Document:

Exhibit 10.2

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

PUBLIC HEALTH SERVICE

 

PATENT LICENSE AGREEMENT—EXCLUSIVE and NON-EXCLUSIVE

 

COVER PAGE

 

For PHS internal use only:

 

Patent License Application Number:
 A-380-2003

 

Serial Number(s) of Licensed Patent(s) and/or Patent Application(s):

 

	
Country
    	
 
    	
Serial Number
    	
 
    	
Filing Date
    	
 
    	
DHHS ref
    
	
USA
    	
 
    	
60/094,425
    	
 
    	
07/28/1998
    	
 
    	
E-015-1998/0-US-01
    
	
PCT
    	
 
    	
PCT/U599/17036
    	
 
    	
07/27/1999
    	
 
    	
E-015-1998/0-PCT-02
    
	
CA
    	
 
    	
2336875
    	
 
    	
07/27/1999
    	
 
    	
E-015-1998/0-CA-07
    
	
EP
    	
 
    	
99938819.2
    	
 
    	
07/27/1999
    	
 
    	
E-015-1998/0-EP-08
    
	
USA
    	
 
    	
09/743,338
    	
 
    	
01/04/2001
    	
 
    	
E-015-1998/0-US-10
    
	
JP
    	
 
    	
2000-562050
    	
 
    	
07/27R 999
    	
 
    	
E-015-1998/0-JP-09
    
	
KR
    	
 
    	
7001236/2001
    	
 
    	
07/27/1999
    	
 
    	
E-015-1998/0-KR-05
    
	
AU
    	
 
    	
5322199
    	
 
    	
07/27/1999
    	
 
    	
E-015-1998/0-AU-06
    

 

Licensee:
 Aridis Pharmaceuticals, LLC

 

Cooperative Research and Development Agreement (CRADA) Number (if applicable):

 

Additional Remarks:

 

 

 

Public Benefit(s): Vaccine against Rotavirus infection

 

This Patent License Agreement, hereinafter referred to as the “Agreement”, consists of this Cover Page, an attached Agreement, a Signature Page, Appendix A (List of Patent(s) and/or Patent Application(s)), Appendix B (Fields of Use and Territory and Biological Materials and Documentation), Appendix C (Royalties), Appendix D (Modifications), Appendix E (Benchmarks), Appendix F (Commercial Development Plan) and Appendix G (Plan for Developing Countries).  The Parties to this Agreement are:

 

1)                                     The National Institutes of Health (“NIH”), the Centers for Disease Control and Prevention (“CDC”), or the Food and Drug Administration (“FDA”), hereinafter singly or collectively referred to as “PHS”, agencies of the United States Public Health Service within the Department of Health and Human Services (“DHHS”); and

 

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Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

2)                                     The person, corporation, or institution identified above and/or on the Signature Page, having offices at the address indicated on the Signature Page, hereinafter referred to as “Licensee”.

 

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Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

PHS PATENT LICENSE AGREEMENT—EXCLUSIVE and NON-EXCLUSIVE

 

PHS and Licensee agree as follows:

 

1.                                      BACKGROUND

 

1.01                        In the course of conducting biomedical and behavioral research, PHS investigators made inventions that may have commercial applicability.

 

1.02                        By assignment of rights from PHS employees and other inventors, DHHS, on behalf of the United States Government, owns intellectual property rights claimed in any United States and/or foreign patent applications or patents corresponding to the assigned inventions.  DHHS also owns any tangible embodiments of these inventions actually reduced to practice by PHS.

 

1.03                        The Secretary of DHHS has delegated to PHS the authority to enter into this Agreement for the licensing of rights to these inventions.

 

1.04                        PHS desires to transfer these inventions to the private sector through commercialization licenses to facilitate the commercial development of products and processes for public use and benefit.

 

1.05                        Licensee desires to acquire commercialization rights to certain of these inventions in order to develop processes, methods, and/or marketable products for public use and benefit.

 

2.                                      DEFINITIONS

 

2.01                        “Benchmarks” mean the performance milestones that are set forth in Appendix E.

 

2.02                        “Commercial Development Plan” means the written commercialization plan attached as Appendix F.

 

2.03                        “First Commercial Sale” means the initial transfer by or on behalf of Licensee or its sublicensees of Licensed Product(s) or the initial practice of a Licensed Process(es) by or on behalf of Licensee or its sublicensees in exchange for cash or some equivalent to which value can be assigned for the purpose of determining Net Sales.

 

2.04                        “Government” means the Government of the United States of America.

 

2.05                        “Licensed Fields of Use” means the fields of use identified in Appendix B.

 

2.06                        “Licensed Patent Rights” shall mean:

 

a)                                     Patent applications (including provisional patent applications and PCT patent applications) and/or patents listed in Appendix A, all divisions and continuations of these applications, all patents issuing from such applications, divisions, and continuations, and any reissues, reexaminations, and extensions of all such patents;

 

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Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

b)                                     to the extent that the following contain one or more claims directed to the invention or inventions disclosed in a) above: i) continuations-in-part of a) above; ii) all divisions and continuations of these continuations-in-part; iii) all patents issuing from such continuations-in-part, divisions, and continuations; iv) priority patent application(s) of a) above; and v) any reissues, reexaminations, and extensions of all such patents;

 

c)                                      to the extent that the following contain one or more claims directed to the invention or inventions disclosed in a) above: all counterpart foreign and U.S. patent applications and patents to a) and b) above, including those listed in Appendix A.

 

Licensed Patent Rights shall not include b) or c) above to the extent that they claim new matter that is not the subject matter disclosed in a) above, except to the extent included under an amendment to this Agreement pursuant to a CRADA between Licensee and the PHS investigators.  For any patent rights under b) or c) above having claims to subject matter disclosed in a) above and other claims to subject matter not disclosed in a) above, those claims corresponding to a) above shall be included in the Licensed Patent Rights.

 

2.07                        “Licensed Process(es)” means processes which, in the course of being practiced would be within the scope of one or more claims of the Licensed Patent Rights that have not been held unpatentable, invalid or unenforceable by an unappealed or unappealable judgment of a court of competent jurisdiction, and these same processes when practiced in conjunction with the Biological Materials and their derivatives.

 

2.08                        “Licensed Product(s)” means tangible materials which, in the course of manufacture, use, sale, or importation would be within the scope of one or more claims of the Licensed Patent Rights that have not been held unpatentable, invalid or unenforceable by an unappealed or unappealable judgment of a court of competent jurisdiction and Biological Materials and their derivatives and pharmaceutical formulations made from said Biological Materials and their derivatives.

 

2.09                        “Exclusive Licensed Territory” means the geographical area identified in Appendix B.

 

2.10                        “Non-Exclusive Licensed Territory” means the geographical area identified in Appendix B.

 

2.11                        “Licensed Territories” mean Exclusive Licensed Territory and Non-Exclusive Licensed Territory.

 

2.12                        “Net Sales” means the total gross receipts for sales of Licensed Products or practice of Licensed Processes by or on behalf of Licensee or its sublicensees, and from leasing, renting, or otherwise making Licensed Products available to others without sale or other dispositions, whether invoiced or not, less returns and allowances, packing costs, insurance costs, freight out, taxes or excise duties imposed on the transaction (if separately invoiced), and wholesaler and cash discounts in amounts customary in the trade to the extent actually granted.  No deductions shall be made for commissions paid to individuals, whether they be with independent sales agencies or regularly employed by Licensee, or sublicensees, and on its payroll, or for the cost of collections.

 

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Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

2.13                        “Practical Application” means to manufacture in the case of a composition or product, to practice in the case of a process or method, or to operate in the case of a machine or system; and in each case, under such conditions as to establish that the invention is being utilized and that its benefits are to the extent permitted by law or Government regulations available to the public on reasonable terms.

 

2.14                        “Research License” means a nontransferable, nonexclusive license to make and to use the Licensed Products or Licensed Processes as defined by the Licensed Patent Rights for purposes of research and not for purposes of commercial manufacture or distribution or in lieu of purchase.

 

2.15                        “Public Sector” means the government of a Developing Country, or any entity empowered by the government of a Developing Country to act for said government in matters applicable to this Agreement, organizations within the United Nations system including the World Health Global Organization and UNICEF, and other non-profit agencies which may purchase drugs or vaccines for delivery, manufacture and/or sale in Developing Countries.

 

2.16                        “Private Sector” means all other parties other than the Public Sector.

 

2.17                        “Developing Country” means countries eligible for support from The Global Alliance for Vaccines and Immunization (GAVI) or successor organization, which at the effective date of this Agreement are those countries with a Gross National Product of less than US $1,000 per capita per year, and at the effective date of this Agreement include the countries listed in Appendix G.

 

2.18                        “Biological Materials” means the materials listed in Appendix B, which include human-bovine reassortment rotavirus strains.  For the sake of clarification, some of the Biological Materials may have been generated under a CRADA between PHS and the original commercial developer of this technology, Wyeth Pharmaceuticals, Inc. (“Wyeth”) and may be subject to the terms and conditions of L-030-1987/1 and L-008-1989/1, which includes in part Paragraph 12.05 as related to Wyeth of this Agreement.

 

3.                                      GRANT OF RIGHTS

 

3.01                        PHS hereby grants and Licensee accepts, subject to the terms and conditions of this Agreement, an exclusive license under the Licensed Patent Rights and the exclusive rights to use the Biological Materials in the Exclusive Licensed Territory to make and have made, to use and have used, to sell and have sold, to offer to sell, and to import or to export any Licensed Product in the Licensed Fields of Use and to practice and have practiced any Licensed Processes in the Licensed Fields of Use.  During the term of this Agreement, Biological Materials shall not be provided by PHS to any third party except under written agreement prohibiting the practice of the rights granted hereunder in the Exclusive Licensed Territory for commercial purposes.  For clarification, Biological Materials may be provided under Research Licenses as described in Paragraph 5.04.

 

3.02                        PHS hereby grants and Licensee accepts, subject to the terms and conditions of this Agreement, a non-exclusive license under the Licensed Patent Rights and non-exclusive right to use the Biological Materials in the Non-Exclusive Licensed Territory to make and have made, to use and have used, to sell and have sold, to offer to sell, and to import or to export any Licensed Product(s) in the Licensed Fields of Use

 

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Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

and to practice and have practiced any Licensed Processes in the Licensed Fields of Use.  For the sake of clarification, the Non-Exclusive Licensed Territory includes (without limitation) Australia, Japan, and South Korea, where patents and patent applications under Licensed Patent Rights have been filed or issued.

 

3.03                        PHS hereby grants and Licensee accepts, subject to the terms and conditions of this Agreement, the right to use the relevant documentation and information listed in Appendix B for development of, regulatory licensing of, and otherwise as related to exercise of Licensee’s rights to Licensed Product(s).

 

3.04                        This Agreement confers no license or rights by implication, estoppel, or otherwise under any patent applications or patents of PHS other than Licensed Patent Rights in the Licensed Territories regardless of whether such patents are dominant or subordinate to Licensed Patent Rights.  To the best of its knowledge, PHS represents that the Licensed Patent Rights and Biological Materials in the Licensed Territories can be exploited without infringing other patents or other intellectual property rights of PHS as of the effective date of this Agreement.

 

4.                                      SUBLICENSING

 

4.01                        Upon written approval by PHS, which approval shall not be unreasonably withheld, Licensee may enter into sublicensing agreements under the Licensed Patent Rights or to the Biological Materials in the Exclusive Licensed Territory or in the Non-Exclusive Licensed Territory if in the latter instance said sublicensing agreement is intended to support expeditious development and commercialization of Licensed Product(s) and expeditious distribution in developing countries, and if said sublicense is associated with Licensee know-how and added value to the licensed technology.

 

4.02                        Licensee agrees that any sublicenses granted by it shall provide that the obligations to PHS of Paragraphs 5.01-5.04, 8.01, 10.01, 10.02, 12.05, and 13.07-13.09 and the obligations to Wyeth of Paragraph 12.05 of this Agreement shall be binding upon the sublicensee as if it were a party to this Agreement.  Licensee further agrees to attach copies of these Paragraphs to all sublicense agreements.

 

4.03                        Any sublicenses granted by Licensee shall provide for the termination of the sublicense, or the conversion to a license directly between such sublicensees and PHS, at the option of the sublicensee, upon termination of this Agreement under Article 13.  Such conversion is subject to PHS approval, not to be unreasonably withheld, and contingent upon acceptance by the sublicensee of the remaining provisions of this Agreement.

 

4.04                        Licensee agrees to forward to PHS a copy of each fully executed sublicense agreement postmarked within thirty (30) days of the execution of such agreement.  To the extent permitted by law, PHS agrees to maintain each such sublicense agreement in confidence.

 

5.                                      STATUTORY AND PHS REQUIREMENTS AND RESERVED GOVERNMENT RIGHTS

 

5.01                        a)            PHS reserves on behalf of the Government an irrevocable, nonexclusive, nontransferable, royalty-free license for the practice of all inventions licensed under the Licensed Patent Rights throughout the world by or on behalf of the Government and on behalf of any foreign government or international organization pursuant to any existing or

 

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Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

future treaty or agreement to which the Government is a signatory.  Prior to the First Commercial Sale, Licensee agrees to provide PHS reasonable quantities of Licensed Products or materials made through the Licensed Processes for PHS research use.

 

b)                                     In the event that Licensed Patent Rights are Subject Inventions made under a Cooperative Research and Development Agreement (CRA DA), Licensee grants to the Government, pursuant to 15 U.S.C. 3710a(b)(1)(A), a nonexclusive, nontransferable, irrevocable, paid-up license to practice Licensed Patent Rights or have Licensed Patent Rights practiced throughout the world by or on behalf of the Government.  In the exercise of such license, the Government shall not publicly disclose trade secrets or commercial or financial information that is privileged or confidential within the meaning of 5 U.S.C. 552(b)(4) or which would be considered as such if it had been obtained from a non-Federal party.  Prior to the First Commercial Sale, Licensee agrees to provide PHS reasonable quantities of Licensed Products or materials made through the Licensed Processes for PHS research use.

