispute to the Company or the Holder (as the case may be) or (II) if no notice gave rise to such dispute, at any time after the Holder learned of the circumstances giving rise to such dispute. If the Holder and the Company are unable to resolve such dispute relating to such Automatic Conversion Price, such Closing Bid Price, such Closing Sale Price, such Conversion Price, such Pre-Automatic Conversion Price, such VWAP or such fair market value (as the case may be) by 5:00 p.m. (New York time) on the third (3rd) Business Day following such delivery by the Company or the Holder (as the case may be) of such dispute to the Company or the Holder (as the case may be), then the Holder shall select an independent, reputable investment bank to resolve such dispute.

 

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(ii)  The Holder and the Company shall each deliver to such investment bank (x) a copy of the initial dispute submission so delivered in accordance with the first sentence of this Section 22(a) and (y) written documentation supporting its position with respect to such dispute, in each case, no later than 5:00 p.m. (New York time) by the fifth (5th) Business Day immediately following the date on which the Holder selected such investment bank (the “Dispute Submission Deadline”) (the documents referred to in the immediately preceding clauses (x) and (y) are collectively referred to herein as the “Required Dispute Documentation”) (it being understood and agreed that if either the Holder or the Company fails to so deliver all of the Required Dispute Documentation by the Dispute Submission Deadline, then the party who fails to so submit all of the Required Dispute Documentation shall no longer be entitled to (and hereby waives its right to) deliver or submit any written documentation or other support to such investment bank with respect to such dispute and such investment bank shall resolve such dispute based solely on the Required Dispute Documentation that was delivered to such investment bank prior to the Dispute Submission Deadline). Unless otherwise agreed to in writing by both the Company and the Holder or otherwise requested by such investment bank, neither the Company nor the Holder shall be entitled to deliver or submit any written documentation or other support to such investment bank in connection with such dispute (other than the Required Dispute Documentation).

 

(iii)  The Company and the Holder shall cause such investment bank to determine the resolution of such dispute and notify the Company and the Holder of such resolution no later than ten (10) Business Days immediately following the Dispute Submission Deadline. The fees and expenses of such investment bank shall be borne solely by the Company, and such investment bank’s resolution of such dispute shall be final and binding upon all parties absent manifest error.

 

(b)  Disputes Over Arithmetic Calculation of the Conversion Rate, Conversion Share Ratio, Pre-Automatic Conversion Price, Post-Automatic Conversion Price or the applicable Redemption Price.

 

(i)  In the case of a dispute as to the arithmetic calculation of a Conversion Rate, a Conversion Share Ratio, a Pre-Automatic Conversion Price, a Post-Automatic Conversion Price or the applicable Redemption Price (as the case may be), the Company or the Holder (as the case may be) shall submit the disputed arithmetic calculation via facsimile (i) within two (2) Business Days after delivery of the applicable notice giving rise to such dispute to the Company or the Holder (as the case may be) or (ii) if no notice gave rise to such dispute, at any time after the Holder learned of the circumstances giving rise to such dispute. If the Holder and the Company are unable to resolve such disputed arithmetic calculation of such Conversion Rate, such Conversion Share Ratio, such Pre-Automatic Conversion Price, such Post-Automatic Conversion Price or the applicable Redemption Price (as the case may be) by 5:00 p.m. (New York time) on the third (3rd) Business Day following such delivery by the Company or the Holder (as the case may be) of such disputed arithmetic calculation, then the Holder shall select an independent, reputable accountant or accounting firm to perform such disputed arithmetic calculation.

