Document:

Exhibit 10.8

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) by and between GEMPHIRE THERAPEUTICS INC., a Delaware corporation (the “Company”) and [      ] (the “Executive”) is signed by the Company and the Executive on [       ], 201[_], and is made effective as of the IPO Date (the “Effective Date”).

 

BACKGROUND

 

The board of directors of the Company (the “Board”) has determined that it is in the best interests of the Company and its stockholders to employ the Executive.  The Executive is currently employed as its [           ] subject to an employment agreement dated [          ], (the “Prior Agreement”).  The Company and the Executive desire to enter into this Agreement to embody the terms of those continued relationships and to amend, restate and supersede the terms and conditions of the Prior Agreement in their entirety.  This Agreement shall represent the entire understanding and agreement between the parties with respect to the Executive’s employment with the Company.

 

NOW, THEREFORE, in consideration of the foregoing and the terms and conditions set forth herein, the parties agree as follows:

 

TERMS AND CONDITIONS

 

1.                                      EMPLOYMENT PERIOD.  The Company hereby agrees to continue the Executive in its employ, and the Executive hereby agrees to remain in the employ of the Company, subject to the terms and conditions of this Agreement, for the period commencing on the Effective Date and ending on the third anniversary of the Effective Date (the “Initial Term”).  The term of this Agreement will automatically be renewed for a term of one (1) year (each, a “Renewal Term”) at the end of the Initial Term and at the end of each Renewal Term thereafter, provided that the Board does not provide written notice to the Executive of its intention not to renew this Agreement ninety (90) days prior to the expiration of the Initial Term or any Renewal Term.  For purposes of this Agreement, “Employment Period” includes the Initial Term and any Renewal Term(s) thereafter.  Notwithstanding the foregoing, in the event of a Change in Control, the date the Change in Control occurs shall become the Effective Date for all purposes thereafter, and each Change in Control thereafter shall result in a new Effective Date on the date of the latest Change in Control.  This Agreement, on the Effective Date, amends, restates and supersedes the Prior Agreement.

 

2.                                      TERMS OF EMPLOYMENT.

 

(a)                                 Position and Duties.

 

(i)                                    During the Employment Period, the Executive shall serve as the [         ] of the Company, and in such other position or positions with the Company and its subsidiaries as are consistent with the Executive’s positions as [         ] of the Company, and

 

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shall have such duties and responsibilities as are assigned to the Executive by the Board consistent with the Executive’s position as [          ] of the Company.

 

(ii)                                During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote reasonable attention and time during normal business hours and on a full time basis to the business and affairs of the Company, to discharge the responsibilities assigned to the Executive hereunder, and to use the Executive’s reasonable best efforts to perform faithfully and efficiently such responsibilities.  During the Employment Period it shall not be a violation of this Agreement for the Executive to (A) be employed by the Company or any of its subsidiaries or Affiliates, (B) serve on corporate, civic or charitable boards, committees, or advisory boards, (C) deliver lectures, fulfill speaking engagements or teach at educational  institutions, (D) manage personal investments, so long as such activities do not significantly interfere with the performance of the Executive’s responsibilities as an employee of the Company in accordance with this Agreement.

 

(b)                                 Compensation.

 

(i)                                    Base Salary.  During the Employment Period, the Executive shall receive an annual base salary (the “Annual Base Salary”) at least equal to $[     ], subject to applicable withholding taxes, which shall be paid in accordance with the Company’s normal payroll practices for senior executive officers of the Company as in effect from time to time.  During the Employment Period, the Annual Base Salary shall be reviewed at least annually by the Board or the Compensation Committee of the Board (the “Compensation Committee”).  Any increase in the Annual Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement.  The Annual Base Salary shall not be reduced after any such increase (unless otherwise agreed to by the Executive) and the term “Annual Base Salary” as utilized in this Agreement shall refer to the Annual Base Salary as so increased or adjusted.

 

(ii)                                Annual Bonus.  In addition to the Annual Base Salary, for each fiscal year ending during the Employment Period, the Executive shall be eligible for an annual cash bonus (the “Annual Bonus”), as determined by the Compensation Committee, which value shall be up to [      ] percent of the Annual Base Salary and as determined in accordance with the policies and practices generally applicable to other senior executive officers of the Company.  Each such Annual Bonus awarded to the Executive shall be paid sometime during the first seventy-five (75) days of the fiscal year next following the fiscal year for which the Annual Bonus is awarded, unless the Executive shall elect, in compliance with Treasury Regulation 1.409A-2(a), to defer the receipt of such Annual Bonus.

 

(iii)                            Long-Term Incentive Compensation.  During the Employment Period, the Executive shall be entitled to participate in any stock option, performance share, performance unit or other equity based long-term incentive compensation plan, program or arrangement (the “Plans”) generally made available to senior executive officers of the Company, on substantially the same terms and conditions as generally apply to such other officers, except that the size of the awards made to the Executive shall reflect the Executive’s position with the Company and the Compensation Committee’s views.

 

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(iv)                             Welfare Benefit Plans.  During the Employment Period, the Executive and/or the Executive’s family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Company and its Affiliated companies (including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death and travel accident insurance plans and programs) made available to other senior executive officers of the Company.

 

(v)                                 Shares and Stock Options.  As of the Effective Date, the Executive shall be entitled to retain all shares of the Company’s common stock (the “Common Stock”) and stock options held by the Executive as of the Effective Date (the “Executive’s Current Equity”); provided, however, to the extent that the Executive remains employed by the Company as of the closing date of a Change in Control, the Executive’s Current Equity shall fully vest effective as of the closing date of a Change in Control.

 

(vi)                             Expenses.  During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the plans, practices, policies and programs of the Company.

 

(vii)                         Vacation.  During the Employment Period, the Executive shall be entitled to paid vacation in accordance with the plans, practices, policies and programs of the Company consistent with the treatment of other senior executive officers of the Company.

 

3.                                      TERMINATION OF EMPLOYMENT.

 

(a)                                 Notwithstanding Section 1, the Employment Period shall end upon the earliest to occur of (i) the Executive’s death, (ii) a Termination due to Disability, (iii) a Termination for Cause, (iv) the Termination Date specified in connection with any exercise by the Company of its Termination Right, (v) a Termination for Good Reason, or (vi) the termination of this Agreement by Executive pursuant to Section 3(b).  If the Employment Period terminates as of a date specified under this Section 3, the Executive agrees that, upon written request from the Company, the Executive shall resign from any and all positions the Executive holds with the Company and any of its subsidiaries and Affiliates, effective immediately following receipt of such request from the Company (or at such later date as the Company may specify).

 

(b)                                 This Agreement may be terminated by the Executive at any time upon thirty (30) days prior written notice to the Company or upon such shorter period as may be agreed upon between the Executive and the Board.  In the event of a termination by the Executive, the Company shall be obligated only to continue to pay the Executive’s salary and provide other benefits provided by this Agreement up to the date of the termination.

 

(c)                                  Benefits Payable Under Termination.

 

(i)                                    In the event of the Executive’s death during the Employment Period or a Termination due to Disability, the Executive or the Executive’s beneficiaries or legal representatives shall be provided the Unconditional Entitlements (as defined below), including, but not limited to, any such Unconditional Entitlements that are or become payable under any

 

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Company plan, policy, practice or program or any contract or agreement with the Company by reason of the Executive’s death or Termination due to Disability.

 

(ii)                                In the event of the Executive’s Termination for Cause or termination by the Executive other than a Termination for Good Reason, the Executive shall be provided the Unconditional Entitlements.

 

(iii)                            In the event of a Termination for Good Reason or the exercise by the Company of its Termination Rights, the Executive shall be provided the Unconditional Entitlements and, subject to the Executive signing and delivering to the Company and not revoking before the sixtieth (60th) day following the Termination Date, a general release of claims in favor of the Company and certain related parties in a form reasonably satisfactory to the Company and the Executive, which the Company shall provide to the Executive within seven (7) days following the Termination Date (the “Release”), the Company shall provide the Executive the Conditional Benefits.  Any and all amounts payable and benefits or additional rights provided to the Executive upon a termination of the Executive’s employment pursuant to this Section 3(c) (other than the Unconditional Entitlements) shall only be payable or provided if the Executive signs and delivers the Release and if the Release becomes irrevocable prior to the sixtieth (60th) day following the Termination Date.  In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement, nor shall the amount of any payment hereunder be reduced by any compensation earned by the Executive as a result of employment by a subsequent employer.

 

(d)                                 Unconditional Entitlements.  For purposes of this Agreement, the “Unconditional Entitlements” to which the Executive may become entitled under Section 3(c) are as follows:

 

(i)                                    Earned Amounts.  The Earned Compensation shall be paid within thirty (30) days following the termination of the Executive’s employment hereunder, or if any part thereof constitutes a bonus which is subject to or conditioned upon any performance conditions, within thirty (30) days following the determination that such conditions have been met, provided that in no event shall the bonus be paid later than ninety (90) days following the Executive’s termination of employment.

 

(ii)                                Benefits.  All benefits payable to the Executive under any employee benefit plans (including, without limitation any pension plans or 401(k) plans) of the Company or any of its Affiliates applicable to the Executive at the time of termination of the Executive’s employment with the Company and all amounts and benefits (other than the Conditional Benefits) which are vested or which the Executive is otherwise entitled to receive under the terms of or in accordance with any plan, policy, practice or program of, or any contract or agreement with, the Company, at or subsequent to the date of the Executive’s termination without regard to the performance by the Executive of further services or the resolution of a contingency, shall be paid or provided in accordance with and subject to the terms and provisions of such plans, it being understood that all such benefits shall be determined on the basis of the actual date of termination of the Executive’s employment with the Company.

 

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(iii)                            Indemnities.  Any right which the Executive may have to claim a defense and/or indemnity for liabilities to or claims asserted by third parties in connection with the Executive’s activities as an officer, director or employee of the Company shall be unaffected by the Executive’s termination of employment and shall remain in effect in accordance with its terms.

 

(iv)                             Medical Coverage.  The Executive shall be entitled to such continuation of health care coverage as is required under, and in accordance with, applicable law or otherwise provided in accordance with the Company’s policies.  The Executive shall be notified in writing of the Executive’s rights to continue such coverage after the termination of the Executive’s employment pursuant to this Section 3(d)(iv), provided that the Executive timely complies with the conditions to continue such coverage.  The Executive understands and acknowledges that the Executive is responsible to make all payments required for any such continued health care coverage that the Executive may choose to receive.

 

(v)                                 Business Expenses.  The Executive shall be entitled to reimbursement, in accordance with the Company’s policies regarding expense reimbursement as in effect from time to time, for all business expenses incurred by the Executive prior to the termination of the Executive’s employment.

 

(vi)                             Stock Options/Equity Awards.  Except to the extent additional rights are provided upon the Executive’s qualifying to receive the Conditional Benefits, the Executive’s rights with respect to any stock options and/or other equity awards granted to the Executive by the Company shall be governed by the terms and provisions of the Plans and Plan rules, provided that the Executive shall have ninety (90) days from the Termination Date to exercise vested options, and award agreements pursuant to which such stock options and equity awards were awarded, as in effect at the Termination Date.

 

(e)                                  Conditional Benefits.  For purposes of this Agreement, the “Conditional Benefits” to which the Executive may become entitled are as follows:

 

(i)                                    Severance Amount.  The Company shall pay the Executive a lump sum amount equal to the Severance Amount.  Subject to Section 3(c)(iii) above, the Severance Amount shall be paid on the date that is sixty (60) days after the Termination Date (or upon the Executive’s death, if earlier).

 

(ii)                                COBRA. Provided that the Executive timely elects continued health insurance coverage under the federal COBRA law, the Company will pay one-hundred percent of the cost of premiums for such health insurance continuation coverage during the twelve (12) months following the Termination Date.  Notwithstanding anything to the contrary in this Agreement, the Executive’s entitlement to any benefits or payments under this Section 3(e)(ii) shall cease on such date that the Executive becomes eligible to receive health insurance coverage from another employer group health plan due to Executive’s employment with a future employer.

 

(iii)                            Stock Options.  All of the Executive’s stock options shall vest and become immediately exercisable in accordance with the applicable Original Stock Option Award

 

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Documents, subject to the same conditions as if the Executive had remained employed under this Agreement through the end of the Employment Period.  Once exercisable, all stock options shall remain exercisable until the stock option termination date.  All of the Executive’s stock options that were vested and exercisable at the Termination Date shall remain exercisable until the expiration date of such stock options.  Except as otherwise expressly provided herein, all stock options shall continue to be subject to the Original Stock Option Award Documents.

 

(iv)                             Equity Awards.  Any restricted stock or other equity award subject to vesting shall continue to vest in accordance with the terms of the Original Award Documents, regardless of the Executive’s termination of employment.  Except as otherwise expressly provided herein, all such restricted stock or other equity awards shall be subject to, and administered in accordance with, the Original Award Documents.