 

5.02                        Licensee agrees that products used or sold in the United States embodying Licensed Products or produced through use of Licensed Processes shall be manufactured substantially in the United States, unless a written waiver is obtained in advance from PHS.

 

5.03                        Licensee acknowledges that PHS may enter into future Cooperative Research and Development Agreements (CRADAs) under the Federal Technology Transfer Act of 1986 that relate to the subject matter of this Agreement.  Licensee agrees not to unreasonably deny requests for a Research License from such future collaborators with PHS when acquiring such rights is necessary in order to make a Cooperative Research and Development Agreement (CRADA) project feasible.  Licensee may request an opportunity to join as a party to the proposed Cooperative Research and Development Agreement (CRADA).

 

5.04                        a)                                     In addition to the reserved license of Paragraph 5.01 above, PHS reserves the right to grant nonexclusive Research Licenses directly or to require Licensee to grant nonexclusive Research Licenses on reasonable terms.  The purpose of this Research License is to encourage basic research, whether conducted at an academic or corporate facility.  In order to safeguard the Licensed Patent Rights, however, PHS shall consult with Licensee before granting to commercial entities a Research License in the Exclusive Licensed Territory or providing to them research samples of materials made through the Licensed Processes and shall, prior to providing such license or materials directly, provide Licensee the first opportunity to negotiate with commercial entities to provide them with such license or materials (For clarification, this right of Licensee to have the first opportunity to negotiate applies to Research Licenses for commercial entities only).  If Licensee fails to offer such a Research License to commercial entities upon terms that are reasonable under the circumstances within sixty (60) days of submission of an application for such Research License, PHS may grant the Research License itself, under conditions consistent with this Agreement and with other Research Licenses granted by PHS for similar technologies and similar uses.  In the event that Licensee can provide convincing written evidence to PHS that a commercial entity that has been granted a Research License to Licensed Patent Rights in the Exclusive Licensed Territory is developing the inventions for commercial manufacture or in lieu of purchase if the inventions are available as commercial products, then Licensee can

 

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Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

request that PHS terminate its Research License with such commercial entities, such request not to be unreasonably denied.

 

b)                                     In exceptional circumstances, and in the event that Licensed Patent Rights are Subject Inventions made under a Cooperative Research and Development Agreement (CRADA), the Government, pursuant to 15 U.S.C. 3710a(b)(1)(B), retains the right to require the Licensee to grant to a responsible applicant a nonexclusive, partially exclusive, or exclusive sublicense to use Licensed Patent Rights in Licensee’s field of use in the Exclusive Licensed Territory on terms that are reasonable under the circumstances; or if Licensee fails to grant such a license, the Government retains the right to grant the license itself.

 

The exercise of such rights by the Government shall only be in exceptional circumstances and only if the Government determines (i) the action is necessary to meet health or safety needs that are not reasonably satisfied by Licensee; (ii) the action is necessary to meet requirements for public use specified by Federal regulations, and such requirements are not reasonably satisfied by the Licensee; or (iii) the Licensee has failed to comply with an agreement containing provisions described in 15 U.S.C. 3710a(c)(4)(B).  The determination made by the Government under this Article is subject to administrative appeal and judicial review under 35 U.S.C. 203(2).

 

6.                                      ROYALTIES AND REIMBURSEMENT

 

6.01                        Licensee agrees to pay to PHS a noncreditable, nonrefundable license issue royalty as set forth in Appendix C.

 

6.02                        Licensee agrees to pay to PHS a nonrefundable minimum annual royalty as set forth in Appendix C.  The minimum annual royalty is due and payable on January 1 of each calendar year and may be credited against any other royalties (including all amounts listed in Appendix C as earned royalties, benchmark royalties, license issue royalties and sublicense royalties) accruing under Appendix C in that year.  The minimum annual royalty due for the first calendar year of this Agreement may be prorated according to the fraction of the calendar year remaining between the effective date of this Agreement and the next subsequent January 1.

 

6.03                        Licensee agrees to pay PHS earned royalties as set forth in Appendix C.

 

6.04                        Licensee agrees to pay PHS benchmark royalties as set forth in Appendix C.

 

6.05                        Licensee agrees to pay PHS sublicensing royalties as set forth in Appendix C.

 

6.06                        A patent or patent application licensed under this Agreement shall cease to fall within the Licensed Patent Rights for the purpose of computing earned royalty payments in any given country on the earliest of the dates that a) the application has been abandoned and not continued, b) the patent expires or irrevocably lapses, or c) the claim has been held to be invalid or unenforceable by an unappealed or unappealable decision of a court of competent jurisdiction or administrative agency.

 

6.07                        No multiple royalties shall be payable because any Licensed Products or Licensed Processes are covered by more than one of the Licensed Patent Rights.

 

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Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

6.08                        On sales of Licensed Products by Licensee to sublicensees or on sales made in other than an arm’s-length transaction, the value of the Net Sales attributed under this Article 6 to such a transaction shall be that which would have been received in an arm’s-length transaction, based on sales of like quantity and quality products on or about the time of such transaction.

 

6.09                        Within thirty (30) days of the earliest to occur of 1) the second anniversary of the effective date of this Agreement; 2) upon completion of the first round of financing in which a total of Five (5) million U.S. Dollars in equity investment is received by Licensee; or 3) the completion of a sublicensing agreement in the Exclusive Licensed Territory, Licensee will be obligated to pay PHS patent costs accumulated by them as follows: a) costs associated with the preparation, filing, prosecution, and maintenance of the PRV and PCT applications and Licensed Patent Rights in the Non-Exclusive Licensed Territory listed in Appendix A, said expenses being those incurred by PHS prior to the time that payment by Licensee under this Paragraph 6.09 is obligated and said expenses to be divided by the greater of 1) four (4), or 2) the number of relevant commercialization licenses of record as of the time payment is obligated; and b) one hundred percent (100%) of costs associated with the preparation, filing, prosecution, and maintenance of all patent applications and patents included within the Licensed Patent Rights listed in Appendix A in the Exclusive Licensed Territory.

 

6.10                        With regard to expenses associated with the preparation, filing, prosecution, and maintenance of all patent applications and patents included within the Licensed Patent Rights in the Licensed Territories incurred by PHS on or after the date on which expenses under Paragraph 6.09 become due, PHS, at its sole option, may require Licensee:

 

a)                                     to pay PHS on an annual basis, within sixty (60) days of PHS’s submission of a statement and request for payment, a royalty amount equivalent to all such patent expenses incurred during the previous calendar year(s), said expenses to be calculated in the same way as in Paragraph 6.09; or

 

b)                                     to pay such expenses directly to the law firm employed by PHS to handle such functions, said expenses to be calculated in the same way as in Paragraph 6.09.  However, in such event, PHS and not Licensee shall be the client of such law firm.

 

6.11                        Licensee may elect to surrender its rights in any country of the Licensed Territories under any Licensed Patent Rights upon ninety (90) days written notice to PHS and owe no payment obligation under Paragraph 6.10 for patent-related expenses incurred in that country after ninety (90) days of the effective date of such written notice.

 

7.                                      PATENT FILING, PROSECUTION, AND MAINTENANCE

 

7.01                        Except as otherwise provided in this Article 7, PHS agrees to take responsibility for, but to consult with, the Licensee in the preparation, filing, prosecution, and maintenance of any and all patent applications or patents included in the Licensed Patent Rights, shall furnish copies of relevant patent-related documents to Licensee, and shall provide Licensee sufficient opportunity to comment on any document that PHS intends to file or to cause to be filed with the relevant intellectual property or patent office; Licensee’s comments shall be considered in good faith and suggestions not to be unreasonably

 

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Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

refused.  Regarding Licensed Patent Rights in the Non-Exclusive Licensed Territory, PHS shall also consult with Licensee in the choice of countries in which protection shall be sought, giving good faith consideration to concerns of cost and efficiency.

 

7.02                        Upon PHS’s written request, Licensee shall assume the responsibility for the preparation, filing, prosecution, and maintenance of any and all patent applications or patents included in the Licensed Patent Rights in the Exclusive Licensed Territory and shall on an ongoing basis promptly furnish copies of all patent-related documents to PHS.  In such event, Licensee shall, subject to the prior approval of PHS, select registered patent attorneys or patent agents to provide such services on behalf of Licensee and PHS.  PHS shall provide appropriate powers of attorney and other documents necessary to undertake such actions to the patent attorneys or patent agents providing such services.  Licensee and its attorneys or agents shall consult with PHS in all aspects of the preparation, filing, prosecution and maintenance of patent applications and patents included within the Licensed Patent Rights in the Exclusive Licensed Territory and shall provide PHS sufficient opportunity to comment on any document that Licensee intends to file or to cause to be filed with the relevant intellectual property or patent office.  PHS’s comments shall be considered in good faith and suggestions not to be unreasonably refused.

 

7.03                        At any time, PHS may provide Licensee with written notice that PHS wishes to assume control of the preparation, filing, prosecution, and maintenance of any and all patent applications or patents included in the Licensed Patent Rights in the Exclusive Licensed Territory.  If PHS elects to assume such responsibilities, Licensee agrees to cooperate fully with PHS, its attorneys, and agents in the preparation, filing, prosecution, and maintenance of any and all patent applications or patents included in the Licensed Patent Rights in the Exclusive Licensed Territory and to provide PHS with complete copies of any and all documents or other materials that PHS deems necessary to undertake such responsibilities.  Licensee shall be responsible for all costs associated with transferring patent prosecution responsibilities to an attorney or agent of PHS’s choice.

 

7.04                        Each party shall promptly inform the other as to all matters that come to its attention that may affect the preparation, filing, prosecution, or maintenance of the Licensed Patent Rights and permit each other to provide comments and suggestions with respect to the preparation, filing, prosecution, and maintenance of Licensed Patent Rights, which comments and suggestions shall be considered by the other party.

 

8.                                      RECORD KEEPING

 

8.01                        Licensee agrees to keep accurate and correct records of Licensed Products made, used, sold, or imported and Licensed Processes practiced under this Agreement appropriate to determine the amount of royalties due PHS.  Such records shall be retained for at least five (5) years following a given reporting period and shall be available during normal business hours for inspection at the expense of PHS by an accountant or other designated auditor selected by PHS for the sole purpose of verifying reports and payments hereunder; any such inspection/audit to be on reasonable notice and not to occur more than once per year.  The accountant or auditor shall only disclose to PHS information relating to the accuracy of reports and payments made under this Agreement.  If an inspection shows an underreporting or underpayment in excess of seven and one half percent (7.5%) for any twelve (12) month period, then Licensee shall reimburse PHS for the cost of the inspection at the time Licensee pays the unreported

 

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Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

royalties, including any late charges as required by Paragraph 9.08 of this Agreement.  All payments required under this Paragraph shall be due within thirty (30) days of the date PHS provides Licensee notice of the payment due.

 

8.02                        Licensee agrees to have an audit of sales and royalties conducted by an independent auditor at least every five (5) years if annual sales of the Licensed Products or Licensed Processes are over two (2) million dollars.  The audit shall address, at a minimum, the amount of gross sales by or on behalf of Licensee during the audit period, terms of the license as to percentage or fixed royalty to be remitted to the Government, the amount of royalty funds owed to the Government under this Agreement, and whether the royalty amount owed has been paid to the Government and is reflected in the records of the Licensee.  The audit shall also indicate the PHS license number, product, and the time period being audited.  A report certified by the auditor shall be submitted promptly by the auditor directly to PHS on completion.  Licensee shall pay for the entire cost of the audit.

 

9.                                      REPORTS ON PROGRESS, BENCHMARKS, SALES, AND PAYMENTS

 

9.01                        Prior to signing this Agreement, Licensee has provided to PHS the Commercial Development Plan at Appendix F, under which Licensee intends to bring the subject matter of the Licensed Patent Rights and/or Biological Materials to the point of Practical Application.  This Commercial Development Plan is hereby incorporated by reference into this Agreement.  Based on this plan, performance Benchmarks are determined as specified in Appendix E.

 

9.02                        Licensee shall provide written annual reports on its product development progress or efforts to commercialize under the Commercial Development Plan for each of the Licensed Fields of Use within sixty (60) days after December 31 of each calendar year.  These progress reports shall include, but not be limited to: progress on research and development, status of applications for regulatory approvals, manufacturing, sublicensing, marketing, importing, and sales during the preceding calendar year, as well as plans for the present calendar year.  PHS also encourages these reports to include information on any of Licensee’s public service activities that relate to the Licensed Patent Rights and/or Biological Materials.  If reported progress differs from that projected in the Commercial Development Plan and Benchmarks, Licensee shall explain the reasons for such differences.  In any such annual report, Licensee may propose amendments to the Commercial Development Plan, acceptance of which by PHS may not be denied unreasonably.  Licensee agrees to provide any additional information reasonably required by PHS to evaluate Licensee’s performance under this Agreement.  Licensee may amend the Benchmarks at any time upon written consent by PHS.  PHS shall not unreasonably withhold approval of any request of Licensee to extend the time periods of this schedule if such request is supported by a reasonable showing by Licensee of diligence in its performance under the Commercial Development Plan and toward bringing the Licensed Products to the point of Practical Application as defined in 37 CFR 404.3(d).  Licensee shall amend the Commercial Development Plan and Benchmarks at the request of PHS to address any Licensed Fields of Use not specifically addressed in the plan originally submitted.