 

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(ii)  The Holder and the Company shall each deliver to such accountant or accounting firm (as the case may be) (x) a copy of the initial dispute submission so delivered in accordance with the first sentence of this Section 22(b) and (y) written documentation supporting its position with respect to such disputed arithmetic calculation, in each case, no later than 5:00 p.m. (New York time) by the fifth (5th) Business Day immediately following the date on which the Holder selected such accountant or accounting firm (as the case may be) (the “Submission Deadline”) (the documents referred to in the immediately preceding clauses (x) and (y) are collectively referred to herein as the “Required Documentation”) (it being understood and agreed that if either the Holder or the Company fails to so deliver all of the Required Documentation by the Submission Deadline, then the party who fails to so submit all of the Required Documentation shall no longer be entitled to (and hereby waives its right to) deliver or submit any written documentation or other support to such accountant or accounting firm (as the case may be) with respect to such disputed arithmetic calculation and such accountant or accounting firm (as the case may be) shall perform such disputed arithmetic calculation based solely on the Required Documentation that was delivered to such accountant or accounting firm (as the case may be) prior to the Submission Deadline). Unless otherwise agreed to in writing by both the Company and the Holder or otherwise requested by such accountant or accounting firm (as the case may be), neither the Company nor the Holder shall be entitled to deliver or submit any written documentation or other support to such accountant or accounting firm (as the case may be) in connection with such disputed arithmetic calculation of the Conversion Rate or the applicable Redemption Price (as the case may be) (other than the Required Documentation).

 

(iii)  The Company and the Holder shall cause such accountant or accounting firm (as the case may be) to perform such disputed arithmetic calculation and notify the Company and the Holder of the results no later than ten (10) Business Days immediately following the Submission Deadline. The fees and expenses of such accountant or accounting firm (as the case may be) shall be borne solely by the Company, and such accountant’s or accounting firm’s (as the case may be) arithmetic calculation shall be final and binding upon all parties absent manifest error.

 

(c)  Miscellaneous. The Company expressly acknowledges and agrees that (i) this Section 22 constitutes an agreement to arbitrate between the Company and the Holder (and constitutes an arbitration agreement) under the Illinois Uniform Arbitration Act, as amended, (ii) a dispute relating to a Conversion Price includes, without limitation, disputes as to (1) whether an issuance or sale or deemed issuance or sale of Common Stock occurred under Section 7(a), (2) the consideration per share at which an issuance or deemed issuance of Common Stock occurred, (3) whether any issuance or sale or deemed issuance or sale of Common Stock was an issuance or sale or deemed issuance or sale of Excluded Securities, (4) whether an agreement, instrument, security or the like constitutes and Option or Convertible Security and (5) whether a Dilutive Issuance occurred, (iii) the terms of this Note and each other applicable Transaction Document shall serve as the basis for the selected investment bank’s resolution of the applicable dispute, such investment bank shall be entitled (and is hereby expressly authorized) to make all findings, determinations and the 

 

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like that such investment bank determines are required to be made by such investment bank in connection with its resolution of such dispute and in resolving such dispute such investment bank shall apply such findings, determinations and the like to the terms of this Note and any other applicable Transaction Documents, (iv) the terms of this Note and each other applicable Transaction Document shall serve as the basis for the selected accountant’s or accounting firm’s performance of the applicable arithmetic calculation, (v) for clarification purposes and without implication that the contrary would otherwise be true, disputes relating to matters described in Section22(a) shall be governed by Section 22(a) and not by Section 22(b), (vi) the Holder (and only the Holder), in its sole discretion, shall have the right to submit any dispute described in this Section 22 to any state or federal court sitting in Chicago, Illinois in lieu of utilizing the procedures set forth in this Section 22 and (vii) nothing in this Section 22 shall limit the Holder from obtaining any injunctive relief or other equitable remedies (including, without limitation, with respect to any matters described in Section 22(a) or Section 22(b)).

 

23.  NOTICES; PAYMENTS.

 

(a)  Notices. Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given in accordance with Section 9(f) of the Securities Purchase Agreement. The Company shall provide the Holder with prompt written notice of all actions taken pursuant to this Note, including in reasonable detail a description of such action and the reason therefore. Without limiting the generality of the foregoing, the Company will give written notice to the Holder (i) immediately upon any adjustment of the Conversion Price, setting forth in reasonable detail, and certifying, the calculation of such adjustment and (ii) at least fifteen (15) days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the Common Stock, (B) with respect to any grant, issuances, or sales of any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property to all or substantially all holders of shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in each case that such information shall be made known to the public prior to or in conjunction with such notice being provided to the Holder.