 

(v)                                 Additional Distribution Rules.  Notwithstanding any other payment date or schedule provided in this Agreement to the contrary, if the Executive is deemed on the Termination Date of the Executive’s employment to be a “specified employee” within the meaning of that term under Section 409A of the Code and the regulations thereunder (“Section 409A”), then each of the following shall apply:

 

(A)                   With regard to any payment that is considered “nonqualified deferred compensation” under Section 409A and payable on account of a “separation from service” (within the meaning of Section 409A and as provided in Section 3(g) of this Agreement), such payment shall not be made prior to the date which is the earlier of (1) the expiration of the six (6)-month period measured from the date of the Executive’s “separation from service,” and (2) the date of the Executive’s death (the “Delay Period”) to the extent required under Section 409A.  Upon the expiration of the Delay Period, all payments delayed pursuant to this Section 3(e)(v)(A) (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid to the Executive in a lump sum, and all remaining payments due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein; and

 

(B)                   To the extent that benefits to be provided during the Delay Period are considered “nonqualified deferred compensation” under Section 409A provided on account of a “separation from service,” the Executive shall pay the cost of such benefits during the Delay Period, and the Company shall reimburse the Executive, to the extent that such costs would otherwise have been paid or reimbursed by the Company or to the extent that such benefits would otherwise have been provided by the Company at no cost to the Executive, for the Company’s share of the cost of such benefits upon expiration of the Delay Period, and any remaining benefits shall be paid, reimbursed or provided by the Company in accordance with the procedures specified herein.

 

The foregoing provisions of this Section 3(e)(v)(A) shall not apply to any payments or benefits that are excluded from the definition of “nonqualified deferred compensation” under Section 409A, including, without limitation, payments excluded from the definition of “nonqualified deferred compensation” on account of being separation pay due to an involuntary separation from service under Treasury Regulation 1.409A-1(b)(9)(iii) or on account of being a “short-term deferral” under Treasury Regulation 1.409A-1(b)(4).

 

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(f)                                   Definitions.  For purposes of this Agreement, the following terms shall have the meanings ascribed to them below:

 

(i)                                    “Affiliate” means any corporation, partnership, limited liability company, trust or other entity which directly, or indirectly through one or more intermediaries, controls, is under common control with, or is controlled by, the Company.

 

(ii)                                “Change in Control” means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:

 

(A)                   any Exchange Act Person becomes the Owner, directly or indirectly, of securities of the Company representing more than 50% of the combined Voting Power of the Company’s then outstanding securities other than by virtue of a merger, consolidation or similar transaction.  Notwithstanding the foregoing, a Change in Control will not be deemed to occur (1) in connection with the issuance of securities of the Company as part of a joint venture or strategic partnership to which the Company is party, (2) on account of the acquisition of securities of the Company directly from the Company, (3) on account of the acquisition of securities of the Company by an investor, any affiliate thereof or any other Exchange Act Person that acquires the Company’s securities in a transaction or series of related transactions the primary purpose of which is to obtain financing for the Company through the issuance of equity securities, (4) on account of the acquisition of securities of the Company by any individual who is, on the IPO Date, either an executive officer or a member of the Board (either, an “IPO Investor”) and/or any entity in which an IPO Investor has a direct or indirect interest (whether in the form of voting rights or participation in profits or capital contributions) of more than 50% (collectively, the “IPO Entities”), (5) on account of the IPO Entities continuing to hold shares that come to represent more than 50% of the combined Voting Power of the Company’s then outstanding securities as a result of the conversion of any class of the Company’s securities into another class of the Company’s securities having a different number of votes per share pursuant to the conversion provisions set forth in the Company’s Amended and Restated Certificate of Incorporation, or (6) solely because the level of Ownership held by any Exchange Act Person (the “Subject Person”) exceeds the designated percentage threshold of the outstanding Voting Securities as a result of a repurchase or other acquisition of Voting Securities by the Company reducing the number of shares outstanding, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of Voting Securities by the Company, and after such share acquisition, the Subject Person becomes the Owner of any additional Voting Securities that, assuming the repurchase or other acquisition had not occurred, increases the percentage of the then outstanding Voting Securities Owned by the Subject Person over the designated percentage threshold, then a Change in Control will be deemed to have occurred;

 

(B)                   a merger, consolidation or similar transaction involving (directly or indirectly) the Company is consummated and, immediately after the consummation of such merger, consolidation or similar transaction, the stockholders of the Company immediately prior thereto do not Own, directly or indirectly, either (1) outstanding voting securities representing more than 50% of the combined outstanding voting power of the surviving entity in such merger, consolidation or similar transaction or (2) more than 50% of the combined outstanding voting power of the parent of the surviving entity in such merger, consolidation or similar transaction, in each case in substantially the same proportions as their Ownership of the

 

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outstanding voting securities of the Company immediately prior to such transaction; provided, however, that a merger, consolidation or similar transaction will not constitute a Change in Control under this prong of the definition if the outstanding voting securities representing more than 50% of the combined voting power of the surviving entity or its parent are owned by the IPO Entities;

 

(C)                   a sale, lease, exclusive license or other disposition of all or substantially all of the consolidated assets of the Company and its subsidiaries is consummated, other than a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its subsidiaries to an entity, more than 50% of the combined voting power of the voting securities of which are Owned by stockholders of the Company in substantially the same proportions as their Ownership of the outstanding voting securities of the Company immediately prior to such sale, lease, license or other disposition; provided, however, that a sale, lease, exclusive license or other disposition of all or substantially all of the consolidated assets of the Company and its subsidiaries will not constitute a Change in Control under this prong of the definition if the outstanding voting securities representing more than 50% of the combined voting power of the acquiring entity or its parent are owned by the IPO Entities; or

 

(D)                   individuals who, on the Effective Date, are members of the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the members of the Board; provided, however, that if the appointment or election (or nomination for election) of any new Board member was approved or recommended by a majority vote of the members of the Incumbent Board then still in office, such new member will, for purposes of this Agreement, be considered as a member of the Incumbent Board.

 

Notwithstanding the foregoing definition, in the case of any payment or benefit that constitutes nonqualified deferred compensation under Section 409A of the Code, if necessary in order to ensure that the Executive does not incur liability for additional tax under Section 409A of the Code, a transaction (or series of related transactions) shall constitute a Change in Control only if, in addition to satisfying the foregoing definition, such transaction (or series of related transactions) also satisfies the definition of a “change in control event” under Treas. Reg. Section 1.409A-3(i)(5).

 

(iii)                            “Code” means the Internal Revenue Code of 1986, as amended and the rules and regulations promulgated thereunder.

 

(iv)                             “Earned Compensation” means any Annual Base Salary earned, but unpaid, for services rendered to the Company on or prior to the date on which the Employment Period ends pursuant to Section 3(a) (but excluding any salary and interest accrued thereon payment of which has been deferred).

 

(v)                                 “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

(vi)                             “Exchange Act Person” means any natural person, entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act), except that “Exchange Act Person” will not include (A) the Company or any subsidiary of the Company, (B) any employee benefit plan of the Company or any subsidiary of the Company or any trustee

 

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or other fiduciary holding securities under an employee benefit plan of the Company or any subsidiary of the Company, (C) an underwriter temporarily holding securities pursuant to a registered public offering of such securities, (D) an entity Owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their Ownership of stock of the Company, or (E) any natural person, entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act) that, as of the IPO Date, is the Owner, directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the Company’s then outstanding securities.

 

(vii)                         “IPO Date” means the date of the underwriting agreement between the Company and the underwriter(s) managing the initial public offering of the Common Stock, pursuant to which the Common Stock is priced for the initial public offering.

 

(viii)                     “Non-Compete Amount” means, if the Executive is an officer or employee of the Company, if a Change in Control occurs and if during the 24 month period following the Change in Control the Executive is terminated without Cause (other than because of the Executive’s death or Disability) or the Executive terminates the Executive’s employment for Good Reason, the amount mutually agreed upon by the Company and the Executive in exchange for the Executive’s covenant not to engage in or otherwise compete against the business engaged in by the Company, directly or indirectly, whether as an employee, consultant, independent contractor, partner, shareholder, investor or in any other capacity, for a one-year period following termination of the Executive’s employment with the Company.

 

(ix)                             “Original Stock Option Award Documents” means, with respect to any stock option, the terms and provisions of the award agreement and Plan pursuant to which such stock option was granted, each as in effect on the Termination Date.

 

(x)                                 “Original Award Documents” means, with respect to any restricted stock or other equity award, the terms and provisions of the award agreement related to and the Plan governing such restricted stock or other equity award, each as in effect on the Termination Date.

 

(xi)                             “Own,” “Owned,” “Owner,” “Ownership” means a person or entity will be deemed to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired “Ownership” of securities if such person or entity, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares voting power, which includes the power to vote or to direct the voting, with respect to such securities.

 

(xii)                         “Person” shall have the same meaning as ascribed to such term in Section 3(a)(9) of the Exchange Act, as supplemented by Section 13(d)(3) of the Exchange Act, and shall include any group (within the meaning of Rule 13d-5(b) under the Exchange Act); provided that Person shall not include (A) the Company or any of its Affiliates, or (B) any employee benefit plan (including an employee stock ownership plan or employee stock purchase plan) sponsored by the Company or any of its Affiliates.

 

(xiii)                     “Severance Amount” means an amount equal to [  ] times the sum of (A) the Annual Base Salary as in effect as of the Termination Date less the Non-Compete

 

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Amount (if applicable) and (B) an amount equal to a prorated portion of the Executive’s cash bonus for the year in which the Termination Date occurs, with such prorated amount determined by multiplying the Executive’s cash bonus for the year in which the Termination Date occurs by a fraction, the numerator of which is the number of full months during such year in which the Executive was employed and the denominator of which is twelve (12).

 

(xiv)                      “Termination for Cause” means a termination of the Executive’s employment by the Company due to (A) an intentional act or acts of dishonesty undertaken by the Executive and intended to result in substantial gain or personal enrichment to the Executive at the expense of the Company, (B) unlawful conduct or gross misconduct that is willful and deliberate on the Executive’s part and that, in either event, is materially injurious to the Company, (C) the conviction of the Executive of, or the Executive’s entry of a no contest or nolo contendre plea to, a felony, (D) material breach by the Executive of the Executive’s fiduciary obligations as an officer or director of the Company, (E) a persistent failure by the Executive to perform the duties and responsibilities of the Executive’s employment hereunder, which failure is willful and deliberate on the Executive’s part and is not remedied by the Executive within 30 days after the Executive’s receipt of written notice from the Company of such failure, or (F) material breach of any terms and conditions of this Agreement by Executive, which breach has not been cured by the Executive within ten days after written notice thereof to Executive from the Company.  For the purposes of this Section 3(f)(xiv), no act or failure to act on the Executive’s part shall be considered “dishonest,” “willful” or “deliberate” unless intentionally done or omitted to be done by the Executive in bad faith and without reasonable belief that the Executive’s action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company.

 

(xv)                          “Termination Date” means the earlier to occur of (A) the date the Company specifies in writing to the Executive in connection with the exercise of its Termination Right or (B) the date the Executive specifies in writing to the Company in connection with any notice to effect a Termination for Good Reason.  Notwithstanding the foregoing, a termination of employment will not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits subject to Section 409A upon or following a termination of employment unless such termination is also a “separation from service” (within the meaning of Section 409A), and notwithstanding anything contained herein to the contrary, the date on which such separation from service takes place will be the Termination Date.

 

(xvi)                      “Termination due to Disability” means a termination of the Executive’s employment by the Company because the Executive has been incapable, after reasonable accommodation, of substantially fulfilling the positions, duties, responsibilities and obligations set forth in this Agreement because of physical, mental or emotional incapacity resulting from injury, sickness or disease for a period of (A) six (6) consecutive months or (B) an aggregate of nine (9) months (whether or not consecutive) in any twelve (12) month period.  Any question as to the existence, extent or potentiality of the Executive’s disability shall be determined by a qualified physician selected by the Company with the consent of the Executive, which consent shall not be unreasonably withheld.  The Executive or the Executive’s legal

 

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representatives or any adult member of the Executive’s immediate family shall have the right to present to such physician such information and arguments as to the Executive’s disability as he, she or they deem appropriate, including the opinion of the Executive’s personal physician.

 

(xvii)                  “Termination for Good Reason” means a termination of the Executive’s employment by the Executive within thirty (30) days of the Company’s failure to cure, in accordance with the procedures set forth below, any of the following events: (A) a reduction in Executive’s Annual Base Salary as in effect immediately prior to such reduction by more than ten percent (10%) without Executive’s written consent, unless such reduction is made pursuant to an across the board reduction applicable to all senior executives of the Company;  (B) the removal of the Executive by the Company from the position of [        ] of the Company; (C) a material reduction in the Executive’s duties and responsibilities as in effect immediately prior to such reduction; or (D) a material breach of any material provision of this Agreement by the Company to which the Executive shall have delivered a written notice to the Board within forty-five (45) days of the Executive’s having actual knowledge of the occurrence of one of such events stating that the Executive intends to terminate the Executive’s employment for Good Reason and specifying the factual basis for such termination, and such event, if capable of being cured, shall not have been cured within twenty-one (21) days of the receipt of such notice.  Notwithstanding the foregoing, a termination shall not be treated as a Termination for Good Reason if the Executive shall have consented in writing to the occurrence of the event giving rise to the claim of Termination for Good Reason.