 

9.03                        Licensee shall report to PHS the dates for achieving Benchmarks specified in Appendix E and the First Commercial Sale in each country in the Licensed Territories within thirty (30) days of such occurrences.

 

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Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

9.04                        Licensee shall submit to PHS within sixty (60) days after each calendar half-year ending June 30 and December 31 a royalty report setting forth for the preceding half-year period the amount of the Licensed Products sold or Licensed Processes practiced by or on behalf of Licensee in each country within the Licensed Territories, the Net Sales, and the amount of royalty accordingly due.  With each such royalty report, Licensee shall submit payment of the earned royalties due.  If no earned royalties are due to PHS for any reporting period, the written report shall so state.  The royalty report shall be certified as correct by an authorized officer of Licensee and shall include a detailed listing of all deductions made under Paragraph 2.10 to determine Net Sales made under Article 6 to determine royalties due.

 

9.05                        Licensee agrees to forward semi-annually to PHS a copy of such reports received by Licensee from its sublicensees during the preceding half-year period as shall be pertinent to a royalty accounting to PHS by Licensee for activities under the sublicense.

 

9.06                        Royalties due under Article 6 shall be paid in U.S. dollars.  For conversion of foreign currency to U.S. dollars, the conversion rate shall be the New York foreign exchange rate quoted in The Wall Street Journal on the day that the payment is due.  All checks and bank drafts shall be drawn on United States banks and shall be payable, as appropriate, to “NIH/Patent Licensing.” All such payments shall be sent to the following address: NIH, P.O. Box 360120, Pittsburgh, PA 152516120.  Any loss of exchange, value, taxes, or other expenses incurred in the transfer or conversion to U.S. dollars shall be paid entirely by Licensee.  The royalty report required by Paragraph 9.04 of this Agreement shall accompany each such payment, and a copy of such report shall also be mailed to PHS at its address for notices indicated on the Signature Page of this Agreement.

 

9.07                        Licensee shall be solely responsible for determining if any tax on royalty income is owed outside the United States and shall pay any such tax (deducting same from the total of royalties due) and be responsible for all filings, including tax exemption certificates for PHS (PHS to provide reasonable information and cooperation in obtaining such certificates), with appropriate agencies of foreign governments.

 

9.08                        Interest and penalties may be assessed by PHS on any overdue payments in accordance with the Federal Debt Collection Act.  The payment of such late charges shall not prevent PHS from exercising any other rights it may have as a consequence of the lateness of any payment.

 

9.09                        All plans and reports required by this Article 9 and marked “confidential” by Licensee shall, to the extent permitted by law, be treated by PHS as commercial and financial information obtained from a person and as privileged and confidential, and any proposed disclosure of such records by the PHS under the Freedom of Information Act (FOIA), 5 U.S.C. § 552 shall be subject to the pre-disclosure notification requirements of 45 CFR § 5.65(d).

 

10.                               PERFORMANCE

 

10.01                 Licensee shall use its reasonable best efforts to bring the Licensed Products and Licensed Processes to Practical Application.  “Reasonable best efforts” for the purposes of this provision shall be determined by reference to the Commercial

 

12

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

Development Plan at Appendix F and performance of the Benchmarks at Appendix E.  The efforts of a sublicensee shall be considered the efforts of Licensee.

 

10.02                 Upon the First Commercial Sale, until the expiration of this Agreement, Licensee shall use its reasonable best efforts to make Licensed Products and Licensed Processes reasonably accessible to the United States public.

 

11.                               1NFRINGEMENT AND PATENT ENFORCEMENT

 

11.01                 PHS and Licensee agree to notify each other promptly of each infringement or possible infringement of the Licensed Patent Rights in the Exclusive Licensed Territory, as well as any facts which may affect the validity, scope, or enforceability of the Licensed Patent Rights in the Exclusive Licensed Territory of which either Party becomes aware.

 

11.02                 Pursuant to this Agreement and the provisions of Chapter 29 of title 35, United States Code, Licensee may: a) bring suit in its own name, at its own expense, and on its own behalf for infringement of presumably valid claims in the Licensed Patent Rights in the Exclusive Licensed Territory; b) in any such suit, enjoin infringement and collect for its use, damages, profits, and awards of whatever nature recoverable for such infringement; and c) settle any claim or suit for infringement of the Licensed Patent Rights in the Exclusive Licensed Territory provided, however, that PHS and appropriate Government authorities shall also have the right to take such actions as set out herein: Licensee shall have the first right to initiate such suit, but in advance of initiating the suit shall notify PHS in writing of its intent, and consult with PHS and provide information to PHS relating to the suit.  During Licensee’s management of any such suit, it shall keep PHS informed regarding the progress of such suit and shall cooperate in good faith with PHS to address issues regarding the protection of PHS rights under this Agreement and in the Licensed Patent Rights, or to address any other concern regarding any Government interest in the action.

 

If Licensee elects not to initiate a suit or engage in settlement discussions with an infringer within a reasonable period after a written request by PHS to do so, then PHS shall have the right to initiate such action.  PHS and Licensee shall have a continuing right to join in any suit by the other party.  Licensee shall take no action to compel the Government either to initiate or to join in any such suit for patent infringement.  Licensee may request the Government to initiate or join in any such suit if necessary to avoid dismissal of the suit.  Should the Government be made a party to any such suit, Licensee shall reimburse the Government for any costs, expenses, or fees which the Government incurs as a result of such motion or other action, including any and all costs incurred by the Government in opposing any such motion or other action.  In all cases, Licensee agrees to keep PHS reasonably apprised of the status and progress of any litigation.  Before Licensee commences an infringement action, Licensee shall notify PHS and give careful consideration to the views of PHB and to any potential effects of the litigation on the public health in deciding whether to bring suit.

 

11.03                 In the event that a declaratory judgment action alleging invalidity or non-infringement of any of the Licensed Patent Rights in the Exclusive Licensed Territory shall be brought against Licensee or raised by way of counterclaim or affirmative defense in an infringement suit brought by Licensee under Paragraph 11.02, pursuant to this Agreement and the provisions of Chapter 29 of Title 35, United States Code or other

 

13

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

statutes, Licensee may: a) defend the suit in its own name, at its own expense, and on its own behalf for presumably valid claims in the Licensed Patent Rights in the Exclusive Licensed Territory; b) in any such suit, ultimately to enjoin infringement and to collect for its use, damages, profits, and awards of whatever nature recoverable for such infringement; and c) settle any claim or suit for declaratory judgment involving the Licensed Patent Rights in the Exclusive Licensed Territory-provided, however, that PHS and appropriate Government authorities shall also have the right to take such actions and shall have a continuing right to join in such suit according to the procedures set out in Paragraph 11.02.  Licensee shall take no action to compel the Government either to initiate or to join in any such declaratory judgment action.  Licensee may request the Government to initiate or to join any such suit if necessary to avoid dismissal of the suit, which request shall not be unreasonably denied.  Should the Government be made a party to any such suit by motion or any other action of Licensee, Licensee shall reimburse the Government for any costs, expenses, or fees which the Government incurs as a result of such motion or other action.  If Licensee elects not to defend against such declaratory judgment action, PHS, at its option, may do so at its own expense.  In all cases, Licensee agrees to keep PHS reasonably apprised of the status and progress of any litigation.  Before Licensee commences an infringement action, Licensee shall notify PHS and give careful consideration to the views of PHS and to any potential effects of the litigation on the public health in deciding whether to bring suit.

 

11.04                 In any action under Paragraphs 11.02 or 11.03:

 

a)                                     If brought by Licensee, the expenses including costs, fees, attorney fees and disbursements, shall be paid by Licensee.  If brought by PHS, the expenses including costs, fees, attorney fees and disbursements shall be paid by PHS.  After reduction by the amount of all expenses including costs, fees, attorney fees and disbursements paid by the initiating party, the remaining value of any recovery made by either party through court judgment or settlement shall be treated as Net Sales, with appropriate earned royalties thereon deducted and paid to PHS, and the remainder paid to Licensee;

 

b)                                     Any party electing to join, follow or otherwise participate in any such action shall bear its own expenses, including costs, fees, attorney fees and disbursements (except that Licensee shall pay the Government’s expenses in the event that Licensee requests the Government to initiate or to join any such suit if necessary to avoid dismissal of the suit).

 

11.05                 PHS shall cooperate fully with Licensee in connection with any action under Paragraphs 11.02 or 11.03.  PHS agrees promptly to provide access to all necessary documents and to render reasonable assistance in response to a request by Licensee.

 

11.06                 With respect to Licensed Patent Rights in the Non-Exclusive Licensed Territory, Licensee and PHS shall notify each other if an infringement as in Paragraph 11.02 or a declaratory judgment as in Paragraph 11.03 has occurred and shall consult with each other and, if possible, with other licensees as to the appropriate course of action.

 

12.                               NEGATION OF WARRANTIES AND INDEMNIFICATION

 

12.01                 PHS offers no warranties other than those specified in Article 1.

 

14

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

12.02                 PHS does not warrant the validity of the Licensed Patent Rights and makes no representations whatsoever with regard to the scope of the Licensed Patent Rights, or that the Licensed Patent Rights may be exploited without infringing other patents or other intellectual property rights of third parties.

 

12.03                 PHS MAKES NO WARRANTIES, EXPRESSED OR IMPLIED, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF ANY SUBJECT MATTER DEFINED BY THE CLAIMS OF THE LICENSED PATENT RIGHTS OR TANGIBLE MATERIALS RELATED THERETO.

 

12.04                 PHS does not represent that it shall commence legal actions against third parties infringing the Licensed Patent Rights.

 

12.05                 Licensee shall indemnify and hold PHS, Wyeth and its affiliates, and their respective employees, students, fellows, agents, consultants, officers and directors harmless from and against all liability, demands, damages, deficiencies, judgements, assessments, costs, or expenses, including reasonable attorneys’ fees and costs of investigating and defending against lawsuits, complaints, actions, or other pending or threatened litigation, and losses, including but not limited to death, personal injury, illness, or property damage in connection with or arising out of: a) the use by or on behalf of Licensee, its sublicensees, directors, employees, or third parties of any Licensed Patent Rights or documentation, information and materials, know-how, or the rights granted, transferred, or assigned to PHS by Wyeth under license agreements L-030-1987/1 and L-008-1989/1 as they relate to this Agreement; or b) the design, manufacture, distribution, use, or sale of any Licensed Products, Licensed Processes or Biological Materials by Licensee, or other products or processes developed in connection with or arising out of the Licensed Patent Rights or Biological Materials.

 

Prior to commencement of human clinical trials by Licensee, Licensee agrees to obtain and maintain a liability insurance program consistent with sound business practice, including commercial general liability and product liability insurance for Licensed Products utilizing documentation, information and materials, know-how, or the rights granted, transferred, or assigned to PHS by Wyeth under license agreements L-030-1987/1 and L-008-1989/1 as they relate to this Agreement, naming PHS and Wyeth and its affiliates, and their respective employees, students, fellows, agents, consultants, officers and directors as insured parties, sufficient to adequately provide such indemnification.  Wyeth shall be given the right to enforce the indemnification and insurance rights and shall be named as a third party beneficiary to this agreement for such purpose.  PHS disclaims any and all liability for the failure of Licensee, its sublicensees or assigns or any other party to satisfy their obligation to Wyeth.  However, in the event of any failure of any such party to indemnify or provide or maintain insurance, in addition to any other remedies it may have against such party, Wyeth retains its rights to terminate the licenses granted to PHS in license agreements L-030-1987/1 and L-008-1989/1 as they relate to this Agreement.

 

12.06                 Licensee’s acceptance of this Agreement shall not be deemed an admission by Licensee of the novelty or patentability of the Licensed Patent Rights.

 

12.07                 Any materials provided by Licensee to PHS hereunder are provided for research purposes only and ARE NOT FOR USE IN HUMANS.  Licensee MAKES NO WARRANTIES, EXPRESSED OR IMPLIED, OF MERCHANTABILITY OR

 

15

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

FITNESS FOR A PARTICULAR PURPOSE OF ANY MATERIALS PROVIDED TO PHS HEREUNDER.

 

12.08                 Licensee does not represent that it will commence legal actions against third parties infringing the Licensed Patent Rights.

 

13.                               TERM, TERMINATION, AND MODIFICATION OF RIGHTS

 

13.01                 This Agreement is effective when signed by all parties and shall extend on a country-by-country basis until the later of (a) the expiration of all royalty obligations under Licensed Patent Rights where such rights exist or have existed or (b) eight (8) years from First Commercial Sale where such rights have ceased to exist or never existed unless terminated as provided in this Article 13 or by mutual agreement of PHS and Licensee.  Upon expiration pursuant to this Paragraph 13.01, Licensee shall have a royalty-free, paid up, non-transferrable perpetual license to the Biological Materials transferred hereunder in the Licensed Territories and all derivatives and products made by Licensee therefrom.

 

13.02                 In the event that Licensee is in default in the performance of any material obligations under this Agreement, including but not limited to the obligations listed in Paragraph 13.05, and if the default has not been remedied within ninety (90) days after the date of notice in writing of such default, PHS may terminate this Agreement by written notice and pursue outstanding amounts owed through procedures provided by the Federal Debt Collection Act.

 

13.03                 In the event that Licensee becomes insolvent, files a petition in bankruptcy, has such a petition filed against it, determines to file a petition in bankruptcy, or receives notice of a third party’s intention to file an involuntary petition in bankruptcy, Licensee shall immediately notify PHS in writing.  Furthermore, PHS shall have the right to terminate this Agreement immediately upon written notice to Licensee, given the understanding that PHS shall first endeavor in good faith to assist Licensee in any efforts to emerge from bankruptcy by maintaining the present License in effect for a reasonable period of time not to exceed one (1) year from Licensee’s receipt of written notice, unless otherwise deemed necessary to address an immediate public health need.