 

(b)  Currency.  All dollar amounts referred to in this Note are in United States Dollars (“U.S. Dollars”), and all amounts owing under this Note shall be paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall be converted into the U.S. Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation. “Exchange Rate” means, in relation to any amount of currency to be converted into U.S. Dollars pursuant to this Note, the U.S. Dollar exchange rate as published in the Wall Street Journal on the relevant date of calculation (it being understood and agreed that where an amount is calculated with reference to, or over, a period of time, the date of calculation shall be the final date of such period of time).

 

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(c)  Payments. Whenever any payment of cash is to be made by the Company to any Person pursuant to this Note, unless otherwise expressly set forth herein, such payment shall be made in lawful money of the United States of America by a certified check drawn on the account of the Company and sent via overnight courier service to such Person at such address as previously provided to the Company in writing (which address, in the case of each of the Buyers (as defined in the Securities Purchase Agreement), shall initially be as set forth on the Schedule of Buyers attached to the Securities Purchase Agreement), provided that the Holder may elect to receive a payment of cash via wire transfer of immediately available funds by providing the Company with prior written notice setting out such request and the Holder’s wire transfer instructions. Whenever any amount expressed to be due by the terms of this Note is due on any day that is not a Business Day, the same shall instead be due on the next succeeding day that is a Business Day. Any amount of Principal or other amounts due under the Transaction Documents which is not paid when due shall result in a late charge being incurred and payable by the Company in an amount equal to interest on such amount at the rate of eighteen percent (18%) per annum from the date such amount was due until the same is paid in full (“Late Charge”).

 

24.  CANCELLATION. After all Principal, accrued Interest, Late Charges and other amounts at any time owed on this Note (including, without limitation, Redemption Prices) have been paid in full, this Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and shall not be reissued.

 

25.  WAIVER OF NOTICE.  To the extent permitted by law, the Company hereby irrevocably waives demand, notice, presentment, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the Securities Purchase Agreement.

 

26.  GOVERNING LAW. This Note shall be governed by and construed and enforced in accor­dance with, and all questions concerning the construction, validity, interpretation and performance of this Note shall be governed by, the internal laws of the State of Illinois, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Illinois or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Illinois. The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in Chicago, Illinois, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein shall (i) be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Company’s obligations to the Holder or to enforce a judgment or other court ruling in favor of the Holder or (ii) limit, or be deemed to limit, any provision of Section 22. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

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27.  SEVERABILITY.  If any provision of this Note is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Note so long as this Note as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

 

28.  CERTAIN DEFINITIONS.  For purposes of this Note, the following terms shall have the following meanings:

 

(a)  “Automatic Conversion Price” means, with respect to a particular date of determination, the lower of (i) the Conversion Price then in effect and (ii) the price which shall be computed as 80% of the quotient of (I) the sum of each daily VWAP of the Common Stock for each of the twenty (20) consecutive Trading Days immediately preceding the applicable Automatic Conversion Date (each such period, an “Automatic Conversion Measuring Period”) divided by (II) twenty (20). All such determinations to be appropriately adjusted for any stock split, stock dividend, stock combination or other similar transaction during any such Automatic Conversion Measuring Period.

 

(b)  “Black Scholes Consideration Value” means the value of the applicable Option or Convertible Security (as the case may be) as of the date of issuance thereof calculated using the Black Scholes Option Pricing Model obtained from the “OV” function on Bloomberg utilizing (i) an underlying price per share equal to the Closing Sale Price of the Common Stock on the Trading Day immediately preceding the public announcement of the execution of definitive documents with respect to the issuance of such Option or Convertible Security (as the case may be), (ii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of such Option or Convertible Security (as the case may be) as of the date of issuance of such Option or Convertible Security (as the case may be) and (iii) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day immediately following the date of issuance of such Option or Convertible Security (as the case may be).

 

(c)  “Bloomberg” means Bloomberg, L.P.

 

(d)  “Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed.