 

(xviii)              “Termination Right” means the right of the Company, in its sole, absolute and unfettered discretion, to terminate the Executive’s employment under this Agreement for any reason or no reason whatsoever.  For the avoidance of doubt, any Termination for Cause effected by the Company shall not constitute the exercise of its Termination Right.

 

(xix)                      “Voting Power” means such number of Voting Securities as shall enable the holders thereof to cast all the votes which could be cast in an annual election of directors of a company.

 

(xx)                          “Voting Securities” means all securities entitling the holders thereof to vote in an annual election of directors of a company.

 

(g)                                 Conflict with Plans.  As permitted under the terms of the applicable Plans, the Company and the Executive agree that the definitions of Termination for Cause or Termination for Good Reason set forth in this Section 3 shall apply in place of any similar definition or comparable concept applicable under either of the Plans (or any similar definition in any successor plan).

 

(h)                                 Section 409A.   It is intended that payments and benefits under this Agreement either be excluded from or comply with the requirements of Section 409A and the guidance issued thereunder and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted consistent with such intent.  In the event that any provision of this Agreement is subject to but fails to comply with Section 409A, the Company may revise the terms of the provision to correct such noncompliance to the extent permitted under any guidance, procedure

 

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or other method promulgated by the Internal Revenue Service now or in the future or otherwise available that provides for such correction as a means to avoid or mitigate any taxes, interest or penalties that would otherwise be incurred by the Executive on account of such noncompliance.  Provided, however, that in no event whatsoever shall the Company be liable for any additional tax, interest or penalty imposed upon or other detriment suffered by the Executive under Section 409A or damages for failing to comply with Section 409A.  Solely for purposes of determining the time and form of payments due the Executive under this Agreement (including any payments due under Sections 3(c) or 5) or otherwise in connection with the Executive’s termination of employment with the Company, the Executive shall not be deemed to have incurred a termination of employment unless and until the Executive shall incur a “separation from service” within the meaning of Section 409A.  The parties agree, as permitted in accordance with the final regulations thereunder, a “separation from service” shall occur when the Executive and the Company reasonably anticipate that the Executive’s level of bona fide services for the Company (whether as an employee or an independent contractor) will permanently decrease to no more than forty (40) percent of the average level of bona fide services performed by the Executive for the Company over the immediately preceding thirty-six (36) months.  The determination of whether and when a separation from service has occurred shall be made in accordance with this subparagraph and in a manner consistent with Treasury Regulation Section 1.409A-1(h).  All reimbursements and in-kind benefits provided under this Agreement shall be made or provided in accordance with the requirements of Section 409A to the extent that such reimbursements or in-kind benefits are subject to Section 409A, including, where applicable, the requirements that (i) any reimbursement is for expenses incurred during the Executive’s lifetime (or during a shorter period of time specified in this Agreement), (ii) the amount of expenses eligible for reimbursement (and the in-kind benefits to be provided) during a calendar year may not affect the expenses eligible for reimbursement (and the in-kind benefits to be provided) in any other calendar year, (iii) the reimbursement of an eligible expense will be made on or before the last day of the calendar year following the year in which the expense is incurred, and (iv) the right to reimbursement (or in-kind benefits) is not subject to set off or liquidation or exchange for any other benefit.  For purposes of Section 409A, the Executive’s right to any installment payments under this Agreement shall be treated as a right to receive a series of separate and distinct payments.  Whenever a payment under this Agreement specifies a payment period with reference to a number of days (e.g., “payment shall be made within ninety (90) days following the date of termination”), the actual date of payment within the specified period shall be within the sole discretion of the Company.

 

4.                                      EXECUTIVE REMEDY. The Executive shall be under no obligation to seek other employment or other engagement of the Executive’s services.  The Executive acknowledges and agrees that the payment and rights provided under Section 3 are fair and reasonable, and are the Executive’s sole and exclusive remedy, in lieu of all other remedies at law or in equity, for termination of the Executive’s employment by the Company upon exercise of its Termination Right pursuant to this Agreement or upon a Termination for Good Reason.

 

5.                                      ADDITIONAL PAYMENTS FOLLOWING A CHANGE IN CONTROL.

 

(a)                                 If, during the Employment Period and within two (2) years after a Change in Control, the Company shall terminate the Executive’s employment other than due to the

 

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Executive’s death, a Termination for Cause, a Termination due to Disability or if the Executive shall effect a Termination for Good Reason:

 

(i)                                    the Company shall pay to the Executive, in a lump sum in cash within thirty (30) days after the Termination Date, the aggregate of the following amounts:

 

(A)                   the Unconditional Entitlements;

 

(B)                   the amount equal to the product of [  ] times the sum of (y) the Annual Base Salary, and (z) the greater of the target bonus for the then current fiscal year under the Plans or any successor annual bonus plan and the average Annual Bonus paid to or for the benefit of the Executive for the prior three (3) full years (or any shorter period during which the Executive has been employed by the Company), and

 

(ii)                                the Company shall provide the Executive the Conditional Benefits minus the Severance Amount.

 

(b)                                 If any payment or benefit (including payments and benefits pursuant to this Agreement) the Executive would receive in connection with a Change in Control from the Company or otherwise (the “Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this paragraph, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Company shall cause to be determined, before any amounts of the Payment are paid to the Executive, which of the following two alternative forms of payment shall be paid to the Executive: (A) payment in full of the entire amount of the Payment (a “Full Payment”), or (B) payment of only a part of the Payment so that the Executive receives the largest payment possible without the imposition of the Excise Tax (a “Reduced Payment”).  A Full Payment shall be made in the event that the amount received by the Executive on a net after-tax basis is greater than what would be received by the Executive on a net after-tax basis if the Reduced Payment were made, otherwise a Reduced Payment shall be made.  If a Reduced Payment is made, (i) the Payment shall be paid only to the extent permitted under the Reduced Payment alternative, and the Executive shall have no rights to any additional payments and/or benefits constituting the Payment, and (ii) reduction in payments and/or benefits shall occur in the following order: (A) reduction of cash payments; (B) cancellation of accelerated vesting of equity awards other than stock options; (C) cancellation of accelerated vesting of stock options; and (D) reduction of other benefits paid to Executive.  In the event that acceleration of compensation from the Executive’s equity awards is to be reduced, such acceleration of vesting shall be canceled in the reverse order of the date of grant.

 

(c)                                  The independent registered public accounting firm engaged by the Company for general audit purposes as of the day prior to the effective date of the Change in Control, or a nationally recognized law firm, shall make all determinations required to be made under this Section 5.  If the independent registered public accounting firm or nationally recognized law firm so engaged by the Company is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, the Company shall appoint a nationally recognized law firm or independent registered public accounting firm or law firm to make the determinations required hereunder.  The Company shall bear all expenses with respect

 

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to the determinations by such independent registered public accounting firm required to be made hereunder.

 

(d)                                 The independent registered public accounting firm or law firm engaged to make the determinations hereunder shall provide its calculations, together with detailed supporting documentation, to the Company and the Executive within fifteen (15) calendar days after the date on which Executive’s right to a Payment is triggered (if requested at that time by the Company or Executive) or such other time as requested by the Company or Executive.  Any good faith determinations of the accounting firm or law firm made hereunder shall be final, binding and conclusive upon the Company and Executive.

 

(e)                                  The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others.  In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and such amounts shall not be reduced whether or not the Executive obtains other employment.  The Company agrees to pay as incurred, to the full extent permitted by law, all legal fees and expenses which the Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company, the Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement), plus, in each case, interest on any delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code.

 

6.                                      CONFIDENTIALITY.

 

(a)                                 Confidentiality.  Without the prior written consent of the Company, except (y) as reasonably necessary in the course of carrying out the Executive’s duties hereunder or (z) to the extent required by an order of a court having competent jurisdiction or under subpoena from an appropriate government agency, the Executive shall not disclose any Confidential Information unless such Confidential Information has been previously disclosed to the public by the Company or has otherwise become available to the public (other than by reason of the Executive’s breach of this Section 6(a)).   The term “Confidential Information” shall include, but shall not be limited to: (i) the identities of the existing and prospective customers or clients of the Company and its Affiliates, including names, addresses, credit status, and pricing levels; (ii) the buying and selling habits and customs of existing and prospective customers or clients of the Company and its Affiliates; (iii) financial information about the Company and its Affiliates; (iv) product and systems specifications, concepts for new or improved products and other product or systems data; (v) the identities of, and special skills possessed by, employees of the Company and its Affiliates; (vi) the identities of and pricing information about the suppliers and vendors of the Company and its Affiliates; (vii) training programs developed by the Company or its Affiliates; (viii) pricing studies, information and analyses; (ix) current and prospective products and inventories; (x) financial models, business projections and market studies; (xi) the financial results and business conditions of the Company and its Affiliates; (xii) business plans and strategies of the Company and its Affiliates; (xiii) special processes,

 

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procedures, and services of suppliers and vendors of the Company and its Affiliates; and (xiv) computer programs and software developed by the Company or its Affiliates.

 

(b)                                 Company Property.  Promptly following the Executive’s termination of employment, the Executive shall return to the Company all property of the Company, and all copies thereof in the Executive’s possession or under the Executive’s control, except that the Executive may retain the Executive’s personal notes, diaries, rolodexes, mobile devices, calendars and electronic calendars, and correspondence of a personal nature.

 

(c)                                  Nonsolicitation.  The Executive agrees that, while the Executive is employed by the Company and during the one-year period following the Executive’s termination of employment with the Company (the “Restricted Period”), the Executive shall not directly or indirectly, (i) solicit any individual who is, on the Termination Date (or was, during the six-month period prior to the Termination Date), employed by the Company or its Affiliates to terminate or refrain from renewing or extending such employment or to become employed by or become a consultant to any other individual or entity other than the Company or its Affiliates or (ii) induce or attempt to induce any customer or investor (in each case, whether former, current or prospective), supplier, licensee or other business relation of the Company or any of its Affiliates to cease doing business with the Company or such Affiliate, or in any way interfere with the relationship between any such customer, investor, supplier, licensee or business relation, on the one hand, and the Company or any of its Affiliates, on the other hand.  Any payments owed to Executive at time of separation as described herein shall be contingent upon Executive’s compliance with the post-employment nonsolicitation provisions.

 

(d)                                 Noncompetition. The Executive agrees that, during the Restricted Period, the Executive shall not be employed by, serve as a consultant to, or otherwise assist or directly or indirectly provide services to a Competitor (as defined below) if (i) the services that the Executive is to provide to the Competitor are the same as, or substantially similar to, any of the services that the Executive provided to the Company or the Affiliates, and such services are to be provided with respect to any location in which the Company or an Affiliate had material operations during the twelve (12) month period prior to the Termination Date, or with respect to any location in which the Company or an Affiliate had devoted material resources to establishing operations during the twelve (12) month period prior to the Termination Date; or (ii) the trade secrets, Confidential Information, or proprietary information (including, without limitation, confidential or proprietary methods) of the Company and the Affiliates to which the Executive had access could reasonably be expected to benefit the Competitor if the Competitor were to obtain access to such secrets or information.  For purposes of this paragraph, services provided by others shall be deemed to have been provided by the Executive to Competitor if the Executive had material supervisory responsibilities with respect to the provision of such services.  The term “Competitor” means any enterprise (including a person, firm, business, division, or other unit, whether or not incorporated) during any period in which a material portion of its business is (and during any period in which it intends to enter into business activities that would be) materially competitive in any way with any business in which the Company or any of the Affiliates were engaged during the twelve (12) month period prior to the Executive’s Termination Date (including, without limitation, any business if the Company devoted material resources to entering in such business during such twelve (12) month period), but for purposes of clause (c) above, the term “Competitor “ shall be limited to those businesses to which the

 

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Executive devoted more than an insignificant amount of time while employed by the Company.  Notwithstanding the foregoing, the term “Competitor” shall not include a business of a Competitor if such business would not, as a stand-alone enterprise, constitute a “Competitor” under the foregoing definition, provided that Executive does not render any services to, or otherwise assist the portion of the business that competes with the Company and its Affiliates.  For the avoidance of doubt, the Company’s and Affiliates’ businesses shall include, without limitation, the lines of business set forth in the Company’s annual report on Form 10-K, provided that nothing in this sentence shall be construed to limit the type of business of the Company and the Affiliates or the restrictions with respect to such businesses in the future.  Any payments owed to Executive at time of separation as described herein shall be contingent upon Executive’s compliance with the post-employment noncompetition provisions.