 

13.04                 Licensee shall have a unilateral right to terminate this Agreement and/or any licenses in any country or territory by giving PHS sixty (60) days written notice to that effect.

 

13.05                 PHS shall specifically have the right to terminate or modify, at its option, this Agreement, if PHS determines that the Licensee: 1) is not executing the Commercial Development Plan consistent with the requirement of Paragraph 10.01 and the Licensee cannot otherwise demonstrate to PHS’s reasonable satisfaction that the Licensee has taken, or can be expected to take within a reasonable time, effective steps to achieve Practical Application of the Licensed Products or Licensed Processes; 2) has not achieved the Benchmarks as may be modified under Paragraph 9.02, and the Licensee cannot otherwise demonstrate to PHS’s reasonable satisfaction that the Licensee has taken, or can be expected to take within a reasonable time, effective steps to correct the failure to achieve the relevant Benchmark in order to achieve the relevant Benchmark within the earliest reasonably possible time; 3) has willfully made a false statement of, or willfully omitted, a material fact in the license application or in any report required by the license Agreement; 4) has committed a material breach of a covenant or agreement

 

16

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

contained in the license; 5) is not keeping Licensed Products or Licensed Processes reasonably available to the public after commercial use commences; 6) cannot reasonably satisfy unmet health and safety needs; or 7) cannot reasonably justify a failure to comply with the domestic production requirement of Paragraph 5.02 unless waived.  In making this determination, PHS shall take into account the normal course of such commercial development programs conducted with sound and reasonable business practices and judgment and the annual reports submitted by Licensee under Paragraph 9.02.  Prior to invoking this right, PHS shall give written notice to Licensee providing Licensee specific notice of, and a ninety (90) day opportunity to respond to, PHS’s concerns as to the previous items 1) to 7).  If Licensee fails to alleviate PHS’s concerns as to the previous items 1) to 7) or fails to initiate corrective action to PHS’s satisfaction, PHS may terminate or modify this Agreement.

 

13.06                 When the public health and safety so require, and after written notice to Licensee providing Licensee a sixty (60) day opportunity to respond, PHS shall have the right to require Licensee to grant sublicenses to responsible applicants, on reasonable terms, in any Licensed Fields of Use under the Licensed Patent Rights in the Exclusive Licensed Territory, unless Licensee can reasonably demonstrate that the granting of the sublicense would not materially increase the availability to the public of the subject matter of the Licensed Patent Rights in the Exclusive Licensed Territory.  PHS shall not require the granting of a sublicense unless the responsible applicant has first negotiated in good faith with Licensee.

 

13.07                 PHS reserves the right according to 35 U.S.C. § 209(0(4) to terminate or modify this Agreement if it is determined that such action is necessary to meet requirements for public use specified by federal regulations issued after the date of the license and such requirements are not reasonably satisfied by Licensee.

 

13.08                 Within thirty (30) days of receipt of written notice of PHS’s unilateral decision to modify or terminate this Agreement, Licensee may, consistent with the provisions of 37 CFR 404.11, appeal the decision by written submission to the designated PHS official.  The decision of the designated PHS official shall be the final agency decision.  Licensee may thereafter exercise any and all administrative or judicial remedies that may be available.

 

13.09                 Within ninety (90) days of expiration or termination of this Agreement under this Article 13, a final report shall be submitted by Licensee.  Any royalty payments, including those incurred but not yet paid (such as the full minimum annual royalty), and those related to patent expense, due to PHS shall become immediately due and payable upon termination or expiration.  If terminated under this Article 13, sublicensees may elect to convert their sublicenses to direct licenses with PHS pursuant to Paragraph 4.03.  Unless otherwise specifically provided for under this Agreement, upon any termination of this Agreement, Licensee shall return all Licensed Products or other materials included within the Licensed Patent Rights in its possession to PHS or provide PHS with certification of the destruction thereof.

 

14.                               GENERAL PROVISIONS

 

14.01                 Neither Party may waive or release any of its rights or interests in this Agreement except in writing.  The failure of the Government to assert a right hereunder or to insist upon compliance with any term or condition of this Agreement shall not constitute a waiver of

 

17

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

that right by the Government or excuse a similar subsequent failure to perform any such term or condition by Licensee.

 

14.02                 This Agreement constitutes the entire agreement between the Parties relating to the subject matter of the Licensed Patent Rights and Biological Materials, and all prior negotiations, representations, agreements, and understandings are merged into, extinguished by, and completely expressed by this Agreement.

 

14.03                 The provisions of this Agreement are severable, and in the event that any provision of this Agreement shall be determined to be invalid or unenforceable under any controlling body of law, such determination shall not in any way affect the validity or enforceability of the remaining provisions of this Agreement.

 

14.04                 If either Party desires a modification to this Agreement, the Parties shall, upon reasonable notice of the proposed modification by the Party desiring the change, confer in good faith to determine the desirability of such modification.  No modification shall be effective until a written amendment is signed by the signatories to this Agreement or their designees.

 

14.05                 The construction, validity, performance, and effect of this Agreement shall be governed by Federal law as applied by the Federal courts in the District of Columbia.

 

14.06                 All notices required or permitted by this Agreement shall be given by prepaid, first class, registered or certified mail or by an express/overnight delivery service provided by a commercial carrier, properly addressed to the other Party at the address designated on the following Signature Page, or to such other address as may be designated in writing by such other Party.  Notices shall be considered timely if such notices are received on or before the established deadline date or sent on or before the deadline date as verifiable by U.S. Postal Service postmark or dated receipt from a commercial carrier.  Parties should request a legibly dated U.S. Postal Service postmark or obtain a dated receipt from a commercial carrier or the U.S. Postal Service.  Private metered postmarks shall not be acceptable as proof of timely mailing.

 

14.07                 This Agreement shall not be assigned by Licensee except: a) with the prior written consent of PHS, such consent not to be withheld unreasonably; or b) as part of a sale or transfer of substantially the entire business of Licensee relating to operations which concern this Agreement.  Licensee shall notify PHS within ten (10) days of any assignment of this Agreement by Licensee, and Licensee shall pay PHS, as an additional royalty, [***] of the fair market value of any consideration received for any assignment of this Agreement within thirty (30) days of such assignment.

 

14.08                 Licensee agrees in its use of Biological Materials and any other PHS-supplied materials to comply with all applicable statutes, regulations, and guidelines, including PHS and DHHS regulations and guidelines.  Licensee agrees not to use the materials for research involving human subjects or clinical trials in the United States without complying with 21 CFR Part 50 and 45 CFR Part 46.  Licensee agrees not to use the materials for research involving human subjects or clinical trials outside of the United States without notifying PHS, in writing, of such research or trials and complying with the applicable regulations of the appropriate national control authorities.  Written notification to PHS of research involving human subjects or clinical trials outside of the

 

18

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

United States shall be given no later than sixty (60) days prior to commencement of such research or trials.

 

14.09                 Licensee acknowledges that it is subject to and agrees to abide by the United States laws and regulations (including the Export Administration Act of 1979 and Arms Export Control Act) controlling the export of technical data, computer software, laboratory prototypes, biological material, and other commodities.  The transfer of such items may require a license from the cognizant Agency of the U.S. Government or written assurances by Licensee that it shall not export such items to certain foreign countries without prior approval of such agency.  PHS neither represents that a license is or is not required or that, if required, it shall be issued.

 

14.10                 Licensee agrees to mark the Licensed Products or their packaging sold in the United States with all applicable U.S. patent numbers and similarly to indicate “Patent Pending” status.  All Licensed Products manufactured in, shipped to, or sold in other countries shall be marked in such a manner as to preserve PHS patent rights in such countries.

 

14.11                 By entering into this Agreement, PHS does not directly or indirectly endorse any product or service provided, or to be provided, by Licensee whether directly or indirectly related to this Agreement.  Licensee shall not state or imply that this Agreement is an endorsement by the Government, PHS, any other Government organizational unit, or any Government employee.  Additionally, Licensee shall not use the names of NIH, CDC, PHS, or DHHS or the Government or their employees in any advertising, promotional, or sales literature without the prior written consent of PHS.

 

14.12                 The Parties agree to attempt to settle amicably any controversy or claim arising under this Agreement or a breach of this Agreement, except for appeals of modifications or termination decisions provided for in Article 13.  Licensee agrees first to appeal any such unsettled claims or controversies to the designated PHS official, or designee, whose decision shall be considered the final agency decision.  Thereafter, Licensee may exercise any administrative or judicial remedies that may be available.

 

14.13                 Nothing relating to the grant of a license, nor the grant itself, shall be construed to confer upon any person any immunity from or defenses under the antitrust laws or from a charge of patent misuse, and the acquisition and use of rights pursuant to 37 CFR Part 404 shall not be immunized from the operation of state or Federal law by reason of the source of the grant.

 

14.14                 Paragraphs 4.03, 8.01, 9.05-9.07, 12.01-12.05, 13.08, 13.09, and 14.12 and the indicated section of Appendix C of this Agreement shall survive termination of this Agreement.

 

SIGNATURES BEGIN ON NEXT PAGE

 

19

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

PHS PATENT LICENSE AGREEMENT—EXCLUSIVE

 

SIGNATURE PAGE

 

For PHS:

 

 

	
/s/ Steven M. Ferguson
    	
 
    
	
Steven M. Ferguson
    	
 
    
	
Director, Division of Technology Development and Transfer
    	
 
    
	
Office of Technology Transfer
    	
 
    
	
National Institutes of Health
    	
 
    
	
 
    	
 
    
	
Mailing   Address for Notices:
    	
 
    
	
 
    	
 
    
	
Office of Technology Transfer
    	
 
    
	
National Institutes of Health
    	
 
    
	
6011 Executive Boulevard, Suite 325
    	
 
    
	
Rockville, Maryland 20852-3804 U.S.A.
    	
 
    

 

For Licensee (Upon, information and belief, the undersigned expressly certifies or affirms that the contents of any statements of Licensee made or referred to in this document are truthful and accurate.):

 

 

	
by:
    	
/s/ Eric Patzer
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Signature of Authorized Official
    	
 
    
	
 
    	
 
    
	
Eric Patzer, Ph.D.
    	
 
    
	
Printed Name
    	
 
    
	
 
    	
 
    
	
President
    	
 
    
	
Title
    	
 
    
	
 
    	
 
    
	
Official and Mailing Address for Notices:
    	
 
    
	
 
    	
 
    
	
Aridis Pharmaceuticals, LLC
    	
 
    
	
 
    	
 
    
	
350 Cervantes Road
    	
 
    
	
 
    	
 
    
	
Portola Valley, CA 94028
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
USA
    	
 
    

 

Any false or misleading statements made, presented, or submitted to the Government, including any relevant omissions, under this Agreement and during the course of negotiation of this Agreement are subject to all applicable civil and criminal statutes including Federal statutes 31 U.S.C. §§ 3801-3812 (civil liability) and 18 U.S.C. § 1001 (criminal liability including fine(s) and/or imprisonment).

 

20

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

APPENDIX A—Patent(s) or Patent Application(s)

 

Patent(s) or Patent Application(s):

 

DHHS Technology Reference E-015-1998/0

 

	
Country
    	
 
    	
Serial Number
    	
 
    	
Filing Date
    	
 
    	
DHHS ref
    
	
USA
    	
 
    	
60/094,425
    	
 
    	
07/28/1998
    	
 
    	
E-015-1998/0-US-01
    
	
PCT
    	
 
    	
PCT/US99/17036
    	
 
    	
07/27/1999
    	
 
    	
E-015-1998/0-PCT-02
    
	
CA
    	
 
    	
2336875
    	
 
    	
07/27/1999
    	
 
    	
E-015-1998/0-CA-07
    
	
EP
    	
 
    	
99938819.2
    	
 
    	
07/27/1999
    	
 
    	
E-015-1998/0-EP-08
    
	
USA
    	
 
    	
09/743,338
    	
 
    	
01/04/2001
    	
 
    	
E-015-1998/0-US-10
    
	
JP
    	
 
    	
2000-562050
    	
 
    	
07/27/1999
    	
 
    	
E-015-1998/0-JP-09
    
	
KR
    	
 
    	
7001236/2001
    	
 
    	
07/27/1999
    	
 
    	
E-015-1998/0-KR-05
    
	
AU
    	
 
    	
5322199
    	
 
    	
07/27/1999
    	
 
    	
E-015-1998/0-AU-06
    

 

21

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

APPENDIX B—Licensed Fields of Use and Territory and Biological Materials and Documentation

 

Licensed Fields of Use:

 

Human Rotavirus Vaccine based on Human-Bovine Rotavirus Reassortants

 

Exclusive Licensed Territory:

 

Europe, Canada and United States of America

 

Non-Exclusive Licensed Territory:

 

Worldwide excluding Europe, Canada, United States of America, India, Brazil, and China

 

For the sake of clarification, the Non-Exclusive Licensed Territory includes (without limitation) Australia, Japan, and South Korea, where patents and patent applications under Licensed Patent Rights have been filed or issued.