 

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(e)  “Closing Bid Price” and “Closing Sale Price” means, for any security as of any date, the last closing bid price and last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price (as the case may be) then the last bid price or last trade price, respectively, of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last closing bid price or last trade price, respectively, of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price or last trade price, respectively, of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC). If the Closing Bid Price or the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price or the Closing Sale Price (as the case may be) of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 22. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period.

 

(f)  “Common Stock” means (i) the Company’s shares of common stock, no par value per share, and (ii) any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.

 

(g)  “Conversion Share Ratio” means, with respect to any applicable Automatic Conversion, the quotient of (i) the number of Pre-Automatic Conversion Shares delivered in connection with such Automatic Conversion divided by (ii) the number of Post-Automatic Conversion Shares applicable to such Automatic Conversion.

 

(h)  “Convertible Securities” means any stock, note, debenture or other security (other than Options) that is, or may become, at any time and under any circumstances, directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any shares of Common Stock.

 

(i)  “Eligible Market” means The New York Stock Exchange, the NYSE MKT, the Nasdaq Global Select Market, the Nasdaq Global Market or the Principal Market (and each successor to each of the foregoing).

 

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(j)  “Equity Conditions” means: (i) with respect to the applicable date of determination either (x) the Registration Statement (as defined in the Securities Purchase Agreement) is effective and each prospectus contained therein shall be available for the issuance to the Holder of all shares of Common Stock issuable upon conversion of this Note (including, without limitation, under Sections 3 and 8) or (y) all shares of Common Stock issuable upon conversion of this Note (including, without limitation, under Sections 3 and 8) shall otherwise be freely transferrable under the 1933 Act (as defined in the Securities Purchase Agreement) (disregarding any limitation on conversion of the Notes); (ii) on each day during the period beginning three months prior to the applicable date of determination and ending on and including the applicable date of determination (the “Equity Conditions Measuring Period”), the Common Stock (including, without limitation, all shares of Common Stock issuable upon conversion of this Note (including, without limitation, under Sections 3 and 8) and all shares of Common Stock issuable upon exercise of the Warrants) is listed or designated for quotation (as applicable) on an Eligible Market and shall not have been suspended from trading on an Eligible Market (other than suspensions of not more than two (2) days and occurring prior to the applicable date of determination due to business announcements by the Company) nor shall delisting or suspension by an Eligible Market have been threatened (with a reasonable prospect of delisting occurring) or pending either (A) in writing by such Eligible Market or (B) by falling below the minimum listing maintenance requirements of the Eligible Market on which the Common Stock is then listed or designated for quotation (as applicable); (iii) on each day during the Equity Conditions Measuring Period, the Company shall have delivered all shares of Common Stock issuable upon conversion of this Note on a timely basis as set forth in this Note and all other shares of capital stock required to be delivered by the Company on a timely basis as set forth in the other Transaction Documents; (iv) any shares of Common Stock to be issued in connection with the event requiring determination may be issued in full without violating Section 3(d)(i) hereof; (v) any shares of Common Stock to be issued in connection with the event requiring determination may be issued in full without violating the rules or regulations of the Eligible Market on which the Common Stock is then listed or designated for quotation (as applicable); (vi) on each day during the Equity Conditions Measuring Period, no public announcement of a pending, proposed or intended Fundamental Transaction shall have occurred which has not been abandoned, terminated or consummated; (vii) the Company shall have no knowledge of any fact that would reasonably be expected to cause (1) the Registration Statement to not be effective or any prospectus contained therein to not be available for the issuance of any shares of Common Stock issuable upon conversion of this Note (including, without limitation, under Sections 3 and 8) or upon exercise of the Warrants or (2) any shares of Common Stock issuable upon conversion of this Note (including, without limitation, under Sections 3 and 8) or exercise of this Warrants to not be freely transferrable under the 1933 Act; (viii) the Holder shall not be in (and no other Buyer shall be in) possession of any material, non-public information with respect to the Company or any of its Subsidiaries provided to any of them by the Company, any of its Subsidiaries or any of its or their respective affiliates, employees, officers, representatives, agents or the like; (ix) on each day during the Equity Conditions Measuring Period, the Company otherwise shall have been in compliance with each, and shall not have breached any, provision, covenant, representation or warranty of any Transaction Document; and (x) on each day during the Equity Conditions Measuring Period, there shall not have occurred an Event of Default or an event that with the passage of time or giving of notice would constitute an Event of Default.