 

(e)                                  Equitable Remedies.  The Executive acknowledges that the Company would be irreparably injured by a violation of Section 6 and the Executive agrees that the Company, in addition to any other remedies available to it for such breach or threatened breach, on meeting the standards required by law, shall be entitled to a preliminary injunction, temporary restraining order, or other equivalent relief, restraining the Executive from any actual or threatened breach of Section 6.  If a bond is required to be posted in order for the Company to secure an injunction or other equitable remedy, the parties agree that said bond need not be more than a nominal sum.

 

(f)                                   Employee Proprietary Information and Inventions Assignment.  The terms of that certain Employee Proprietary Information and Inventions Assignment Agreement between the Executive and the Company dated [          ], 201[     ] are hereby incorporated by reference (the “Invention Assignment Agreement”).  To the extent that there are any conflicts between the terms and conditions of the Invention Assignment Agreement and this Agreement, the terms and conditions of this Agreement shall control. All non-conflicting terms of the Invention Assignment Agreement are hereby expressly preserved.

 

(g)                                 Severability; Blue Pencil.  The Executive acknowledges and agrees that the Executive has had the opportunity to seek advice of counsel in connection with this Agreement and the restrictive covenants contained herein are reasonable in geographical scope temporal duration and in all other respects.  If it is determined that any provision of this Section 6 is invalid or unenforceable, the remainder of the provisions of this Section 6 shall not thereby be affected and shall be given full effect, without regard to the invalid portions.  If any court or other decision-maker of competent jurisdiction determines that any of the covenants in this Section 6 is unenforceable because of the duration or geographic scope, of such provision, then after such determination becomes final and unappealable, the duration or scope of such provision, as the case may be, shall be reduced so that such provision becomes enforceable, and in its reduced form, such provision shall be enforced.

 

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7.                                      SUCCESSORS.

 

(a)                                 This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution.  This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives.

 

(b)                                 This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns and any party acting in the form of a receiver or trustee capacity.

 

(c)                                  The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.  As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.

 

8.                                      MISCELLANEOUS.

 

(a)                                 This Agreement shall be construed, and the rights and obligations of the parties hereunder determined, in accordance with the substantive laws of the State of Michigan, without regard to its conflict-of-laws principles.  For the purposes of any suit, action or proceeding based upon, arising out of or relating to this Agreement or the negotiation, execution or performance hereof, the parties hereby expressly submit to the jurisdiction of all federal and state courts sitting within the confines of the Federal Eastern District of Michigan (the “Venue Area”) and consent that any order, process, notice of motion or other application to or by any such court or a judge thereof may be served within or without such court’s jurisdiction by registered mail or by personal service in accordance with Section 8(b).  The parties agree that such courts shall have the exclusive jurisdiction over any such suit, action or proceeding commenced by either or both of said parties.  Each party hereby irrevocably waives any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding based upon, arising out of or relating to this Agreement or the negotiation, execution or performance hereof, brought in any federal or state court sitting within the confines of the Venue Area and hereby further irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.  The captions of this Agreement are not part of the provisions hereof and shall have no force or effect.  This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.

 

(b)                                 All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

 

	
If to the Executive:
    	
At Executive’s address as it appears in the
    
	
 
    	
Company’s books and records or at such other
    

 

17

 

	
 
    	
place as Executive shall have designated by
    
	
 
    	
notice as herein provided to the Company
    
	
 
    	
 
    
	
If to the Company:
    	
Gemphire Therapeutics Inc.
    
	
 
    	
Attn: Chairman of the Board
    
	
 
    	
Gemphire Therapeutics Inc.
    
	
 
    	
43334 Seven Mile Road, Suite 1000
    
	
 
    	
Northville, Michigan 48167
    
	
 
    	
Telephone: (248) 681-9815
    
	
 
    	
Fax: (734) 864-5765
    
	
 
    	
 
    
	
with a copy to:
    	
Honigman Miller Schwartz and Cohn LLP
    
	
 
    	
350 East Michigan Avenue, Suite 300
    
	
 
    	
Kalamazoo, Michigan 49007
    
	
 
    	
Attention: Phillip D. Torrence, Esq.
    
	
 
    	
Telephone: (269) 337-7702
    
	
 
    	
Fax: (269) 337-7703
    
	
 
    	
Email: ptorrence@honigman.com
    

 

or to such other address as either party shall have furnished to the other in writing in accordance herewith.  Notice and communications shall be effective when actually received by the addressee.

 

(c)                                  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

 

(d)                                 The Company hereby agrees to indemnify the Executive and hold the Executive harmless to the extent provided under Certificate of Incorporation of the Company (as amended), the By-Laws of the Company (as amended) and the Indemnification Agreement entered into by and between the Company and the Executive against and in respect of any and all actions, suits, proceedings, claims, demands, judgments, costs, expenses (including reasonable attorney’s fees), losses, and damages resulting from the Executive’s good faith performance of the Executive’s duties and obligations with the Company. This obligation shall survive the termination of the Executive’s employment with the Company.

 

(e)                                  From and after the Effective Date, the Company shall cover the Executive under directors’ and officers’ liability insurance both during and, while potential liability exists, after the Employment Period in the same amount and to the same extent as the Company covers its other executive officers and directors.

 

(f)                                   The Company may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

 

(g)                                 The Executive’s or the Company’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the executive to effect a

 

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Termination for Good Reason shall not be deemed to be a waiver of such provision of right or any other provision or right of this Agreement.

 

(h)                                 This Agreement, the Invention Assignment Agreement, and all agreements, documents, instruments, schedules, exhibits or certificates prepared in connection herewith, represent the entire understanding and agreement between the parties with respect to the subject matter hereof, supersede all prior agreements or negotiations between such parties, including the Prior Agreement, and may be amended, supplemented or changed only by an agreement in writing which makes specific reference to this Agreement or the agreement or document delivered pursuant hereto, as the case may be, and which is signed by the party against whom enforcement of any such amendment, supplement or modification is sought.

 

SIGNATURES ON THE FOLLOWING PAGE

 

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IN WITNESS WHEREOF, the Company and the Executive have executed this Agreement as of the date first above written.

 

 

	
THE EXECUTIVE:
    	
 
    	
THE COMPANY:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
GEMPHIRE THERAPEUTICS   INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
[INSERT NAME]
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    
						

 

SIGNATURE PAGE TO EMPLOYMENT AGREEMENTExhibit 10.9

 

LICENSE AGREEMENT

 

THIS LICENSE AGREEMENT (“Agreement”) is made effective as of the 16th day of April, 2011 (the “Effective Date”), by and between Michigan Life Therapeutics, LLC a corporation organized and existing under the laws of Michigan with offices at 2020 Shadford Road, Ann Arbor, MI 48104 (“LICENSEE”) and Pfizer Inc., a corporation organized and existing under the laws of Delaware with offices at 235 East 42nd Street, New York, NY 10017 (“PFIZER”). LICENSEE and PFIZER may, from time-to-time, be individually referred to as a “Party” and collectively referred to as the “Parties”.

 

RECITALS

 

WHEREAS, PFIZER owns certain patents hereinafter referred and defined as License Patents; and

 

WHEREAS, LICENSEE wishes to obtain, and PFIZER wishes to grant, certain licenses relating to these License Patents on the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the mutual agreements and covenants set forth herein and other good and valuable consideration, the receipt and sufficiency of which the Parties hereby acknowledge, the Parties, intending to be legally bound hereby, agree to the foregoing and as follows:

 

1.                                      DEFINITIONS

 

1.1                               “Affiliate” means, with respect to a Party, any Person that controls, is controlled by, or is under common control with that Party. For the purpose of this definition, “control” shall refer to: (a) the possession, directly or indirectly, of the power to direct the management or policies of an entity, whether through the ownership of voting securities, by contract or otherwise, or (b) the ownership, directly or indirectly, of fifty percent (50%) or more of the voting securities of such entity.

 

1.2                               “Applicable Laws” means all applicable laws, statutes, rules, regulations and guidelines, including, without limitation, all good manufacturing practices and all applicable standards or guidelines promulgated by the appropriate Regulatory Authority.

 

1.3                               “Business Day” means any day other than a Saturday, a Sunday or a day on which commercial banks located in New York, New York are authorized or required by law to remain closed.

 

1.4                               “Calendar Quarter” means the three (3) month period commencing as of the Effective Date and each successive three (3) month period thereafter.

 

*  Information redacted pursuant to a confidential treatment request by Gemphire Therapeutics Inc. under 5 U.S.C. §552(b)(4) and Rule 406 under the Securities Act of 1933 and submitted separately with the Securities and Exchange Commission.

 

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1.5                               “Calendar Year” means the twelve (12) month period commencing as of the Effective Date and each successive twelve (12) month period thereafter.

 

1.6                               “Commercialize” or “Commercialization” means to manufacture for sale, market, promote, distribute, and sell.

 

1.7                               “Commercially Reasonable Efforts” means: (a) with respect to the further Development of the Product, the efforts and expenditures required to obtain Regulatory Approvals and/or securing patents, that is comparable to any of LICENSEE’s products that are at a similar stage of development, and (b) with respect to Commercialization of the Product, efforts and expenditures that are comparable to those used for any of LICENSEE’s products that are of similar commercial potential.

 

1.8                               “Common Stock” means shares of the common stock of the LICENSEE, par value $.01 per share.

 

1.9                               “Control” or “Controlled” means, with respect to any Intellectual Property Rights, the legal authority or right (whether by ownership, license or otherwise) of a Party to grant a license or a Permitted sublicense of or under such Intellectual Property Rights to the other Party without breaching the terms of any agreement with a Third Party.

 

1.10                        “Convertible Securities” means any bonds, debentures, notes or other evidences of indebtedness, and any warrants, shares or any other securities convertible into, exercisable for, or exchangeable for Common stock, but excluding Options.

 

1.11                        “Develop” or “Development” means to conduct any and all research and development activities necessary to obtain Regulatory Approval.

 

1.12                        “FDA” means the United States Food and Drug Administration, or a successor federal agency thereto.

 

1.13                        “First Commercial Sale” means the first sale for use or consumption by the general public of the Product following receipt of Regulatory Approval for such Product from the US Federal Drug Authority or relevant foreign counterpart in the Territory.

 

1.14                        “Fully Diluted Shares” means the number of shares of the Common Stock that are or would be issued and outstanding immediately following the issuance of all Subsequent Financing Securities plus all shares of Common Stock issuable upon conversion of all such Subsequent Financing Securities plus all shares of Common Stock that are issuable upon exercise or conversion of all other Options or Convertible Securities outstanding immediately following the issuance of all such Subsequent Financing Securities.

 

*  Information redacted pursuant to a confidential treatment request by Gemphire Therapeutics Inc. under 5 U.S.C. §552(b)(4) and Rule 406 under the Securities Act of 1933 and submitted separately with the Securities and Exchange Commission.

 

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1.15                        “GAAP” means the generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board.

 

1.16                        “IND” means: (a) an investigational new drug application filed with the FDA for authorization for the investigation of the Product, and (b) any of its foreign equivalents as filed with the applicable Regulatory Authorities in the relevant regulatory jurisdictions in the Territory, as applicable.

 

1.17                        “Intellectual Property Rights” means all trade secrets, copyrights, patents and other patent rights, Trademarks, moral rights, know-how and any and all other intellectual property or proprietary rights now known or hereafter recognized in any jurisdiction.

 

1.18                        “License Patents” means any patents secured as listed in Schedule A and, the rights to use the Patents on the terms contained herein.

 

1.19                        “Milestone” means each milestone as set forth in Section 5.1.2.

 

1.20                        “NDA/BLA” means: (a) a new drug application or a new biologic license application filed with the FDA for authorization for marketing the Product, and (b) any of its foreign equivalents as filed with the applicable Regulatory Authorities in other countries or regulatory jurisdictions in the Territory, as applicable.

 

1.21                        “Net Sales” means the consolidated gross amount of Licensed products invoiced by Licensee or any Affiliate, less sales returns, and allowances actually paid, granted or accrued, including trade, quantity and cash discounts, chargebacks, rebates, and customary trade discounts actually taken, outbound freight, value added tax, sales or use taxes, and custom or excise duties. Net sales shall be determined from the consolidated books and records of the Licensee and/or Affiliate of the Licensee, as the case maybe, and as maintained in accordance with the US. GAAP consistently applied.

 

The following principles shall apply in the calculation of Net Sales:

 

1.21.1              In the case of any sale of Product which is not invoiced or is delivered before invoice, Net Sales shall be calculated at the time of shipment or when the Product is paid for, if paid for before shipment or invoice.

 

1.21.2              In the case of any sale or other disposal of Product for non-cash consideration, Net Sales shall be calculated as the fair market price of the Product in the country of sale or disposal.

 

*  Information redacted pursuant to a confidential treatment request by Gemphire Therapeutics Inc. under 5 U.S.C. §552(b)(4) and Rule 406 under the Securities Act of 1933 and submitted separately with the Securities and Exchange Commission.