 

Biological Materials:

 

Rotaviruses:

 

(1) Preseed BRota-HP-PSOI, Type ST3 (1 container with 15 ml of virus suspension)

(2) Preseed BRota-HD-PS03, Type ST1 (1 container with 15 ml of virus suspension)

(3) Preseed BRota-HDS I -PS03, Type ST2 (1 container with 15 ml of virus suspension)

(4) Preseed BRota-ST3-PS02, Type ST4 (I container with 15m1 of virus suspension)

 

PHS and Licensee acknowledge that Licensee requests, for the following human-bovine reassortant strains (or strains derived therefrom), a sample of the Preseed, Master virus seed (FRhL2 cell adapted) and Master virus seed (Vero cell adapted).  These samples will be provided by PHS and included under this Agreement, pending reasonable review by PHS for each to establish that PHS has legal access to the materials and the right to include same under this Agreement:

 

	
(I) HD x BRV-1, clone 47-1-1 (VP7:1 [D])
    	
ATCC VR-2617
    
	
(2) HDS1 x BRV-1, clone 66-1-1 (VP7:2 [DS-1])
    	
ATCC VR-2616
    
	
(3) HP x BRV-2, clone 22-1-1 (VP7:3 [P])
    	
ATCC VR-2611
    
	
(4) HST3 x BRV-2, clone 52-1-1 (VP7:4 [ST3])
    	
ATCC VR-2612
    
	
(5) IAL28 x UK, clone 33-1-1 (VP7:5 [IAL28]
    	
ATCC VR-2613)
    
	
(6) AU32 x UK, clone 27-1-1 (VP7:9 [AU32]
    	
ATCC VR-2614)
    
	
(7) KC-1 x UK, clone 32-1-1 (VP7:10 [KC-1]
    	
ATCC VR-2615)
    

 

Antibodies:

 

(1) Lot W1A1-anti IgG2a (serotype I) [ 5 ml (5 vials x 1m1) of monoclonal antibody preparation)]

(2) Lot 1C10A-anti IgA( serotype 2) [ 5 ml (5 vials x 1m1) of monoclonal antibody preparation)]

(3) Lot RIA-anti IgG2b (Serotype 3) [ 5 ml (5 vials x 1m1) of monoclonal antibody preparation)]

(4) Lot S4A- anti IgG1 (Serotype 4) [ 5 ml (5 vials x 1m1) of monoclonal antibody preparation)]

(5) Rabbit Polyclonal Antisera [10 ml (1 tube x 10 ml) of sera]

 

22

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

Documentation:

 

BB-IND 7219: Human Bovine Reassortant Rotavirus (Book 1: Ser 000-008 (7/3/97-9/28/00))

BB - IND 8415

BB - IND — 7928

 

23

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

APPENDIX C—Royalties

 

ROYALTIES:

 

Licensee agrees to pay to PHS a noncreditable, nonrefundable license issue royalty in the amount of [***] as follows:

 

·                                          [***] due three (3) months after effective date of this Agreement

·                                          [***]due two (2) years after the effective date of this Agreement.

·                                          [***] at the first to occur of:

 

1)                                     raising a cumulative [***] in financing, whether from individuals, venture capital, or through the formation of partnership/sublicensing, where such payment is due within thirty (30) days of this event; or

 

2)                                     a firmly underwritten initial public offering and sale of Licensee’s Common Stock pursuant to an effective registration statement under the Securities Act of 1933, as amended, where such payment is due within sixty (60) days of this event.  This clause shall survive termination or expiration of this Agreement.

 

Licensee agrees to pay to PHS a nonrefundable minimum annual royalty in the amount of:

 

[***] for years one through three (1-3)

[***] for years four (4) through the year in which the First Commercial Sale occurs

[***] after the year in which the First Commercial Sale occurs through the remainder of this Agreement.

 

Minimum annual royalties shall be creditable as provided in Paragraph 6.02 of this Agreement.

 

Licensee agrees to pay PHS earned royalties on Net Sales by or on behalf of Licensee and its sublicensees as follows:

 

[***] in the Exclusive Licensed Territory where Licensed Patent Rights exist

[***] in the Non-Exclusive Licensed Territory where Licensed Patent Rights exist

[***] in the Exclusive Licensed Territory where no Licensed Patent Rights exist

[***] in the Non-Exclusive Licensed Territory where no Licensed Patent Rights exist

 

The above earned royalties shall be reduced, on a Licensed Product-by-Licensed Product, country-by-country, and year-to-year basis by [***] for every [***] paid as royalties for third party licenses required to sell Licensed Product or Licensed Process where said royalties for the third party license exceed [***] and provided that such reduction in earned royalties owed to PHS shall never be reduced below [***] of the earned royalties rates specified above.

 

Licensee agrees to pay PHS benchmark royalties within ninety (90) days after accomplishment of the following Benchmarks, whether achieved by Licensee or sublicensee:

 

·                                          [***] — upon completion of Phase 11 clinical trials necessary for the first complete regulatory license application for a Licensed Product.

·                                          [***]— upon commencement of a Phase 111 clinical trial for the evaluation of safety of a Licensed Product;

 

24

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

·                                          [***]— upon completion of the Phase 111 clinical trials necessary for the first complete regulatory license application for a Licensed Product.

·                                          [***]— upon launch of the first Licensed Product.

 

Licensee agrees to pay PHS additional sublicensing royalties as follows:

 

[***] of the fair market value of any consideration received for granting each sublicense, excluding earned royalties received for Net Sales of Licensed Products, for which the earned royalties noted above shall accrue.

 

25

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

APPENDIX D—Modifications

 

PHS and Licensee agree to the following modifications to the Articles and Paragraphs of this Agreement:

 

Modifications made to the model language have been incorporated into the body of this Agreement.

 

26

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

APPENDIX E—Benchmarks and Performance

 

Licensee agrees to the following Benchmarks for its performance under this Agreement and, within thirty (30) days of achieving a Benchmark, shall notify PHS that the Benchmark has been achieved.

 

·              IND filing: January 2009.

·              Phase I clinical trial completion: November 2010.

·              Phase II clinical trial completion: November 2012.

·              Phase III clinical trial completion: May 2016.

·              Biological License Application (BLA) submission: May 2017.

·              BLA approval: November 2018.

·              First Commercial Sale: January 2019.

 

For the sake of clarification, the above benchmarks can be modified from time to time per Paragraph 9.02 in the Agreement.

 

·              Developing world access

 

Within six (6) months of NDA/BLA equivalent approval in any Licensed Territory, Licensee shall send a written report to PHS detailing the potential Public Sector market to fulfill the public health need for the approved Licensed Product in Developing Countries, including the impact of any approved competing Licensed Product.  The report shall also include Licensee’s amendment to the Commercial Development Plan, Appendix F, to satisfy said potential Public Sector market either directly with Licensee’s own resources and/or through joint ventures with third parties.  Acceptance of this report and amendment is required by PHS in writing, such acceptance will not be unreasonably denied.

 

Licensee agrees:

 

a)             To the extent that Licensee shall satisfy the potential Public Sector market through its own resources, and provided there is a commercially reasonable market therefore, Licensee shall make commercially reasonable efforts to deliver the first allotment of a safe and effective Licensed Product to the Public Sector for distribution and/or sale in Developing Countries within two (2) years of First Commercial Sale and thereafter Licensee agrees to use commercially reasonable efforts to meet any delivery date and in the quantities required in an order placed by the Public Sector.

 

b)             To the extent that Licensee shall satisfy the potential Public Sector market through joint ventures with third parties, Licensee shall:

 

(i)                                     Within one (1) year after First Commercial Sale, make commercially reasonable efforts to negotiate with third parties in order to effect joint ventures or other partnership agreements to make and sell the Licensed Products and Licensed Processes and (or to assist in development of similar third party licensed products or processes made under license directly between the third party and PHS for the technology covered by the Agreement [hereinafter “Third Party Products”]) to provide know-how and effect technology transfer to said third parties that will allow them to manufacture a safe and effective Licensed Product (or Third Party Products) for distribution and/or sale in Developing Countries.

 

27

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

(ii)                                  Within two (2) years of First Commercial Sale, and provided there is a commercially reasonable market therefore, make commercially reasonable efforts to have entered into at least one (1) joint venture or other partnership agreement with at least one (1) third party for the purpose of manufacturing a safe and effective Licensed Product or Third Party Product for distribution and/or sale in Developing Countries.

 

(iii)                               Subject to (ii) above, Within four (4) years of First Commercial Sale, ensure that any said third party(ies) have made commercially reasonable efforts to have delivered a first allotment of a safe and effective Licensed Product or Third Party Product to the Public Sector for distribution and/or sale in Developing Countries, and thereafter ensure that said third party(ies) use commercially reasonable efforts to meet any delivery date(s) and in the quantities required in an order placed by the Public Sector.

 

28

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

APPENDIX F—Commercial Development Plan

 

Background

 

This project will use the four monovalent human-bovine UK reassortant rotavirus strains designated D x UK (VP 7 serotype 1), DS-1 x UK (VP 7 serotype 2), P x UK (VP 7 serotype 3) and ST3 x UK (VP 7 serotype 4) previously tested in clinical trials that established the safety and immunogenicity of the orally administered quadrivalent mixture.

 

Proof of Concept Studies

 

This previous quadrivalent vaccine was a mixture of four serotype-specific human-bovine reassortants, which were individually produced in DBS FRhL2 cells at titers ranging from 1053 to 1058 pfu/mL, and then stored frozen.  The four reassortants were thawed and combined immediately prior to administration.  A Vero cell manufacturing process was developed by Wyeth, which represents an attractive alternative cell substrate with significant manufacturing advantages (titers ranging from 1075 to108° pfuimL).  Proof of concept studies will be performed with Vero cell produced material, which will continue into development, unless deficiencies in this material compared to the previously tested DBS FRhL2 cell material are identified.

 

In the initial proof of concept testing, we will prepare bulk vaccine in 1-10L microcarrier cultures of Vero cells based on a process developed by Wyeth using human-bovine reassortants.  Formulations, drying processes and milling conditions will be screened to generate dried powders with each individual strain, which will be subsequently tested for stability.  Once satisfactory results are obtained with each individual reassortant, the stability of the combined quadrivalent mixture will be verified.

 

From the studies by Wyeth with Rotashield®, it is known that about 90 mg of buffer (sodium bicarbonate and citric acid) is required in the final formulation to allow rotavirus to survive the acid environment of the stomach and transit to its final destination in the upper small intestine.  Similar amounts of buffer will be incorporated into the dried powder and then the powder will be fabricated into a quick dissolving tablet using standard powder mixing and tableting processes.

 

Preclinical Testing

 

Animal models that can provide relevant data with bovine rotavirus strains are restricted to a murine model with a limited ability to predict human safety and immunogenicity.  Additionally, the quadrivalent human-bovine reassortant vaccine already has been tested in humans.  Consequently, we do not anticipate that significant animal testing of the stabilized quadrivalent vaccine will be required prior to clinical testing.  We will perform extensive stability testing to demonstrate that the infectivity of the rotavirus vaccine doesn’t change during storage.  In addition, a battery of in vitro tests will be performed to demonstrate product purity, safety, identity and consistency of manufacture and that the key physical, chemical and immunological characteristics of the rotavirus strains are comparable to the previously tested strains.

 

Clinical Testing

 

The clinical program of the stabilized vaccine will exploit the prior human safety, immunogenicity and dose ranging data with individual monovalent reassortants and combined quadrivalent vaccine.  The initial phase 1 study will compare the safety of a single dose of the stabilized quadrivalent vaccine in 10 adults to the previous formulation of quadrivalent vaccine in 10 adults.  If the vaccines have similar safety profiles, we will proceed to phase 2 clinical testing of a single dose of stabilized quadrivalent vaccine in

 

29

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

10 young children (2-5 years) followed by testing of two doses of the stabilized quadrivalent vaccine administered to 200 young infants at 2 and 4 months of age for safety and immunogenicity (ELISA IgG and IgA and plaque reduction neutralization).  The progression from adults to children and then infants will necessarily require close coordination and careful review of safety data with the FDA.

 

It is estimated that preclinical and phase 1 and 2 clinical testing can be completed within 7.5 years.

 

If the immunogenicity or reactogenicity profile of the reassortants in the stabilized vaccine are not the same as the previously tested vaccine, then subsequent phase 2 testing will include dose ranging (starting at lower doses) to define the dose of the reassortants in the stabilized vaccine that exhibits similar levels of reactogenicity and immunogenicity (5).  These studies may require an additional 6-12 months to complete.

 

The phase 3 trial in 1,000 infants will be designed to obtain efficacy data in one rotavirus season; however, the trial will be extended for more than one year to gather data on the persistence of protection during subsequent rotavirus seasons.  To obtain sufficient clinical safety data for regulatory approval, a large-scale safety trial (up to 60,000 subjects) is planned that will require —2.5 years to complete.

 

During phase 3 clinical testing a bridging/consistency trial in 1,000 infants has been included to allow a transfer from a clinical pilot plant to a commercial manufacturing facility or a technical transfer to a partner’s manufacturing facility.  This trial will be completed concurrently with the other phase 3 clinical studies.  The table below lists the major phases of development and the time for each phase.  Total time for product development from project initiation to first commercial sale is estimated to require about 13.7 years.

 

Market and Competition: There are two competitors (Merck and GSK) developing rotavirus vaccines.  The Aridis vaccine will be competitively superior to both, because no refrigeration will be required and administration will be as a 2 dose quick dissolving wafer assuring full dose receipt.  Both competitor vaccines require refrigeration, administration as a liquid (with inherent inconsistencies in dosing), and either a 3-dose regimen or lengthy mixing procedures.  We will identify an established marketing partner, who in combination with a superior product will allow us to capture a large share of the rotavirus vaccine market.