 

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(k)  “Equity Conditions Failure” means, with respect to a particular date of determination, that on any day during the period commencing twenty (20) Trading Days immediately prior to such date of determination, the Equity Conditions have not been satisfied (or waived in writing by the Holder).

 

(l)  “Equity Value Redemption Premium” means 135%.

 

(m)  “Fundamental Transaction” means that (i) the Company or any of its Subsidiaries shall, directly or indirectly, in one or more related transactions, (1) consolidate or merge with or into (whether or not the Company or any of its Subsidiaries is the surviving corporation) any other Person, or (2) sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially all of its respective properties or assets to any other Person, or (3) allow any other Person to make a purchase, tender or exchange offer that is accepted by the holders of more than 50% of the outstanding shares of Voting Stock of the Company (not including any shares of Voting Stock of the Company held by the Person or Persons making or party to, or associated or affiliated with the Persons making or party to, such purchase, tender or exchange offer), or (4) consummate a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with any other Person whereby such other Person acquires more than 50% of the outstanding shares of Voting Stock of the Company (not including any shares of Voting Stock of the Company held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination), or (5) (I) reorganize, recapitalize or reclassify the Common Stock, (II) effect or consummate a stock combination, reverse stock split or other similar transaction involving the Common Stock or (III) make any public announcement or disclosure with respect to any stock combination, reverse stock split or other similar transaction involving the Common Stock (including, without limitation, any public announcement or disclosure of (x) any potential, possible or actual stock combination, reverse stock split or other similar transaction involving the Common Stock or (y) board or stockholder approval thereof, or the intention of the Company to seek board or stockholder approval of any stock combination, reverse stock split or other similar transaction involving the Common Stock), or (ii) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the 1934 Act and the rules and regulations promulgated thereunder) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by issued and outstanding Voting Stock of the Company.

 

(n)  “Fundamental Transaction Redemption Premium” means 135%.

 

(o)     “GAAP” means United States generally accepted accounting principles, consistently applied.

 

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(p)  “Holder Optional Redemption Period” means each of the following periods: (i) January 1, 2013 through March 31, 2013; (ii) April 1, 2013 through June 30, 2013; (iii) July 1, 2013 through September 30, 2013; (iv) October 1, 2013 through December 31, 2013; (v) January 1, 2014 through March 31, 2014; (vi) April 1, 2014 through June 30, 2014; (vii) July 1, 2014 through September 30, 2014; and (viii) October 1, 2014 through December 31, 2014.

 

(q)  “Interest Rate” means zero percent (0%) per annum, as may be adjusted from time to time in accordance with Section 2.

 

(r)  “Maturity Date” shall mean December 31, 2014; provided, however, the Maturity Date may be extended at the option of the Holder (i) in the event that, and for so long as, an Event of Default shall have occurred and be continuing or any event shall have occurred and be continuing that with the passage of time and the failure to cure would result in an Event of Default or (ii) through the date that is twenty (20) Business Days after the public announcement on a Current Report on Form 8-K of the consummation of a Fundamental Transaction in the event that a Fundamental Transaction is publicly announced or a Fundamental Transaction Notice is delivered prior to the Maturity Date, provided further that if a Holder elects to convert some or all of this Note pursuant to Section 3 hereof, and the Conversion Amount would be limited pursuant to Section 3(d) hereunder, the Maturity Date shall automatically be extended until such time as such provision shall not limit the conversion of this Note.

 

(s)  “Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.

 

(t)  “Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.