 

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1.21.3              Net Sales shall be reduced by [*] for sales of any Combination Products. For purposes of this Subsection 1.20.3, “Combination Products” means any pharmaceutical product containing: (a) the Product and (b) one or more other therapeutically active ingredient(s).

 

1.21.4              Unless otherwise specified herein, Net Sales shall be calculated in accordance with GAAP generally and consistently applied.

 

1.22                        “Options” means rights, options or warrants to subscribe for, purchase or otherwise acquire Common Stock or Convertible Securities.

 

1.23                        “Patent Rights” means: (a) the patents and patent applications listed in Schedule A, (b) all divisionals, continuations, and continuations-in-part that claim priority to the patents or patent applications described in subsection (a), (c) all patents that have issued or in the future issue from any of the foregoing patent applications in subsections (a) and (b), including utility, model and design patents and certificates of invention, (d) any reissues, renewals, extensions or additions of any of the foregoing, and (e) any foreign equivalents of any of the foregoing.

 

1.24                        “Person” means an individual, corporation, partnership, limited liability company, trust, business trust, association, joint stock company, joint venture, pool, syndicate, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed herein.

 

1.25                        “Permitted sub licensee(s)” means any third party, who is not an Affiliate of the Licensee, and in respect of whom, the Licensee has received prior written consent from Pfizer to assign any of its rights in the License Patents.

 

1.26                        “Product” means Gemcabene calcium and further identified by CI-1027, PF-01430506, and/or PD-072953 (“Compound”) along with certain intellectual property, information, and other related assets.

 

1.27                        “Regulatory Approval” means, with respect to the Product in any country or jurisdiction, any approval (including where required, pricing and reimbursement approvals), registration, license or authorization that is required by the applicable Regulatory Authority to market and sell the Product in such country or jurisdiction.

 

1.28                        “Regulatory Authority” means any governmental agency or authority responsible for granting Regulatory Approvals for the Product in the Territory.

 

1.29                        “Regulatory Filings” means, with respect to the Product, any submission to a Regulatory Authority of any appropriate regulatory application, including, without limitation, any IND, NDA/BLA, any submission to a regulatory advisory

 

*  Information redacted pursuant to a confidential treatment request by Gemphire Therapeutics Inc. under 5 U.S.C. §552(b)(4) and Rule 406 under the Securities Act of 1933 and submitted separately with the Securities and Exchange Commission.

 

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board, any marketing authorization application, and any supplement or amendment thereto.

 

1.30                        “Royalty Term” means, with respect to the Product in each country in the Territory, the period commencing on the Effective Date and expiring upon the later of: the expiration or abandonment of the last Valid Claim of the Patent Rights, including any patent term extensions or supplemental protection certificates, in such country in the Territory.

 

1.31                        “Subsequent Financing Securities” means shares of the LICENSEE’S Series A Preferred Stock or shares of any other convertible preferred equity security hereafter issued and sold by the LICENSEE (or to be issued and sold by the LICENSEE contingent upon the occurrence of any milestone or similar event, or upon the satisfaction of one or more conditions) in a bona fide, arm’s length equity financing transaction with an unrelated third party.

 

1.32                        “Territory” means the entire world.

 

1.33                        “Third Party” means any Person other than a Party or an Affiliate of a Party.

 

1.34                        “Trademarks” has the meaning as set forth in Section 13.6.5.

 

1.35                        “Use” means to make, have made, use, sell, offer for sale, and import.

 

1.36                        “Valid Claim” means either: (a) a claim of an issued and unexpired patent included within the Patent Rights, which has not been permanently revoked or declared unenforceable or invalid by an unreserved and unappealable or unreversed and unappealed decision of a court or other appropriate body of competent jurisdiction, or (b) a claim of a pending patent application included within the Patent Rights, which claim was filed in good faith and has not been abandoned or finally disallowed without the possibility of appeal or refiling of such application.

 

2.                                      LICENSE GRANT

 

2.1                               License Grant of Patent Rights.

 

Subject to the terms and conditions of this Agreement, PFIZER hereby grants to LICENSEE an exclusive, royalty-bearing right and license under the Patents Rights to Use the Product within the Territory Subject to the terms and conditions of this Agreement, PFIZER hereby grants to LICENSEE a royalty-bearing right and license to use the License Patents for the purpose of the Development and Commercialization of the Product in the within the Territory.

 

2.2                               Retained Rights.  LICENSEE acknowledges and agrees that PFIZER retains the right to make, have made and use the Product for any other purpose.

 

*  Information redacted pursuant to a confidential treatment request by Gemphire Therapeutics Inc. under 5 U.S.C. §552(b)(4) and Rule 406 under the Securities Act of 1933 and submitted separately with the Securities and Exchange Commission.

 

5

 

2.3                               Residuals.  PFIZER may use for any purpose the Residuals resulting from access to or work with the Product and Know-How. As used herein, “Residuals” means information in non-tangible form which may be retained by persons who have had access to the Product and Know-How, including ideas, concepts, know-how or techniques contained therein.

 

2.4                               No Additional Rights.  Nothing in this Agreement shall be construed to confer any rights upon LICENSEE by implication, estoppel, or otherwise as to any technology or Intellectual Property Rights of PFIZER or its Affiliates other than the License Patents, regardless of whether such technology or Intellectual Property Rights shall be dominant or subordinate to any License Patents.

 

3.                                      TRANSFER OF DOCUMENTATION

 

3.1                               PFIZER agrees to maintain its currently existing records relating to the license Rights and Products, including regulatory records, for a period of six (6) months from the Effective Date. In the event that the LICENSEE wishes to access these, PFIZER will use reasonable efforts to: (a) make available to LICENSEE at the licensee’s costs, currently available records which are with it on the Effective Date. The LICENSEE understands that the costs for such retrieval will be approximately [*] per day.

 

Notwithstanding the foregoing, in no event shall PFIZER provide: (a) data or records that include technology or products other than the Product, or (b) laboratory notebooks, PFIZER internal team meeting minutes, communications, personal notes or internal correspondence that are related to the Product, provided that PFIZER will provide to LICENSEE relevant summary information that pertains to subsections (a) and (b) to the extent such information: (x) exists as of the Effective Date, (y) is retained by PFIZER and (z) is reasonably retrievable by PFIZER.

 

4.                                      DEVELOPMENT AND COMMERCIALIZATION

 

4.1                               Development.  LICENSEE shall itself, or through its Affiliates, use Commercially Reasonable Efforts to Develop the Product in the Territory. In connection with its efforts to develop the Product, LICENSEE shall bear all responsibility and expense for filing Regulatory Filings in LICENSEE’s name and obtaining Regulatory Approval for the Product. LICENSEE will undertake such activities at its sole expense and shall provide to PFIZER reports regarding LICENSEE’s progress within thirty (30) days following the expiration of each Calendar Year.

 

4.2                               Commercialization.  LICENSEE shall itself, or through its Affiliates or Permitted sub licensees, use Commercially Reasonable Efforts to Commercialize the Product in the Territory. LICENSEE will undertake such activities at its sole

 

*  Information redacted pursuant to a confidential treatment request by Gemphire Therapeutics Inc. under 5 U.S.C. §552(b)(4) and Rule 406 under the Securities Act of 1933 and submitted separately with the Securities and Exchange Commission.

 

6

 

expense. It is expressly clarified that the Licensee shall be solely liable to meet or execute any and all compliances related to the manufacture, distribution or sale of the Licensed Products

 

4.3                               Payment Terms.

 

4.3.1                     In consideration of the licenses and rights granted to LICENSEE hereunder, LICENSEE shall pay to PFIZER payments in the following manner.

 

4.3.2                     In partial consideration for the rights granted by PFIZER, the LICENSEE agrees that, upon the issuance of any Subsequent Financing Securities, or at any time at the request of PFIZER, the LICENSEE shall issue to PFIZER a number of shares of Common Stock equal to 15 percent of the LICENSEE’S Fully-Diluted Shares (such shares, the “Stock Consideration”). LICENSEE agrees that it shall take all such actions that are reasonably requested by Pfizer, or that are otherwise necessary or required, to give effect to the foregoing issuance of stock to PFIZER. LICENSEE represents and warrants to PFIZER that the Stock Consideration, when issued, and delivered in accordance with the terms hereof, will be duly and validly issued, fully-paid and non-assessable and will be issued in compliance with all applicable “federal and state securities laws regarding registration or qualification of such securities, and will not be issued in violation of any pre-emptive rights.

 

4.3.3                     Milestone Payments.  LICENSEE shall notify PFIZER as soon as practicable upon achievement of each Milestone. In further consideration of the licenses and rights granted to LICENSEE, within thirty (30) days upon achievement of each Milestone set forth below, LICENSEE shall pay to PFIZER the corresponding non-creditable and non-refundable milestone payment (each, a “Milestone Payment”).

 

	
MILESTONE
    	
 
    	
MILESTONE
   PAYMENT
    
	
·                  Date of Regulatory Submission in any   and first country in the Territory
    	
 
    	
$[*]
    
	
 
    	
 
    	
 
    
	
·                  Date of receipt of Regulatory   Approval in the following countries
    	
 
    	
USA $[*]

EU $[*]

Japan $[*]
    
	
 
    	
 
    	
 
    
	
·                  One year Post Approval of the First   received Regulatory Approval in any country in the Territory
    	
 
    	
$[*]
    

 

*  Information redacted pursuant to a confidential treatment request by Gemphire Therapeutics Inc. under 5 U.S.C. §552(b)(4) and Rule 406 under the Securities Act of 1933 and submitted separately with the Securities and Exchange Commission.

 

7

 

	
MILESTONE
    	
 
    	
MILESTONE
   PAYMENT
    
	
·                  Sales Milestones
    	
 
    	
$[*] one-time payment upon achieving consolidated Net Sales of   $[*].

$[*] one-time payment when first achieving consolidated Net Sales   of $[*].

$[*] one-time payment when first achieving consolidated Net Sales   of $[*].

$[*] one-time payment when first achieving consolidated Net Sales   of $[*].
    

 

4.3.4                     Royalty Payments.

 

(a)                                 In consideration of the licenses and rights granted to the LICENSEE hereunder, LICENSEE shall pay to PFIZER the royalties set forth below on consolidated Net Sales of Product(s) in the Territory (collectively, “Royalties”).

 

	
NET SALES
    	
 
    	
ROYALTY RATE
    
	
Net Sales equal to [*] per Calendar Year
    	
 
    	
[*] of Net Sales
    
	
Net Sales equal to [*] per Calendar Year
    	
 
    	
[*] of Net Sales
    
	
Net Sales equal or more than [*] per Calendar Year
    	
 
    	
[*] of Net Sales
    

 

(b)                                 LICENSEE shall pay to PFIZER the applicable Royalties within thirty (30) days following the expiration of each Calendar Quarter after the date of the First Commercial Sale. Royalties will be payable on a country-by-country basis commencing as of the First Commercial Sale of a Product in each country until the expiration of the Royalty Term for such Product in each country.

 

(c)                                  All payments shall be accompanied by a report that includes reasonably detailed information regarding a total monthly sales calculation of Net Sales of Product (including all Deductions) and all Royalties payable to PFIZER for the applicable Calendar Quarter (including any foreign exchange rates employed).

 

(d)                                 This Royalty shall be payable for the Royalty Term. It is expressly clarified that any and all fees, royalties, income or any direct or indirect benefit from association with the Permitted sublicense shall be valued and included for the purposes of computing and ascertaining Milestone Payments and Royalties that shall be payable to PFIZER.

 

*  Information redacted pursuant to a confidential treatment request by Gemphire Therapeutics Inc. under 5 U.S.C. §552(b)(4) and Rule 406 under the Securities Act of 1933 and submitted separately with the Securities and Exchange Commission.

 

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4.3.5                     Other Payments.  LICENSEE shall pay to PFIZER any other amounts due under this Agreement within thirty (30) days following receipt of invoice.

 

4.3.6                     Late Payments.  Any late payments shall bear interest, to the extent permitted by law, at [*] on the date payment is due.

 

4.4                               Payment Method.

 

4.4.1                     Any payments under Section 5 that are recorded in currencies other than the US Dollar shall be converted into US Dollars at the average of the daily foreign exchange rates published in the Wall Street Journal (or any other qualified source that is acceptable to both Parties) for the Calendar Quarter in which such payments or expenses occurred, or for periods less than a Calendar Quarter, the average of the daily rates published in the Wall Street Journal for such period.

 

4.4.2                     All payments from LICENSEE to PFIZER shall be made by wire transfer in US Dollars to the credit of such bank account as may be designated by PFIZER in writing to LICENSEE. Any payment which falls due on a date which is not a Business Day may be made on the next succeeding Business Day.

 

4.5                               Taxes.

 

4.5.1                     It is understood and agreed between the Parties that any amounts payable by LICENSEE to PFIZER hereunder are exclusive of any and all applicable sales, use, VAT, GST, excise, property, and other taxes, levies, duties or fees (collectively, “Taxes”). LICENSEE shall be responsible for billing and collection from its customers and remitting to the appropriate taxing authority any and all Taxes which it is required to collect or remit. Each Party will be responsible for their own income and property taxes.