 

Project Timelines for Quadrivalent Vaccine:

 

	
Project Phase
    	
 
    	
Years
    
	
1. Preclinical development (culminating in IND   filing)
    	
 
    	
3.7
    
	
2. Phase 1 clinical (safety)
    	
 
    	
1.8
    
	
3. Phase 2 clinical in children & infants   (safety & immunogenicity)
    	
 
    	
2.0
    
	
4. Phase 3 clinical development (efficacy, expanded   safety, mfg consistency, bridging)
    	
 
    	
3.5
    
	
5. File BLA
    	
 
    	
1.0
    
	
6. Regulatory review & approval
    	
 
    	
1.5
    
	
7. First commercial sale
    	
 
    	
0.2
    
	
Total Time
    	
 
    	
13.7
    

 

30

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

APPENDIX G—Developing Countries

 

For the purpose of this Agreement, Developing Country will include the following countries:

 

1 Afghanistan

2 Albania

3 Angola

4 Armenia

5 Azerbaijan

6 Bangladesh

7 Benin

8 Bhutan

9 Bolivia

10 Bosnia & Herzegov

11 Burkina Faso

12 Burundi

13 Cambodia

14 Cameroon

15 Central Afr Rep

16 Chad

17 Comoros

18 Congo, Dem Rep

19 Congo, Rep

20 Cote d’Ivoire

21 Cuba

22 Djibouti

23 Eritrea

24 Ethiopia

25 Gambia

26 Georgia

27 Ghana

28 Guinea

29 Guinea-Bissau

30 Guyana

31 Haiti

32 Honduras

33 Indonesia

34 Kenya

35 Korea, DPR

36 Kyrgyz Republic

37 Lao PDR

38 Lesotho

39 Liberia

40 Madagascar

41 Malawi

42 Mali

43 Mauritania

44 Moldova

45 Mongolia

46 Mozambique

47 Myanmar

48 Nepal

 

31Exhibit 10.3

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

LICENSE and OPTION AGREEMENT

 

BRIGHAM YOUNG UNIVERSITY and ARIDIS, LLC

 

This Agreement, effective July 29, 2005 is entered into between Brigham Young University, a Utah non-profit corporation and institution of higher education, with its principal campus and place of business located at Provo, Utah 84602 (referred to in this Agreement as “BYU”) and Aridis, LLC, a California corporation with its principal place of business located at 350 Cervantes Road, Portola Valley, CA 94028, (referred to in this Agreement as “LICENSEE”).

 

RECITALS

 

I                                           BYU is the sole owner of certain intellectual property rights known as “Stabilization of Biological Agents” and has the right to grant licenses with respect to these rights.

 

A.                                    BYU is an institution of higher education and is not in the business of commercially developing ideas, inventions, or other types of intellectual property, but it does desire to have Stabilization of Biological Agents available to the public and is willing to grant a license for this purpose.

 

B.                                    LICENSEE has represented to BYU that LICENSEE has the technical and commercial ability, and the technical, financial and other resources necessary to successfully develop and sell products or services based upon Stabilization of Biological Agents.

 

C.                                    LICENSEE desires to obtain a license to Stabilization of Biological Agents upon the terms and conditions of this Agreement.

 

In consideration of the promises and mutual covenants contained in this Agreement the parties agree as follows:

 

TERMS OF AGREEMENT

 

1.                                      Definitions

 

For the purposes of this Agreement, the following terms, words and phrases shall have the meaning ascribed to them in this Section.

 

1.1                               “ADJUSTED GROSS SALES” shall mean actual gross receipts or the fair market monetary equivalent value of consideration received by LICENSEE, AN AFFILIATE OR A SUBLICENSEE for the sale, lease, license, transfer or use of LICENSED PRODUCTS, less qualifying costs directly attributable to such sale, lease, license or transfer actually allowed and ‘borne by LICENSEE, an AFFILIATE, or a SUBLICENSEE.  Such qualifying costs shall be limited to the costs of the following:

 

1

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

A.                                    Trade or quantity discounts and credits for free goods actually allowed and taken in such amounts as are customary in the trade;

 

B.                                    Sales, import and export duties (or other transportation taxes) and/or production, use, delivery and excise taxes directly imposed with reference to particular sales;

 

C.                                    Outbound transportation and insurance expenses prepaid or allowed; and

 

D.                                    Amounts allowed or credited by reason of timely rejections, recalls, destruction or returns, or for rebates or chargebacks.

 

No deductions shall be made for commissions paid to individuals, whether they be regularly employed by LICENSEE or by independent sales agents, or for the cost of collections.

 

1.2                               “AFFILIATE” shall mean any person or entity owned or controlled directly or indirectly by LICENSEE or a SUBLICENSEE or any person or other entity controlled by, controlling or under common control with LICENSEE or a SUBLICENSEE.  The term “control” means possession, direct or indirect, of the powers to direct or cause the direction of the management and policies of a person or entity; whether through ownership, voting securities, beneficial interests, by contract, by agreement, or otherwise.

 

1.3                               “FIELD OF APPLICATION-ANTIBODIES” means therapeutic antibodies for treatment of infectious diseases.

 

1.4                               “FIELD OF APPLICATION-VACCINES” means vaccines and prophylactic biologics.

 

1.5                               “IMPROVEMENT(S)” means any invention (not currently comprised by the LICENSED TECHNOLOGY described in Exhibit A) which is both (i) specific in its operation or use as dependent upon the use of the LICENSED TECHNOLOGY as described (i.e., not general to the field of stabilization of biological agents), and (ii) an enhancement or improvement of some portion of the LICENSED TECHNOLOGY.

 

1.6                               “INTELLECTUAL PROPERTY” means and includes all patent applications listed in Exhibit A and all patent applications claiming the inventions described in Exhibit A, including any divisional, continuation, or continuation-in-part to such applications to the extent comprising the inventions described therein, as well as any patent issued thereon, any reissue or extension of such patent, and any foreign counterparts to such patents and application.

 

1.7                               “LICENSED PRODUCT(S)” means and includes any drug or other product whose manufacture, use or sale in a country would but for this agreement comprise an infringement of a valid patent claim included in the INTELLECTUAL PROPERTY, the phrase “valid patent claim” meaning either (i) a claim issued and not expired, revoked, abandoned or held unenforceable, or (ii) a claim that is pending, made in good faith, and reasonably designed to cover inventions described in the INTELLECTUAL PROPERTY.  Solely for purposes of calculating ADJUSTED GROSS SALES above, LICENSED PRODUCT shall also include any

 

2

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

drug or other product whose manufacture, use or sale in a country would, but for Aridis’s own ownership rights in a valid patent claim covering an IMPROVEMENT, comprise an infringement of that patent claim.

 

1.8                               “LICENSED TECHNOLOGY” means and includes all of BYU’s rights in the INTELLECTUAL PROPERTY known as “Stabilization of Biological Agents” as more particularly described in Exhibit A, which is attached to this Agreement and by reference is incorporated and made part of this Agreement.

 

1.9                               “LICENSEE” is Aridis, LLC and its AFFILIATES and any other person or entity that becomes a successor in interest to, purchases, merges with, assumes control of, or becomes an assignee of LICENSEE.

 

1.10                        “SUBLICENSEE” is any person or entity sublicensed by LICENSEE under any of its license rights under this Agreement.

 

1.11                        “TERRITORY” means the world.

 

2.                                      BYU Grant

 

2.1                               Subject to the provisions of Section 2.6, BYU hereby grants LICENSEE an exclusive right and license to utilize the LICENSED TECHNOLOGY to develop LICENSED PRODUCTS, and IMPROVEMENTS, and to make, have made, use, have used, import, have imported, and sell, lease and otherwise transfer LICENSED PRODUCTS within the TERRITORY and the FIELD OF APPLICATION-VACCINES as authorized in this Agreement until such time as this Agreement expires or is terminated.  This grant will extend to the manufacture, sale, lease, transfer or other disposition of LICENSED PRODUCTS within the TERRITORY and the FIELD OF APPLICATION-VACCINES through an AFFILIATE or through LICENSEE’s use of any retail outlet or distributor.

 

2.2                               Subject to the provisions of Section 2.4, BYU hereby grants LICENSEE a non-exclusive right and license to utilize the LICENSED TECHNOLOGY to develop LICENSED PRODUCTS, and IMPROVEMENTS, and to make, have made, use, have used, import, have imported, and sell, lease and otherwise transfer LICENSED PRODUCTS within the TERRITORY and the FIELD OF APPLICATION-ANTIBODIES as authorized in this Agreement until such time as this Agreement expires or is terminated.  This grant will extend to the manufacture, sale, lease, transfer or other disposition of LICENSED PRODUCTS within the TERRITORY and the FIELD OF APPLICATION-ANTIBODIES through an AFFILIATE or through LICENSEE’s use of any retail outlet or distributor.

 

2.3                               BYU hereby grants LICENSEE an option to convert the non-exclusive grant of Section 2.2 for the FIELD OF APPLICATION-ANTIBODIES into an exclusive grant upon acceptance by BYU of a reasonable development plan for the exploitation of the FIELD OF APPLICATION-ANTIBODIES including financing and a development plan and schedule.  If the exclusive license is granted, LICENSEE shall agree to pay milestone payments for the FIELD OF  APPLICATION-ANTIBODIES equal to the payments specified in Section 6.1 for

 

3

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

the HELD OF APPLICATION-VACCINES.  This option shall terminate on the fifth anniversary of the effective date of this Agreement, or if BYU receives a bona fide offer for license rights for the FIELD OF APPLICATION-ANTIBODIES from a third party and LICENSEE fails to exercise its option within ninety days of notice thereof, whichever event occurs earlier in time.

 

2.4                               The grants provided under this Agreement shall specifically include the right for LICENSEE to sublicense to SUBLICENSEES its rights under this Agreement to the LICENSED TECHNOLOGY with respect to the TERRITORY, in the following fields:

 

(i)                                     the FIELD OF APPLICATION-VACCINES;

 

(ii)                                  the FIELD OF APPLICATION-ANTIBODIES, where the sublicense is made to
 cover LICENSED PRODUCTS developed or jointly developed by LICENSEE; and

 

(iii)                               the FIELD OF APPLICATION-ANTIBODIES, if the option described in section 2.3 above is exercised.

 

All sublicenses granted by LICENSEE shall be subject to the terms and conditions of this Agreement and any sublicense agreement shall have an express provision to this effect.  No sublicense shall relieve LICENSEE of any of its obligations under this Agreement.  Sublicenses under this Agreement shall be structured to guarantee the payment of royalties to BYU in an amount at least equal to the amount of royalties which BYU would have received from LICENSEE had LICENSEE made, sold, leased, or otherwise transferred the LICENSED PRODUCTS authorized in the sublicense.  LICENSEE agrees to forward to BYU a fully executed copy of each sublicense agreement within thirty (30) days of its execution, and to act as a fiduciary to protect BYU’s interests in the sublicense and to collect and transmit to BYU all royalties due.

 

2.5                               Nothing in this Agreement shall be considered as granting any rights, express or implied, in BYU’s patents, patent applications, inventions, methods, technical, confidential or proprietary information, expertise, know-how, trade secrets or knowledge not specifically licensed in this Agreement, and all rights not expressly granted by this Agreement to LICENSEE are expressly reserved by BYU.  The license granted by this Agreement shall not be construed to confer any rights upon LICENSEE by implication, estoppel or otherwise as to any existing, new or derivative technology not specifically licensed by this Agreement.  The reservation of rights described in this Section is intended to be broadly construed and not to be limited by the definitions set forth in this Agreement.

 

2.6                               Notwithstanding the exclusive license granted pursuant to this Agreement with respect to the TERRITORY and FIELD OF APPLICATION, BYU, the Church of Jesus Christ of Latter-day Saints and the Church Education System reserve the right to make, have made or use the LICENSED TECHNOLOGY, LICENSED PRODUCTS, and IMPROVEMENTS anywhere in the world for continuing research and non-commercial academic and ecclesiastical uses without cost.  Moreover, should BYU, The Church of Jesus Christ of Latter-day Saints or any educational institution within the Church Education System (collectively, the “Church”)

 

4

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

wish to purchase any LICENSED PRODUCTS from LICENSEE or its AFFILIATES, LICENSEE agrees to sell such LICENSED PRODUCTS at the [***] or the price given by LICENSEE to its most favored customers, whichever is less.  (The parties to this Agreement do not expect that these sales would comprise more than [***] of the overall LICENSED PRODUCT sales in any country.  If BYU or the Church were to require LICENSED PRODUCT in excess of this amount the parties agree to meet in order to agree upon fair consideration for the LICENSED PRODUCTS provided.)

 

3.                                      Rights in Improvements

 

3.1                               Upon any termination of this Agreement other than its termination due to expiration of the patent rights as described in section 16.1, and to the extent LICENSEE at that time has the legal right to grant such license, LICENSEE shall grant to BYU a non-exclusive, irrevocable, perpetual, worldwide license, to any of LICENSEE’s rights in IMPROVEMENTS.  LICENSEE agrees to disclose to BYU all information reasonably requested by BYU with respect to any such licensed IMPROVEMENTS and to provide to BYU all documents and data, in whatever form, reasonably necessary for BYU to exercise such license rights.  BYU’s license under this Section shall include the right to practice, license or sublicense IMPROVEMENTS for commercial use when done in conjunction with the practice, license or sublicense of INTELLECTUAL PROPERTY and LICENSED TECHNOLOGY, provided that BYU and LICENSEE shall agree in advance upon an appropriate sharing between them for royalties or other consideration received by BYU, in recognition of and to the extent of the value contributed to the INTELLECTUAL PROPERTY and LICENSED TECHNOLOGY by addition of the licensed IMPROVEMENTS.

 

3.2                               During the term of this Agreement, LICENSEE shall disclose to BYU (under appropriate confidentiality, where appropriate) information with respect to any IMPROVEMENTS developed by LICENSEE for which patent protection is being sought, in order that BYU may assess whether it has any legitimate ownership interest in the invention comprised by the IMPROVEMENT.

 

3.3                               During the term of this Agreement, any IMPROVEMENTS and associated patent rights which are developed by licensees of BYU other than LICENSEE, and for which BYU hereafter acquires ownership or license rights, shall be deemed to be included under the definition of INTELLECTUAL PROPERTY and LICENSED TECHNOLOGY above and included in the license herein.