 

(u)  “Permitted Indebtedness” means (i) total Indebtedness of the Company and its Subsidiaries (other than as expressly specified in, and permitted by, the immediately following clauses (ii) and (iii) below) not to exceed $250,000 in the aggregate outstanding at any time; provided, however, such Indebtedness shall be made expressly subordinate in right of payment to the Indebtedness evidenced by the Notes, as reflected in a written agreement acceptable to the Holder and approved by the Holder in writing, and which Indebtedness does not provide at any time for (A) the payment, prepayment, repayment, repurchase or defeasance, directly or indirectly, of any principal or premium, if any, thereon until ninety-one (91) days after the Maturity Date or later and (B) total interest and fees at a rate in excess of the Interest Rate; (ii) Indebtedness incurred by the Company and its Subsidiaries under that certain Amended and Restated Credit Agreement, dated as of February 13, 2009, by and between the Company and Texas Capital Bank, N.A. (the “Revolving Line of Credit”) not to exceed $1,000,000 in the aggregate outstanding at any time; and (iii) Indebtedness evidenced by this Note and the Other Notes.

 

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(v)  “Permitted Liens” means (i) any Lien for taxes not yet due or delinquent or being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP, (ii) any statutory Lien arising in the ordinary course of business by operation of law with respect to a liability that is not yet due or delinquent, (iii) any Lien created under the Revolving Line of Credit, and (iv) any Lien created by operation of law, such as materialmen’s liens, mechanics’ liens and other similar liens, arising in the ordinary course of business with respect to a liability that is not yet due or delinquent or that are being contested in good faith by appropriate proceedings.

 

(w)  “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity or a government or any department or agency thereof.

 

(x)  “Pre-Automatic Conversion Price” means, with respect to a particular date of determination, the lower of (i) the Conversion Price then in effect and (ii) the price which shall be computed as 80% of the quotient of (I) the sum of each daily VWAP of the Common Stock for each of the twenty (20) consecutive Trading Days immediately preceding the delivery by the Company to the Holder of the applicable Automatic Conversion Notice divided by (II) twenty (20). All such determinations to be appropriately adjusted for any stock split, stock dividend, stock combination or other similar transaction during any such measuring period.

 

(y)  “Principal Market” means the Nasdaq Capital Market.

 

(z)  “Post-Automatic Conversion Shares” means that number of shares of Common Stock that would be required to be delivered pursuant to Section 8 on an applicable Automatic Conversion Date without taking into account the delivery of any Pre-Automatic Conversion Shares.

 

(aa)  “Quarter” means each of: (i) the period beginning on and including January 1 and ending on and including March 31; (ii) the period beginning on and including April 1 and ending on and including June 30; (iii) the period beginning on and including July 1 and ending on and including September 30; and (iv) the period beginning on and including October 1 and ending on and including December 31.

 

(bb)  “Redemption Notices” means, collectively, Event of Default Redemption Notices, Fundamental Transaction Redemption Notices and Holder Optional Redemption Notices, and each of the foregoing, individually, a “Redemption Notice.”

 

(cc)  “Redemption Premium” means (i) in the case of the Events of Default described in Section 4(a) (other than Sections 4(a)(viii) through 4(a)(x)), 135% or (ii) in the case of the Events of Default described in Sections 4(a)(viii) through 4(a)(x), 100%.

 

(dd)  “Redemption Prices” means, collectively, the Designated Redemption Amounts, the Event of Default Redemption Prices, the Fundamental Transaction Redemption Prices and the Holder Optional Redemption Prices, and each of the foregoing, individually, a “Redemption Price.”

 

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(ee)  “Securities Purchase Agreement” means that certain securities purchase agreement, dated as of the Subscription Date, by and among the Company and the initial holders of the Notes pursuant to which the Company initially issued the Notes and Warrants, as may be amended from time to time.

 

(ff)  “Subscription Date” means October 28, 2012.

 

(gg)  “Subsidiary” means, with respect to the applicable time of determination, any Person in which the Company, directly or indirectly, (i) owns any of the outstanding capital stock or holds any equity or similar interest of such Person or (ii) controls or operates all or any part of the business, operations or administration of such Person, and all of the foregoing, collectively, “Subsidiaries” (it being understood and agreed that in no event shall Calpine Corporation be considered a Subsidiary of the Company so long as the Company directly or indirectly only owns 2,000 shares or less thereof).

 

(hh)  “Successor Entity” means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting from or surviving any Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such Fundamental Transaction shall have been entered into.