 

4.5.2                     If LICENSEE is required to make a payment to PFIZER subject to a deduction of tax or withholding tax (a “Withholding Tax Requirement”), then the sum payable by LICENSEE (in respect of which such deduction or withholding is required to be made) shall be increased to the extent necessary to ensure that PFIZER receives a sum equal to the sum which it would have received had no such Withholding Tax Requirement been applicable, and the amount required to be deducted or withheld shall be remitted by LICENSEE in accordance with Applicable Law.  Any such withholding taxes required under Applicable Law to be paid or withheld shall be an expense of, and borne solely by, LICENSEE.

 

*  Information redacted pursuant to a confidential treatment request by Gemphire Therapeutics Inc. under 5 U.S.C. §552(b)(4) and Rule 406 under the Securities Act of 1933 and submitted separately with the Securities and Exchange Commission.

 

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4.5.3                     The Parties agree to cooperate and produce on a timely basis any tax forms or reports, including an IRS Form W-8BEN, reasonably requested by the other Party in connection with any payment made by LICENSEE to PFIZER under this Agreement.

 

4.6                               In the event that licensee is unable to adequately commercialize the Product or license Patents within a period of ten (10) years, PFIZER shall have the option of revoking the License Patents in its favor and/or that of its Affiliates. Any monies paid by the Licensee to PFIZER shall remain nonrefundable.

 

5.                                      RECORDS; AUDIT RIGHTS

 

5.1                               Relevant Records.

 

5.1.1                     Relevant Records.  LICENSEE shall maintain accurate financial books and records pertaining to and LICENSEE’s sale of the Product, including any and all calculations of the applicable Fees (collectively, “Relevant Records”). LICENSEE shall maintain the Relevant Records for the longer of: (a) the period of time required by Applicable Law, or (b) three (3) years following expiration or termination of this Agreement.

 

5.1.2                     Audit Request.  PFIZER shall have the right during the term and for twelve (12) months thereafter to engage, at its own expense, an independent auditor reasonably acceptable to LICENSEE to examine the Relevant Records from time-to-time, but no more frequently than once every twelve (12) months, as may be necessary to verify compliance with the terms of this Agreement. Such audit shall be requested in writing at least seven (7) days in advance, and shall be conducted during LICENSEE’s normal business hours and otherwise in manner that minimizes any interference to LICENSEE’s business operations.

 

5.1.3                     Audit Fees and Expenses.  PFIZER shall bear any and all fees and expenses it may incur in connection with any such audit of the Relevant Records; provided, however, in the event an audit reveals an underpayment of LICENSEE of more than [*] as to the period subject to the audit, LICENSEE shall reimburse PFIZER for any reasonable and documented out-of-pocket costs and expenses of the audit within thirty (30) days after receiving invoices thereof.

 

5.1.4                     Payment of Deficiency.  If any audit establishes that LICENSEE underpaid any amounts due to PFIZER under this Agreement, then LICENSEE shall pay PFIZER any such deficiency within thirty (30) days after receipt of written notice thereof. For the avoidance of doubt, such payment will be considered a late payment, subject to section 5.1.6.

 

*  Information redacted pursuant to a confidential treatment request by Gemphire Therapeutics Inc. under 5 U.S.C. §552(b)(4) and Rule 406 under the Securities Act of 1933 and submitted separately with the Securities and Exchange Commission.

 

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6.                                      INTELLECTUAL PROPERTY RIGHTS

 

6.1                               Pre-existing IP.  Each Party shall retain all rights, title and interests in and to any Intellectual Property Rights that are owned, licensed or sublicensed by such Party prior to or independent of this Agreement.

 

6.2                               Developed IP.  LICENSEE shall own all rights, title and interests in and to any Intellectual Property Rights that are both: (a) related to the Product, and (b) conceived solely by LICENSEE, its Affiliates or Permitted sub licensee’s following the Effective Date (collectively, “Developed IP”). LICENSEE hereby grants to PFIZER a non-exclusive, sub licensable, royalty-free right and license under the Developed IP for any research or development purpose. For clarification purposes this license is a non-commercial license.

 

6.3                               Patent Prosecution.

 

(a)                                 Patent Prosecution and Maintenance. Subject to PFIZER’s rights set forth below, LICENSEE will be responsible for filing, prosecuting (including in connection with any reexaminations, oppositions and the like) and maintaining the Patent Rights in the Territory (and in PFIZER’s name )at LICENSEE’s own cost and expense. LICENSEE will select qualified patent counsel and corresponding foreign associates to prepare, file, prosecute and maintain the Patent Rights. LICENSEE will keep PFIZER reasonably informed of the status of the Patent Rights by timely providing PFIZER copies of significant communications relating to such Patent Rights that are received from any patent office or patent counsel of record or foreign associate.

 

Assistance.

 

As reasonably requested by PFIZER in writing, LICENSEE shall obtain patent term restoration at LICENSEE’S expense (under, but not limited to, the Drug Price Competition and Patent Term Restoration Act), supplementary protection certificates or their equivalents, and patent term extensions with respect to the Patent Rights in the United States, Japan and Europe.

 

(b)                                 Failure to Prosecute or Maintain.  In the event LICENSEE elects to forgo filing, prosecution or maintenance of the Patent Rights, LICENSEE shall notify PFIZER of such election at least forty-five (45) days prior to any filing or payment due date, or any other due date that requires action (“Election Notice”). Upon receipt of an Election Notice, PFIZER shall be entitled, upon written notice to LICENSEE, at its sole discretion and expense, to

 

*  Information redacted pursuant to a confidential treatment request by Gemphire Therapeutics Inc. under 5 U.S.C. §552(b)(4) and Rule 406 under the Securities Act of 1933 and submitted separately with the Securities and Exchange Commission.

 

11

 

file or to continue the prosecution or maintenance of such Patent Right in such country in PFIZER’s name using counsel of its own choice and at its own expense (“Pfizer Patent Rights”), in which case, the term “Patent Rights” shall be modified to exclude the Pfizer Patent Rights as of the date LICENSEE provides PFIZER such Election Notice.

 

7.                                      INFRINGEMENT; MISSAPPROPRIATION

 

7.1                               Notification.  Each Party will promptly notify the other Party in writing of any actual or threatened infringement, misappropriation or other violation by a Third Party of any License Patents in the Territory of which it becomes aware (“Third Party Infringement”).

 

7.2                               Infringement Action.

 

7.2.1                     Right of First Enforcement.

 

(a)                                 LICENSEE shall have the first right (but not the obligation), at its own expense, to control enforcement of the License Patents against any Third Party Infringement. Prior to commencing any such action, LICENSEE shall consult with PFIZER and shall give due consideration to PFIZER’s recommendations regarding the proposed action. LICENSEE shall give PFIZER timely notice of any proposed settlement of any such action instituted by LICENSEE and shall not, without the prior written consent of PFIZER, enter into any settlement that would: (i) adversely affect the validity, enforceability or scope of any of the Patent Rights, (ii) give rise to liability of PFIZER or its Affiliates, (iii) admit non-infringement of any Patent Rights, or (iv) otherwise impair PFIZER’s rights in any License Patents or this Agreement.

 

(b)                                 If LICENSEE does not obtain agreement from the alleged infringer to desist or fails to initiate an infringement action within: (i) sixty (60) days following LICENSEE’s receipt of notice of the alleged infringement, or (ii) thirty (30) days before the expiration date for filing such actions, whichever comes first, PFIZER shall have the right, at its sole discretion, to control such enforcement of the License Patents at its sole expense.

 

7.2.2                     Recoveries.  Any recoveries resulting from an action relating to a claim of Third Party Infringement shall first be applied against payment of each Party’s costs and expenses incurred in connection therewith

 

*  Information redacted pursuant to a confidential treatment request by Gemphire Therapeutics Inc. under 5 U.S.C. §552(b)(4) and Rule 406 under the Securities Act of 1933 and submitted separately with the Securities and Exchange Commission.

 

12

 

(a)                                 Any remaining recoveries shall be retained by (or if received by PFIZER, paid to) LICENSEE; provided however, PFIZER shall be entitled to a Royalty on such remaining recoveries at the applicable rate set forth herein as if the amount of such remaining recoveries were Net Sales of LICENSEE in the Calendar Year in which the recoveries were received by LICENSEE. If LICENSEE fails to institute an action or proceeding and PFIZER exercise its right to prosecute such infringement, any remaining recoveries shall be retained by PFIZER.

8.                                      CONFIDENTIALITY

 

8.1                               Definition.  “Confidential Information” means the terms and provisions of this Agreement and other proprietary information and data of a financial, commercial or technical nature that the disclosing Party or any of its Affiliates has supplied or otherwise made available to the other Party or its Affiliates, which are: (a) disclosed in writing or (b) if disclosed orally, summarized in writing and provided to the receiving Party after disclosure. All Know-How shall be considered PFIZER’s Confidential Information.

 

8.2                               Obligations.  The receiving Party will protect all Confidential Information against unauthorized disclosure to Third Parties with reasonable degree of care. The receiving Party may disclose the Confidential Information to its Affiliates, and their respective directors, officers, employees, subcontractors, Permitted sublicense’s, consultants, attorneys, accountants, banks and investors (collectively, “Recipients”) who have a need-to-know such information for purposes related to this Agreement, provided that the receiving Party shall hold such Recipients to written obligations of confidentiality with terms and conditions at least as restrictive as those set forth in this Agreement.

 

8.3                               Exceptions.

 

8.3.1                     The obligations under this Section shall not apply to any information to the extent the receiving Party can demonstrate by competent evidence that such information:

 

(a)                                 is (at the time of disclosure) or becomes (after the time of disclosure) known to the public or part of the public domain through no breach of this Agreement by the receiving Party or any Recipients to whom it disclosed such information;

 

(b)                                 was known to, or was otherwise in the possession of, the receiving Party prior to the time of disclosure by the disclosing Party;

 

*  Information redacted pursuant to a confidential treatment request by Gemphire Therapeutics Inc. under 5 U.S.C. §552(b)(4) and Rule 406 under the Securities Act of 1933 and submitted separately with the Securities and Exchange Commission.

 

13

 

(c)                                  is disclosed to the receiving Party on a non confidential basis by a Third Party who is entitled to disclose it without breaching any confidentiality obligation to the disclosing Party; or

 

(d)                                 is independently developed by or on behalf of the receiving Party or any of its Affiliates, as evidenced by its written records, without use or access to the Confidential Information.

 

8.3.2                     The restrictions set forth in this Section shall not apply to any Confidential Information that the receiving Party is required to disclose under Applicable Laws or a court order or other governmental order, provided that the receiving Party: (a) provides the disclosing Party with prompt notice of such disclosure requirement if legally permitted, (b) affords the disclosing Party an opportunity to oppose or limit, or secure confidential treatment for such required disclosure and (c) if the disclosing Party is unsuccessful in its efforts pursuant to subsection (b), discloses only that portion of the Confidential Information that the receiving Party is legally required to disclose as advised by the receiving Party’s legal counsel.

 

8.3.3                     In the event that PFIZER wishes to assign, pledge or otherwise transfer its rights to receive some or all of the Milestone Payments and Royalties payable hereunder, PFIZER may disclose to a Third Party Confidential Information of LICENSEE in connection with any such proposed assignment, provided that PFIZER shall hold such Third Parties to written obligations of confidentiality with terms and conditions at least as restrictive as those set forth in this Agreement.

 

8.4                               Right to Injunctive Relief.  LICENSEE agrees that breaches of this Section may cause irreparable harm to PFIZER and shall entitle PFIZER, in addition to any other remedies available to it (subject to the terms of this Agreement), the right to seek injunctive relief enjoining such action.

 

8.5                               Ongoing Obligation for Confidentiality.  Upon expiration or termination of this Agreement, the receiving Party shall, and shall cause its Recipients to, destroy or return (as requested by the disclosing Party) any Confidential Information of the disclosing Party, except for one copy which may be retained in its confidential files for archive purposes.

 

9.                                      REPRESENTATIONS, WARRANTIES AND COVENANTS

 

9.1                               Representations and Warranties by Each Party.  Each Party represents and warrants to the other Party as of the Effective Date that:

 

*  Information redacted pursuant to a confidential treatment request by Gemphire Therapeutics Inc. under 5 U.S.C. §552(b)(4) and Rule 406 under the Securities Act of 1933 and submitted separately with the Securities and Exchange Commission.

 

14

 

(a)                                 it is a corporation duly organized, validly existing, and in good standing under the laws of its jurisdiction of formation;

 

(b)                                 it has full corporate power and authority to execute, deliver, and perform under this Agreement, and has taken all corporate action required by Applicable Law and its organizational documents to authorize the execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement;

 

(c)                                  this Agreement constitutes a valid and binding agreement enforceable against it in accordance with its terms;

 

(d)                                 all consents, approvals and authorizations from all governmental authorities or other Third Parties required to be obtained by such Party in connection with this Agreement have been obtained; and

 

(e)                                  the execution and delivery of this Agreement and all other instruments and documents required to be executed pursuant to this Agreement, and the consummation of the transactions contemplated hereby do not and shall not: (i) conflict with or result in a breach of any provision of its organizational documents, (ii) result in a breach of any agreement to which it is a party that would impair the performance of its obligations hereunder; or (iii) violate any Applicable Law.