 

4.                                      Activities of LICENSEE

 

4.1                               The parties acknowledge that LICENSEE may investigate or develop alternative approaches towards the stabilization of biological agents other than the LICENSED TECHNOLOGY.  LICENSEE represents that it enters into this Agreement, including its performance obligations under Section 5 hereunder, and its obligations to support and cooperate in BYU’s efforts to obtain properly patentable valid patent claims as set out in Section 12 hereunder, all in good faith.

 

5

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

5.                                      Performance Requirements

 

5.1                               LICENSEE shall, during the term of this Agreement, use its reasonable best efforts to bring one or more LICENSED PRODUCTS to market in order to maximize the ADJUSTED GROSS SALES through a thorough, vigorous and diligent commercial program.

 

5.2                               LICENSEE has delivered to BYU a development plan and schedule which is attached hereto as Exhibit B.  LICENSEE shall use its reasonable best efforts to accomplish said development plan and schedule.

 

5.3                               LICENSEE shall provide biannual progress reports to BYU by the last day of January and the last day of July until LICENSEE’S first commercial sale.

 

5.4                               LICENSEE’s failure to perform in accordance with this Section of the Agreement to the reasonable satisfaction of BYU may be considered by BYU to be a material breach of this Agreement and as such may entitle BYU to exercise its termination rights in accordance with Section 16.4 below.

 

6.                                      Milestone Payments and Royalties

 

In consideration of the license granted under this Agreement, LICENSEE shall pay to BYU, in the manner designated below until the Agreement shall be terminated, as follows:

 

6.1                               Milestone Payments: LICENSEE shall make the following milestone payments for the first LICENSED PRODUCT to BYU according to the following schedule:

 

	
Upon the completion of   Phase 2 clinical trials
    	
 
    	
[***]
    
	
 
    	
 
    	
 
    
	
Upon the completion of Phase 3 clinical trials
    	
 
    	
[***]
    
	
 
    	
 
    	
 
    
	
Upon the first commercial sale of a LICENSED PRODUCT
    	
 
    	
[***]
    

 

6.2                               Earned Royalties: Earned royalties shall be paid quarterly in the amount equal to [***] of the ADJUSTED GROSS SALES for LICENSED PRODUCT anywhere in the TERRITORY and FIELD OF APPLICATION-VACCINES or FIELD OF APPLICATION-ANTIBODIES.

 

6.3                               If LICENSEE judges it to be necessary to license and utilize additional rights from a third party which are reasonably considered to fall within the scope of the LICENSED TECHNOLOGY, LICENSEE may reduce the Earned Royalties due BYU on any such LICENSED PRODUCT sold which utilizes the third party’s licensed rights by one-half of the royalty paid to the third party for said rights provided prior notice is given to BYU by LICENSEE and BYU provides written consent thereto, which consent shall not be unreasonably withheld.  However, under no circumstances shall the Earned Royalties payable to BYU be less than [***]

 

6

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

6.4                               Any royalty amount due to BYU arising out of this Agreement shall accrue at the time of receipt by LICENSEE of consideration for LICENSED PRODUCT or LICENSED PROCESS and shall be deemed to be held in trust for the benefit of BYU until actual payment of such amounts is made pursuant to this Agreement.

 

7.                                      Reports, Records, Penalties and Interest

 

7.1                               LICENSEE shall keep, and shall require all SUBLICENSEES, AFFILIATES, and any other party responsible by the terms of this Agreement to make payments to BYU to keep, at their own expense, accurate books of account, using generally accepted accounting principles and practices, detailing all data necessary to calculate and easily audit any payments due to BYU under this Agreement.  These books of account shall be kept at LICENSEE’s, AFFILIATE’s or SUBLICENSEE’s principal place of business.  These books and supporting data shall be open at all reasonable times, upon ten (10) calendar days written notice, throughout the term of this Agreement and for a period of five (5) years following the end of the calendar year to which they pertain, to inspection by BYU or its agents for the purpose of verifying LICENSEE’s reports, royalty statements or other compliance with this Agreement.  In the event that any such inspection reveals any underpayment of royalties by LICENSEE, LICENSEE shall promptly rectify any such underpayment, reimburse BYU for the cost of such inspection if such inspection reveals a deficiency in any quarterly payment due to BYU hereunder in the amount of [***] or more of the amount payable to BYU, and shall pay the penalty and interest amounts specified in Section 7.4 below.

 

7.2                               LICENSEE, within sixty (60) days after the last day of each full calendar quarter subsequent to the effective date of this Agreement, shall deliver to BYU an accurate written report summarizing in sufficient detail to allow BYU to verify all payment amounts, the data used during the preceding three-month period under this Agreement to calculate the payments due to BYU during the applicable accounting period.  These records and reports shall include at least the following information for the accounting period:

 

A.                                    Calculation of ADJUSTED GROSS SALES, itemized as to the number and the identity of the LICENSED PRODUCTS sold.

 

B.                                    All qualifying deductible costs claimed as offsets as applicable.

 

C.                                    Calculation of earned royalties and total royalties due broken down by applicable category.

 

D.                                    Names and address of all AFFILIATES and SUBLICENSEES and full reports from them complying with the reporting requirements of Section A-C.

 

7.3                               With each such report submitted, LICENSEE shall pay to BYU all fees, royalties and all other amounts due, payable and arising pursuant to this Agreement.  If no amounts shall be due, LICENSEE shall so report.  All amounts paid to BYU pursuant to this Agreement shall be in United States Dollars unless otherwise agreed in writing between the parties, and the amount of all royalties to be paid to BYU shall be determined on the basis of the relevant

 

7

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

currency exchange rate published by the Wall Street Journal on the last business day of the calendar quarter to which such royalties relate.

 

7.4                               A penalty will be assessed in an amount equal to [***] of any payment due to BYU arising out of this Agreement if the payment is made more than sixty (60) days late.  Interest will accrue from the thirtieth day after the payment was due at a rate of [***] per annum or the highest rate permitted by law, whichever is lower.  Any unpaid interest or penalty shall be compounded monthly at the applicable interest rate.  The penalty and interest provisions of this Section 7.4 shall not apply to any payment reasonably in dispute or any circumstance of force majeure as described in Section 22.6.

 

7.5                               In the event LICENSEE engages an independent auditor or employs an internal auditor for the purpose of verifying the accuracy of its books of account, LICENSEE shall cause said auditor to verify the accuracy of the quarterly reports required in Section 7.2 of this Agreement, and LICENSEE shall provide to BYU a copy of the report and any documentation generated in the verification process on or before ninety (90) days after the verification process is completed.

 

8.                                      Confidentiality

 

8.1                               If either party receives material provided by the other party which is marked as confidential, or is verbally so designated and confirmed in writing by the disclosing party within thirty (30) days of the receipt of the materials by the receiving party, the receiving party shall take reasonable precautions to protect such material and to preserve its confidential, proprietary or trade secret status during the term of this Agreement and for a period of five (5) years after termination of this Agreement.

 

8.2                               In determining whether or not information is confidential, the burden of proof shall be upon the receiving party to establish by competent proof and by preponderance of the evidence that such information to be non-confidential was:

 

A.                                    Already known to the receiving party at the time of disclosure by the disclosing party or independently developed by the receiving party, or

 

B.                                    Generally available to the public or otherwise part of the public domain at the time of its disclosure to the receiving party, or

 

C.                                    Became generally available to the public or otherwise part of the public domain after its disclosure and other than through any act or omission of the receiving party in breach of this Agreement, or

 

D.                                    Subsequently, lawfully disclosed to the receiving party by a third party, or

 

E.                                     Required by law to be disclosed.

 

8.3                               LICENSEE may disclose BYU’s confidential information to its agents, employees, independent contractors, officers, AFFILIATES and SUBLICENSEES where

 

8

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

reasonably necessary to further the objectives of this Agreement, and otherwise only to the extent it is authorized in writing to do so by BYU.

 

8.4                               All of the receiving party’s SUBLICENSEE’s, employees and independent contractors with access to the disclosing party’s confidential information shall be bound in writing, copies of which shall be retained by the receiving party and submitted to the disclosing party upon request of the disclosing party, to make no unauthorized use or disclosure of the confidential information.

 

8.5                               Both parties agree that a breach of its obligation to protect the other party’s confidential information shall cause immediate and irreparable harm which cannot be adequately compensated by monetary damages.  Accordingly, any breach or threatened breach of confidentiality shall entitle the disclosing party to preliminary and permanent injunctive relief in addition to such remedies as may be otherwise available.

 

9.                                      Separate Service Agreement

 

If BYU and LICENSEE mutually agree that BYU shall supply technical and engineering services required to effectively transfer to LICENSEE the LICENSED TECHNOLOGY licensed herein, then LICENSEE shall reimburse BYU for its expenses incurred in furnishing such technical and engineering services pursuant to the terms and conditions of a separate written agreement.

 

10.                               Export Controls and Applicable Laws

 

10.1                        It is understood that the LICENSED TECHNOLOGY may be subject to United States laws and regulations controlling the export of technical data, computer software, laboratory prototypes and other commodities (including the Arms Export Control Act, as amended, and the Export Administration Act of 1979), and LICENSEE’s obligations under this Agreement may be contingent upon compliance with applicable United States export laws and regulations.  The transfer of certain technical data and commodities may require a license from the cognizant agent of the United States Government and/or written assurances by LICENSEE that LICENSEE shall not export data or commodities to certain foreign countries without prior approval of such agency.  BYU neither represents that a license shall not be required nor that, if required, it shall be issued.  LICENSEE shall observe and obey all export laws in countries in which it shall do business.

 

10.2                        In the exercise of its rights, and the performance of its obligations under this Agreement, LICENSEE shall comply with all applicable laws, regulations and governmental orders.  LICENSEE shall obtain, and shall maintain in full force and effect throughout the continuance of this Agreement, all licenses, permits, authorizations and approvals required under all applicable laws, regulations and governmental orders of the TERRITORY, and shall make all filings, notifications and reports to all relevant governmental agencies, which are necessary or appropriate in order for the performance by LICENSEE of all of its obligations under this Agreement.  In the event that the issuance of any such license, permit, authorization or approval is conditioned upon any material modification or amendment of BYU’s rights under this

 

9

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

Agreement, and is sought without BYU’S agreement to that modification or amendment, then BYU shall have the right to terminate this Agreement with respect to the affected territory, and such TERRITORY shall be excluded from the definition of the TERRITORY herein

 

11.                               Patent Marking and Copyright Notice

 

If applicable, LICENSEE agrees to mark the LICENSED PRODUCTS sold in the United States with all applicable United States patent numbers and copyright notices.  All LICENSED PRODUCTS shipped to or sold in other countries shall be marked in such a manner as to conform with the patent and/or copyright laws and practice of the country of manufacture or sale.

 

12.                               Patent Prosecution and Maintenance

 

12.1                        BYU shall use its reasonable best efforts to apply for, seek prompt issuance of, and maintain during the term of this Agreement any patent rights to properly patentable INTELLECTUAL PROPERTY set forth in Exhibit A or to any enhancements and modifications thereto.  BYU shall diligently prosecute, file, perfect and maintain all such patent rights, patents or applications utilizing legal counsel of its choice.  LICENSEE shall cooperate with BYU in such prosecution, filing and maintenance.

 

12.2                        Payment of one-third of all fees and costs relating to the filing, prosecution, perfection and maintenance of the patent rights, both domestic and foreign, shall be reimbursed by LICENSEE to BYU, whether such fees and costs were incurred before or after the date of this Agreement.  If the option for an exclusive license to the HELD OF APPLICATION-ANTIBODIES of Section 2.3 is granted, and if BYU has no other non-exclusive licensee in the FIELD OF APPLICATION-ANTIBODIES, LICENSEE shall pay an additional one-third of said patent-related costs.  For filings outside the United States not made in joint agreement between the parties, LICENSEE may elect not to reimburse BYU for such expenses by providing advance written notice to BYU, but any such filing in such country shall thereafter be excluded from INTELLECTUAL PROPERTY and LICENSED TECHNOLOGY as defined herein.

 

12.3                        LICENSEE shall have the right to comment upon all patent prosecution or interference matters.  Strategic matters affecting potential breadth and term of any patent coverage, and all other material matters related to patent prosecution, shall be managed by joint agreement negotiated in good faith among BYU, LICENSEE and (where necessary) any third party BYU licensees.  Copies of all documentation and correspondence with governmental patent offices and patent counsel shall be provided to LICENSEE.

 

12.4                        LICENSEE SHALL HAVE NO CLAIM OR DAMAGES AGAINST BYU, ITS  PERSONNEL, TRUSTEES OR STUDENTS FOR FAILURE TO PERFORM ITS  OBLIGATIONS PURSUANT TO SECTION 12 OF THIS AGREEMENT, AND SHALL NOT CONSIDER BYU’S FAILURE TO SO PERFORM A BREACH OF THIS AGREEMENT, PROVIDED THAT BYU COMPLIES WITH THE FOLLOWING TERMS: IF BYU SHALL ELECT NOT TO PERFORM ITS OBLIGATIONS HEREUNDER WITH RESPECT TO ANY  OR ALL PATENT APPLICATIONS AND PATENTS, THEN IT SHALL PROVIDE  LICENSEE WITH REASONABLE ADVANCE WRITTEN NOTICE OF ITS INTENT, AND  PROVIDE LICENSEE THE OPPORTUNITY THEREAFTER TO CONTINUE THE

 

10

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

PROSECUTION, FILING, PERFECTION AND MAINTENANCE OF SUCH PATENT  APPLICATIONS AND PATENTS INDEPENDENTLY OF BYU AND AT ITS OWN  EXPENSE.