 

(ii)  “Trading Day” means, as applicable, (x) with respect to all price determinations relating to the Common Stock, any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded, provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time) unless such day is otherwise designated as a Trading Day in writing by the Holder or (y) with respect to all determinations other than price determinations relating to the Common Stock, any day on which The New York Stock Exchange (or any successor thereto) is open for trading of securities.

 

(jj)  “Voting Stock” of a Person means capital stock of such Person of the class or classes pursuant to which the holders thereof have the general voting power to elect, or the general power to appoint, at least a majority of the board of directors, managers, trustees or other similar governing body of such Person (irrespective of whether or not at the time capital stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency).

 

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(kk)   “VWAP” means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market (or, if the Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities market on which such security is then traded) during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its “Volume at Price” function or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC). If the VWAP cannot be calculated for such security on such date on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 22. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period.

 

(ll)  “Warrants” has the meaning ascribed to such term in the Securities Purchase Agreement, as may be amended from time to time, and shall include all warrants issued in exchange therefor or replacement thereof.

 

30.  DISCLOSURE. Upon receipt or delivery by the Company of any notice in accordance with the terms of this Note, unless the Company has in good faith determined that the matters relating to such notice do not constitute material, non-public information relating to the Company or any of its Subsidiaries, the Company shall simultaneously with any such receipt or delivery publicly disclose such material, non-public information on a Current Report on Form 8-K or otherwise. In the event that the Company believes that a notice contains material, non-public information relating to the Company or any of its Subsidiaries, the Company so shall indicate to such Holder contemporaneously with delivery of such notice, and in the absence of any such indication, the Holder shall be allowed to presume that all matters relating to such notice do not constitute material, non-public information relating to the Company or any of its Subsidiaries. Nothing contained in this Section 30 shall limit any obligations of the Company, or any rights of the Holder, under Section 4(j) of the Securities Purchase Agreement.

 

31.  MAXIMUM PAYMENTS. Without limiting Section 9(d) of the Securities Purchase Agreement or Section 27 above, nothing contained in this Note shall, or shall be deemed to, establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law. In the event that the rate of interest required to be paid or other charges under this Note exceeds the maximum permitted by such law, any payments in excess of such maximum shall be credited against amounts owed by the Company to the Holder and thus refunded to the Company.

 

[signature page follows]

 

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IN WITNESS WHEREOF, the Company has caused this Note to be duly executed as of the Issuance Date set out above.

 

	
ROYALE ENERGY, INC.

 

	
By: _______________________________________________                                                               

	
Name:

	
Title:

  

  

  

EXHIBIT I

 

 

ROYALE ENERGY, INC.

 

CONVERSION NOTICE

 

Reference is made to the Convertible Note (the “Note”) issued to the undersigned by Royale Energy, Inc. (the “Company”). In accordance with and pursuant to the Note, the undersigned hereby elects to convert the Conversion Amount (as defined in the Note) indicated below into shares of Common Stock (as defined in the Note), as of the date specified below.

 

	
Date of Conversion:

	  
	
Conversion Amount to be converted:

	  
	
Conversion Price:

	  
	
Number of shares of Common Stock to be issued:

	  
	
Please issue the Common Stock into which the Note is being converted in the following name and to the following address:

	
Issue to:

	  
	  	  
	  	  
	
Facsimile Number:

	  
	
Holder:

	  
	
By:

	  
	
Title:

	  
	
Dated:

	  
	
Account Number:

	  
	
  (if electronic book entry transfer)

	  
	
Transaction Code Number:

	  
	
  (if electronic book entry transfer)

	  

  

  

  

EXHIBIT II

 

ACKNOWLEDGMENT

 

The Company hereby acknowledges this Conversion Notice and hereby directs _________________ to issue the above indicated number of shares of Common Stock in accordance with the Transfer Agent Instructions dated _____________, 20__ from the Company and acknowledged and agreed to by ________________________.

 

	
Royale Energy, Inc.

	
By:  ________________________________________________                                                              

	
Name:

	
Title:

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