 

9.2                               Representations and Warranties by LICENSEE.

 

9.2.1                     LICENSEE represents and warrants that it has the financial and commercial capabilities to Develop and Commercialize the Product in accordance with this Agreement.

 

9.2.2                     LICENSEE represents and warrants to PFIZER that it shall comply with all Applicable Law with respect to the performance of its obligations hereunder.

 

9.2.3                     Without limiting the generality contained herein, LICENSEE shall comply with the U.S. Foreign Corrupt Practices Act of 1977 (as modified or amended). LICENSEE represents and warrants that it has not and will not directly or indirectly offer or pay, or authorize such offer or payment of, any money, or transfer anything of value, to improperly seek to influence any Government Official. If LICENSEE is itself a Government Official, LICENSEE represents and warrants that it has not accepted, and will not accept in the future, such a payment or transfer. As used herein, “Governmental Official” means: (a) any elected or appointed government

 

*  Information redacted pursuant to a confidential treatment request by Gemphire Therapeutics Inc. under 5 U.S.C. §552(b)(4) and Rule 406 under the Securities Act of 1933 and submitted separately with the Securities and Exchange Commission.

 

15

 

official (e.g., a member of a ministry of health), (b) any employee or person acting for or on behalf of a government official, agency, or enterprise performing a governmental function, (c) any political party officer, employee, or person acting for or on behalf of a political party or candidate for public office, (d) an employee or person acting for or on behalf of a public international organization, or (e) any person otherwise categorized as a government official under local law. “Government” is meant to include all levels and subdivisions of non-U.S. governments (i.e., local, regional, or national and administrative, legislative, or executive). LICENSEE will update these warranties if it or any of its employees, or a relative of such an individual, becomes a Government Official, or if a Government or Government Official becomes an owner of LICENSEE.

 

9.3                               No Other Warranties.  EXCEPT AS EXPRESSLY STATED HEREIN, NEITHER PARTY MAKES ANY REPRESENTATIONS OR EXTENDS ANY WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, INCLUDING BUT NOT LIMITED TO WARRANTIES OF TITLE, NON-INFRINGEMENT, VALIDITY, ENFORCEABILITY, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE OF THE LICENSED PRODUCT. ANY INFORMATION PROVIDED BY PFIZER OR ITS AFFILIATES IS MADE AVAILABLE ON AN “AS IS” BASIS WITHOUT WARRANTY WITH RESPECT TO COMPLETENESS, COMPLIANCE WITH REGULATORY STANDARDS OR REGULATIONS OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER KIND OF WARRANTY WHETHER EXPRESS OR IMPLIED.

 

10.                               INDEMNIFICATION

 

10.1                        Indemnification by LICENSEE.  LICENSEE agrees to indemnify, hold harmless and defend PFIZER and its Affiliates, and their respective officers, directors, employees, contractors, agents and assigns (collectively, “Pfizer Indemnitees”), from and against any Claims arising or resulting from: (a) the Development of a Product by LICENSEE, its Affiliates (b) the Commercialization of a Product by LICENSEE, its Affiliates, subcontractors or Permitted sub licensees, (c) the negligence, recklessness or wrongful intentional acts or omissions of LICENSEE, its Affiliates, subcontractors or Permitted sub licensees, (d) breach by LICENSEE of any representation, warranty or covenant as set forth in this Agreement or (e) breach by LICENSEE of the scope of the license set forth in this Agreement. As used herein, “Claims” means collectively, any and all Third Party demands, claims, actions and proceedings (whether criminal or civil, in contract, tort or otherwise) for losses, damages, liabilities, costs and expenses (including reasonable attorneys’ fees).

 

*  Information redacted pursuant to a confidential treatment request by Gemphire Therapeutics Inc. under 5 U.S.C. §552(b)(4) and Rule 406 under the Securities Act of 1933 and submitted separately with the Securities and Exchange Commission.

 

16

 

10.2                        In the event of any non-compliance of any terms contained herein the LICENSEE hereby confirms and undertakes that any and all of its rights as provided herein in the Licensed Patents, including but not limited to all documents, materials or applications that maybe in possession or name of the Licensee or its Affiliate, shall be deemed to have been irrevocably transferred back to PFIZER, at no cost to PFIZER. Costs for such transfer shall be borne by the LICENSEE.

 

10.3                        Indemnification Procedure.  In connection with any Claim for which PFIZER seeks indemnification from LICENSEE pursuant to this Agreement, PFIZER shall: (a) give LICENSEE prompt written notice of the Claim; provided, however, that failure to provide such notice shall not relieve LICENSEE from its liability or obligation hereunder, except to the extent of any material prejudice as a direct result of such failure; (b) cooperate with LICENSEE, at LICENSEE’s expense, in connection with the defense and settlement of the Claim; and (c) permit LICENSEE to control the defense and settlement of the Claim; provided, however, that LICENSEE may not settle the Claim without PFIZER’s prior written consent, which shall not be unreasonably withheld or delayed, in the event such settlement materially adversely impacts PFIZER’s rights or obligations. Further, PFIZER shall have the right to participate (but not control) and be represented in any suit or action by advisory counsel of its selection and at its own expense.

 

11.                               LIMITATION OF LIABILITY

 

Consequential Damages Waiver.  EXCEPT FOR A BREACH OF SECTION 9 OR OBLIGATIONS ARISING UNDER SECTION 10, NEITHER PARTY SHALL BE LIABLE FOR ANY INDIRECT, CONSEQUENTIAL, SPECIAL, EXEMPLARY OR PUNITIVE DAMAGES, INCLUDING DAMAGES FOR LOST PROFITS OR LOST REVENUES REGARDLESS OF WHETHER IT HAS BEEN INFORMED OF THE POSSIBILITY OR LIKELIHOOD OF SUCH DAMAGES OR THE TYPE OF CLAIM, CONTRACT OR TORT (INCLUDING NEGLIGENCE).

 

12.                               TERM; TERMINATION

 

12.1                        Term.  The term of this Agreement shall commence as of the Effective Date and shall expire upon the last-to-expire Royalty Term.

 

12.2                        Termination for Cause.  Each Party shall have the right, without prejudice to any other remedies available to it at law or in equity, to terminate this Agreement in the event the other Party breaches any of its material obligations hereunder and fails to cure such breach within thirty (30) days of receiving notice thereof; provided, however, if such breach is capable of being cured, but cannot be cured within such thirty (30) day period, and the breaching Party initiates actions to

 

*  Information redacted pursuant to a confidential treatment request by Gemphire Therapeutics Inc. under 5 U.S.C. §552(b)(4) and Rule 406 under the Securities Act of 1933 and submitted separately with the Securities and Exchange Commission.

 

17

 

cure such breach within such period and thereafter diligently pursues such actions, the breaching Party shall have such additional period as is reasonable to cure such breach, but in no event will such additional period exceed sixty (60) days. Any termination by a Party under this Section shall be without prejudice to any damages or other legal or equitable remedies to which it may be entitled from the other Party. For the avoidance of doubt, LICENSEE’s failure to use Commercially Reasonable Efforts to Develop and Commercialize the Product shall constitute a material breach by LICENSEE under this Agreement.

 

12.3                        Termination for a Bankruptcy Event.  Each Party shall have the right to terminate this Agreement in the event of a Bankruptcy Event with respect to the other Party. “Bankruptcy Event” means the occurrence of any of the following: (a) the institution of any bankruptcy, receivership, insolvency, reorganization or other similar proceedings by or against a Party under any bankruptcy, insolvency, or other similar law now or hereinafter in effect, including any section or chapter of the United States Bankruptcy Code, as amended or under any similar laws or statutes of the United States or any state thereof (the “Bankruptcy Code”), where in the case of involuntary proceedings such proceedings have not been dismissed or discharged within ninety (90) days after they are instituted, (b) the insolvency or making of an assignment for the benefit of creditors or the admittance by a Party of any involuntary debts as they mature, (c) the institution of any reorganization, arrangement or other readjustment of debt plan of a Party not involving the Bankruptcy Code, (d) appointment of a receiver for all or substantially all of a Party’s assets, or (e) any corporate action taken by the board of directors of a Party in furtherance of any of the foregoing actions.

 

12.4                        Termination for Challenge to License Patents.  PFIZER shall have the right to immediately terminate this Agreement at any time after the Effective Date in its entirety or on a country-by-country basis in the event LICENSEE or any of its Affiliates or its or their Permitted sub licensees contests, challenges, supports or assists any Third Party to contest or challenge, in any patent office, court, regulatory agency or other forum, PFIZER’s ownership of or rights in, or the validity, enforceability or scope of, any of the License Patents.

 

12.5                        Termination for Convenience.  LICENSEE shall have the right to terminate this Agreement for convenience upon ninety (90) days prior written notice to PFIZER. In the event LICENSEE terminates for convenience, LICENSEE shall pay to PFIZER an early termination fee in an amount equal to US Dollars [*].

 

12.6                        Effect of Termination or Expiration.

 

12.6.1              Upon termination or expiration of this Agreement, LICENSEE shall pay to PFIZER all amounts due to PFIZER as of the effective date of termination or expiration within thirty (30) days following the effective date of termination or expiration.

 

*  Information redacted pursuant to a confidential treatment request by Gemphire Therapeutics Inc. under 5 U.S.C. §552(b)(4) and Rule 406 under the Securities Act of 1933 and submitted separately with the Securities and Exchange Commission.

 

18

 

12.6.2              Upon termination of this Agreement, LICENSEE shall have the right to sell its remaining inventory of Product following the termination of this Agreement so long as LICENSEE has fully paid any and all Royalties, Milestone Payments and Permitted sublicense Fees owed to PFIZER, and LICENSEE otherwise is not in material breach of this Agreement.

 

12.6.3              Subject to this Section 12, upon termination of this Agreement, all licenses granted by PFIZER to LICENSEE shall terminate. For clarity, termination of the licenses granted by PFIZER to LICENSEE shall terminate all Permitted sublicenses granted by LICENSEE hereunder.

 

12.6.4              With the exception of termination of this Agreement by LICENSEE pursuant to Section 12.2, upon termination of this Agreement:

 

(a)                                 LICENSEE hereby grants to PFIZER a non-exclusive, fully paid-up, royalty-free, worldwide, transferable, perpetual and irrevocable license, with the right to sublicense, to Use any Intellectual Property Rights Controlled by LICENSEE that arise from the Development or Commercialization of the Product, including without limitation, any and all Developed IP for Use of the Product.

 

(b)                                 To the extent permitted by applicable Regulatory Authorities, LICENSEE shall: (i) transfer to PFIZER all Regulatory Filings and Regulatory Approvals held by LICENSEE with respect to the Product, and (ii) to the extent subsection (i) is not permitted by the applicable Regulatory Authority, permit PFIZER to cross-reference and rely upon any Regulatory Approvals and Regulatory Filings filed by LICENSEE with respect to the Product.

 

(c)                                  LICENSEE hereby grants to PFIZER a fully paid-up, royalty-free, worldwide, transferable, sub licensable, perpetual and irrevocable license to use the Trademarks identifying a Product for the purpose of manufacturing, marketing, distributing and selling the Product. As used herein, “Trademarks” means all registered and unregistered trademarks, service marks, trade dress, trade names, logos, insignias, domain names, symbols, designs, and combinations thereof.

 

(d)                                 Upon PFIZER’s request, LICENSEE shall continue all on-going Development for a mutually agreed upon migration period after termination of this Agreement, which period shall not be less than six (6) months unless otherwise agreed to by the Parties (“Migration Period”). During the Migration Period, LICENSEE shall provide such knowledge transfer and other training to

 

*  Information redacted pursuant to a confidential treatment request by Gemphire Therapeutics Inc. under 5 U.S.C. §552(b)(4) and Rule 406 under the Securities Act of 1933 and submitted separately with the Securities and Exchange Commission.

 

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PFIZER or its Affiliates or a Third Party that is designated in writing by PFIZER (“Designated Affiliate/Third Party”) as reasonably necessary for PFIZER or the Designated Affiliate/Third Party to continue such activities. In connection with such transfer, LICENSEE shall, at PFIZER’s option: (i) transfer to PFIZER or the Designated Affiliate/Third Party all Product at the cost paid by LICENSEE to manufacture such Product, (ii) transfer to PFIZER or the Designated Affiliate/Third Party all Licensee Inventory owned by LICENSEE at the cost paid by LICENSEE for such Licensee Inventory, and (iii) assign to PFIZER or the Designated Affiliate/Third Party any agreements with Third Parties with respect to the Development or Commercialization of the Product. As used herein, “Licensee Inventory” means all components and works in process produced or held by LICENSEE with respect to the manufacture of Products.