 

13.                               Infringement

 

LICENSEE will have the first right to pursue, prosecute and settle infringement matters in its exclusive field of use.  BYU shall have the first right to pursue all other infringement matters.  In either case the other party may pursue matters not elected by the party with the first right (provided the matter is within LICENSEES’ field of use).  Where LICENSEE takes first action, proceeds shall be divided, net of expenses, 75% to LICENSEE and 25% to BYU.  Where BYU takes first action, proceeds shall be divided 75% to BYU and 25% to LICENSEE.

 

14.                               Warranty and Limitation of Remedy

 

14.1                        BYU represents and warrants that to the best of its knowledge it is the owner of the entire right, title, and interest in and to and has the sole right to grant licenses under this Agreement to the LICENSED TECHNOLOGY as described on Exhibit A.  BYU makes no warranty or representation with respect to the application of the LICENSED TECHNOLOGY to any particular purpose.

 

14.2                        BYU makes no representation that the manufacture, use, lease, or sale of the LICENSED TECHNOLOGY will not infringe a copyright or patent granted to others, other than to state that it knows of no such copyright, patent or other proprietary interests which would be so infringed.

 

14.3                        Each party represents and warrants to the other that it has all of the requisite power and authority to enter into this Agreement and to perform each and every term, provision and obligation of this Agreement, and that neither the execution nor delivery of this Agreement will conflict with or result in a breach of the terms, provisions or obligations of, or constitute a default pursuant to, any other agreement or instrument under which such party is obligated.

 

14.4                        ALL WARRANTIES MADE IN THIS AGREEMENT ARE EXCLUSIVE AND, TO THE EXTENT PERMITTED BY LAW, ARE IN LIEU OF ALL OTHER WARRANTIES EXPRESS  AND IMPLIED, INCLUDING BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, OR ANY OTHER WARRANTY WHETHER EXPRESS OR IMPLIED.

 

14.5                        BYU will not be liable for any loss of profits or for any claim or demand against LICENSEE by any other party.  BYU’s liability, if any, for any damages to LICENSEE shall not exceed in any event the total earned royalties which have been paid by LICENSEE to BYU during the term of this Agreement.  IN NO EVENT WILL BYU BE LIABLE FOR INCIDENTAL OR  CONSEQUENTIAL DAMAGES EVEN IF BYU HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.  No action, regardless of form, arising out of the transaction subject of this Agreement may be brought against BYU more than one year after the cause of action is discovered.

 

11

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

15.                               Product Liability and General Indemnification

 

15.1                        BYU does not warrant the effectiveness or operation of any of the LICENSED PRODUCTS, and the parties to this Agreement agree and understand that BYU shall have no liability to any user of LICENSED PRODUCTS.  LICENSEE, therefore, agrees to hold BYU harmless and indemnify BYU, its trustees, officers, employees and agents from and against any and all litigation, claims, damages or actions (including reasonable attorneys’ fees) that may be instituted against BYU arising out of LICENSEE’s marketing, distribution, sale, production, manufacture, lease, consumption or advertisement of the LICENSED TECHNOLOGY or LICENSED PRODUCTS or arising from any obligation of LICENSEE under this Agreement, including, but not limited to, claims resulting from any alleged type of defect in the LICENSED TECHNOLOGY or LICENSED PRODUCTS or damages allegedly caused by any breach of contract by LICENSEE, its AFFILIATES or SUBLICENSEES, or the use or misuse of the LICENSED TECHNOLOGY or LICENSED PRODUCTS, notwithstanding any third-party allegation that their claims, injuries or damages were proximately caused in part or wholly by BYU’s negligence.  In the event BYU is sued as a party defendant or otherwise pursuant to claims identified in this Section as being subject to indemnification, LICENSEE agrees to defend BYU at LICENSEE’s sole expense in such action.  Should any award or decree be made against BYU, it shall be the obligation of LICENSEE to (a) appeal the decision and pay if the appeal is lost or (b) pay such award or make any settlement as may be warranted before or after the decision on appeal.  BYU shall have the right to elect to participate in any such action with counsel of its choosing; the costs of BYU’s participation shall be at its own expense.

 

15.2                        LICENSEE shall immediately notify BYU of any litigation in which it, its officers or its directors, agents or employees may be involved if there is a reasonable possibility that this Agreement or BYU will be affected and afford BYU reasonable cooperation should BYU elect to make its own defense.

 

16.                               Term and Termination

 

16.1                        Subject to earlier termination in accordance with this Section, this Agreement shall commence on the effective date of this Agreement and remain in force until the expiration of the last valid patent claim contained in the LICENSED TECHNOLOGY.

 

16.2                        The Agreement may be terminated immediately by written notice to LICENSEE by BYU at its election in the event of the occurrence of any one of the following circumstances:

 

A.                                    In the event LICENSEE is placed in the hands of a receiver or makes a general assignment for the benefit of creditors, such that LICENSEE is unable to perform its continuing obligations hereunder; or

 

B.                                    In the event that all or substantially all of the assets of LICENSEE or its successor-in-interest are seized or attached in a final, unappealed or unappealable order in conjunction with any action brought against it by a third party creditor, such that LICENSEE is unable to perform its continuing obligations hereunder.

 

12

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

16.3                        This Agreement may be terminated effective upon thirty (30) days written notice from BYU and the failure of LICENSEE to cure any breach or default prior to the expiration of the thirty-day notice period in any of the following circumstances:

 

A.                                    In the event LICENSEE becomes insolvent or shall cease to carry on its business in the normal course; or

 

B.                                    In the event there is a transfer or sale of LICENSEE’s business purporting to transfer or assign this Agreement and/or the LICENSED TECHNOLOGY without the prior express written consent of BYU.

 

16.4                        In the case of breach or default arising from LICENSEE’s failure to pay BYU royalties or other costs or expenses pursuant to the Agreement when due and payable, failure to complete the performance requirements of Section 5 of this Agreement, or from any other material breach or default of this Agreement, BYU shall have the right to terminate this Agreement upon thirty (30) days written notice to LICENSEE.  Termination shall become effective upon the failure of LICENSEE to cure such breach or default within such notice period.

 

16.5                        LICENSEE may terminate this Agreement at any time by providing sixty (60) days written notice to BYU.

 

16.6                        Upon termination of this Agreement for any reason, the parties shall not be released from any obligation that has matured prior to the effective date of the termination.  LICENSEE may, however, after the effective date of such termination, sell all LICENSED PRODUCTS in its inventory or in process as of the time of such termination, provided that LICENSEE shall pay to BYU the royalties and other consideration due on such products as required by this Agreement and shall submit the reports as required.

 

16.7                        Upon the termination of this Agreement, any SUBLICENSEE which has not breached in any material way its sublicense agreement shall be offered by BYU the option of receiving a license directly from BYU on substantially the same terms and conditions as those provided herein.

 

16.8                        Upon the termination of this Agreement, LICENSEE shall immediately cease using the INTELLECTUAL PROPERTY and return to BYU all documents and information as may have been provided by BYU pursuant to this Agreement, which contain information which is confidential or proprietary to BYU.

 

16.9                        Nothing herein shall be construed to limit BYU’s legal or equitable remedies in the event of a default by LICENSEE and/or subsequent termination of this Agreement by BYU.

 

17.                               Dispute Resolution and Mediation

 

17.1                        With respect to any and all claims, disputes or controversies arising out of the performance of or in connection with this Agreement, the parties agree to attempt in good faith to resolve those claims, disputes or controversies by negotiations between the parties.  In the

 

13

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

event either party believes the negotiation discussions are likely not to result in settlement, the parties must, in good faith, participate in mediation sessions with a professional mediator to be mutually selected by the parties and the expense of which is to be paid fifty percent (50%) by each party.  In the event, after one or more mediation sessions, either party believes the mediation process is not likely to resolve the dispute by mutual agreement, such party may seek any legal or equitable remedy available through a court of competent jurisdiction.

 

17.2                        Nothing in this Section shall be construed to waive any rights of timely performance of any obligation existing under this Agreement.

 

18.                               Licensee Assignment

 

Neither this Agreement nor the LICENSED TECHNOLOGY is assignable by LICENSEE without the express written consent of BYU, which shall not be unreasonably withheld.  Any attempt to make such an assignment without BYU’s written consent may be voided at the election of BYU.  LICENSEE agrees that in the event BYU elects to void an unauthorized assignment that BYU will have suffered immediate and irreparable damage and shall be entitled to immediate injunctive relief.  In the event BYU does not elect to void an unauthorized assignment, LICENSEE agrees that the assignee will be treated in all respects as a LICENSEE for purposes of this Agreement.  Nothing in this section may be construed to preclude BYU from initiating an independent action against the assignee of the unauthorized assignment or to otherwise pursue other legal or equitable remedies against LICENSEE, the assignee or both.

 

19.                               Non Use of BYU Name

 

LICENSEE shall not use the name of Brigham Young University nor of any of its employees, nor any adaptation thereof, in any advertisement, promotion or sales literature without the express prior written consent from BYU in each case, except that LICENSEE may state that it is licensed by BYU.

 

20.                               Publication

 

BYU shall have the right to publish any academic paper, article or learned treatise and make public disclosure at professional meetings or seminars regarding any portion of the LICENSED TECHNOLOGY which has been or may be invented, conceived or developed by BYU.

 

21.                               Payment, Notices and Other Communications

 

Any payment, notice or other communication pursuant to this Agreement shall be sufficiently made or given on the date of mailing if sent by certified first-class mail, postage prepaid, addressed to the receiving party at its address designated below or such address as shall be designated by written notice given to the other party.

 

14

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

	
BYU:
    	
Technology Transfer Office
    
	
 
    	
A-285 ASB
    
	
 
    	
Brigham Young University
    
	
 
    	
P.O. Box 21231
    
	
 
    	
Provo, Utah 84602-1231
    
	
 
    	
(801) 378-6266
    
	
 
    	
 
    
	
LICENSEE:
    	
Aridis, LLC
    
	
 
    	
350 Cervantes Road
    
	
 
    	
Portola Valley, CA 94028
    

 

22.                               Miscellaneous Provisions

 

22.1                        Independence of Parties.   BYU and LICENSEE are independent parties engaged in independent business and neither party nor any respective agent or employee of either party shall be regarded as an agent or an employee of the other.  Nothing in this Agreement shall be construed as reserving to either party the right to control the other in the conduct of its business, nor shall either party have the authority to make any promise, guarantee, warranty or reservation which will create any obligation or liability whether express or implied on behalf of the other.

 

22.2                        Attorneys’ Fees.  In the event a legal proceeding is commenced in a court of competent jurisdiction to construe or enforce any provision of this Agreement, the prevailing party, in addition to all other amounts to which such party may be entitled, shall be entitled to recover from the non-prevailing party its reasonable attorneys’ fees, expert witness fees and costs incurred in connection with the proceeding.

 

22.3                        Waiver.  No waiver by either party, whether express or implied, of any provisions of this Agreement or of any breach or default of either party, shall constitute a continuing waiver of such provision or a waiver of any other provisions of this Agreement.

 

22.4                        Governing Law.  This Agreement shall be interpreted and construed in accordance with the laws of the State of Utah.  Venue for any legal disputes shall be in Utah County, Utah.

 

22.5                        Partial Invalidity.  Should any Section or any part of a Section of this Agreement be held unenforceable or in conflict with the law of any jurisdiction, the validity of the remaining Sections and Subsections shall not be affected by the invalidity of any other part of the Agreement.

 

22.6                        Force Majeure.  Neither party to this Agreement shall be in default because of a delay or failure to perform which is not the result of the defaulting party’s intentional or negligent acts or omissions, but results from causes beyond the reasonable control of such party such as acts of God, terrorism, civil disobedience and war.

 

22.7                        Entire Agreement.  This Agreement constitutes the entire Agreement and understanding between the parties and supersedes all prior agreements and understandings with

 

15

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

respect to the LICENSED TECHNOLOGY, whether written or oral.  No modification or claimed waiver of any of the provisions of this Agreement shall be valid unless in writing and signed by authorized representatives of the party against whom such modification or waiver was sought to be enforced.

 

22.8                        Full and Fair Meaning.  This Agreement shall be interpreted in accordance with its fair meaning and shall not be interpreted for or against any party on the ground that such party drafted or caused to be drafted this Agreement or any part thereof.

 

22.9                        Binding Effect.  This License Agreement shall be binding upon and shall inure to the benefit of the successors, assigns and legal representatives of the parties.

 

22.10                 Headings.  The paragraph and subparagraph headings contained in this Agreement are for convenience and reference only.  They are not intended to define, limit, or expand the scope of the provisions of this Agreement.

 

IN WITNESS WHEREOF, the parties have entered into this Agreement:

 

	
Date:
    	
July 29, 2005
    	
 
    	
BRIGHAM YOUNG   UNIVERSITY
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Gary R. Hooper
    
	
 
    	
 
    	
 
    	
Gary R. Hooper
    
	
 
    	
 
    	
 
    	
Associate Academic Vice   President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Date:
    	
July 29, 2005
    	
 
    	
LICENSEE
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Eric Patzer
    
	
 
    	
 
    	
 
    	
Eric J. Patzer
    
	
 
    	
 
    	
 
    	
President
    

 

16

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

EXHIBIT A

 

LICENSED TECHNOLOGY

 

STABILIZATION OF BIOLOGICAL AGENTS

 

The LICENSED TECHNOLOGY includes U.S. patent application number 10/199,061, “Plasticized Hydrophilic Glasses for Improved Stabilization of Biological Agents”, the corresponding Patent Cooperation Treaty application number PCT/US02/28320, Canadian application number 2,458,794, European Patent Office application number 02795489.0 and any additional foreign counterparts thereof, as well as all continuations, continuations-in-part, divisions and renewals thereof, all patents which may be granted thereon, and all reissues, reexaminations and extensions; and any trade secrets and know-how which are in existence upon the effective date of this Agreement.

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