 

12.7                        Survival.  Expiration or termination of this Agreement shall not relieve the. Parties of any obligation accruing hereunder prior to such expiration or termination. Without limiting the foregoing, the provisions of Sections 5, 6.1, 8, 10, 11, 12.6, 14, 15, 16.3 and 16.8 shall survive expiration or termination of this Agreement.

 

13.                               PUBLICITY

 

13.1                        Publicity.

 

13.1.1              Subject to PFIZER’s rights herein), neither Party (nor any of its Affiliates or agents) shall use the Trademarks of the other Party or its Affiliates in any press release, publication or other form of promotional disclosure without the prior written consent of the other Party in each instance.

 

13.1.2              Each Party agrees not to issue any press release or other public statement, whether written, electronic, oral or otherwise, disclosing the existence of this Agreement, the terms hereof or any information relating to this Agreement without the prior written consent of the other Party, provided however, that neither Party will be prevented from complying with any duty of disclosure it may have pursuant to Applicable Law or the rules of any recognized stock exchange so long as the disclosing Party provides the other Party at least ten (10) Business Days prior written notice to the extent practicable and only discloses information to the extent required by Applicable Law or the rules of any recognized stock exchange.

 

*  Information redacted pursuant to a confidential treatment request by Gemphire Therapeutics Inc. under 5 U.S.C. §552(b)(4) and Rule 406 under the Securities Act of 1933 and submitted separately with the Securities and Exchange Commission.

 

20

 

14.                               LICENSEE INSURANCE

 

14.1                        Insurance Requirements.  LICENSEE will maintain during the term of this Agreement and until the later of: (a) three (3) years after termination or expiration of this Agreement, or (b) the date that all statutes of limitation covering claims or suits that may be instituted for personal injury based on the sale or use of the Product have expired, commercial general liability insurance from a minimum “A-” AM Bests rated insurance company, including contractual liability and product liability or clinical trials, if applicable, with coverage limits of not less than [*] per occurrence and [*] in the aggregate. LICENSEE has the right to provide the total limits required by any combination of primary and umbrella/excess coverage. The minimum level of insurance set forth herein shall not be construed to create a limit on LICENSEE’s liability hereunder. Such policies shall name PFIZER and its Affiliates as additional insured and provide a waiver of subrogation in favor of PFIZER and its Affiliates. Such insurance policies shall be primary and non-contributing with respect to any other similar insurance policies available to PFIZER or its Affiliates. Any deductibles for such insurance shall be assumed by LICENSEE.

 

14.2                        Policy Notification.  LICENSEE shall provide PFIZER with certified copies of such policies or original certificates of insurance evidencing such insurance: (a) prior to execution by both Parties of this Agreement, and (b) prior to expiration of any one coverage. Such certificates shall provide that PFIZER shall be given at least thirty (30) days written notice prior to cancellation, termination or any change to restrict the coverage or reduce the limits afforded.

 

15.                               DISPUTE RESOLUTION

 

15.1                        General.  Except for disputes for which injunctive or other equitable relief is sought to prevent the unauthorized use or disclosure of proprietary materials or information or prevent the infringement or misappropriation of a Party’s Intellectual Property Rights, the following procedures shall be used to resolve any dispute arising out of or in connection with this Agreement.

 

15.2                        Meeting.  Promptly after the written request of either Party, each of the Parties shall appoint a designated representative to meet in person or by telephone to attempt in good faith to resolve any dispute. If the designated representatives do not resolve the dispute within sixty (60) Business Days of such request, then an executive officer of each Party shall meet in person or by telephone to review and attempt to resolve the dispute in good faith. The executive officers shall have sixty (60) Business Days to attempt to resolve the dispute.

 

16.                               GENERAL PROVISIONS

 

16.1                        Assignment.  Neither Party may assign its rights and obligations under this Agreement without the other Party’s prior written consent, except that: (a) PFIZER may assign to a Third Party its rights to receive some or all of the Fees

 

*  Information redacted pursuant to a confidential treatment request by Gemphire Therapeutics Inc. under 5 U.S.C. §552(b)(4) and Rule 406 under the Securities Act of 1933 and submitted separately with the Securities and Exchange Commission.

 

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payable hereunder, (b) each Party may assign its rights and obligations under this Agreement or any part hereof to one or more of its Affiliates without the consent of the other Party; and (c) either Party may assign this Agreement in the event of a Change in Control. As used herein, “Change in Control” means the acquisition of a party by a Third Party or the sale of all or substantially all of its business to which this Agreement relates. The assigning Party shall provide the other Party with prompt written notice of any such assignment. Any permitted assignee pursuant to clauses (b) and (c) above shall assume all obligations of its assignor under this Agreement, and no permitted assignment shall relieve the assignor of liability for its obligations hereunder. Any attempted assignment in contravention of the foregoing shall be void.

 

16.2                        Severability.  Should one or more of the provisions of this Agreement become void or unenforceable as a matter of law, then such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement, and the Parties agree to substitute a valid and enforceable provision therefore which, as nearly as possible, achieves the desired economic effect and mutual understanding of the Parties under this Agreement.

 

16.3                        Governing Law; Exclusive Jurisdiction.

 

16.3.1              This Agreement shall be governed by and construed under the laws in effect in the State of New York, US, without giving effect to any conflicts of laws provision thereof or of any other jurisdiction that would produce a contrary result.

 

16.3.2              The courts of New York shall have exclusive jurisdiction over any action brought to enforce this Agreement, and each of the Parties hereto irrevocably: (a) submits to such exclusive jurisdiction for such purpose; (b) waives any objection which it may have at any time to the laying of venue of any proceedings brought in such courts; (c) waives any claim that such proceedings have been brought in an inconvenient forum, and (d) further waives the right to object with respect to such proceedings that any such court does not have jurisdiction over such Party. Notwithstanding the foregoing, application may be made to any court of competent jurisdiction with respect to the enforcement of any judgment or award.

 

16.4                        Force Majeure.  Except with respect to delays or nonperformance caused by the negligent or intentional act or omission of a Party, any delay or nonperformance by such Party (other than payment obligations under this Agreement) will not be considered a breach of this Agreement to the extent such delay or nonperformance is caused by acts of God, natural disasters, acts of the government or civil or military authority, fire, floods, epidemics, quarantine, energy crises, war or riots or other similar cause outside of the reasonable control

 

*  Information redacted pursuant to a confidential treatment request by Gemphire Therapeutics Inc. under 5 U.S.C. §552(b)(4) and Rule 406 under the Securities Act of 1933 and submitted separately with the Securities and Exchange Commission.

 

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of such Party (each, a “Force Majeure Event”), provided that the Party affected by such Force Majeure Event will promptly begin or resume performance as soon as reasonably practicable after the event has abated. If the Force Majeure Event prevents a Party from performing any of its obligations under this Agreement for one hundred eighty (180) days or more, then the other Party may terminate this Agreement immediately upon written notice to the non-performing Party.

 

16.5                        Waivers and Amendments.  The failure of any Party to assert a right hereunder or to insist upon compliance with any term or condition of this Agreement shall not constitute a waiver of that right or excuse a similar subsequent failure to perform any such term or condition by the other Party. No waiver shall be effective unless it has been given in writing and signed by the Party giving such waiver. No provision of this Agreement may be amended or modified other than by a written document signed by authorized representatives of each Party.

 

16.6                        Relationship of the Parties.  Nothing contained in this Agreement shall be deemed to constitute a partnership, joint venture, or legal entity of any type between PFIZER and LICENSEE, or to constitute one Party as the agent of the other. Moreover, each Party agrees not to construe this Agreement, or any of the transactions contemplated hereby, as a partnership for any tax purposes. Each Party shall act solely as an independent contractor, and nothing in this Agreement shall be construed to give any Party the power or authority to act for, bind, or commit the other Party.

 

16.7                        Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns.

 

16.8                        Notices.  All notices, consents, waivers, and other communications under this Agreement must be in writing and will be deemed to have been duly given when: (a) delivered by hand (with written confirmation of receipt), (b) sent by fax (with written confirmation of receipt), provided that a copy is sent by an internationally recognized overnight delivery service (receipt requested), or (c) when received by the addressee, if sent by an internationally recognized overnight delivery service (receipt requested), in each case to the appropriate addresses and fax numbers set forth below (or to such other addresses and fax numbers as a Party may designate by written notice):

 

If to PFIZER:

 

Pfizer Inc.

235 East 42nd Street

New York, NY 10017

Fax: [*]

Attention: General Counsel

 

*  Information redacted pursuant to a confidential treatment request by Gemphire Therapeutics Inc. under 5 U.S.C. §552(b)(4) and Rule 406 under the Securities Act of 1933 and submitted separately with the Securities and Exchange Commission.

 

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If to LICENSEE:

 

Michigan Life Therapeutics, LLC

2020 Shadford Road

Ann Arbor, MI 48104

Fax: 734-864-5765

Attention: Dr. Charles Bisgaier

 

16.9                        Further Assurances.  LICENSEE and PFIZER hereby covenant and agree without the necessity of any further consideration, to execute, acknowledge and deliver any and all such other documents and take any such other action as may be reasonably necessary or appropriate to carry out the intent and purposes of this Agreement.

 

16.10                 No Third Party Beneficiary Rights.  This Agreement is not intended to and shall not be construed to give any Third Party any interest or rights (including, without limitation, any third party beneficiary rights) with respect to or in connection with any agreement or provision contained herein or contemplated hereby.

 

16.11                 Entire Agreement; Confidentiality Agreement.

 

(a)                                 This Agreement, together with its Schedules, sets forth the entire agreement and understanding of the Parties as to the subject matter hereof and supersedes all proposals, oral or written, and all other prior communications between the Parties with respect to such subject matter, including, without limitation, that certain Confidentiality Agreement by and between the Parties, dated October 28, 2008 and amendment dated January 29, 2009 (“CDA”). The Parties acknowledge and agree that, as of the Effective Date, all Evaluation Material (as defined in the CDA) disclosed by PFIZER or its Affiliates pursuant to the CDA shall be considered PFIZER’s Confidential Information and subject to the terms set forth in this Agreement.

 

(b)                                 In the event of any conflict between a material provision of this Agreement and any Schedule hereto, the Agreement shall control.

 

16.12                 Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

16.13                 Cumulative Remedies.  No remedy referred to in this Agreement is intended to be exclusive, but each shall be cumulative and in addition to any other remedy referred to in this Agreement or otherwise available under law.

 

*  Information redacted pursuant to a confidential treatment request by Gemphire Therapeutics Inc. under 5 U.S.C. §552(b)(4) and Rule 406 under the Securities Act of 1933 and submitted separately with the Securities and Exchange Commission.

 

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16.14                 Waiver of Rule of Construction.  Each Party has had the opportunity to consult with counsel in connection with the review, drafting and negotiation of this Agreement. Accordingly, any rule of construction that any ambiguity in this Agreement shall be construed against the drafting Party shall not apply.

 

[Signatures on next page]

 

*  Information redacted pursuant to a confidential treatment request by Gemphire Therapeutics Inc. under 5 U.S.C. §552(b)(4) and Rule 406 under the Securities Act of 1933 and submitted separately with the Securities and Exchange Commission.

 

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IN WITNESS WHEREOF, the Parties intending to be bound have caused this Agreement to be executed by their duly authorized representatives as of the Effective Date.

 

	
MICHIGAN LIFE THERAPEUTICS, LLC
    	
 
    	
PFIZER
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
/s/ Charles L. Bisgaier
    	
 
    	
By:
    	
/s/ Tim Rolph
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Name:
    	
Charles L. Bisgaier
    	
 
    	
Name:
    	
Tim Rolph
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Title:
    	
Chief Executive Manager
    	
 
    	
Title:
    	
VP, Pfizer Global Research
    
	
 
    	
Michigan Life Therapeutics, LLC
    	
 
    	
 
    	
Head of CV, Metabolic and Endocrine
    
									

 

*  Information redacted pursuant to a confidential treatment request by Gemphire Therapeutics Inc. under 5 U.S.C. §552(b)(4) and Rule 406 under the Securities Act of 1933 and submitted separately with the Securities and Exchange Commission.

 

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SCHEDULE A:  PATENT RIGHTS

1.             PATENTS

 

	
Docket
   Number
    	
 
    	
Former Dkt
   No
    	
 
    	
Country
    	
 
    	
Application
   Number
    	
 
    	
Application
   Date
    	
 
    	
Status
    	
 
    	
Sub Status
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
[*]
    	
 
    	
[*]
    	
 
    	
[*]
    	
 
    	
[*]
    	
 
    	
[*]
    	
 
    	
[*]
    	
 
    	
[*]
    

 

*  Information redacted pursuant to a confidential treatment request by Gemphire Therapeutics Inc. under 5 U.S.C. §552(b)(4) and Rule 406 under the Securities Act of 1933 and submitted separately with the Securities and Exchange Commission.

 

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